Mondi Group
Integrated report and
financial statements 2022
Delivering
sustainable
solutions–
Scope
Mondi’s Integrated report and financial
statements 2022 is our primary report to
shareholders, providing an overview of the
performance of the Group for the year ended
31 December 2022.
The report is prepared in accordance with
the requirements of the Disclosure Guidance
and Transparency and Listing Rules of the
United Kingdom Listing Authority and the
Listings Requirements of the JSE Limited
where applicable.
The Strategic report contains the required
non-financial information disclosures and
Section 172 statement in accordance with
the UK Companies Act 2006.
The report 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.
Russian operations reporting considerations
The Group’s Russian operations have been
classified as held for sale and since June
2022, reported as discontinued operations.
Unless otherwise mentioned, 2021 figures
have been restated and 2022 figures and
performance are based on the Group’s
continuing operations (which exclude the
Russian operations). Please refer to pages 209-
212 for further information. For sustainability
metrics, 2020 and 2021 figures have been
restated to reflect the Group’s continuing
operations and enable a year-on-year
performance comparison to our 2020 baseline,
except GHG emissions which include the
Group’s Russian operations in line with our
Net-Zero targets. Selected sustainability KPIs
for the Group including its Russian operations
is available in the consolidated sustainability
performance data which forms part of our full
2022 suite of reports, available at the link shown
at the bottom of this page.
Alternative Performance Measures
The 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 on pages 242-248.
TCFD disclosure
In line with the UK Listing Rules, this report is
consistent with the Financial Stability Board’s
Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and
recommended disclosures relating to the
impact of climate change on governance,
strategy, risk management and metrics and
targets. Further information can be found on
pages 48-57.
SASB
This report is prepared in accordance
with the Sustainability Accounting Standards
Board (SASB): Containers & Packaging Industry
Standard. Relevant disclosures are highlighted
by the icon above and further disclosures can
be found in our Sustainable Development
report and in our GRI & SASB Index available
online as part of our 2022 suite of reports.
Sustainable Development report
We prepare a detailed, externally assured
Sustainable Development report in accordance
with the Global Reporting Initiative (GRI)
Universal Standards (2021) and SASB. Our
Sustainable Development report, consolidated
performance data and supporting index reports
can be found online as part of our 2022 suite
of reports.
Overview
1-11
Strategic
report
12-83
Governance
84-153
Financial
statements
154-256
Our customer proposition
2022 at a glance
Our businesses
Where we operate
Letter from the Chair
Our business model
Market context
Our strategy
Strategic framework
Chief Executive Officer’s strategic review
Key performance indicators
Section 172 statement
Mondi Action Plan 2030
(including our TCFD disclosure)
Business unit trading review
Financial review
Principal risks
Viability statement
Chair’s introduction
Board of directors
2
4
6
8
10
14
18
20
20
22
30
32
36
66
68
72
82
86
88
Executive Committee and Company Secretary 90
Corporate governance report
Nominations Committee
Audit Committee
Sustainable Development Committee
Remuneration report
Other statutory information
Directors’ responsibility statement
Independent auditors’ report
Financial statements
Production statistics and exchange rates
Group financial record
Alternative Performance Measures
Additional information for shareholders
Shareholder information
Glossary of sustainability-related terms
92
107
112
121
124
152
157
158
171
239
240
242
249
251
255
Visit our website for Mondi’s complete 2022
Integrated and Sustainable Development
reporting suite
www.mondigroup.com
Mondi Group
Integrated report and financial statements 2022
1
How is Mondi
delivering sustainable
solutions?
Mondi is a global leader in sustainable packaging
and paper. Our integrated value chain, cross-sector partnerships,
extensive technical expertise and broad portfolio of solutions
help our customers to make more sustainable choices.
We are investing to expand our capacity, improve efficiency,
eliminate waste and tackle emissions. By building on our leading
positions, we are amplifying and accelerating the value that our
solutions deliver to all of our stakeholders.
Q &A Throughout this report, we have
highlighted the key questions
that our stakeholders ask us.
The answers capture the initiatives
and commitments that make
Mondi sustainable by design.
2
Mondi Group
Integrated report and financial statements 2022
Our customer proposition
Uniquely positioned to deliver sustainable solutions
The Mondi Way connects our 22,000 people across the world through
a shared purpose, consistent long-term strategy and strong values. It enables
us to nurture an environment in which high performance, collaboration and
innovation thrives.
p urpose
sustainable by design
We contribute to a better world
by making innovative, sustainable
packaging and paper solutions
The
Mondi
Way
grow, create,
Inspire. together
drive value accretive
growth, sustainably
Performance – Care – Integrity
We are passionate, entrepreneurial and empowered
We are respectful and look out for each other
We are honest, transparent and inclusive
We drive performance along the value chain
We invest in assets with cost advantage
We inspire our people
We partner with customers for innovation
c
u
lt
ure
strategy
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
3
How does
the Mondi Way deliver
for customers?
Leading the way in
structurally growing markets
Investing with a
long-term focus
Innovating through a
culture of collaboration
Our leading market positions and purpose-driven focus on
sustainability make us the partner of choice for meeting customer
demand in our structurally growing packaging markets, underpinned
by demand for eCommerce and sustainable solutions.
Market context
Page 18-19
Our consistent strategy and disciplined investment programme
provide us with a competitive advantage through the cycle and
deliver security of supply for our customers. Through our investments,
we can increase capacity, drive innovation and minimise our
environmental footprint.
Chief Executive Officer’s strategic review
Page 22-29
Our solutions-oriented customer partnerships and significant
cross-industry collaborations amplify our capability to tackle
key challenges like food waste, climate change, biodiversity loss
and unsustainable packaging.
Empowered People
Page 41-43
Our award-winning products
Mondi won eight WorldStar Packaging
Awards in 2023. The annual competition
rewards the greatest achievements in packaging
innovation and technologies worldwide, with
a focus on both sustainability and end-user
convenience.
Visit our website for all our award-winning products
www.mondigroup.com
4 Mondi Group
Integrated report and financial statements 2022
2022 at a glance
Delivering on our strategy
Strong financial performance from continuing operations1
Group revenue
€8,902m
q28%
Underlying EBITDA
€1,848m
q60%
Return on capital employed
Cash generated from operations
23.7%
q980bps
Profit before tax
€1,560m
q119%
Dividend per share
70.0
q8%
euro
cents
€1,292m
q29%
Basic underlying earnings per share
195.6
q78%
euro
cents
Leverage (net debt to underlying EBITDA)
0.5 times
1.5 times
€1 billion expansionary capital
investment pipeline on track
to deliver growth across
our packaging businesses
Completed sale
of the Personal
Care Components
business, delivering
greater focus
1 Performance based on continuing operations (which excludes the Group’s
Russian operations). Refer to note 26 in the consolidated financial statements
for further information on the Group’s Russian discontinued operations.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
5
Delivering innovative solutions
and keeping materials in circulation
Circular Driven Solutions
Page 38-40
82%
of our revenue is from
packaging and paper
products that are reusable,
recyclable or compostable
4%
reduction of absolute
waste to landfill from our
manufacturing processes
compared to our 2020
baseline
Engaging, developing and
safeguarding our people
Empowered People
Page 41-43
8%
improvement in Total
Recordable Case Rate
compared to 2020 baseline
Transitioning to a low carbon,
circular economy
Taking Action on Climate
Page 44-57
Net-Zero
science-based GHG
reduction targets approved
for Scopes 1, 2 & 3, aligned
to a 1.5°C scenario
17%
reduction of our absolute
Scope 1 and 2 GHG emissions
against our 2019 baseline
100%
responsibly sourced fibre
(75% FSCTM or PEFC certified,
with the balance controlled wood)
6
Mondi Group
Integrated report and financial statements 2022
Our businesses
Packaging and paper that is sustainable by design
We offer our customers a wide range of packaging
solutions based on our principle of paper where
possible, plastic when useful. We are also a leading
manufacturer of printing papers used at home,
in the office and for professional applications.
Markets served based on Group revenue
Consumer and retail
Building and
construction
Industrial and agriculture
Paper for home, office
and professional printing
Examples of our product portfolio
Consumer and retail
Industrial and agriculture
FlexiBag Recyclable
A fully recyclable, mono-
material bag with convenient
features and barrier properties
suited for dry food and
pet food
MailerBAG
A patented, fully recyclable
paper bag for eCommerce
shipments that is easy
to open and reclose and
convenient to return
Protector Bag
Flexible, recyclable paper
packaging that ensures
high product protection for
bulky, sensitive or irregularly
shaped goods
Pak-(k)it
A recyclable, easy to
assemble corrugated
solution for transporting
bulk or large items
ProVantage KraftTop LinerX
A recyclable, lightweight and
high-strength containerboard
solution with a wide range
of end-uses, from food and
beverage to luxury packaging
TrapezeBox
An appealing, fully recyclable
corrugated packaging solution
that replaces rigid plastic and
is sustainable by design
Paper for home, office
and professional printing
Pergraphica®
Full-spectrum premium
printing papers for creative
communications, design,
publishing and luxury
packaging
Color Copy
Office and professional
printing paper for digital
colour printing
Building and construction
ONE bag
A recyclable, lightweight and
efficient solution for high-speed
filling of powdered goods made
from only one ply of paper
For our full product list, see our website
www.mondigroup.com/en/products-and-solutions
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
7
Our business units
Segment revenue
Underlying EBITDA
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Packaging
We serve our customers with a range of consumer, retail, industrial and specialised applications. Our integrated asset
base is well-invested and cost-advantaged to capture opportunities in our structurally growing packaging markets.
Our packaging is innovative and sustainable by design, focusing on quality and service.
Corrugated
Packaging
Flexible
Packaging
We produce containerboard and a broad range of
converted corrugated solutions designed to protect,
transport and display our customers’ products along
the value chain until they reach the end consumer.
Corrugated packaging’s strength, printability, recyclability
and customisation potential makes it an ideal solution
for fast-moving consumer goods, eCommerce, heavy
industrial and other specialised applications.
Corrugated Packaging
Page 66
We are a global flexible packaging producer with
a unique portfolio of paper, flexible-plastic and hybrid-
based solutions. Our kraft papers are converted into
strong, lightweight paper-based packaging such as
paper bags, while our functional paper and films protect
adhesive surfaces or provide protective barriers to papers
for packaging and other applications.
We also make a range of plastic-based flexible
packaging solutions which provide functionality and
product protection. Our broad range of products are
used in a range of consumer, retail, construction and
industrial applications.
Flexible Packaging
Page 66
Uncoated
Fine Paper
Our Uncoated Fine Paper business produces a wide range
of home, office, converting and professional printing papers,
tailored to the latest digital and offset print technologies.
We also produce pulp which is sold to customers around
the world.
Uncoated Fine Paper
Page 67
The above is based on the Group’s continuing operations (which exclude the Group’s Russian operations).
Leading market positions
in Europe
#1 virgin containerboard producer
#1 containerboard producer
#1 corrugated solutions producer
in emerging Europe
in emerging Europe
Leading market positions
globally
#1 kraft paper producer
#1 paper bags producer
#3 consumer flexible packaging
in Europe and a global leader
producer in Europe
Leader in coating applications
in Europe
Leading market positions
producer in Europe
#2 uncoated fine paper
#1 uncoated fine paper
producer in South Africa
8
Mondi Group
Integrated report and financial statements 2022
Where we operate
Global network delivering for our customers
Mondi employs 22,000 people across 100 production
sites in more than 30 countries, with key operations
located in Europe, North America and Africa.
Production sites per business unit
Corrugated Packaging
Flexible Packaging
Mill (6)
Converting plant (19)
Mill (5)
Converting plant (66)
Uncoated Fine Paper
Mill (5)
In addition to those countries represented graphically on these pages, Flexible Packaging operates
four production sites in South East Asia.
Group offices
London, Vienna
Europe
Production sites
Austria
Belgium
Bulgaria
Czech Republic
Finland
France
Germany
Hungary
Italy
Netherlands
Poland
Serbia
Slovakia
Spain
Sweden
Türkiye
Ukraine
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
9
Revenue
by location
of production
Revenue
by location
of customer
Employees
Operating
segment
net assets
Emerging Europe
Western Europe
North America
Africa
Asia and Australia
South America
North and
South America
Africa and
Middle East
Production sites
Colombia
Mexico
USA
Production sites
Côte d’Ivoire
Egypt
Iraq
Jordan
Lebanon
Morocco
Oman
South Africa
10 Mondi Group
Integrated report and financial statements 2022
Letter from the Chair
How is Mondi supporting a
sustainable future while showing
characteristic resilience?
Philip Yea
Chair
Welcome to Mondi’s Integrated report
for 2022. The year has been marked by
very significant external challenges, not
least the devastating conflict in Ukraine,
the consequential increase in energy costs,
the broader inflationary pressures and the
uncertain economic environment the world
still faces. However, I am pleased to report
that Mondi has demonstrated exceptional
resilience through the relevance of our
products, our integrated low-cost business
model and the financial flexibility afforded
by our strong balance sheet.
Our teams at all levels have responded
well to the challenges and opportunities this
new environment has thrown up. Moreover,
our strong relationships with customers
and communities have stood us in good
stead as we continue to pursue our plans
to support a sustainable future.
Focusing on our opportunities
Mondi delivered strongly on all key
performance metrics during the year.
Our continuing operations (which exclude
any contribution from our Russian
businesses) generated underlying EBITDA
of €1,848 million (up 60% on 2021) and
ROCE of 23.7% (2021: 13.9%).
Through our integrated value chain, low-
cost position and long-term investments
to drive energy self-sufficiency, we are
well positioned to navigate the challenges
and opportunities of recent turbulence.
In 2022, we both mitigated the impact
of significantly higher input costs and
benefited from expanded margins.
We continue to prioritise the growth of our
packaging businesses to satisfy increases
in demand for sustainable products and
eCommerce solutions. As Andrew discusses
in detail on pages 24-25, Mondi offers a
unique customer proposition in this space.
With a broad product portfolio, deep
technical expertise and an integrated value
chain, we can help customers to make the
best material choices and make progress with
us on the journey towards a circular economy.
I draw your attention to the many product
innovations and partnerships illustrated in
case studies throughout this report.
Our evolving business
Beyond the devastating humanitarian
tragedy which it unleashed, the geopolitical
ramifications of the conflict in Ukraine are
profound. After careful consideration the
Board concluded that a divestiture of our
Russian businesses to acceptable parties
would be the right way forward. In August
2022 we announced an agreement to sell
our operations at Syktyvkar to Augment
Investments Limited, a disposal which will
be subject to shareholder approval due
to its size. In December 2022 we followed
this announcement with an agreement
to divest the Group’s converting plants in
the region which will complete our planned
exit from Russia once finalised. It is planned
that the net proceeds from both disposals
will be returned to shareholders as soon
as reasonably practicable following receipt.
The necessary steps continue to be
taken with the relevant authorities towards
finalising the approval of these divestitures,
but complex and evolving regulatory
considerations mean that there can be no
certainty on when this may be completed.
Andrew discusses more about the impact
of the divestiture on page 25.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
11
In June we completed the sale of the Group’s
Personal Care Components business for
€615 million enabling the Group to simplify
its portfolio and focus on our strategic priority
to grow in sustainable packaging.
The Board is pleased with the progress
made during the year on our significant
capital investment programme, which
will support volume growth, lower our
cost base and reduce our environmental
footprint. We have acquired the Duino mill
near Trieste, Italy, and plan to invest there to
produce around 420,000 tonnes per annum
of high-quality recycled containerboard
which will further strengthen the backward
integration of our Corrugated Packaging
business.
Chief Executive Officer’s strategic review
Page 22-29
Delivering sustainably
At the end of another year in which the
urgency of the climate crisis grows more
apparent around the world, I am encouraged
by the unwavering focus of our colleagues in
pursuing the Group’s ambitious sustainability
commitments. These are captured in
our Mondi Action Plan 2030 (MAP2030)
sustainability framework which sets out
how circular driven solutions, created by
empowered people, taking action on climate
will be crucial for the prosperity of the
people, places and ecosystems that matter
so much to our business and stakeholders.
On climate action, we are proud to be
one of the first companies in our sector
to achieve the validation of our Net-Zero
greenhouse gas (GHG) emissions reduction
target by the Science Based Targets
initiative. We are committed to reducing our
GHG emissions across our value chain and
investing in the capital expenditure projects
and other initiatives that are required to
achieve our objectives while strengthening
competitiveness and enhancing efficiency.
We have made clear progress towards
our target to make all our packaging
and paper products reusable, recyclable
or compostable by 2025, achieving 82%
in 2022 based on revenue. Our Path to
Circularity Scorecard defines whether a
product is classified as reusable, recyclable
or compostable and consolidates our
comprehensive know-how with industry
circularity guidelines.
Our research and development teams are
collaborating with partners across the value
chain to develop sustainable alternatives
where not yet available, and our commercial
teams are working closely with customers
to drive adoption of them. The Group
continues to contribute expertise to the
debate on how best to promote sustainable
forestry and eliminate unsustainable
packaging. Our aim is to provide practical
insight into the considerations involved in
creating a regulatory framework that works
in practice to drive the meaningful progress
we are all seeking.
MAP2030
Page 36-65
Prioritising people
I am delighted to have seen the energy
and dedication shared by colleagues around
the business in building new pathways for
sustainable growth. From ground-breaking
innovation and knowledge-sharing to
proactively driving our customers’ adoption
of more sustainable solutions, our people
continue to make a meaningful difference
to our business, our industry and beyond.
It was a privilege for me to join Mondi’s
senior leaders at their Leadership Forum
2022 and to witness first-hand the depth
of their expertise in a culture of open
debate, while celebrating some of the
great work across the Group through the
Mondi Diamond Awards which recognise
excellence and innovation.
Nurturing a diverse and inclusive
workplace is key to unlocking the
creativity that enables Mondi’s innovation.
Our target of ensuring that 30% of our
workforce comprises women by 2030
is innately challenging within the context
of a manufacturing industry, so we continue
to work hard to identify those actionable
steps across the business which will
support the delivery of this commitment.
Safety remains an absolute focus across
the Group. Our approach centres on the
behaviours of each and every individual who
works for or in partnership with Mondi by
promoting a 24-hour safety mindset that
addresses the Social Psychology of Risk.
The Board was deeply saddened by the
fatality of a contractor at our Frantschach
mill in Austria during the second half of
the year. Although no systemic failures or
management actions were identified that
could have prevented the incident, it is a
reminder that we can never be complacent
in prioritising safety.
Empowered People
Page 41-43
Board developments
The Group is committed to the highest
levels of corporate governance, and this
is supported by the effective combination
of skills, experience and judgement of our
directors.
In May, the Board was pleased to
welcome Saki Macozoma to the Board
as an independent non-executive director.
We benefit from his long track record
across a range of different industries and
his extensive insight into the South African
business environment.
Tanya Fratto retired from the Board
at the conclusion of the 2022 Annual
General Meeting with our thanks for her
contribution over the past six years, latterly
in her role as Chair of the Remuneration
Committee, where her successor is Dame
Angela Strank. As part of the long-term
planning of the Board’s composition we
also undertook a search to strengthen the
Audit Committee. I am pleased to confirm
that as a result of this search, Anke Groth
will join the Board in April 2023.
Looking ahead
The resilience of Mondi has stood us
in good stead this past year despite the
significant challenges, both event-driven
and cyclical. Although there are clear
signs that the economic environment
for 2023 will be less favourable than the
past 12 months, the attractiveness of our
products and solutions remains compelling.
We have the people, technologies and
financial resources to deliver on opportunities
through and beyond the current cycle.
I remain excited about our ability to deliver
attractive returns in 2023 and sustainably
thereafter.
Philip Yea
Chair
Dividend per share
(euro cents)
70.0
euro
cents
Dividend cover (times)
76
2.5
57
3.0
65
60
2.2
2.4
70
2.8
2018
2019
2020
2021
20221
1 Based on proposed final dividend of 48.33 euro cents per share
12 Mondi Group
Integrated report and financial statements 2022
Ho w i s M o ndi
co ntri b uti n g t o t h e
c i r c u la r e c o n o m y?
Strategic report
Our business model
Market context
Our strategy
Strategic framework
Chief Executive Officer’s strategic review
Key performance indicators
Section 172 statement
Mondi Action Plan 2030
(including our TCFD disclosure)
Business unit trading review
Financial review
Principal risks
Viability statement
14
18
20
20
22
30
32
36
66
68
72
82
The Strategic report was approved by the Board
on 22 February 2023 and is signed on its behalf by:
Andrew King
Group CEO
Mike Powell
Group CFO
Expertise
Collaborating with customers
Paper and plastic have specific properties
that make them fit for different purposes, such
as the use of renewable materials or recycled
content, recyclability or barrier functionality
that prevents food waste. We partner with our
customers to understand and navigate critical
trade-offs on their path to more sustainable
packaging solutions and the achievement
of their sustainability goals.
Ho w i s M o ndi
co ntri b uti n g t o t h e
c i r c u la r e c o n o m y?
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
13
Vision
Designing for sustainability
Up to 80% of a product’s environmental
impact is influenced at the design phase.
That’s why we introduced our Sustainable
Products Criteria in 2017 to underscore
the parameters that define a sustainable
solution. In 2022, we updated this
with our Sustainable Product Principles
(SPP). These are aligned with our Path
to Circularity Scorecard and consider all
aspects of product design, from responsible
sourcing to recyclability, reuse, compostability
and material efficiency.
Innovation
Reducing waste
We recently developed a fully recyclable,
plastic-free packaging solution, Hug&Hold,
to replace the shrink film for PET bottle
bundle packs. The kraft paper sleeve using
Mondi’s unique Advantage SpringPack
Plus combined with a lightweight Mondi
corrugated carrier provide high pack stability
and convenience.
14 Mondi Group
Integrated report and financial statements 2022
Our business model
Creating value through the Mondi Way
The Mondi Way
connects purpose,
strategy and culture
to our business model
Purpose
The
Mondi
Way
Culture
Strategy
Our purpose is to contribute to a better world
by making innovative packaging and paper
solutions that are sustainable by design. We do
this through the execution of our strategy by
delivering value accretive growth in a sustainable
way for all our key stakeholders. Our strategy
builds on the competitive advantages we enjoy
today and sets a clear roadmap embedding
sustainability into operational and investment
decisions into the future.
Our strategy
Page 20-29
We foster a culture that connects, guides and
inspires our people to achieve Mondi’s purpose.
Our values of Performance – Care – Integrity
underpin our culture, empowering our people
to be passionate and entrepreneurial in a
respectful and inclusive way. The dedication
and commitment of our employees is essential
to delivering on our strategic priorities as we
contribute to a better world.
Empowered People
Page 41-43
What we rely on
We build and maintain trusted relationships and
manage our key resources responsibly to create value
for our stakeholders.
Long-standing relationships
The integrated nature of our business means that we rely on the
strong relationships we have built over time to drive our business
forward for our joint success:
— Caring for our employees and
delivering against operational
priorities
— Partnering with our customers
to innovate and reliably meet
their needs
— Optimising our value chain
— Collaborating with our
communities to address
challenges and create
opportunity
— Engaging with investors
to share our performance
and strategic priorities
with suppliers and contractors
— Shaping our context
with partners and industry
associations
Responsible use of resources
We are determined to protect and safeguard biodiversity
and ecosystems. In order to do this, we procure raw materials
and use natural resources responsibly.
We have a disciplined capital allocation framework, ensuring we can
invest in our portfolio through the cycle and take advantage of value
accretive opportunities when they arise.
MAP2030
Page 36-65
Financial review
Page 68-71
What makes us different
We leverage our distinct competitive advantages
to create opportunities for our business and
generate value for our stakeholders.
Unique platform
As a leading paper and flexible plastic-based packaging
solutions provider, we are well positioned to take a holistic view
to meet our customers’ requirements with our broad range
of sustainable solutions
Leading market positions
Our leading market positions provide scale, reliability
and the capability to service key accounts and innovate
with our customers and partners
Cost-advantaged assets
We have well-located operations with access to cost
competitive raw materials and a high-quality, well-invested
asset base
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
15
What we do
The value we create
By combining our integrated value chain, strong relationships,
responsible resource management, and leveraging our
competitive advantages, we create value for our stakeholders
in line with the Mondi Way.
Examples of our value creation in 2022
Employees
Suppliers and contractors
443,000
employee and contractor
training hours
We invest in the development
of our people, providing a
safe working environment and
supporting a diverse, skilled
and committed workforce
Customers
82%
of revenue is from packaging
and paper products that
are reusable, recyclable
or compostable
We deliver innovative
sustainable packaging
and paper solutions to our
customers, with a continuous
drive to improve overall
customer satisfaction
Communities
€196 million
direct taxes paid
In addition to taxes paid,
we invest in local community
initiatives supporting health,
environment protection,
education, local enterprise
and infrastructure
78%
of supplier sites screened
since 2019 (based on total
spend)
We engage with our suppliers,
encouraging supply chain
transparency and fair working
conditions, and take action
to mitigate our risks
Investors
70.0 euro
cents
total recommended
dividend per share
Our dividend policy reflects
our disciplined strategy of
value creation and aims to
offer shareholders long-term
dividend growth in line with
our cover policy
Partners and
industry associations
Strategic
partnerships and initiatives
Our global collaborations
support us to find sustainable
solutions to the collective
challenges we face and bring
about meaningful change
As a global leader, we make a broad range of innovative
and sustainable packaging and paper solutions to meet
our customers’ growing needs.
Integrated value chain
Page 16-17
Responsibly
sourced raw
materials
Efficient
production
Sustainable
packaging and
paper solutions
Recycling
Managing our risks
Successfully identifying and mitigating the potential
impact of risks on our business and appropriately setting
our risk appetite is critical to ensure we continue to generate
long-term value for our stakeholders.
Principal risks
Page 72-81
Vertical integration
Our vertically integrated network reduces the Group’s
exposure to price volatility, providing security of supply and
production and logistics optimisation
Focus on continuous improvement
We continuously drive performance along the value chain,
focusing on excellence and improvement across our processes
Strong financial position
Our robust financial position and strong cash generation
provide us with strategic flexibility
Sustainable by design
Sustainability is embedded in everything we do, making
us a strong partner and employer of choice
Entrepreneurial culture
Our entrepreneurial culture brings the best out of Mondi’s
people, helping to develop an empowered and inclusive team
that contributes to a better world
16 Mondi Group
Integrated report and financial statements 2022
Our business model
Integrated value chain
As a global packaging and paper solutions
provider, we operate across a number of regions,
servicing our customers with a broad range
of sustainable solutions. The integrated nature
of our business means that we engage with key
stakeholders through long-standing relationships
and partnerships to ensure that our sourcing
practices are responsible, our production
processes are efficient, that we improve our
environmental performance, and the products
we produce are fit-for-purpose and contribute
to a circular economy.
Stakeholder engagement
Page 32-33
Environmental performance
Page 58-59
Procurement
Page 62-63
End-of-life and recycling
We are committed to supporting the transition to a
circular economy and preventing waste. Our focus is on
creating high-quality, innovative packaging and paper
solutions that are designed for a sustainable end-of-life
through recycling or composting.
Our paper-based solutions already contribute to the
circular economy. We aim to include an increasing
proportion of recycled content in our plastic-based
packaging solutions and monitor our progress in
the use of renewable and recycled content across
our portfolio.
Our collaboration with stakeholders along the value
chain helps to eliminate unsustainable packaging,
support cross-industry initiatives to improve
recycling practices and identify new opportunities
to use waste as a secondary raw material.
Key relationships and partnerships:
— Cross-industry organisations to drive the
elimination of waste and development of circular
solutions, such as 4evergreen, CEFLEX and the
Ellen MacArthur Foundation
— Industry partners for secondary raw materials,
including in the cement industry where ash from
our production process can be used as an input
material in the production of bricks, or in the
agricultural sector, where our sludge residues
can be used for soil enhancement
— Professional recycling organisations
Based on 2022 statistics
Recycling
Responsibly sourced raw materials
As part of our manufacturing processes, we require raw
materials such as wood, paper for recycling, chemicals, resins
and access to natural resources, most notably water and energy.
Based on revenue, over 80% of our packaging and paper
solutions are fibre-based for which wood is the primary raw
material. We procure wood from responsible sources and
our South African sustainably managed plantations, with
around 90% of our wood sourced domestically in the countries
where our mills are located. In addition, we source paper
for recycling from waste collection companies or directly
from retailers.
Key relationships and partnerships:
— Engagement across our global supply chain which spans
12,000 suppliers in 67 countries
— Fibre certification schemes such as FSC and PEFC
— Wood supply organisations
— Partnerships with scientific organisations such as the IUFRO-
Mondi partnership to promote climate-fit and resilient forests
— NGOs, including the Endangered Wildlife Trust
— Waste collection companies
— Retail business partners
Wood
Wood
14.5 million m3
14.5 million m3
Paper for recycling
Paper for recycling
1.3 million tonnes (mt)
1.3 million tonnes (mt)
Resins and other
Resins and other
raw materials
raw materials
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
17
SASB
Efficient production
Sustainable solutions
The Group’s integrated pulp and paper mills, located in
Europe and South Africa, are cost advantaged, producing
pulp, packaging papers and uncoated fine paper. In addition,
most of our mills are able to generate the majority of their
energy needs internally, with 80% from renewable fuels.
We produce a broad range of packaging and paper solutions
to meet our customers’ needs for consumer and industrial
end-uses. Partnering with customers provides an opportunity
to innovate and create fit-for-purpose solutions that contribute
to a circular economy.
Our broad range of containerboard and kraft paper packaging
grades are used by our converting operations and sold to other
customers. Our converting operations use packaging paper
(sourced internally and externally) and other raw materials to
produce corrugated solutions and flexible packaging products
(paper, plastic or hybrid-based) across our global network.
Our converted corrugated solutions and flexible packaging
products are predominately delivered to customers regionally
while our pulp and packaging papers are sold globally.
Engagement with logistic partners ensures our products
arrive at the right location, on time and according to expected
quality standards.
Key relationships and partnerships:
— Employees across our production sites and corporate offices
— Contractors, mainly during annual maintenance and project-related shuts
— Industry associations and other organisations developing design
for circularity guidelines, such as Cepi and CEFLEX
— Service providers for machinery and other technologies to drive
operational excellence, including energy efficiency and reduced emissions
— Communities surrounding our operations focusing on our impact
on local or nearby areas
Key relationships and partnerships:
— Employees (sales and supply chain teams)
— Partnering with and delivering on our customers’ needs across
a range of end-uses including food and beverage, pet food,
eCommerce, home and personal care, industrial, chemicals,
transport, agriculture and office and professional printing
— Logistics providers
— Multi-stakeholder initiatives to drive more sustainable consumption
and engage on product-related legislative developments, such as
Cepi, the Ellen MacArthur Foundation and 4evergreen
Pulp and paper mills
Converting operations
Pulp and packaging paper net exposure
Pulp
3.6 mt
Containerboard
2.4 mt
Box plants
Pulp
0.2 mt
Corrugated Packaging
Page 66
Containerboard
1.4 mt
Corrugated solutions
1.9 bn m2
Flexible Packaging
Page 66
Kraft paper
0.4 mt
Kraft paper
1.3 mt
Uncoated fine paper
0.9 mt
Converting plants
Paper
bags
6.0 bn bags
Consumer
flexibles
2.0 bn m2
Functional
paper and films
3.3 bn m2
Uncoated Fine Paper
Page 67
Uncoated fine paper
0.9 mt
18 Mondi Group
Integrated report and financial statements 2022
Market context
Opportunities and challenges in our packaging markets
Global packaging demand is estimated at
around $1 trillion per annum, roughly half of which
is accounted for by Europe and North America.
From a materials perspective, paper-based
packaging comprises about 40% of the global
market, while plastic-based packaging represents
another 40%. Metal and glass make up most
of the remaining portion.
We are building on our market leading position
in the structurally growing packaging markets
in which we operate, underpinned by demand
for eCommerce and sustainable solutions.
Packaging is used in a wide range of end-uses to protect,
preserve, provide key information and promote the packaged
product. Around 60% of the global packaging market serves
consumer end-uses (including food, drink, healthcare and
cosmetics), while the remaining 40% comprises industrial,
transport and other applications.
With an integrated business model and key operations located in
Europe, North America and Africa, we are well positioned to meet
demand for sustainable solutions across the globe. Our packaging
businesses offer customers a broad portfolio of corrugated
(paper-based) and flexible (paper, plastic and hybrid-based)
solutions, tailored to their specific needs.
Our businesses
Page 6-7
Market sources: Smithers – The Future of Sustainable Packaging:
Long-term Strategic Forecasts to 2032
Consumer demand for sustainable solutions
The opportunities and challenges we face
— Population growth and economic
development are increasing consumption,
adding pressure on scarce natural resources
and emphasising the need for renewable,
low carbon and recyclable products in line
with a circular economy
— Growing awareness among consumers
about the impact of the products and
services they consume is driving demand
for more sustainable solutions, creating
a platform for innovation and new business
opportunities, while challenging major
FMCGs, retailers and packaging players
to actively drive positive change
— Consumers are looking for brands that
care for people and the environment, and
are willing to pay a premium for products
and packaging with superior sustainability
credentials
Product substitution risk
Page 76
Recent developments and implications
— Legislation – such as the Single-Use
Plastics Directive, the Packaging and
Packaging Waste Regulation and the
Ecodesign for Sustainable Products
Regulation – is helping to drive the
transition to more sustainable solutions
and aims to make sustainable products
the norm in the European Union
— Increasing demand for packaging
that is fit-for-purpose, convenient and
functional — considering properties such
as recyclability, durability and the use
of renewable materials — is reinforcing
demand for innovative new solutions such
as functional barrier papers and recyclable
mono-material plastic solutions
— Brands and retailers increasingly recognise
their commitments to sustainability as a
potential source of competitive advantage
and differentiation
How we are responding
— Collaborating with our customers to help
them achieve their sustainability goals,
leveraging our platform of fit-for-purpose
packaging solutions
— Working to achieve our commitment of
100% reusable, recyclable or compostable
packaging and paper solutions by 2025
— Partnering with industry associations
and participating in other cross-value
chain initiatives to eliminate unsustainable
packaging, drive innovation and promote
circular solutions at scale
— Leveraging our R&D centres, cross-
functional packaging development
expertise and strong customer relationships
to be the go-to supplier for sustainable
packaging
— Investing in our asset base to grow capacity,
create new business opportunities and
enhance quality for our customers
Circular Driven Solutions
Page 38-40
Paper-based dishwasher tablet packaging
with 75% less plastic
Together with Reckitt we have developed a new paper-based
packaging solution for the company’s market-leading Finish
dishwasher tablets.
The solution significantly reduces plastic use while still providing
the necessary product protection by combining responsibly sourced
paper with the barrier protection provided by the remaining plastic
layer. In addition to reducing plastic waste, the product is also
expected to lower GHG emissions across its life cycle, helping
Reckitt deliver on its sustainability goals.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
19
Global packaging by region
(%)
Global packaging by material
(%)
Europe
North America
Asia-Pacific
Rest of world
24
23
45
8
Board
Flexible paper
Flexible plastic
Rigid plastic
Metal
Glass
Other
33
7
16
21
12
4
7
eCommerce and digitalisation
The opportunities and challenges we face
— Digitalisation continues to shape the
Recent developments and implications
— eCommerce retail continues to increase
world around us, connecting billions of
people with information at unprecedented
speed and scale. It creates opportunities
to change behaviours, challenge
convention and make processes more
precise and efficient through automation
and data analytics
— Online retail channels are disrupting
traditional alternatives as they enable
more purchasing flexibility and faster
deliveries, adding complexity to supply
chain requirements for high efficiency
and transparency
— Well-informed, time-pressed and
price-savvy consumers increasingly
expect value and convenience from
their online purchases
its penetration, driven by the ongoing rise
in online shopping as digital access and
product availability increase globally
— Demand for eCommerce packaging
that is sustainable and provides a positive
‘unboxing’ experience (relating to design,
ease of opening, recycling or reuse)
is increasing, supporting brand loyalty
and inspiring repeat purchases
— Product protection continues to be
a key consideration for our customers
and their eCommerce packaging
decisions, impacting product design
and materials used
— Increasing reliance on technology and
exposure to cyber security risks as the
adoption of remote and flexible working
models continue for our customers and
employees
Cyber security risk
Page 81
Automating for eCommerce with eComPack
Along with German machine producer Heiber + Schröder,
we have developed a high-speed, automated packaging
machine for EnvelopeMailers.
Leveraging Mondi’s broad range of eCommerce solutions,
the EnvelopeMailer is a renewable, recyclable and highly
protective paper-based corrugated mailer, making it ideal
for eCommerce packaging. Together with the eComPack
machine, it enables eCommerce companies to automate
and optimise their packing operations with increased output
in fulfilment centres handling high volumes.
How we are responding
— Developing innovative and sustainable
packaging solutions for eCommerce
applications, building on our broad
and unique portfolio encompassing
corrugated and flexible packaging
products, optimising material usage,
enabling the reuse of solutions for returns
and delivering on service and quality
— Investing in digital technologies as an
accelerator for our strategy, including
advanced analytics to improve processes,
automation and robotics to foster
efficiency and quality, and digital platforms
to better connect with our customers
and colleagues
— Increasing capacity and eCommerce
capabilities by investing across our
production network
— Protecting our systems and enhancing
cyber security through investment in
our technical infrastructure and targeted
internal communication
— Collaborating with machine suppliers
to drive innovation, creating faster and
more efficient production processes
for our customers
Our strategy
Page 20-29
20 Mondi Group
Integrated report and financial statements 2022
Our strategy
Strategic framework
Our strategy is to deliver value accretive
growth, sustainably, by prioritising growth in
our packaging businesses and leveraging our
four strategic value drivers. With sustainability
at the centre of our strategy, our approach
builds on the competitive advantages we
have today and guides our investment and
operational decisions so that we can continue
creating value in a sustainable way.
All strategic value drivers are important,
although our priorities may differ across the
value chain. Digital initiatives play an important
role across all four drivers to accelerate delivery
against our strategic objectives.
Chief Executive Officer’s strategic review
Page 22-29
We drive value accretive
growth, sustainably
Our structurally growing packaging markets offer significant
opportunities for value accretive growth, leveraging our
unique product portfolio, leading market positions, innovation
capabilities and high-quality asset base.
Sustainability lies at the centre of our purpose, culture
and strategy. We have a solid history of setting and
achieving credible sustainability targets and reporting
on our performance, as we contribute to finding solutions
to sustainability challenges and play our part to deliver
on the UN Sustainable Development Goals (SDGs).
We work together with our stakeholders to address
risks, seize opportunities and empower decision-making.
It is only through this collaborative spirit that we will achieve
the impact, innovation and scale necessary to bring about
positive change beyond our own boundaries.
Mondi Action Plan 2030
MAP2030, our sustainability roadmap to 2030, builds
on our strong progress made to date and sets out the
actions we need to take over the next decade to achieve
our ambitious goals. MAP2030 has three action areas,
each with three high-level commitments supported
by more detailed targets, built on a foundation of
responsible business practices.
Circular driven solutions
Innovative packaging and paper solutions that
keep materials in circulation and prevent waste
Created by empowered people
An empowered and inclusive team
that contributes to a better world
Taking action on climate
Climate resilience through our forests
and operations for the future of the planet
Built on responsible business practices
Spanning environmental performance, human rights,
communities and procurement
MAP2030
Page 36-65
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
21
Drive performance
along the value chain
Invest in assets
with cost advantage
Continuous improvement initiatives, commercial
excellence, lean processes, rigorous quality management
and operational excellence programmes enhance our
productivity and efficiency, and prevent waste.
We invest in our asset base through the cycle to drive
organic growth, strengthen cost competitiveness, improve
environmental performance, and enhance our product
offering, quality and service to customers.
We collaborate across the Group to tackle challenges
and create opportunities. Rigorous benchmarking enables
us to share best practice, leverage insights across the
business and identify emerging issues to optimise
productivity and performance throughout the organisation.
Centralised functions, such as procurement, technical,
sustainable development, treasury and tax, improve
coordination and control and reduce costs.
Digital technology supports our drive to accelerate
performance, reduce costs and deliver productivity and
efficiency gains. By combining technology, data science
and the talents of our people, we continue to build on our
digital capabilities, creating opportunities to refine processes,
improve our offering to our customers and generate value
for our business.
We regularly review our portfolio and take decisive actions
where appropriate to optimise our network, manage our
cost base and maintain operational efficiency.
Across our vertically integrated pulp and paper operations,
we are focused on leveraging our cost advantages as
relative cost competitiveness is a key value driver. In our
converting plants, we focus on enhancing our capabilities
to better serve our customers with innovative solutions that
are sustainable by design.
Operating in structurally growing packaging markets,
our growth priorities and value-enhancing expansionary
capital investments are directed towards our packaging
businesses, which today account for around 80% of the
Group’s underlying EBITDA.
In addition, and where appropriate, we look to acquire
businesses that produce high-quality products with
sustainable competitive advantage and the potential
to achieve world-class operating standards. This enables
us to generate synergies through integration and enhance
our customer offering.
Inspire
our people
Partner with customers
for innovation
We are committed to providing an inspiring, inclusive, diverse
and safe working environment for our people. We want to
give them the confidence to take action in their own area of
responsibility and unlock potential across the business in line
with our values of performance, care and integrity.
The safety, health and mental wellbeing of our people is
a priority for us. We embed clearly defined methodologies,
procedures and robust controls to ensure they, and other
people who have reason to be on Mondi sites, stay safe.
We promote a 24-hour safety mindset with initiatives to
address peoples’ conscious and unconscious behaviours,
elevating safety to the front of peoples’ minds and actions.
Creating an inclusive environment that fosters and respects
diversity is vital to our success and builds competitive
advantage. Our aim is to create equal opportunities where
all employees can grow and make a contribution based
on individual backgrounds, experience and ideas.
Enhancing the skills of our people through training and
personal development initiatives is a key part of developing
an agile and motivated workforce that is capable of delivering
our strategy and driving success in a sustainable way.
We collaborate with our customers and other partners
along the value chain to develop high-quality, innovative,
sustainable packaging and paper solutions. This helps us
to eliminate unsustainable packaging, lead the transition to
a circular economy, prevent waste and grow our customer
base of forward-thinking brands.
Our customer-centric approach helps to find the optimal
solution following our principle of paper where possible,
plastic when useful. We prioritise the use of paper-based
solutions as a renewable and widely recycled resource
to replace unnecessary plastic packaging. However, when
functional barriers are required, lightweight plastic-based
flexible packaging can be the most sustainable choice
if designed and manufactured for recycling and disposed
of appropriately.
Our innovation capabilities, supported by our R&D
centres, product and technical know-how, and strong
customer relationships, are critical in meeting increasingly
sophisticated and bespoke customer needs by delivering
packaging solutions that maximise resource efficiency
and minimise waste.
22 Mondi Group
Integrated report and financial statements 2022
Chief Executive Officer’s strategic review
How is Mondi
delivering sustainable
value accretive growth?
Andrew King
Group CEO
In this Q&A, our Group CEO Andrew
King reflects on 2022, his thoughts for
the year ahead and why he believes
Mondi’s unique customer proposition
and long-term opportunities will
continue to deliver value accretive
growth, sustainably.
Q1. How would you summarise
Mondi’s performance in 2022?
Mondi delivered a strong financial and
operational performance in 2022 thanks to
our distinct competitive advantages and the
resolve of our teams across the business.
We made good progress across our
MAP2030 commitments and we continue
to develop fit-for-purpose solutions, set
apart by our broad product offering and
innovation capabilities. My sincere thanks
go to all colleagues for their professionalism,
agility and commitment in another year of
strong progress.
Q2. How are you driving growth
across the Group?
We have an ambitious organic growth
programme involving a €1 billion pipeline
of expansionary capital investment projects
where we continue to make encouraging
progress. Among the highlights, I am delighted
that the Board approved our €400 million
investment in a new paper machine at our
Štětí mill (Czech Republic), which supports
further growth in our sustainable packaging
offering. Significant projects like this reflect the
confidence we have to invest in our structurally
growing packaging markets through the
cycle. Importantly, our organic investment
programme impacts a number of different
growth markets, both geographical and
product, providing the diversity that brings real
resilience to our portfolio. You can read more
about our expansionary capital investment
pipeline in the table on the next page.
During the year, we also successfully
completed the disposal of our Personal Care
Components business, allowing us to focus on
the growth in our core packaging businesses.
Group revenue
€8,902m
q28%
Underlying EBITDA margin
20.8%
q420bps
ROCE
23.7%
q980bps
Underlying EBITDA
€1,848m
q60%
Operating profit
€1,685m
q114%
Cash generated from operations
€1,292m
q29%
This section includes Alternative Performance Measures which are defined on pages 242-248. Unless other specified, all figures
presented and commentary provided is based on the Group’s continuing operations (which exclude the Group’s Russian operations).
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
23
Pulp and paper mills
€220 million
Corrugated Packaging
Converting operations
€185 million
— Kuopio (Finland) mill modernisation
including increasing semi-chemical
fluting capacity by 55,000 tonnes
(€125 million)
Estimated start-up date: Q4 2023
— Debottlenecking kraftliner production
at Świecie (Poland) by 55,000 tonnes
(€95 million)
Estimated start-up date: 2024
— Investments across our central and
eastern European plant network:
— Strengthening our leading market
positions
— Supporting growth in eCommerce
— Enhancing product and service offering
Pulp and paper mills
€400 million
Flexible Packaging
Converting operations
€190 million
— New 210,000 tonne per annum kraft
paper machine at Štětí (Czech Republic)
— Meeting growing demand for sustainable
paper-based flexible packaging and
helping us to better serve our customers
as well as improve productivity and
energy efficiency
— Full production ramp-up expected
by 2027
Estimated start-up date: 2025
— Expanding our paper bags business’s
global reach through greenfield plant
investments in Colombia and Morocco
— Investing across our plant network:
— Upgrading paper bag capabilities
— Consolidating our leading market
position in European pet food
packaging (€65 million)
— Enhancing coating capabilities with
sustainable paper-based solutions
with barrier properties (€50 million)
Investing
Our capital investment programme
is focused on meeting our customers’
growing demand for sustainable packaging
and paper solutions. Our investments
enhance our product offering, quality
and service to customers; strengthen
our cost competitiveness; improve our
environmental footprint; and deliver
growth. We seek to invest through the
cycle given our confidence in the long-
term growth of the markets we operate
in and our leading positions within them.
We continue to make good progress
in executing on our previously announced
€1 billion pipeline of expansionary capital
projects. These investments, which
are outlined to the right, are diversified
across the value chain and also in terms
of product and geography.
Adding to this pipeline of capital
investment projects, in January 2023
we completed the acquisition of the
Duino mill near Trieste (Italy) for a total
consideration of €40 million. We plan to
convert the existing paper machine into
a high-quality, cost-competitive recycled
containerboard machine with an annual
capacity of around 420,000 tonnes for
an estimated capital investment cost of
€200 million. The mill is ideally located
to source paper for recycling, supply
the Group’s Corrugated Solutions plants
in central Europe and Türkiye as well as
to serve the growing local Italian market.
The converted machine is expected to
start-up in 2025.
We continue to actively evaluate further
growth opportunities in the packaging
markets in which we operate, leveraging
the structural growth drivers, our leading
market positions and high-quality,
cost-advantaged asset base.
24 Mondi Group
Integrated report and financial statements 2022
Chief Executive Officer’s strategic review continued
Q3. How is Mondi taking
advantage of the structural
growth drivers in its packaging
markets?
It’s clear that the long-term structural
growth drivers around sustainable
packaging, eCommerce and brand value
are here to stay, and we continue to see
good momentum across our markets.
We are uniquely positioned to support
our customers because we offer a full
range of solutions, from pure paper-based
solutions through to flexible plastic-based
products and a growing selection of hybrid
solutions. This means we can objectively
consider what is the best and most
sustainable solution for each application.
It also drives the development of innovative
corrugated and flexible packaging in
partnership with our customers as we
transition to a circular economy.
Market context
Page 18-19
We continue to invest in our packaging
businesses to meet our customers’ growing
demand. Over the past five years, capital
expenditure in our packaging businesses
was around €0.8 billion above depreciation
(or 161% of depreciation), with a further
€0.5 billion spent on bolt-on packaging
acquisitions. Today, our packaging
businesses account for around 80%
of the Group’s underlying EBITDA.
Our strategic priority for each business unit
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine Paper
Grow
Grow
Optimise
Five-year net investment1
2018-2022 (%)
Underlying EBITDA2
2022 (%)
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine Paper
63
31
6
€1.3 bn
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine Paper
35
42
23
€1.8 bn
Capital expenditure as a percentage
of depreciation (packaging businesses)
2018-2022 (five-year average)
Five-year production volume CAGR3
2018–2022 (excluding disposals)
Depreciation
176%
149%
161%
+5%
+4%
+4%
+4%
Packaging
pulp and
paper mills
Packaging
converting
operations
Packaging
businesses
(total)
Container-
board
Kraft
paper
Paper
bags
Corrugated
solutions
1 Net investment is calculated as capex plus acquisitions less depreciation and disposals, and excludes
the Group’s discontinued operations and the divested Personal Care Components business
2 Underlying EBITDA split excludes corporate costs
3 Consumer flexibles and functional paper and films production volume CAGRs were negligible
due to plant network optimisation
Overview
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Integrated report and financial statements 2022
25
Q4. What are you doing to make
the most of Mondi’s uniquely
broad product portfolio?
Mondi’s extensive range of solutions
means we can offer insightful advice
to our customers and design packaging
that maximises functionality while
minimising the environmental impact.
Collaboration between our Consumer
Flexibles and Paper Bags businesses
is a good example. Historically, paper
bags have largely been used in industrial
applications, but we’re seeing increasing
crossover, with customers eager to switch
to paper-based packaging wherever
it makes sense for consumer end-uses.
Similarly, we’re driving the development
of functional barrier papers, where we
have the capability to add barrier layers
to our paper-based solutions while
still ensuring they are fully recyclable.
We have made organisational changes
within our Flexible Packaging business
unit to nurture this increasing integration
and provide the best proposition to
customers.
Q5. How has the Group responded
to higher input costs in recent times?
Most of our pulp and paper mills generate
the majority of their energy needs internally,
with around 80% of the fuels used in this
process from biomass sources, and only
around 10% of our fuel sourced from natural
gas. This is the result of the significant
investments we have made over a number
of years in making our facilities more
energy efficient and increasing backward
integration, primarily into biomass-based
energy generation.
Our customers value the security of supply,
service, quality and innovation that we
provide, and this has supported the price
increases required in response to rising
input costs. Furthermore, our ongoing focus
on operational performance continues to
mitigate inflationary effects.
Q6. Does the decision to divest its
Russian operations impact Mondi’s
growth prospects?
In August 2022, we announced that we had
agreed the sale of Syktyvkar to Augment
Investments Limited, and in December
2022, we announced the sale of our Russian
packaging converting operations to the
Gotek Group. Both transactions are subject
to regulatory approvals.
The Group’s most significant facility
in Russia is the integrated mill located
in Syktyvkar (Komi Republic). It primarily
serves two markets: uncoated fine paper,
which is largely a domestic business, and
containerboard, which historically served
both domestic and international markets.
In 2022, these volumes were redirected into
the domestic market. At the same time, we
ramped up production at our new 300,000
tonne per annum containerboard machine
at Ružomberok (Slovakia), which produces
a similar product, enabling us to continue
to serve customers outside Russia.
Given Mondi’s strong financial position, and
the domestic market focus of the Russian
operations, the divestment of these assets
will have minimal effect on the future
growth prospects of the Group outside
Russia. Importantly, our expansionary
capital investment programme, which was
first formulated before the war in Ukraine,
is unaffected by the decision to divest
from Russia.
partnering
Paper-based Protector Bags
for bike handlebars
Our close customer collaboration
provides an opportunity to develop
fit-for-purpose packaging solutions with
our customers. For example, German
bike manufacturer Diamant has replaced
the plastic bubble wrap around its
bike handlebars with our paper-based
solution of premade Protector Bags.
As well as providing robust protection
to the bikes during transport, this will
reduce Diamant’s plastic packaging by
around 85% per year.
Mono-material recyclable
packaging for bacon
Together with the Austrian food company
Handl Tyrol, we have developed a high-
barrier, mono-material polypropylene
packaging solution for bacon. The fresh
food packaging solution effectively protects
the product to prevent food spoilage and
can be recycled in existing streams for
mixed polyolefins.
26 Mondi Group
Integrated report and financial statements 2022
Chief Executive Officer’s strategic review continued
Total Scope 1 and 2 GHG emissions
(million tonnes)
Scope 3 emissions
(thousand tonnes CO2e)
Group excluding Russian operations
Russian operations
4.74
4.32
1
.
9
1
4.35
1
.
9
4
.
2
4
1
.
2
4
1
3.94
1
.
7
6
2
.
1
8
2019 SBT
baseline
2020
2021
2022
Q7. Have you made progress
on your MAP2030 sustainability
ambitions?
I have always believed that you can only
make meaningful progress if sustainability
is truly embedded in the organisation.
Our sustainability journey started a long
time ago and the launch of our MAP2030
sustainability framework in early 2021
reflects our ongoing commitment to
contribute to a better world by focusing
on the areas where we can have the most
positive impact. It has been wonderful to
see how colleagues across the Group have
embraced our latest commitments and
this collective determination is driving our
progress, with a clear acknowledgement
that we still have a lot of work to do.
Purchased goods and services
Fuel and energy-related activities
Upstream transportation and distribution
Downstream transportation and distribution
Employee commuting
Business travel
Other
2,160
593
380
203
29
3
55
A key pillar of our sustainability framework
is around climate change. Here we have
accelerated our climate ambition by
committing to Net-Zero in line with a 1.5°C
scenario, and I am particularly pleased that
Mondi is among the first packaging and
paper companies with Net-Zero targets
validated by the Science Based Targets
initiative (SBTi), committing us to reducing
GHG emissions across Scopes 1, 2 and 3.
Read more about our actions taken on
climate and other aspects of MAP2030
in the respective MAP2030 sections.
Taking Action on Climate
Page 44-57
Recognising
Celebrating excellence
Since 2008, the Mondi Diamond Awards
have recognised our colleagues’ innovative
spirit and achievements across a number
of categories.
Over the years, the awards have become
a unique platform for sharing knowledge,
experiences and insights that can be
scaled across the Group. This year,
we celebrated a record number of entries,
demonstrating our employees’ passion
for excellence and entrepreneurial culture.
Q8. How is the Group inspiring
employees to deliver Mondi’s
strategy?
The talent, commitment and energy
of our people stands out every time I visit
our operations. Our track record of success
is a direct outcome of our shared purpose
and culture that empowers people to make
a difference. My priority is to ensure that
we provide a safe, supportive and inclusive
environment in which we can all be at our best.
We continue to invest in our people through
training and development programmes
that support their growth. This includes the
Mondi Academy — our global learning hub
— and other upskilling initiatives that help
to develop a strong talent pipeline.
During the year, we completed a series of
employee pulse surveys across a number of
our operations. Together with our upcoming
Group-wide employee survey planned for
2023, these activities provide insight and
opportunities to engage with our global
workforce.
We increased the proportion of the
Group’s annual bonus targets that are
linked to sustainability KPIs. We believe
that this will help focus our actions, further
embed sustainability into our activities
and contribute to meeting our MAP2030
targets. These metrics, now comprising
20% of the total annual bonus score, cover
safety, greenhouse gas emissions and
waste to landfill targets and are applicable
to around 3,400 colleagues across the
Group, including the executive directors
and Executive Committee members.
Remuneration report
Page 124-151
The winning projects ranged from
digitalisation of the production
environment and safety risk management
to young talent development and
sustainable packaging solutions.
The Mondi Diamond Awards help us to
inspire our people, challenge each other
to foster greater innovation and further
cultivate our values of Performance,
Care and Integrity.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
27
Total Recordable Case Rate
(per 200,000 hours worked)
0.63
8% improvement
on 2020 baseline
We promote a 24-hour safety mindset
across the Group with initiatives to address
people’s conscious and unconscious
behaviours, elevating safety to the front
of their minds and actions. We regretfully
experienced a fatality of a contractor
at our Frantschach mill (Austria) in the
year and two life-altering injuries at our
operations. All incidents are investigated
and actions taken where necessary to
prevent reoccurrences. As part of our
MAP2030 commitments, we are committed
to reduce our Total Recordable Case Rate
(TRCR) by 15% against a 2020 baseline,
along with targets for zero fatalities and
life-altering injuries. In 2022, our TRCR
was 0.63, representing an 8% improvement
on our 2020 baseline.
You can find out more about our many
initiatives to safeguard, develop and inspire
our people in our MAP2030 section.
Empowered People
Page 41-43
Q9. Mondi’s purpose is to
contribute to a better world
by making innovative packaging
and paper solutions that are
sustainable by design. How does
the Group’s strategy support this?
Packaging plays a vital role in getting
products safely from where they are
produced to where they are needed.
We make it possible to do this in the
most efficient way while preventing loss
or damage and minimising environmental
impacts. For our business, it means
making packaging that is fit-for-purpose
and contributes to a circular economy.
This helps us to play our part in tackling
some of the world’s biggest sustainability
challenges – from food loss to plastic
pollution, nature loss and climate change
– by delivering packaging solutions that are
designed at the outset with sustainability
in mind.
We are making progress towards
our commitment to make 100% of our
packaging and paper products reusable,
recyclable or compostable by 2030, with
82% meeting the criteria in 2022, up from
77% in 2021.
I see real value in multi-stakeholder
initiatives and partnerships to drive positive
change at scale. These include the WBCSD
Forest Solutions Group, the Ellen MacArthur
Foundation, 4evergreen alliance and the
International Union of Forest Research
Organizations, among others. We also
work with organisations such as the United
Nations World Food Programme to help
eliminate food waste by developing fit-for-
purpose packaging solutions. Our MAP2030
section outlines our partnerships and
provides further detail on the progress we
have made against our ambitious targets.
Circular Driven Solutions
Page 38-40
Reusable, recyclable
or compostable products
(% of Group revenue)
82%
Q10. How does Mondi’s resilient
business model create opportunities
for the Group?
One of our strategic value drivers is to invest
in our high-quality assets. This has been a
fundamental principle under which we have
operated and, as a consequence, we enjoy
very strong cost positions in the markets
that we serve. This is supported by our
enduring focus on operational excellence,
encompassing the systematic drive for
productivity and efficiency gains, supported
by rigorous benchmarking, knowledge
sharing, digitalisation, automation and
other initiatives. This enables us to reliably
supply our customers with quality products,
even in challenging times, and puts us in
a great position to work together to deliver
circular driven solutions.
Our business model
Page 14-17
Q11. What is Mondi’s near-term
outlook?
As we enter 2023, significant geopolitical
and macro-economic uncertainties
remain. Whilst a number of input costs
are starting to decline, we continue to
see an environment of softer demand
and pricing, with destocking expected
to continue through the first quarter.
Notwithstanding these challenges, we
remain confident of our compelling product
portfolio and resilient business model.
Our cash generation and strong balance
sheet provide strategic flexibility, enabling
us to meet growing customer demand for
sustainable products and continue to invest
to strengthen our leading market positions.
We remain well positioned to deliver
attractive returns and sustainable value
accretive growth.
Vertical integration
(production in million tonnes)
Consumed internally
Net market exposure
0.2
3.4
1.6
0.3
0.7
(0.2)
0.4
0.9
0.9
Pulp
Virgin
container-
board
Recycled
container-
board
Kraft
paper
Uncoated
fine
paper
28 Mondi Group
Integrated report and financial statements 2022
Chief Executive Officer’s strategic review continued
Strategic performance summary
Drive value accretive
growth, sustainably
Drive performance
along the value chain
Progress in 2022
— Strong operational and financial delivery across the Group,
delivering returns well in excess of our cost of capital
— Completed the sale of the Personal Care Components
business
— Validated our science-based Net-Zero GHG emissions
reduction targets by the SBTi, aligned to a 1.5°C scenario
— Progressed against our ambitious MAP2030 commitments,
including the reduction of our absolute Scope 1 and
2 greenhouse gas emissions by 17% against our 2019
baseline
— Engaged in multi-stakeholder partnerships, for example
with the WBCSD Forest Solutions Group, the Ellen
MacArthur Foundation, 4evergreen alliance and the
International Union of Forest Research Organizations
Medium-term priorities
— Continue to innovate and collaborate along the value chain
with key stakeholders to further develop our sustainable
packaging and paper portfolio
— Build on our climate resilience by reducing GHG emissions
across our value chain in line with our science-based
Net-Zero targets
— Work on delivering our MAP2030 commitments by actively
engaging with our people and other stakeholders
Related risks and mitigation
Pandemic risk
1
Strategic risks
3 5 6
Financial risks
7 8 9
Operational risks
10 11 12 13 14 15 16
Compliance risk
17
Progress in 2022
— Strong operational performance in the
face of tight supply chains and rising
costs, including annual production
records at two pulp and paper mills
— Reorganised business units by moving
Functional Paper and Films into Flexible
Packaging to strengthen integration along
the kraft paper value chain
— Optimisation of converting plant network
including consolidating corrugated
solutions’ production in Adana (Türkiye)
into one production site
— Progressed on a number of digitalisation
initiatives to drive productivity gains,
including the adoption of predictive
maintenance techniques based on real-
time data analysis and advanced wood
chip analysis to optimise pulp quality
Medium-term priorities
— Continue to evaluate, invest in and roll out
focused digital platforms and initiatives
across our network to drive productivity
and efficiency gains
— Continuous improvement initiatives
across our business to reduce costs and
waste, maintain quality standards and
enhance operational performance
Related risks and mitigation
Pandemic risk
1
Strategic risks
2 4 6
Financial risks
7 8 9
Operational risks
10 11 12 16
Further detail in Chief Executive Officer’s
strategic review
Q1, Q2, Q3, Q7, Q9, Q10
Further detail in Chief Executive Officer’s
strategic review
Q1, Q4, Q5, Q10
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
29
Invest in assets
with cost advantage
Inspire
our people
Partner with customers
for innovation
Progress in 2022
— Realised financial and sustainability
benefits from recently completed major
capital projects
— Progressed on our €1 billion expansionary
capital investment pipeline that will drive
value accretive growth, including the
approval of a new kraft paper machine
at Štětí
— Acquired the Duino mill in early
2023 with plans to convert the paper
machine to a cost-competitive recycled
containerboard machine
— Continued to invest in our asset base
to drive growth, strengthen cost
competitiveness, enhance our offering
and improve our environmental footprint
Progress in 2022
— Developed and enhanced our people’s
skills through training programmes and
upskilling initiatives
— Engaged with colleagues across the
organisation to provide insight and foster
a collaborative team spirit including the
completion of a number of employee
pulse surveys to develop a more diverse
and inclusive workplace
— Continued care for the physical and
mental health of our people, for example
the expanded Employee Assistance
Programme which provides counselling
support to Mondi employees and their
families
— Maintained strong focus on safety with
an 8% improvement in Total Recordable
Case Rate compared to our 2020 baseline
Progress in 2022
— Increased the proportion of our
product portfolio that is reusable,
recyclable or compostable, achieving
82% in the year
— Ongoing focus on developing
innovative and sustainable packaging
and paper solutions, leveraging our
unique platform, and continuing to
be externally recognised with award-
winning products, including eight
2023 WorldStar Packaging Awards
— Improved our overall quality
performance with a 26% reduction
in total customer complaints over
the last 2 years
Medium-term priorities
— On-time and on-budget execution
of capital investment programme
to enhance our offering and deliver
to our customers
— Convert the existing paper machine at
our Duino mill into a cost competitive
recycled containerboard machine
— Continue to evaluate further organic
and selective inorganic investment
opportunities
Medium-term priorities
— Focus on talent attraction, retention and
diversity and inclusion (D&I) initiatives
to provide purposeful employment for
all our employees
— Continue to engage with our employees,
including the 2023 Group-wide employee
survey to create an inspiring and inclusive
work environment
— Continuous focus on improving our
safety performance and embedding
a behaviour-based safety mindset
Medium-term priorities
— Continue to partner with our
customers to develop innovative
and sustainable packaging solutions
— Increase the proportion of products
that are reusable, recyclable or
compostable, aiming to reach 100%
by 2025
— Ongoing engagement with customers
to improve quality standards and
overall customer satisfaction
Related risks and mitigation
Pandemic risk
1
Strategic risks
2 3 4 5 6
Financial risks
7 8 9
Operational risks
11 12 16
Compliance risk
17
Related risks and mitigation
Pandemic risk
1
Operational risks
14 15 16
Compliance risk
17
Related risks and mitigation
Pandemic risk
1
Strategic risks
3 4 6
Operational risk
16
Compliance risk
17
Further detail in Chief Executive Officer’s
strategic review
Q2, Q3, Q5, Q6, Q10
Further detail in Chief Executive Officer’s
strategic review
Q1, Q7, Q8
Further detail in Chief Executive Officer’s
strategic review
Q3, Q4, Q5, Q6, Q9, Q10
30 Mondi Group
Integrated report and financial statements 2022
Key performance indicators
Tracking our performance
Our Key performance indicators (KPIs) provide
a broad measure of the Group’s performance.
We set individual targets for each of our business
units in support of these Group KPIs.
Russian operations KPI considerations
The KPIs shown below are based on the Group’s continuing
operations (which exclude the Russian operations) for 2022,
2021 and for sustainability metrics, 2020. All other prior period
amounts include the Group’s Russian operations. The different
presentation basis is represented by the vertical dotted line.
2022 performance
The Group achieved
a ROCE of 23.7%.
Link to strategic
framework
Why this is a KPI
ROCE provides a measure of
the efficient and effective use
of capital in our operations.
We compare ROCE to
our current estimated Group
pre-tax weighted average
cost of capital to measure
the value we create.
Link to strategic
framework
Why this is a KPI
TSR provides a market-related
measure of the Group’s
progress against our objective
of delivering long-term value
for our shareholders.
TSR measures the total return
to Mondi’s shareholders,
including both share price
movement and dividends paid.
2022 performance
While the recommended total
dividend per share for the year
represents an 8% increase on 2021,
the share price performance in
the year was negatively impacted
by the Russian invasion of Ukraine
given the Group’s significant
exposure to Russia (around 20%
of total EBITDA over the previous
three years).
Why this is a KPI
Keeping people safe and
healthy is a moral and a business
imperative that applies to all
who work for and on behalf
of Mondi. Our 24-hour safety
mindset supports our goal of
sending everybody home safely,
every day.
2022 performance
In 2022, our TRCR was 0.63,
representing an 8% improvement
on our 2020 baseline.
We regretfully experienced
one fatality at our Frantschach
mill (Austria) in the year and
two life-altering injuries at
our operations.
Link to strategic
framework
Why this is a KPI
We aim to maintain investment
grade credit ratings to ensure
we have access to funding
for value accretive investment
opportunities through the
business cycle.
2022 performance
Our investment grade credit
ratings were reaffirmed during
the year – Standard & Poor’s
BBB+ (stable outlook) and
Moody’s Investors Service Baa1
(stable outlook).
Link to strategic
framework
Return on capital employed (ROCE)
% (12-month trailing)
ROCE
Current estimated pre-tax weighted
average cost of capital
23.6
23.7
19.8
15.2
13.9
10.0
2018
2019
2020
2021
2022
Total Shareholder Return (TSR)
% (vs FTSE All Share Index)
Mondi plc
Median of peer group
1-year
(20)%
3-year
(12)%
5-year
(10)%
-20
-10
0
10
20
Total Recordable Case Rate (TRCR)
(per 200,000 hours worked)
0.68
0.63
0.68
0.71
0.63
2018
2019
2020
baseline
2021
2022
Investment grade credit rating
Standard & Poor’s
Non-investment grade
Moody’s Investors Service
Investment grade
BBB+
BBB
BBB-
BB+
BB
BB-
Dec
2017
Apr
2018
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
Dec
2022
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
31
Using KPIs to measure the success of our strategy
Our strategy is to deliver value accretive growth, sustainably.
This is underpinned by four strategic value drivers which build on
the competitive advantages we enjoy today and set a clear roadmap
for investment and operational decisions into the future. We use KPIs
to provide a measure of Mondi’s strategic performance and value creation.
Aligning KPIs to remuneration
Our executive directors are set specific targets relating to TSR and ROCE
for the Long-Term Incentive Plan while the Group’s annual bonus (which covers
around 3,400 employees including the Group CEO and Group CFO) covers
ROCE, underlying EBITDA and sustainability metrics encompassing safety,
GHG emissions and waste to landfill targets.
Our strategy
Page 20-29
Underlying EBITDA
(€ million)
Underlying EBITDA margin
1,764
1,658
.
2
3
6
%
.
2
2
8
%
1,848
.
2
0
8
%
1,353
.
2
0
3
%
1,157
.
1
6
6
%
2018
2019
2020
2021
2022
Total Scope 1 and 2 GHG emissions
(million tonnes)
Group excluding Russian operations
Russian operations
4.74
4.32
1
.
9
1
4.35
1
.
9
4
.
2
4
1
.
2
4
1
3.94
1
.
7
6
2
.
1
8
2019 SBT
baseline
2020
2021
2022
Waste to landfill
(thousand tonnes)
232
229
121
124
116
2018
2019
2020
baseline
2021
2022
Remuneration report
Page 124-151
Why this is a KPI
Underlying EBITDA provides a
measure of the cash generating
ability of the Group that is
comparable from year to year.
Tracking our cash generation
is one of the components
we measure when we assess
our value creation through
the cycle.
Why this is a KPI
Our focus is to reduce our
GHG emissions to address
climate-related impacts and
secure the long-term success
of our business.
2022 performance
Underlying EBITDA of
€1,848 million represents
a 60% year-on-year increase.
The Group’s underlying
EBITDA margin was 20.8%.
Link to strategic
framework
Link to strategic
framework
2022 performance
We were among the first
companies in our sector to have
our science-based Net-Zero
targets validated by the Science
Based Targets initiative in 2022.
We reduced our absolute Scope
1 and 2 GHG emissions by 17%
compared to our 2019 baseline
and remain on track to meet
our targets.
Why this is a KPI
Our goal is to keep materials
in circulation. We are focused on
reducing our waste and reusing
or recycling unavoidable waste
generated in our production
processes instead of disposing
of it to landfill.
2022 performance
We continue to make progress
against our target of zero
waste and have successfully
reduced our absolute waste to
landfill from our manufacturing
processes by 4% compared
to our 2020 baseline.
Link to strategic
framework
Reusable, recyclable or compostable products
(% of Group revenue)
74
77
82
Why this is a KPI
The demand for sustainable
packaging continues to rise,
with brands and consumers
looking for solutions to help
meet their sustainability pledges
and support the transition to
a circular economy. We began
reporting our progress against
this KPI in 2020.
2022 performance
We estimate that 82% of our
revenue in 2022 was generated
from products that were reusable,
recyclable or compostable.
We are working towards our
ambitious target of reaching
100% by 2025.
Link to strategic
framework
2020
2021
2022
32 Mondi Group
Integrated report and financial statements 2022
Section 172 statement
Stakeholder engagement
Listening to and engaging with our diverse stakeholders drives progress, trust and
transparency. It enables us to understand external developments and market expectations
and supports our identification of opportunities and risks.
Our employees
Our customers
Key issues raised in 2022 and our response
Our customers continued to focus
on topics including security of supply,
product quality, the circular economy and
related legislative initiatives, sustainable
packaging solutions, competitive advantage
and carbon emissions. In 2022, to meet
customer requests for transparency on the
climate and water impacts of our products,
we conducted 234 Product Impact
Assessments and 336 Product Carbon
Footprint assessments.
We continued our engagement with Graz
University to work on process improvements
on the material and energy efficiency of
our pulping process.
In 2022, we continued our customer
collaboration to develop solutions to meet
their sustainability goals and maintained
our ongoing collaborations with multi-
stakeholder initiatives, such as CEFLEX and
4evergreen, as well as the Ellen MacArthur
Foundation.
Key issues raised in 2022 and our response
Themes highlighted in 2022 centred
around feedback and recognition,
personal development opportunities,
collaboration, diversity and inclusion and
mental health. To support building our
talent pipeline, the International Graduate
Programme was initiated with graduates
and interns taking part in the ‘Grow with
Mondi’ event.
In 2022, around 31% of all employees
took part in the online Performance
and Development Review process.
Around 2,600 employees shared their
views in the pulse surveys. To support
our culture of development and
inclusion, we established the “Curious
Community”, a new online community
to exchange ideas on diversity and
inclusion.
We also extended the reach of the
Employee Assistance Programme
to include Thailand, with 94% of our
employees worldwide now able to rely
on its support. The newly developed
Mental Wellbeing Index for our employee
survey was tested in various locations.
Making a Difference Day (MADD) took
place across most of Mondi’s locations
with a focus on inclusive behaviour,
mental health, safety and climate action.
Local MADD initiatives included webinars
and management talks.
Our suppliers
and contractors
Key issues raised in 2022 and our response
Local sourcing, secure contracts and
capacity building are key topics for suppliers.
There is also increasing attention from our
stakeholders on the environmental and
social performance of our suppliers and
contractors. In 2022, we risk-screened
369 supplier sites using our Responsible
Procurement process. We conducted
workshops with some of our key global
suppliers to collect primary carbon data
and engage with them on their GHG
reduction targets to support our Scope 3
engagement.
Safety was a key priority for contractors,
particularly during annual maintenance and
project-based shuts. During the Richards
Bay (South Africa) rebuild project, we
continuously discussed learnings and
identified improvement opportunities.
Annual maintenance shuts in 2022 saw
over 9,600 contractors working on our
sites. Overall, we achieved a good shut
performance with zero life-altering injuries
during more than 1.2 million hours worked.
We support smallholders in South
Africa via our corporate social projects
and provide them with sustainability
training opportunities. In 2022, Mondi
sourced 157,040 tonnes of wood from
rural smallholdings (1-10 hectares each).
Mondi Zimele also distributed 1.2 million
seedlings and provided training, mill visits
and knowledge-sharing field days to eligible
small growers.
33
Our communities
Our investors
Key issues raised in 2022 and our response
We continued to engage with investors
throughout the year, focusing on our
financial performance, market dynamics,
governance and remuneration, strategy,
capital allocation and sustainability priorities
and actions.
During the year, the Group’s interests
in Russia were regularly discussed during
investor engagement activities following
Russia’s invasion of Ukraine in February, the
Board’s assessment of the Group’s interests
in Russia and the decision in May to divest
the operations. Discussions focused on
the implications for the Group’s strategy,
business model and value creation.
During the second half of the year, the
Group entered into agreements to sell its
Russian businesses in line with the decision
taken in May.
The Board recommended a final 2022
dividend of 48.33 euro cents per share.
This final dividend, together with the interim
dividend, amount to a total dividend for
the year of 70.00 euro cents per share, an
increase of 8% on the 2021 total dividend.
Key issues raised in 2022 and our response
We invested €8.9 million in social
initiatives supporting health, environmental
protection, education, local enterprise
and infrastructure. Our mills continued to
serve local communities with power supply,
wastewater treatment and waste disposal
services. Mondi Group and many of our
local operations supported people in need
in Ukraine through aid campaigns, including
a donation of €2 million to the World Food
Programme for humanitarian assistance.
In South Africa, Mondi Zimele focused on
income generating projects and self-help
groups to support livelihoods. Our nine
mobile health clinics provided healthcare
and support for forestry contractor
employees and their families and provided
Early Childhood Development services and
support sessions.
In 2022, we conducted two Socio-Economic
Assessment Toolbox (SEAT) processes
in our paper mills at Mondi Štětí (Czech
Republic) and Mondi Corrugated Turkey
Tire paper mill (Türkiye). The SEAT reports
will be published on Mondi’s website,
capturing the process and all outcomes.
We received and addressed 167 complaints
from communities, including 153 odour-
related and 13 noise-related complaints.
We continue to invest in the latest
technologies to reduce our impacts
on communities.
Partners and industry
associations
Key issues raised in 2022 and our response
Our partnerships aim to find solutions
to societal challenges such as climate
change, biodiversity and water stewardship,
responsible sourcing, circular economy
and food waste.
We maintained our membership of
the WBCSD’s Forest Solutions Group
and actively supported the development
of the Nature-Positive Roadmap for our
sector. We continued to engage with
IUFRO to identify ways to improve forests’
resilience to climate change.
In South Africa, we worked with Endangered
Wildlife Trust to support our biodiversity
status review of our plantation forestry
operations and launched a partnership to
explore biodiversity accounting approaches
in plantation forestry.
We continued supporting the Mondi
Ecological Networks Programme of the
University of Stellenbosch. WWF-Mondi
Water Stewardship Partnership in South
Africa also progressed well.
We collaborated with CEFLEX and
4evergreen to drive progress across the
value chain with development of tools,
such as design guidelines. With Cepi, we
engaged in discussions related to the GHG
Protocol Mirror Group and the Packaging
and Packaging Waste Regulation for
example.
We also engaged with SBTi to validate our
new Net-Zero GHG emissions reduction
targets.
Stakeholder Engagement Index
In this index, we offer further insights into how
we have engaged with different stakeholder
groups, the topics raised and our response.
Visit our website to download
www.mondigroup.com
Financial statementsGovernanceOverviewStrategic reportMondi Group Integrated report and financial statements 2022 34 Mondi Group
Integrated report and financial statements 2022
Section 172 statement
How stakeholder considerations shape decision-making
Mondi’s strategic decision-making framework focuses on delivering sustainable value for key
stakeholders, and relies on the quality of the relationships it has with them. The Board’s deliberations
take into account the long-term interests of our stakeholders, along with the impact of our business
and the balance of actions required to deliver sustainable growth.
Our approach
Mondi categorises its stakeholders into six key groups described
in the preceding pages and reviews these annually. As part of the
Board’s responsibilities and as a methodology for maximising the
effectiveness of their decisions, the directors debate stakeholder
considerations in the short-, medium- and long-term, taking
account of four key principles:
1. Local and personal engagement
The Board has determined the most effective and scalable
way of engaging stakeholders is to embed responsibilities
throughout the organisation, while facilitating regular
feedback from colleagues who maintain strong day-to-day
relationships with our stakeholders. The Executive Committee
and Sustainable Development Committee are important
mechanisms for reporting these insights to the Board on
a regular basis.
2. Informed decision-making
The Board seeks to understand the material issues relevant to
stakeholders as they evolve. In addition to the regular feedback
it receives from stakeholders and colleagues, the Group carries
out an established materiality assessment, which is conducted
every three years or more often if needed.
3. Long-term horizons
To grow and protect value, the Board maintains a long-term
view that stretches beyond the projected tenure of the
directors and considers impacts far into the future. This can
be seen with the longer-term focus of our MAP2030 framework.
4. Two-way dialogue
Long-term decision-making, trade-offs and the nuances
of local relationships mean it is important not only to take
stakeholders into account at Board level, but to effectively
communicate our actions to them. This is integral to how
Mondi communicates and manages its reputation, supporting
the Board’s focus on promoting the strongest standards of
business ethics and governance.
Local and personal engagement
One way in which the Board gains insights from local and
personal engagement is from Mondi’s Socio-Economic
Assessment Toolbox (SEAT) process. SEATs are arranged
as an open dialogue with a variety of stakeholders facilitated
by an independent third party. The conclusions of each
assessment are shared with the local management team as
well as Mondi’s senior leadership, including the Sustainable
Development Committee.
www.mondigroup.com/SEATs
In May 2022 a SEAT was carried out at our Štětí mill in the
Czech Republic. The mill employs around 1,000 people and
is the largest producer of pulp and packaging paper in the
country. The SEAT process included around 21 meetings
and involved conversations with a range of stakeholders such
as employees, customers and community representatives.
The stakeholders interviewed identified Mondi Štětí as a:
— Strong and reliable business partner
— Responsible manufacturer who cares about good
working conditions
— Modern, supportive and reliable partner to local
communities in the region
— Mill with high environmental standards
In terms of areas for improvement, three overarching issues
were of most concern to stakeholders:
— Vehicle traffic
— Odour emissions
— A perception of overly stringent safety rules
The local management team reviewed all the findings and
responded formally with their feedback in the publication of
a SEAT report. This included steps on where improvements
can be made for the future, of which some, such as traffic
alleviation measures, have already been implemented.
Further details of the Štětí SEAT and outcomes can be found
on pages 74 of the 2022 Sustainable Development report.
Pages 32-35 of this report aim to provide a snapshot of how this
approach works and, in doing so, serve as a statement summarising
how Mondi’s directors have fulfilled their Section 172 duty in 2022.
This includes a summary of who our key stakeholders are, how we
engage with them and how we respond to their interests.
Corporate governance report – Stakeholder engagement
Page 93-98
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
35
Ambitious investment
at Mondi Štětí
What did the Board’s decision entail?
In October 2022 the Board approved a €400 million
investment in a new kraft paper machine at our
Štětí mill in the Czech Republic. The investment
forms part of the Group’s €1 billion expansionary
capital investment programme to accelerate growth
in sustainable packaging and will further strengthen
Mondi’s leading position in the market.
What was the context for the decision?
— The investment and associated production optimisation
will provide Mondi with the opportunity to develop new
paper-based products that help customers in their efforts
to achieve their sustainability targets.
— Demand for packaging that is fit-for-purpose and
sustainable remains high. Regulations, such as the
EU Packaging and Packaging Waste Regulation, are
accelerating requirements around waste reduction and
promoting the use of renewable and recyclable products.
How did the decision account for stakeholder interests?
The Board based its decision on an in-depth review of the
benefits expected:
— Customers: The additional capacity will meet growing
customer demand for sustainable paper-based flexible
packaging and provide an opportunity to optimise
production and develop new products across Mondi’s kraft
paper operations. Customers will also benefit from new,
on-site product development and innovation capabilities.
— Employees: The investment will provide colleagues and
potential new hires with long-term career development
and training opportunities and renewed confidence in the
future of the mill. It will also strengthen the mill’s reputation
as an attractive employer and motivate colleagues.
— Investors: Our disciplined approach to investigating
and executing capital projects is a key strength at Mondi.
Successful completion will further lower our cost base, deliver
volume growth and contribute to the Group’s overall performance.
— Communities: The investment contributes to the sustainable
future of the mill and will stimulate local economic activity and
employment.
— Environment: Kraft paper has sound sustainability credentials,
is made from certified fibre and is fully recyclable. The investment
will also increase the mill’s energy efficiency and reduce the
mill’s specific greenhouse gas emissions.
What were the trade-offs?
— The Board reviews numerous capital investments across
multiple locations, taking into consideration various financial
and non-financial benefits to stakeholders. Ultimately, the Board
directs capital to those projects with the strongest long-term
return on investment in alignment with our sustainability goals
and stakeholder responsibilities.
— Medium-term demand and supply market dynamics and
consideration of the sustained competitiveness of the machine
in the European sack kraft paper market.
— The additional workload for employees and resources available
to execute the project as a result of such a large investment.
— Increased raw material consumption, most notably wood
and energy, to supply our expanded production as well as
reallocating market pulp for kraft paper production.
What was the outcome of the decision?
The Board approved the investment in a new kraft paper machine.
By deciding to invest, the Board demonstrated its continuing
support for the Group’s strategy and prioritisation of sustainable
packaging as the means to sustaining long-term value creation
for all stakeholders. By extension, the decision demonstrates the
Board’s stewardship – and the Group’s progress – in achieving
its purpose: to contribute to a better world by making innovative,
sustainable packaging and paper solutions that are sustainable
by design.
Strategic framework
Page 20
The Mondi Way
Page 14
36 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
In 2022, we entered our second year of the delivery against our
Mondi Action Plan (MAP2030), our sustainability framework built
on our purpose to contribute to a better world by making innovative
packaging and paper solutions that are sustainable by design.
Our three MAP2030 action areas – Circular
Driven Solutions, Created by Empowered
People, Taking Action on Climate – are
supported by a set of responsible business
practices covering human rights, communities,
responsible procurement and environmental
performance. Each of these areas have
commitments and targets for 2030, with
some milestones set for 2025 or earlier.
The Board and the Sustainable Development
(SD) Committee form core parts of our
sustainability governance framework and
review the progress towards our MAP2030
commitments, providing valuable leadership
and guidance along the way.
Changes in 2022
In May 2022, the Board announced the
decision to divest the Group’s Russian
operations. As a result, some MAP2030
targets were revised to reflect our
continuing operations. Figures presented
and commentary provided in this section
(unless otherwise mentioned) are based
on the Group’s continuing operations
(which exclude the Group’s Russian
operations). The MAP2030 framework
remains unchanged and there is positive
momentum and progress towards meeting
our commitments.
We have also removed the ‘Business
Ethics & Governance’ focus area from
our Responsible Business Practices
in recognition that this is an integral part
of our approach rather than a term specific
target to be achieved.
Sustainable Development report 2022
www.mondigroup.com/sd22
Circular
Driven Solutions
Created by Empowered
PEOPLE
MAP
2030
Mondi Action Plan
Taking Action on
CLIMATE
Built on Responsible Business Practices
Human Rights | Communities | Procurement | Environmental Performance
Remuneration
The strategic importance of our
sustainability agenda is reflected in the
remuneration structure across the Group.
In 2022, we introduced sustainability KPIs
into our annual bonus to embed sustainability
goals more deeply throughout the business,
with KPIs from all three MAP2030 action
areas covered, representing 20% of the
Group’s annual bonus.
Remuneration report
Page 124-151
Stakeholders
Listening to and engaging with our diverse
stakeholders drives progress, trust and
transparency. It helps us to understand
external developments and market
expectations; supports our identification
of opportunities and risks; and offers
further insight on our MAP2030 progress.
In 2022, we engaged with a range
of external and internal stakeholders,
including employees, customers, suppliers,
communities, partners, industry associations
and regulators.
Stakeholder engagement
Page 32-33
Materiality
Our materiality assessment process enables
us to explore what matters most to our
business and our stakeholders. Our latest
materiality assessment was carried out in
2021 with third party support, taking both
impact and financial materiality into account.
Among internal audiences, the material
sustainability topics that have increased in
significance include nature and biodiversity,
and Diversity & Inclusion (D&I). Eight of
the top ten issues considered to be critically
important were environmental and the other
two were employee safety, health and
wellbeing and product safety and quality.
Among external stakeholders, climate
change was the top priority across all
stakeholder groups. Forest-related issues,
along with nature positive and biodiversity,
were a priority for customers and NGOs.
A summary of our materiality assessment
and its outcomes can be found in our 2022
Sustainable Development report.
Sustainable Development report 2022
www.mondigroup.com/sd22
Page 90
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
37
Innovative packaging and paper
solutions that keep materials
in circulation and prevent waste
An empowered and inclusive
team that contributes to
a better world
Climate resilience through
our forests and operations
for the future of the planet
2022
performance
2022
performance
2022
performance
Make our packaging and paper
solutions reusable, recyclable
or compostable
— 100% of our packaging and paper
products are reusable, recyclable
or compostable by 2025
Avoid waste by keeping
materials in circulation
— Eliminate waste to landfill from
our manufacturing process
Work with others to eliminate
unsustainable packaging
— Progress made through our
partnerships and stakeholder
engagement activities every year
Circular Driven Solutions
Page 38-40
Build skills that support
long-term employability
— Enable our employees to participate
in upskilling programmes
Provide purposeful employment
for all our employees in a
diverse and inclusive workplace
— Achieve 90% Purpose Satisfaction
score in our employee survey
— Achieve 90% Inclusiveness score
in our employee survey
— Employ 30% women across Mondi
Create an environment that
enables a positive work-life
experience, valuing our safety,
health and mental wellbeing
— Zero fatalities
— Zero life-altering injuries
— 15% reduction of Total Recordable
Case Rate
— Support our employees in
pursuit of a work-life experience
that enhances their wellbeing
— Our operations drive awareness
of and take measures to improve
health and mental wellbeing
Empowered People
Page 41-43
Reduce our greenhouse gas
emissions in line with science-
based Net-Zero targets
— Reduce Scope 1 and 2 emissions
by 46.2% by 2030 from
a 2019 baseline*
— Reduce Scope 3 emissions
by 27.5% by 2030 from
a 2019 baseline*
— Reduce Scope 1, 2 and 3 GHG
emissions by 90% by 2050
from a 2019 baseline*
Maintain zero deforestation
in our wood supply, sourcing
from resilient forests
— Maintain 100% FSCTM certification
in our own forest landholdings
— 100% responsibly sourced fibre
with 75% FSCTM-/PEFC-certified
fibre procured by 2025 and the
remainder meeting the FSCTM
Controlled Wood standard
— Implement leading forestry
measures to ensure productive
and resilient forests
Safeguard biodiversity
and water resources in our
operations and beyond
— Conduct water stewardship
assessments at our mills and
forestry operations by 2025,
and implement required actions
to address the findings by 2030
— Conduct biodiversity assessments
at our mills and forestry operations,
introducing biodiversity action
plans where necessary by 2025
Taking Action on Climate
Page 44-57
Key
Completed
On track
Slightly behind target
Not on track
In development
* Updated in 2022
38 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
We consider the environmental
impacts of our products at each
stage of the value chain, from sourcing
raw materials to product design and
end-of-life, to drive progress towards
a circular economy and eliminate
unsustainable packaging.
Commitment: Make our packaging and paper solutions reusable, recyclable or compostable
SASB
Target
100% of our packaging and paper
products are reusable, recyclable
or compostable by 2025
SASB
Consumer demand and
regulatory developments
continue to play an important
role in accelerating the elimination
of unsustainable packaging.
Our approach is to help our customers
make more sustainable choices at all
stages of the design process by using
paper where possible and plastic when
useful. In particular, our innovation and R&D
teams develop paper-based, flexible plastic
mono-material or hybrid solutions with
a sustainable end-of-life. These solutions
strike a balance between the features
that are critical for protecting packaging
contents and thereby prevent (food)
waste, while using resources efficiently
and avoiding plastic pollution.
Performance
2022
2021
This year at a glance
The percentage of reusable, recyclable or compostable
products based on revenue has increased to 82% (77% in 2021)
In 2022, the European Union published
amendments and regulations under the
‘European Green Deal’ action plan that
are relevant to our sector, including the
Packaging and Packaging Waste Regulation
and the Eco-Design for Sustainable Products
Regulation. This legislation aims to make
sustainable goods, services and business
models the norm. We are encouraged by
this drive to standardise systems across the
EU, from sorting and labelling to verifiable
sustainability credentials.
— Our business units started implementing
their Circular Driven Solutions roadmaps
to achieve our target, applying the Path
to Circularity Scorecard criteria, which
classifies products as reusable, recyclable
or compostable according to harmonised
criteria and thresholds. In 2022, the
percentage of reusable, recyclable or
compostable products based on revenue
increased to 82% (77% in 2021). Read more
about our Scorecard on page 23 of our
2022 Sustainable Development report.
Key initiatives and progress in 2022
— We continue to invest in R&D and
opened a recycling laboratory for fibre-
based products and pulp at Mondi
Frantschach (Austria). We also invested
in a new R&D centre in Mondi Steinfeld
(Germany), including pilot lines for both
plastic- and paper-based solutions.
— Up to 80% of a product’s environmental
impact is influenced at the design
phase.1 We aim to optimise this phase
of production through our Sustainable
Products Principles (SPP), the most
recent update to our Sustainable
Products Criteria which promotes seven
principles of sustainable design including
recyclability, reuse, and compostability.
— We see an increasing demand from
customers to use life cycle-based
assessments to compare and identify
more sustainable solutions. In 2022,
234 products were assessed in our PIA
tool, and 336 product carbon footprints
were calculated.
— To further build capacity and
understanding of sustainability topics
across our business, our employees
completed 2,122 hours of sustainability
training. Topics ranged from the
recyclability of paper and plastic, to
human rights and our Net-Zero journey.
1 https://wrap.org.uk/resources/guide/embedding-
environmental-sustainability-product-design
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
39
Commitment: Avoid waste by keeping materials in circulation
Target
Eliminate waste to landfill from
our manufacturing process
We view waste disposed to landfills
as a lost resource. We work to avoid
waste, starting with product design
and the selection of raw materials
through to our manufacturing
processes and increasing the
use of by-products as secondary
raw materials for other industries.
Performance
2022
2021
This year at a glance
Reduced our total waste to landfill by around 8,500 tonnes in 2022,
which is a reduction of more than 4% since 2020
We explore alternatives for the disposal
of waste to landfill, such as using ashes
to manufacture bricks. In this way, we find
economically feasible solutions to reuse
and recycle these highly valuable resources.
This not only reduces our waste to landfill,
it also avoids greenhouse gas (GHG)
emissions.
Our first priority is to minimise waste
in our production processes through
our efficiency initiatives. Where possible,
we provide secondary raw materials for
other industries, to avoid waste to landfill.
Key initiatives and progress in 2022
— We reuse recovered fibre from the
wastewater treatment plant of our mill
in Richards Bay (South Africa).
— In our Ružomberok (Slovakia) mill we
found an alternative use for waste lime
mud, previously landfilled, as a resource
in the cement production process.
— Biomass-based chemicals, such as
tall oil, a by-product from the wood
pulp manufacturing process, is used to
produce biodiesel for energy generation,
substituting fossil fuels.
— The ash from our bark boilers is used
in the production of cement and bricks.
— We are researching the use of fly ash
as feedstock for speciality materials.
Environmental performance
Page 58-59
Closing the loop
in eCommerce
In 2022, we worked with a large European
fashion e-retailer, MODIVO, to create
a range of packaging solutions tailored
to eCommerce needs.
We supported MODIVO to switch from
the standard rigid packaging, used in the
distribution of the e-retailer’s collection
of shoes, bags and clothing, to Mondi’s
MailerBAGS. These bags are reusable
and recyclable, and designed to reduce
waste and protect products and to reduce
the space requirements and overall
packaging costs.
40 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Circular Driven Solutions continued
Commitment: Work with others to eliminate unsustainable packaging
Target
Progress made through our partnerships
and stakeholder engagement activities
every year
Collaboration is needed to drive
progress towards a circular economy
that eliminates unsustainable
packaging. We work with customers
and others across the value chain to
support the transition to sustainable
packaging solutions.
The elimination of food waste is key to
this commitment. We can play a vital role
by developing suitable packaging which
boosts food shelf-life without compromising
packaging recyclability. The lack of
harmonisation of collection, sorting and
recycling at a country and at a European
level remains a fundamental challenge.
Performance
2022
2021
This year at a glance
We continue to engage in cross-value chain initiatives such
as CEFLEX and 4evergreen, contributing to the development
of industry-wide guidelines for recycling and design for circularity
Key initiatives and progress in 2022
— Our partnership with the World Food
Programme (WFP) entered its second
year in 2022, offering expertise to help
eliminate food waste due to defective
packaging. Sustainable and effective
packaging plays a critical role in a
humanitarian context, maintaining food
safety and nutrition when it reaches
those in need.
— We participated with WFP at a
United States Agency for International
Development (USAID) Joint Initiative
webinar to share learning among
humanitarian organisations about
packaging waste management and
sustainable packaging.
— In 2022, we joined the Business Coalition
for a Global Plastics Treaty. This new
Coalition led by the Ellen MacArthur
Foundation and WWF endorses a common
vision for an international legally binding
instrument to end plastic pollution,
by providing a clear voice in the treaty
negotiations.
— We renewed our membership with
the Ellen MacArthur Foundation. Mondi
is a signatory of the Global Commitment,
working to eliminate plastic pollution
and creating 100% reusable, recyclable
or compostable plastic packaging by
2025. Under The Global Commitment
we reported 31% (2021: 28%) of our plastic
packaging (based on weight) as designed
for recycling, based on the CEFLEX
guideline and in line with our Path to
Circularity Scorecard criteria.
— We continued our active engagement
with CEFLEX, a pan-European multi-
stakeholder consortium working to make
all flexible packaging in Europe circular
by 2025. We were involved in the near
infrared (NIR) sortability tests, and testing
of the web-based Design for Circular
Economy (D4ACE) tool.
— We provided technical expertise to
support the workstreams of 4evergreen,
an alliance to boost the recycling rate
of fibre-based packaging in Europe
to 90% by 2030. Mondi representatives
actively engaged in the development
of three guidance documents in 2022:
the ‘Circularity by Design’ guideline, the
‘Guidance on the Improved Collection
and Sorting‘, and the ‘Recyclability
Evaluation Protocol’.
What’s next in Circular Driven Solutions?
— Support customers to transition to more sustainable solutions, where identified
and available in our portfolio
— Prioritise developing innovative alternatives to products that are not recyclable
or compostable today
— Continue to work with cross-value chain collaborators, our industry associations
and other key partners to support the development of harmonised and
improved collection, sorting and recycling infrastructure to promote sustainable
packaging and eliminate plastic leakage to the environment
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
41
Mondi employs 22,000 people working
in more than 30 countries. Our goal is to
be an employer of choice by engaging
and developing our people to realise
their potential. This leads to long-term
employability and supports the stability
and longevity of our business.
Commitment: Build skills that support long-term employability
Target
Enable our employees to participate
in upskilling programmes
Our tools, processes and initiatives
are designed to support each
employee’s growth and career journey.
We anticipate and respond to shifts
in society by creating upskilling
programmes and continuous learning
that support the growth of every
Mondi employee.
The Mondi Academy is our global learning
hub and drives collaboration across our
business through expert communities,
functional academies and a pool of internal
trainers. Employees have access to tailored
digital learning tools.
A culture of feedback and proactive
exchange on an individual’s strengths
and areas for improvement supports
each employee’s personal development.
Performance and Development Reviews
(PDRs) and 360° feedback mean employees
and their managers can reflect on individual
performance and set goals.
Performance
2022
2021
This year at a glance
Continued with multiple people development initiatives, including
the Mondi Academy, Talent and Graduate programmes, Performance
and Development Reviews, and Individual Development Plans
Individual Development Plans (IDP)
are a tool for employees to reach their
short- and long-term goals by setting a
development path according to individual
needs. This offers the specific skills required
to grow in their career. Many employees
also participate in performance-related
pay schemes that reward employees for
meeting business objectives. We also have
long service and recognition awards.
We use other formal and informal
processes to communicate and engage
with employees. This includes an intranet,
local sessions on safety, operational
objectives and the Mondi Way, and
a Group-wide employee survey that is
conducted approximately every two years.
There are a number of performance-related
pay schemes that reward employees for
the pursuit and achievement of business
objectives, in which the majority of our
employees participate.
The Mondi Way
Page 14
Stakeholder engagement
Page 32-33
Key initiatives and progress in 2022
— We have a strong talent pipeline, with
initiatives such as NEXGEN, job shadowing,
mentoring and coaching helping people
to gain experience in preparation for future
positions.
— The International Graduate Programme
started in 2022 and develops future leaders
by offering them experience across different
locations and departments.
— Our Customer Experience Academy
was piloted this year for employees
in customer-facing roles. It helps them to
understand the customer life cycle – from
creating business, to growing business
and solving problems.
— The Mondi Diamond Awards recognise
excellence across our operations. A record
number of 118 teams submitted entries
in 2022.
— All employees are encouraged to
participate in upskilling programmes
offered by the Mondi Academy and
local operations. In 2022, new methods
of learning made available for employees
included e-learning modules, e-books,
audio learning and language apps. In total,
employees and contractors across
Mondi completed 443,000 training hours
(2021: 425,000), including 49% of hours
dedicated to safety training.
42 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Created by Empowered People continued
Commitment: Provide purposeful employment for all our employees in a diverse and inclusive workplace
Target
Achieve 90% Purpose Satisfaction
score in our employee survey
Achieve 90% Inclusiveness score
in our employee survey
Performance
2022
2021
This year at a glance
Around 2,600 employees had the opportunity to share their views
on topics relevant to their local context in pulse surveys in 2022
Group-wide survey will be conducted in 2023
Employ 30% women across Mondi
Women employed increased to 22% (2021: 21%)
We focus on inclusive recruiting initiatives to attract a diverse range of talents
We support our employees
to realise their individual purpose
and contribution to Mondi’s purpose
by promoting a diverse and inclusive
work culture. A diverse workforce is
responsive to local contexts, changing
environments and different customer
needs. Inclusive workplaces foster
belonging among employees.
At Mondi, a diverse and inclusive workplace
means understanding, accepting and valuing
differences between people including those
of different races, ethnicities, genders, ages,
religions, disabilities, and sexual orientations,
with differences in education, personalities,
skill sets and levels of experience. We
consider all applications for employment
in a fair and balanced way, based on
capabilities, skills and experience.
We are committed to offering consistent
and fair training, career development
and promotion, including for people with
disabilities, as outlined in our Labour and
Human Rights Policy. At our Group office
in Vienna, we have partnered with MyAbility,
a social business which brings together
companies and people with disabilities
to foster a more inclusive workplace.
If an employee suffers a life-altering injury
at work, we facilitate appropriate medical
treatment and ongoing rehabilitation, and
support their continued employment by
finding alternative equivalent jobs for them,
where required.
The shift across Mondi towards creating
a diverse workforce and inclusive culture
involves everyone, at every level. Three
members of Mondi’s Executive Committee
are on the D&I Steering Committee along
with the Group Communication Director,
with one Business Unit CEO as the Steering
Committee Chair. The Committee serves
as a sounding board and advisory panel,
providing management attention, buy-in
and support for global D&I initiatives.
Attracting female candidates
Mondi Dynäs (Sweden) filled 36% of open positions
with women in 2022, and attracted female applicants
to 85% of the jobs advertised through an inclusive
recruiting project seeking to address the under-
representation of women working in our plants.
The almost triple increase in female applicants
compared to 2021 was achieved by modernising
every step of the recruitment process and
job requirements to have a broader appeal
to women.
Key initiatives and progress in 2022
— In 2022, our Group-wide employee
survey was redesigned to better listen
to employee views and new questions
included for a Mental Wellbeing Index.
The redesigned employee listening
journey was kicked-off with pulse surveys
in some locations, with around 2,600
employees invited to provide their views
on topics addressing purpose satisfaction,
inclusiveness and wellbeing.
— In 2022, 22% of Mondi employees were
female (2021: 21%). To achieve our goals
from a 2020 baseline, four out of every
10 new hires will need to be women.
The rate of female hires in 2022, totalling
31%, signals that we need to keep working
on becoming an attractive employer
for women.
— Mondi has been named as a top Diversity
Leader 2023 in Europe by the Financial
Times and Statista.
— The female representation on our
Executive Committee is 25% (2021: 33%),
with female direct reports to the Executive
Committee of 25% (2021: 30%) and three
(33%) female directors (2021: 44%) on the
Mondi Board.
Nominations Committee
Page 107-111
Gender diversity 2022
Male
% Female
%
Directors
6 67%
3 33%
Senior managers*
238 76%
75 24%
Employees
17,142 78% 4,848 22%
* As at 31 December 2022. Senior managers as defined by
Mondi and including directors of all subsidiaries in accordance
with the definition set out in Section 414C of the UK
Companies Act 2006
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
43
Commitment: Create an environment that enables a positive work-life experience,
valuing our safety, health and mental wellbeing
Target
Zero fatalities
Zero life-altering injuries
15% reduction of Total Recordable
Case Rate1
Support our employees in pursuit
of a work-life experience that
enhances their wellbeing
Our operations drive awareness
of and take measures to improve
health and mental wellbeing
Our MAP2030 commitments and core
values of performance, care and integrity
hold us accountable for creating
a working environment that values
safety, health and mental wellbeing.
Our people-centric safety approach
promotes a 24-hour safety mindset,
reinforcing an interdependent culture where
everyone looks after their own safety as well
as that of others. We are shifting our focus
from traditional safety (focusing mainly on
controls and physical elements) to addressing
Social Psychology of Risk (psychological and
cultural), to drive continuous improvement
in our safety performance and culture. We
use the lead and lag indicators to monitor
and improve our safety performance and
to address risks before an incident occurs.
Performance against these indicators forms
part of our senior managers’ bonus scheme
and they are revised annually based on the
previous year’s performance.
Our aim is to build the best possible working
environment, processes and structures
to enhance people safety and wellbeing.
We are developing flexible working models
and offering employees access to assistance
programmes and support, with a strong
focus on mental wellbeing.
1 The TRCR baseline for 2020 has been revised to 0.68, to
reflect our continuing operations. Our target of achieving
a 15% improvement by 2030 remains, and therefore the
objective for 2030 is revised to 0.58. To reflect our continuing
operations, our TRCR milestone for 2022 was also revised
from 0.60 to 0.66
Performance
2022
2021
This year at a glance
Tragically, a contractor was fatally injured at our Frantschach mill (Austria)
in August during manual handling work
In January, a contractor suffered life-altering injuries at our Warszawa
(Poland) Corrugated Solutions plant through contact with rotating
equipment. In April, an employee suffered a life-altering injury while
setting up a winder in Mondi Štětí (Czech Republic)
7.8% reduction of our Total Recordable Case Rate compared with
our 2020 baseline, and a 11.8% reduction since last year
Professional counselling accessible for 94% of our employees
Ongoing work regarding flexible working in various locations
A new Mental Wellbeing Index for our 2023 global employee survey was
developed. The index was tested in pulse surveys in various locations
After the fatality in our Frantschach mill this
past year, a full investigation into the event
and underlying causes was launched. Although
no systemic failures or management actions
were identified that could have prevented
the incident, it is a reminder that we can
never be complacent in prioritising safety.
Key initiatives and progress in 2022
— We have targeted a 15% reduction
in Total Recordable Case Rate (TRCR)
against our 2020 baseline. We achieved
a TRCR decrease of 11.8% compared
to 2021, equivalent to a 7.8% decrease
against our 2020 baseline.1
— Continued roll out of our Social
Psychology of Risk approach and tools.
— Implementation of a contractor safety
campaign, ‘Your Reason To Be Safe’, to
maintain a good safety performance and
prevent fatalities in Uncoated Fine Paper.
— Zero life-altering incidents during our
large capital expenditure projects and
annual shutdowns.
— Achievement of our Group safety lead
indicators.
— Our flexible work framework allows more
flexible working models for all colleagues.
A model was tested and proven successful
by Mondi Ružomberok (Slovakia) to allow
flexible start and end times to a working
shift, while fulfilling standard working hours.
Over 1,000 employees participated with
successful results.
— We continued to provide specialist
support through the Employee Assistance
Programme (EAP), with a focus on
awareness-raising campaigns on issues
such as stress, anxiety, fears, lost motivation
and sleeping problems.
What’s next in Empowered People?
— Roll out the updated employee survey to our global Group-wide employees
— Encourage a more inclusive leadership approach, with leaders as allies for
diversity and inclusion advocating for change
— Roll out further tools, initiatives and training programmes to embed Social
Psychology of Risk into the business. This will include safety training for safety,
health and environment (SHE) professionals and the development and roll out
of training covering the revised MICE methodology
— Revise Practice Notes to address our high risk activities and processes that have
been identified through risk assessments
— Focus on technical safety-related issues, including capital expenditure project
assistance programmes, and develop a technical safety handbook and standards
44 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
By investing in our energy-intensive
operations, driving more responsible
and sustainable practices, and setting
ambitious targets, we continue to
reduce our emissions and impacts
on nature.
TCFD
Page 48-57
Commitment: Reduce our greenhouse gas emissions in line with science-based Net-Zero targets
SASB
Target
Performance
2022
2021
This year at a glance
Reduce our Scope 1 and 2 emissions
by 46.2% by 2030 from a 2019 baseline*
Absolute Scope 1 and 2 emissions decreased by 16.9% compared
with our 2019 baseline, and 9.4% since last year
Reduce Scope 3 emissions
by 27.5% by 2030 from a 2019 baseline*
Absolute Scope 3 emissions decreased by 12.6% compared with
our 2019 baseline, and 5.1% since last year
Reduce Scope 1, 2 and 3 emissions
by 90% by 2050 from a 2019 baseline*
Absolute Scope 1, 2 and 3 emissions decreased by 15.0% compared
with our 2019 baseline, and 7.4% since last year
* Updated in 2022
SASB
We aim to reduce our GHG
emissions to play our part in
tackling the climate crisis. Our
near- and long-term science-based
Net-Zero targets have been validated
by the Science Based Targets initiative
(SBTi) in 2022 and are in line with
a 1.5°C scenario.
Our Scope 1 primary carbon impact occurs
through the combustion of fuels to generate
the energy required for our manufacturing.
Our Scope 2 emissions are related to
energy purchases. Our Scope 3 indirect
GHG emissions occur throughout the value
chain, predominantly from the purchase of
raw materials and fuels, and transportation
of supplies and products.
Actions to drive progress within our
operations across Scope 1 and 2 are:
— Continue to modernise our operations
and invest in energy and process
efficiency projects
— Increase share of renewables used
for energy generation
— Purchase electricity generated from
green energy providers
Our new Net-Zero targets accelerate our
existing ambitions to reduce our operational
GHG emissions across Scope 1 and 2,
replacing our science-based targets set in
2019. The new Scope 1 and Scope 2 GHG
emissions reduction target is measured
as a reduction in absolute emissions,
replacing our previous separate Scope 1
and Scope 2 emission reduction targets
which were emission intensity reduction
targets (per tonne of saleable production).
We have also set a Scope 3 target to tackle
GHG emissions across our value chain
and are working with suppliers, particularly
for raw materials and fuels, to reduce our
Scope 3 GHG emissions.
Actions to drive progress across our
value chain for Scope 3 are:
— Engage with strategic suppliers on their
reduction targets and transition plans and
collaborate with them in projects to reduce
their GHG emissions
— Replace carbon-intensive raw materials
— Improve the quality of our GHG emissions
data by obtaining primary data from suppliers
Key initiatives and progress in 2022
The following actions were taken during
2022 to meet our climate commitments:
— Approval of our new science-based
Net-Zero GHG reduction targets by the
SBTi in line with a 1.5°C scenario.
— Continued investment in our energy plants
to reduce GHG emissions (Scope 1),
increase self-sufficiency and improve
energy efficiency. This includes investing
€400 million in a new paper machine
at our Štětí mill (Czech Republic). This
investment in the modernisation of our
manufacturing facilities will reduce the mill’s
specific GHG emissions by more than 10%.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
45
— Long-term power purchase agreements
GHG emissions of our pulp and paper mills
(PPAs) with renewable electricity providers
can further increase our future renewable
electricity supply. We also invest in our
mills’ electricity self-sufficiency using
renewable sources, where feasible, to
reduce our Scope 2 emissions. The share
of renewable fuels used in our energy
plants increased to 80% (2021: 79%) and
our electricity self-sufficiency increased
to 81% (2021: 78%).
— In 2022, we decreased our total Group’s
Scope 2 emissions by 25.7% by securing
renewable electricity at our mills in
Dynäs (Sweden), Ružomberok (Slovakia),
Frantschach (Austria), Stambolijski
(Bulgaria) and Kuopio (Finland).
— We developed a roadmap for reducing
Scope 3 emissions including improved
data quality with actions particularly
focused on raw materials, fuel suppliers
and service providers.
In 2022, our performance included:
— GHG emission reduction of Scope 1
by 0.25 million tonnes and Scope 2 by
0.16 million tonnes compared to 2021.
This is a 9.4% decrease in absolute
Scope 1 and Scope 2 emissions and
a 16.9% reduction since a 2019 baseline.
Since 2004, we have reduced our absolute
Scope 1 and Scope 2 GHG emissions
by 3.0 million t CO2e, a 43.5% reduction.
Absolute Scope 1 emissions (million tonnes CO2e)
Absolute Scope 2 emissions (million tonnes CO2e)
Specific GHG emissions (tonnes CO2e per tonne
of saleable production)*
Specific Scope 1 emissions (tonnes CO2e per tonne
of saleable production)
Specific Scope 2 emissions (tonnes CO2e per tonne
of saleable production)
We report our GHG emissions according to the Greenhouse Gas Protocol, published by the WBCSD and the WRI, and have
reported our Scope 1 and 2 GHG data in compliance with ISO 14064:1-2006. ERM CVS has assured, to a reasonable level of
assurance, our 2022 absolute Scope 1 and absolute Scope 2 GHG emissions data, in accordance with ISO 14064-3.
* The specific GHG emissions of our mills per tonne of saleable production includes GHG emissions related to manufacturing
(0.45 t/t) and to energy sales (0.13 t/t)
Energy consumption of our pulp and paper mills
Energy consumed by pulp and paper core processes
in the form of heat and electricity at our operations
(billion kWh)
Energy purchased by our mills from external sources
(billion kWh)
Total electricity requirements for producing pulp
and paper (billion kWh)
Total heat requirements for producing pulp and paper
(billion kWh)
Energy sold to the local grids (billion kWh)
Total energy sales including green fuel sales (billion kWh)
SASB
% change
2021-2022
-6.9%
-27.0%
2021
3.6
0.45
2022
3.3
0.33
0.63
0.58
-7.5%
0.56
0.53
-5.2%
0.07
0.05
-25.6%
2021
2022
% change
2021-2022
19.7
19.7
0.2%
1.2
4.1
15.5
0.5
0.8
78%
1.2
-7.8%
4.2
2.7%
15.5
0.5
0.8
81%
-0.4%
-1.3%
6.2%
2.4%
— We reduced the Group’s Scope 3
Our mills’ electricity self-sufficiency**
** Including energy generated for sale
Energy consumption of Group (including converting plants and discontinued operations)‡
Total energy use (million kWh)
Energy purchased (million kWh)
Scope 1 emissions (t CO2e)
Scope 2 emissions (t CO2e)
2021
2022
Mondi
Group
UK
operations†
Mondi
Group
UK
operations†
41,589
1,852
3,715,327
630,254
–
–
40,913
1,701
– 3,469,849
–
468,036
–
–
–
–
† No UK production sites were operated in 2021 and 2022
‡ This table fulfils the Group’s Streamlined Energy and Carbon Reporting (SECR) disclosure requirements
emissions by around 183,000 tonnes
CO2e, which is a reduction of 5.1% against
last year and a 12.6% reduction against
the 2019 baseline of our short-term
Net-Zero target.
We participate in working groups and
partnerships to support our climate
ambitions. These include:
— UN Business Ambition for 1.5°C:
The world’s largest and fastest-growing
group of companies committed to taking
urgent climate action aligned with a 1.5°C
scenario and Net-Zero by 2050.
— World Business Council for Sustainable
Development (WBCSD): As a member
of the Forest Solutions Group, we
participated in the WBCSD/World
Resources Institute technical working
group and advisory committee to develop
the new GHG Protocol Land Sector
and Removals Guidance.
46 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate continued
Commitment: Maintain zero deforestation in our wood supply, sourcing from resilient forests
Target
Maintain 100% FSC certification
in our own forest landholdings
100% responsibly sourced fibre with 75%
FSCTM-/PEFC-certified fibre procured
by 2025 and the remainder meeting
the FSCTM Controlled Wood standard
Implement leading forestry measures
to ensure productive and resilient forests
Sustainable working forests have a
critical role in addressing the climate
crisis and in securing long-term
benefits for society and landowners.
They are central to our business
to produce sustainable paper and
packaging solutions.
We have an opportunity to lead in our
South African forestry operations by
developing best practice to promote forest
growth and resilience. In central Europe,
where we source the majority of our wood
fibre, we work with partners to catalyse
change at scale.
Our sustainable forest management
practices and the development of resilient
forest landscapes are enabled by:
— Collaborating with scientific and other
partners
— Engaging with suppliers and forest owners
— Scaling up and developing forest
certification
Performance
2022
2021
This year at a glance
In 2022, FSC certification in our South African forestry landholdings
maintained and PEFC certification implemented
The share of certified wood procured for all mills was 75.4%
Continued implementation of best management practices
in our South African plantation forestry, supporting improved
growth and reducing disturbances
In 2022, we completed the Forest Risk
Map for Central and Eastern European
coniferous forests to support strategic
forest management planning. The study
highlights regions which might be more
susceptible to climate change impacts.
Our partnership with the International Union
of Forest Research Organizations (IUFRO)
aims to improve understanding of climate
change impacts and challenges for forests.
In 2022, we organized two events engaging
with representatives from the forest value
chain, focusing on the roles of forest
management, policy, industry and science,
to address future and diverse demands on
forests.
We believe FSC and PEFC certification play
an important role in supporting sustainable
fibre sourcing in the long term, and we work
with these organisations to continue to
improve their effectiveness.
SASB
Key initiatives and progress in 2022
— In South Africa, we successfully
maintained FSC and ISO 14001
certifications and introduced PEFC
certification of the forestry and
environmental management systems
at over 250,000 hectares of our
landholdings.
— Since 2020 the proportion of certified
wood has increased by 2% in the context
of an overall increase of wood supply
volumes by 5%. In 2022, we procured
14.5 million m3 of wood fibre of which
100% was responsibly sourced, with 75%
FSC- or PEFC-certified and the remaining
meeting the FSC Controlled Wood
standard.
— Forest fires are the main threat to forests
in our landholdings in South Africa.
We have a tree improvement programme
and silviculture techniques to maintain
healthy, resilient and productive tree
plantations, along with a robust fire
management system.
— We are a member and co-chair of the
WBCSD Forest Solutions Group (FSG)
and supported the development of a
Forest Sector Nature-Positive Roadmap,
to define ‘nature positive’ for the forest
sector.
Procurement
Page 62-63
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
47
Commitment: Safeguard biodiversity and water resources in our operations and beyond
Performance
2022
2021
This year at a glance
To date assessments have been completed for 38% of our mills
and forestry operations
All assessments were finalised in 2021. To date action plans have been
developed for 46% of our mills and forestry operations
— Mondi South Africa’s forestry operations
initiated the first phase of the biodiversity
action plan that was agreed in 2021.
GRI Biodiversity download
www.mondigroup.com/en/sustainability
— We continued to work in partnership with
the Endangered Wildlife Trust’s National
Biodiversity and Business Network
to further improve our biodiversity
management system and to pilot the
Biological Diversity Protocol.
Key initiatives and progress in 2022
— We successfully started a project to
install an additional anaerobic wastewater
treatment plant at our Ružomberok mill
(Slovakia).
— We conducted water stewardship
assessments against our Group Water
Stewardship Standard for the mills in
Ružomberok (Slovakia), Štětí (Czech
Republic) and Świecie (Poland) and
developed action plans for water
stewardship. To date, we have assessed
38% of our mills and forestry operations.
— We conducted an assessment to identify
water reduction opportunities at our
mill in Richards Bay (South Africa) and
established water reduction projects,
such as increasing water reuse in the mill.
— We assessed and developed biodiversity
action plans for three mills, located in
Frantschach (Austria), Richards Bay
(South Africa) and Kuopio (Finland).
To date, we have assessed 46% of our
mills and forestry operations.
Target
Conduct water stewardship assessments
at our mills and forestry operations
by 2025, and implement required
actions to address the findings by 2030
Conduct biodiversity assessments
at our mills and forestry operations,
introducing biodiversity action plans
where necessary by 2025
Water and biodiversity are
fundamental to ecosystem resilience.
In the forest sector, the most
significant biodiversity and water
impacts occur in forestry landscapes
and primary processing facilities.
We are committed to conducting
biodiversity and water stewardship
assessments for our forestry operations
and mills, so that we can manage our
impacts and dependencies on nature
and support healthy ecosystems
around our manufacturing sites and at
a landscape level. Our approach includes
the implementation of biodiversity action
plans and water impact assessments, and
we have enhanced our collaboration with
local environmental NGOs and scientific
institutions to support these actions.
Water stewardship is a priority, particularly
in water-stressed and water-scarce regions.
Our approach includes assessing and
managing our own water-related risks and
conducting basin- and production-related
water stewardship assessments.
We manage our water impacts by reducing
water use and increasing water recycling
and reuse. This includes modernising our
wastewater treatment facilities at our mills,
to treat and return our waste water without
negatively impacting water quality and
water recycling.
What’s next in Taking Action on Climate?
— Continue to develop and implement our biodiversity action plans and
water stewardship assessments across our operations
— Continue to develop metrics to measure our impacts on biodiversity
and ecosystems
— Invest in projects that help to achieve our science-based Net-Zero GHG
reduction targets and improve our sustainability performance
— Scale up our engagement with our suppliers and service providers,
such as logistics companies, to drive progress on Scope 3 emissions
48 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate: TCFD
We are committed
to reducing our carbon
emissions and have been
taking action across
our operations for nearly
two decades.
Our TCFD journey
Investing in our energy-intensive operations,
driving more responsible and sustainable
practices and setting ambitious targets
has paved the way for our success over
a number of years and sets a platform for
our future plans and investments as we
continue our drive to transition to a circular
economy and further reduce our emissions.
We recognise that the impact of climate
change gives rise to physical and transition
risks. We also recognise clear opportunities
for our business to drive value accretive
growth with sustainability at the centre
of our strategy.
The Intergovernmental Panel on Climate
Change (IPCC) has made it clear that the
world has reached ‘Code Red’1 when it
comes to global warming. Every business
has a role to play in reducing greenhouse
gas (GHG) emissions. At Mondi, we are
striving to reduce our emissions in line with
a 1.5°C scenario by committing to achieve
Net-Zero GHG emissions reduction targets
by 2050. In 2022, the Science Based Targets
initiative (SBTi) assessed and validated our
targets as science-based Net-Zero targets.
The Financial Stability Board’s Task Force
on Climate-related Financial Disclosures
(TCFD) recommendations facilitate clear
disclosure of our governance, strategy, risk
management and metrics and targets in
relation to our climate change-related risks
and opportunities, enabling transparent
disclosure on how we are taking action
on climate.
The timeline below shows how we have
integrated the TCFD recommendations into
our journey of taking action on climate, and
how we have reduced our emissions since
setting our first Group-wide GHG reduction
target in 2005 against a 2004 baseline.
We strive to build on our assessment of
the Group’s climate change-related risks
and opportunities, enhance the quality of
our scenario modelling and develop our
risk management and mitigation approach
throughout the Group.
1 UN Secretary-General’s statement on the IPCC Working
Group 1 Report on the Physical Science Basis of the Sixth
Assessment, 2021
Our journey of taking action on climate
2005
2018
2019
2020
2021
2022
2030
2050
1st Group-wide
GHG emission
reduction target
set in 2005 against
a 2004 baseline
Voluntary
disclosure in
line with TCFD
recommendations
Approval of
science-based
GHG reduction
targets by SBTi,
aligned with
a below 2.0°C
scenario
Climate change
risks identified as a
standalone Group
principal risk
‘Triple A’ CDP
score (Climate,
Forest, Water)
‘Triple A’ CDP
score (Climate,
Forest, Water)
Compliant
with TCFD
recommendations
First Sustainability
Linked Loan signed
CDP’s ‘A list’
(A score for water
and forests and
A- score for
climate change)
Approval of
science- based
Net-Zero targets
by the SBTi in
line with a 1.5°C
scenario
Compliant
with TCFD
recommendations
3.0 million tonnes of CO2e reduction
of absolute Scope 1 and 2 emissions (2004 baseline)
Long-term: Reduce absolute
Scope 1, 2 and 3 by 90% by 2050
Consistency statement
In line with the UK Listing Rules, we confirm that the disclosures included in the Integrated report and financial statements 2022 are consistent
with the four TCFD Recommendations and 11 Recommended Disclosures and All Sector Guidance. The table on the following page contains
the relevant disclosure locations.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
49
TCFD Recommendations and Recommended Disclosures
Disclosure location
Further information
Governance
a) Describe the Board’s oversight of climate-related risks and opportunities
Page 50
b) Describe management’s role in assessing and managing climate-related
Page 50
risks and opportunities
Strategy
a) Describe the climate-related risks and opportunities the organisation
Page 52-55
has identified over the short, medium, and long term
b) Describe the impact of climate-related risks and opportunities
on the organisation’s businesses, strategy, and financial planning
c) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
Page 51-52
Page 51-52
Risk management
a) Describe the organisation’s processes for identifying and assessing
Page 56
climate-related risks
b) Describe the organisation’s processes for managing climate-related risks
Page 56
c) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall
risk management
Metrics & Targets
a) Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management
process
Page 56
Page 56
b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions,
Page 45
and the related risks
c) Describe the targets used by the organisation to manage climate-related
Page 44
risks and opportunities and performance against targets
Corporate governance report
Page 92-123
Taking Action on Climate
Page 44-57
Principal risks
Page 72-81
Our strategy
Page 20-29
Taking Action on Climate
Page 44-57
Taking Action on Climate
Page 44-57
Our strategy
Page 20-29
Principal risks
Page 72-81
Principal risks
Page 72-81
Principal risks
Page 72-81
Key performance indicators
Page 30-31
Taking Action on Climate
Page 44-57
Environmental Performance
Page 58-59
Taking Action on Climate
Page 44-57
Taking Action on Climate
Page 44-57
Remuneration report
Page 124-151
50 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Governance
While the Board as a whole has
responsibility for overseeing our approach
to sustainability, the Sustainable
Development Committee, on behalf of
the Board, oversees and monitors our
sustainable development policies, practices
and progress against our sustainability
commitments and targets. It provides
guidance in relation to sustainability
matters, including climate change-related
issues, reviewing and updating the Group’s
framework of sustainability policies and
strategies, ensuring they are aligned with
global best practice.
The Sustainable Development Committee
met seven times during 2022, with climate
change-related matters discussed by the
committee at the majority of these meetings.
Every Board member attends each
meeting of the Sustainable Development
Committee, even if they are not a member
of the committee, providing context for
Board discussions.
The Chair of the Sustainable Development
Committee also reports back to the Board
after every meeting. Further details on the
experience of our Sustainable Development
Committee members can be found on
pages 88-89.
Progress against our sustainability
commitments and targets, articulated
through MAP2030, was an integral part of
the Sustainable Development Committee’s
agenda throughout the year, with each of
the key action areas reviewed and focus
given not only to the current status of each
commitment, but also to the actions being
taken towards achieving these commitments.
Further details of our performance in this
regard can be found on pages 44-47.
Alongside this, the Sustainable
Development Committee also spent time
considering the climate change-related
risks and opportunities facing the Group
in the context of the recommendations
of the TCFD. Read our Board members,
biographies for more information on the
sustainability experience.
Each risk and opportunity was reviewed
and discussed, considering in particular
the potential impact in each case.
The Sustainable Development Committee
acknowledges that this is an iterative process,
with the quantification of the financial
impact and the methodologies applied
being continually refined, and that these
discussions support the development of the
committee’s understanding of these risks and
opportunities and provide context not only for
Mondi’s plans for addressing climate change
but also for its wider decision-making.
During 2022, the Sustainable Development
Committee also addressed a number
of other key matters including safety
performance and serious incidents,
sustainable development governance
and risks, environmental performance
and climate change, forestry, stakeholder
relationships, product stewardship,
responsible procurement and people
development and diversity. Further details
on the key matters considered by the
Sustainable Development Committee
during the year can be found on page 123.
Our Sustainability Governance Framework
Mondi Board
SD Committee
Chaired by an
independent
non-executive
director
Executive
Committee
Chaired by the
Group CEO
Other Board committees
Chaired by independent non-executive directors
Group functions
and network
Audit Committee
Remuneration
Committee
Oversees the Group’s
sustainability approach,
policies, performance
and commitments
Responsible for
the governance
of matters related to
environment, climate
change, labour, human
rights, biodiversity and
product stewardship
Ensures alignment with
global best practice
Management
responsibility
for sustainability
performance within
operations guided by
the SD Committee
Ensures that business
unit line management
holds primary
responsibility and
accountability for
sustainability
performance
e
s
o
p
r
u
P
s
e
i
t
i
l
i
b
i
s
n
o
p
s
e
R
Oversees the Group’s
corporate financial
reporting, the internal
control system, risk
management and the
relationship with the
external auditor
Oversees the Group’s
corporate financial
reporting, including
ESG disclosures
Oversees the
risk assessment
process, including
sustainability risks
Monitors the
effectiveness of
the internal control
systems, including in
the SpeakOut
platform
Responsible for
ensuring that our
incentive arrangements
drive the appropriate
behaviours that deliver
our strategy
Provide expert
insights and support
to business on
specific sustainable
development matters
Specifically in relation
to our sustainability
agenda, aligns
remuneration to
performance against
key focus areas
of MAP2030
Sustainable
development, legal,
human resources,
communications,
procurement, internal
audit and global
specialist networks:
safety and occupational
health; social
sustainability; energy;
fire safety; environment;
product stewardship;
kraft recovery boiler;
wood supply
Business unit and operational level responsibilities
Management frameworks including Sustainable Development Management System, Corporate Governance Code,
other management systems, policies, standards and externally verified certification
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
51
Additional governance oversight is provided
by the Audit Committee and Remuneration
Committee. The Audit Committee oversees
the Group’s corporate financial reporting
and annual planning process, which include
sustainability-related metrics, and the
Group’s risk assessment process, which
includes climate change risks. Details on
the key matters considered by the Audit
Committee during the year can be found
on page 113. The Remuneration Committee
is responsible for ensuring that our incentive
arrangements drive the appropriate
behaviours that deliver our strategy,
including the alignment of remuneration
to performance against our MAP2030
key focus areas. Details on the key
matters considered by the Remuneration
Committee during the year can be found
on page 128.
The Executive Committee, chaired by the
Group CEO, and operational management
teams consisting of senior executives
from across the Group, monitor our
approach to sustainability. The Executive
Committee regularly reviews progress
against our sustainability commitments and
targets. In addition, all papers and updates
prepared for the Sustainable Development
Committee, including those relating to
climate change, are reviewed and discussed
by the Executive Committee, prior to
submission to the Sustainable Development
Committee, allowing the Executive
Committee to develop its understanding
and awareness of sustainability matters
and to provide relevant input.
The Group Technical & Sustainability
Director and the Group Head of
Sustainable Development are responsible
for coordinating actions related to the
Group’s climate change-related risks
and opportunities and providing reports
to the Executive Committee to enable
it to discharge its responsibility.
Strategy
Sustainability is at the core of Mondi’s
strategy and we have a long-standing
focus on becoming less carbon intensive.
Since 2004, the baseline year for our first
Group-wide GHG target, we have reduced
our absolute GHG emissions by 3.0 million
tonnes CO2e, which is a 43.5% reduction.
This has been achieved through targeted
investments to reduce our reliance on fossil
fuels and a focus on improving energy
efficiency across our operations.
We believe that we have the right
strategy, including our climate transition
plan to Net-Zero by 2050, to address
the challenges and opportunities arising
from climate change.
We recognised that there are many
uncertainties around the potential impacts
of climate change and continue to enhance
the quality of our scenario modelling
to further understand these impacts.
We consider that based on our current
understanding, our strategy is resilient.
The Group’s climate change-related risks
and opportunities are routinely considered
in our strategic and financial planning, our
capital allocation decisions and our operational
management. Climate change risks have
been identified as one of our strategic
principal risks and are reflected in our
accounting policies and financial reporting.
The impact of climate change is considered
in the estimates of future cash flows used
in the impairment assessment of goodwill,
as detailed on page 191-192. Climate change
is, as detailed on page 193-194, included as
a factor that impacts the conversion factor
used in the assumptions for valuation
of the Group’s forestry assets and as a
factor incorporated into the risk premium
applied to mature and immature timber.
Climate change was considered in the
assessment of fair value of assets and
liabilities acquired in business combinations,
as detailed on page 208.
The Group accounting policies reflect the
impact of climate change considerations
in relation to the assessment of the residual
values and estimated useful economic
lives of property, plant and equipment, as
detailed on page 225, and in relation to the
accounting policy applied for the valuation
of forestry assets and the assessment of
goodwill for impairment.
The Group’s €750 million five-year revolving
multi-currency credit facility agreement
(RCF), entered into in 2021, incorporates
key sustainability targets linked to MAP2030,
classifying the facility as a Sustainability
Linked Loan. Linking our access to capital
to our sustainability targets reflects our
commitment to meeting our strategic
sustainability targets.
Energy-related investments can drive
decarbonisation and enhance our asset
base. For nearly two decades, GHG
emission reduction targets have been
central to our approach as a manufacturer
with energy-intensive processes and to our
strategy for delivering sustainable growth.
Our current commitments, outlined in
MAP2030, build on the progress we have
achieved so far and set ambitious targets
into the future.
Our investments aim to optimise energy
and process efficiency and replace
fossil fuel-based energy with renewable
sources. Since 2015, we have invested
around €650 million in energy efficiency,
including the rebuild of a recovery boiler
at our Richards Bay site (South Africa) and
installation of energy-efficient back-up
boilers at our mill in Świecie (Poland).
These projects evidence our continuous
drive to improve our environmental
performance and operate sustainably
by investing through the cycle in our
production network.
Enhancing our
understanding of
scenario modelling
In 2022, we participated in a project
lead by the World Business Council for
Sustainable Development (WBCSD) to
develop a scenario analysis tool, referencing
commonly agreed scenarios for the Food,
Agriculture and Forestry sectors.
Going forward, we plan to utilise this
tool, launched in late 2022, to support
us to evolve our understanding of climate
change-related impacts on our business
and consider the impact of climate scenarios
on our risks and opportunities. We support
this type of initiative, which provides the
opportunity to engage and collaborate with
peers in our industry to address challenges
relating to climate change modelling, and
support the formation of best practices
and enhanced comparability.
52 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Strategy continued
We identified seven climate change-related
risks and three climate change-related
opportunities that we have assessed
as material to our business. Materiality
considers both financial impacts and other
considerations such as the importance of
key climate change-related topics to internal
and external stakeholders. Further details on
our approach to materiality are detailed on
page 36. For additional information, please
visit our Sustainable Development report.
We evaluate and report on our short-
(up to 3 years), medium- (3-7 years) and
long-term (more than 7 years) climate-related
transition and physical risks and opportunities,
and their financial implications.
Transition risks may occur when moving
towards a less polluting, low carbon
economy. Such transitions could mean
that some sectors of the economy face
big shifts in asset values or higher costs of
doing business. Climate change means we
may face more frequent or severe weather
events like flooding, droughts and storms.
These events bring physical risks that impact
our business and society directly and have
the potential to affect the economy.
The TCFD recommends applying widely
used reference scenarios that are publicly
available and peer reviewed. For 2022,
our assessment of the financial implications
of our climate change-related risks and
opportunities was prepared considering
1.5°C, 2°C and business-as-usual (BAU)
scenarios.1, 2 We have added the additional
1.5°C scenario in order to align our climate
change-related risks and opportunities
assessment with our Net-Zero commitment.
Physical risks and opportunities are considered
more severe under the BAU scenario, as under
this scenario, physical climate change-related
events will be more frequent and severe
with an increased likelihood of impact on our
business. Under the 1.5°C and 2°C scenarios
we still observe some impacts of physical
climate risks. Our mitigation measures are
designed to reduce the impact of these risks
under the three presented scenarios.
In contrast to physical risks, transition risks
and opportunities increase in likelihood under
the 2°C scenario compared with BAU, with
earlier policy action and a more aggressive
transition, and are further amplified under the
1.5°C scenario. This is driven by an increase
in stricter regulations around carbon and
energy as well as the increased scrutiny
of target achievements through increased
market and customer pressure.
Given the nature of transition risks, the
likelihood of occurrence is lower under
the BAU scenario, as there is limited
change projected to current regulation
and litigation pressures.
During the year, we assessed our climate
change-related risks and opportunities
and have specified the estimated financial
impact, outlining a potential reduction in
operating profit for risks and a potential
increase in operating profit for opportunities,
as disclosed in the tables below and on
pages 53-55, taking into consideration
mitigation measures implemented by the
Group. These risks and opportunities only
reflect our climate change-related risks
and opportunities and reflect an update of
the risks and opportunities presented in our
2021 Integrated report and our 2022 CDP
submission. For an overview of all our Group
principal risks, please refer to page 74.
1 The International Energy Agency’s 2°C scenario is based
on limiting global temperature rise to below 2°C above pre-
industrial levels under an emissions trajectory that allows CO2
emissions to be reduced by almost 60% by 2050 compared
with 2013. Under this scenario emissions are projected to
decline from 2020 and they continue their decline after 2050
to reach carbon neutrality
2 The Representative Concentration Pathway’s 8.5 (RCP8.5)
scenario is a business-as-usual (BAU) scenario, which
projects the global mean temperature to rise by 2.6 to 4.8°C
and the global mean sea level to rise by 0.45 to 0.82 metres
by the late-21st century
Climate change-related risks and opportunities
Timeframe
Scenario sensitivity
Short Medium Long
1.5°C
2°C
BAU
Climate change-related risks
Physical risks
1. South African plantation yield loss
2. Chronic changes in precipitation
3. Higher wood procurement costs
4. Risk of flooding
Transition risks 5. GHG emissions regulatory changes (net impact)
6. Energy supply costs
7. Asset impairment risk
Total climate change-related risks
Climate change-related opportunities
1. Sale of by-products
2. Reduced operating costs through energy efficiency
3. Changing customer behaviour
Total climate change-related opportunities
Estimated
financial
impact (€m)
15-20
10-15
100-200
15-85
35-110
90-200
10-30
275-660
10-15
15-25
120-240
145-280
Anticipated onset
of risk or opportunity
Estimated full impact
of risk or opportunity
High likelihood
Low likelihood
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
53
Estimated
financial
impact
(€m)
15–20
Climate change-related risks: Physical risks
Risk
Risk description
How we manage and mitigate this risk
1.
South African
plantation
yield loss
Timeframe:
Medium-term
2.
Chronic changes
in precipitation
Timeframe:
Long-term
3.
Higher wood
procurement
costs
Timeframe:
Long-term
4.
Risk of
flooding
Timeframe:
Long-term
Increased severity and frequency of extreme
weather events may result in disruptions and
decreased harvesting capacity of our managed
plantation forests in South Africa. Extreme weather
conditions may impact plantations through
sustained higher temperatures, which can lead to
stronger winds and increased windfalls. Plantations
may be vulnerable to changes in rainfall patterns
and erosion. Higher temperatures may increase
vulnerability of trees to pests and diseases.
Fire remains a challenge for our South African
plantations, exacerbated in years when drought
conditions occur.
Water is a key natural resource used in our
production process. Extended water shortages
are a concern as they could disrupt production at
our operations. This is especially relevant in water
scarce regions and locations dependent on small
catchment areas. Water supply is identified as a
risk at our Richards Bay (South Africa), Frantschach
(Austria) and Stambolijski (Bulgaria) mills. Our risk
quantification considers mitigation measures in
place at the mills and is based on lower production
at the mills as a result of water shortages.
Temperature increase, changes in rainfall patterns
and windstorms can result in large-scale forest
damage. In Europe, at lower altitudes, fibre losses
from pests (e.g. bark beetles) and diseases are
expected to continue unless precipitation increases.
A reduction in the cutting capacity of the sawmilling
industry due to a lack of spruce saw logs could lead
to a change in the mix of available pulpwood and
sawmill chips.
Increasing competition for wood is being driven
by demand for renewable raw materials and timber
for green energy generation to achieve EU GHG
reduction and Net-Zero targets. At the same time,
there is a call to increase forest areas set aside for
conservation.
Our mills are often located close to rivers which
provide the water needed for our operations.
Climate change may increase the frequency and
extent of flooding events through surface water
flooding (e.g. after extreme rainfall or rapid snow
melting) or flooding of low-lying coastal regions
(due to sea level rise) which may cause damage
to our operations.
While taking into account the investments we have
made at our operations to mitigate the potential
impact of flooding, our risk quantification has been
updated to consider mill downtime due to wider local
infrastructure damage in the event of a significant
flooding event. The update has been informed following
the significant flooding in Durban (South Africa) in
April 2022 which impacted our Merebank mill.
Our tree improvement programme aims to
produce stronger, more robust trees that can resist
disturbances such as drought, pests and diseases.
We mitigate fire risks with naturally vegetated open
corridors acting as fire-breaks between forest
plantations, investment in a firefighting fleet and
efficient logging site management.
We have improved pre- and post-burning
assessments at harvesting sites. These aim to
mitigate the risks of erosion and nutrient loss after
prescribed burning to ensure healthy soils, which
are critical for productive plantation forests.
10–15
We conduct water stewardship assessments
and develop methods to significantly reduce water
use by implementing closed loops and recycling
water used in our processes. We continue to
investigate cost-effective improvements to local
water management systems. We work with local
authorities and other industries to identify solutions
to enhance water stewardship around our mills.
100-200
15-85
In mountainous regions, we expect an increase
in yearly forest growth due to rising temperatures.
At lower altitudes, spruce will be mainly replaced
with other softwood species. We are investigating
alternatives to support flexibility in species mix for
our future pulp production.
We invest in research and development projects
and are building strategic partnerships with
forest owners and industries, NGOs and scientific
institutions to foster sustainable forest management.
This is supported by the sustainable working forest
model and fit-for-purpose certification concepts,
which we developed and promote with our partners.
We have started to explore approaches to climate-
fit forestry to enhance forest ecosystems’ resilience.
We also promote the cascading use of wood
nationally and via Cepi on a European level.
Our operations regularly review their flood
prevention plans, collaborate with governments and
hydropower energy providers in the regions where
we operate and invest in flood protection solutions
where necessary.
Our current flooding assessments show the
measures implemented are generally sufficient to
mitigate this risk to an acceptable level, with only
a few additional measures required such as the
elevation of motors and vulnerable equipment,
additional pumps and water-level sensors.
Our geographic diversification enables operational
flexibility to meet customer orders if flooding were
to occur at a mill.
54 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Strategy continued
Climate change-related risks: Transition risks
Risk
Risk description
How we manage and mitigate this risk
Estimated
financial
impact
(€m)
35-110
We collect detailed information on GHG emissions
from our mills and consider the cost of carbon when
making investment decisions.
Our ongoing investments reduce our reliance on
fossil fuels, improve energy efficiency and help to
mitigate the risk of insufficient CO2 allowances
for our EU-based operations, and reduce CO2
emissions for our South African operations.
90-200
We continue to focus on energy efficiency and
to deliver incremental improvements through
operational enhancements and our ongoing capital
investment programme. Biomass accounts for
around 80% of our mills’ fuel needs, with only around
10% of our fuel sourced from natural gas. This has
been made possible through significant investments
over a number of years in making our facilities more
energy efficient and increasing backward integration,
primarily into biomass-based energy generation.
Investment in improvements to our energy profile
and increased electricity self-sufficiency, including
the use of renewable energy sources, strengthens
the energy efficiency of our operations while
reducing operating costs. Where we generate
electricity surplus to our own requirements,
we may sell such surplus.
10-30
The Group aims to keep abreast of new and
evolving regulation and takes actions to mitigate
the impact of changes either in our own operations
or through participation in cross-value chain
partnerships. We also have the resources and
capacity to accelerate low-carbon energy-related
investments to achieve base load capacity in
the instance of regulatory and/or other required
changes.
5.
GHG regulatory
changes
(net impact)
Timeframe:
Medium-term
SASB
6.
Energy supply
costs
Timeframe:
Medium-term
7.
Asset impairment
risk
Timeframe:
Long-term
Including the recently acquired Duino mill in Italy,
ten of Mondi’s 13 pulp and paper mills fall under the
EU Emissions Trading Scheme (EU ETS). Some of
our mills have sufficient EU ETS allowances, while
there is potential that five will face a deficit in the
medium term, and three could be excluded from
receiving EU ETS allowances due to exceeding
a 95% renewable energy generation share, resulting
in the potential for the Group to be in a net deficit
position. There is a South African carbon tax on
emissions from fossil fuels, which includes fossil
fuel combustion at our Richards Bay and Merebank
operations; however, this is currently offset by our
forestry-related sequestration allowance. Our risk
quantification considered an EU ETS carbon price
range of €50 to €150 per tonne CO2.
Due to increasing regulation on fossil-based energy
sources, increased demand for renewable energy
and the shifting energy supply mix, the Group
estimates that our total energy costs could increase
sharply in the medium term, estimated by up to
10-20%.
In the medium- to long-term, the energy supply
mix transition in Europe includes the closing
of coal-fired power plants, selective closure of
nuclear power capacity and increased reliance on
renewable sources of energy such as onshore and
offshore wind, solar and biomass. Wind and solar
energy supply can be inconsistent due to weather
patterns leading to reliance on fossil fuels during the
energy transition period.
The energy supply cost risk does not consider
fluctuations in energy prices due to geopolitical
or other non-climate related factors.
Driven by evolving regulation, there is a risk that
certain of the Group’s assets may be susceptible to
impairment if regulations require fossil-based energy
plants to be decommissioned by a certain date.
Our risk quantification considers the estimated
carrying value of fossil fuel-based energy plants
in our mills based within the EU at 2030 and their
potential impairment. An impairment is a one-
off write-down of an asset. The mill’s remaining
carrying value is excluded from our quantification
as our medium- to long-term capital investment
programme aims to replace fossil fuel-based energy
with renewable sources.
Total estimated financial impact of climate change-related risks
275-660
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
55
Estimated
financial
impact
(€m)
10-15
15-25
120-240
Climate change-related opportunities
Opportunity
Opportunity description
How we realise this opportunity
1.
Sale of
by-products
Timeframe:
Short-term
2.
Reduced
operating costs
through energy
efficiency
Timeframe:
Medium-term
3.
Changing
customer
behaviour
Timeframe:
Short- to
long-term
By-products of the kraft pulping process include
turpentine and tall oil. These renewable by-products
are highly valued as substitutes for fossil fuel-based
materials. They can be used internally for energy
generation or extracted, purified and sold as higher
value secondary raw materials.
We are investigating additional opportunities to use
other by-products (e.g. lignin from black liquor and
eucalyptol extraction) to create additional revenue
streams in the future.
The production of pulp, paper and packaging
is energy-intensive and energy generation is the
major source of our GHG emissions. By improving
the efficiency of our energy plants and manufacturing
operations, we have the opportunity to realise
cost savings.
The growing demand for sustainable packaging
is driving investment, collaboration and innovation
to meet evolving customer needs. Paper-based
packaging is renewable and generally recyclable
making it an ideal alternative to less sustainable
solutions. Where certain barriers are required, flexible
plastic packaging can be an ideal solution when
manufactured, used and disposed of appropriately.
Leveraging our unique platform of paper where
possible, plastic when useful, we see an opportunity
to meet the demand for more sustainable products,
using our leading corrugated packaging and flexible
packaging footprint and increasing the focus on
recyclability and the amount of recycled content
used within our solutions.
While we continue to enhance our understanding
around this opportunity, our estimated quantification
is based on revenue growth of 1-2% per annum for
our packaging businesses in the long term.
The extraction and sale of renewable by-products
from the kraft pulping process is part of our circular
economy approach. We continue to invest in our
mills to realise this opportunity, which is dependent
on the existing infrastructure.
Investing in optimising energy and process
efficiencies in our operations has been
a long-standing focus.
Since 2015, we have commissioned capital
investment projects of around €650 million in
energy efficiency measures and in increasing
biomass-based energy in our mills.
Further investment projects are planned to
meet our science-based Net-Zero GHG emission
reduction targets over the coming years, which is
also expected to reduce our specific energy costs
and improve energy efficiency.
As a leading packaging producer, Mondi is uniquely
positioned to leverage the Group’s innovation
capabilities, leading market positions and strong
customer base to deliver sustainable packaging
solutions to our customers.
We actively collaborate with customers using our
customer-centric approach to develop innovative
solutions that are sustainable by design.
We are also investing in our asset base to increase
our cost-advantaged packaging capacity to meet
growing demand.
We are leveraging strong partnerships to bring
about positive change and drive the transition to
a circular economy.
Total estimated financial impact of climate change-related opportunities
145-280
56 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Risk management
Climate change was specifically identified
as a standalone Group principal risk in 2019
and remains a principal risk, as detailed
on page 77. Climate change risks, and the
related mitigating actions, are reviewed
and updated annually using the input of
the content reviewed by the Sustainable
Development Committee and presented to
the Audit Committee along with all Group
principal risks. Read about the Group’s risk
management framework on pages 72-73.
A cross-functional team identifies and
assesses our material climate change-
related risks and opportunities through an
iterative continuous improvement process.
The annual review considers the breadth
of our business, across operating locations
and our product portfolio, including
consultations with internal and external
technical subject experts and senior
operational management. Our climate
change-related risks and opportunities
are reviewed and approved by the
Executive Committee and the Sustainable
Development Committee annually.
Climate change-related risks and
opportunities are managed and where
possible mitigated by our operational
management team and through our
capital investment programme. The climate
change-related risks and opportunities
are considered in the preparation of, and
integrated in, the Group’s three-year 2023-
2025 plan (“budget period”).
Metrics and targets
The Group uses a variety of metrics to
measure the current and potential impact
of our climate change-related risks and
opportunities, including GHG emissions,
sustainable fibre metrics, waste to landfill,
NOx emissions, water use and effluent load
(COD) in waste water.
The targets covering GHG emissions from
Mondi’s operations and value chain (Scope
1, 2 and 3) are consistent with a reduction
required to keep global warming to 1.5°C
by 2050 and prevent the most damaging
effects of climate change according to
the latest climate science.
Direct GHG emissions are from our
energy plants through combustion of
fuels to generate the energy required
for our manufacturing (Scope 1). We also
purchase energy from the grid (Scope
2) and have indirect GHG emissions
throughout the value chain, mainly as
a result of our purchase of raw materials,
fuel and transportation, which together
make up more than 95% of our total
Scope 3 emissions. We are acting across
all three Scopes and working closely with
our partners to reduce GHG emissions
for our business, our customers and our
value chain.
In 2022, our ambitious science-based Net-
Zero targets, which include both short-term
and long-term GHG emissions reduction
targets, including Scope 3, were approved
by the SBTi. Our efforts to reduce our
Scope 1 and 2 emissions have provided
a firm foundation on which we were able
to revise our existing Scope 1 and 2 science-
based targets to be more ambitious and
add a Scope 3 target, in line with a 1.5°C
scenario. We remain committed to zero
deforestation in our wood fibre supply
chains and to maintaining carbon sinks
in forestry through implementation of best
forest management and silviculture practices.
Taking Action on Climate
Page 44-57
We report our GHG emissions according
to the Greenhouse Gas Protocol, published
by the WBCSD and the WRI, and have
reported our Scope 1, 2 and 3 GHG data
in compliance with ISO 14064:1-2006.
ERM CVS has assured, to a reasonable
level of assurance, our 2022 absolute Scope
1 and absolute Scope 2 GHG emissions
data, in accordance with ISO 14064-3, and
limited level of assurance on our Scope 3
GHG data.
Given the strategic importance of
sustainability, the Group’s executive
directors remuneration is linked to their
contribution to the overall success of
MAP2030, including our GHG reduction
targets. 20% of the annual bonus awarded
to members of the Executive Committee,
which includes the Group CEO and the
Group CFO, and approximately 3,400
employees across the Group, is linked
to sustainability objectives.
Remuneration report
Page 124-151
Overview
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Integrated report and financial statements 2022
57
We are developing our climate-related metrics in accordance with the revised guidance provided by the TCFD in October 2021.
The table below describes these metrics in more detail.
Cross-industry,
climate-related metric
category
Our approach
Climate-related
risk/opportunity
Further
information
GHG emissions
We report our performance against Scope 1, 2 and 3 emissions
Risk 5
Transition risks
Physical risks
Climate-related
opportunities
We report the potential financial impact for three transition risks,
as well as the mitigation measures in place
Risks 5, 6, 7
We report the potential financial impact for four physical risks,
as well as the mitigation measures in place
Risks 1, 2, 3, 4
We report the potential financial impact for three opportunities
arising from climate change, including the impact on demand
for our products
Opportunities 1, 2, 3
Capital deployment
We discuss our capital investment strategy deployed to mitigate
the impact of climate change
Risks 4, 5, 6, 7
Internal carbon prices We consider the impact and cost of the Group’s GHG emissions
Risk 5
when evaluating our capital investment projects
Remuneration
Annual bonus incentives include a proportion associated
with GHG emissions
Page 45
Page 54
Page 53
Page 55
Page 51-54
Page 54
Page 56
Reducing Scope 3
emissions
Engaging with suppliers, particularly
for raw materials and fuels, is key to
reducing our Scope 3 GHG emissions.
We have evaluated our Scope 3
emissions related to the raw materials
we use and defined potential steps for
reducing these emissions.
We conducted three pilot tests in 2022
with key suppliers to collect primary
GHG data and engage with them on their
GHG reduction targets. Actions such
as improving logistics of raw materials
or increasing the share of renewable
raw materials were also considered.
Transport of our finished products
to our customers contributes to Scope 3
emissions for both Mondi and our customers.
Our products are mainly transported by
third-party logistics partners. We reported
203,000 tonnes of downstream transport-
related emissions in 2022.
We are working closely with our
downstream logistics partners to identify
and implement improvement projects in
transportation. For example, to reduce
transport-related emissions of our products
we can increase the proportion of transport
by train, thereby reducing our use of trucks
and improving specific loading capacities.
In 2021, we conducted a successful pilot
project with a logistics partner to reduce
maritime transport-related GHG emissions
through the use of biofuel.
M
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A
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58 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Built on
Responsible
business practices
— Resource efficiency is fundamental
to many of our material issues.
We work with partners across our
value chain to continuously improve
the environmental performance
of our operations.
— We respect human rights and
proactively identify and manage
potential risks across our own
operations and across our value
chain.
MAP2030 is built on a foundation
of responsible business practices
comprising environmental performance,
human rights, communities and
procurement. Each area has its own
commitments and targets to guide
our actions.
— Healthy, prosperous and dynamic
communities help the success
of our businesses. We align
our community development
programmes and social
investments with local needs.
— Supply chain transparency is
fundamental to our responsible
procurement processes.
Environmental performance
Commitment: We will continually work on improving the environmental performance
of our operations to minimise environmental impacts
Target
Performance
2022
2021
This year at a glance
Reduce specific contact water consumption
by 10% by 2030 from a 2020 baseline*
Specific contact water consumption decreased by 3.2% compared
with our 2020 baseline. We reported a slight 0.4% increase against 2021
Reduce specific effluent load to the
environment (measure COD) by 15%
by 2030 from a 2020 baseline*
Reduce specific NOx emissions from
our pulp and paper mills by 10% by 2030
from a 2020 baseline*
Reduce specific waste to landfill by 30%
by 2030 from a 2020 baseline*
100% of our operations will be
certified according to globally accepted
environmental standards equivalent
to ISO 14001 by 2025
* Updated in 2022
Specific COD emissions decreased by 7.7% compared with
our 2020 baseline, and increased by 4.1% since last year, mainly
due to process instabilities in Świecie’s wastewater treatment plant
after the annual shut
Our specific NOx emissions were 6.1% lower compared with our
2020 baseline, and 2.6% lower than last year
Specific waste to landfill decreased by 7.8% compared with our
2020 baseline, and 6.5% compared to last year, primarily due to process
improvements in Štětí and turning sludge into a soil improvement
product in Kuopio (Finland)
100% of our pulp and paper mills and 70% of our converting operations
are ISO 14001 certified. This is an increase from 71% in 2021 to 74% across
the Group
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
59
Environmental performance continued
We work with partners across our
value chain to use resources wisely,
reverse environmental degradation
and develop circular solutions, to
mitigate any environmental impact
from our manufacturing processes.
Most of the energy we use for our
processes is generated from our pulp
and paper mills. This comes from biomass-
based by-products of the pulp process and
from fossil fuels. We are also committed
to managing and reducing our water use
and finding alternative solutions for waste
that involves recycling and reuse to support
a circular economy. The modernisation
of our energy and manufacturing facilities
helps us to reduce our emissions, run
resource-efficient operations, avoid
disturbances and protect the rights of
our neighbours and other stakeholders.
Environmental management
systems
Our Group Sustainable Development
Management System (SDMS) supports
our operations to meet environmental
protection standards, minimise their
environmental impacts, comply with
legislation, and improve reporting and
transparency.
We also carry out environmental and
energy audits. These highlight opportunities
to reduce our environmental impacts and
deliver cost savings in resource, waste and
energy management.
Water
Water is vital to our production processes.
We monitor a number of parameters related
to water emissions, including chemical
oxygen demand (COD) and adsorbable
organic halogen (AOX) compounds, as well
as phosphorous and nitrogen compounds.
We achieved the 2025 specific COD
reduction target and have set a new 2030
target to reduce the specific COD load
of our operations by 15% by 2030 against
a 2020 baseline.
In 2022, we continued implementing our
Group-wide Water Stewardship Standard
to reduce our freshwater impact, with a
particular focus on regions with higher
water risks. Our approach to managing
water impacts includes assessing and
managing risk, reducing water consumption,
investing in water recycling and treating
waste water.
We have updated our water consumption
target to reduce specific contact water
consumption by 10% by 2030 compared
with a 2020 baseline. Contact water
consumption has decreased by 3.2%
compared with our 2020 baseline due to
water optimisation projects in Štětí and
Ružomberok. In 2022, specific contact water
consumption of our pulp and paper mills
in water-stressed areas slightly increased
by 0.2% compared with the 2020 baseline.
We reduced the Group’s total water
input by 2.6% against 2021. We used
215 million m3 of water in our operations
as contact and non-contact water and
discharged 92% back to the aquatic
environment.
Air emissions
We innovate and invest in modernising
our operations to minimise the impacts
of our air emissions, such as using low
NOx burners and implementing flue-gas
abatement techniques. Our main source
of air emissions is on-site energy generation
and the by-product from the combustion
process in our energy plants, nitrous oxide
(N2O), is a significant greenhouse gas.
In 2022, our specific NOx emissions were
6.1% lower than the 2020 baseline. The 2025
specific NOx reduction target was also
achieved in 2022. A new 2030 target has
been set to reduce the specific NOx of
our operations by 10% by 2030 from a 2020
baseline.
Total reduced sulphur emissions increased
by 11.2% since last year mainly from our
Richards Bay mill, due to problems in
the burning zone for non-condensable
gases. SO2 increased by 15.5% mainly due
to a higher sulphur content in coal used
at Merebank.
Ozone depleting substances have
increased due to replacing old ODS from
cooling devices. Particulate emissions
decreased by 7.4% due to modernisation
programs conducted in Richards Bay and
Ružomberok.
Waste
We actively engage with external
stakeholders to reduce our environmental
impact. This includes finding alternative
solutions for waste involving recycling and
reuse and innovating to support a circular
economy.
We focus on reducing the quantity of
waste that is landfilled and manage the
disposal of our waste streams to improve
the circularity of our material flows. We are
engaging with external waste treatment
companies and companies interested in
the use of secondary raw materials. In 2022,
we reduced our specific waste to landfill by
7.8% since 2020 and 6.5% compared with
the previous year.
Only a small portion of our total waste
streams are hazardous waste. In total,
around 5,000 tonnes of hazardous waste
was sent to landfill in 2022 – approximately
4.4% of our total waste to landfill.
Air emissions
Specific NOx emissions
Total reduced sulphur (TRS)
Total SO2
Total particulate
2022
performance
2021
performance
% change
2021–2022
1.19 tonne
1.22 tonne
35.0 tonnes
31.5 tonnes
1,399 tonnes
1,212 tonnes
687 tonnes
742 tonnes
What’s next?
— Continue to address the topics
identified in our ISO14001 gap
analysis to implement ISO 14001
across all of our operations by 2025
— Continue to focus on environmental
audits of converting operations
-2.6%
11.2%
15.5%
-7.4%
30.5%
Total ozone depleting substances (ODS)
4.1 tonnes
3.1 tonnes
Mondi uses very small amounts of organic solvents, mainly in printing at our converting operations.
Volatile organic compound emissions from our operations are not material and are not reported at Group level.
60 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Built on responsible business practices continued
Human rights
Commitment: Strengthen governance systems to prevent human rights violations
and remedy any adverse impacts
Target
Develop the due diligence and risk
assessment methodology and guidance
with the support of Danish Institute for
Human Rights (DIHR) by end of 2021
100% of operations with a completed
human rights due diligence & risk
assessment, and action plan in place
to address findings by 2025
100% of operations to have addressed
their human rights impacts (investigate,
prevent future occurrences and remedy
adverse impacts) by 2030
Performance
2022
2021
This year at a glance
The methodology and guidance, developed in 2021, were refined
after pilot-testing this year, with training on both rolled out in 2022
Completed pilots for the Human Rights Due Diligence (HRDD)
approach in two operations and identified human rights focus topics
for the Group as a baseline for continuing with a risk-based approach
for the due diligence roadmap
Operations where the HRDD pilots were completed have developed
action plans as part of their due diligence and work on the implementation
of these plans has commenced
We are committed to respecting
human rights in our operations and
across our supply chain. We are
proactively working to identify and
manage potential risks and are rolling
out a Human Rights Due Diligence
(HRDD) approach across the
business.
Our human rights approach is embedded in
our relevant practices and policies, including
our Code of Conduct for Suppliers and
Business Integrity Policy. The UN Guiding
Principles on Business and Human Rights
offer a comprehensive guidance framework
to monitor and report on potential human
rights risks.
Our management tools and policies include:
— We respect, protect and fulfil
— HRDD process to integrate human rights
considerations into our procedures
to identify and assess risks and
define action plans and appropriate
management controls.
— Robust internal processes and tools
to facilitate the reporting, investigation
and resolution of grievances. The formal
grievance mechanism, SpeakOut, is the
Group’s anonymous channel available
to the public and operated by an
independent third party.
Sustainability governance
Page 64
people’s right to ‘just and favourable
conditions’ of work, including a fair
wage, a decent living, safe and healthy
working conditions, no discrimination,
fair remuneration and reasonable
limitation of working hours.
— We do not tolerate any inhumane
treatment of employees, any form of
forced labour, modern slavery, human
trafficking, physical punishment or other
abuse. Our Human Trafficking and
Modern Slavery Statement complies
with the UK Modern Slavery Act.
Modern Slavery Statement
www.mondigroup.com/en/investors/
governance/regulatory-reports/
uk-modern-slavery-act/
Piloting the Human Rights
Due Diligence (HRDD) toolkit
We conducted two HRDD pilots at our
operations in Mexico and Türkiye, to test
the methodology and guidance. The local
assessment teams sought to understand
areas of risk and vulnerable groups
within their operations through dialogues
with individual rights holders, groups
and representatives.
No violations of human rights were
found but areas of improvement were
identified, relating to working hours, safety
improvements and equality. The operations
have clearly defined action plans in place
and are working on the identified measures.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
61
Human rights continued
Key actions in 2022
— In 2022, we confirmed our priority human
rights risk areas, based on the topics
most significant for our operations.
These are fair working conditions,
freedom of association and collective
bargaining, indigenous and land rights,
modern slavery, child labour, and
safeguarding our environment.
— We have established a risk-based
approach and a risk identification process
that takes into account the local context,
prior incidents as well as established
practices. This baseline of risk areas
and processes sets the foundation for
assessing priorities and developing our
action plan and roadmap for the HRDD
within our operations.
— We introduced training on the HRDD
and risk assessment methodology
and conducted two HRDD pilots with
local teams.
Communities
— We had a total of 47 incidents, 45 from
SpeakOut and 2 further cases through
other channels (2021: 39 individual
incidents aggregated from a total of
61 gross cases reported, 34 incidents
from SpeakOut and 5 from other
channels). Overall, topics encompassed
allegations concerning work-related
harassment and unfair treatment, labour
rights and safety and health matters.
All SpeakOut messages are addressed
and treated with utmost discretion
and may involve the respective Mondi
management team where relevant, in
accordance with standard procedures.
Appropriate responses and corrective
actions were taken on all issues (further
details of cases are not disclosed due
to confidentiality).
— Incidents with potential human rights
impact related to privacy or unfair
treatment at the workplace were
immediately addressed.
What’s next?
— Conduct risk-identification
exercises across all operations.
The findings will be evaluated and
consolidated, to help us to better
understand our overall risk areas
and next steps. These will form the
baseline for the roadmap for all
operations
— Conduct further training and
awareness-raising to improve
our understanding of how Mondi’s
business activities and relationships
potentially impact human rights
— Integrate all human rights-related
learnings and findings into our
continuous management processes,
so that they are considered in all
our actions and decisions
Commitment: Maintain social investments in our communities to support
sustainable development aligned with local needs
Target
Report on our total social investment
annually
Performance
2022
2021
This year at a glance
Mondi Group and our Mondi operations around the world have spent
over €8.9 million on social investments, including a €2 million donation
to the World Food Programme to support people in need in Ukraine
We support sustainable development
in the areas where we operate
and engage with communities
around our operations to build trust
and collaboration, while seeking
to understand the impact of our
operations.
Our stakeholder engagement tools
help us to understand the needs of local
communities and our impacts on them,
including:
— Stakeholder and Community
Engagement Plans that detail the
stakeholders, topics and engagement
activities to be conducted by our operations.
— Socio-Economic Assessment Toolbox
(SEAT) process where open dialogues
with a variety of local key stakeholders are
facilitated by an independent third party.
— Feedback and grievance mechanisms
available to employees and the public
to make us aware of issues and respond
promptly.
The various stakeholder engagements
help us align our community development
programmes and social investments
with local needs. We apply principles
of sustainable development to social
investments, such as those reflected in
the UN Sustainable Development Goals
national and local development priorities.
Social investments
Our social investments focus on areas
where we can make the greatest difference
and support the key drivers of development
in these communities. Our voluntary
investments include monetary contributions
and skills sharing by employees.
We target initiatives with a Science,
Technology, Engineering and Mathematics
(STEM) education focus, environmental
protection, enterprise support and job
creation. We also support community
health provision and infrastructure
development, and in recent years included
the investment areas of COVID-19 and
Ukraine support.
In 2022, we had social investments of
€8.9 million (2021: €5.4 million) across
areas such as education, enterprise support,
environmental protection, infrastructure
development, Ukraine support and
COVID-19 response. Further details
about these investments can be found
on page 75 of our 2022 Sustainable
Development report.
62 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Built on responsible business practices continued
Communities continued
SEATs in Štětí and Tire
In 2022, we conducted two SEAT
processes in our operations in Mondi Štětí
(Czech Republic) and Mondi Corrugated
Turkey. Dialogues took place with various
stakeholders to understand our impact
and relationships with the community.
Feedback was positive, with stakeholders
appreciating Mondi’s role as an employer
and supporter of local initiatives. Challenges
include traffic and sporadic odour issues
in Štětí, water use and preserving the
company’s heritage in Tire (Türkiye).
The local management teams reviewed
the findings and prepared a SEAT report
that includes steps on how to improve
across areas of concerns.
Procurement
What’s next?
— Engage with local stakeholders
via our SEAT process at two
Mondi mills in 2023
— Continue to implement stakeholder
and community engagement
plans that detail how we support
communities, aligned to needs
of the local communities
— We will review our social investment
strategies, including areas of focus,
to evaluate potential partnerships
to enable meaningful collaboration
at a local and global level
Commitment: We mitigate risks and create greater transparency in our supply chains
through our responsible procurement process
Target
We will minimise the supplier risk ratio*
year-on-year
Performance
2022
2021
This year at a glance
Risk assessment focused mainly on newly onboarded and reactivated
suppliers. One supplier production site (0.3% of 369 screened) remained
residual high-risk
Commitment: Ensure that all our wood fibre (round wood, wood chips and market pulp)
is sourced solely from credible wood sources
Target
Maintain 100% of wood fibre compliant
with credible standards (FSC, PEFC,
or Controlled Wood)
Performance
2022
2021
This year at a glance
Achieved in 2022
For high-risk countries, maintain 100%
FSC-certified fibre sourcing or implement
additional risk mitigation measures
A small volume of wood from high-risk countries was FSC Controlled
Wood (with additional third-party verification) rather than FSC-certified.
This was due to wood supply disruptions in Europe in 2022
100% PEFC or FSC certified market pulp
Achieved in 2022
100% PEFC or FSC Chain-of-Custody
certification for our pulp and paper mills
We will continue to work with certification
bodies to ensure credibility of the
certification and Controlled Wood systems
Achieved in 2022
Mondi participated in the PEFC and FSC General Assemblies in 2022
and contributed to issue-specific working groups
* Total number of residual high-risk suppliers divided by the total number of suppliers screened
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
63
Key Actions in 2022
— Completed a ‘Sustainability in
Procurement’ project, with external
experts, to integrate the MAP2030
targets into the procurement strategy
and support our Net-Zero commitment.
We identified potential improvements to
our Responsible Procurement process
to create a longer-term, scalable
approach for risk assessments among
our supplier base.
— Initial supplier engagement workshops on
climate action to define a path to reduce
Mondi’s Scope 3 emissions.
— Extended our DDMS for wood fibre,
focusing on challenges posed by
disruptions in the European wood
markets. Collaboration with third-party
verification bodies to adequately address
high or uncertain risks in sourcing
countries.
What’s next?
— Implement a sustainability risk
assessment and rating tool to
improve transparency in our supply
chain and mitigate risks
— Continue to actively engage
suppliers to improve their
sustainability performance and take
action, together, to drive down GHG
emissions across the supply chain
— Build supply chain resilience
by developing robust solutions
for addressing risks, particularly
in existing and new wood sourcing
countries
Taking Action on Climate
Page 44-57
Supplier engagement
We undertake supplier risk management,
quality management, evaluations, audits
and collaborate with suppliers as part
of our efforts to meet our quality and
sustainability requirements. We have a
number of processes and policies in place
to support this work, including a supplier
audit programme.
Our approach to responsible procurement
and managing supply chain risk is governed
by our Group-wide Supply Chain and
Responsible Procurement Policy, Business
Integrity Policy, General Supplier Quality
Requirements, and Code of Conduct
for Suppliers.
Supplier Code of Conduct
Our companies and business units
worldwide, including joint ventures in
which we have a controlling interest, are
required to apply the Code of Conduct for
Suppliers as a minimum standard. It defines
the minimum standards for our suppliers
for environmental, social and governance
topics, and other legal and ethical issues.
Due Diligence Management System
Our DDMS stipulates that all our wood fibre
(round wood, wood chips and market pulp)
is purchased from responsible sources
and in line with our commitment to zero
deforestation. We use FSC and PEFC
certification as an important risk mitigation
tool with the FSC Controlled Wood
standard as the minimum assurance level.
We have defined specific requirements
for certification in cases where there
are context-specific or supply chain
complexities. For example, we require 100%
of market pulp to be certified, because of
its complex supply chains. Or, we mitigate
risks in high-risk countries by requiring
FSC certification or by targeted third-
party verification audits when FSC is not
available there.
Sustainable Development report 2022
www.mondigroup.com/sd22
Page 78-82
Procurement continued
A sustainable supply chain
and transparently managing supply
chain risks requires responsible
procurement processes, tools,
governance, reporting and supplier
engagement.
In 2022, our global supply chain included
around 12,000 suppliers* in 67 countries.
We procured €7.0 billion worth of
goods and services from these suppliers
(2021: €5.5 billion), with 58% sourced
locally (2021: 57%).
We use two methods within Mondi to
manage procurement: the Due Diligence
Management System (DDMS), which is
relevant to procurement of wood and pulp,
and the Responsible Procurement Process,
which is used for all other materials and
services.
Our Responsible Procurement Process
evaluates and monitors suppliers globally,
based on their sustainability risk and
performance. It applies a risk-based
approach to assess suppliers against our
Code of Conduct for Suppliers. An initial
screening highlights potential high-risk
suppliers in one or more of three areas:
labour and human rights, environment
and climate change, biodiversity and
water security. We identify inherent risks
in our supply chain, assess the supplier
performance and work on corrective
actions, where needed.
Since the launch of our Responsible
Procurement Process in 2019, we assessed
over 7,000 supplier sites, representing
approximately 78% of our total spend.
In 2022, 369 supplier sites were screened,
with 40 supplier sites considered
potential high-risk and consequently
requested to complete a questionnaire.
The questionnaire from potential high-risk
suppliers was assessed and follow-up
evaluations conducted. Following these
efforts, one supplier site (0.3%) remained
classified as potential high-risk (2021: 0.1%)
and one supplier site (0.3%) did not
complete the questionnaire (2021: 2.3%).
Escalation procedures are being carried
out with these suppliers.
* Direct active suppliers to continuing operations
grouped into single entities, excluding Personal
Care Components suppliers
64 Mondi Group
Integrated report and financial statements 2022
Mondi Action Plan 2030
Built on responsible business practices continued
Sustainability
governance
Eight global specialist network groups
provide expert insight and support
to the business on specific sustainable
development matters.
We consistently apply our Sustainable
Development Governance Policy across
the Group, supported by policies for:
— Safety and Occupational Health
— Labour and Human Rights
— Sustainable Forestry
— Energy and Climate Change
— Environment
— Supply Chain and Responsible
Procurement
— Product Stewardship
— Communities
In 2022, our Governance Policy was
updated to include reference to the
Sustainability Accounting Standards Board
(SASB). A reference to our concept of
Social Psychology of Risk as a key safety
and health focus area was added to the
Safety & Occupational Health Policy.
Sustainability risks
and opportunities
Sustainable development risks are
addressed in our Group-wide risk
management framework, which is designed
to address strategic, financial, operational
and compliance risks that could undermine
our ability to achieve our business objectives.
We exercise due diligence prior to
introducing new operations, practices,
processes and products.
Code of Business Ethics
Our Code of Business Ethics supports high
ethical standards across our organisation
based on five principles: legal compliance;
honesty and integrity; human rights;
stakeholders; and sustainability. The code is
applied in Mondi’s policies and procedures,
including the Business Integrity Policy on
anticorruption.
The reporting of violations includes
notifying the Group CEO, Group CFO
and Group Head of Internal Audit in
all instances.
Strong governance is fundamental
to building a resilient and successful
organisation with sustainability
embedded at all levels. Robust
policies, standards and management
systems guide our operations.
Policies, standards and due
diligence processes
The Board and its committees provide
leadership to implement the principles
of good corporate governance across the
Group, ensuring all decisions and actions
are based on integrity, responsibility,
accountability, fairness and transparency.
The Board reviews the performance
approach and outcomes. Our Board
members are diverse in origin, gender, race,
education and experience. At the end of
2022, we had one director of colour and
three female directors (representing 33%
of the composition of the Board).
Sustainability was covered at seven
meetings during the year, with aspects
of sustainability that are material to our
business being reviewed. The Board is
updated on sustainability matters and
external stakeholder views by the Group’s
Head of Sustainable Development.
They also receive information on external
environmental, social and governance (ESG)
rating assessments and activities with
external organisations and partners.
The Board is ultimately responsible for
sustainability governance and delegates
different areas of responsibility to specific
committees. Accountability for sustainable
development policies, systems, practices,
commitments and the effectiveness of our
approach towards managing all aspects of
sustainability are monitored at four levels:
— The Sustainable Development
Committee chaired by an independent
non-executive director
— The Executive Committee chaired by
the Group CEO
— Other committees of the Board, such as
the Audit Committee and Remuneration
Committee, chaired by independent
non-executive directors
— The operational management team
consisting of senior executives from
across Group operations
Anti-corruption policies
and procedures
The Business Integrity Policy outlines
Mondi’s zero tolerance of bribery
and corruption. It forms part of the
annual Group risk assessment process
and outcomes are reviewed by the Audit
Committee and the Board. It is available
to employees and business partners and
all relevant employees must complete
a mandatory business integrity training
each year, which also covers anti-corruption
topics. In 2022, the number of relevant
employees to complete the online business
integrity training was 3,593 with 3,406
(94%) of those employees completing
the training online.
Our process for reporting violations
includes notifying the Group CEO, Group
CFO and Group Head of Internal Audit
in all instances.
SpeakOut
SpeakOut is an anonymous grievance
platform for employees, customers,
partners, and other stakeholders to
raise any concerns relating to potential
bribery, discrimination, fraud, corruption,
environmental pollution, major safety
and health violations, harassment or other
significant topics. Access to SpeakOut
incident information is restricted to named
responsibles, and coordination of the cases
is handled by Group Internal Audit.
The internal audit function is responsible for
monitoring the SpeakOut process, overseen
by the Board. The Audit Committee informs
management of reported issues, where
appropriate, and makes sure related risks
are adequately addressed.
Sustainability in investment
decision-making
Positive and negative impacts on
environmental parameters and sustainability
targets must be reported as part of the
capital investment decision-making
process for all investments over €500,000.
Future environmental costs are factored
into our investment decision-making
process, such as internal region-specific
carbon prices.
TCFD
Page 48-57
Sustainable Development Committee
Page 121-123
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
65
Reporting
on our
sustainability
performance
Comprehensive and transparent
disclosure underpins the trust
we share with our stakeholders
and supports our progress through
accountability. Pages 32-35
summarise our established approach
and how our directors have fulfilled
their duties under Section 172 of
the Companies Act 2006 in 2022.
External assurance
Our Sustainable Development (SD) report
provides a comprehensive view of our
approach to sustainable development and
our performance in 2022. The consolidated
performance data file (excel and pdf) show
our sustainability key performance indicators
in line with MAP2030 for the period 2018
to 2022 (unless otherwise indicated).
ERM CVS has been engaged to provide
assurance on selected information and
KPIs as well as check that the SD report
is in accordance with the Global Reporting
Initiative (GRI) Universal Standards (2021)
and the SASB: Containers & Packaging
Industry Standard, and that information
included in our Integrated report is
consistent and comparable.
We have also prepared an index mapping
our GRI and SASB disclosures. The signed
ERM CVS Independent Assurance
Statement is included in our Sustainable
Development Report.
Sustainable Development Report 2022
www.mondigroup.com/sd22
GRI & SASB Index
www.mondigroup.com/en/sustainability
Non-financial information statement
In accordance with Sections 414CA and 414CB of the UK Companies Act 2006, the required
non-financial information disclosures can be found integrated throughout the Strategic report.
A summary of key areas of disclosure is set out below:
Reporting requirement
Business model
Information relating to environmental matters
Information relating to employees
Information relating to social matters
Information relating to respect for human rights
Information relating to anti-corruption and anti-bribery matters
Principal risks
Further information
Page 14-16
Page 44-59
Page 41-43
Page 61-62
Page 60-61
Page 64
Page 72-81
Non-financial key performance indicators
Page 30-32, 36-65
External recognition
We have been recognised as a leader in sustainability by a number of external corporate ratings and indices, including:
CDP A-list
CDP Double ‘A’ score for
forests and water security
and an ‘A-’ score for climate
change
‘AAA’ rating
MSCI ESG rating top ‘AAA’
score for strong resilience
to environmental, social and
governance risks
Prime status
ISS ESG Corporate Rating
highest sector-specific score
for ESG performance
Ranked #1 in Paper
& Forestry Industry
Sustainalytics top score
out of 78 companies ranked
in Paper & Forestry Industry
(Sep 2022)
Top 10 Companies
Ranked No. 6 overall and
No. 1 among container and
packaging peers in 2022
Nature Benchmark by the
World Benchmarking Alliance
Member of FTSE4Good
Index Series
Member of Index Series,
demonstrating strong ESG
practices
Top 1% globally
Platinum status in EcoVadis
Corporate Social Responsibility
(CSR) ratings
Highest level score
in Paper Sector
Top level climate change score
by Transition Pathway Initiative
— Management Quality:
Level 4 rating
— Carbon performance aligned
with Paris Pledges
Member of Top 30 Index
Constituent of the FTSE/
JSE Responsible Investment
Top 30 Index for stocks
with highest ESG ratings
in South Africa
Industry-leading
sustainability reporting
For four consecutive
years, ranked as a Top 10
sustainability reporter in the
global annual member ranking
of Reporting Matters by
WBCSD and Radley Yeldar
66 Mondi Group
Integrated report and financial statements 2022
Business unit trading review
Corrugated
Packaging
Underlying EBITDA
(€ million)
€662m
(2021: €543m)
Flexible
Packaging
Underlying EBITDA
(€ million)
€797m
(2021: €567m)
ROCE
(%)
25.3%
ROCE
(%)
20.9%
Corrugated Packaging delivered strongly in the year driven by
significantly higher average selling prices which more than offset
materially higher input costs. We grew underlying EBITDA in
the first half of the year by implementing selling price increases
to compensate for rising costs. In the second half, continued
inflationary cost pressures, alongside softer demand, led to
downward pressure on margins, although still at good levels.
Containerboard sales volumes were marginally up on the prior year
supported by our broad, high-quality product portfolio, sharp focus
on customer service and investment in the business. In Corrugated
Solutions, industry demand was softer compared to the strong
volume growth delivered in the prior year. Our box volumes were
down 3% on the prior year.
We implemented price increases across all containerboard grades
during 2022, leading to significantly higher average selling prices
year-on-year, with the magnitude of the increases varying by
grade. Average benchmark European selling prices for unbleached
kraftliner and recycled containerboard were up around 30%
while average benchmark white top kraftliner and semi-chemical
fluting prices, which are typically more stable over time, were up
around 20%. On the back of reduced cost support and destocking,
containerboard prices declined towards the end of the year and
are today lower than 2022 averages.
Corrugated Solutions was successful in passing on higher input paper
and other costs through box price increases over the course of the year.
With the exception of paper for recycling, input costs were
significantly higher year-on-year, in particular energy, wood, transport
and chemical costs. Average benchmark European paper for recycling
prices were flat on 2021 averages with prices higher in the first half
offset by declines in the second half. We mitigated the impact of
higher European energy costs on our business by leveraging our
broad geographic footprint, integration and high-level of energy
self-generation. Wood costs remain elevated while we are currently
seeing softer input costs across most other categories. Fixed costs
were well managed although increased due to inflationary effects.
We remain confident in our expansionary investment pipeline,
encompassing both our containerboard and corrugated solutions
network, together with our plans to convert the paper machine at
the recently acquired Duino mill in Italy. These projects will leverage
our integrated platform and deliver volume growth, enhance our
product and service offering, drive cost competitiveness and
strengthen our environmental performance.
This section includes Alternative Performance Measures which are defined on pages 242-248.
Unless other specified, all figures presented and commentary provided is based on the Group’s
continuing operations (which exclude the Group’s Russian operations).
Flexible Packaging achieved volume growth and successfully
implemented price increases to recover significantly higher
input costs.
Volume growth was supported by our innovative and sustainable
packaging portfolio. Kraft paper sales volumes were up 4% on the
prior year, benefiting from the increasing demand from customers
for sustainable paper-based flexible packaging and recently
completed capital investments. Paper bags and consumer flexibles’
volumes were stable supported by resilient customer demand.
Our Functional Paper and Films business continues to leverage
its coating capabilities to integrate barrier properties into paper-
based solutions.
We continue to see good demand from customers across our
broad range of sustainable packaging solutions, as we leverage our
unique product portfolio and in-depth technical expertise to drive
product development initiatives with our customers in support of
a circular economy.
Prices in the kraft paper value chain increased significantly in
the first half and into the third quarter, and stabilised thereafter.
Following demand growth in the first half of 2022 and industry
supply disruptions, which supported meaningful price increases,
slowing economic activity and destocking, particularly in Europe,
dampened demand in the second half and into the first quarter
of 2023.
In our converting operations, we were successful in achieving price
increases during the year to pass through the higher input costs,
supported by our broad product offering and pricing discipline.
Input costs were materially up year-on-year, with higher wood,
energy, plastic resin, chemical and transport costs. Moving into
2023, input costs are generally softer except for wood costs
which remain elevated. Fixed costs were well controlled although
increased due to higher maintenance costs, additional personnel
to serve growing customer demand, and inflationary effects.
We continue to invest across our platform. We approved the
investment in a new kraft paper machine at Štětí (Czech Republic)
which will meet the growing demand for sustainable paper-based
flexible packaging. In addition, our investments in our converting
operations are diversified across our global network and will drive
organic growth underpinned by the structural growth drivers in
our markets.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
67
Uncoated
Fine Paper
Underlying EBITDA
(€ million)
€427m
(2021: €55m)
ROCE
(%)
34.7%
Uncoated Fine Paper successfully implemented price increases
which more than offset materially higher input costs. We recorded
a higher non-cash forestry fair value gain and benefited from shorter
planned project-related maintenance shuts. Our business remains
well placed, continuing to benefit from our cost competitiveness,
broad product portfolio and excellent customer service.
Uncoated fine paper sales volumes were lower in the year due to
softening European demand towards the end of the year, temporary
tightness in European wood availability and the impact from flooding
in Durban (South Africa) which affected production at the Merebank
mill for most of the second quarter. Pulp sales volumes were up
in the year following the start-up of the rebuilt recovery boiler
at Richards Bay (South Africa) in the first quarter and successful
ramp-up during the year.
On the back of increasing costs, we implemented price increases
during the year. Average benchmark European uncoated fine
paper selling prices and average benchmark European bleached
hardwood pulp prices were both up more than 40% year-on-year.
While Southern African uncoated fine paper prices have remained
broadly flat in early 2023, European uncoated fine paper and pulp
prices have come under downward pressure.
Input costs were up with significantly higher energy, wood and
chemical costs. While wood prices remain elevated, most other
input costs are declining as we enter 2023. Fixed costs were stable,
with strong cost control and shorter maintenance shuts mitigating
inflationary cost pressures.
We recorded a higher non-cash forestry fair value gain in the year
of €169 million (2021: loss of €7 million) reflecting materially higher
market prices for timber.
VinoBox
Portfolio of corrugated wine
shipping solutions that is
fully recyclable and offers our
customers a range of single,
modular and premium designs
to meet their needs
Advantage
StretchWrap
Recyclable lightweight paper
with outstanding stretch and high
tensile strength for wrapping
pallets and reducing reliance
on plastic for transport
Pergraphica®
Our premium brand for creative,
design, publishing and luxury
applications – now Cradle
to Cradle Certified® Bronze
68 Mondi Group
Integrated report and financial statements 2022
Financial review
How is Mondi's strong
financial position delivering
for shareholders?
Mike Powell
Group CFO
Financial performance (continuing operations)
€ million
Group revenue
Underlying EBITDA
% margin
Depreciation, amortisation and impairments (underlying)
Underlying operating profit
Special items
Operating profit
Underlying operating profit
Net profit from joint ventures
Net monetary gain arising from hyperinflationary economies
Net finance costs
Underlying profit before tax
Underlying tax charge
Effective tax rate
Non-controlling interests
Underlying earnings
Basic earnings per share (euro cents)
Basic underlying earnings per share (euro cents)
2022
2021 % change
28%
60%
85%
8,902
1,848
6,974
1,157
20.8% 16.6%
(375)
782
7
(405)
1,443
242
1,685
789
114%
1,443
782
85%
1
17
(143)
1,318
(296)
22%
(73)
949
244.5
195.6
6
—
(83)
705
(154)
22%
(17)
534
112.0
110.1
87%
78%
118%
78%
ROCE (%)
23.7%
13.9%
Our financial position
€ million
Property, plant and equipment
Goodwill
Working capital
Other assets (including assets held for sale at 31 December
2022)
Other liabilities (including liabilities directly associated
with assets held for sale at 31 December 2022)
Net assets excluding net debt
Equity
Non-controlling interests in equity
Net debt
Capital employed
2022
2021
4,167
4,870
769
1,282
2,034
926
988
558
(987)
(690)
7,265
5,794
460
1,011
7,265
6,652
4,498
391
1,763
6,652
This section includes Alternative Performance Measures which are defined on pages 242-248. Unless otherwise specified, all figures
presented and commentary provided is based on the Group’s continuing operations (which exclude the Group’s Russian operations).
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
69
Mondi delivered a strong financial and
operational performance across all key metrics.
Underlying EBITDA was €1,848 million, up
60%, and ROCE increased to 23.7%. Our
businesses achieved higher average selling
prices which offset materially higher input
costs. Corrugated Packaging increased
underlying EBITDA by 22% to €662 million
(2021: €543 million) and Flexible Packaging
grew underlying EBITDA 41% to €797 million
(2021: €567 million). Uncoated Fine Paper
significantly improved underlying EBITDA,
delivering €427 million in the year (2021:
€55 million), in part due to a higher non-
cash forestry fair value gain of €169 million
(2021: loss of €7 million).
Group revenue of €8,902 million was
up 28% on the prior year. We saw volume
growth in containerboard, kraft paper and
pulp sales following continued investment
across our portfolio, with lower volumes
in corrugated solutions and uncoated fine
paper. Selling price increases were achieved
in all businesses in response to tight market
conditions and inflationary pressures.
Input costs increased materially year-
on-year. Energy costs increased sharply
during the year, driven predominantly by
higher European gas and electricity prices.
We were able to mitigate the impact of
these higher costs as most of our pulp and
paper mills generate the majority of their
energy needs internally, with around 80% of
the fuels used in this process from biomass
sources, and only around 10% of our fuel
sourced from natural gas. Following record
European energy prices in the third quarter
of 2022, these fell sharply in the fourth
quarter but were, on average, sequentially
higher in the second half of the year.
European energy prices are currently
lower than 2022 averages.
Wood costs in central and eastern Europe
were also materially higher on the comparable
prior year period. Increasing demand for
firewood as an alternative energy source to
fossil fuels, coupled with reduced supply due
to less calamity wood on the market, and
the impact of sanctions on the availability
of Russian and Belarusian timber contributed
to the market tightness impacting both
cost and availability. Wood prices remain
at elevated levels but are expected to soften
as the year progresses.
Fixed costs, excluding a higher non-cash
forestry fair value gain of €169 million (2021:
loss of €7 million), were well controlled
although increased year-on-year. The impact
of planned maintenance shuts on underlying
EBITDA in 2022 was around €90 million
(2021: €140 million), which is lower than prior
year due to the prolonged project-related
shut at Richards Bay (South Africa) in the
fourth quarter of 2021. Based on prevailing
market conditions, we estimate that the
impact of planned maintenance shuts in
2023 will be similar to 2022.
Depreciation, amortisation and impairment
underlying charges of €405 million (2021:
€375 million) were higher year-on-year
mainly due to our capital investment
programme.
Underlying operating profit of €1,443 million
was up 85% on 2021. After special items,
relating to the gain on disposal of the Personal
Care Components business, operating profit
was €1,685 million, up 114%. Basic earnings
per share of 244.5 euro cents were up 118%
compared to 2021.
Underlying EBITDA development
(€ million)
2,342
(1,879)
(38)
90
176
1,848
(405)
242
1,685
1,157
Underlying
EBITDA
(2021)
Sales
prices
Costs
Sales
volumes
Currency
effects
Forestry fair
value gain
Underlying
EBITDA
(2022)
Depreciation,
amortisation
& impairments
Operating
special items
Operating
profit
(2022)
Movement in continuing operations’ net debt
(€ million)
1.5x
Net debt
to underlying
EBITDA
(1,689)
1,848
(419)
(569)
0.5x
Net debt
to underlying
EBITDA
(1,011)
(323)
(321)
642
Net debt
at 31 December
2021
Underlying
EBITDA
Working
capital
Capital
expenditure1
Tax and
interest2
Dividends
1 Includes forestry assets and intangible assets capital expenditure
2 Including payment of derivative interest
(180)
Forestry fair
value gain
and other
Disposal of
Personal Care
Components
business
Net debt
at 31 December
2022
70 Mondi Group
Integrated report and financial statements 2022
Financial review
Strong cash flow generation
Cash generated from continuing operations
was €1,292 million (2021: €1,001 million),
reflecting the Group’s continued strong
cash generating capability. Working capital
at 31 December 2022 was 14% (2021: 14%)
of revenue, giving rise to an investment in
working capital of €419 million for the year
(2021: €195 million).
Capital expenditure was €508 million
(2021: €481 million) as we continue to pursue
value accretive growth by investing in our
asset base. On the back of our investment
programme, our capital expenditure in
2023 and 2024 is expected to be around
€800-850 million per annum.
We also completed the disposal of the
Personal Care Components business for
an enterprise value of €615 million.
Tax paid was €196 million (2021: €138 million)
and interest paid, including derivative interest,
was €127 million (2021: €78 million). We are
pleased to have paid dividends to shareholders
of €321 million (2021: €298 million) in
the year.
Russian operations
(discontinued operations)
Divestiture of Russian operations
In May 2022, the Board decided to divest
the Group’s Russian assets. Given progress
with the divestment process, the Board
subsequently concluded, in June 2022, that
the Russian operations satisfied the criteria
to be classified as held for sale and that they
should also be classified as discontinued
operations.
In August 2022, the Group entered into an
agreement to sell its most significant facility
in Russia, Joint Stock Company Mondi
Syktyvkar, together with two affiliated
entities (together ‘Syktyvkar’) to Augment
Investments Limited for a consideration of
RUB 95 billion (€1.2 billion, at an exchange
rate of 78.43 Russian rouble versus euro
as at 31 December 2022), payable in cash
on completion. The disposal excludes a
cash balance of RUB 16 billion (€204 million,
at an exchange rate of 78.43 Russian rouble
versus euro as at 31 December 2022)
which is planned to be distributed by form
of dividend to Mondi before completion.
Remittance of this dividend requires the
approval of the Ministry of Finance of the
Russian Federation. The agreement with
Augment Investments Limited has a long
stop date of 12 May 2023 after which
either party can terminate the agreement
without recourse.
In addition, in December 2022, the Group
confirmed it had entered into an agreement
to sell its three Russian packaging converting
operations to the Gotek Group for a
consideration of RUB 1.6 billion (€20 million,
at an exchange rate of 78.43 Russian rouble
versus euro as at 31 December 2022),
payable in cash on completion.
The disposals are conditional on the buyers’
receiving approval from the Russian
Federation’s Government Sub-Commission
for the Control of Foreign Investments and
customary antitrust approvals. The Syktyvkar
disposal is also subject to the approval of
Mondi’s shareholders at a General Meeting.
These approval processes remain ongoing.
As the disposals are being undertaken
in an evolving political and regulatory
environment, there can be no certainty
as to when they will be completed.
As previously announced, it is intended
that the net proceeds from the disposals
and the above mentioned dividend will be
distributed to Mondi’s shareholders as soon
as reasonably practicable following receipt.
Refer to note 26 in the consolidated
financial statements for further information
on the divestiture of Russian operations.
Trading review
The Russian operations generated a profit
after tax of €266 million for the year
(2021: €213 million).
The operations benefited from higher
selling prices which mitigated the impact
of higher input costs and inflationary
impacts. Sales volumes were lower
driven predominantly by the cessation
of containerboard exports to Europe which
were partly redirected to the local market.
As previously announced, all significant
capital expenditure projects at the Group’s
Russian operations were suspended.
Strategic financial priorities
and returns to shareholders
We believe that a strong and stable financial
position, supported by an investment grade
credit rating, increases our flexibility and
provides access to capital markets through
the business cycle. This in turn allows
us to invest through the cycle and take
advantage of strategic opportunities when
they arise. To deliver on our strategy, we
maintain an appropriate capital structure
with a balance between equity and net debt.
The primary sources of our debt include
our €2.5 billion Guaranteed Euro Medium
Term Note Programme and a €750 million
Sustainability Linked Revolving Credit
Facility as detailed below.
We are focused on undertaking selective
organic capital investment opportunities in
our packaging businesses and supporting
the ordinary dividend. To the extent we
have capacity beyond these requirements,
we are able to consider acquisitions and/
or additional shareholder distributions.
We remain focused on allocating capital
while maintaining solid investment grade
credit metrics.
Dividend
We have a disciplined capital allocation
policy ensuring we can invest in the
business through the cycle for long-term
growth and deliver attractive returns, while
supporting the ordinary dividend within
a targeted dividend cover range of two
to three times over the cycle.
With our strong financial position and
confidence in the future of the business,
the Board has recommended an increase
in the final 2022 dividend to 48.33 euro
cents per share. The final dividend, together
with the interim dividend, amount to a total
dividend for the year of 70.00 euro cents
per share, an increase of 8% on the 2021
total dividend.
The final dividend is subject to the approval
of the shareholders of Mondi plc at the
Annual General Meeting scheduled for
4 May 2023 and, if approved, is payable on
12 May 2023 to shareholders on the register
on 31 March 2023.
Net debt and interest
(continuing operations)
€ million
Net debt
2022
2021
1,011
1,689
Net finance costs
143
83
Committed facilities
2,635
2,760
of which undrawn
Net debt to underlying
EBITDA (times)
757
0.5
803
1.5
Managing our financial risks
Our capital structure
Capital employed is managed on a basis
that enables the Group to continue trading
as a going concern, while delivering
acceptable returns to shareholders. We
maintain an appropriate capital structure,
with a balance between equity and net
debt, in order to sustain our investment
grade credit rating.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
71
Our capital employed is used to fund the
growth of the business and to finance our
liquidity needs. We have diverse sources
of funding with various debt maturities.
Our short-term liquidity needs are met
through our €750 million Sustainability
Linked Revolving Credit Facility and available
cash. We aim to maintain sufficient headroom
under this facility for the potential needs
of the Group.
Other primary sources of the Group’s net
debt include our €2.5 billion Guaranteed
Euro Medium Term Note Programme and
financing from various banks and other
credit agencies.
At 31 December 2022, Mondi had a strong
liquidity position of €1,818 million, comprising
€757 million of undrawn committed debt
facilities and cash and cash equivalents held
by continuing operations of €1,061 million.
The weighted average maturity of our
committed debt facilities was 3.8 years.
The Group’s financing agreements do not
contain financial covenants.
Mondi retains a strong financial position.
Continuing operations’ net debt at
31 December 2022 was €1,011 million,
reduced from €1,689 million at 31 December
2021, reflecting the Group’s strong cash
generation and proceeds from the disposal
of the Personal Care Components business.
Net debt to underlying EBITDA ended
the year at 0.5 times (31 December 2021:
1.5 times).
As expected, net finance costs of
€143 million were higher than the prior
year driven by higher interest rates, in
particular in the Czech Republic, Poland
and South Africa, and currency mix effects.
The Group’s investment grade credit ratings
were unchanged with Standard & Poor’s
at BBB+ (stable outlook) and Moody’s
Investors Service at Baa1 (stable outlook).
Currencies
Our global presence results in exposure to
foreign exchange risk in the ordinary course
of business. Currency exposures arise from
commercial transactions denominated
in foreign currencies, financial assets and
liabilities denominated in foreign currencies
and translational exposure on our net
investments in foreign operations.
Our policy is to fund subsidiaries in their
local functional currency wherever practical.
External funding is obtained in a range of
currencies and, where required, converted
into the subsidiaries’ functional currencies
through the swap market.
We hedge material net balance sheet
exposures and forecast future capital
expenditure. We do not hedge our
exposures to projected future sales or
purchases. We do not take speculative
positions with derivative contracts.
Currency movements had a net positive
impact on underlying EBITDA of around
€90 million versus the prior year, due to the
effect of the stronger US dollar relative to
the euro on our export-oriented businesses.
Tax
We aim to manage our tax affairs in
accordance with national legislative
provisions and within the guidelines set
down by the Organisation for Economic
Cooperation and Development (OECD).
Our objective is to structure our operations
tax efficiently and take advantage of
available incentives and exemptions
provided by governments for eligible
capital investments, R&D and similar
expenditure. We do not enter into any
artificial arrangements and tax decisions are
made in response to business transactions
and activities.
Our approach to tax is formalised in our
publicly available tax strategy, which the
Board reviews and approves each year.
While ultimate responsibility for the tax
affairs of the Group rests with the Board,
the Executive Committee ensures that the
tax governance framework is aligned with
the principles of financial management
applied throughout the Group. At both
Board and Executive Committee level, the
Group CFO is accountable for the Group’s
tax affairs.
We have dedicated internal tax resources
throughout the organisation, supported
by a centralised Group tax function
that takes day-to-day responsibility for
management of the Group’s tax affairs.
We maintain a detailed set of operational
guidelines aimed at ensuring a robust tax
control environment. In addition, we seek
regular professional advice to ensure that
we remain up to date with changes in tax
legislation, disclosure requirements and
best practice.
Tax risks are monitored on a continuous
basis and are more formally reviewed on
a half-yearly basis by the Audit Committee
as part of our half-yearly reporting
process. The Board formally reviews
tax management activities on an annual
basis. As Mondi operates in a number of
countries, each with a different tax system,
the Group is regularly subject to routine
tax audits and tax authority reviews which
may take a considerable period of time
to conclude. We maintain a constructive
dialogue with tax authorities, working in
a transparent manner to resolve disputes.
Where necessary, provision is made for
known issues and the expected outcomes
of any negotiations or settlements.
The underlying tax charge from continuing
operations for the year was €296 million
(2021: €154 million) giving an effective tax
rate of 22% (2021: 22%), in line with our
expectation.
Maturity profile of net debt
(€ million)
Composition of debt
(€ million)
Currency split of net debt
(€ million)
Within 1 year
1–2 years
2–5 years
>5 years
(959)
523
644
803
Bonds
Lease liabilities
Bank loans
and overdrafts
1,843
128
101
Euro
Polish zloty
Czech koruna
South African
rand
Thai baht
Turkish lira
Other
(121)
361
324
215
109
60
63
The graph excludes net cash of €959 million (maturity within 1 year)
The graph excludes net euro cash of €121 million
72 Mondi Group
Integrated report and financial statements 2022
Principal risks
Managing our risks
Our Group risk management framework and internal
control environment is designed to address the risks
that could undermine our business model and ability
to execute our strategy into the future.
Risk management is by its nature a dynamic
and ongoing process. Risk management is
of key importance given the diversity of the
Group’s locations, markets and production
processes.
In combination with the Audit Committee,
the Board has conducted a robust
assessment of the Group’s principal and
emerging risks and is satisfied that the
Group has effective systems and controls
in place to manage these risks within the
risk appetite levels established.
Our risk management framework
The Board has overall responsibility
for setting the Group’s strategy and is
responsible for monitoring and maintaining
the effectiveness of the Group’s risk
management activities and internal control
processes. The Board has put in place
procedures for identifying, evaluating, and
managing the risks faced by the Group.
The Board has determined the Group’s
residual risk exposure and related risk
appetite, using a risk rating matrix which
takes into consideration both the likelihood
of the risk event occurring and the
magnitude of the impact in the event that
the risk event occurs. The risk rating matrix
is based on the residual risk that the Group
faces after taking into consideration the
internal control environment and related
mitigating actions and controls. The Board
has established specific appetite levels for
each principal risk, ensuring that our risk
exposure remains appropriate at all times.
The Board considers changes in principal
risks and reviews emerging risks during
the year.
The Audit Committee performs an annual
review of the Group’s principal risks and
related mitigation, including consideration
of acceptable risk appetite levels for the
Group. Each of the Group’s principal and
emerging risks is reviewed in detail by
either the Board, the Audit Committee or
the Sustainable Development Committee
through the course of the year, considering
the detailed risk description, the controls
and mitigating actions in place, the level
of internal and external assurance obtained,
and the resultant residual risk exposure.
Business units are required to conduct
an annual, detailed review of their risks
and compile a risk register which is
reviewed and approved by the business
unit operating committees. The risk
management process ensures that the
various business unit operating committees
review the principal and emerging risks in
their respective businesses and identify
the actions and controls to mitigate these
risks. Management assurance is provided
on both a formal and informal basis.
Risk management is embedded in all
decision-making processes and captured
in our policies, procedures and delegated
authorities, with ongoing review by the
Board and risk assessments forming part
of all investment decisions.
Our internal control environment
Our internal controls aim to provide
reasonable assurance as to the accuracy,
reliability and integrity of our financial
information, non-financial disclosures and
the Group’s compliance with applicable
laws, regulations and internal policies,
as well as the effectiveness of internal
processes.
Through our structured approach, the
control environment is subject to regular
oversight and review to reduce the
likelihood of any significant deficiencies
arising, control weaknesses are identified
and addressed, and new or emerging risks
are identified early and monitored regularly.
The Group’s internal control systems have
been in place for the year under review and
up to the date of approval of the Integrated
report and financial statements 2022 and
are in accordance with the Guidance on
Risk Management, Internal Control and
Related Financial and Business Reporting
issued by the Financial Reporting Council.
No significant failings or weaknesses were
identified in the internal control systems for
the year under review.
The Board and its committees have
approved the Group’s financial, business
conduct, operating, and administrative
policies, including those relating to
delegation of signing authorities and
information security. The policies provide
a framework for the Group’s internal
control environment and outline required
standards of behaviour. Business units are
required to ensure that they adhere to
approved Group policies and that they have
implemented their own supporting policies
where appropriate. In line with the approved
delegation of authorities, specific matters
are reserved for Executive Committee
or Board approval, including the approval
of major capital investments, acquisitions,
and disposals.
Management is responsible for
regularly reviewing the Group’s financial
performance, and it is the responsibility
of management at all operational levels to
ensure that risks are appropriately managed
and a proper internal control environment
is in place to anticipate and respond to
risks. The Group’s financial reporting
process includes the monthly results and
management reports, an annual three-year
plan (“budget period”), and three updates
to the first budget year during the course
of that budget year. Detailed monthly
management reports and variance
analyses comparing actual with planned
results are prepared. In-depth reviews of
business units and market developments
are performed regularly, and are designed
to ensure ongoing monitoring of financial
and sustainability performance and early
identification of potential issues and/
or emerging risks. In addition, the Board
reviews the Integrated report and financial
statements to ensure it is fair, balanced and
understandable, and the Audit Committee
reviews and approves the accounting
policies for each financial year.
Overview
Strategic report
Governance
Financial statements
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Integrated report and financial statements 2022
73
External audit
External assurance
is provided through
external audit which
is designed to detect
material errors and
material irregularities
that impact the
financial statements
Internal audit
The Group has a
centrally coordinated
internal audit
function that reports
directly to the Audit
Committee and is
mandated to perform
Group-wide reviews
of key processes,
projects and
systems, based on
the Group’s strategy
and principal risks.
Our risk management framework and internal control environment
Board
Overall responsibility for the Group’s strategy and risk management
Determines risk appetite in line with Group strategy, and approves the Group’s risk management framework
Approves the annual three-year plan
Sustainable Development Committee
Audit Committee
Monitors and reviews material safety, health, environmental
and other sustainable development risks, including climate
change risks and opportunities
Reviews and monitors the adequacy and effectiveness of
the Group’s internal control and risk management processes
Ongoing review of the principal risks through
the course of the year
Approves the annual internal audit plan
Executive Committee
Formulates risk management policies in terms of the approved risk management framework
to ensure risks are managed within accepted tolerance levels
Assesses and monitors risks on an ongoing basis
Business units
Group functions
Hold the ownership, responsibility and accountability
for assessing and mitigating risks as well as implementing
risk management policies and procedures
Responsible for oversight of adherence to the Group’s
policies, procedures and controls; facilitation of the
implementation of risk management practices; and
management of specific risk areas that benefit from
central coordination (e.g. tax, treasury, controlling, legal,
procurement, information management, sustainable
development, safety and health)
Work closely with the business units to manage
and monitor these risk areas
The three levels of assurance in our internal control environment
Operational management
Management review and assurance
Independent assurance
— Key policies and procedures covering
all main areas of business conduct are
approved by the Board and each business
unit and Group function is required to
adhere to these overall Group policies.
— Management is responsible for regularly
reviewing its entity’s operating, financial
and sustainability performance and
for preparing and reviewing monthly
management accounts and business
reports as appropriate.
— Twice a year, all financial managers
are required to complete an internal
control assessment and provide written
confirmation of compliance with Group
policies and procedures. This formal
confirmation highlights any control
weaknesses or deficiencies identified.
— Management is responsible for regularly
reviewing the Group’s operating, financial and
sustainability performance, including monthly
management accounts, and the progress of
significant capital investment projects.
— Management at Group level and, in more
depth, at business unit level is responsible
for a detailed assessment of current market
conditions.
— The Group functions (information
management, controlling, sustainable
development, safety and health, treasury
and tax) each have Board-approved policies
in place against which conduct is regularly
assessed.
— Internal and external audit.
— Regular reviews and vetting by external
regulatory and non-regulatory parties,
as required and as part of our operational
management, including ISO certification,
annual insurance assessments, sustainable
development report assurance and
information security programmes.
— The Group sustainable development key
performance indicators are externally
verified.
Sustainable Development report
www.mondigroup.com/sd22
74 Mondi Group
Integrated report and financial statements 2022
Principal risks
Principal risks in 2022
Over the course of the past year, the Board
and the Audit Committee have reviewed
the Group’s principal and emerging risks.
In evaluating the Group’s risk management
and internal control processes, the Audit
Committee has considered both internal
and external audit reports and received
confirmation from the finance directors of
the business units that the Group’s control
frameworks have operated satisfactorily.
The sustainable development risks considered
throughout our business have been reviewed
by the Sustainable Development Committee
during the year. Sustainable development
risks that are considered to be principal
risks are reviewed by the Audit Committee
as part of the annual review process.
Key changes in the year
The Group’s most significant risks are
long term in nature. The assessment of the
principal risks is updated annually to reflect
the developments in our strategic priorities
and Board discussions on principal and
emerging risks.
During the year, we improved our internal
risk management processes. A revised risk
assessment approach was used to update
our principal risks, providing further detail and
clearer articulation of risk within the Group.
An enhanced risk assurance map was
developed and used to present our principal
risks to the Board, Audit Committee and
Sustainable Development Committee,
facilitating detailed discussions on risk.
The Group remains committed to the
continuous improvement of risk assessment,
risk management and risk reporting.
Our Group risk map was updated to
present an improved visual representation
of the Group’s risks. The updated risk map
presents our principal risks based on a risk
exposure score which assigns a higher
weighting to the impact of a risk event than
to the perceived likelihood. This emphasises
the prioritisation and escalation of risks
that could have the greatest impact to our
business. The principal risks reflected on
the risk map are based on the updated
methodology, with the movement of risks
reflecting changes to principal risks during
the year.
During the year, the risk to energy security
and related input costs was increased.
As the transition to cleaner energy sources
accelerates, accompanied by increased
regulation, the energy supply portfolio
in the regions in which we operate is
undergoing profound long-term changes
(e.g. higher demand for external biomass),
which increases the risk of more volatility
in pricing and major energy interruptions.
Additionally, the impact of the war in
Ukraine on global and specifically European
energy markets is acute and has driven
significant increases in pricing and raised
the risk of access to critical energy supplies.
Climate change continues to drive long-
term structural changes to pricing and
availability of wood. The impact of the
war in Ukraine and related sanctions has
restricted the movement of raw materials,
including Russian and Belarusian wood.
In addition, the European energy supply
balance has been disrupted, resulting in
increasing demand for wood for heating
purposes. Consequently, the cost and
availability of raw materials risk was updated
to reflect an increase in the anticipated
likelihood of occurrence of the risk.
Given the Group’s commitment to divest
its Russian assets and the subsequent
agreements entered into to divest
these assets, the principal risks have
been prepared and presented excluding
our Russian operations. The exclusion of
Russia from our risk assessment has not
significantly impacted the risk exposure
scores presented on the risk map.
Emerging risks
The Board has highlighted the execution
of major capital expenditure projects as
a continued emerging risk. The emerging
risk is managed through mitigating
activities, such that the residual risk
exposure is not considered significant.
All capital expenditure projects are planned
in detail with contingency plans in place
in order to avoid cost overruns and design
and building defects, and to ensure
employee and contractor safety. Post-
investment reviews are conducted on major
capital expenditure projects to evaluate
the project execution against the original
plan and identify lessons learnt. We will
continue to monitor potential risks relating
to executing major capital expenditure
projects in the year ahead.
2
1
4
9
8
12
16
13
15
5
10
11
6
3
14
17
7
t
c
a
p
m
I
Likelihood
Risk movement in the year: 10
11
Pandemic
1. Pandemic risk
Strategic
2. Industry productive capacity
3. Product substitution
4. Fluctuations and variability
in selling prices or gross
margins
Operational
10. Cost and availability
of raw materials
11. Energy security and
related input costs
12. Technical integrity of
our operating assets
13. Environmental impact
5. Country risk
6. Climate change risks
Financial
7. Capital structure
8. Currency risk
9. Tax risk
14. Employee and contractor
health and safety
15. Attraction and retention
of key skills and talent
16. Cyber security risk
Compliance
17. Reputational risk
Overview
Strategic report
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Financial statements
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Integrated report and financial statements 2022
75
Our principal risks
Link to Strategy
Pandemic
1 Pandemic risk
Strategic
2
3
Industry productive capacity
Product substitution
4 Fluctuations and variability in selling
prices or gross margins
5 Country risk
6 Climate change risks
Financial
7 Capital structure
8 Currency risk
9 Tax risk
Operational
10 Cost and availability of raw materials
Risk owner
Executive Committee
(oversight CEO)
Executive Committee
(oversight CEO)
SD Committee (oversight Group
Head of Sustainable Development)
Group CFO
Group Treasurer
Group Head of Tax
Executive Committee
(oversight CEO)
11 Energy security and related input costs
12 Technical integrity of our operating assets
Group Head of Operations
13 Environmental impact
SD Committee (oversight Group
Technical Director & Group Head
of Sustainable Development)
14 Employment and contractor health
Group Head of Safety & Health
and safety
15 Attraction and retention of key skills
Group HR Director
and talent
16 Cyber security risk
Chief Information Officer
Compliance
17 Reputational risk
Executive Committee
(oversight CEO)
Our principal risks, independently or in combination, may impact the Group’s ability to deliver on its strategy. The above table
indicates the components of our strategy that are most likely to be impacted as a result of each principal risk and are defined below:
Drive value accretive growth, sustainably
Drive performance along the value chain
Invest in assets with cost advantage
Inspire our people
Partner with customers for innovation
76 Mondi Group
Integrated report and financial statements 2022
Principal risks
Pandemic risk
Strategic risks
1 Pandemic risk
2 Industry productive capacity
3 Product substitution
Potential impact
— A pandemic may cause the Group to
experience material labour shortages, supply
chain or operational interruptions, higher input
costs or increased cyber security attacks that,
if experienced in the Group’s major facilities
or on a widespread basis, could have a material
adverse effect on the Group’s business.
— A pandemic could potentially impact the
technical integrity of our assets, as contractors,
suppliers and employees’ restricted availability
on our sites limits maintenance and capital
works.
— Increased safety risk to employees and
contractors due to changes in shift patterns
and less interaction by leaders on the mill or
plant floor; general physical and mental health
risks are heightened by a pandemic.
— A pandemic and related lockdowns can have
a severe economic impact, driving changes in
consumer behaviour, demand for some of our
products, and increased risk of additional taxes
being levied by governments.
— A pandemic could increase the Group’s
reputational risk, as communities may become
more vulnerable to loss of livelihoods and more
dependent on major local businesses to secure
jobs, safeguard employee and community
health, and support local organisations.
Mitigation
— Closely monitor latest developments, assess
risks, provide guidance, and implement
preventative policies in line with local
regulations and recommendations.
— Respond with actions to safeguard employee
and community health, secure jobs directly
and indirectly, support and fund local clinics
and hospitals and produce goods and services
needed for everyday life.
— Continuous monitoring of the impact on
business operations with prompt interventions
when necessary. Implement cost controls such
as temporarily ceasing discretionary spend and
postponing non-essential capital expenditure.
— Personal protection measures implemented
at all of our sites, with intensified hygiene and
social distancing protocols that meet or exceed
local and international guidelines and, where
possible, flexible working for employees.
— Implement cost controls such as temporarily
ceasing discretionary spend and postponing
non-essential capital expenditure.
— Digital collaboration tools enable effective
communication for employees with their
colleagues, customers and suppliers; we raise
employee awareness to cyber security risks
and implement additional security measures
related to remote working, including additional
monitoring and testing of our network and all
relevant systems on a regular basis.
— Maintain a strong balance sheet, sufficient
liquidity, investment grade credit metrics and
good relationships with a broad range of banks.
— For any new critical infectious diseases
flagged as likely to develop into a pandemic,
the Group will employ its internal monitoring
and mitigating activities in line with the
safety protocols and government regulations
developed during the COVID-19 pandemic.
Potential impact
— Market supply/demand balance is impacted
by large incremental new capacity additions.
— Unless market growth exceeds capacity additions,
excess capacity may lead to lower selling prices.
— Plant utilisation levels are the main driver of
profitability in paper mills.
— Investments in newer technology may lower
operating costs and provide increased product
functionality, particularly relevant in the converting
businesses, which can increase competition and
impact margins.
Mitigation
— Monitor industry developments in terms
of changes in capacity and utilisation levels both
short and long-term, as well as market trends
and trade flows in our product markets, enabling
us to establish target capacity utilisation levels in
the short term and to evaluate capital investment
projects in the long-term.
— Strategic focus on owning cost-advantaged
assets, with consistent investment to secure
our competitiveness, coupled with increasing
our exposure to structurally growing packaging
markets.
— Partnering with our customers for innovation,
developing sustainable and responsibly produced
products.
— Continuous focus on operational performance,
quality, customer relationships and service,
including developing and applying digital
platforms to drive performance in our operations
and improve customer reach.
— Maintaining strong relationships with machine
suppliers to identify current market developments
and technologies, coupled with a routine review
of our asset portfolio and capacity utilisation
levels to identify underperforming assets and
take decisive action to drive performance.
Potential impact
— Changes in consumer preferences and socio-
economic and demographic trends can affect
the demand for packaging and paper products
in general, and demand for specific grades of
our products in particular.
— Substitution can be to a different packaging or
paper substrate or to a different solution meeting
the same need.
— With increased public awareness of sustainability
challenges and our customers’ focus on sustainable
packaging on balance, our business faces more
opportunities than risks, underpinned by the
transition to more sustainable solutions, although
there could be pressures on certain areas of our
portfolio.
— Product substitution trends, many of which benefit
Mondi are, for example, replacing plastic-based
with paper-based packaging, moving to mono-
material recyclable plastic packaging solutions,
reducing the weight of products, increasing the
recycled content in packaging, demand for certified
and responsibly produced materials and the impact
of digital media on uncoated fine paper demand.
— The increased public and stakeholder focus on the
impact of plastic waste on marine and terrestrial
ecosystems has led to changes in legislation
which can be complex and unclear, and lack
harmonisation which could pose substitution
or related challenges.
— New and evolving legislation such as the Packaging
and Packaging Waste Regulation or Extended
Producer Responsibility schemes may negatively
impact demand for some of our products.
Mitigation
— A wide portfolio of paper-based and flexible
plastic-based solutions, providing protection from
the effects of substitution between the substrates.
— Engagement with customers and consumers
to help understand and drive a more sustainable
approach to their packaging requirements.
— Development of sustainable, competitive and
cost-effective products.
— Continuous focus on products enjoying positive
substitution dynamics and growing regional
markets.
— Regular monitoring of trends and new
developments in our product markets; conducting
customer surveys to get better insight and
response to our customers’ needs.
— Organisational collaboration to find solutions to our
customers’ sustainability challenges by leveraging
our customer-centric approach.
— Continued collaboration with stakeholders across
the value chain such as the Ellen MacArthur
Foundation, CEFLEX and 4evergreen.
— Providing product impact and life cycle analysis
insights to customers through our Product Impact
Assessment (PIA tool), product carbon footprints,
Paper Profiles1 and other expert analysis on
trade-offs.
1 Paper Profile is a uniform environmental product declaration
offered by around 19 European pulp and paper companies
Overview
Strategic report
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Financial statements
Mondi Group
Integrated report and financial statements 2022
77
4 Fluctuations and variability in
selling prices or gross margins
Potential impact
— Price fluctuations in our key paper products can
have material profit and cash flow implications.
— Selling prices are determined by changes in
capacity and demand for our products, which are,
in turn, influenced by macroeconomic conditions,
competitive behaviour, consumer spending
preferences and inventory levels maintained
by our customers.
— Changes in prices differ between products
and geographic regions, and the timing and
magnitude of such changes have varied
significantly over time.
— Gross margins in our converting operations
are impacted by fluctuations in key input costs,
such as paper, which cannot be passed on to
customers in all cases.
Mitigation
— Strategic focus on higher growth markets
and products where we enjoy a competitive
advantage through innovation, proximity
or production cost.
— Continued investment in our high-quality, cost-
advantaged asset base, ensuring we maintain
our competitive cost position while developing
businesses in higher growth markets with better
long-term fundamentals.
— Exposure to price volatility of key input costs is
reduced by our high levels of vertical integration.
— Financial policies and contract structures
take the inherent price volatility of the markets
in which we operate into consideration.
— Ongoing monitoring of current market
fundamentals, market demand trends and market
prices, enabling evaluation of price expectations
in the short-term and increased understanding
of long-term trends.
— Continuous monitoring of our order intake
to identify changing trends and developments
in our own product markets.
— Frequent review of gross margin development in
order to monitor price pass through to customers.
5 Country risk
6 Climate change risks
Potential impact
— The Group has operations across more than
30 countries with differing political, economic
and legal systems. In some countries, such systems
are less predictable than in countries with more
developed institutional structures. Political or
economic upheaval, inflation, changes in laws,
nationalisation, or expropriation of assets may
have a material effect on our operations in those
countries.
— The current macroeconomic environment is
impacted by a number of uncertainties, including
the effects of increased protectionism, use of trade
tariffs and economic sanctions.
— In South Africa, the Group is subject to land claims
and could face adverse land claim rulings.
— Sustained higher inflation is emerging in many
developed economies. Türkiye is experiencing
a hyperinflationary economic environment.
Mitigation
— Our geographic diversity and decentralised
management structure, utilising local resources in
countries in which we operate, reduce our exposure
to any specific jurisdiction. Our operational
management teams have strong localised
operational experience.
— Capital and debt is structured in each country
based on assessed risks and exposures in order
to mitigate the effect of country specific risks.
— Regular review of our sales strategies to ensure
compliance with trade restrictions and sanctions
and to mitigate export risk in countries with less
predictable environments and, where possible,
obtaining credit insurance.
— Country specific risk premiums are approved
by the Board to be added to the required returns
on investment projects in those countries where
risks are deemed to be higher; new investments
are subject to rigorous strategic and commercial
evaluation.
— Maintain a permanent internal audit presence and
operate asset protection units in large operations
in higher risk locations.
— In South Africa, we continue to engage with
government on land matters and monitor how the
expropriation bill will be implemented. The Group
has settled a number of land claims structured as
sale and leaseback arrangements, which provide
a framework for settling future land claims.
— Regular formal and informal interaction with
government officials, local communities, and
business partners helps us to remain abreast
of changes and new developments.
Potential impact
— Climate change risks will likely impact our
business in the medium- and long-term.
— Our manufacturing operations are energy-
intensive resulting in Scope 1 and Scope 2
greenhouse gas (GHG) emissions.
— Fibre is the main raw material for our products
and forests are an important carbon store,
with sustainably managed forests supporting
a circular bioeconomy.
— Customers and consumers are increasingly
concerned about the consequences of climate
change and are looking for solutions produced
from renewable materials and reduced carbon
footprints. Investors are increasingly focused
on the climate impact of their portfolios.
— Our climate change risks include transition and
physical risks. Transition risks include regulatory
risks, for example GHG emissions regulatory
changes and energy supply cost volatility due
to changes in future energy supply mix. Physical
risks include the impact of water shortages due
to drought or changing precipitation patterns and
increased costs driven by a shortage of wood
supply in the long-term due to physical impacts
such as droughts, pests and diseases.
Mitigation
— Reducing our GHG emissions through a
combination of capital investment and ongoing
efficiency programmes to improve our energy
efficiency, optimise the use of biomass-based
fuels and decrease carbon-intensive energy
sources.
— Sourcing our wood from diverse regions and
forest types, mitigates the potential impacts of
climate change on our wood fibre raw material,
particularly in Europe. In South Africa, we
continue to investigate and select trees which
require less water and are more resistant to pests
and disease.
— Monitoring and measuring our impact on climate
change, reporting and having our GHG emissions
and energy usage independently assured.
— Committing to transition to Net-Zero in line with
a 1.5°C scenario by 2050 and working on reducing
our emissions in line with our approved SBTi
targets across Scope 1, 2 and 3 emissions.
— Through our participation in organisations such
as the We Mean Business Coalition, which aims
to catalyse business action, we support policy
ambition to accelerate the transition to a low-
carbon economy.
— Continuing to investigate the financial implication
of our short-, medium- and long-term climate
change risks and opportunities.
— Investigating and reporting on climate change
risks and opportunities in adherence to
internationally accepted recommendations,
such as those published by the FSB’s TCFD.
TCFD
Page 48-57
78 Mondi Group
Integrated report and financial statements 2022
Principal risks
Financial risks
7 Capital structure
8 Currency risk
9 Tax risk
Potential impact
— A strong and stable financial position enables
strategic flexibility and provides the ability to take
advantage of opportunities as they arise.
— Our ability to raise debt and/or equity financing
is significantly influenced by general economic
conditions, developments in credit markets,
equity market volatility, and our credit rating.
— Failure to obtain financing at reasonable rates
could prevent us from realising our strategy
and have a negative impact on our competitive
position.
Mitigation
— Maintaining strong investment grade credit
metrics provides access to global debt capital
markets.
— Our central treasury function operates under
a Board-approved treasury policy, targeting
investment grade credit ratings and with access
to diverse sources of funding with varying
maturities.
— The majority of our external debt is issued
centrally.
— Regular reporting to the Board on our treasury
management policies.
— Our central treasury function monitors
compliance with treasury policies at operating
level and we engage external advisors to review
the treasury function at regular intervals.
Potential impact
— We operate in a number of countries, all with
different tax systems, and an international tax
environment which is becoming more onerous,
requiring increasing transparency and reporting
and in-depth scrutiny of the tax affairs of
multinational companies, such as the Global
Reporting Initiative’s Tax reporting standard.
— We make significant intragroup charges, the basis
for which is subject to review during tax audits.
Mitigation
— A Board-approved Group tax strategy is reviewed
annually.
— Appropriate and attentive management of our
affairs, with operations structured tax efficiently to
benefit from available incentives and exemptions.
— Dedicated tax resources throughout the Group
supported by a centralised Group tax team.
— Arm’s length principles are applied in the pricing
of all intragroup transactions in accordance with
Organisation for Economic Cooperation and
Development (OECD) guidelines.
— External advisory opinions are obtained where
relevant, including for all major projects with
potential tax consequences such as acquisitions
and restructuring activities, with external
benchmarks used where possible.
— Regular engagement with external advisors to
stay up-to-date with changes in tax legislation
and tax practice.
Potential impact
— As a multinational group, operating globally,
we are exposed to the effect of changes in
foreign currency rates; the impact of currency
fluctuations affects us because of mismatches
between the currencies in which our operating
costs are incurred and those in which revenues
are received.
— Key operating cost currencies that are not fully
offset by local currency denominated revenues
include the South African rand, Polish zloty
and Czech koruna; while the fluctuations in the
US dollar, British pound and Turkish lira can also
have a material impact as our revenues in these
currencies are greater than operating costs
incurred.
— Appreciation of the euro compared with the
currencies of the other key paper-producing
regions or paper pricing currencies, notably the
US dollar, reduces the competitiveness of Mondi
products in Europe compared with imports from
such key paper-producing regions, which can
result in lower revenues and earnings.
Mitigation
— Hedging is utilised for balance sheet exposures
and material forecasted capital expenditures
upon identification.
— Diversification of the Group’s currency
exposure creates natural hedges, as such we
do not hedge our exposure to projected future
sales or operating costs and our businesses
respond to adverse currency fluctuations by
increasing selling prices or increasing exports
where competitiveness improves as operating
currencies weaken; entities also borrow in their
local currencies to minimise translation risk.
— Continuous monitoring of exchange rate
movements and sensitivities, and evaluation of
the impact of exchange variances on our results.
— Regular review of our prices and monitoring
of import and export trade flows.
Overview
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Integrated report and financial statements 2022
79
Operational risks
10 Cost and availability
of raw materials
Potential impact
— We use significant amounts of wood, pulp,
paper for recycling, polymers and chemicals in
our production processes, meaning access to
these raw materials is essential to our operations.
— The prices for many of these raw materials
generally fluctuate in correlation with global
commodity cycles.
— Wood prices and availability may be adversely
affected by reduced quantities of available
suitable wood supply due to increased frequency
of severe weather events, changes in rainfall,
increased pest and disease outbreaks, increasing
use of wood as biofuel, alternate use of wood for
heating and changes in demand for wood as a
building material.
— Climate change is expected to create long-term
structural changes to the pricing and availability
of wood, with temperature and precipitation
changes resulting in a geographic shift of
optimal forest growth areas, and an impact from
forest-related legislative policies mainly driven by
environmental conservation and CO2e emission
reduction targets, particularly in the EU.
— Where raw materials are sourced in areas of
weaker governance, we may face potential social
and environmental risks, poor safety and labour
practices and human rights issues.
— Force majeure events can influence raw material
supply and pricing, directly affecting the market
production and supply balance.
— The war in Ukraine has resulted in sanctions
on the export of Russian and Belarusian wood
and created an imbalance in European energy
markets, increasing the use of wood as an energy
source. These factors have tightened the wood
market in Europe, impacting both the price and
availability of wood.
Mitigation
— Where possible, indexation clauses in revenue
contracts allow the pass-through of major raw
material price movements.
— We are committed to acquiring our raw materials
from responsible sources and avoiding the use
of any controversial or illegal supply.
— Multi-stakeholder processes address challenges
in meeting demand for sustainable fibre; we
encourage legislation for the local collection
of recycled materials.
— Sustainable management of our forestry
operations is key in managing our social and
environmental impact, helping to protect worker
and community rights and develop resilient
landscapes and ecosystems.
— Our operations use multiple suppliers and our
centralised procurement teams work closely with
our operations in actively pursuing longer-term
agreements with strategic suppliers; in Europe,
we source our wood from diverse regions and
forest types to mitigate the potential supply
impacts of unforeseen events. We source wood
from our own managed forests in South Africa.
— Strategic partnerships with suppliers of critical
raw materials enable higher volume allocation
in times of shortages, and a safety stock
programme facilitates exchange of raw materials
within our plant network.
— Our responsible procurement process helps us
to assess and evaluate the performance of our
suppliers and their adherence to our policies.
— Wood and pulp suppliers are assessed as part
of our Due Diligence Management System which
addresses the main legal and sustainability risks.
— In South Africa, we have tree improvement
programmes to produce stronger trees; fire
prevention and firefighting capacity are integrated
into a fire management system with local Fire
Protection Associations and neighbouring
operations.
11 Energy security
and related input costs
Potential impact
— Availability of sufficient and reliable energy supply
is a key focus area; as the transition to cleaner
energy sources accelerates, accompanied by
increased regulation, the energy supply portfolio
is undergoing long-term changes, such as an
increase in demand for renewable energy and
an increase in carbon taxes, which increases the
risk of more volatile pricing as well as potential
for severe energy interruptions.
— Security of supply of gas is subject to political
pressures as a result of the war in Ukraine and
could be intermittent, while renewable energy
sources, such as wind and solar, are subject
to unpredictable physical weather patterns.
Competition for sources of green energy, such
as biomass, causes cost and availability pressures.
— Rapid increases in fuel and energy costs
represent higher direct costs to the Group as
well as for our suppliers, which in turn may seek
to increase prices which may be difficult to pass
on to customers and could cause a contraction
of gross margins.
— Income from the sale of green energy, either from
sales of certificates, subsidies or sales of green
energy to the grid, represent a source of income
for various pulp and paper mills and are subject
to both volatility in price and regulatory changes.
— Availability of sufficient and reliable electricity
supply in South Africa remains a concern and
above inflationary increases are virtually certain.
Mitigation
— Investment in improvements to our energy profile
and increased electricity self-sufficiency, including
the use of renewable energy sources, strengthens
the energy efficiency of our operations while
reducing ongoing operating costs and carbon
emission levels.
— Where we generate electricity surplus to our own
requirements, we may sell such surplus externally;
we also generate income from the sale of green
energy credits in certain of our operations at
prices determined in the open market.
— Our focus on optimising the use of biomass-
based fuels enables reduced use of fossil-based
energy sources, such as carbon-intensive coal.
— Energy costs are closely monitored and
benchmarked against external sources and we
monitor our electricity usage, carbon emission
levels and use of renewable energy; most of our
larger operations have high levels of electricity
self-sufficiency.
— We actively monitor the renewable energy market
fundamentals and changes in legislation and
maintain contact with local energy regulators.
— We have undertaken detailed compliance
assessments regarding Industry Emissions and
Energy Efficiency Directives to determine future
investment requirements.
80 Mondi Group
Integrated report and financial statements 2022
Principal risks
Operational risks continued
12 Technical integrity
of our operating assets
13 Environmental
SASB
14 Employee and contractor
impact
health and safety
Potential impact
— Accidents, incidents and exposure to
occupational health hazards, such as noise and
stress, may cause injury or harm to employees and
contractors, property damage, lost production
time, and/or harm to our reputation.
— Risks include fatalities, serious injuries,
occupational diseases, substance abuse and
instances of violent crime in some jurisdictions.
— General health and mental health risks were
heightened by the pandemic.
Mitigation
— Continuous improvement of safety standards
through monitoring incidents, major close calls
and recordable case rates to transfer learnings
across our operations with the goal of sending
everybody home safely every day.
— Embedded safety management systems
including, among others, risk assessments,
safety procedures and controls.
— We have a goal of zero harm and aim to advance
our 24-hour safety mindset and develop the
desired safety culture as well as focusing on the
Social Psychology of Risk.
— An employee assistance programme
and wellness initiatives are offered across the
countries in which the Group operates in order
to help employees with general health and mental
health concerns.
— We continue to engineer out the most significant
risks in our operations, supported by robust
controls and procedures for operating those
assets and conducting related tasks.
— Our Permit to Work methodology across the
Group supports us to achieve our safety targets.
— Extensive training to ensure that performance
standards and practice notes are communicated
and understood and our incentives are impacted
by the non-achievement of safety milestones
(lag indicators) as well as achievement of lead
indicators.
— Our Task Risk Management Methodology
provides a practical approach to conducting
pre-task risk assessments, and our focus is on
better understanding the high risk tasks in our
operations.
— We apply externally accredited safety
management systems, with continuous
benchmarking against global safety standards,
and conduct regular audits of our operations
to ensure our facilities remain fit-for-purpose.
Potential impact
— We have four major mills, Świecie (Poland),
Štětí (Czech Republic), Ružomberok (Slovakia)
and Richards Bay (South Africa), which account
for approximately 70% of our total pulp and
paper production capacity. If operations at any
of these key facilities are interrupted for any
significant length of time, it could have a material
effect on our financial position or performance.
Our converting operations are spread over a
considerably larger number of plants, providing
risk diversification.
— Incidents such as fires, explosions or large
machinery breakdowns, or the inability of
our assets to perform the required function
effectively and efficiently while protecting our
people, the business, the environment and
stakeholders, could result in property damage,
loss of production, reputational damage, and/or
safety and environmental incidents.
— Regular maintenance and project-related
shuts can experience delays in start-up and
ramp-up due to reliance on external suppliers
and contractors for engineering services and
equipment supplies.
Mitigation
— Our capital investment programme supports
the replacement of older equipment to improve
both reliability and integrity, and our proactive
repair and maintenance approach is designed
to improve production reliability and minimise
breakdown risks.
— We conduct detailed risk assessments of
our high-priority equipment and have specific
processes and procedures in place for the
ongoing management and maintenance of
such equipment.
— We continue to develop our asset management
system to ensure best practices for maintenance
procedures and we have a maintenance training
programme for our employees.
— Benchmarking activities enable us to optimise
our production throughout the organisation
by learning from our best performing operations
and to identify any emerging issues early.
— Digital initiatives utilising advanced analytics,
machine sensors and process automation
enable improved operational efficiency and
asset utilisation; a digital predictive maintenance
approach is in development to support our robust
condition monitoring programme in our mills.
— We actively monitor all incidents and have a
formal process which allows us to share lessons
learned across our operations, identify emerging
issues, conduct benchmarking, and evaluate
the effectiveness of our risk reduction activities.
— External experts perform technical integrity
assessments at our major sites and enhance our
engineering and loss prevention competencies
and capabilities.
— Our Fire Protection programme is supported by
external experts and independent loss prevention
audits and we take out property insurance cover
for key risks.
Potential impact
— Our operations are water, carbon and energy
intensive and generate emissions to air, water
and land. We are subject to a wide range of
environmental laws and regulations, as well as the
requirements of our customers and expectations
of our broader stakeholders. Costs to meet
compliance requirements, such as Best Available
Techniques (BAT), potential restoration and
soil and groundwater clean-up activities, and
increasing costs from the effects of emissions
could have an adverse impact on our profitability.
— The availability of water in water scarce and
stressed areas could pose a risk to continuing
to operate our production facilities to their full
potential.
— As we purchase significant amounts of wood
and fibre on the market and manage plantation
forestry landholdings in South Africa, a decline in
ecosystem functions and loss of biodiversity could
impact the natural resources that we rely on.
Mitigation
— We ensure compliance with all applicable
environmental requirements where we operate;
our own policies and procedures, at or above
local policy requirements, are embedded in all
our operations and are supported by externally
accredited environmental management systems.
— Our focus, as captured by our MAP2030 targets
and commitments, is on a cleaner production
philosophy to address the impact from emissions,
discharge, and waste; we manage our water
resources responsibly to address risks related to
water scarcity, and promote equitable use of water
resources among local stakeholders wherever
we operate.
— We promote the responsible management of
forests and associated ecosystems, protect high
conservation value areas and implement measures
to protect biodiversity.
— We participate in international associations
and engage with universities, NGOs and other
organisations, such as Cepi, WWF, Alliance
for Water Stewardship and the World Business
Council for Sustainable Development’s Forest
Solutions Group.
— We organise specialist internal networks sharing
best practice and comprehensively report and
investigate major environmental incidents to
avoid reoccurrence.
— We monitor our environmental performance
indicators and report our progress against our
targets, with our Scopes 1 and 2 GHG emissions
independently assured to a reasonable assurance
level and Scope 3 receiving limited assurance.
— We monitor regulatory developments to ensure
compliance with existing operating permits and
perform water impact assessments to better
understand our local environmental footprint.
— External verification and assurance of our
sustainability reporting is obtained, including
social, safety, forestry, environmental and product
stewardship KPIs.
— We conduct biodiversity assessments at our
manufacturing and forestry operations to evaluate
our impact on biodiversity and ecosystems, and
develop action plans to manage impacts.
Overview
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Financial statements
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Integrated report and financial statements 2022
81
15 Attraction and retention
of key skills and talent
16 Cyber security risk
17 Reputational risk
Compliance risk
Potential impact
— Access to the right skills, particularly management
Potential impact
— The Group could experience targeted
and untargeted cyber-attacks as cybercrime
continues to increase and attempts are
increasingly sophisticated.
— More employees are working remotely, placing
pressure and further reliance on our IT systems,
increasing data processing requirements and
providing new channels for cyber-attacks.
— The consequences of successful attacks include
compromised data, financial fraud, and system
shutdowns.
Mitigation
— We have a comprehensive IT Security Policy
approved by the Board.
— Extensive training and awareness programmes
are provided for all our users.
— Our IT infrastructure is regularly tested and
our systems are based on well-proven products.
— We conduct regular threat assessments and
utilise external providers.
— The Group’s core IT services are ISO 27001
certified.
— Established incident response and business
contingency plans are in place.
and technical skills, is critical to support the
performance and growth of our business.
— Operations in remote locations or highly
competitive markets make attracting and
retaining skilled employees challenging.
— Losing skills or failing to attract new talent to
our business has the potential to undermine our
ability to drive performance and deliver on our
strategic objectives.
— The economies of Western Europe and the
United States are seeing an ageing workforce
which could present challenges in the future.
Socio-political issues in South Africa result
in skilled workers looking to emigrate.
Mitigation
— Our culture and values play a key role in
empowering and inspiring our people, highlighted
by programmes and collaboration initiatives to
inspire our people throughout our operations.
— We have a zero tolerance policy towards
discrimination and we provide equal opportunities
for all employees.
— The setting of ambitious sustainability
commitments in our MAP2030 framework
supports our reputation as a Group that places
significant importance on sustainability issues,
which assists in attracting and retaining our
people.
— We are investing in employer branding, engaging
in fair and transparent recruitment practices and
have diversity and inclusion, labour and human
rights policies in place.
— Competitive compensation levels through
benchmarking and continue to support and
invest in Group-wide as well as local training
programmes.
— Implemented measures to monitor and manage
succession planning, staff turnover, internal
placements and training.
— Performed 360° feedback at a management
level and regularly conduct performance and
development reviews at a local level.
— In addition to a Group-wide employee survey
approximately every two years, regular pulse
surveys provide focused fast employee
engagement and feedback.
— Through a confidential reporting platform,
SpeakOut, employees and external stakeholders
can raise concerns about conduct that may be
contrary to our values.
Potential impact
— Non-compliance with the legal and governance
requirements and globally established responsible
business conduct in any of the jurisdictions in
which we operate and within our supply chain
could expose us to significant risk if not actively
managed.
— Failure to successfully manage relationships with
our stakeholders could disrupt our operations
and adversely impact the Group’s reputation.
— Fines imposed by authorities for non-compliance
are severe and, in some cases, legislation
can result in criminal sanction for entities and
individuals found guilty.
— Areas of weaker governance present the
challenge of addressing potential human rights
issues in our operations and supply chain; human
rights legislation, such as the UK Modern Slavery
Act 2015, further highlights the need to identify
and address potential risks of child labour,
forced or bonded labour, modern slavery, human
trafficking and other human rights risks in our
supply chain.
Mitigation
— We operate a comprehensive training and
compliance programme, supported by self-
certification and reporting, with personal sanction
for failure to comply with Group policies.
— We engage with our local stakeholders through
formal and informal processes such as our
Socio-Economic Assessment Toolbox (SEAT),
community engagement, and social investments.
— We perform screening of our suppliers for
sustainability risk in accordance with our Code
of Conduct for Suppliers to better align with our
risk criteria and to enable us to more effectively
enforce the Code.
— We continue to assess our governance of
human rights issues and any potential risks in
our operations and supply chain, assisted by the
development of a human rights due diligence
mechanism for our operations.
— Compliance committees are established at a
Group level to monitor the risk relating to trade
controls, data protection, competition compliance
and business integrity – chaired by the Group
CFO with representatives from across the
business. Our legal and governance compliance is
supported by a centralised legal compliance team
and is subject to regular internal audit review.
— We have a confidential reporting platform
(SpeakOut), enabling employees, customers,
suppliers, communities and other stakeholders
to raise concerns about misconduct and
irregularities.
82 Mondi Group
Integrated report and financial statements 2022
Viability statement
As part of the approval of this
Integrated report, the Board has
assessed the Group’s prospects
and viability.
Factors in assessing long-term prospects
The Group’s business model and strategic
framework are described in detail on pages
14-17 and 20-21 respectively. Our strategy is
to deliver value accretive growth sustainably
by focusing on our four strategic value drivers.
These value drivers build on the competitive
advantages we enjoy today, setting a clear
roadmap for investment and operational
decisions into the future. Our performance
against our strategic objectives is discussed
in more detail on pages 22-31.
Mondi’s geographical spread with
100 production sites across more than 30
countries and broad product portfolio help
mitigate potential risks of customer or supplier
liquidity issues. By combining our integrated
value chain, strong relationships, responsible
resource management, and leveraging our
competitive advantages, we create value for
our stakeholders in line with the Mondi Way.
The Group’s financial position, cash flows,
liquidity position and borrowing facilities
are described in the financial statements.
At 31 December 2022, the Group’s continuing
operations had €757 million of undrawn,
committed debt facilities. The weighted
average maturity of the Group’s committed
debt facilities of continuing operations was
3.8 years. The principal loan arrangements
are disclosed in note 20 of the financial
statements. In addition, the Group had
€1,061 million of cash and cash equivalents
available, excluding cash of €320 million
classified as assets held for sale which
is held by the discontinued operations,
to fund its short-term needs.
Assessment of viability
The Board believes that the three years
to December 2025 is an appropriate period
over which a reasonable expectation of
the Group’s longer-term viability can be
evaluated. In coming to this view, the
Board has considered the inherent volatility
in selling prices, input costs and exchange
rates, the time taken for new investments
in pulp and paper production capacity
to be introduced into the market, typical
new product development cycles, and
the Group’s capital structure. Given our
principal risks, the Board believes that
the ability to assess the Group’s longer-
term viability beyond this period becomes
increasingly reduced. For these reasons,
three years also represents the period of
the Group’s formal planning horizon.
The assessment of viability has been based
on the Group’s continuing operations.
Any impact from the discontinued operations
or expected proceeds from disposal are
fully excluded from the assessment.
The Board has considered the Group’s
current financial position, strategy and plans
for the next three years.
The Group’s principal risks identified
on pages 76-81 have been assessed
for potential impact as part of the risk
assessment. Opportunities and challenges
shaping the future of packaging are
described in detail on pages 18-19.
The Group’s three-year 2023-2025 plan
(“budget period”) has been tested for
severe but plausible downside scenarios.
These are summarised in the table at the
bottom of this page.
While linked to the Group’s principal
risks, the scenarios detailed in the table
below are hypothetical and designed to
test the ability of the Group to withstand
such severe outcomes. In an event that
a scenario partly or fully takes place, the
Group has various options available to
maintain liquidity and continue operations.
The scenarios modelled are linked to those
risks which are most likely to occur and
have the most significant impact.
The sales volume compression scenario
(Scenario 1) was calculated with assumed
reductions of up to 5% depending on
the relevant product compared with the
assumptions in each year of the budget
period.
The margin compression scenario
(Scenario 2) was calculated with assumed
reductions of up to 5% depending on
the relevant product compared with the
assumptions in each year of the budget
period.
Both margin and volume sensitivities have
been modelled considering current and
potential future market developments.
Due to the current volatile and
unpredictable situation on the energy
markets, gas and electricity prices in our
major European operations have been
tested in Scenario 3 for price increases and
for the risk of unavailability of gas in certain
periods, based on internal management
assumptions. The impact of higher input
costs, which are usually passed on through
higher sale prices in the converting
operations, have been excluded from the
downside sensitivities, similar to prior years.
Scenario testing
Scenario modelled
Scenario 1
Scenario 2
Scenario 3
Volume compression
Sales volume reduction across pulp and
paper mills and converting operations
Margin compression
Sales prices reduction in pulp and paper mills and
gross margin reduction in converting operations
Input costs inflation
Increase in materials, energy, consumables used
and variable selling expenses
Link to principal risks
2 Industry productive capacity
3 Product substitution
12 Technical integrity of our operating assets
4 Fluctuations and variability in selling prices
or gross margin
10 Costs and availability of raw materials
11 Energy security and related input costs
Scenario 4
Currency risk
Volatility in foreign exchange rates
8 Currency risk
Overview
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Financial statements
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Integrated report and financial statements 2022
83
Furthermore, in Scenario 4 the currency
risk was tested as the wide geographic
spread exposes the Group to the potential
impact of exchange rate fluctuations.
We have evaluated the impact of a weaker
US dollar and Turkish lira exchange rates,
and stronger other emerging market
currencies including the South African
rand, relative to the euro. These currencies
were chosen as the Group has a significant
exposure in them. A 10% weakening and
a 10% strengthening of the respective
currencies against the euro was applied,
based on historical exchange rate
developments.
While the assumptions we have applied in
all four scenarios are possible, they do not
represent our view of the likely outcome.
Testing was performed for Scenarios 1
and 2 individually and in combination for
a duration of three years as these two
scenarios are the ones most likely to
happen in combination.
We have assessed the impact of these
assumptions on the Group’s key financial
metrics over the assessment period,
including profitability, net debt and net
debt to underlying EBITDA.
Based on the results of these scenarios
individually and in combination for
Scenarios 1 and 2, the Board is satisfied
that the Group would be able to respond
to such circumstances through various
means which could include a reduction
and deferral of capital expenditure and
further rationalisation and/or restructuring
of operations, to ensure that the Group
continues to meet its ongoing obligations.
The Group meets its funding requirements
from a variety of sources as more fully
described in the financial statements
in note 20. The Board is satisfied that
the Group will have sufficient liquidity to
meet its needs over the planning horizon.
Testing the compliance with a covenant
is no longer needed as none of the loan
agreements has a financial covenant.
The scenario testing is carried out against
Mondi’s current committed debt facilities,
with the assumption that the Group’s
€500 million Eurobond maturing in April
2024 will not be refinanced. However, the
Group has a track record of successfully
accessing both the bank and debt capital
markets for funding and is expecting to
be able to refinance the facilities if needed.
The Board believes that the strong and
stable financial position of the Group,
supported by a continued strong investment
grade credit rating from both Moody’s
Investors Service (Baa1, outlook stable) and
Standard & Poor’s (BBB+, outlook stable),
ensures the Group has access to funding
through the business cycle.
Taking into account the Group’s strategy,
principal risks and the results of the
downside scenario assessments, the
directors have a reasonable expectation
that the Group will be able to continue
in operation and meet its liabilities as they
fall due over the period of the assessment.
Going concern
The directors have reviewed the Group’s
budget and considered the assumptions
contained in the budget, including
consideration of the principal risks which
may impact the Group’s performance in
the 18 months following the balance sheet
date and considerations of the period
immediately thereafter. The going concern
assessment has been based on the Group’s
continuing operations. Any impact from
the discontinued operations or expected
proceeds from disposal are fully excluded
from the assessment.
The Group has a strong balance sheet.
Continuing operations’ net debt at
31 December 2022 was €1,011 million,
reduced from €1,689 million at 31 December
2021, reflecting the Group’s strong cash
generation and proceeds from the disposal
of the Personal Care Components business.
At 31 December 2022, the Group had a
strong liquidity position of €1,818 million,
comprising €757 million of undrawn
committed debt facilities and cash and cash
equivalents held by continuing operations
of €1,061 million. The weighted average
maturity of our committed debt facilities
was 3.8 years.
The current and possible future impact
from the macroeconomic environment on
the Group’s activities and performance has
been considered by the Board in preparing
its going concern assessment. The base
case forecasts for the Group’s continuing
operations were sensitised to reflect a
severe but plausible downside scenario
on Group performance. The scenario
testing assumed severe but plausible
volume and margin reductions happening
in combination and was carried out against
Mondi’s current committed debt facilities,
with the assumption that the Group’s
€500 million Eurobond maturing in April
2024 will not be refinanced. However, the
Group has a track record of successfully
accessing both the bank and debt capital
markets for funding and is expecting to be
able to refinance the facilities if needed.
In the severe but plausible downside
scenario, the Group has sufficient
liquidity headroom through the whole
period covered.
In addition to its modelled downside going
concern scenario, the Board has reverse
stress tested the model to determine the
extent of downturn which would result in
no liquidity headroom. A decline of 84%
to the planned underlying EBITDA in the
period until 30 June 2024, well in excess
of that contemplated in the plausible
downside scenario, would need to persist
throughout the observed period to result in
no liquidity headroom, which is considered
very unlikely. This reverse stress test also
does not incorporate mitigating actions
like reductions and deferrals of capital
and operational expenditure or cash
preservation responses, which the Group
would implement in the event of a severe
and extended revenue decline.
Following its assessment, the directors
have formed a judgement, at the time
of approving the Integrated report and
consolidated financial statements, that there
are no material uncertainties that cast doubt
on the Group’s going concern status and
that it is a reasonable expectation that the
Group has adequate resources to continue
in operational existence for the foreseeable
future. For this reason, the Group continues
to adopt the going concern basis in
preparing the Integrated report and
financial statements 2022.
84 Mondi Group
Integrated report and financial statements 2022
Ho w i s M o ndi
taki n g actio n o n
c l i m a t e ?
Governance
Chair’s introduction
Board of directors
Executive Committee and Company Secretary
Corporate governance report
Nominations Committee
Audit Committee
Sustainable Development Committee
Remuneration report
Other statutory information
86
88
90
92
107
112
121
124
152
Commit
Sourcing certified wood
We are committed to zero deforestation
and responsible wood sourcing. During 2022,
the increase in demand for wood as an energy
source as well as the impact of sanctions on
Russian and Belarusian timber, contributed to
tightness in Central European wood markets.
Despite these headwinds, we continued
to follow our consistent approach following
the principles of cascading wood use
as we remain committed and on track
to meet our MAP2030 targets.
Overview
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Governance
Financial statements
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Integrated report and financial statements 2022
85
Reduce
Setting bold emissions targets
At Mondi, we are committed to play our part
in tackling the climate crisis and limiting global
warming to 1.5°C. We have a long-standing focus
on reducing GHG emissions in our operations
and improving energy and process efficiencies.
Since our first baseline year for emission
reduction targets in 2004, we have reduced
our absolute Scope 1 and 2 GHG emissions
by 43.5%. Looking ahead, our new science-
based Net-Zero targets have been validated
by the Science Based Targets initiative (SBTi)
to accelerate climate change mitigation.
Secure
Increasing energy efficiency
and self-sufficiency
Improving energy efficiency has always been
an integral part of our roadmap to minimise
the environmental impact of our operations.
Our pulp and paper mills generate most
of their energy needs internally using biomass
and by-products from the pulp manufacturing
process. This secures our energy supply and
allows us to mitigate the impact of external
fuel cost fluctuations while staying on track
to achieve our Net-Zero targets.
86 Mondi Group
Integrated report and financial statements 2022
Chair’s introduction
How has our governance
framework supported our
progress in 2022?
Philip Yea
Chair
Dear fellow shareholder
This report provides you with a
more detailed look at our approach
to governance, how it facilitates
the achievement of our purpose and
strategy, and the Board’s key focus
areas during the year.
During a year of considerable macroeconomic
uncertainty, and wide-ranging impacts of
the war in Ukraine, Mondi’s well-established
governance framework continued to provide
the foundation for a strong, effective and
engaged Board, enabling it to lead the
Group with integrity, and with the long-
term sustainability of the business and the
interests of our stakeholders at the forefront
of all decision-making.
I am pleased that, following the impact
of COVID-19, we were able to resume
face-to-face meetings this year, with
every Board and committee meeting held
predominantly, if not entirely, in-person.
While the culture of transparency, openness
and respect among Board members
and senior managers supported effective
virtual meetings, and the flexibility they
offer can be valuable, it is clear that the
relationships that develop and strengthen
during in-person meetings support the
long-term success of the business.
Board composition
At the Annual General Meeting in May, we
said goodbye to Tanya Fratto who retired
from the Board after almost six years as
a non-executive director, five of which
were spent as chair of the Remuneration
Committee. We thank Tanya for her
contribution and wish her all the best
for the future.
As outlined in last year’s report, in August
2021, Enoch Godongwana left the Board
at short notice to become South Africa’s
Finance Minister, and so the Nominations
Committee’s focus towards the end of 2021
and into early 2022 was on the recruitment
of a successor. I am pleased to confirm
that the search successfully concluded
with the appointment of Saki Macozoma
as an independent non-executive director
in May 2022, bringing significant executive
and non-executive experience, and further
strengthening the Board. You can find Saki’s
biography on page 89.
In light of Tanya’s retirement, we also
initiated a search for a new non-executive
director. While we are confident that
appointments made over recent years
have given us a diverse Board with integrity
and depth of experience, looking ahead,
we believe there is benefit in further
broadening the range of skills on the Board.
How we comply with the UK Corporate Governance Code
Mondi aims to comply with the principles and provisions of the July 2018 edition
of the UK Corporate Governance Code issued by the Financial Reporting Council
(available at www.frc.org.uk).
It is the view of the Board that Mondi has applied the principles, and complied
with the provisions, of the UK Corporate Governance Code throughout the year.
The Governance report is structured according to the sections of the UK Corporate
Governance Code 2018 in order to clearly demonstrate how we have applied the principles.
Overview
Strategic report
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Financial statements
Mondi Group
Integrated report and financial statements 2022
87
The focus was on identifying someone
with financial experience to strengthen
the Audit Committee, while at the same
time ensuring we have the broad range
of competencies necessary to achieve our
purpose and strategy, and that any new
appointment supports our commitment
to further increasing the level of diversity
on the Board. I am pleased to confirm
that we have successfully concluded the
search, and that Anke Groth will join the
Board on 1 April 2023. We look forward
to her joining us. Anke’s biography can be
found on page 109.
Our people
The safety and health of our workforce
continues to be a priority for the Board
and is always high on the agenda at every
meeting. While Mondi’s strong safety
culture is deeply embedded across the
organisation, we were deeply saddened
by the fatality of a contractor at our
Frantschach mill (Austria) during the
second half of the year. Our thoughts
go out to their family, friends and work
colleagues. Every effort is made to
understand the circumstances, identify
root causes and implement actions to
minimise the risk of a reoccurrence of such
tragic incidents. We also look to ensure
that all the necessary support is provided
following any serious safety incident,
whether that be support to the families
and work colleagues of those affected,
or to enable those injured to return to work.
More information regarding the actions
we are taking to improve safety can be
found on page 43.
Safety was also a key focus of the
meetings Sue Clark undertook with a
cross-section of employees during the year
in her role as the non-executive director
responsible for understanding the views
of employees. It was raised at every plant
and mill visited by Sue, underlining the
prominence given to safe behaviour across
the business. Besides safety, employees
used the opportunity to discuss a wide
range of issues with Sue, including culture,
recruitment and retention, diversity and
pay and performance. More information
relating to her work, and the Board’s wider
efforts to understand the views of Mondi’s
employees, can be found on pages 94-96.
Details of our engagement with our key
stakeholders more broadly, and how we
consider their interests during decision-
making, recognising the responsibility
we have as a Board in this respect, can
be found on pages 32-35 in our Section
172 statement. During 2022, the views and
interests of our stakeholders were brought
into sharp focus during the discussions
and decision-making required in respect
of the war in Ukraine and the implications
for Mondi’s operations in Russia. While
the Board was unanimous in its decisions
in this regard, it was a clear example of the
constant need to balance competing views,
and our culture of allowing open and honest
debate in the boardroom was crucial.
Long-term sustainability
The impacts of our business, and the
actions we can take to mitigate these
impacts, are subject to increasing scrutiny,
and rightly so. During the year, the
Sustainable Development Committee,
on behalf of the Board, considered a wide
range of issues, from climate-related risks
and opportunities and our progress towards
science-based greenhouse gas emissions
reduction targets, to product stewardship
and our responsible procurement process.
The work being undertaken across the
organisation aimed at managing these
impacts is extensive, and a thorough
understanding of this at Board level
is central to decision-making.
The deliberations of the Sustainable
Development Committee, the meetings of
which are normally attended by every Board
member, provide the Board with valuable
insight, and ensure the Board is in the best
position possible to take decisions that
may affect our broad range of stakeholders.
Further information on the work of the
Sustainable Development Committee can
be found on pages 121-123.
Looking forward
Despite the economic challenges
that face us going into 2023, and the
increasing necessity to limit our impact
on the environment in which we operate,
I remain confident that Mondi has the right
governance framework and culture in place
to support the achievement of our strategy
and purpose, to enable our stakeholders
to achieve their ambitions, and to secure
the long-term sustainable success of the
business.
I would like to thank everyone across
the organisation for their work during
2022, and I look forward to discussions
and engagement with our stakeholders
during 2023.
Philip Yea
Chair
SpeakOut
The Group has an anonymous
grievance system called ‘SpeakOut’,
operated by an independent
third party.
SpeakOut, monitored by the Internal
Audit function and overseen by the
Board and Audit Committee, is a
simple, accessible and confidential
platform through which our employees,
customers, suppliers, and other
stakeholders can raise concerns about
any unethical practices and conduct
contrary to Mondi’s values. The service is
fundamental to ensuring the confidence
of our employees and other stakeholders
in our culture and values.
Any type of concern can be raised
via SpeakOut. The Board and Audit
Committee receive regular reports
of SpeakOut messages received and
ensure that appropriate investigation
into each message has been undertaken
and responses given, with actions taken
where any allegation proves to have some
foundation.
The reports allow the Board to identify
any particular trends and common issues,
with messages classified into categories
including HR-related concerns, business
integrity issues and environmental and
safety topics, and to consider whether
any changes to Mondi’s risk management
processes are required as a result.
The effectiveness of the SpeakOut
platform is kept under regular review.
More information about SpeakOut and
Mondi’s approach to anti-bribery and
corruption in particular can be found
on page 64.
88 Mondi Group
Integrated report and financial statements 2022
Board of directors
Philip Yea
Chair
Andrew King
Group CEO
Mike Powell
Group CFO
Appointed to the Board
April 2020 and as Chair
in May 2020
Independent
Yes (on appointment)
Committee memberships
Nominations (Chair),
Remuneration
Qualifications
Graduated with an MA
in Modern Languages
from Oxford University,
Fellow of the Chartered
Institute of Management
Accountants (UK)
Appointed to the Board
October 2008 and as
Group CEO in April 2020
Independent
No
Committee memberships
Executive (Chair),
Sustainable Development
Qualifications
Graduated in Commerce
from the University of
Cape Town, Chartered
Accountant (South
Africa)
Skills and experience
Philip has extensive listed company experience, both
as an executive and non-executive director, across
a range of sectors. His broad industry background
and knowledge of operating within large, international
corporates, as well as his significant leadership
experience, bring invaluable insight to the Board
and are key to the future growth and development of
Mondi. Philip’s experience and knowledge of UK listed
companies underpins the Board’s commitment to
delivering best practice corporate governance.
Philip started his career as a graduate trainee at
Perkins Engines before holding a range of finance
roles at companies including Mars Ltd and Guinness
plc, becoming Group Finance Director of Diageo plc
on its creation in 1997. He was a managing director
at Investcorp from 1999 to 2004, leaving to become
CEO of 3i Group plc, a role he held until 2009.
He has held a number of non-executive roles,
including Chair at Equiniti Group plc, Greene King
plc and bwin.party digital entertainment plc; Senior
Independent Director at Vodafone Group plc,
Manchester United plc and Computacenter plc;
and non-executive director at Marshall of Cambridge
(Holdings) Ltd, Aberdeen Standard Asia Focus plc,
Rocket Internet SE and HBOS plc.
Current external appointments
None.
Skills and experience
Andrew has more than 20 years’ experience with
Mondi in various strategy, business development and
leadership roles, giving him a detailed understanding
of Mondi’s strategy, capital allocation priorities,
financial structure and the environment in which the
Group operates. He has played a key role in defining
the Group’s strategic direction and re-shaping the
capital structure since listing. Andrew’s long and varied
experience with Mondi brings extensive knowledge
of the markets and conditions in which the Group
operates, providing a key contribution in developing and
executing Mondi’s strategy to enhance competitiveness
and deliver sustainably into the future.
Andrew completed articles with Deloitte & Touche
in Johannesburg in 1994. In 1995 he joined Minorco,
part of Anglo American, as a financial analyst, before
assuming responsibility for the group’s investment
management activities, and transferring to its corporate
finance department in 1998. He worked on a number
of group M&A activities before being appointed a
vice president of Anglo American Corporate Finance
in 1999.
He was appointed Mondi’s Vice President of Business
Development in 2002 and Corporate Development
Director in 2004. He served as CFO of Mondi from
June 2005 to May 2006. He was then appointed as
Group Strategy and Business Development Director
before becoming the CFO of the Mondi Group
in 2008.
Andrew was appointed CEO of the Mondi Group
on 1 April 2020.
Current external appointments
None.
Appointed to the Board
November 2020
Independent
No
Committee membership
Executive
Qualifications
Graduated in Computer
Science & Accounting
from the University of
Manchester, member
of the Chartered
Institute of Management
Accountants (UK)
Skills and experience
Mike has significant financial and strategic experience
and extensive experience leading finance teams, having
been chief financial officer and an executive director
of a number of large international listed companies.
He brings a clear operational focus, strong leadership
experience and knowledge of operating in large
industrial groups across a variety of geographies.
The strategic financial insight Mike brings drives
Mondi’s strong financial performance and culture
of continuous improvement.
Mike started his career at Pilkington plc, spending
15 years in a variety of finance and operational roles.
He went on to become Chief Financial Officer
at Nippon Sheet Glass and then AZ Electronic
Materials plc.
He was subsequently appointed Group Finance
Director at BBA Aviation plc, before being appointed
Group Chief Financial Officer at Ferguson plc,
a multinational distributor of plumbing and heating
products. Mike also served as a non-executive
director of Low & Bonar from December 2016
to May 2020.
Mike joined Mondi as Group CFO in November 2020.
Current external appointments
None.
Stephen Young
Senior Independent
Director
Appointed to the Board
May 2018
Independent
Yes
Committee memberships
Audit (Chair),
Nominations, Sustainable
Development
Qualifications
Graduated in
Mathematics from
Southampton University,
member of the Chartered
Institute of Management
Accountants (UK)
Skills and experience
Stephen brings a strong financial and general
management background to the Board with
experience gained internationally across a variety of
sectors, including industrial and engineering. Stephen’s
experience brings crucial insight to maintaining and
developing Mondi’s robust risk management system
and allows him to act as an experienced sounding
board for executive management.
He spent his early career in commercial accounting
and finance roles at companies including Ford Motor
Company, Mars, Inc and Grand Metropolitan plc (now
Diageo plc). He was Group Finance Director of the
Automobile Association until its acquisition by Centrica
in 2000 before becoming Group Finance Director at
Thistle Hotels plc.
In 2004 Stephen was appointed Group Finance
Director at Meggitt plc, an international engineering
business specialising in aerospace equipment.
He held this role for nine years, before being
appointed CEO in 2013. Stephen stepped down
from the board of Meggitt plc on 31 December 2017.
He was also a non-executive director of Derwent
London plc from 2010 until May 2019.
Stephen was appointed as Senior Independent
Director of Mondi plc on 6 May 2021. To support
Mondi’s compliance with new diversity requirements
in the UK Listing Rules, Stephen will relinquish this
role at the conclusion of the 2023 Annual General
Meeting, with Dominique Reiniche taking over.
Stephen’s position as Chair of the Audit Committee
will not change.
Current external appointments
Non-executive director and Audit Committee Chair
at Weir Group plc.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
89
Svein Richard
Brandtzaeg
Non-Executive
Director
Sue Clark
Non-Executive
Director
Saki Macozoma
Non-Executive
Director
Dominique
Reiniche
Non-Executive
Director
Dame Angela
Strank
Non-Executive
Director
Appointed to the Board
April 2021
Independent
Yes
Committee memberships
Audit, Nominations,
Sustainable Development
Qualifications
PhD in Chemical
Engineering from the
Norwegian University of
Science and Technology
Skills and experience
Svein Richard has a strong commercial and strategic
background as a former chief executive of Norsk Hydro
ASA and more recently as a non-executive director
on a number of boards. His experience of leading
a global industrial group brings valuable insight to the
Board’s strategic planning and driving growth in key
geographies. His leadership experience in developing
business synergies and harnessing sustainable
opportunities are a valuable addition to Board
discussions.
Appointed to the Board
April 2021
Independent
Yes
Committee memberships
Audit, Nominations,
Remuneration
Qualifications
BSc in Biological
Sciences from the
University of Manchester
and an MBA from Heriot
Watt University
Skills and experience
Sue brings to the Board significant commercial
and strategic experience gained across a range
of industries, with exposure to a broad range
of stakeholders in both an executive and non-
executive capacity. Sue has significant experience
in the consumer goods sector and understands the
challenges of changing customer and consumer
preferences and the need to build and protect the
company’s reputation with all its stakeholders.
Sue started her career with the Central Electricity
Generating Board before holding a variety of
communication roles at National Power plc. She went
on to join Scottish Power plc, where she became
Director of Corporate Affairs. In 2000, Sue joined
Appointed to the Board
May 2022
Independent
Yes
Committee memberships
Audit, Nominations
Qualifications
BA in Economics
and Politics from the
University of South Africa
Skills and experience
Saki has a strong track record as a chair and non-
executive director across a number of listed and private
entities and brings to the Board significant experience
from a range of industries. He also brings extensive
insight into the South African business environment,
including into key regulatory and sustainability
considerations for Mondi’s operations in South Africa.
From 1993 to 1994, Saki worked for South African
Breweries as Business Development Manager, before
being elected a member of South African parliament
in 1994, a position he held until 1996. Saki went on to
be appointed a managing director at Transnet Limited,
the company responsible at that time for South Africa’s
rail network, harbours and South African Airways.
He started his career at Ardal og Sunndal
Verk AS, the Norwegian state-owned aluminium
business before it merged with Norsk Hydro
ASA. Svein Richard went on to hold a variety of
management roles at Norsk Hydro, leading a number
of its businesses, before being appointed chief
executive in 2009, a position he held until retiring
in 2019. Svein Richard was also Chair of Veidekke
ASA from 2019 until stepping down in May 2022,
and a non-executive director of Eramet Norway
until October 2022.
Current external appointments
Vice Chair of Den Norske Bank ASA and Dormakaba
Holding AG, and a non-executive director of Swiss
Steel Holding AG.
Railtrack Group plc, before moving to SABMiller plc
in 2003, where she was a member of the executive
management team, and Director of Corporate Affairs
until 2012 and then Managing Director, Europe, until
the business was acquired in 2016.
Sue was a non-executive director of Bakkavor Group
plc until 2020 and Tulchan Communications LLP until
2023, and a member of the Supervisory Board of
AkzoNobel NV until April 2021.
Current external appointments
Senior Independent Director at Imperial Brands plc,
and a non-executive director of Britvic plc. Sue will
also be appointed as a non-executive director of
easyJet plc on 1 March 2023.
In 2001, he joined New African Investments Limited,
a publicly listed investment company, as Chief
Executive Officer, a role he held until 2004. He was
also previously chair of MTN Group Limited and
a non-executive director of Standard Bank Group
Limited, Liberty Holdings and Murray and Roberts
Holdings Limited.
Current external appointments
Chair of Vodacom Group Limited, Safika Holdings
(Pty) Ltd, Tshipi é Ntle Manganese Mining (Pty) Ltd
and Ntsimbintle Mining (Pty) Ltd.
Appointed to the Board
October 2015
Independent
Yes
Committee memberships
Nominations,
Remuneration,
Sustainable Development
(Chair)
Qualifications
MBA from ESSEC
Business School in Paris
Skills and experience
Dominique’s extensive experience in senior business
leadership positions in Europe, as well as in international
strategic consumer marketing and innovation,
provides valuable insight to the Board. Her global
leadership exposure brings rounded insight to Mondi’s
sustainability goals and drives progress to meet the
Group’s ambitious targets.
Her career began with Procter & Gamble before moving
to Kraft Jacobs Suchard as Director of Marketing and
Strategy and a member of their executive committee.
After helping Jacobs Suchard through its acquisition
by Kraft-Mondelez, Dominique joined The Coca-Cola
System in 1992 as Marketing and Sales Director and
then held various roles of increasing responsibility up
to General Manager France. From 2002 to early 2005,
she was CEO Europe for Coca-Cola Enterprises
and subsequently CEO Europe for the Coca-Cola
Company, then Chair from 2013 until stepping down
in 2014.
Dominique was a non-executive director of Peugeot-
Citroen SA between 2012 and 2015, AXA SA between
2005 and 2017 and Severn Trent Plc between 2016
and 2021. She was also Chair of Eurostar International
Limited from July 2019 until April 2022.
Current external appointments
Non-executive director and Chair of Chr.
Hansen Holding A/S and a non-executive director
of Deliveroo plc and PayPal (Europe).
Appointed to the Board
April 2021
Independent
Yes
Committee memberships
Nominations,
Remuneration (Chair),
Sustainable Development
Qualifications
BSc and PhD in Geology
from the University
of Manchester and a
Chartered Engineer
Skills and experience
Angela has extensive experience of operating in
large, international companies in both executive and
non-executive roles, with expertise including operations,
technology and sustainability. Her valuable knowledge
of combining technology, sustainability and low-carbon
energy brings key insight into innovation for circular driven
solutions and business growth, and her international
executive leadership in the UK-listed environment will
prove valuable for guiding executive remuneration.
Angela started her career with the Institute of Geological
Sciences before joining BP plc in 1982, where she held
various international senior leadership and strategic
technology/engineering-focused roles. She was
appointed BP Chief Scientist and Head of Downstream
Technology in 2014 and was appointed to the Group
Executive Committee in 2018, a position she held until
her retirement in 2020. Angela was honoured with a
Damehood (DBE) in 2017, and is a Fellow of the Royal
Society, the Royal Academy of Engineers and the
Institute of Chemical Engineers, as well as an honorary
Fellow of the UK Energy Institute. Angela holds
honorary DSc degrees from Royal Holloway University
and the University of Bradford, and is an honorary
professor of the University of Manchester.
Angela was also a non-executive director of Severn
Trent plc until she stepped down in March 2022.
Current external appointments
Non-executive director of SSE plc and Rolls-Royce
Holdings plc.
90 Mondi Group
Integrated report and financial statements 2022
Executive Committee and Company Secretary
Andrew King
Group CEO
Board of directors
Page 88
Mike Powell
Group CFO
Board of directors
Page 88
Markus Gärtner
CEO, Corrugated
Packaging
Michael Hakes
Group HR Director
Lars Mallasch
Group Technical &
Sustainability Director
Appointed to the
Executive Committee
October 2018
Qualifications
Doctorate of Technical
Sciences from ETH
Zürich and a Master
of Science in Electrical
Engineering from
Stanford University
Skills and experience
Markus has significant industrial and international
business experience. He started his career at McKinsey
& Company, working on numerous operational and
strategic projects across a variety of industries.
Markus went on to join Novelis AG, a leading producer
of rolled aluminium products, where he held various
roles in strategy and sales with growing responsibility,
until he eventually became the head of one of Novelis’
three businesses as Vice President & General Manager
Specialities.
In this capacity, he was responsible for a diverse range
of applications, including consumer packaging solutions
and industrial products.
Markus joined Mondi in September 2018 as CEO,
Fibre Packaging/Paper and was appointed to
the Executive Committee in October that year.
He subsequently became CEO, Corrugated
Packaging in October 2019.
Current external appointments
None.
Appointed to the
Executive Committee
April 2018
Qualifications
Human Resources
Management Degree
from Chamber of
Commerce and Industry
of the Lower Rhine
Region, member of the
Advanced HR Executive
Programme at the
University of Michigan
and the Global Leadership
Programme at INSEAD
Appointed to the
Executive Committee
September 2020
Qualifications
Graduated in Paper
Technology from the
University of Applied
Science in Munich
Skills and experience
Michael has more than 30 years of international
HR experience gained across the automotive,
manufacturing and industrial services sectors.
Michael began his career in various HR roles at
companies across Europe, including the Mitsubishi
Electric Group, Johnson Controls and Faurecia.
In 2007 he was appointed Group Chief HR Officer
at LM Wind Power, a Danish-based supplier of rotor
blades to the wind industry.
Michael went on to become Group Senior Vice
President Human Resources at Germanischer Lloyd
until its merger with Det Norske Veritas in 2013.
Following the merger, he was appointed Executive
Vice President HR of the maritime division of the
newly formed organisation DNV GL, an international
ship and offshore classification society.
Michael joined Mondi in April 2018 as Group
HR Director.
Current external appointments
None.
Skills and experience
Lars has extensive experience in the pulp and paper
industry, having worked in the industry for over 25 years.
Lars began his career with a paper making
apprenticeship and then studied Paper Technology in
Munich. He joined Voith, the global technology company,
in 1997 as Commissioning Engineer for Capital Projects.
Lars subsequently held a variety of management roles
in Voith Paper’s board and packaging division, gaining
a wide range of experience and working internationally
in a number of different countries.
After 14 years with Voith, Lars joined Mondi in 2011
as Group Head of Capital Expenditure, a role he held
for six years.
Alongside this, he held the role of Technical Director
Containerboard between 2012 and 2014 and
Technical Director Packaging Paper from 2014 until
2018. He also held the role of Operations Director
at Mondi’s Štětí mill between 2017 and 2019.
In 2019, Lars was appointed as Mondi’s Corrugated
Packaging Technology and Capex Director and
alongside this, was appointed as Director of
Containerboard Operations at Mondi’s Syktyvkar
and Richards Bay mills in February 2020.
Lars was appointed to his current role, and as a member
of the Executive Committee, in September 2020.
Current external appointments
None.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
91
Vivien
McMenamin
CEO, South Africa
Appointed to the
Executive Committee
October 2017
Qualifications
MSc in Economics from
the University of London
and Advanced High
Performance Leadership
Certificate from IMD
Switzerland
Skills and experience
Viv has over 20 years’ experience in the pulp and
paper industry, having held executive responsibility
in Mondi South Africa for marketing and sales, human
resources, corporate affairs and transformation. Viv’s
roles have included Mondi Group Head of Sustainable
Development and Director Land and Forestry, giving
her significant sustainability experience and insight.
In October 2017, she was appointed CEO of Mondi
South Africa.
Viv was instrumental in the establishment of
Mondi Zimele, Mondi’s small business development
organisation, and crafting Mondi’s innovative approach
to land reform.
Prior to Mondi, Viv worked in government and the
anti-apartheid movement in South Africa, serving
Nelson Mandela as a member of the President’s
Task Force on Local Economic Development and
as a member of President Thabo Mbeki’s Economic
Advisory Panel.
Viv previously served on the boards of SiyaQhubeka
Forests, South African Association for Marine Biological
Research (SAAMBR) and Durban Girls College.
Current external appointments
Non-executive director of KAP Industrial Holdings
Limited.
Thomas Ott
CEO, Flexible
Packaging
Appointed to the
Executive Committee
January 2022
Qualifications
Graduated in business
administration from the
WU-Vienna business
school
Skills and experience
Thomas has extensive experience in the industrial
bags and consumer packaging industries, having held
a variety of roles with Mondi for more than 25 years,
building Mondi’s Industrial Bags business and shaping
Mondi’s portfolio in Europe.
Thomas started his career with Deloitte & Touche
in 1992, before joining Mondi in 1995 as a financial
controller. He went on to hold a number of leadership
roles within Mondi before becoming COO Industrial
Bags in 2012, a role he held until 2019. During this
time, he successfully restructured Western Europe
and supported Mondi’s growth in North America,
the Middle East and Africa.
Thomas briefly moved to Amcor EMEA, focusing
on consumer packaging as a member of the EMEA
executive team in the role VP Food, Snacks and
Confectionery, before returning to Mondi in March
2021 as COO Kraft Paper & Paper Bags.
In January 2022, he was appointed CEO of Mondi’s
Flexible Packaging business.
Current external appointments
None.
Gunilla Saltin
CEO, Uncoated
Fine Paper
Jenny Hampshire
Company Secretary
Appointed to the
Executive Committee
December 2019
Qualifications
MSc in Chemical
Engineering from
the Royal Institute of
Technology in Stockholm,
a PhD in Chemical
Engineering from the
University of Idaho in the
US and an Executive MBA
in General Management
from the Stockholm
School of Economics
Skills and experience
Gunilla has more than 21 years’ experience in the pulp
industry, having worked for Södra Cell, one of the
largest pulp producers, from 2000 until joining Mondi
in August 2019.
Gunilla started her career in R&D engineering, holding
a number of roles in this field before joining Södra
Cell as a process development manager. She went on
to manage Södra’s kraft paper mill in Värö in Sweden
for three years, before being appointed Södra Cell’s
Executive Vice President in 2008, with responsibility
for production, sales and marketing and leading
the business through several investments including
a significant mill extension project.
During this period, Gunilla was also Acting CEO of
Södra Skogsägarna Ekonomisk Förening, a forestry
cooperative with 52,000 forest owners.
Gunilla was appointed Group Technical & Sustainability
Director on 1 December 2019, a role she held until
August 2020, and CEO, Uncoated Fine Paper in
February 2020.
Current external appointments
Member of the Board of Luossavaara-Kiirunavaara
Aktiebolag (LKAB).
Skills and experience
Jenny Hampshire, a fellow of the Chartered Governance
Institute, joined Mondi in May 2007 and has held various
roles in the company secretariat, including five years
as Assistant Company Secretary. She was appointed
Company Secretary of Mondi plc in December 2016.
Prior to joining Mondi, Jenny worked for The BOC
Group plc in its company secretariat.
Diversity of the
Executive Committee
Nationalities represented
on the Executive Committee
Female
Male
2
6
German
South African
Austrian
British
Swedish
Swiss
2
2
1
1
1
1
92 Mondi Group
Integrated report and financial statements 2022
Corporate governance report
Board leadership and company purpose
Promoting long-term
sustainable success
The importance of the role businesses play
in society is self-evident, with increased
scrutiny of how they manage the impacts
they have on the environment in which
they operate and on wider stakeholders.
Having an effective board in place,
consisting of directors with the necessary
skills, knowledge and integrity, is crucial in
understanding and managing these impacts,
and ensuring that Mondi operates both
understanding and fulfilling its responsibility
to society. The Board provides leadership
to the Group, establishing its strategy with
the aim of achieving long-term sustainable
success for the Group, our shareholders
and our other stakeholders. The biographies
for Mondi’s Board members, setting out
the competencies we believe they bring
to the Board and the skills and experience
that allow them to contribute to the long-
term success of Mondi, can be found on
pages 88-89.
Mondi’s purpose, strategy and culture
define The Mondi Way and how we run our
business. This is illustrated in our business
model, set out on pages 14-17, which
explains how we achieve our purpose
and deliver value for stakeholders while
ensuring sustainability is at the centre
of everything we do. Strong, ethical
leadership, supported by a robust corporate
governance framework, is crucial to the
achievement of our purpose and strategy
in a way that balances the interests of our
key stakeholders while creating long-term
sustainable value.
Supported by its committees, the Board
has responsibility for setting and overseeing
the implementation of the Group’s strategy,
ensuring the implementation of an
appropriate risk management framework and
overseeing sustainable financial performance.
Mondi’s governance framework and our
culture of transparency ensure that the Board
has the information it needs to assess the
risks and opportunities facing the Group
and the sustainability of the business model.
The structure of the Board and its
committees, the division of responsibilities
and the policies and procedures in place
to facilitate the effective operation of the
Board are detailed on pages 99-101.
How the Board monitors
culture
Mondi’s culture defines our behaviour and
the way we do business, across the Group,
within our operations and in the boardroom.
It is critical to fulfilling our purpose and
achieving long-term sustainable success.
The Mondi Way sets out the key values
that form the foundation of our culture,
reinforced by our Code of Business
Ethics which comprises the principles
governing the way we behave and conduct
business – legal compliance, behaving with
honesty and integrity, respect for human
rights, consideration of stakeholders and
sustainability. The Board’s responsibility
for assessing and monitoring the culture
of the Group is embedded in the Matters
Reserved for the Board.
There are a number of ways in which the
Board monitors and assesses culture, with
the insight acquired used as context for
discussions and decision-making, including:
Site visits
The directors are encouraged to visit Mondi’s
key assets and operations so that they can
get a more in-depth understanding of the
business. Such visits offer directors the
opportunity to see for themselves how our
safety and sustainability culture is working
in practice, to talk to local management
and employees and to see how Mondi’s
values are communicated at a local level.
During 2022, in addition to visits to sites by
individual directors, the Board visited Mondi’s
mill in Štětí (Czech Republic) and the Group
office in Vienna (Austria), more details of
which can be found on page 96.
SpeakOut
Mondi has an anonymous grievance
system called ‘SpeakOut’ operated by
an independent third party. Any type
of concern can be raised via SpeakOut,
and the Board and Audit Committee
receive regular reports of the messages
received. These reports provide insight
into matters of concern to our employees
and other stakeholders and draw out
behaviour that is contrary to Mondi’s values.
More information relating to SpeakOut
can be found on page 64.
Board presentations
The Board has in place a rolling programme
of presentations from members of the
Executive Committee and other senior
management. These presentations give the
directors direct exposure to members of
senior management beyond the executive
directors, allowing directors the opportunity
to ask questions and hear their views.
The directors also gain valuable additional
insight helpful to succession planning
discussions. Presenters and members of
local management are also invited to attend
Board dinners, which offer a more informal
setting for discussion. More information can
be found on page 103.
Employee survey results
The Board receives regular reports from
the Group HR Director on the results
of our employee surveys, the issues raised
and the follow-up actions being taken,
giving the Board an insight into how
employees feel about the culture of the
Group and particular areas that may need
addressing. Results are classified into
categories including acting with integrity,
caring, being empowered and being
transparent, allowing comparison of the
results in each category against previous
surveys. The last Group-wide survey,
undertaken in 2020, was used to determine
our first Inclusiveness score, combining a
set of questions covering respect, fairness
and trust. Mondi scores above external
benchmarks in the individual questions,
leading to an Inclusiveness score of 79%
favourable answers in 2020. This sets the
baseline for our ambitious target to reach
90% by 2030 and gives us a way of directly
measuring and monitoring aspects of
culture over time. The next Group-wide
survey is due to take place in early 2023.
More information about the way in which
the views of employees are gathered and
assessed can be found on page 32.
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Safety reports and statistics
The Board reviews safety statistics and
key safety focus areas at every meeting.
Caring for our employees is fundamental to
Mondi’s culture and this includes ensuring
safe behaviour. Reviewing the safety reports
highlights to the Board any concerns
around the approach to safety specifically
or indications of wider leadership issues
at particular plants or mills.
Review of key policies
The Board undertakes an annual review
of Mondi’s key policies. This gives the
Board the opportunity to assess whether
policies remain suitable for Mondi, reflect
the appropriate values and approach to
the way the business is run and support
its long-term sustainable success. However,
there were no material changes to Mondi’s
policies as a result of this review during
2022.
Feedback from non-executive director
responsible for understanding the views
of employees
During 2021, Sue Clark was appointed
as the independent non-executive director
responsible for understanding and feeding
back to the Board the views and concerns
of our employees. Sue’s engagement with
our employees provides the Board with
valuable insight into how groups of our
employees are feeling about Mondi and
any matters of concern to them, giving
the Board helpful information concerning
how well the Group’s culture is embedded
across the organisation and any issues
that might need greater attention.
Information relating to the outcomes of
this engagement during 2022 can be found
on page 95.
Stakeholder engagement
Understanding the impact of our
business on our key stakeholders, and the
environment in which we operate, is central
to the Board’s deliberations and decision-
making. This is reflected in Mondi’s Code
of Business Ethics, recognising the fact
that engagement and collaboration with
our stakeholders is essential if we are to
fulfil our purpose, deliver our strategy and
create long-term, sustainable value for
our shareholders in a manner that reflects
our high standards of business conduct.
Understanding what matters most to
all our stakeholders, and what they hope
to achieve, allows us to make balanced
judgements.
While the Board undertakes a certain
level of direct engagement, there is also a
significant amount of indirect engagement
that takes place across the Group.
Through our delegation framework, the
output from this engagement is relayed
to the Board, through the Executive and
other committees of the Board, members
of senior management and those closest
to the stakeholders in question. Details of
our key stakeholders, engagement activities
undertaken during the year and the
outcome of these activities can be found
in our Section 172 statement on pages
32-35. The information provided over
the next few pages and in our Section 172
statement explains how the feedback from
this engagement influences the Board’s
decision-making.
Information enabling the Board to assess
and understand the views and priorities of
our key stakeholders comes from a number
of different sources. During 2022, these
included:
— Presentations from the CEO of each
business unit, and other members
of senior management, highlighting
those stakeholder issues that are
of specific relevance to their business
or area of responsibility, including the
views of our customers and how these
influence product development and key
sustainability considerations (see page
103 for more information).
— Updates on the global initiatives
Mondi participates in, primarily related
to sustainability matters, and collaboration
with external bodies.
— Regular environmental performance
reviews, including metrics on our
greenhouse gas emissions, given at
meetings of the Sustainable Development
Committee, which all Board members
usually attend.
— Presentations from external advisers
and other bodies in relation to matters
impacting the environment in which we
operate, including regulatory changes,
market developments and other issues
directly impacting our stakeholders.
In particular, the President and CEO
of the World Business Council for
Sustainable Development joined the
Board during the year for a discussion
around sustainability focus areas for
external stakeholders, emerging themes
and issues for boards and the actions
Mondi should be considering in response.
On the following pages, we focus more
specifically on how we have engaged with
employees and investors.
How does the Board consider our
stakeholders when taking decisions?
Understanding the views and issues
raised by our stakeholders through the
engagement methods referred to opposite
forms a key part of the Board’s decision-
making process. The regular flow of
information to the Board provides context
and ensures that the directors are made
aware of the interests of our stakeholders
and the key matters affecting them when
directors consider the Group’s strategy
and take decisions.
To assist the Board, all papers requiring
material decisions include clear explanation
as to the expected impact on those
stakeholders relevant to the decision,
whether positive or negative. For capital
expenditure decisions in particular, a more
comprehensive review of the impact on
our stakeholders is part of the established
process we have for developing the
necessary business case.
Examples of the ways in which stakeholder
interests and views have influenced the
Board’s decision-making during the year
can be found on pages 34-35.
94 Mondi Group
Integrated report and financial statements 2022
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Board leadership and company purpose continued
How the Board has engaged
with employees
Our employees are core to Mondi’s
long-term sustainable success, and as
a global employer, employing around
22,000 people across more than
30 countries, we have a responsibility
to provide a safe and healthy working
environment, to operate with integrity
and to instil a culture that supports
our people in fulfilling their potential.
Understanding the experiences and
views of our employees, and the
issues that matter most to them, is an
area of focus for the Board, with this
insight allowing the directors to assess
the impact of their decisions on our
workforce. Rather than use only one
method to engage with employees, we
use a combination of different methods.
Some of our people are office-based
but many work in our production
facilities and so no single method is
suitable. By using a range of methods,
we aim to reach as many people as we
can, engaging with them in the manner
most suitable for them.
Ongoing methods of engagement
In 2021, the Board agreed that Sue Clark, an
independent non-executive director, would
be responsible for undertaking engagement
with Mondi’s employees on behalf of the
Board and for understanding and feeding
back their views and concerns. Sue’s
exposure to a broad range of stakeholders
in both an executive and non-executive
capacity and her previous communication-
focused roles mean she is well positioned
to take on this responsibility. The Inspire
initiative, led by Sue in conjunction
with the Group HR director, facilitates
open discussions with a broad range of
employees at differing levels of seniority
across Mondi’s plants and business units.
The sessions enable employees to share
their thoughts on a diverse range of topics,
including culture, training, safety and
wellbeing, diversity and remuneration.
Alongside this, Mondi has a European
Communication Forum, a formally
constituted body designed to facilitate
communication between Mondi and its
employees. At least once a year, employee
representatives from plants across Europe
attend the Forum, at which a number
of presentations are given by senior
management. The meetings offer employee
representatives an opportunity to hear
about developments across the business,
while also providing an open forum for
employees to ask questions and to express
their views directly to members of senior
management. The meetings are usually
attended by the Group CEO, the Group HR
Director and other Executive Committee
members as appropriate.
The Board also uses the following
mechanisms to ensure it has a broad view
of the issues affecting our employees and
their views on key matters:
— Twice yearly presentations from the
Group HR Director, providing detailed
updates on engagement activities
undertaken, the views expressed by
employees, their key concerns and
issues and the actions being taken
to address them.
— Feedback from the CEO and other
Executive Committee members, who are
in regular contact with a wide spectrum
of employees from across the Group.
— Results of global and local employee
surveys. These provide insight into
the issues that matter most to our
employees and how they feel about
working for Mondi, guiding decisions that
might impact employees and allowing
the Board to identify areas for future
focus. A number of the questions are
also designed to test the culture in the
organisation and to allow the Board
to judge how well the desired culture
is embedded.
— Site visits, giving the Board the
opportunity to engage with local
employees, as well as dinners involving
members of local management, allowing
for informal discussion (see page 96 for
more information).
— Senior leadership forums, incorporating
the Mondi Diamond Awards, usually
attended by the Chair of the Board and
held approximately every three years,
providing the opportunity for engagement
with a wider range of senior employees
from across all areas of the business.
— SpeakOut reports, which are presented
to the Audit Committee and Board
at meetings throughout the year.
The reports provide details of the
messages received via our confidential
reporting platform, SpeakOut, giving the
Board insight into specific issues affecting
our employees and allowing the Board
to identify any trends. Further details on
SpeakOut can be found on page 64.
— Review of usage rates for Mondi’s
Employee Assistance Programme
which offers an anonymous counselling
service for employees. The programme is
available to approximately 94% of Mondi’s
workforce.
The Board continues to believe that
this combination of methods remains
appropriate and effective, providing
insight into the views of a broad range of
employees from across Mondi’s locations
and allowing for two-way engagement,
with employees having direct access
to members of the Board and senior
management.
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95
Key events in 2022
The annual meeting of the European
Communication Forum was held in
October 2022. The meeting was attended
by representatives from across Mondi’s
European operations, as well as members
of senior management, including the
Group CEO, Group HR Director and
Group Head of Safety & Health. Sue Clark
also attended the meeting in her role as
the non-executive director responsible
for understanding the views of employees,
further reinforcing the value of these
meetings and providing employee
representatives with a direct channel
of communication to the non-executive
members of the Board.
The meeting consisted of presentations
relating to matters including financial
performance, HR initiatives and safety and
health, providing attendees with a wide
range of information on the operation of the
business. The formal presentations were
followed by a question and answer session,
allowing participants to openly engage
and to raise questions and comments on
a broad range of topics. Of particular focus
for participants were the divestment of
Mondi’s Russian operations; flexible working
arrangements, including part-time working;
rising inflation and energy costs and the
impact on cost of living for employees; and
Mondi’s SpeakOut platform. Matters raised
during these meetings are subject to
subsequent follow-up where appropriate,
with further information provided to
participants where required and regular
meetings throughout the year between
the Group HR Director and the chair of the
European Communication Forum, ensuring
continuous dialogue.
A dinner was also held for participants,
allowing further opportunity for more
informal engagement outside of the
meeting.
Alongside this, as part of the Inspire
initiative, Sue visited a selection of
Mondi’s sites during the year, including
Romeoville (USA), Örebro (Sweden) and
Świecie (Poland), meeting with a cross-
section of employees and discussing
a diverse range of topics. The meetings,
which were also joined by the Group HR
Director, were open sessions during which
employees were encouraged to share their
views and ask questions on any aspect
of life at Mondi. Sue reported back to
the Board on the matters raised and the
themes emerging during these discussions,
with focus areas including:
— Safety, with the clear message
from employees being that safety is
considered the top priority and that they
feel empowered to cease production
in the event of unsafe behaviour.
— Culture, with employees expressing
confidence in their ability to speak
up and express their views openly.
The consistency of culture across the
plants, despite the differing locations,
style of production and product focus
also came through.
— Challenges with recruiting and retaining
talent, the increasing expectation from
existing and prospective employees
for flexible working arrangements, and
methods and speed of training within
the operations.
— Diversity, with broad discussion
around leadership in this regard,
potential initiatives and concerns
around improving the diversity of
the succession pipeline into senior
operational roles.
In addition, pay and performance
and wider remuneration at Mondi were
discussed, more details of which can be
found in the Remuneration report on
page 127.
The level of engagement and open and
honest dialogue during these meetings
resulted in valuable feedback for the
Board, and the topics discussed and
views expressed provide important
context for Board discussions and
key decisions. The output reaffirmed
the effectiveness of Mondi’s approach
to safety and that leadership and
the desired culture in this regard is
felt throughout the organisation. It is
clear however that continued focus
on succession planning, talent retention
and improving diversity is critical, and
these matters will continue to form
part of the Board’s, and its committees’,
agendas during the coming year.
In addition to the above, the Board
undertook visits to Mondi’s Štětí mill
(Czech Republic) and the Group office
in Vienna (Austria) during the year,
more details of which can be found
on page 96.
96 Mondi Group
Integrated report and financial statements 2022
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Board leadership and company purpose continued
How the Board has engaged
with employees continued
Board
site visits
The June 2022 Board programme was
held at our Štětí mill (Czech Republic).
The two-day visit incorporated the
scheduled Board and committee meetings
but also provided the opportunity for
the Board to listen to presentations
from the local management team and
to tour the mill.
The visit provided valuable context for the
decision subsequently taken in October
2022 to invest in a new 210,000 tonne
per annum kraft paper machine at the
mill. The impact of the investment on key
stakeholders, including customers and
employees, was a key factor in the decision
and so having the opportunity to assess
some of the impacts and to see first-hand
the culture, safety approach, the drive to
improve environmental performance and
the dedication of the employees at the
mill provided critical insight for the Board.
A dinner with representatives from the mill
was also held, offering the opportunity for
direct and more informal engagement with
Board members.
The directors were also able to visit the
converting operations located adjacent
to the mill.
In addition, the October 2022 Board
programme was held at our Group office
in Vienna (Austria), facilitating in-person
engagement between the Board and
members of senior management based
in Vienna. In particular, an invitation to
attend a Board dinner was extended to
a wide group of people, with attendees
ranging from function heads to HR
business partners to key members of
operational management. Such events
offer valuable insight for the purposes of
succession planning and monitoring and
assessment of the organisational culture.
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97
How the Board has engaged
with investors
Understanding the views of our
investors is fundamental to the way
we run the business, the development
of our strategy and how we shape
our priorities. These are taken into
consideration with every decision the
Board makes. The engagement we
have with investors, both directly and
indirectly, allows the Board to determine
which issues are of most importance
to them and to understand what long-
term, sustainable value means from
their perspective. While recognising
that every investor has their own
rationale for investing in Mondi
and that their investment goals vary,
ongoing engagement allows the Board
to take fully informed decisions, with
an understanding of how different
groups of investors may be impacted.
Ongoing methods of engagement
While the Chair is responsible for
ensuring effective communication with
shareholders, day-to-day management of
this engagement is delegated to the Group
CEO and Group CFO. They undertake
active engagement with investors on a
regular basis, meeting with Mondi’s largest
shareholders, analysts and other fund
managers. Meetings with the Chair are
offered on a regular basis and the Senior
Independent Director is available to meet
with shareholders as required, should any
issues arise that are not resolved through
the more regular channels. The committee
chairs are also available for engagement
with investors and other stakeholders where
appropriate.
In addition, the executive management
and the Head of Investor Relations make
themselves available to investors on an
ongoing basis in order to maintain an open
dialogue, resulting in a number of ad hoc
meetings and calls taking place throughout
the year.
The Company Secretary’s office is the focus
for private shareholder communications,
responding to individual shareholder
correspondence, and coordinating our
engagement on corporate governance
matters.
We also maintain ongoing contact with
our debt providers, and the Group CFO
and Group Treasurer hold regular meetings
with the credit rating agencies, relationship
banks and debt investors.
All directors are kept informed of the
views raised and feedback from investors,
particularly from the full and half-year
investor roadshows, which are presented
and discussed at Board meetings. Analyst
reports are shared regularly with the Board
and consideration given to any views,
both positive and negative, regarding
the Group’s performance, future direction
and the perceptions of the management
team. These views provide context for, and
feed into, the Board’s discussions around
strategy, capital allocation and succession
planning.
Mondi’s Annual General Meeting (AGM)
also presents an opportunity for shareholders
to question the directors about our activities,
performance and prospects.
Key events in 2022
Details of the key investor events
that have taken place during 2022 can
be found on page 98. Feedback from
these investor events, particularly the
roadshow meetings, was provided to
the Board, with the feedback covering
investor views on Mondi’s strategy,
market developments and approach
to sustainability. Mondi’s brokers
also joined one of the Board meetings
during the year in order to provide
insight into the views of investors
on Mondi’s presence in Russia and
the long-term options available in this
regard. These perspectives, which
included a range of views, contributed
to the Board’s deliberations concerning
whether to divest Mondi’s Russian
operations.
Alongside this, Philip Yea held
meetings with a number of Mondi’s
major shareholders during the year.
There was no specific agenda for
these meetings, but instead they were
designed to offer open discussion and
engagement. Topics covered included
capital allocation, the impact of the war
in Ukraine, including on Mondi’s Russian
operations, culture and the strength
of senior management. Philip also took
the opportunity to assess views on new
diversity targets and in particular the
forthcoming Listing Rule requirement
to have a female hold at least one of
the four key board roles, being chair,
CEO, CFO and senior independent
director. It was important to understand
the views of investors in this regard, in
particular the speed at which the Board
should look to achieve it. These views
were fed into succession planning
discussions and the decision was taken
to appoint Dominique Reiniche as Senior
Independent Director with effect from
the conclusion of the 2023 AGM.
Engagement with investors was also
undertaken in relation to the Directors’
Remuneration Policy, which is being
put forward to shareholders for approval
at the 2023 AGM. Engagement in this
regard was led by Dame Angela Strank
as chair of the Remuneration Committee.
Further details can be found on page 127.
98 Mondi Group
Integrated report and financial statements 2022
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Board leadership and company purpose continued
How the Board has engaged
with investors continued
The AGM continued to be a valuable
opportunity for direct engagement
between the Board and shareholders.
The AGM in 2022 was our first as a
fully hybrid meeting, with shareholders
able to attend in person for the first
time since the start of the COVID-19
pandemic.
Those shareholders joining virtually
were able to see and hear the Board,
ask questions both verbally and in
written form and vote live during
the meeting. To maximise engagement,
shareholders were also able to submit
their questions in advance of the
meeting, with written answers provided
in advance of the proxy voting deadline
wherever possible. All resolutions were
passed, with approximately 76% of the
total Group shares voted, indicating high
levels of engagement.
While we were pleased with the
success of the AGM in 2022, and
we intend to retain the hybrid format
in 2023, given the cost and complexity
involved, we continue to look for ways in
which we can simplify the arrangements
while continuing to maximise levels
of engagement.
Full details of the arrangements for the
2023 AGM, and explanations of each
resolution to be proposed at the AGM,
can be found in the 2023 AGM notice
which is contained in a separate circular
to be made available to all shareholders
in advance of the meeting.
2022 investor events
March
Preliminary results announcement
UK full year results roadshow, including
Jefferies Paper & Packaging conference
Johannesburg and Cape Town
full-year results roadshow
London investor roadshow
Bank of America Sun City conference
April
Discussions with investors and advisory bodies
prior to Annual General Meeting
May
Annual General Meeting and trading update
UBS Pan European small and mid-cap conference
US investor roadshow
Exane Future of Packaging conference
June
London investor roadshow
August
Half-year results announcement
Johannesburg and Cape Town
half-year results roadshow
September
London half-year results roadshow
October
Trading update
Overview
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Financial statements
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Integrated report and financial statements 2022
99
Division of responsibilities
Composition and
independence of the Board
The directors holding office during the
year ended 31 December 2022 are listed
opposite, together with their attendance
at Board meetings. Biographical details
for those in office at the date of this report
can be found on pages 88-89.
The size and composition of the Board
and its committees are kept under review
by the Nominations Committee. While
we are of the view that collectively there
is an appropriate balance of capabilities,
business experience, independence
and skills diversity on the Board to meet
the Group’s current business needs,
we are constantly assessing the mix
of competencies on the Board and its
committees and considering succession
planning requirements. A search focusing
on the recruitment of a new independent
non-executive director to strengthen
the financial experience on the Audit
Committee was initiated during the year,
resulting in the decision to appoint Anke
Groth. Further information can be found
on page 109.
Meetings between the Chair and non-
executive directors without management
present are held prior to every Board
meeting. Stephen Young as Senior
Independent Director also met with the
other directors without the Chair present to
lead the review of the Chair’s performance.
Composition
of the Board
Independent non-executive
director tenure
Chair
Executive
directors
Independent
non-executive
directors
Female
Male
1
2
6
3
6
Nationalities represented
on the Board
0–3 years
3–6 years
6–9 years
9+ years
4
1
1
0
British
South African
French
Norwegian
5
2
1
1
Diversity
of the Board
Board attendance1
Directors
Philip Yea
Svein Richard Brandtzaeg
Sue Clark
Tanya Fratto2
Andrew King
12/12
12/12
12/12
4/6
12/12
Saki Macozoma3
Mike Powell
Dominique Reiniche
Dame Angela Strank
Stephen Young
5/6
12/12
12/12
12/12
12/12
1 The maximum number of meetings held during the year that each director could attend is shown next to the number attended
2 Tanya Fratto stepped down from the Board on 5 May 2022. Tanya was unable to attend two meetings prior to the date
of her retirement due to other commitments. One of the meetings was called at short notice
3 Saki Macozoma joined the Board on 6 May 2022. Saki missed one meeting following his appointment due to another
commitment. The meeting was called at short notice and Saki provided his views ahead of the meeting
Board policies and procedures
There are a number of policies in place
designed to ensure that the Board
can function effectively. These include:
Professional advice
A policy is in place pursuant to which
each director may obtain independent
professional advice at Mondi’s expense
in the furtherance of their duties as a
director of Mondi plc. No requests were
received during the year.
In addition, each of the committees
is empowered, through its terms
of reference, to seek independent
professional advice at Mondi’s expense
in the furtherance of its duties.
Directors’ & Officers’ liability insurance
Throughout the year to 31 December
2022, in line with market practice, Mondi
maintained directors’ and officers’ liability
insurance.
Procedure for conflicts of interest
Company law and the articles of
association of Mondi plc allow directors
to manage potential conflicts. A formal
procedure is in place for the reporting and
review of any potential conflicts of interest.
This requires any potential conflicts to
be reported to the Company Secretary
so that the conflict can be discussed by
the Board and authorised if appropriate.
The Board may impose any restrictions on
the authorisation that it thinks appropriate.
Conflict authorisations are reviewed on
an annual basis. Directors are also obliged
to confirm their directorships annually as
a matter of course for review by the Board.
External directorships policy
To ensure that our directors are able to
dedicate sufficient time to Mondi, Mondi
has a policy setting out the parameters
regarding external appointments. Executive
directors must notify and obtain agreement
from the Nominations Committee before
accepting external positions.
They are permitted to retain any fee
paid to them in respect of directorships
external to Mondi. Neither of Mondi’s
executive directors currently holds
a directorship external to Mondi.
The policy also covers non-executive
directors who are required to notify
the Chair of any proposed appointments,
including the time commitment and any
potential conflicts of interest, so that the
Nominations Committee can consider and,
if appropriate, agree to the appointment.
During the year, it was agreed that Svein
Richard Brandtzaeg could join the board
of Dormakaba Holding AG and Sue Clark
the board of easyJet plc as non-executive
directors. After considering their other
commitments, and their attendance
records to date, as well as Svein Richard’s
decision to step down from Eramet
Norway and Sue’s retirement from Tulchan
Communications LLP, it was determined
that they would continue to have the
necessary time to dedicate to Mondi.
100 Mondi Group
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Division of responsibilities continued
Division of responsibilities
The division of responsibilities between the Chair and the Group CEO has been clearly defined and approved by the Board.
The functions and duties of the Senior Independent Director are also set out in a separate statement.
Chair
Philip Yea
Group CEO
Andrew King
Group CFO
Mike Powell
— Leads and manages the Board, setting
— Leads and manages the business with
— Manages the day-to-day operations of
the Group, in this case within his remit as
Group CFO, in accordance with authority
delegated by the Board
— Together with the Group CEO, leads the
relationship with institutional shareholders
Biography
Page 88
the agenda, providing direction and focus,
ensuring effectiveness and open and
transparent debate
— Undertakes regular engagement with
the Group CEO in between meetings
— Ensures there is a constructive relationship
between the executive and non-executive
directors
— Ensures high standards of corporate
governance and ethical behaviour
and oversees the culture of the Group
— Oversees the induction, training and
development of directors and the
consideration of succession
day-to-day responsibility for running the
operations and, in particular, the execution
of strategy within the delegated authority
from the Board
— Ensures the communication of Mondi’s
values and goals throughout the organisation,
leading by example
— Chairs the Executive Committee and leads
and motivates the management team
— Ensures the Group has effective processes,
controls and risk management systems
— Develops and implements Group policies,
including with regard to safety and
sustainability
— Ensures effective communication with
shareholders and other stakeholders
— Together with the Group CFO, leads the
relationship with institutional shareholders
— Ensures the Board receives accurate,
timely and clear information to support
discussion and decision-making
Biography
Page 88
Biography
Page 88
Senior Independent
Director
Stephen Young
— Provides support to, and acts as a sounding
board for, the Chair and the non-executive
directors
— Acts as a point of contact for shareholders
Independent
non-executive directors
Svein Richard Brandtzaeg, Sue Clark,
Saki Macozoma, Dominique Reiniche,
Dame Angela Strank
Company Secretary
Jenny Hampshire
— Provide independent oversight of the
— Supports the Chair in the delivery of
Group’s activities
— Offer an external perspective to, and
constructively challenge, management
— Available as a trusted intermediary for other
— Provide to the Board a diversity of knowledge
directors, as necessary
— Manages chair succession
Biography
Page 88
and experience
— Monitor management performance and the
development of the organisational culture
— Review and agree strategic priorities and
monitor the delivery of the Group’s strategy
— Ensure the integrity of financial reporting
and the effectiveness of internal controls
and risk management
— Determine executive director remuneration
Biographies and portraits
Page 89
accurate and timely information ahead
of each meeting
— Ensures compliance with Board and
committee procedures
— Acts as a key point of contact for Chair
and non-executive directors
— Provides support to the Board and
committees, and advises on governance,
statutory and regulatory requirements
— Provides advice on legal, governance and
listing requirements, in particular relating
to continuing obligations and directors’
duties
Biography
Page 91
Overview
Strategic report
Governance
Financial statements
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Integrated report and financial statements 2022
101
Board leadership and governance
The Board
Nominations
Committee
Oversees the
composition of the Board
and committees and
considers succession
planning and diversity,
making recommendations
to the Board
Audit
Committee
Oversees the Group’s
corporate financial
reporting, the internal
control system,
risk management and
the relationship with the
external auditor
Remuneration
Committee
Responsible for
recommending overall
remuneration policy and
the setting of executive
and senior management
remuneration
Sustainable
Development
Committee
Oversees the Group’s
strategy, commitments,
targets and performance
relating to safety,
the environment,
climate-related matters
and other sustainable
development issues
Read more
Page 107
Read more
Page 112
Read more
Page 124
Read more
Page 121
CEO
Executive
Committee
Day-to-day management
of the Group
Disclosure
Committee
Responsible for classifying
and overseeing the
prompt disclosure of inside
information and overseeing
the creation of insider lists
The primary role of the Board, led by
the Chair, is to ensure the long-term
sustainable success of the Group, taking
into consideration the views and interests
of our key stakeholders. Our governance
processes and procedures provide a
framework to support the Board in the
fulfilment of this role.
There is a clearly defined Schedule of
Matters Reserved for the Board, setting
out those key matters that require Board
approval. The Board meets at least seven
times a year and an annual rolling agenda
is agreed with the Board to ensure that all
key matters reserved for its consideration
are covered in the annual cycle of
meetings. The Board is supported by
a number of committees, each of which has
its own terms of reference and annual work
programme. The Matters Reserved for the
Board and the terms of reference are
reviewed at least annually and are available
on the Group’s website.
The Chair, with support from the Company
Secretary, ensures the distribution of
appropriate, accurate and well-presented
materials, with meeting packs being
circulated electronically a week before
each meeting. Each Board programme
is usually held over two days, enabling the
directors to spend more time together and
form a greater understanding of each other,
developing a culture of trust and openness
in the boardroom.
Where appropriate, other senior executives
and advisers are invited to attend and
present at meetings, providing the
non-executive directors with a broader
perspective on matters under consideration
and assisting the Board with monitoring
performance and achieving its objectives
(see page 103 for more information).
102 Mondi Group
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Division of responsibilities continued
Board activity
The key matters considered by the Board during the year are set out below. While this is not an exhaustive list, it provides insight into the
discussions of the Board and how it aims to promote the long-term success of the Group and achieve its key objectives. In addition to the matters
set out, each meeting includes a report from the Group CEO providing an operational update; a report from the Group CFO on the Group’s
financial performance; an update on safety performance; and a report from the Company Secretary on recent governance and regulatory matters.
Operational performance
Financial performance, funding and capital
— Received regular updates from the Group CEO and detailed
reports from the CEOs of the business units, enabling the
Board to monitor operational performance.
— Monitored the implementation of a number of large
capital expenditure projects, including ongoing projects
at our Kuopio mill (Finland) and our Świecie mill (Poland)
(see page 23 for more information).
— Received presentations in relation to technology developments
in the Paper Bags, Consumer Flexibles and Corrugated
Solutions businesses, and detailed insights into research
and development activities, improving the Board’s knowledge
and providing context for capital investment decisions.
Strategy formulation and monitoring
— Concluded a strategy review session resulting in continued
support for Mondi’s strategic direction and confidence that
Mondi’s strategy is sustainable in the long-term (see below
for more information).
— Considered the impact of the war in Ukraine and ultimately
agreed to divest the Group’s Russian assets (see page 70
for further information).
— Considered and approved the disposal of Mondi’s Personal
Care Components business for an enterprise value of
€615 million, simplifying Mondi’s portfolio and increasing
the focus on Mondi’s core packaging and paper businesses.
— Considered and approved the acquisition of the Duino mill
in Italy for a total consideration of €40m, with the aim of
building on Mondi’s integrated platform.
— Considered and approved a number of capital expenditure
projects, including a €400m investment in a new 210,000
tonne per annum kraft paper machine at our Štětí mill (Czech
Republic), taking into account the sustainability impact of such
investments and the interests of Mondi’s key stakeholders
(see page 23 for more information).
— Reviewed and approved the full- and half-year results and
trading updates.
— Reviewed and approved the Mondi Group Integrated report
and financial statements, ensuring they are fair, balanced and
understandable (see page 118 for more information).
— Considered and monitored the impact of the war in Ukraine
on the Group’s financial position, including in relation to
liquidity and the Group’s debt facilities.
— Considered dividend recommendations and declarations
in light of the Group’s stated dividend policy. This resulted
in the decisions to pay a final dividend in May 2022 and an
interim dividend in September 2022 (see page 70 for more
information).
— Reviewed and approved the Group business plan for 2023–
2025, including the budget for 2023, considering assumptions
made and the reasonableness of the plan and focusing
on the operational overviews, cash flow management and
capital allocation.
— Annual reviews of the Group treasury and Group tax
functions and performance, including funding, liquidity
and insurance.
Governance and stakeholders
— Reviewed the Group’s corporate governance framework
in light of governance and regulatory developments.
— Reviewed investor feedback following the full- and half-year
results announcements (see pages 97-98 for more information).
— Reviewed the interests of key stakeholders, agreeing
that the current stakeholder groups remain appropriate
(see pages 32-35 for more information).
— Reviewed the output from the Board evaluation process and
agreed an action plan (see page 106 for more information).
Strategy review
The Board’s annual in-depth review
of Mondi’s strategy considered where
Mondi is today, its strategic focus,
options for future growth and detailed
business unit strategic initiatives.
The existing strategy was reviewed in the
context of key demand drivers, including
developing macroeconomic conditions,
demand for sustainable packaging and
eCommerce, and the principal risks facing
the Group. Of particular focus were the
growth opportunities available to the
Group, including the Group’s ambitious
expansionary capital investment programme.
In addition, there was a review of the
current challenges faced in respect of wood
sourcing, including supply chain disruptions
and increasing costs, driven primarily by
the war in Ukraine, and energy, with rising
costs, energy self-sufficiency and measures
to minimise reliance on gas discussed in
detail. These topics were relevant to many
of the Board’s discussions throughout the
year, and long-term plans and mitigation
measures in this regard were core to the
Board’s determination of whether the strategic
direction remained sustainable.
These discussions were set against the
backdrop of the Board’s decision to divest
its Russian assets.
The Board ultimately confirmed its
continued support for Mondi’s strategic
direction, confirming the need to ensure
that sustainability continues to be at the
core of Mondi’s strategy.
More information on Mondi’s strategy
can be found on pages 20-21.
Overview
Strategic report
Governance
Financial statements
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Integrated report and financial statements 2022
103
Presentations from
senior management
During the year, members of Mondi’s
senior management presented to
the Board on a variety of topics.
These presentations not only provide
insight into the business directly from
those on the ground but also support
the Board’s focus on succession
planning, allowing Board members to
hear from, speak to and get to know
potential future leaders.
Each of the business unit CEOs provided
updates on their areas of responsibility
within Mondi, focusing on safety performance,
market position and dynamics, financial
performance and people development.
The specific impacts on each business of
developing trends and key strategic drivers
were also reviewed, including sustainability,
eCommerce and digitalisation. The other
members of the Executive Committee also
presented to the Board in relation to their
areas of responsibility. These presentations
included updates on technology developments
in Mondi’s core manufacturing processes from
the Group Technical & Sustainability Director
and employee engagement initiatives from
the Group HR Director.
In addition, the Group Head of Fibre
Sourcing presented Mondi’s long-term
wood sourcing strategy, the Group Head
of Quality updated the Board on initiatives
to improve quality for customers and the
newly appointed Group Communication
Director provided insight into the Group’s
communication strategy and key focus areas
for both internal and external audiences.
The Group Heads of Tax and Treasury also
updated the Board on their current focus
areas. These presentations provided insight
into the priorities of a number of Mondi’s
key stakeholders and also current risk areas.
Safety and sustainability
People and culture
— Monitored safety performance across the Group, including
— Reviewed employee engagement matters, including
the number, type and severity of incidents. In 2022, there was
particular focus on understanding the events that tragically
resulted in a fatality at Mondi’s Frantschach mill (Austria).
views raised by employee representatives at the Employee
Communication Forum meeting in October 2022 (see pages
94-96 for more information).
— Held a discussion with the president and CEO of the World
Business Council for Sustainable Development, advancing
the knowledge of the Board and providing insight into
sustainability focus areas for external stakeholders, emerging
themes and issues for boards and the actions Mondi should
be considering in response.
— Received updates from Sue Clark in her role as
non-executive director responsible for understanding the
views of employees, providing insight into the culture and
key employee issues gained during site visits undertaken
throughout the year (see page 95 for more information).
— Reviewed reports received via Mondi’s anonymous grievance
— Received updates on key sustainability regulatory and best
platform, SpeakOut (see page 64 for more information).
practice developments from the Group Head of Sustainable
Development through the Sustainable Development
Committee, and via regular business unit reviews.
— Monitored the work of the Sustainable Development
Committee, focusing in particular on progress against Mondi’s
MAP2030 sustainability commitments and the Group’s most
material sustainability risks and opportunities. A detailed
explanation of the work of the Sustainable Development
Committee can be found on pages 121-123.
Risk management
— Reviewed the Group’s risk management processes, plan and
risk tolerance levels and internal controls, with consideration
of risk monitoring, activities to ensure risk mitigation and
independent assurance processes. This resulted in a number
of changes based on the recommendations of the Audit
Committee, including increased risk ratings for energy
security and related input costs, and cost and availability
of raw materials (see page 74 for more information).
— Received half-yearly presentations on IT risks and cyber
security (see page 113 for more information).
— Reviewed the Group insurances, ensuring an appropriate
balance of risk between the Group and our external insurers.
— Reviewed and approved the Group’s human trafficking
and modern slavery statement.
Leadership
— Considered and approved the appointments of Saki
Macozoma and Anke Groth as independent non-executive
directors (see page 109 for more information).
— Noted the retirement of Tanya Fratto at the 2022 AGM and
agreed the appointment of Dame Angela Strank as Chair of
the Remuneration Committee with effect from the conclusion
of the 2022 AGM.
— Agreed the appointment of Dominique Reiniche as Senior
Independent Director with effect from the conclusion of the
2023 AGM in response to the new Listing Rule requirement
to have a woman in one of the senior positions on the Board
(see page 108 for more information).
— Monitored the work of the Nominations Committee in relation
to succession and talent management plans, particularly in
relation to the Group CEO and CFO.
104 Mondi Group
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Composition, succession and evaluation
Induction, training and
development
Training and development is important
in ensuring the ongoing effectiveness
of the Board and that we have the right
combination of skills and knowledge.
This begins with an induction for all new
directors. While there is an outline induction
programme in place, this is discussed with
each new director and is tailored to meet
any specific requirements. The aim is to
familiarise a new director with the nature
of the Group’s business and operations,
highlighting the key challenges and
opportunities as well as the regulatory
environment in which the Group operates,
the key duties of the director, including
in relation to Section 172 and stakeholder
interests, and the culture and values of
the Group. All directors are given access
to an online director handbook containing
documents including key policies and the
terms of reference for each committee.
Details of the induction programme for
Saki Macozoma, who joined the Board
in May 2022, are provided below.
We also aim to ensure that existing
directors receive ongoing training and
development opportunities. We offer
the directors the opportunity to keep up
to date with regulatory, governance and
economic changes as well as developments
in the markets and environments in which
we operate. We do this through Board
presentations, both from internal and
external presenters, site visits, updates
aimed at providing wider context to the
Group’s activities and position in the market,
and regular reports from the Company
Secretary highlighting developing trends
and future changes in governance and
regulation. In addition, we aim to hold
at least one Board meeting a year at one
of Mondi’s sites, giving Board members
the opportunity to refresh and develop
their understanding of Mondi’s operations.
Given the international nature of Mondi’s
business, the travel restrictions imposed
by COVID-19 have made site visits difficult
in recent years but during 2022, the Board
was able to resume visits. Further details
can be found on page 96.
Each director can discuss any development
needs with the Chair at any time, but the
opportunity arises more formally during the
annual review process, when discussions
regarding individual performance are held.
In addition, all directors are encouraged
to strengthen and refresh their knowledge
by attending any workshops, seminars and
courses relevant to their respective roles,
and details of the availability of these are
provided regularly.
Saki Macozoma’s
induction
Following Saki’s appointment to the
Board in May 2022, a number of meetings
and briefings were organised in order
to provide him with a detailed overview
of the Group, and to give him the insight
and knowledge required to make as full
and effective a contribution as possible
to the Board upon appointment.
Site visits are also a crucial element
of the induction process, and early
on in his tenure, Saki was able to visit
Mondi’s Štětí mill (Czech Republic)
as part of the wider Board visit in
June 2022. Further information can be
found on page 96. Along with a number
of other Board members, Saki also
visited the Richards Bay mill (South
Africa) in February 2023. The visit
included tours of the mill, nursery and
harvesting operation. This was the
first visit to the Richards Bay mill for
a number of directors, representing
a useful opportunity for them to further
develop their understanding of Mondi’s
operations and to see the results of
recent investment.
Meetings were held with each of
the Executive Committee members,
allowing Saki the opportunity to gain an
understanding of the Group’s business
units, culture, risk areas and priorities,
and providing the context necessary
for matters discussed at Board and
committee meetings. Saki also met
with the Company Secretary early on in
the induction process, with the session
covering matters including directors’
duties, share dealing procedures,
Mondi’s approach to managing conflicts
of interest and key policies.
Given the increasing focus on
sustainability and the relevance of such
matters to Board decisions, meetings
were also arranged with the Group
Heads of Sustainable Development and
Safety & Health. Opportunities for Saki
to meet with other members of senior
management continue to be identified
as part of his ongoing induction.
Overview
Strategic report
Governance
Financial statements
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Integrated report and financial statements 2022
105
2021 Board evaluation process
In 2021, we conducted an internal Board evaluation. The process was supported by Lintstock, an independent governance advisory
firm. Below are the key actions reported last year, and details of the progress we have made against those actions:
Action agreed from 2021 evaluation
Progress achieved
To reinstate full physical attendance at Board meetings,
as well as Board site visits, as soon as safe and practicable
to do so in light of the continuing impact of COVID-19
To continue to develop succession planning at senior
management level, focusing particularly on succession
planning for the Group CEO and CFO
To successfully conclude the recruitment of a new
non-executive director to succeed Enoch Godongwana
To move oversight of the MAP2030 people-related
commitments from the Nominations Committee to the
Sustainable Development Committee, the committee
responsible for overseeing progress against all other MAP2030
commitments, allowing the Sustainable Development
Committee to have full oversight on behalf of the Board
and the Nominations Committee to focus on senior-level
succession planning
Board meetings throughout 2022 were held as full physical
meetings. Site visits resumed, with the Board visiting Mondi’s
Štětí mill (Czech Republic) in June 2022 and the Group office
in Vienna (Austria) in October 2022. Further information can
be found on page 96.
Succession plans for the Executive Committee and other
key roles were reviewed and discussed by the Nominations
Committee in detail during the year. Potential internal successors
for the Group CEO and CFO in particular were assessed, with
consideration given to their development needs. To assist the
Nominations Committee with such planning, opportunities were
provided wherever possible for Board members to meet senior
management. Executive Committee members presented to the
Board, in person, at regular intervals, and Board dinners were
reinstated to allow more time for interaction and discussion.
Other members of senior management were also invited to
join Board meetings where appropriate.
In May 2022, Saki Macozoma was appointed to the Board
as a new non-executive director, concluding the search for
a successor to Enoch Godongwana.
This was completed during the year, with the Sustainable
Development Committee undertaking its first full review of
progress against the MAP2030 people-related commitments
in June 2022. The terms of reference for the committee were
amended accordingly.
To continue the development of Mondi’s strategy in light
of the growing importance of sustainability and ensure
sustainability matters are appropriately considered in all
investment decisions
Sustainability considerations have continued to form
a key part of strategy discussions and all decision-making.
The sustainability implications of all major capital allocation
decisions are evaluated using a standardised template.
106 Mondi Group
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Composition, succession and evaluation continued
2022 Board evaluation process
In line with best practice, in 2022 we conducted an external Board evaluation, the
last one having been in 2019. After considering potential providers, the Nominations
Committee recommended that Lintstock be engaged to undertake the evaluation in
light of the positive engagement with and valuable insight gained from Lintstock during
recent internal evaluations. The Board agreed the recommendation. Lintstock has
no other connection to Mondi beyond the provision of board evaluation services.
Anonymity was ensured throughout the process to allow for the provision of candid
and open feedback by participants. The evaluation process was led by Philip Yea
in conjunction with the Nominations Committee and is set out below.
As a result of the process, the Board
concluded that it continues to operate
in an effective manner, benefiting from
positive dynamics, strong engagement
and relationships with senior management
and a boardroom culture that allows
for open and constructive challenge.
Each director continues to contribute
effectively to the Board.
There was consensus around the
priorities for the forthcoming year, and
the key actions agreed by the Board
as a result of the evaluation include the
following:
— Expand the Board’s regular reviews
of the business units to include greater
detail concerning consumer trends
and their impact on Mondi’s customers
— Expand the scope of the Board’s
review of the development of major
competitors and their strategies
— Increase the Board’s visibility
and understanding of key regulatory
developments, particularly in relation
to sustainability
— Maintain the strong focus on diversity
and inclusion, with the Board to review
steps taken to operationalise the tools
that have been developed across the
business to support improvements
in this regard
— Continue to give in-depth
consideration to executive director
succession
The Board considers that it continues
to benefit from the annual review
process, the results of which help guide
the future focus of meeting agendas
and behaviours.
Engagement
Decision to engage Lintstock
to conduct the evaluation
Questionnaires completed
Questionnaires relating to the Board, committees
and individual performance completed by directors,
the Company Secretary and other regular attendees
at Board and committee meetings
Interviews
One-on-one interviews conducted by Lintstock with each
director and the Company Secretary covering a range
of matters, including the conduct of the Board, strategy
and Mondi’s approach to sustainability
Report issued
Detailed report issued and
reviewed with the Chair
Report considered
Report presented by Lintstock
at a meeting of the Nominations Committee
Action plan recommended
Action plan recommended by the Nominations
Committee and agreed by the Board
Overview
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Financial statements
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Integrated report and financial statements 2022
107
Corporate governance report
Nominations Committee
The committee considered the future needs
of the Board, considering both skills and
diversity. As a result, the committee agreed
that an additional non-executive director should
be recruited. To strengthen the level of relevant
financial experience on the Audit Committee, the
committee agreed that recent financial experience
was a key attribute for potential candidates.
Composition and attendance1
Members throughout the year
Committee member since Meeting attendance
Philip Yea, Chair
Svein Richard Brandtzaeg
Sue Clark
Tanya Fratto2
Saki Macozoma3
Dominique Reiniche
Dame Angela Strank
Stephen Young4
April 2020
April 2021
April 2021
January 2017
May 2022
October 2015
April 2021
May 2018
7/7
7/7
7/7
3/3
4/4
7/7
7/7
6/7
1 The maximum number of meetings held during the year that each director could attend is shown
next to the number attended
2 Tanya Fratto stepped down from the Board and the committee on 5 May 2022. Tanya attended
all meetings up to the date of her retirement
3 Saki Macozoma joined the committee on 6 May 2022. Saki attended all meetings following
his appointment
4 Stephen Young was unable to attend one meeting during the year due to an unavoidable
commitment
Other regular attendees
— Group CEO
Philip Yea
Chair of the Nominations Committee
Dear Shareholder
I am pleased to present this report, which
provides an overview of the areas of focus
for the committee during the year, and
those for the year ahead, as well as its key
activities and the framework within which
it operates.
Composition
To ensure the committee has access to as
wide a range of knowledge and experience
as possible, each non-executive director
is a member. In line with this practice, Saki
Macozoma joined the committee upon his
appointment to the Board in May 2022.
Tanya Fratto stepped down from the
committee in May 2022 following her
retirement from the Board, and I would
like to thank her for her contribution to the
committee.
Areas of focus
The key focus of the committee is to ensure
that the composition of the Board and its
committees is appropriate and relevant
to the Group, and that the Board continues
to be in the best position to deliver the
Group’s strategy and to ensure that the
business operates in line with Mondi’s
purpose, culture and values. This includes
overseeing Board diversity and succession
matters.
The Board believes diversity, in all its forms,
is key to long-term sustainable success,
and this continues to underpin the Board’s
succession and recruitment plans. During
the year, we were pleased to welcome
Saki to the Board. Saki brings significant
business experience and his insight into
the South African business environment is
valuable given Mondi’s origins and footprint.
Following Saki’s appointment, the Board
meets the principles of the Parker Review
in relation to ethnic diversity on boards.
Following Tanya’s retirement, the committee
considered the future needs of the Board,
considering both skills and diversity.
As a result, the committee agreed that an
additional non-executive director should
be recruited. To strengthen the level
of relevant financial experience on the
Audit Committee, the committee agreed
that recent financial experience was
a key attribute for potential candidates.
An external search agency was engaged
and I am pleased to confirm that Anke
Groth will join the Board on 1 April 2023
as an independent non-executive director.
Anke brings significant financial and
commercial experience, and I look forward
to her joining us.
108 Mondi Group
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Nominations Committee continued
From 2023, in line with the UK Listing Rules,
companies will be required to report on
the gender and ethnic diversity of their
boards and executive management, as well
as compliance with targets relating to the
number of women on the board and in key
roles. While these reporting requirements
do not come into force until 2023, given
our commitment to improving diversity
across the organisation, we have made the
decision to report early in this regard. As we
do not currently meet all the targets, the
decision has been made that at the 2023
Annual General Meeting (AGM), Stephen
Young will relinquish his role as Senior
Independent Director and Dominique
Reiniche will take it on. Their other roles
as Chairs of the Audit and Sustainable
Development Committees respectively will
not change. I should like to thank Stephen
for his support as Senior Independent
Director and his willingness to relinquish
the role to support our compliance with
the latest Listing Rule requirements.
In addition, following Anke’s appointment
in April 2023, we will have 40%
female representation on the Board.
The disclosures relating to the gender and
ethnic diversity of the Board and executive
management, in the form specified in the
Listing Rules, can be found on page 111.
Alongside this, the committee continued
to consider succession planning in relation
to the Board and those in key management
and operational roles. While the committee
routinely reviews succession plans in this
regard, last year’s Board evaluation process
identified this as an area requiring more
focus, particularly in relation to the Group
CEO and CFO. In response to this, the
committee considered in detail succession
plans for these roles. The committee was
particularly focused on potential internal
candidates, assessing their readiness for
each role, their development needs and
the support required from the Board and
the organisation as a whole to prepare them
as potential successors. This will remain
a focus for the committee during 2023.
A more detailed overview of the key
matters considered by the committee
during the year can be found below.
Committee effectiveness
The committee’s performance and
effectiveness were reviewed as part of the
Board evaluation undertaken during the
year, more details of which can be found
on page 106. I am pleased to confirm that
the committee is seen to be operating
effectively and fulfilling the duties delegated
to it by the Board.
Philip Yea
Chair, Nominations Committee
Nominations Committee activity
Set out below are some of the key matters addressed by the committee.
Succession planning
— Considered the Board’s succession plans, in
Board evaluation
— Monitored progress against the agreed
relation to existing directors, the requirements
of the Board and committees in the longer
term and the skills and experience required
to support the Group’s future growth strategy.
— Reviewed the succession plans in place for
members of the Executive Committee and
other key positions, both in the short and
long term.
— Discussed the new Listing Rule requirement
for boards to disclose whether they have
met the target of having a female in the role
of CEO, CFO, Chair or Senior Independent
Director, with the committee considering the
actions required to achieve this and the views
of Mondi’s major shareholders. This resulted
in a recommendation to the Board that
Dominique Reiniche be appointed as Senior
Independent Director with effect from the
conclusion of the 2023 AGM.
action plan from the prior year’s evaluation
process (see page 105 for more information).
— Considered and agreed the process for the
2022 evaluation of the Board, committees
and individual directors, to be an externally
facilitated evaluation (as required every
three years) carried out by Lintstock
(see page 106 for more information).
Corporate governance and other matters
— Considered, and recommended to the
Board, the election of Anke Groth and Saki
Macozoma and the re-election of all other
directors at the AGM.
— Reviewed the committee’s terms
of reference, performance and work
programme for 2023.
— Considered, and agreed to, the committee’s
report for inclusion in the Group’s Integrated
report and financial statements.
Board and committee composition
— Completed the search for a South African
non-executive director to succeed Enoch
Godongwana following his resignation,
with the appointment of Saki Macozoma
in May 2022.
— Following the retirement of Tanya Fratto
from the Board in May 2022, recommended
to the Board that Dame Angela Strank
be appointed Chair of the Remuneration
Committee.
— Considered the wider diversity of the
Board and the committees, including
in respect of gender, ethnicity and skills
and experience, resulting in the decision
to initiate a search for a non-executive
director with financial experience.
More details can be found on page 109.
— Reviewed the continued independence
of each non-executive director, including
consideration of their term in office
and any potential conflicts of interest,
concluding that each non-executive
director remained independent.
— Reviewed the time commitment required
of each non-executive director, concluding
that all non-executive directors continued
to devote appropriate time to fulfil their
duties to Mondi.
Overview
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Financial statements
Mondi Group
Integrated report and financial statements 2022
109
Amrop Woodburn Mann, an external
search agency based in Johannesburg,
South Africa, with significant expertise
in the South African market, was
engaged to assist with the selection
process leading to the appointment of
Saki Macozoma. Saki’s biography can
be found on page 89 and details of his
induction programme can be found on
page 104.
In addition, Russell Reynolds Associates,
an external search agency and signatory
to the Voluntary Code of Conduct for
Executive Search Firms, was engaged
to assist with the recruitment of an
additional independent non-executive
director, following the retirement of
Tanya Fratto in May 2022. This led to the
appointment of Anke Groth with effect
from 1 April 2023. Upon appointment
to the Board, Anke will be appointed to
the Audit and Nominations Committees.
Anke’s biography can be found below.
Neither Amrop Woodburn Mann nor
Russell Reynolds Associates provide any
services to the Mondi Group other than
Board-level recruitment.
On appointment, each non-executive
director receives a letter of appointment
setting out, among other things, their
term of appointment, the expected time
commitment for their duties to Mondi and
details of any committee memberships.
Non-executive directors are initially
appointed for a three-year term, subject
to annual re-election by shareholders,
after which a review is undertaken to
consider renewal of the term for a further
three years.
Board appointments
Mondi has a rigorous and transparent process in place for the recruitment and
appointment of directors, led by the committee. This process was followed in relation
to the appointments of Saki Macozoma and Anke Groth as independent non-executive
directors and is set out below.
Key requirements agreed and candidate specification drawn up
taking into account succession planning requirements, gender, ethnic
and other forms of diversity and the key skills and experience required
to strengthen Board and committee capabilities and to ensure they have
the competencies necessary to manage the impacts of the business
External independent search agent engaged
to assist with the selection process
Search conducted and long list of potential candidates
provided for consideration
the long list to include male and female candidates
from a variety of backgrounds
Short list chosen from long list
for interview by the Chair and at least one other appropriate director
Short list reduced to an agreed number of candidates
for interview by other executive and non-executive directors
Nominations Committee considers the preferred candidates
including ability to commit time to the role, confirmation that each individual
would be deemed independent on appointment and the likely views of key
stakeholders, including major shareholders and regulatory bodies and in
relation to financial, sustainability, strategy and risk management experience.
A recommendation is made to the Board
Board considers the recommendation
and whether to proceed with the appointment
Anke Groth’s biography
Anke began her career in the energy industry,
initially in business development and mergers and
acquisitions in two regional energy companies,
before working for E.ON SE from 2001 to 2018.
Her roles at E.ON SE included Vice President
of Mergers & Acquisitions; Chief Financial Officer,
Spain; Senior Vice President Investor Relations and,
from 2016 to 2018, Chief Financial Officer of E.ON
UK plc. In 2018 Anke decided to join KION Group
AG, active in the capital goods sector and publicly
listed on the German stock exchange, as Group
Chief Financial Officer & HR Director, a role she
held until stepping down in 2022.
She is currently a member of the Supervisory Board
at E.ON SE and the Administrative Board at DKV
Mobility Group SE. Anke has a degree in Business
Economics.
Anke’s independence was reviewed and confirmed
as part of the appointment process. At the date of
this report, Anke does not hold any shares in Mondi
plc. Anke has received a letter of appointment
from Mondi plc, the terms of which provide for
her appointment to be terminable on six months’
notice. Her fees will be in accordance with the
details set out on page 132 for non-executive
directors.
110 Mondi Group
Integrated report and financial statements 2022
Corporate governance report
Nominations Committee continued
Diversity & Inclusion
Mondi has a well-established commitment
to encouraging and promoting diversity
and inclusion (D&I) in all its forms. This is
reflected in our behaviour and in one of our
strategic value drivers, Inspire our people.
As a global organisation operating in
more than 30 countries, D&I is integral
to how we do business. Diversity at Board
and committee level and throughout the
workforce provides a broad range of
perspectives, supporting the achievement
of our strategy and contributing to our
success. We are committed to creating a
diverse and inclusive working environment
that is fair and non-discriminatory, from
recruitment and people development
to reward and our approach to talent
management. We strive for an inclusive
environment where differences are valued
and embraced, where our people are
empowered and developed to grow to
their full potential, thereby developing
and maintaining a competitive business
advantage.
The Group’s D&I Policy, which was approved
by the Board, is intended to help us meet
these goals and support the development
of a diverse pipeline, throughout the
organisation and up to the Executive
Committee and the Board. It sets out
guidelines for matters such as recruitment,
the use of search firms, succession and
annual reviews, both at Board level and
for the wider workforce.
The policy can be found on Mondi’s website
www.mondigroup.com/en/sustainability/
governance-of-sustainability
Key elements of the policy include the
following:
At Board and Executive Committee level:
— The Board supports the recommendations
and targets outlined in the FTSE
Women Leaders Review (previously the
Hampton-Alexander Review) in relation to
gender diversity on the Board and across
the Executive Committee and in direct
reports to the Executive Committee,
and is committed to increasing levels
of gender diversity.
— The Board supports the principles and
targets outlined in the Parker Review
in relation to ethnic diversity on boards.
— For Board appointments, Mondi will,
wherever possible, engage executive
search firms that have signed up to the
Voluntary Code of Conduct for Executive
Search Firms.
— Search firms will be requested to include
a sufficient number of credible and suitably
qualified female candidates and candidates
from a variety of ethnic backgrounds.
— The Nominations Committee will review,
at least annually, succession plans in
relation to the Board, the Executive
Committee and other senior managers
in light of D&I levels across the Group
and taking into account skills, experience
and diversity requirements.
— Mondi commits to complying with
the seven UN ‘Women Empowerment
Principles’.
At employee level:
— Recruitment activities are aligned with
the aims of our D&I Policy and applicable
employment/equality legislation in
jurisdictions in which we operate,
including to promote diversity of all types
and to ensure fair and non-discriminatory
working practices.
— We aim to ensure that a sufficient pipeline
of candidates of diverse backgrounds
is considered during succession planning.
— We aim to ensure that the nationalities
of candidates at long- and shortlist
stages are appropriately representative
of our international footprint, subject
to the availability of candidates with the
necessary qualifications and experience.
— We will ensure fair and equal training
and development opportunities.
While appointments at all levels will
continue to be made based on skill and
ability, it is clear that all forms of diversity
are key to ensuring that we have the
right mix of backgrounds, knowledge and
experience to meet our future business
needs and to manage the impacts of our
business. D&I is therefore central to our
succession planning discussions and is
critical to the long-term sustainable success
of our business. Additional information on
the specific process followed for Board-level
appointments can be found on page 109.
In 2022, we reported to the FTSE Women
Leaders Review that as at 31 October 2022,
we had 25% female representation on our
Executive Committee and 25% in the direct
reports to the Executive Committee, giving
a combined total of 25%. As at 31 December
2022, our combined total remained at 25%.
The percentage of women on the Executive
Committee and in the direct reports to
the Executive Committee has declined
compared to 2021, when the combined total
was 30%, due primarily to the retirement
of Mondi’s Group Communication &
Marketing Director who was female.
The majority of the direct reports to this
role were also female. While this role was
not directly replaced, we have a diverse
pool of high-calibre employees within
the Group who have been identified as
having the potential to be appointed to
Executive Committee roles in the future.
Increasing diversity at this level of the
organisation remains a key focus. We also
reported that, following the retirement of
Tanya Fratto from the Board in May 2022,
we had three female directors representing
33% of the composition of the Board as at
31 October 2022. While this percentage
remained the same at 31 December 2022,
we are pleased to confirm that Anke Groth
will join the Board in April 2023, increasing
the percentage of women on the Board to
40%.
In addition, we announced in January 2023
that Dominique Reiniche will be appointed
Senior Independent Director with effect from
the conclusion of the 2023 Annual General
Meeting, satisfying the new Listing Rule
requirement for one of the senior positions
on the Board to be held by a woman.
In 2021, following the resignation of
Enoch Godongwana, Mondi reported that
we did not meet the target of one director
of colour on the Board (as defined by the
Parker Review in relation to ethnic diversity
on boards). During 2022, Mondi appointed
Saki Macozoma and is now compliant with
this target, as well as the new Listing Rule
requirement for at least one board member
to be of a minority ethnic background
(as defined in the Listing Rules).
In line with new Listing Rule disclosure
requirements, against which we have
chosen to voluntarily report this year, more
detailed information relating to the gender
and ethnic diversity of Mondi’s Board and
Executive Committee members can be
found in the tables opposite. The data is
provided in the form specified under Listing
Rule 9.8.6(R)(10) and was collected directly
from the individuals concerned.
Overview
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Financial statements
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Integrated report and financial statements 2022
111
Gender identity/sex of members of the Board and Executive Committee as at 31 Dec 2022
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
4
0
0
6
2
0
75%
25%
0%
Number
of Board
members
Percentage
of the Board
6
3
0
67%
33%
0%
Men
Women
Not specified/prefer not to say
Ethnic background of members of the Board and Executive Committee as at 31 Dec 2022
Number
of senior
positions on
the Board
(CEO, CFO,
SID and Chair)
Number
of Board
members
Percentage
of the Board
Number in
executive
management
Percentage
of executive
management
White British or other white
(including minority-white groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic group, including Arab
Not specified/prefer not to say
7
0
0
1
0
1
78%
0%
0%
11%
0%
11%
4
0
0
0
0
0
8
0
0
0
0
0
100%
0%
0%
0%
0%
0%
A D&I target is included in the Mondi
Action Plan 2030 (MAP2030), released in
2020, and we have committed to providing
purposeful employment for all, in a diverse
and inclusive workplace. Progress is
measured by the Purpose Satisfaction and
Inclusiveness scores in our global employee
survey (each to reach 90% by 2030,
against a 2020 baseline of 78% and 79%
respectively), and by the overall percentage
of women that we employ across Mondi
(to reach a minimum of 30% women globally
by 2030, against a 2020 baseline of 21%).
It is clear that while significant work is being
undertaken in this regard, with initiatives
ongoing throughout the organisation,
meeting the target of 30% women across
the organisation will be challenging. In many
of the countries in which we operate, a
cultural shift is required, with education
and a change of mindset needed, as well
as changes to underlying recruitment
processes, to remove the barriers that
discourage women from entering our
workforce. The Board and the organisation
as a whole are committed however to
making the changes required. Read more
about our MAP2030 commitments and our
progress in this regard on pages 41-43.
The former D&I taskforce – a cross-
business, cross-functional team – was
extremely helpful in kicking off various
D&I initiatives across the organisation.
However, following the appointment of a
new Senior Manager Diversity & Inclusion,
a new governance framework around
D&I was implemented. Operationally, the
D&I function reports to the Group HR
Director, while a D&I steering committee
has been formed to provide policy
oversight and facilitate the necessary
stakeholder engagement to ensure D&I is
firmly embedded across the organisation.
Mondi’s approach to D&I is focused on
local community development, as well
as creating cultures that are welcoming
and foster belonging. In line with this,
initiatives have been started, such as the
Curious Community, a group consisting of
more than 100 members from 13 different
countries who span all levels of seniority,
from Executive Committee members to
those working in our plants. It provides a
safe space for employees to connect, learn
and find inspiration and ideas to implement
at a local level. Key activities in 2022
included a highly interactive kick-off event
with a panel discussion among community
members on their personal experience of
inclusion and exclusion, providing opportunities
for participants to discuss and reflect,
and ideas labs to identify barriers to hiring
more women and find creative solutions.
In addition to the cultural aspects around
D&I, structures are being implemented to
drive delivery on our commitments, including
the appointment of D&I champions in the
business units, tasked with regular reporting,
follow-up and best practice sharing.
In South Africa specifically, we are committed
to making a positive contribution to the
process of transformation. We have taken
active steps to meet the requirements of
Broad-Based Black Economic Empowerment
(BBBEE), including establishing transformation
forums in our South African operations to
allow our employees to discuss equity and
training-related issues and ideas.
Our current BBBEE certificate
can be found on Mondi’s website
www.mondigroup.com/en/corporate-
governance/regulatory-reports/broad-
based-black-economic-empowerment-
act-annual-compliance-report
D&I is also an essential part of Mondi’s
leadership development programme.
We offer training with a focus on female
career strategies for higher management
positions and training on career building
for young female employees. In addition,
employee exchanges, where individuals
spend time working in different business
units and locations around the Group, enable
participants to gain experience of different
working practices and skills as well as having
exposure to different cultures. We have also
recently collaborated with Female Factor, a
global community striving to enhance female
leader careers by boosting confidence,
competence and connections. This provides
an opportunity to offer a number of women
across the Group access to mentoring,
networking and knowledge sharing.
The Mondi cultural characteristics
incorporate our aim to hire and work
effectively with people from a variety of
diverse backgrounds, ethnicity, race, gender,
culture and age. We measure our progress
through the use of tools such as our global
employee surveys and 360° feedback.
While it is recognised that there are
many challenges and there is more work
to do, management and the Board are
fully committed to our diversity journey and
we believe that our ambitious goals will be
achieved by working across the business
and engaging our stakeholders on our 2030
commitments, sharing good practice, and
collaborating both internally and externally.
112 Mondi Group
Integrated report and financial statements 2022
Corporate governance report
Audit Committee
The accounting implications of the Board’s
decision to divest the Group’s Russian assets
were of particular interest to the committee.
During the year, we were required to consider
a number of critical accounting judgements,
as well as the application of significant accounting
estimates in the valuation of the Russian assets.
Composition and attendance1
Members throughout the year
Committee member since Meeting attendance
Stephen Young, Chair2
Svein Richard Brandtzaeg
Sue Clark
Tanya Fratto3
Saki Macozoma4
May 2018
April 2021
April 2021
May 2017
May 2022
6/6
6/6
6/6
1/2
4/4
1 The maximum number of meetings held during the year that each director could attend
is shown next to the number attended
2 Stephen Young satisfies the requirement for the committee to have a member with recent
and relevant financial experience given his previous role as Group Finance Director at Meggitt
plc and the other commercial accounting and finance roles he has held during his career.
Stephen is a member of the Chartered Institute of Management Accountants
3 Tanya Fratto stepped down from the Board and the committee on 5 May 2022. Tanya was
unable to attend one meeting prior to the date of her retirement due to another commitment
4 Saki Macozoma joined the committee on 6 May 2022. Saki attended all meetings following
his appointment
Other regular attendees
— Group CEO
— Group CFO
— Chair and non-executive directors who are not members
of the committee
— Group Controller
— Group Head of Internal Audit
— Representatives from PricewaterhouseCoopers LLP as external auditor
Stephen Young
Chair of the Audit Committee
Dear Shareholder
I am pleased to present this report, which
provides an overview of the areas of focus
for the committee during the year, as well
as its key activities and the framework within
which it operates.
Composition
During 2022, Tanya Fratto stepped down
from the committee following her retirement
from the Board – I would like to thank Tanya
for her contribution during her time on the
committee. In May 2022, Saki Macozoma was
appointed as a member of the committee.
Saki has extensive experience in an executive
and non-executive capacity, making him well
placed to provide valuable knowledge and
insight to the committee.
The Board remains comfortable that the
committee members have the appropriate
knowledge, skills and experience to fulfil
the duties delegated to the committee.
Each member has appropriate knowledge
and understanding of financial matters and
commercial expertise gained from industries
with similar manufacturing, engineering
and technology-focused international
operations, to give the committee as a
whole competence relevant to the sector
in which the Group operates.
Despite this, we continue to look for
opportunities to further strengthen the
financial experience on the committee,
and to ensure that in the long term, the
committee continues to have the breadth
of knowledge it requires. I am therefore
pleased to confirm that Anke Groth will join
the committee in April 2023. Further details
can be found on page 109.
Areas of focus
The committee’s primary responsibility is
to oversee the Group’s corporate financial
reporting, including the relationship with the
external auditor, and to assist the Board with
any judgements required. This remained the
key focus of the committee during the year.
The accounting implications of the Board’s
decision to divest the Group’s Russian assets
were of particular interest to the committee.
During the year, we were required to consider
a number of critical accounting judgements,
as well as the application of significant
accounting estimates in the valuation of the
Russian assets. Specifically, the committee
was required to consider whether the Group
should continue to consolidate its Russian
businesses, if and when the businesses
satisfied the requirements to be classified
as held for sale, and whether the Russian
businesses should be presented as
discontinued operations.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
113
After consideration of the detailed
accounting rules, and with input from
management and Mondi’s external
auditor, it was concluded that Mondi
retained control of the Russian businesses,
resulting in continued consolidation of
the businesses, and that they should be
classified as held for sale, and, as a separate
major geography, also therefore presented
as discontinued operations. The position
remained unchanged at 31 December
2022. In addition, after consideration of the
significant accounting estimates applied
in the valuation of the Russian assets, the
committee concluded that impairment was
not required in the period to 30 June 2022.
Subsequent to this, following the conclusion
of an agreement to sell Mondi’s three
Russian packaging converting operations,
the decision was taken to impair the related
assets. Given the uncertainty and complexity
involved, the accounting treatment
applicable to the Russian businesses
remains under close review. A more detailed
explanation of the accounting treatment
applied can be found on pages 209-212.
As context for these decisions, the committee
received an overview of the sanctions imposed
on Russia as a result of the war in Ukraine
from Mondi’s legal advisers. This enabled the
committee to assess the impact of these
sanctions on Mondi’s Russian businesses, the
actions being taken in response and the risks
associated with operating in Russia.
The committee also spent time considering
the accounting implications of the sale of
the Personal Care Components business,
and the impact of hyperinflation in Türkiye,
details of which can be found on pages 213
and 230 respectively.
Cyber security remained a notable focus
for the committee during the year, given
the increasing number and sophistication
of the methods being employed by cyber
attackers. The Group continues to undertake
significant work in this regard, and the
committee was pleased to hear that external
testing of Mondi’s infrastructure, which
is undertaken regularly, indicated that the
measures we have in place remain effective
and robust in this developing landscape.
Progress with the separation of the Russian
businesses from Mondi’s IT infrastructure,
a complex task being undertaken in a rapidly
evolving environment, was also monitored
closely by the committee. More information
on Mondi’s approach to cyber security can
be found on page 81.
In addition, the Committee noted that the
Financial Reporting Council had carried
out a limited scope desktop review of the
judgement and estimate disclosures in
Mondi’s 2021 Financial statements as part
of its Judgements and Estimates thematic
review. The committee was pleased that
Mondi’s disclosure was used as an example
of best practice and that no questions were
raised as a result of the review.
A more detailed overview of the key
matters considered by the committee
during the year can be found below.
Committee effectiveness
The committee’s performance and
effectiveness were reviewed as part of
the Board evaluation undertaken during the
year, more details of which can be found
on page 106. I am pleased to confirm that
the committee is seen to be operating
effectively and fulfilling the duties delegated
to it by the Board.
Stephen Young
Chair, Audit Committee
Audit Committee activity
Set out below are some of the key matters addressed by this committee.
Financial reporting
— Reviewed the integrity of all financial
announcements with input provided by the Group
CFO, Group Controller and PwC as appropriate.
External audit matters
— Recommended to the Board that the appointment
of PwC for the 2022 audit be put to shareholders
at the Annual General Meeting.
— Reviewed the Mondi Group Integrated report
— Reviewed the independence, objectivity and effectiveness
and financial statements for tone and consistency,
agreed the application of critical accounting
policies and key judgements, and considered
whether the report as a whole was fair, balanced
and understandable (see page 118 for more
information).
— Reviewed and discussed PwC’s reports to the
committee.
— Considered in detail the accounting implications
of the decision to divest the Group’s Russian
operations, agreeing the approach to be taken
(see pages 209-212 for more information).
— Considered the accounting implications of the
sale of the Personal Care Components business,
and the associated reorganisation of the business
segments (see page 213 for more information).
— Considered the impact of hyperinflation in Türkiye
(see page 230 for more information).
— Reviewed and agreed the accounting policies to
be applied for the year ending 31 December 2022.
— Reviewed new accounting pronouncements and
any impact for the Group’s financial reporting.
— Reviewed the going concern basis of accounting
and the longer-term viability statement
(see pages 82-83 for more information).
of PwC (see page 119 for more information).
— Reviewed and approved the external audit plan,
taking account of the scope, materiality and audit
risks and agreeing the audit fees.
— Reviewed and agreed the engagement and
representation letters.
— Held two meetings with PwC without management
present; the committee Chair also engaged regularly
with the lead audit partner.
Risk management and internal controls
— Undertook a detailed review of the Group’s risk
management policy, plan and tolerance levels and process
to assess the risks. This resulted in the recommendation
of changes to the Board, including increased risk
ratings for energy security and related input costs, and
cost and availability of raw materials. Emerging risks
were also considered, with a particular focus on the
execution of major capital expenditure projects given
Mondi’s extensive capital expenditure programme.
Further information can be found on page 74.
— Received a detailed overview of the sanctions
imposed on Russia as a result of the war in Ukraine,
allowing the committee to understand the impact on
Mondi and the risks associated with Mondi’s continued
presence in Russia.
— Undertook a more in-depth review of a number of the
most significant Group risks with presentations from
relevant members of senior management considering
the level of risk and the monitoring and mitigation
measures in place.
— Received half-yearly presentations on IT risk
management and cyber security, focusing in
particular on key measures taken to continuously
strengthen Mondi’s protection against IT risk and
cyber attacks and internal and external testing
undertaken to assess the robustness of the
IT infrastructure.
Internal audit matters
— Reviewed and agreed the internal audit plan,
confirming the focus on key risk areas and adequate
cover of all material operations.
— Received reports from the Group Head of
Internal Audit (see page 120 for more information).
— Undertook a review of the effectiveness of the
Internal Audit function (see page 120 for more
information).
— Reviewed summaries of messages and reporting
from SpeakOut, providing insight into the culture
of the Group and issues of particular concern
to stakeholders.
— Held a meeting with the Group Head of Internal
Audit without management present.
Governance and other
— Monitored and reviewed the continued
implementation of those elements of the Group’s
Code of Business Ethics reserved for review by
the committee.
— Reviewed the legal and compliance risks faced
by the Group.
— Reviewed Mondi’s competition compliance
programme.
— Reviewed the committee’s terms of reference,
performance and work programme.
114 Mondi Group
Integrated report and financial statements 2022
Corporate governance report
Audit Committee continued
Internal control
The Group’s internal control and risk management framework, embedded in all key operations, is designed to address all the significant
strategic, financial, operational and compliance risks that could undermine our ability to achieve our business objectives in the future
and is managed within risk tolerance levels defined by the Board. In accordance with the provisions of the UK Corporate Governance
Code, the Group has in place an internal control environment to protect the business from principal risks which have been identified.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting and we have responsibility
for ensuring the effectiveness of these controls. Full details of Mondi’s internal control and risk management framework can be found
in the Strategic report on pages 72-73.
The committee has reviewed the risk management process and the Group’s system of internal controls. The committee considers that
the system of internal controls operated effectively throughout the financial year and up to the date on which the financial statements
were signed.
Significant issues related to the financial statements
The committee has considered each of the following items based on discussions with, and submissions by, management and
satisfied itself as to the accounting treatment and presentation thereof. The most significant items were discussed with the external
auditor during the planning stage and on completion of the audit.
The key considerations in relation to the 2022 financial statements were:
Action
The committee has:
— considered reports from management regarding the control
assessment of the Russian subsidiaries due to the restrictions
imposed by the Russian government or any other authority;
— considered reports from management describing the
arguments behind the judgement of held for sale and
discontinued operations treatment;
— satisfied itself that the Group has retained control through
the year ended 31 December 2022 and the classification as
held for sale and discontinued operations is appropriate and
disclosed according to the Group’s accounting policy;
— considered and satisfied itself with the report from
management on, and the outcome of, the valuation of the
Syktyvkar mill assets and the packaging converting plants-
related impairment; and
— considered the disclosures on the divestment of the Russian
operations as set out in note 26 of the financial statements.
Matter considered
On 4 May 2022, the Board decided to divest its Syktyvkar mill
and three converting plants in Russia. Given progress with
the divestment process, the Board subsequently concluded,
in June 2022, that the Russian operations satisfied the criteria
to be classified as held for sale and that they should also be
classified as discontinued operations.
In the context of an increased level of uncertainty, the Board
has exercised critical judgements as to whether the Group
continues to control its Russian subsidiaries, if and when the
businesses in Russia satisfied the requirements to be classified
as held for sale and whether they should be reported as
discontinued operations.
Syktyvkar mill
On 12 August 2022, the Group entered into an agreement to
sell its Syktyvkar mill, comprising OJSC Mondi Syktyvkar together
with two affiliated entities, to Augment Investments Limited for
a consideration of RUB 95 billion (€1.2 billion, at an exchange
rate of 78.43 Russian rouble versus euro as at 31 December
2022), payable in cash on completion. The disposal is conditional
on the approval of the Russian Federation’s Government
Sub-Commission for the Control of Foreign Investments and
customary antitrust approvals and, as a Class 1 transaction
under the UK Listing Rules, it is conditional upon the approval
of Mondi’s shareholders at a General Meeting. As the disposal
is being undertaken in an evolving political and regulatory
environment, there can be no certainty as to when the
disposal will be completed.
Packaging converting plants
On 15 December 2022, the Group confirmed that it has
entered into an agreement to sell its three Russian packaging
converting operations to the Gotek Group for a consideration
of RUB 1.6 billion (€20 million, at an exchange rate of 78.43
Russian rouble versus euro as at 31 December 2022), payable
in cash on completion. The three packaging converting
operations comprise a corrugated solutions plant, LLC Mondi
Lebedyan, and two consumer flexibles plants, LLC Mondi Aramil
and LLC Mondi Pereslavl.
Overview
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Integrated report and financial statements 2022
115
Significant issues related to the financial statements continued
Matter considered
Action
Packaging converting plants continued
Following the announcement, the related assets were impaired
by €57 million.
The disposal is conditional on the approval of the Russian
Federation’s Government Sub-Commission for the Control
of Foreign Investments and customary antitrust approvals.
As the disposal is being undertaken in an evolving political
and regulatory environment, there can be no certainty
as to when the disposal will be completed.
Details of the Russian operations are included in note 26
of the financial statements.
Special items are those financial items which the Group
considers should be separately disclosed on the face of the
income statement to assist in understanding the underlying
financial performance achieved by the Group as special
items affect year-on-year comparability. The classification
of an item as special is based on materiality in the context
of the current year’s financial performance and generally
must exceed €10 million. Subsequent adjustments to items
previously reported as special items continue to be reflected
as special items in future periods even if they do not exceed
the quantitative reporting threshold.
The net special item income (before tax) for the year was
€242 million (2021: €7 million), consisting of a gain on the sale
of the Personal Care Components (PCC) business to Nitto
Denko Corporation. Details of the special items are included
in notes 3 and 27 of the financial statements.
Effective from 30 June 2022 and following the completion of
the sale of the PCC business, the Group’s operating segments
were reorganised. Functional Paper and Films, previously part
of the Engineered Materials operating segment, was moved
to Flexible Packaging to strengthen integration along the kraft
paper value chain and further support the development of
innovative functional papers with barrier properties, fulfilling
customers’ needs for sustainable packaging. The remaining
part of the previously reported Engineered Materials operating
segment, namely the disposed PCC business (see notes 3 and
27 of the financial statements), has been reported in the PCC
(divested) operating segment up to the date of disposal.
Accordingly, the Group has restated the previously reported
segment information to present the Group’s operations under
the new organisational structure.
Goodwill of €141 million previously allocated to the Engineered
Materials group of cash-generating units (CGUs) was
assigned to the divested PCC group of CGUs. The remaining
goodwill of €73 million was moved to the Flexible Packaging
group of CGUs, together with the retained Functional Paper
and Films operations. The reorganisation has no impact on
the overall Group result.
The committee has:
— critically reviewed each item presented by management
as being special to ensure that the items are in line with
the Group’s accounting policy;
— considered both the quantification and presentation
of special items;
— reviewed the adequacy of the descriptions of the special
items in the financial statements and the Strategic report; and
— considered whether any significant transactions that were
not classified as special were appropriately classified in the
financial statements and appropriately described in the
Strategic report.
The committee has:
— considered a report from management in relation
to the restated segmental information;
— assessed the definition of operating segments post
the reorganisation; and
— discussed with management and satisfied itself that the
restated segmental information was appropriate.
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Audit Committee continued
Significant issues related to the financial statements continued
Matter considered
In addition to property, plant and equipment of €4,167 million,
intangible assets of €64 million and goodwill of €769 million
are included as assets in the statement of financial position.
As set out in the accounting policies, the goodwill is tested for
impairment annually and property, plant and equipment and
intangible assets whenever there is any indication that those
assets are impaired.
Details of goodwill impairment tests and impairments
of property, plant and equipment and intangible assets are
included in notes 10, 12 and 13 of the financial statements.
Effective from 1 January 2022, the Group has applied IAS 29,
Financial Reporting in Hyperinflationary Economies, for its
subsidiaries in Türkiye.
IAS 29 requires judgement to determine when to apply
hyperinflationary accounting and which general price index
to select and other approximations to be made in order
to restate the financial statements of subsidiaries operating
in a hyperinflationary economy.
For the year ended 31 December 2022, the adjustments
from hyperinflationary accounting have resulted in an increase
in total assets of €91 million, an increase in Group revenue of
€125 million, a decrease in underlying EBITDA of €44 million
and a net monetary gain of €17 million.
Significant estimation is required in determining
the assumptions to be applied for the valuation of the
Group’s forestry assets and retirement benefit obligations.
Such assumptions are based, as far as possible, on observable
market data and, in the case of the retirement benefit
obligations, on the input and advice of actuaries.
Details are included in the financial statements (forestry
assets in note 14 and retirement benefits in note 24).
Action
The committee has:
— considered a report from management describing potential
impairment indicators for tangible and intangible assets and
the outcomes of related impairment tests where performed;
— considered a report from management on the outcomes
of the annual goodwill impairment test;
— reviewed the underlying assumptions applied and compared
them with the Group’s three-year 2023-2025 plan (budget
period) and the current macroeconomic environment;
— considered the sensitivities underlying the primary
assumptions to determine the consequences that reasonably
possible changes in such assumptions may have on the
recoverable amount of the underlying assets; and
— satisfied itself that no impairments related to goodwill were
required and impairments of property, plant and equipment
and intangible assets were justified.
The committee has:
— considered reports from management; and
— satisfied itself that the judgements and adjustments applied
are appropriate and considered according to the Group’s
accounting policy.
The committee has:
— considered reports from management;
— reviewed the assumptions applied in the valuation of the
forestry assets and retirement benefits;
— considered the basis on which these assumptions were
determined, and evaluated the assumptions by comparing
them with prior years and considering market developments
during 2022; and
— satisfied itself that the assumptions, and the changes to
those assumptions when compared with the year ended
31 December 2021, were appropriate.
Overview
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Significant issues related to the financial statements continued
Matter considered
The Group has operations in a number of countries each
with a different tax system.
The Group is regularly subject to routine tax audits and
provisions are made based on the tax laws in the relevant
country and the expected outcomes of any negotiations
or settlements.
The Group’s recognition of deferred tax assets, relating
to future utilisation of accumulated tax losses, is dependent
on the future profitability and performance of the underlying
businesses.
Understanding of the Group’s risks and implications related
to climate change is continuously being enhanced. While the
Group’s assessments still reflect that these may not be severe
in the short term, it is believed that climate change risks are
likely to have a medium- and long-term impact on business.
The financial statement disclosures consider the impact of
climate change, notably in the estimates used to calculate the
fair value of our forestry assets. The Group continues to assess
accounting policies, judgements and estimates to consider the
impact of climate change.
Action
The committee has:
— received regular reports from management about new
legislative developments that may impact the Group’s tax
positions;
— considered reports from management outlining the Group’s
most significant tax exposures, including ongoing tax audits and
litigation, and has reviewed the related tax provisions recognised
by management, satisfying itself these are appropriate and
the risk of new unexpected exposures arising is low; and
— considered a report from management outlining the key
assumptions relating to the recognition of deferred tax assets
and satisfied itself that the assumptions made are reasonable
and consistent from year to year.
The committee has:
— participated in overseeing the Group’s approach
to sustainability;
— received regular reports from management about climate
change and related legislative developments that may impact
the Group’s disclosure;
— reviewed the Integrated report (including the TCFD section)
and the financial statements for consistency with respect
to climate change risks;
— reviewed the assumptions applied in the valuation of the
forestry assets;
— considered accounting policies, judgements and estimates
on the basis of expected climate change impacts; and
— satisfied itself that the assumptions, and the changes to
those assumptions when compared with the year ended
31 December 2021, were appropriate.
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Audit Committee continued
Fair, balanced and understandable
In line with the committee’s responsibility
for ensuring there are robust financial
reporting procedures and internal controls
in place, and the UK Corporate Governance
Code requirement for the committee to
advise the Board in relation to the annual
report and accounts, in particular whether,
taken as a whole, it is fair, balanced and
understandable, the committee undertook
an assessment of the Integrated report and
financial statements 2022. This incorporated
the work undertaken by the committee
throughout the year to monitor financial
reporting. The process and outcome are
set out opposite.
Oversight through the year
— Review of applicable accounting policies and pronouncements
and their application
— Review of regular financial results and announcements
— Reports from the Group Controller and PwC
— Reports from Internal Audit
Review included
— Provision of an outline plan including content and structure,
design concepts and timetable
— Consideration of regulatory and governance requirements
for reporting
— Review of detailed reports from the Group Controller and
PwC providing the opportunity for debate and challenge
— Summaries of areas where management judgements or significant
accounting estimates had been made
— Consideration of going concern and longer-term viability
— Separate meetings with PwC without management present
Review confirmed
— Well documented planning and procedures for the preparation
of the report
— Collaborative approach between all parties required
to contribute to the report
— Basis of preparation consistent with financial reporting
throughout the year
— All significant issues had been considered
— Messaging was consistent particularly the narrative reflecting
the financials
Conclusion
— After completion of the detailed review, the committee
was satisfied that:
— taken as a whole, the Group’s Integrated report and financial
statements 2022, were fair, balanced and understandable;
— the report accurately reflected the information shareholders would
require in order to assess the Group’s position and performance,
business model and strategy; and
— the use of alternative performance measures contained in the
report assists in presenting a fair review of the Group’s business.
Recommendation
— The committee reported its findings and conclusion to the Board
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External audit
PricewaterhouseCoopers LLP (PwC) was
first appointed as auditor by shareholders
at the Annual General Meeting in May
2017, replacing Deloitte LLP following a
tender process. The 2022 audit was PwC’s
sixth for Mondi and Simon Morley’s third
as lead audit partner. Given Simon was
previously a Key Partner Involved in the
Engagement since 2017, his maximum
tenure is a combined seven years, such that
he will rotate off as lead audit partner after
the 2023 audit. Work is therefore underway
to identify a successor.
We are required to undertake a mandatory
audit tender process after 10 years and the
decision to undertake such a process will
be taken by the committee. Following an
assessment of the independence, objectivity
and effectiveness of the external auditor,
details of which can be found below, the
committee has concluded that it remains
satisfied with the effectiveness and quality
of the audit work. The committee also
remains satisfied with PwC’s capabilities
and the relationship with Mondi. In light
of this, it is not currently anticipated that
a tender process will be conducted before
such a process is required, in 2027.
The committee confirms its compliance
for the financial year ended 31 December
2022 with the provisions of The Statutory
Audit Services for Large Companies
Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
External audit independence, objectivity and effectiveness
A formal framework for the assessment of the effectiveness of the external audit process and quality of the audit has been adopted
by the committee, covering all aspects of the audit service provided by PwC. While part of the assessment is managed annually,
it is treated as an ongoing review throughout the cycle.
Evaluation focus
— Robustness of audit process
— Audit quality, including quality controls
— Audit partners and team, including skills,
character and knowledge
— Independence and objectivity
— Formal reporting
Key inputs
Audit Committee
— Continually monitored audit performance
throughout the year
— Reviewed and agreed the audit plan
— Reviewed the quality of reporting to
the committee, the level of challenge
and professional scepticism and the
understanding demonstrated by PwC
of the business of the Group
— Reviewed the quality of the audit team,
technical skills and experience and the
allocation of resources during the audit
— Considered the interaction with
management and the level of challenge
— Regular meetings held between the
Chair of the committee and the audit
engagement partner
— Reviewed feedback from committee
members including views on how PwC
has supported the work of the committee
and communicated with the committee
— Considered the effectiveness of Mondi’s
policies and procedures for maintaining
auditor independence
— Met with PwC twice during the year
without executive management present
Management
— Feedback from engagement with the
Group CFO, Group Controller and Group
Head of Internal Audit
— Feedback from questionnaires issued
at corporate and business unit levels to
those personnel involved with the audit
PwC
— Provided the committee with
confirmation that they operate in
accordance with the ethical standards
required of audit firms
— Confirmed the policies and procedures
they have in place to maintain their
independence
Regulators
— The UK Financial Reporting Council’s
(FRC) 2021/22 report on Audit Quality
Inspections included a review of audits
carried out by PwC
Key outputs
— The quality of the audit partners and
team were confirmed, with no material
issues raised in the feedback received
— The audit had been well planned and
delivered, with work completed on
schedule and management comfortable
that any key findings had been
raised appropriately, as well as active
engagement on misstatements and
appropriate judgements on materiality
— PwC demonstrated a good
understanding of the Group and
its internal control systems, and had
identified and focused on the areas
of greatest financial reporting risk
— PwC’s reporting to the committee
was clear, open and thorough, including
explanations of the rationale for particular
conclusions as appropriate
— It was confirmed that, through the review
of management papers and analyses
and the discussion of key matters with
management and the auditor, there had
been an appropriate level of challenge
during the course of the audit, with
the external auditor and the Audit
Committee challenging management’s
judgements and assertions on matters
including critical accounting judgements
and key sources of estimation
uncertainty; impairment of property,
plant and equipment and goodwill;
and assumptions underlying the going
concern basis of accounting in preparing
the financial statements and the viability
statement
Conclusion
The committee, having considered
all relevant matters, has concluded that
it is satisfied that auditor independence,
objectivity and effectiveness have been
maintained.
120 Mondi Group
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Audit Committee continued
Non-audit services
A policy is in place that governs the
provision of non-audit services provided by
PwC to Mondi, setting out those services
that are permissible and the process to
be followed to obtain approval for such
services. All such services must be approved
– there are no pre-approvals in place.
Authority is delegated by the committee
to the Chair of the committee to approve
such services. The policy was last updated
in 2020 to reflect the changes introduced
by the Revised Ethical Standard 2019.
For all non-audit services, the business
must submit a formal request setting out the
objectives, scope of work, likely fee level and
the rationale for requiring the work to be
carried out by the Group’s external auditor.
The committee monitors compliance with
the policy and the monetary cap on non-
audit fees, receiving reports at each meeting
detailing all approved non-audit services.
Total fees for non-audit services amounted
to €1.1 million, representing 18% of the audit
fee, with the vast majority of the non-audit
fees incurred relating to the half-year review
and other assurance services in relation
to reporting obligations associated with
the divestment of the Group’s Russian
operations.
Internal audit
Mondi’s Internal Audit function forms
an integral part of Mondi’s governance
and risk management and internal control
frameworks. The primary purpose of the
Internal Audit function is to help the Board
and executive management to protect the
assets, reputation and sustainability of the
organisation and to manage and mitigate
its risks effectively. This includes assessing
whether all significant risks are identified
and appropriately reported by management
to the Board and executive management,
and whether they are adequately controlled.
The Audit Committee has primary
responsibility for monitoring and reviewing
the scope and effectiveness of the Group’s
Internal Audit function. The Group Head
of Internal Audit has direct access and
responsibility to the committee, as well
as regular access to Mondi’s executive
management. During 2022, following the
decision by the incumbent Group Head
of Internal Audit to retire at the end of the
year, the committee, in line with its terms
of reference, approved the appointment
of a successor. Having considered the
knowledge, skills and experience required
for the role, the committee is confident
that the new appointee is well placed to
lead and further develop the Internal Audit
function.
An internal audit charter, approved by
the committee, is in place. The charter
sets out the purpose, remit and authority
of the Internal Audit function. Each year,
the committee considers and approves
the internal audit plan, which is designed
to focus on the Group’s key risks to ensure
that they are managed effectively within the
context of our business objectives and that
appropriate internal controls are in place.
The committee ensures that all material
operations are covered and that there
is an appropriate degree of financial
and geographical coverage. Every Mondi
operation is visited at least once every five
years, with all major plants audited annually.
Reports are given at each committee
meeting, providing an update on activities,
resourcing levels, progress against plan,
results from audits carried out and
management’s response to address
any areas highlighted for improvement.
The committee will consider deviations from
plan as the need arises during the year,
usually in response to a material acquisition
or change in the Group’s risk profile
highlighted through audit reports and
through matters raised via the anonymous
grievance system, SpeakOut.
In 2020, an external review of the
Internal Audit function was undertaken
by Independent Audit, a consultancy
firm specialising in board evaluations and
effectiveness reviews, with a full report
presented to the committee. The review
concluded that the Internal Audit function
is led by an experienced and independent
Group Head of Internal Audit and
supported by a professional team of well-
qualified people. The report highlighted
in particular a positive culture around the
role and contribution of the Internal Audit
function and comprehensive audit planning
processes. The execution of audits is
governed by an appropriate methodology
supplemented by good practice guidance.
Some recommendations were made,
including to consider widening the scope
of the internal audit plan and to include
audits which consider the effectiveness
of the overall control framework, to assess
resourcing levels and to further customise
reporting. The implementation of these
recommendations is in process and
expected to be concluded by the end of
2023. An internal review was undertaken
in 2022. The committee has concluded
following the review that the Internal Audit
function remains effective in carrying out
its remit.
Overview
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121
Corporate governance report
Sustainable Development Committee
Dear Shareholder
I am pleased to present this report, which
provides an overview of the areas of focus
for the committee during the year, as well
as its key activities and the framework
within which it operates.
While the Board as a whole has
responsibility for overseeing Mondi’s
approach to sustainability, the committee,
on behalf of the Board, oversees and
monitors Mondi’s sustainable development
policies, practices and progress against
our sustainability commitments and
targets. It provides guidance in relation
to sustainability matters, including
climate change-related issues, reviewing
and updating the Group’s framework
of sustainability policies and strategies,
ensuring they are aligned with global best
practice.
A summary report from the directors on
the Group’s sustainability practices is set
out on pages 36-65.
Areas of focus
The committee is continuously focused
on the safety of our employees and reviews
safety performance at every meeting to
ensure our high standards are maintained.
We were deeply saddened by the fatality of
a contractor at our Frantschach mill (Austria)
in August. The committee considered it
essential to fully investigate the incident
and to spend time understanding
the event and the underlying causes.
While the investigation concluded that
there was no systemic failure of risk control
and no actions by management could have
prevented the accident, the significant
impact that an incident has on families,
friends and colleagues is fully recognised
and we look to take any lessons we can
to minimise the risk of a reoccurrence.
Mondi is determined to minimise the impact
of our business on climate change with the right
balance of robust governance and a rigorous
approach to reducing greenhouse gas emissions
across the value chain. This is supported by
Mondi’s progress towards producing packaging
and paper solutions with a sustainable end-of-life,
contributing to a circular economy.
Composition and attendance1
Members throughout the year
Committee member since Meeting attendance
Dominique Reiniche, Chair
Svein Richard Brandtzaeg
Andrew King
Dame Angela Strank
Stephen Young2
May 2017
April 2021
May 2020
April 2021
May 2018
7/7
7/7
7/7
7/7
6/7
1 The maximum number of meetings held during the year that each director could attend is shown
next to the number attended
2 Stephen Young was unable to attend one meeting of the committee during the year due to
an unavoidable commitment
Other regular attendees
— Group CFO
— Chair and non-executive directors who are not members
of the committee
— Group Technical & Sustainability Director
— Group Head of Sustainable Development
— Group Head of Safety & Health
Dominique Reiniche
Chair of the Sustainable Development Committee
122 Mondi Group
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Sustainable Development Committee continued
We work hard to continuously improve
and ensure that we proactively embed
our safety culture across the Group.
Feedback from Sue Clark in this regard,
in her role as the non-executive director
responsible for understanding the views
of employees, was encouraging, with the
safety culture clearly evident during her site
visits, and employees confirming that safety
is a priority. During the year, the committee
focused further on understanding the Social
Psychology of Risk. This included reviewing
new tools to promote engagement across
our sites and to increase general personal
awareness, with the aim of preventing
unconscious actions that can pose
a safety risk.
The committee also spent time reviewing
sustainability risks and opportunities.
Climate change in particular is a principal
issue facing the business and climate
change risks and opportunities were
considered in detail. Further information,
including Mondi’s disclosures in line with
the recommendations of the Task Force on
Climate-related Financial Disclosure, can be
found on pages 44-57. Mondi is determined
to minimise the impact of our business on
climate change with the right balance of
robust governance and a rigorous approach
to reducing greenhouse gas emissions
across the value chain. This is supported
by Mondi’s progress towards producing
packaging and paper solutions with
a sustainable end-of-life, contributing to
a circular economy. Product stewardship
was discussed at length, reviewing the tools
developed to assess the impact of Mondi’s
products and progress made to ensure
a sustainable end-of-life supporting the
transition to a circular economy.
A key area of focus for the committee
was the progress made against the Mondi
Action Plan 2030 (MAP2030) commitments
and targets. Further information on our
performance against these targets can
be found on pages 36-65.
During 2022, the committee took over
responsibility for the people-related
targets from the Nominations Committee.
Progress towards the agreed diversity
targets was reviewed in detail. It is clear
to the committee that while significant
work is being undertaken in this regard,
with initiatives ongoing throughout the
organisation, meeting the target of 30%
women across the organisation by 2030
will be challenging. In many of the countries
in which we operate, a cultural shift is
required, with education and a change
of mindset needed, as well as changes
to underlying recruitment processes, to
remove the barriers that discourage women
from entering our workforce. The Board,
the committee and the organisation as
a whole are committed however to making
the changes required. Also considered
by the committee was the development
of a Human Rights Due Diligence
process, including the decision-making,
methodology and resources dedicated
to the process, and the learnings taken
from pilot tests undertaken in Mexico and
Türkiye, designed to ensure the process
focuses on the issues most material to
Mondi.
The committee reviewed the Group’s
relationships and engagement with
key stakeholders to deliver against the
MAP2030 framework. A particular focus
was on our partnerships that address
global forestry-related challenges, such
as the WBCSD’s Forest Solutions Group.
In addition, the committee also took a
deeper dive into stakeholder engagement
in South Africa. We recognise the
importance of supporting our people
and our local communities, and of building
long-lasting relationships with our key
stakeholders in the environments in which
we operate. In South Africa specifically,
these efforts have improved fibre security
and generated a wider base of local,
competitive, sustainable suppliers for our
mills. The committee will continue to closely
monitor Mondi’s relationships with key
stakeholders and engagement undertaken
in this regard.
A more detailed overview of the key
matters considered by the committee
during the year can be found opposite.
Committee effectiveness
The committee’s performance and
effectiveness were reviewed as part of
the Board evaluation undertaken during the
year, more details of which can be found
on page 106. I am pleased to confirm that
the committee is seen to be operating
effectively and fulfilling the duties delegated
to it by the Board.
Dominique Reiniche
Chair, Sustainable Development Committee
Overview
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Integrated report and financial statements 2022
123
Sustainable Development Committee activity
Set out below are some of the key matters addressed by this committee.
Safety performance and serious incidents
— Received a detailed report on the
Stakeholder relationships
— Reviewed the Group’s relationships
and engagement with key stakeholders,
including governments and non-
governmental organisations, focusing
on the partnerships that will be required
to support Mondi in achieving MAP2030
and the primary areas for engagement.
— Received an update on engagement
initiatives being undertaken particularly in
South Africa, looking at local stakeholders
and creating an enabling environment.
— Reviewed the outcome of the Socio-
Economic Assessment Toolbox (SEAT)
undertaken at the Štětí mill (Czech
Republic) in May 2022, a process
involving 130 stakeholder conversations.
The process confirmed that there are
no significant areas of concern. Further
information can be found on page 62.
— Reviewed Mondi’s ESG ratings in order
to understand which ratings are most
important to our stakeholders, how
we perform and where there is potential
for improvement.
Environmental performance and
climate change
— Reviewed climate-related risks and
opportunities and the potential impacts
on the business in line with the TCFD
recommendations (see pages 48-57
for more information).
— Reviewed performance against each
of the environmental key performance
indicators and commitments, including
progress in reducing GHG emissions
in line with science-based targets, water
stewardship and actions taken to identify
and mitigate impacts on biodiversity.
— Reviewed the Group’s performance
and current status to meet the MAP2030
milestones and key contributing factors.
— Reviewed the potential impact of excluding
the Russian operations from the MAP2030
environmental performance targets.
fatality at our Frantschach mill (Austria)
and a follow-up report on the outcome
of the investigation into the incident.
— Received regular reports on safety
performance at Group and business unit
level, including individual mill performance,
classification of incidents and peer
comparisons, giving the committee insight
into the safety culture and specific sites
that required further focus. There was
a particular focus on safety during the
annual maintenance shuts.
— Received a presentation on Social
Psychology of Risk, with a focus on how
to embed safety in unconscious behaviour
and the ways in which culture can be
adapted to promote safe behaviour in
the workplace.
— Considered and agreed the safety
milestones and leading and lagging
indicators for the next reporting period.
Sustainable development governance
and risks
— Reviewed the material sustainability
issues, risks and opportunities.
— Reviewed and approved the proposal
for the annual sustainable development
report.
— Reviewed and approved the Group’s
human trafficking and modern slavery
statement, giving consideration to the
actions being taken to minimise such
risks in our organisation and supply chain.
— Reviewed the progress made in the roll
out of the Human Rights Due Diligence
process and the roadmap to 2025.
— Reviewed Group sustainable
development policies and approved
amendments to reflect best practice and
align with Mondi’s MAP2030 approach.
— Reviewed the committee’s terms of
reference and performance, concluding
that the terms remain appropriate and
that the committee has covered all
matters required of it.
— Reviewed the performance against
MAP2030 commitments and targets
with key action areas identified.
— Considered and agreed the committee’s
annual work programme.
Forestry
— Received an update on forestry-related
sustainability topics, focusing in particular
on the MAP2030 forestry-related
commitments and targets and progress
to date.
— Considered the challenges facing
the industry in respect of sustainable
wood sourcing, particularly in light of
climate change and increasing policy
developments in this area and discussed
the key partnerships developed by Mondi
to further understand and address these
challenges.
Product stewardship
— Received an update on the Group’s
approach to product stewardship
practices in the context of the MAP2030
circular driven solutions commitments,
focusing on the ‘Path to Circularity’
scorecard developed to measure
progress against the target for products
to be reusable, recyclable or compostable
as well as consideration of the tools to
assess the impact of Mondi’s products.
Responsible procurement
— Reviewed the development of Mondi’s
Responsible Procurement process,
including the continued roll out of a
supplier screening process designed to
identify and manage high-risk suppliers.
— Discussed trialling a third-party provider
to undertake a sustainability risk rating
to enable the Responsible Procurement
process to be scaled up, across all
Mondi’s tier 1 suppliers.
People development and diversity
— Received a presentation on the Group’s
approach to people management and
diversity in the context of the MAP2030
empowered people commitments.
— Reviewed the performance against key
KPIs and diversity statistics and initiatives
for the Group, discussing in particular
actions to make progress against the
target of employing 30% women by 2030.
— Reviewed the approach to the next
employee survey scheduled for 2023
and employee engagement activities.
124
Remuneration report
Statement from the Chair of the Remuneration Committee
During 2022, the committee conducted the
triennial review of our Directors’ Remuneration
Policy. The focus was on simplicity, fairness,
transparency and the relationship between the
executive experience and that of shareholders,
and the wider workforce at Mondi.
Composition and attendance1
Members throughout the year
Committee member since Meeting attendance
Dame Angela Strank, Chair2
Sue Clark
Tanya Fratto3
Dominique Reiniche
Philip Yea
April 2021
April 2021
January 2017
October 2015
April 2020
5/5
5/5
2/3
5/5
5/5
1 The maximum number of meetings held during the year that each director could attend is shown
next to the number attended
2 Dame Angela Strank was appointed as Chair of the committee following Tanya Fratto’s
retirement from the Board in May 2022
3 Tanya Fratto stepped down from the Board and the committee on 5 May 2022. Tanya was unable
to attend one meeting of the committee prior to the date of her retirement due to another
commitment. Dame Angela Strank chaired the meeting in her absence
Other regular attendees
— Non-executive directors who are not members of the committee
— Group CEO
— Group HR Director
— Group Head of Reward
— Head of Executive Reward
— External remuneration consultant
Dame Angela Strank
Chair of the Remuneration Committee
Dear Shareholder
It is with pleasure that I present this,
my first report on directors’ remuneration
as Chair of the Remuneration Committee
(the committee). I succeeded Tanya Fratto
as Chair of the committee at the conclusion
of the 2022 AGM.
Compliance statement
This report has been prepared on behalf
of, and has been approved by, the Board.
It complies with the Large and Medium-
sized Companies and Groups (Accounts
and Reports) Regulations 2008 (as amended
in 2018) (the “Regulations”), the UK Corporate
Governance Code and the UK Listing
Rules, and takes into account the Directors’
Remuneration Reporting Guidance
and the relevant policies of shareholder
representative bodies.
In accordance with the UK Companies Act,
shareholders will be asked to vote on two
separate resolutions at the 2023 Annual
General Meeting (AGM) as follows:
— the binding triennial vote on the
proposed Directors’ Remuneration Policy
(DRP), as set out on pages 133-136.
If approved, the DRP will become
effective from the date of the 2023 AGM.
— an advisory vote on the Directors’
Remuneration Report excluding
the DRP, which provides details of
the remuneration earned by directors
for performance in the year ended
31 December 2022, and how the DRP
will be implemented for 2023, if approved.
Review of Directors’ Remuneration Policy
Over the course of 2022, the committee
undertook an extensive review of our
current DRP in advance of the triennial
vote to be held at the 2023 AGM.
The current policy was strongly supported
by shareholders with 92.81% votes in favour
at the 2020 AGM, and shareholders have
remained strongly supportive, endorsing
last year’s remuneration report with over
97% of votes cast in favour. The current
remuneration structure has contributed
to our success, aligning reward to long-
term sustainable performance. While we
considered alternatives, our conclusion
is that the current remuneration structure
remains fit for purpose, underpinning
our strategy and aligning to our KPIs, to
drive the desired performance, focus and
Mondi Group Integrated report and financial statements 2022 125
As a result we are in a strong position.
We are focussed on operational efficiency
and cost control, but remain ambitious,
and continue to invest in our asset base to
capture opportunities that will allow us to
deliver sustainably into the future and meet
the long-term needs of our customers.
The successful completion of the disposal
of our Personal Care Components (PCC)
business simplified the portfolio and
enabled the Group to focus on the core
packaging and paper businesses and
enhance its ability to pursue growth in
sustainable packaging.
Safety remains an absolute focus across
the business. Our priority remains to
eliminate all fatal accidents and continue to
maintain our strong safety record. We apply
high standards across the organisation which
all our employees and contractors adhere
to, whether they work in an office or our
operations. Regrettably we had one fatality
in the year and our sincere condolences
go out to the family, friends and colleagues
impacted. We can never be complacent and
continue our focus on safety. In 2022, a Social
Psychology of Risk approach continued
to be applied across Mondi. Our 24-hour
safety mindset, continues to shift the focus
to drive continuous improvement in safety
performance and culture.
Sustainability is at the core of the strategy
and embedded into Mondi’s actions and
decisions. Clear and measurable progress
was made during 2022 against the
ambitious targets of the Mondi Action Plan
2030 (MAP2030). This included accelerating
our climate plans, as we transition to Net-
Zero by 2050, by committing to Net-Zero
in line with a 1.5°C scenario. Our science-
based Net-Zero target was approved
by the Science Based Targets initiative
(SBTi) in accordance with the SBTi Net-
Zero Standard, committing us to reducing
greenhouse gas (GHG) emissions across
Scopes 1, 2 and 3. The strategic importance
of our sustainability agenda is reflected in
the remuneration structure. The introduction
of sustainability KPIs into the Group annual
bonus from 2022 has further embedded
sustainability goals into the organisation
and encouraged delivery against the
MAP2030 targets.
behaviours. However, we are taking the
opportunity to make some minor best-
practice adjustments to reflect better the
UK Corporate Governance Code and
the expectations of both our institutional
investors and the proxy voting agencies.
The following changes are being proposed
to the policy:
— in the annual bonus, payouts for on-target
performance against non-financial metrics,
will be reduced from 53% to 50% of the
maximum opportunity. This is consistent
with the approach already applied to
the financial metrics. No changes to
the annual bonus policy maximum are
proposed, which will remain at 200%
of base salary; and
— the post-employment shareholding
requirement for executive directors
will be 100% of the in-employment
requirement (or the actual shareholding,
if lower), for two years post-cessation.
Previously this had tapered to 50%
in the second year post-cessation.
While no changes are being proposed
to the structure of the Long-Term Incentive
Plan (LTIP) under the DRP, a number
of adjustments are also being proposed
to the operation of the LTIP:
— the inclusion of cumulative Earnings
per Share (EPS) as an additional
performance metric into the LTIP to
include a growth measure and provide
a more rounded assessment of company
performance. For the 2023 LTIP grants,
performance will be measured against
ROCE (50%), relative TSR (25%) and EPS
(25%); and
— the current TSR bespoke comparator
group of packaging and paper
companies will be expanded to include
two additional companies: Klabin and
Packaging Corporation of America
(PCA), bringing the peer group to fifteen
companies to make the group more
robust.
Further details on the implementation of
the proposed DRP are detailed on pages
131-132.
The committee will continue to focus
on performance driven reward that aligns
the remuneration of our executives to
the interests of our shareholders. We are
confident that the DRP and our approach
to its implementation will support Mondi’s
success for the next three-year cycle,
incentivising the management team to deliver
long-term sustainable shareholder value.
Alignment of the proposed DRP
with the Code
When determining the proposed DRP, the
committee considered clarity, simplicity, risk,
predictability, proportionality and alignment
to culture as set out in the UK Corporate
Governance Code. The committee
also took into account prevailing best
practice. We operate simple variable
pay arrangements, which are subject to
clear performance measures aligned with
the Group’s strategy and interests of all
stakeholders. The application of recovery
provisions (malus and clawback) enables
the committee to have appropriate regard
to risk considerations. As part of our culture
we want our employees within the Group
to share in the success of the Group, with
their interests aligned to shareholders.
For example we operate a Share Incentive
Plan for our UK employees, and around
3,400 colleagues participate in the Group
annual bonus plan.
In 2022, all directors’ salaries and fees
were paid in pound sterling, as opposed
to past years when some directors were
paid in other currencies. Previously the
remuneration and fees were disclosed in
the remuneration report in euro. In order
to reduce complexity and provide greater
transparency to the remuneration received,
all amounts shown in this remuneration
report have been stated in pound
sterling (unless stated otherwise), without
adjustment for foreign exchange rates.
Historical numbers relating to prior years
have been restated from euro to pound
sterling using the yearly average exchange
rate relating to the relevant year.
Performance in 2022
Context of remuneration
Mondi delivered a strong financial and
operational performance over 2022,
against the backdrop of considerable
macroeconomic uncertainty, and wide-
ranging impacts of the war in Ukraine.
After careful assessment of all the options,
the Board decided to divest the Group’s
Russian assets.
Mondi has continued to deliver
strongly despite the difficult macro-
economy and significant cost pressures.
Underlying EBITDA from our continuing
operations (excl. Russian operations) was
up 60%. Despite the impact of the high
energy costs, energy efficient investments
in biomass sources in most of our pulp and
paper mills has enabled us to generate
the majority of our energy needs internally.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 126
Remuneration report
Statement from the Chair of the Remuneration Committee
continued
Given our strong financial position and
confidence in the future of the business, the
Board recommended a final 2022 dividend
of 48.33 euro cents per share. The final
dividend, together with the interim dividend,
amount to a total dividend for the year of
70.00 euro cents per share, an increase of
8% on the 2021 total dividend.
Further details on performance in 2022
are set out on page 4 and on page 5.
Remuneration outcomes aligned
to performance
Annual bonus
For the 2022 annual bonus, performance
was assessed against financial (60%),
safety (10%), GHG emissions (5%), Waste
to Landfill (WtL) (5%) and personal (20%)
targets.
In line with the Integrated report and
financial statements which are being
reported on a continuing operations basis
(excl. Russian operations), the annual
bonus targets for 2022 were restated.
The outcomes for these components
were determined by the performance
on a continuing operations basis (excl.
Russian operations). Had the targets and
performance outcomes not been restated,
the bonus outcomes would have been
unchanged from those decided by the
committee and disclosed in this report.
Performance outcomes are reflected in
the remuneration received by directors.
Annual bonuses of 96% and 97% of maximum
have been awarded in respect of performance
in 2022 for Andrew King and Mike Powell
respectively. The outturn, as a percentage
of the maximum opportunity, is a reflection
of a strong performance against all
components of the bonus scorecard.
— The strong financial performance of the
Group, where both underlying EBITDA
of €1,848 million and ROCE of 23.7%
were above the stretching maximum
targets set, resulting in the financial
element of the bonus (60% of maximum)
being received in full.
— The Group’s annual bonus is linked to
sustainability objectives, including GHG
emissions & Waste to Landfill. Both the
GHG emission and Waste to Landfill
binary targets were achieved, resulting
in the full 10% of this component of the
bonus being received in full. There is
positive momentum towards meeting
the MAP2030 commitments.
— Lead and lag indicators are used to
monitor and improve safety performance
and to address risks before an incident
occurs. A Total Recordable Case Rate
(TRCR, the Lag indicator) of 0.63 was
achieved, compared to a target of 0.66,
and the Executive Committee individually
and collectively achieved all of the
lead indicators, aimed at preventing
incidents. The incident that resulted in
the fatality was independently reviewed
by the Sustainable Development, and
Remuneration Committees. The findings
concluded there was no systemic
failure of risk control and no actions by
management that could have prevented
the accident. Given the circumstances,
and after careful deliberation, the
Remuneration Committee determined not
to adjust the bonus outturn. As such, the
full safety component of the bonus (10%
of maximum opportunity) will be received.
— The personal element of the bonus
(20% of maximum) reflected specific
operational and strategic objectives,
set in the context of the exceptional
challenges of 2022. This element resulted
in 16% and 17% for Andrew King and
Mike Powell respectively. Further details
are set out on pages 142–145.
In accordance with the DRP, half of these
annual bonus awards will be delivered in
deferred shares which vest after three years.
LTIP
The performance period for the 2020
Long-Term Incentive Plan (LTIP) ended on
31 December 2022. Half of the award was
based on average ROCE performance and
half on relative TSR performance over the
three-year performance period.
The ROCE performance range, originally
determined by the committee in 2020, was
set at 12% to 18%. This range has not been
adjusted, following the decision to divest our
Russian assets. In determining the outcome
for the three-year average ROCE, we have
used performance for 2020 and 2021 of
operations including Russia, and for 2022,
performance of continuing operations
(excl. Russia). ROCE for the three-year
performance period was 18.6%, exceeding
stretch performance requirement of 18.0%
and leading to vesting of 100% of this
element.
The Group’s TSR over the period was
-8.6%, which was below the median TSR
performance of the comparator group
of 19.4%, resulting in zero vesting for this
element. The share price performance was
negatively impacted by the Russian invasion
of Ukraine, given the Group’s significant
exposure to Russia, around 20% of the total
EBITDA over the previous three years.
As a result, 50.0% of the overall LTIP
award will vest in March 2023, and, for our
executive directors, be subject to a two-
year post-vesting holding period until 2025.
Further details are set out on page 146.
The committee is mindful of the potential
for windfall gains for the awards granted in
2020. The expected share price on vesting
will be below the share price at grant.
Further, in determining the vesting outcome
for the LTIP, the wider performance of the
business was taken into consideration.
The committee believes the bonus and
LTIP outcomes are a fair reflection of the
wider business performance over the 2022
financial year and over the longer term, and
reflect the wider stakeholder experience.
As a result, the committee determined
that no discretionary adjustments to these
outcomes would be required.
Further information about the levels of
executive remuneration earned in 2022,
including details of performance against
the relevant targets for both bonus and LTIP
are given on pages 141–146.
Remuneration in 2023
Base salary
At Mondi we have high calibre employees
and our philosophy has always been to pay
a total remuneration package that attracts
and retains the best people, with salaries
intended to be fair and well positioned
in the market. The underlying principles
underpinning this year’s salary review, were
to recognise the continued hard work of
our colleagues in a challenging economic
environment, and the additional pressures
this is putting on the cost of living. Our pay
increases this year have been primarily
targeted to support the wider workforce,
with the UK workforce being awarded
a 9% salary increase.
Acknowledging the approach taken
for employees, the impact on total
remuneration of salary increases, and the
need for appropriate restraint for executive
directors, Andrew King and Mike Powell’s
base salaries were increased by 6.0%
to £1,073,500 and £684,500 respectively,
effective from 1 January 2023. This is three
percentage points below the average
increase for Mondi’s UK workforce of 9%.
The committee also considered workforce
increases in our other key markets and
noted that increases in these geographies
were also higher than the 6.0% increase
for executive directors. The committee
considers that the salaries for the executive
directors are appropriate for a company
of Mondi’s size and complexity.
Mondi Group Integrated report and financial statements 2022 127
Pension
Executive director pensions were fully
aligned to those of the local UK workforce
in 2020. Both Andrew King and Mike Powell
and the majority of the UK workforce,
receive a pension allowance of 8% of
base salary.
Variable pay
There are no proposed changes
to the annual bonus and LTIP awards
opportunities. For 2023, Andrew King will
be eligible for a maximum bonus of 185%
of base salary and an LTIP award of 230%
of base salary. Mike Powell will be eligible
for a maximum bonus of 170% of base
salary and an LTIP award of 210% of base
salary. Actual award levels for both the
annual bonus and LTIP remain below
the policy maxima.
Annual bonus
Given the strategic importance of
sustainability, 20% of the total bonus
opportunity is assessed against sustainability
measures (see pages 36–64 of this
report for further detail on our MAP2030
framework). Half of the sustainability
metrics are assessed against safety
measures. The scorecard also includes
GHG emissions and elimination of Waste
to Landfill, each with a weighting of 5% of
maximum bonus opportunity. These metrics
are based on robust, quantifiable targets.
These scorecard metrics address the key
focus area of MAP2030; namely circular
driven solutions, created by empowered
people, taking action on climate.
The sustainability metrics are included
in the annual bonus rather than the LTIP,
as the annual bonus extends deeper into
the organisation, to approximately 3,400
colleagues who participate in the Group
bonus plan. These metrics further align
our executive directors’ incentives to those
of the Executive Committee.
These sustainability metrics, together with
ROCE and underlying EBITDA, are at the
core of Mondi’s strategy. Details of the
performance measures and weightings
are on pages 131–132.
LTIP
For the 2023 LTIP grant, performance will
be assessed against ROCE, relative TSR
and an additional EPS metric. The inclusion
of this growth metric, together with ROCE
and relative TSR, will provide a more
rounded assessment of performance.
The committee also reviewed the TSR
peer group to ensure business performance
is assessed against the most relevant peer
group companies, which are subject to
broadly the same market forces and trading
environment as Mondi. As a result of this
review, Klabin and PCA will be added to the
bespoke packaging and paper peer group
to make the group more robust. Details of
the performance measures, weightings and
targets are on pages 131-132.
When considering the above changes
to the LTIP performance measures, the
committee also discussed the possible
inclusion of a sustainability measure in the
LTIP, given its strategic importance to Mondi.
Sustainability measures form 20% of the
annual bonus in which approximately 3,400
employees participate. Only a small population
of around 30 senior individuals participate
in the LTIP and as such, the committee
considered that measuring sustainability in
the bonus was more meaningful given the
plan’s much wider reach within the workforce.
The committee will keep its decision
regarding the inclusion of sustainability
in the LTIP under ongoing review.
We will continue to review the opportunity,
performance measures and targets of our
variable pay plans periodically, within the
parameters of the prevailing approved DRP.
Further details on the implementation
of the DRP for the 2023 financial year
are detailed on page 131.
Executive director pay and
the broader workforce
The committee takes into account the
discretionary pay increases for senior
management and the wider workforce,
and the collective bargaining agreements
applicable to the majority (59%) of Mondi
employees, when considering executive
director pay increases. A detailed analysis
of pay and incentives is presented to the
committee annually, covering approximately
98% of the global workforce in all
geographies and business units. Sue Clark,
our non-executive director responsible
for understanding the views of employees,
participates in our Inspire initiative. As a
consequence of COVID-19, in 2021 Inspire
was virtual, however in 2022 Sue has been
able to meet in person with employees
across many Mondi locations and business
units, and at different levels of seniority.
Over the course of these Inspire visits,
employees have shared their thoughts
on a diverse range of topics including
pay and performance and wider
remuneration at Mondi.
Sue has reported back to the Board on
the discussions of these sessions and
the themes emerging from the Inspire
meetings, and these views contribute
to the wider remuneration discussions
of the committee where relevant.
The Inspire initiative is not solely focused
on remuneration but is intended to create
a forum to understand better the broader
employee experience, and the views of
colleagues on culture, training, safety,
wellbeing, diversity and any other areas
that impact their working life at Mondi.
These are open sessions where employees
are encouraged to share their views and ask
questions on any aspect of life at Mondi.
For further details on wider employee
engagement, see pages 94-96. We have
made a good start in bringing the employee
voice into the Boardroom and will continue
to expand the breadth and depth of our
Inspire initiative to support this endeavour.
Alongside Inspire Mondi has a European
Communication Forum. At least once
a year employee representatives from
plants across Europe attend the Forum.
The meetings are an opportunity to share
developments across the business while
providing an open forum for employees
to ask questions and express their views
directly to members of senior management
including the CEO, Group HR Director and
the non-executive director responsible for
understanding the views of our employees.
Shareholder engagement
In 2022, during the development of the
DRP we engaged with a cross-section
of shareholders and proxy agencies on
developments and external expectations
relating to executive pay. We also wrote
to shareholders in late 2022, setting out
our proposed changes to the DRP and its
implementation, and inviting them to discuss
their views. A number of follow up calls with
investors were held. The feedback from
those investors was positive and no material
concerns were raised.
Conclusion
I should like to thank you for the constructive
feedback and strong support you have
given our remuneration report in prior years.
I very much hope that you will continue
to give your support to the remuneration
resolutions proposed at the 2023 AGM.
Dame Angela Strank
Chair of the Remuneration Committee
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 128
Remuneration report
Remuneration at a glance
Summary of our proposed Directors' Remuneration Policy and implementation for 2023
Implementation of DRP in 2023
Fixed pay
Base salary, pension
and benefits
Annual bonus
Short-term variable
remuneration
Long-Term Incentive Plan
Long-term variable
remuneration
Share ownership policy
Salary
Group CEO:
£1,073,500 (6.0% increase);
Group CFO:
£684,500 (6.0% increase)
Average increase for Mondi’s
UK workforce was 9%.
Pension
8% of salary, aligned to
the majority of the UK
workforce.
Benefits
Directors will continue to receive
benefits in line with policy, which
include car allowance, medical
insurance, death and disability
insurance and employment
taxation advice.
Cash element
Half of any bonus earned is
deferred in shares for three years
— To incentivise and reward the achievement of stretching annual performance targets.
— Maximum opportunity unchanged from prior year at 185% of base salary (Group CEO)
and 170% of base salary (Group CFO).
— Performance measures for 2023 will be underlying EBITDA (35%), ROCE (25%), safety (10%), reduction
in greenhouse gas emissions (5%), elimination of Waste to Landfill (5%) and personal objectives (20%).
3-year performance period
2-year holding period
— To incentivise and reward the delivery of the Group’s long-term strategic objectives,
and provide alignment with shareholders.
— Maximum opportunity unchanged from prior year at 230% of base salary (Group CEO)
and 210% of base salary (Group CFO).
— Performance measures for 2023 will be ROCE (50%), relative TSR (25%) and cumulative EPS (25%).
— To align the interests of executive directors with those of shareholders.
— Minimum shareholding requirement of 300% of base salary for the Group CEO and 250%
of base salary for the Group CFO.
— A post-employment shareholding requirement applies – equal to the full in-employment
shareholding requirement (or actual shareholding, if lower) for a period of two years.
Key decisions made during the year
Review of the Directors'
Remuneration Policy
Review of executive director salaries
Andrew King and Mike Powell's base
salaries increased by 6.0% on 1 January
2023, below the level of increases awarded
to the UK workforce of 9%.
Review of 2022 annual bonus outcomes
The Group's Russian assets have been
reported as discontinued operations since
June 2022. The targets for the annual bonus
were restated to reflect our continuing
operations.
Vesting of 2020 LTIP award
The ROCE target range was not restated
to reflect the continuing operations after
planned divestment of our Russian assets.
In addition, the committee considered the
potential for windfall gains. The expected
vesting share price will be below the share
price at grant.
2023 LTIP award performance measures
and targets
Klabin and PCA have been added to the
bespoke TSR peer group to make the
group more robust.
Cumulative EPS, as an additional growth
measure, will be included for the 2023 LTIP
grant. This will provide a more rounded
assessment of financial performance,
together with ROCE and relative TSR.
Review of non-executive director fees
The non-executive director base fees,
the attendance fee for meetings outside
country of residence (per meeting) and all
supplemental fees were increased by 5%.
An additional fee for the non-executive
director responsible for understanding the
views of employees was also introduced.
These changes took effect from 1 January 2023.
Engaging with our workforce
on remuneration
During 2022, as part of our Inspire initiative,
Sue Clark, our non-executive director
responsible for understanding the views of
employees, was able to connect with a range
of employees (covering various levels of
seniority, location, business unit and gender),
and fed back to the Board on findings.
Mondi Group Integrated report and financial statements 2022
129
Linking our reward and strategy
Our strategy:
Drive value accretive growth, sustainably
Underpinned by our four strategic value drivers:
Drive performance along the value chain
Invest in assets with cost advantage
Inspire our people
Partner with customers for innovation
At or above maximum
Between threshold and maximum
Below threshold
Remuneration outcomes
Andrew King
Base salary
£1,012,700
Annual bonus
Annual bonus
U. EBITDA
35%
Outturn
35%
ROCE
25%
Outturn
25%
Sustainability
scorecard
20%
Personal
20%
Outturn
20%
Outturn
16% / 17%
TSR
50%
Outturn
0%
LTIP
Average 3-yr ROCE
50%
Outturn
50%
Mike Powell
Base salary
£645,750
Annual bonus
U. EBITDA
35%
Outturn
35%
ROCE
25%
Outturn
25%
Sustainability
scorecard
20%
Outturn
20%
Personal
20%
Outturn
16%
U. EBITDA
35%
Outturn
35%
ROCE
25%
Outturn
25%
Sustainability
scorecard
20%
Outturn
20%
Personal
20%
Outturn
17%
96%
Total outturn
£1,798,556
50% deferred in shares
LTIP
TSR
50%
Outturn
0%
ROCE
50%
Outturn
50%
50%
Total outturn
£1,141,740
2-year holding period
97%
Total outturn
£1,064,842
50% deferred in shares
LTIP
TSR
50%
Outturn
0%
ROCE
50%
Outturn
50%
50%
Total outturn
£311,222
2-year holding period
Benefits, pension contributions and other
£290,681
Benefits, pension contributions and other
£92,584
Total remuneration 2022
£4,243,677
Annual bonus
Pages 142-145
Total remuneration 2022
£2,114,398
Long-Term Incentive Plan (LTIP)
Page 146
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
130
Remuneration report
Remuneration at a glance continued
Fixed vs variable remuneration outcomes
Andrew King Group CEO
Mike Powell Group CFO
2022
31%
2021
35%
42%
51%
27%
14%
£4,243,677
2022
35%
£3,497,506
2021
32%
50%
47%
15%
£2,114,398
21%
£2,189,834
2020
50%
27%
23%
£2,464,961
2020
64% 36% 0%
£204,561
Salary, benefits, pension & other
Annual bonus
Performance shares (LTIPs)
1 Andrew King became Group CEO in 2020, prior to that he was Group CFO. Mike Powell became Group CFO in 2020
Executive directors’ shareholdings2
Andrew King Group CEO
Mike Powell Group CFO3
Shares at 31.12.22:
209,005
Read more
Page 149
% base salary:
300%
Shares at 31.12.22:
50,156
Read more
Page 149
% base salary:
113%
2 Including beneficial and non-beneficial share interests of connected persons and unvested BSP shares net of tax
3 Mike Powell joined the Board in November 2020. New appointees are required to meet the relevant shareholding requirements within five years from appointment
Total Shareholder Return – Mondi vs FTSE All Share
10-year Mondi plc
10-year FTSE All-Share
)
£
(
e
u
a
V
l
400
300
200
100
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
This graph shows the value, by 31 December 2022 of £100 invested in Mondi plc on 31 December 2012, compared with the value of £100 invested in the FTSE All-Share Index on the same date.
TSR has been calculated on a three-month average basis
Source: Thomson Datastream
Mondi Group Integrated report and financial statements 2022
Remuneration report
Statement of implementation of Directors’ Remuneration
Policy in 2023
Current salary levels, and increases awarded in January 2023, are as follows.
131
Name
Andrew King
Mike Powell
Base salary
effective
1 Jan 2023
Previous
base salary
£1,073,500
£1,012,700
£684,500
£645,750
% change
6.0%
6.0%
Andrew King’s and Mike Powell’s base salaries were each increased by 6.0%. The average increase for Mondi’s UK workforce was 9%.
Bonus Share Plan (BSP) for 2023
The bonus structure for 2023 is shown below. Andrew King’s and Mike Powell’s maximum bonus opportunities will be 185% of base salary
and 170% of base salary respectively.
Measure
Weighting (%) Why chosen?
How targets are set
Underlying EBITDA
35%
ROCE
25%
Sustainability scorecard
Safety
Greenhouse gas
emissions
Waste to Landfill
10%
5%
5%
Personal objectives
20%
Underlying EBITDA provides a measure
of the cash-generating ability of the
business that is comparable from
year to year.
ROCE provides a measure of the efficient
and effective use of capital in our operations.
Reflects the strategic importance of progress
towards our MAP2030 framework.
One of the key indicators of whether the
business is meeting its sustainability goal
of zero harm.
One of our key environmental indicators
in our MAP2030 framework.
One of our key circular driven solution
indicators in our MAP2030 framework.
Targets and ranges are set each year by
the committee taking account of required
progress towards strategic goals, and the
prevailing market conditions.
Targets are set each year by the committee,
based on the specific annual priorities in our
MAP2030 framework.
The committee considers input from the
Sustainable Development Committee, and
sets appropriate standards and goals.
An indicator of the contribution each
executive director is making to the overall
success of the management team.
Targets are set each year by the committee,
based on the specific priorities, and areas
of responsibility, of the role.
Targets for the annual bonus will be disclosed collectively in next year’s report as the committee considers the financial targets to be
commercially sensitive. Half of any bonus earned in respect of 2023 performance will be paid out in cash and the other half will be deferred
into shares for three years as nil cost options.
Long-Term Incentive Plan (LTIP) for 2023
LTIP awards that are to be made in 2023 will be assessed against three performance measures; ROCE, TSR and EPS, weighted 50%, 25%
and 25% respectively and measured over the three-year performance period commencing on 1 January 2023. The awards will be subject
to a two-year holding period from the date of vesting. The committee’s intention is to grant at the level of 230% of base salary and 210%
of base salary for Andrew King and Mike Powell respectively. The committee continues to exercise restraint by granting awards below the
policy maxima for the eighth consecutive year.
Metric
Why chosen?
How targets are set
Average 3-year ROCE (50%)
TSR, relative to a peer group
of competitors (25%)
EPS, measured on a 3-year cumulative
basis (25%)
A key indicator of the
efficient and effective use
of capital.
The committee sets threshold and stretch levels, aligned to
the Group’s strategic targets. ROCE targets for the LTIP are
detailed below.
TSR measures the
total returns to Mondi’s
shareholders, so provides
close alignment with
shareholder interests.
A key growth measure,
that represents the
bottom-line return and
provides a balance to the
ROCE and TSR metrics.
The committee sets the performance requirements for each
grant. A bespoke peer group of packaging and paper sector
companies is used. TSR targets with respect to the LTIP are
detailed below.
EPS targets are set in the context of the long-term financial
plan, reflecting underlying EPS. The EPS figures for each
year in the performance period are added together to form
a cumulative 3-year target.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 132
Remuneration report
Statement of implementation of Directors’ Remuneration
Policy in 2023 continued
The targets for the 2023 LTIP awards are as follows:
Measure
ROCE (average)
Mondi’s TSR relative to bespoke peer group
Cumulative EPS (euro cents)
Weighting
(%)
Threshold
(25% vesting)
Maximum
(100% vesting)
50%
25%
25%
12%
18%
Median Upper quartile
443
541
Between threshold and maximum, the LTIP awards will vest on a straight-line basis.
Both the TSR and ROCE targets have remained the same since the 2020 LTIP award; no adjustments are being made in light of the
planned divestment of the Russian assets. The Russian business typically achieved ROCE well above the Group average. The committee
considers these targets remain appropriately stretching.
The committee reviewed the TSR peer group, with a focus on peers who are subject to broadly the same market forces and trading
environment as Mondi. This review concluded in Klabin and PCA being added to the TSR peer group. The TSR peer group for the 2023
LTIP awards consists of the following companies:
BillerudKorsnäs
Huhtamaki
DS Smith
Holmen
International Paper
Klabin
Mayr-Melnhof
Metsä Board
PCA
Sappi
Smurfit Kappa
Stora Enso
The Navigator Company
UPM
WestRock
The committee has discretion to amend the vesting outturn should any formulaic output be inappropriate (e.g. unreflective of underlying
performance). Where the provision is utilised, the committee will explain clearly the basis for this decision.
Non-executive directors’ remuneration
Fee levels for 2023 are as set out in the table below. The Chair fee, non-executive director base fee, the attendance fee for meetings
outside the country of residence (per meeting) and all supplemental fees have been increased by 5%, effective from 1 January 2023.
A supplementary fee for the non-executive director responsible for understanding the views of employees was introduced.
Role
Board Chair fee
Non-executive base fee
Additional fees:
Supplement for Senior Independent Director
Supplement for Audit Committee Chair
Supplement for Remuneration Committee Chair
Supplement for Sustainable Development Committee Chair
Supplement for the non-executive director responsible for understanding the views of employees
Attendance fee for meetings outside country of residence (per meeting)
Fees from
1 January 2023
Fees from
1 January 2022
£484,313
£81,870
£461,250
£77,972
£21,000
£22,000
£21,000
£21,000
£11,000
£2,680
£20,000
£21,000
£20,000
£20,000
–
£2,552
Mondi Group Integrated report and financial statements 2022 Remuneration report
Directors’ Remuneration Policy
133
This part of the Directors’ Remuneration Report sets out the Directors’ Remuneration Policy (‘DRP’) for the Group and has been prepared
in accordance with The Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended).
The policy is submitted for approval by a binding shareholder vote at the 2023 Annual General Meeting (‘AGM’).
The following changes to the DRP are being proposed:
— payouts for on-target performance against non-financial metrics, will be reduced from 53% to 50% of the maximum opportunity. This is
consistent with the approach already applied for the financial metrics. No changes to the annual bonus policy maximum are proposed,
which will remain at 200% of base salary; and
— the post-employment shareholding requirement for executive directors will be 100% of the in-employment requirement (or the actual
shareholding, if lower), for two years post-cessation. Previously this had tapered to 50% in the second year post-cessation.
When reviewing the DRP, the committee considered a number of alternative approaches, which were discussed at a number of meetings
before a decision was reached. The committee received input from management and its independent advisers to ensure that various
perspectives were considered. To avoid any conflicts of interest, no directors were involved in conversations relating to their own pay.
The committee engaged in a consultation with major shareholders at the end of 2022 and early 2023 on the above change.
Feedback received was supportive of the proposed changes.
Remuneration Policy principles
Mondi’s approach is that remuneration should underpin the Group’s strategy. The remuneration is intended to attract, incentivise and retain
high calibre individuals.
The committee considers the principles set out in Provision 40 of the UK Corporate Governance Code when determining the design,
implementation and assessment of remuneration.
Simplicity
Clarity
Risk
Predictability
Proportionality
Alignment to Culture
We operate a simple remuneration structure of fixed pay + short-term incentive + long-term incentive,
avoiding undue complexity or the potential to deliver unintended outcomes.
The committee is committed to transparency regarding the components of the remuneration structure, the
potential outcome and the rationale for the quantum of awards made. The choice of metrics and the targets
set for the assessment of performance under our variable pay plans underpin the overall strategy.
The remuneration structure and the variable pay plans reflect the risk appetite set by the Board. The
performance measures, and the targets set, do not encourage inappropriate behaviours or excessive
risk-taking. Holding periods are in place for the LTIP. Mitigation is provided through the application of market
practice aligned recovery provisions (both malus and clawback). The committee also retains discretion to
override formulaic vesting outcomes, where pay outcomes do not reflect the wider business performance.
The post-employment MSR has been extended such that 100% of the in-employment shareholding guideline
must be held for two years post-employment, further promoting the delivery of sustainable share price
performance.
The committee is confident that the remuneration structure and its operation are well understood by
participants, including potential outcomes driven by performance levels achieved.
The potential outcomes under the remuneration structure at threshold, target and maximum performance
levels have been assessed and are understood. The committee carefully considers the targets set for the
variable pay elements to ensure reward is appropriately linked to performance and to minimise the risk
of excessive outturns. The annual bonus and LTIP outturns are at the discretion of the committee.
The committee considers that the remuneration strategy supports the wider strategy. The approach to pay
positioning, pension contribution levels and variable pay participation is applied consistently and underpins
the Mondi Group values.
Remuneration policy for executive directors compared to other employees
Mondi’s remuneration practices across the wider Group are aligned to those of the executive directors. Salaries are paid fairly in relation
to the market value of the role, recognising local markets and collective bargaining agreements. Executive salary increases are made in line
with, or below those of the wider workforce. Pensions and benefits are offered to employees across the Group according to the country,
and the seniority of the role. The senior management participate in an annual cash bonus on similar terms to the executive directors in
terms of structure and metrics. Almost all (95%) of senior management participate in the BSP or a deferred cash plan. 71% of the wider
workforce participate in an annual bonus programme.
The main difference between the structure of reward for executive directors and employees in general is the proportion of the total
remuneration that is at risk and subject to performance. Executive directors and other senior executives participate in the LTIP, in addition
to the annual bonus.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 134
Remuneration report
Directors’ Remuneration Policy continued
Executive directors’ remuneration policy table
The tables below set out the DRP for executive directors and non-executive directors to be approved by shareholders at the 2023 AGM.
If approved, the policy will be effective from the date of the 2023 AGM, with those changes to the parts of the policy applicable to the
annual bonus applying for the full 2023 financial year. Awards made prior to the approval of the policy remain subject to the prevailing
approved policy at grant.
Base salary
Purpose and link to strategy
To recruit and reward executives of a suitable calibre for the role and duties required.
Operation
Ordinarily reviewed annually by the committee, taking account of a number of factors including (but not limited
to) Group and individual performance, the skills and experience of the individual and changes in role scope and
responsibilities. The committee also takes into consideration the levels of increase for the broader employee
population.
Reference is also made to remuneration levels in companies of similar size and complexity to Mondi.
The committee considers the impact of any base salary increase on the total remuneration package.
Salaries (and other elements of the remuneration package) may be paid in different currencies as appropriate
to reflect their geographic location.
Performance measures
Whilst no formal performance conditions apply, an individual’s performance in role is taken into account
when determining any salary increase.
Maximum opportunity
There is no prescribed maximum base salary or annual increase.
However, increases will normally not exceed the general level of increase awarded in the UK or the location in
which the executive is based (in percentage of salary terms). On occasion a higher increase may be awarded
in appropriate circumstances, for example:
— on promotion or development in role or change in responsibilities of the individual;
— where an individual has been appointed to the Board at lower than typical market salary to allow for growth
in the role, in which case larger increases may be awarded to move salary positioning to a typical market level
as the individual gains experience;
— change in size and/or complexity of the Group; and/or
— significant market movement.
Benefits
Purpose and link to strategy
To provide market competitive benefits.
Operation
The Group typically provides:
— car allowance or company car;
— medical insurance;
— death and disability insurance;
— limited and specific personal taxation and financial advice; and
— other ancillary benefits based on individual circumstances, including relocation and assistance with expatriate
expenses.
Other benefits may be introduced from time to time to ensure the benefits package is appropriately competitive
and reflects the circumstances of the individual director.
Performance measures
Not applicable.
Maximum opportunity
While the committee has not set an absolute maximum on the level of benefits executive directors may receive,
the value is set at a level which the committee considers to be appropriately positioned taking into account
relevant market levels based on the nature and location of the role, and individual circumstances.
Pension
Purpose and link to strategy
To provide market competitive pension contributions or allowances.
Operation
Defined contribution to pension, or cash allowance of equivalent value. Only base salary is pensionable.
Performance measure
Not applicable.
Maximum opportunity
Executive directors receive a company contribution and/or equivalent cash allowance not exceeding the
contribution available to the majority of the workforce in the relevant country (currently 8% of salary for the
UK workforce).
Benefits under any non-UK pension arrangement may be provided in accordance with the terms of the
applicable scheme.
Mondi Group Integrated report and financial statements 2022 135
Bonus Share Plan (BSP)
Purpose and link to strategy
Operation
Performance measures
To provide incentive and reward for annual performance achievements. To also provide sustained alignment
with shareholders through a deferred component.
Awards are based on annual performance against stretching financial and non-financial targets. Targets are
reviewed annually and any pay-out is determined by the committee after the year end based on targets set for
the financial period. For 2023, the tables on pages 131–132 provide details of performance metrics, weightings,
the rationale and how targets are set.
The policy gives the committee the authority to select suitable performance metrics, aligned to Mondi’s strategy
and shareholders’ interests, and to assess the performance outcome.
The committee has discretion to amend the pay-out should any formulaic output not reflect the committee’s
assessment of overall business performance, or if the committee considers the formulaic outturn is not
appropriate in the context of other factors considered by the committee to be relevant.
Ordinarily, half of the award is delivered in cash and half is deferred into a conditional share award or a nil
(or nominal) cost option which normally vests following a three-year service period. Any dividend equivalents
accruing on shares between the date when the award was granted and when it vests, will be delivered in shares.
Malus and clawback provisions apply (see page 136).
Performance is normally assessed against a balanced scorecard of metrics as determined by the committee from
time to time, such as underlying EBITDA, ROCE and sustainability. Individual performance may also be assessed
against suitable objectives aligned to the delivery of Mondi’s strategy. The majority of the bonus is assessed against
quantifiable financial and science-based sustainability measures, with over 50% assessed against financial targets.
The on-target bonus, as a percentage of maximum, has been reduced from 53% to 50% for non-financial
targets, aligned to the approach for financial targets for performance awards made in, and after, 2023. Subject
to the committee’s discretion to override formulaic outturns, for financial measures and non-financial measures,
no more than 25% of maximum is earned for threshold performance, 50% of maximum is earned for on-target
performance and 100% of maximum is earned for maximum performance.
Maximum opportunity
The maximum annual bonus opportunity for executive directors is 200% of base salary.
The committee retains discretion to set the actual maximum below the policy maximum.
Long-Term Incentive Plan (LTIP)
Purpose and link to strategy
To provide incentive and reward for the delivery of the Group’s strategic objectives, and provide further
alignment with shareholders through the use of shares.
Operation
The committee may grant awards annually as conditional shares or as nil (or nominal) cost options.
Awards will usually vest to the extent that performance conditions are met, typically measured over three years.
A two-year post-vesting holding period normally applies to LTIP shares that vest (net of tax). The two-year
holding requirement will normally continue if the director leaves employment during the holding period or is
permitted to retain any part of the award as a good leaver. The shares held will count towards the executive
director’s normal shareholding requirement. For 2023, the tables on pages 131–132 provide details of performance
metrics, weightings, the rationale and how targets are set.
The committee has discretion to vary the formulaic vesting outturn if it considers that the outturn does not
reflect the committee’s assessment of performance or is not appropriate in the context of other factors
considered by the committee to be relevant.
Dividend equivalents will accrue to the first date shares can be acquired and will be delivered in shares, based
on the proportion of the award that vests.
Under the plan rules, in exceptional circumstances, the committee has the ability to cash-settle awards,
if necessary. There is no current intention for awards for the executive directors to be delivered in this way.
Malus and clawback provisions apply (see page 136).
Performance measures and targets are set each year by the committee, before the grant. The committee
annually reviews the performance measures, and in line with the rules of the LTIP, reserves the right to change
the measures and/or set different targets for future grants to ensure they remain appropriately challenging in the
prevailing economic environment.
Performance measures under the LTIP will be based on financial measures (which may include, but not be limited
to, Total Shareholder Return, return on capital employed, and earnings per share) and may include non-financial
measures (such as ESG measures). For awards granted in 2023, metrics comprise ROCE (50% weighting), relative
TSR (25% weighting) and cumulative EPS (25% weighting).
Subject to the committee’s discretion to override formulaic outturns, no more than 25% of the awards will vest
at threshold performance, increasing to 100% for maximum performance.
Performance measures
Maximum opportunity
The maximum award level under the LTIP in respect of any financial year is 250% of base salary.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 136
Remuneration report
Directors’ Remuneration Policy continued
Share ownership policy
Purpose and link to strategy
To further align the interests of executive directors with those of shareholders.
Operation
The Minimum Shareholding Requirement (MSR) for the CEO is 300% of base salary and 250% for the CFO.
On appointment, an executive director is normally required to meet the MSR within five years from the date
of appointment.
While the executive director is building to the required shareholding level, deferred bonus awards under the BSP,
net of the expected tax liability, will count towards the requirement. Once the required shareholding has been
met, such shares will not count unless the committee, at its sole discretion, determines that a number of deferred
shares may count towards the holding requirement of a director.
Unvested LTIP awards (i.e. those awards where performance targets and/or a service requirement must still be met
for awards to vest) will not count towards the holding requirement. LTIP shares that have vested and on which tax has
been paid and that are within the two-year post-vesting holding period will count towards the holding requirement.
Previously compliant directors who do not meet the minimum requirement on annual assessment are normally
expected to achieve compliance by 31 December of the same year. The executive directors are entitled to
participate in all employee share plans on the same basis as all other employees.
Post-employment MSR:
A post-employment shareholding requirement applies. Under the policy, executive directors will be expected
to retain a shareholding for two-years post-employment.
For both years post-employment, the full in-employment MSR level applies. New executive directors who have
not achieved the necessary in-employment MSR level at date of exit, will be required to retain the actual level
of shares held at date of exit.
In order to allow the committee to deal with unexpected circumstances, the committee retains discretion on how
to operate the policy and may make exceptions and allowances as it sees fit.
Recovery provisions (Malus and Clawback)
The committee may operate malus and clawback (i) for a period of three years from the payment of the BSP cash award or (ii) until the
date of release for BSP share awards, and for a period of three years following the vesting date of LTIP awards.
The malus and clawback provisions for the BSP and LTIP are set out in the rules for each plan, but in summary may be applied in the event of:
— misstatement of financial results;
— error or misstatement of performance;
— gross or serious misconduct;
— corporate failure;
— severe downturn in financial or operational performance; or
— severe reputational damage.
Committee discretion
The committee, consistent with market practice, retains discretion over a number of areas relating to the operation and administration
of the DRP. These include (but are not limited to) the following:
— who participates in the incentive plans;
— the timing of award grants and/or payments;
— the size of an award and/or a payment (within the limits set out in the DRP table on pages 133–136);
— the choice and weighting of performance metrics (in accordance with the statements made in the DRP table on pages 133–136);
— in exceptional circumstances, determining that any share-based award (or any dividend equivalent) shall be settled (in full or in part) in cash;
— discretion relating to the measurement of performance and pro-rating for time for LTIP awards in the event of a change of control or
restructuring;
— determination of a good leaver (in addition to any specified categories) for incentive plan purposes based on the rules of each plan and
the appropriate treatment in such circumstances;
— determining the extent of payment or vesting of an award based on the assessment of any performance conditions, including discretion as
to the basis on which performance is to be measured if an award vests in advance of normal timetable (on cessation of employment as a
good leaver or on the occurrence of a corporate event) and whether (and to what extent) pro-ration shall apply in such circumstances;
— whether (and to what extent) malus and/or clawback shall apply to any award;
— adjustments required in certain circumstances (e.g. rights issues, corporate restructuring, on a change of control and special dividends); and
— the ability to adjust existing performance conditions for exceptional events so that they can still fulfil their original purpose whilst being
no less stretching.
Mondi Group Integrated report and financial statements 2022 137
Remuneration scenarios at different performance levels
CEO – Andrew King
CFO – Mike Powell
Fixed pay
BSP cash
BSP shares
LTIP
Fixed pay
BSP cash
BSP shares
LTIP
£7,000,000
£6,000,000
£5,000,000
£4,000,000
£3,000,000
£2,000,000
£1,000,000
34%
14%
14%
38%
100%
43%
17%
17%
23%
53%
14%
14%
19%
£4,000,000
£3,500,000
£3,000,000
£2,500,000
£2,000,000
£1,500,000
£1,000,000
£500,000
35%
14%
14%
37%
100%
43%
17%
17%
23%
53%
14%
14%
19%
Minimum
Target
Maximum
Share price
growth
Minimum
Target
Maximum
Share price
growth
The charts above illustrate the total potential remuneration for each executive director at three performance levels.
Assumptions:
Minimum = fixed pay only (salary + benefits + pension)
Target = 50% vesting of the annual bonus and LTIP awards
Maximum = 100% vesting of the annual bonus and LTIP awards
Share price growth – impact of 50% share price growth for LTIP shares between award and vesting
Salary levels (on which other elements of the package are calculated) are based on those applying on 1 January 2023
Remuneration policy for non-executive directors
Element
Non-executive board chair fee
Other non-executive fees
Purpose and link to strategy
To attract and retain a high-calibre Chair and non-executives, with the necessary experience and skills.
To provide fees which take account of the time commitment and responsibilities of the role.
Operation
The Chair receives an all-inclusive fee. The Chair’s
fee is reviewed periodically by the committee.
The non-executives are paid a basic fee.
Attendance fees are also paid to reflect the requirement
for non-executive directors to attend meetings in
various international locations.
Additional fees may be paid to reflect the extra
responsibilities and time commitments, including
but not limited to chairing main Board committees,
the role of the Senior Independent Director and the
non-executive director responsible for understanding
the views of employees. Non-executive directors’
fees are reviewed periodically by the Chair and
executive directors.
Non-executive directors are not eligible to participate in any of the Group’s share schemes, incentive schemes
or pension schemes.
The Group may reimburse the reasonable expenses of Board directors that relate to their duties on behalf
of Mondi (including tax thereon if applicable). The Group may also provide advice and assistance with Board
directors’ tax returns where these are impacted by the duties they undertake on behalf of Mondi.
Maximum opportunity
While there is not a maximum fee level, fees are set by reference to market median data for companies of similar
size and complexity to Mondi.
Remuneration policy for executive directors compared to the wider workforce
The remuneration policy for executive directors reflects the different levels of responsibility and market practices. The key difference
to the remuneration of the wider workforce is the proportion of remuneration that is ‘at risk’. For senior roles, a higher proportion of the
remuneration package comprises of variable pay which drives an increased emphasis on pay for performance. Only a small number of
the most senior colleagues participate in the LTIP and the BSP. Participation in these plans is focused on those individuals who have the
greatest accountability for the performance of the Group.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 138
Remuneration report
Directors’ Remuneration Policy continued
Directors’ contracts and notice periods
Executive Directors
Andrew King’s and Mike Powell’s service contracts provide for termination on one year’s notice by either party. The Group may elect to
make a payment in lieu of notice and, if it does so, to apply mitigation. Payment in lieu of notice would comprise base salary, benefits and
pension contributions for the notice period (or, if applicable, the balance of the notice period).
The notice periods for the executive directors who served during the period under review are as follows:
Executive director
Andrew King
Mike Powell
Unexpired term/notice period
Terminable on 12 months’ notice
A director’s service contract may be terminated without notice and without any further payment or compensation, except for sums
accrued up to the date of termination, on the occurrence of certain events such as gross misconduct.
Non-executive directors
All non-executive directors have letters of appointment with Mondi plc for an initial period of three years. In accordance with best practice,
non-executive directors are subject to annual re-election at the Annual General Meeting. Appointments may be terminated by either party
with six months’ notice. No compensation is payable on termination, other than accrued fees and expenses.
Service contracts for new appointments
Normally, for any new executive director appointments, the Group’s policy is that the service contracts should provide for one year’s notice
by either party. The contract would provide that, in the event of termination by the company, other than for ‘cause’, the executive would be
eligible for payment of the base salary, pension contribution and benefits in respect of the unexpired portion of the 12-month notice period.
The committee would take account of the remuneration and contract features that the executive may be forgoing or relinquishing in order
to join Mondi, in comparison with the overall remuneration package that Mondi is able to offer.
The committee may consider compensating a newly-appointed executive director for other relevant contractual rights forfeited when
leaving their previous employer and/or remuneration forgone as a result of leaving their previous employer.
Approach to remuneration on recruitment
The appointment of high calibre executives to the Board, whether by internal promotion or external recruitment is important for the
success of the Group. The remuneration package for a newly appointed executive director would be set in accordance with the prevailing
approved remuneration policy at the time of appointment. Base salary would be set at an appropriate level taking into consideration the
skills and experiences of the individual, the complexity of the role and the individual’s current remuneration. The variable pay would be
considered consistent with that of existing executive directors and would be subject to the maximum limits of the policy. Certain relocation
expenses may be met, as appropriate.
For an internal appointment, any existing pay components awarded in respect of the prior role would be allowed to pay out in accordance
with the terms of the award.
For external appointments, the committee may offer additional cash and/or share-based payments to replace any variable pay awards an
individual may have forgone to join Mondi, if it considers these to be in the best interests of the Group and its shareholders. This includes
awards made under Section 9.4.2 of the UK Listing Rules. Any such payments would take account of the remuneration forgone including
the nature of the award, the time horizons and any performance conditions attached to the award. The key terms and an explanation of the
rationale for such a component would be disclosed in the remuneration report for the relevant year.
Depending on the timing of the appointment, the committee may consider it appropriate to set different annual performance conditions
for the first performance year of appointment. An LTIP award may be made shortly after appointment, or as soon as practical following a
closed period.
Mondi Group Integrated report and financial statements 2022 139
Policy on loss of office
Notice periods will not normally exceed 12 months. The Group may elect to make a payment in lieu of notice as determined by the
respective contract of employment, taking account of local employment law, and, if it does, to apply mitigation. The committee reserves
the right to make any other payments in connection with an executive director’s cessation of office or employment where the payments
are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of
settlement of any claim arising in connection with the cessation of a director’s office or employment. Any such payments may include but
are not limited to paying any fees for outplacement assistance and/or the director’s legal and/or professional advice fees in connection
with their cessation of office or employment.
The Group would seek to apply the principles of mitigation to any payment in lieu of notice by, for example, making payments in
instalments that can be reduced or ended if the former executive wishes to commence alternative employment during the payment
period. An executive director’s eligibility for bonus on cessation of employment will be determined by the committee in accordance with
the relevant plan rules, taking into account the reason for their departure and prevailing local legislation. Where eligible, the departing
director’s bonus would typically be determined in the normal way after the relevant year end, i.e. based on the applicable performance
conditions, pro-rated for the period worked in that year, save that no portion would be required to be deferred into a BSP award. However,
the committee has the discretion to apply different treatment. Any share-based entitlements granted to an executive director under the
Group’s share plans will be determined based on the relevant plan rules. The default treatment is that any outstanding awards lapse on
cessation of employment. However, in certain prescribed circumstances, such as death, disability, retirement or other circumstances at
the discretion of the committee (taking into account the individual’s performance and the reasons for their departure) ‘good leaver’ status
can be applied. For good leavers, vesting of BSP awards is accelerated to as soon as practical after employment termination (as they are
not subject to performance conditions). Typically, LTIP awards remain subject to performance conditions (measured over the original time
period) and are reduced pro rata to reflect the proportion of the performance period actually served. The committee has the discretion
to apply different treatment (including to disapply the application of performance conditions and/or time pro rating) if it considers it
appropriate to do so. However, it is envisaged that this would only be applied in exceptional circumstances. Post-vesting holding periods
will normally continue to apply, notwithstanding any cessation of employment.
Statement of consideration of employment conditions elsewhere in the Group
The Directors’ Remuneration Policy, and the remuneration of senior colleagues is set taking into appropriate account the pay and
employment conditions of the wider workforce. The committee receives a report of a detailed annual review of management and
pay practices across the Group. The review includes salary levels and market positioning, gender pay, remuneration trends, collective
bargaining and bonus participation.
Proposed salary increases for the executive directors are considered in the context of those being adopted across the Group.
The committee receives an additional report, detailing the approach management is taking across all geographies, to support their
decision making.
The key difference in the remuneration of executive directors and employees in general is the proportion of the remuneration package that
is performance related and delivered under the short and long-term incentive plans. The percentage of variable pay in the remuneration
package is greater for the executive, particularly the long-term incentive.
The Group does not consult formally with employees on the Directors’ Remuneration Policy, however employees are encouraged to
provide feedback on a wide spectrum of topics, including remuneration, through a number of channels. In some countries, this is through
consultations with employee representatives. The Group also conducts periodic employee surveys to understand the engagement of
employees and identify actions. The Board has also designated a non-executive director to understand the views of employees through
the Inspire meetings. The Board receives feedback from all of these channels.
Statement of consideration of shareholder views
The committee takes into account the views of shareholders in the formulation of the Directors’ Remuneration Policy. As part of the review
of the policy, a consultation was undertaken with the major shareholders. Feedback received from shareholders at the Annual General
Meeting is also considered.
In the event that either the remuneration policy or implementation resolutions receive a significant proportion of votes against, the
committee will seek to engage further with shareholders to understand better the reasons for their voting decision.
Legacy arrangements
For the avoidance of doubt, in approving this policy report, authority is given to the Group to honour any commitments entered into with
current or former directors that have been disclosed to shareholders in previous remuneration reports. Details of any payments to former
directors will be set out in the annual report on remuneration as they arise.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 140
Remuneration report
Annual report on remuneration
Mondi’s TSR performance over the last ten years
The following graph sets out the comparative TSR of Mondi plc relative to the FTSE All-Share Index, for the period between 31 December
2012 and 31 December 2022. This index was chosen because it is the broad equity market index of Mondi plc.
This graph shows the value, by 31 December 2022 of £100 invested in Mondi plc on 31 December 2012, compared with the value of £100
invested in the FTSE All-Share Index on the same date. TSR has been calculated on a three-month average basis.
10-year Mondi plc
10-year FTSE All-Share
)
£
(
e
u
a
V
l
400
300
200
100
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: Thomson Datastream
Historical CEO remuneration
Year
2022
20211
20202
2019
2018
20173
2016
2015
2014
2013
CEO
Andrew King
Andrew King
Andrew King / Peter Oswald
Peter Oswald
Peter Oswald
Peter Oswald / David Hathorn
David Hathorn
David Hathorn
David Hathorn
David Hathorn
Total remuneration
% of maximum
bonus earned
£4,243,677
£3,497,506
£3,559,580
£3,322,216
£3,906,849
£3,354,544
£4,867,142
£5,255,561
£5,859,585
£4,966,152
96%
97%
42%
44%
88%
63%
69%
90%
92%
73%
% of LTI
vested
50.0%
45.6%
50.0%
67.2%
76.6%
72.5%
92.5%
100.0%
100.0%
100.0%
1 The three-year performance cycle of the 2019 LTIP award ended on 31 December 2021. The award value shown in the 2021 Remuneration report was calculated using the average share price,
being £18.07. The actual share price on vesting was £14.07. The award values for 2021 have been restated on this basis
2 Andrew King’s and Peter Oswald’s 2020 total remuneration is in respect of their tenure as Group CEO. Their salary and bonus has been subject to a pro-rata time reduction. The bonus earned and LTIP
vested is based on their remuneration in the role as Group CEO. Peter’s bonus earned was 41% of maximum bonus opportunity
3 For 2017 the CEO remuneration reflects David Hathorn’s remuneration up to his retirement from the Boards on 11 May 2017, including the pro rata CEO annual bonus, and Peter Oswald’s base salary,
pension, benefits and pro rata CEO annual bonus, as well as the 2015 LTIP vesting amount, with effect from 11 May 2017
Mondi Group Integrated report and financial statements 2022
141
2022 remuneration of directors (audited)
The remuneration policy operated as intended in 2022. The table below sets out the total remuneration for each person who served as
a director in the years ended 31 December 2022 and 31 December 2021. A full breakdown of fixed pay and pay for performance in 2022
is detailed below.
Executive directors
Fixed pay
Pay for performance
Base salary
Benefits1
Pension
contribution
Total Fixed
Remuneration
Value of LTIP
vesting in
respect of the
performance
period ended
in the year3 4
Annual bonus
including
grant value of
BSP award2
Value of LTIP
vesting at
date of grant
Share price
gain on
vesting
LTIP award
between
grant and
vest dates
Total Variable
Remuneration
Other1
Total
2022
Andrew
King
Mike
Powell
2021
Andrew
King
Mike
Powell
£1,012,700 £207,865
£81,016
£1,301,581 £1,798,556 £1,141,740 £1,115,507
— £1,800 £2,942,096 £4,243,677
£645,750 £39,124
£51,660
£736,534 £1,064,842
£311,222
£273,630 £17,743 £1,800 £1,377,864 £2,114,398
£988,000 £133,813
£79,040
£1,200,853 £1,772,966
£490,962
£474,419
— £32,725 £2,296,653 £3,497,506
£630,000 £24,503
£50,400
£704,903 £1,028,160
£456,771
£438,067
£6,135
— £1,484,931 £2,189,834
Non-executive directors
Philip Yea
Svein Richard Brandtzaeg8
Sue Clark8
Tanya Fratto6
Saki Macozoma7
Dominique Reiniche
Dame Angela Strank8
Stephen Young
Year ended 31 December 2022
Year ended 31 December 2021
Fees
Other5
Total
Fees
Other5
Total
£461,250
—
£461,250
£450,000
—
£450,000
£95,836
£83,076
£33,552
£61,477
£108,180
£96,281
£124,076
£3,456
—
—
£3,672
£2,971
£99,292
£83,076
£33,552
£65,149
£55,426
£52,936
£96,070
—
£2,160
—
—
—
£57,586
£52,936
£96,070
—
£111,151
£101,050
£10,256
£111,306
—
—
£96,281
£52,936
£124,076
£110,221
—
—
£52,936
£110,221
1
Included in this column are accommodation costs, car allowance, life and health cover. For Andrew King, this figure also includes gross Vienna accommodation costs for his business travel of £43,052,
a total of £53,984 for UK, South African and Austrian tax advice benefit, and a total tax equalisation and other benefit gross-ups of £83,506. The column 'Other' shows matching SIP shares
2 This is the total annual bonus amount awarded in respect of the financial year 2022, and includes both the upfront cash element and the deferred share award. For further details, see pages 142–145
3 For 2022, the three-year performance cycle of the 2020 LTIP ended on 31 December 2022 and the awards will vest in March 2023. The award value (including equivalent dividends on LTIP shares due to
vest in March 2023 set out on page 146) shown is based on the average share price over the last three months of the financial year ended 31 December 2022 of £14.78. For Andrew King, the 2020 LTIP
awards were granted on 11 May 2020, when the share price was £15.85. This equated to a decrease in value of £1.07 per share. As disclosed in the 2020 remuneration report, Mike Powell’s 2020 LTIP
award was granted on 2 December 2020, with a grant share price of £13.88, in respect of incentives forgone as a result of leaving his former employer. This equated to an increase in value of £0.90 per share
4 For 2021 for Andrew King, this included cash amounts of equivalent value of dividends paid during the years 2021 and 2022 on the vesting of the 2018 and 2019 LTIP awards, to the values of £69,005 and
£45,354 respectively. For 2021, for Mike Powell, this has included a dividend equivalent to the value of £12,569 on the first LTIP award granted in respect of incentives forgone as a result of leaving his
former employer. In the 2021 remuneration report, the value of the 2019 LTIP awards vesting for which the three-year performance cycle ended on 31 December 2021 was calculated using the average
share price for the three months ended 31 December 2021, being £18.07. The actual share price on vesting was £14.07. The award values for 2021 have been restated on this basis. The awards were
granted on 29 March 2019, when the share price was £17.73. This equated to a decrease in value of £3.66 per share. As a consequence a zero gain is shown for Andrew King. Andrew’s loss due to share
price depreciation was £97,816
5 Svein Richard Brandtzaeg, Saki Macozoma and Dominique Reiniche received tax advice in the year, constituting taxable benefits to the gross values shown in this column
6 Tanya Fratto stepped down from the Board on 5 May 2022. The 2022 figures reflect her remuneration as a non-executive director from 1 January 2022 to 5 May 2022
7 Saki Macozoma was appointed as non-executive director on 6 May 2022. The 2022 figures reflect his remuneration as a non-executive director from 6 May 2022 to 31 December 2022
8 Appointed as non-executive directors on 22 April 2021. The 2021 figures reflect each individual’s remuneration as a non-executive director from 22 April 2021 to 31 December 2021
9 None of the executive directors have entitlements under a defined benefit pension scheme
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 142
Remuneration report
Annual report on remuneration continued
Annual bonus
2022 bonus outcomes (audited)
For the annual bonus in respect of 2022 performance, the performance measures and achievement levels were:
Weight (% max)
Outcomes:
Andrew King (% of max)
Mike Powell (% of max)
Underlying EBITDA
35
35
35
BSP performance measures
ROCE
25
25
25
Sustainability
scorecard
Personal
objectives
20
20
20
20
16
17
Total
100
96
97
1 The sustainability scorecard includes safety (10/20), reduction in GHG emissions (5/20) and elimination of waste to landfill (5/20) measures
Financial and sustainability elements of 2022 bonus (audited)
Financial performance was assessed against the underlying EBITDA and ROCE ranges that were set for 2022 that were restated to
reflect the continuing operations (excl. Russian operations). The outcomes for these components were determined by performance on a
continuing operations basis (excl. Russian operations). Had the targets and performance outcomes not been restated, the bonus outcomes
would have been unchanged from those decided by the committee and disclosed in this report. The ranges and outcomes are shown on
the next page.
A maximum of 10 points are awarded for safety.
Five points relate to the achievement of Lead indicators. This is a shared objective requiring individual involvement of all members of the
Executive Committee. All the individual activities must be completed by the Executive Committee members to achieve the five points.
If all the activities are not achieved, then these five points lapse for all.
A further five points relate to the achievement of an annually defined TRCR (Total Recordable Case Rate) that was restated to reflect the
continuing operations (excl. Russia). Fatalities, which are part of the TRCR are discretionally assessed by the Remuneration Committee.
The Executive Committee achieved all of the Lead indicators for the 2022 performance year. The TRCR achieved for 2022 was 0.63 relative
to a milestone of 0.66.
Prior to 2022, the impact of fatalities was formulaic. The approach for 2022 and going forward is that any fatality within the Group is
assessed on a discretionary basis, which is more reflective of Mondi's values and proactive approach to safety. The Remuneration
Committee proactively assesses any fatalities on a case-by-case basis and will utilise its discretion to adjust any payouts under the
bonus, if appropriate. There was one fatality in 2022 at the Frantschach mill in Austria. The Remuneration and Sustainable Development
Committees independently reviewed the detailed investigation report of the incident and agreed with the findings. After careful
deliberation and discussion, including consideration of the year-on-year safety improvements of the Group, the Remuneration Committee
concluded that there was no systemic failure of risk control. There were no direct actions from management that could have prevented the
incident. Further, no changes to the safety procedures were identified. As a consequence, the Remuneration Committee determined there
should be no discretionary adjustment to the bonus. In addition, the year-on-year Group safety performance improved.
Mondi Group Integrated report and financial statements 2022 143
A further five points each relate to binary GHG and WtL reduction targets. These have also been restated to reflect the continuing
operations (excl. Russia).
Performance measure
Underlying EBITDA
ROCE
Sustainability Scorecard
Safety Lead indicators (SLI)
Safety Lag (TRCR)
Greenhouse gas emissions (GHG)
Waste to Landfill (WtL)
Threshold
Maximum
Outcome
€ 1,113m
€1,505m
€1,848m
12.9%
17.5%
23.7%
0.73
Binary1 Achieved in full
0.66
0.39 t/t
0.63
0.36 t/t
22.87 kg/t
20.95 kg/t
% of bonus
opportunity
achieved
35%
25%
5%
5%
5%
5%
1 This is a shared objective requiring individual pro-active safety actions against key strategic tasks of all members of the Executive Committee
At or above maximum
Between threshold and maximum
Below threshold
CEO
Bonus outcome as percentage of maximum opportunity: 96%
Underlying EBITDA
ROCE
35%
(Max)
35%
25%
(Max)
25%
Sustainability scorecard
Personal objectives
20%
(Max)
20%
(Max)
5%
5%
5%
5%
16%
Performance measure achieved
Sustainability performance measure achieved
Performance measure not achieved
SLI
TRCR
GHG
WTL
CFO
Bonus outcome as percentage of maximum opportunity: 97%
Underlying EBITDA
ROCE
35%
(Max)
35%
25%
(Max)
25%
Sustainability scorecard
Personal objectives
20%
(Max)
20%
(Max)
5%
5%
5%
5%
17%
Performance measure achieved
Sustainability performance measure achieved
Performance measure not achieved
SLI
TRCR
GHG
WTL
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 144
Remuneration report
Annual report on remuneration continued
Achievement against personal objectives of executives for 2022 bonus (audited)
Key personal and sustainability objectives and achievements
The executive directors share many key objectives and also have individual objectives that are specific to their roles. Key objectives,
and achievements against these objectives during 2022, included:
Planned divestment
of Russian assets
(these new objectives
were set to respond
to the war in Ukraine)
Strategy development
and execution
Drive value accretive
growth, sustainably
Drive performance
along the value chain
Invest in assets
with cost advantage
Inspire our people
Partner with customers
for innovation
The war in Ukraine created an immediate and critical objective for our executive directors in terms
of how Mondi protected shareholder value whilst determining the appropriate options available.
— Assessed all options for the Group’s interests in Russia, including any form of legal separation.
— Developed and proposed at speed an approach, which the Board approved, resulting in the decision
to divest the Group’s Russian assets.
— Delivered an extensive internal and external stakeholder communication.
— Subject to regulatory approval, agreed the sale of the Syktyvkar facility for a consideration of RUB
95 billion (around €1.2 billion at 31 December 2022 exchange rate) and the sale of the Group’s three
packaging converting operations in Russia for a consideration of RUB 1.6 billion (around €20 million
as at 31 December 2022 exchange rate) payable in cash on completion.
— Enabling the Group to simplify its portfolio and focus on the strategic priority to grow in sustainable
packaging by:
— Continuing to foster the growth of eCommerce and sustainable packaging by developing
fit-for-purpose solutions.
— Completing the disposal of the PCC business ahead of schedule, allowing us to focus on growth
in our core packaging business.
— Product development and innovation activities, supporting customers transition to more
sustainable packaging solutions. New sustainable solution innovations include:
— Hug&Hold, a paper-based packaging solution, to replace the plastic shrink wraps for PET bottle
bundle packs, combining a kraft paper sleeve and corrugated clip.
— Mondi and Reckitt have developed a new paper-based packaging solution for the company’s
market-leading Finish dishwasher tablets.
— Development of a high-speed, automated packaging machine for EnvelopeMailer, a renewable,
recyclable and highly protective paper based mailer enabling eCommerce companies to automate
and optimise their packing operations with increased output in fulfilment centres handling high volumes.
— Good progress made on MAP2030 sustainability targets and commitments, including:
— In 2022, we reduced our Scope 1 emissions by 0.25 million tonnes and Scope 2 emissions by
0.16 million tonnes compared to 2021. This is a 9.4% decrease in absolute Scope 1 and Scope 2
emissions of the Group and a 16.9% reduction since the 2019 baseline. Our Scope 1, 2 and 3
absolute emissions were reduced by 0.59 million tonnes, which is a 7.4% reduction since last year
(2021: 7.9 mt).
— In 2022, our forestry landholdings in South Africa achieved PEFC certification in addition to
FSC certification.
— Validated our Net-Zero GHG emission reduction targets with the SBTi in alignment with the SBTi’s
new Net-Zero Standard.
— Recognition for sustainability approach achieving the highest rating by a number of third parties
(such as MSCI, Sustainalytics and EcoVadis) and successfully maintaining the Group’s place on CDP’s
annual ‘A list’ having achieved an A- score for forestry and water security, and A- score in climate
change.
— External validation of our product innovations including being awarded eight of the prestigious
global 2023 WorldStar Packaging Awards and a number of other national awards.
— Continued investment in our asset base to drive organic growth, enhance our product offering,
quality and service to customers, strengthen our cost competitiveness and improve our environmental
footprint including:
— Progressed with €1 billion expansionary capital investment pipeline including approval of new
210,000 tonne kraft paper machine for €400 million at Štěti (Czech Republic) to meet the growing
demand for sustainable paper-based flexible packaging and to serve our customers better.
— Acquired Duino mill near Trieste (Italy) with the plan to convert the existing lightweight coated
mechanical paper machine into a high-quality, cost-competitive recycled containerboard machine
with an annual capacity of around 420,000 tonnes providing an opportunity to grow our packaging
business, build on our integrated platform and broaden our geographic reach.
— Actively evaluated further investment opportunities for growth in our packaging markets.
Mondi Group Integrated report and financial statements 2022 145
Operational and financial
performance
Drive value accretive growth,
sustainably
Drive performance
along the value chain
Inspire our people
Financial efficiency
and financing
Drive value accretive growth,
sustainably
Drive performance
along the value chain
Invest in assets
with cost advantage
— All financial KPIs (from continuing operations) over and above those assessed for the bonus
performance exceeded budget and prior year, including underlying EBITDA of €1,848 million,
up 60%, ROCE of 23.7%, up 980 basis points, and basic underlying earnings per share of
195.6 (euro cents), up 78%.
— Strong operational performance in the face of tight supply chains and rising costs including annual
production records at two pulp and paper mills.
— Focus on continuous improvement initiatives to enhance productivity and efficiency, improve quality
standards and reduce costs across the business, including the use of digital initiatives.
— Maintained high levels of interaction with colleagues including the Mondi Leadership Forum, bringing
together the Group’s senior leaders to share experiences and knowledge across the Group.
— Maintained strong liquidity and a robust financial position with net debt at 31 December 2022
from continuing operations of €1,011 million, down €678 million from 2021, resulting in a net debt
to underlying EBITDA of 0.5 times.
— Investment grade credit ratings reconfirmed by Moody’s (Baa1) and Standard & Poor’s (BBB+).
Organisational structure
— Identified organisational opportunities that maximise our quality asset base, strengthen integration
Drive value accretive growth,
sustainably
Drive performance
along the value chain
Invest in assets
with cost advantage
Partner with customers
for innovation
along the value chain and fulfil our customers’ needs for sustainable packaging including:
— Increased cross-value chain collaboration, supporting our customers to meet their sustainability
goals by leveraging our unique portfolio following our principle of paper where possible and plastic
when useful.
— Reorganised the Group’s operating segments following the completion of the sale of the PCC
business by moving Functional Paper and Films to Flexible Packaging to strengthen integration
along the value chain and further support the development of innovative functional papers with
barrier properties.
The overall personal ratings
of the executive directors were:
— Andrew King 16/20
— Mike Powell 17/20
Detail of annual bonus awarded for the year (audited)
Name
Andrew King
Mike Powell
Maximum bonus
(% of salary)
Maximum
bonus
% of maximum
185% of salary
£1,873,495
170% of salary
£1,097,775
96
97
Awarded
in cash
£899,278
£532,421
Awarded
in shares
Total
£899,278
£1,798,556
£532,421
£1,064,842
The committee reviewed performance against these performance measures and considered the underlying performance of the Group
during the performance period. As part of the review, the committee also considered the outcomes that would have resulted had the
targets not been restated for continuing operations, excl. Russian operations. The performance would have achieved stretch targets.
The committee determined that restating the targets had not changed the outturns and concluded the overall bonus outcomes to
be appropriate. No discretion was exercised by the committee in determining the Group bonus outcomes. The Group financial and
sustainability performance of the annual bonus will equally be reflected in the bonus outcome of the 3,400 colleagues who participate in
the Group bonus plan.
In accordance with our DRP, 50% of the bonuses earned are paid in cash, the remaining 50% is deferred into shares which are released
after three years. No further conditions are attached to these shares, except for being in service at date of vesting.
BSP Awards granted in 2022 (audited)
On 10 March 2022 the committee made the following awards under the Group’s BSP to the following executive directors in relation to the
2021 bonus outcome.
Name
Andrew King
Mike Powell
Type of award
Relating to FY
Number of shares
Share price at grant1
Face value of shares
Nil-cost option
Nil-cost option
2021
2021
64,849
37,607
£13.67
£13.67
£886,486
£514,088
1 Being a three-day average share price commencing on the day of announcement of financial results
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 146
Remuneration report
Annual report on remuneration continued
Long-Term Incentive Plan (LTIP) (audited)
Vesting of the 2020 awards
The LTIP awards that were granted in 2020, with a three-year performance period ending on 31 December 2022, will vest in March 2023
at 50.0% of maximum against the (equally weighted) relative TSR and ROCE performance conditions, as shown in the table below.
The committee considered the level of payout is reflective of the overall performance of the Group. No discretion was exercised by the
committee in determining the vesting outcomes.
Measure
Mondi’s TSR relative to bespoke peer group
ROCE (average)
Weighting (%)
Threshold
(25% vesting)
Maximum
(100% vesting)
Actual
Actual vesting
(% of max)
50%
50%
Median Upper quartile Below median
—
12% p.a.
18% p.a.
18.6% p.a.1
100.0%
1 The three-year ROCE that was achieved was 18.6% ( 15.2% in 2020, 16.9% in 2021 and 23.7% in 2022)
TSR peer group ranking
Mondi’s rank in
the TSR peer group
Outcome
13th
Vesting
(% of relevant shares)
0%
Threshold
Median
25%
Total vesting (%
max)
50.0%
Maximum
Upper
quartile
100%
Mondi plc achieved a TSR of -8.6%, over the performance period and Mondi’s rank within the TSR peer group was 13th. The share price
performance in 2022 was negatively impacted by the Russian invasion of Ukraine, given the Group’s significant exposure to Russia, around
20% of total EBITDA over the previous three years. The TSR performance therefore was below the median position required for threshold
vesting of 25% of the relevant shares. Therefore 0% of the maximum shares attributable to this element will vest.
ROCE
Threshold
Three-year ROCE (%)
12%
Details of 2020 LTIP vesting
Name
Andrew King
Mike Powell2
Maximum
18%
Outcome
18.6%
Number of
awards granted
Vesting
performance
Shares vesting
Dividend
equivalents
Total number of
shares vesting
Average share
price
Total estimate
value of award
on vesting
140,758
39,427
50.0%
50.0%
70,379
19,714
6,870
1,343
77,249
21,057
£14.78
£14.78
£1,141,740
£311,222
1
In accordance with the LTIP Plan Rules, the committee has discretion to allow LTIP participants to receive the benefit of any dividends paid on vesting shares between the grant date and the vesting
date in the form of a cash award. Dividend equivalents will be delivered in shares
2 Mike Powell’s share grant relates to a buyout of forfeited awards from his previous employer, as disclosed in the 2020 remuneration report
3 25% of the award would have vested for threshold performance for each of the two measures
In accordance with the DRP, vested awards are subject to a two-year holding period whereby the executive (including those who have left
employment) must retain the number of vested shares net of tax for a minimum of two years from the point of vesting.
Awards granted in 2022 (audited)
On 10 March 2022, the committee made the following award under the Group’s LTIP to the following executive directors:
Name
Type of award
Basis of award Number of shares
Share price at
grant1
Face value of
shares
Andrew King
Nil-cost option 230% of salary
Mike Powell
Nil-cost option 210% of salary
170,389
99,201
£13.67
£13.67
£2,329,218
£1,356,078
Vesting at
minimum
performance
25.0%
25.0%
End of performance
period
31/12/24
31/12/24
1 Being a three-day average share price commencing on the date of the announcement of the financial results
Mondi Group Integrated report and financial statements 2022 147
The performance conditions, as summarised in the table below, are based on two performance measures of equal weight – relative TSR
and ROCE – measured over a three-year performance period ending on 31 December 2024. This combination of metrics provides an
appropriate means of aligning the operation of the LTIP with shareholders’ interests and the Group’s strategy.
Measure
Mondi’s TSR relative to bespoke peer group
ROCE (average)
Weighting
(%)
Threshold
(25% vesting)
Maximum
(100% vesting)
50.0%
50.0%
Median Upper quartile
12% p.a.
18% p.a.
Between threshold and maximum the LTIP awards will vest on a straight-line basis
The TSR performance condition is based on the Group’s TSR relative to a group of competitor companies.
The following companies were selected:
BillerudKorsnäs
Huhtamaki
Metsä Board
Stora Enso
WestRock
DS Smith
Holmen
International Paper
Sappi
The Navigator Company
Mayr-Melnhof
Smurfit Kappa
UPM
The committee has discretion to amend the vesting outturn should any formulaic output be inappropriate (e.g. unreflective of underlying
performance). Where the provision is utilised the committee will seek to explain clearly the basis for this decision.
Payments to past directors (audited)
Payments made with regards to Peter Oswald, who stepped down as Group CEO on 31 March 2020, were disclosed in the 2020 and 2019
remuneration reports. In respect of the 2019 LTIP award, Peter received a value on vesting of £300,812 and a dividend equivalent bonus of
£34,467. There were no other payments made to past directors during the period.
Payments for loss of office (audited)
There were no payments for loss of office made to directors during the period.
CEO pay ratio
Mondi is not required to report the CEO pay ratio, employing fewer than the threshold 250 people in the UK. However, in line with our
commitment to fairness and transparency, a voluntary disclosure is being made.
The table below sets out the pay ratio of the Group CEO compared to the 25th, 50th (median) and 75th percentile employee, based on
total remuneration of all permanent UK employees of the listed parent entity, for 2022. A snapshot date of 31 December 2022 was used.
This group of employees represents less than 1% of our global workforce.
Year
2022
2021
2022
Salary
Total pay and benefits
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
Method
Option A
Option A
51:1
50:1
CEO
25th percentile
£1,012,700
£4,243,677
£62,093
£83,896
35:1
36:1
Median
pay ratio
£83,834
£121,542
20:1
24:1
75th percentile
£119,053
£207,988
The Option A methodology, where the total annual pay for UK colleagues is calculated to identify the employee at the median, 25th and
75th percentile, has been applied. This calculation methodology was selected as being the most accurate way of identifying the respective
percentiles. No element of remuneration was excluded for the purposes of calculating the CEO pay ratio. The total full-time equivalent
remuneration for the relevant employees has been calculated based on the amount paid or receivable in respect of the financial year
(unless stated otherwise). The bonus figures used for employees represent the bonuses received during the relevant financial year in
relation to the previous year. Throughout the Group, pay is positioned to be fair and market competitive in the context of the talent market
for the relevant role, reflecting local market data and other relevant benchmarks. The committee notes the limited comparability of pay
ratios across companies and sectors, given the diverse range of business models and employee population profiles which exist across the
market. A significant proportion of the CEO’s total remuneration is delivered in variable remuneration, and particularly via long-term share
awards, to drive alignment with shareholders. As a result, the pay ratio is strongly influenced largely by the LTIP outcome and may therefore
fluctuate significantly on a year-to-year basis. The ratio has remained broadly static, largely as a consequence of CEO pay increases being
no more than those of the wider workforce, pension levels being aligned, LTIP and bonus opportunity levels being held and LTIP vesting
levels and bonus outturns between the two years being similar. The committee has confirmed that the ratio is consistent with the Group’s
wider policies on employee pay, reward and progression.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 148
Remuneration report
Annual report on remuneration continued
Percentage change in directors' remuneration
The table below shows the percentage change in each director’s salary/fees, benefits and bonus between the year ended 31 December
2022 and the two preceding years, and the average percentage change in the same remuneration over the same period in respect of the
employees of the listed parent entity and the Group on a full time equivalent basis.
The average employee change has been calculated by reference to the average of employee pay. Saki Macozoma was appointed to the
Board during the year ended 31 December 2022 and Tanya Fratto stepped down from the Board during the year ended 31 December
2022. Accordingly, they both have been excluded from the table below.
Salary/fees7
Taxable benefits2
Annual bonus
Average
employee
Mondi plc1
Average
employee
Mondi
Group
Andrew
King2
Mike
Powell3
Philip
Yea4
Svein Richard
Brandtzaeg5
Sue
Clark5
Dominique
Reiniche
2022
2021
2020
2022
2021
2020
2022
2021
2020
-1.3%
14.5%
-11.2%
1.2%
3.2%
-0.6%
82.9%
4.5%
3.6%
0.6%
N/A
N/A
2.5%
1.9%
0.0%
2.5%
0.0%
–
55.3%
59.7%
-26.4% -78.7%
N/A 238.3%
–
22.3%
1.4%
3.6%
-28.9%
18.1% 164.6% 138.1%
-58.1%
5.2%
-5.5%
–
2.5%
12.8%
–
–
–
–
–
–
–
20.3%
9.2%
–
–
11.3%
–
–
–
–
–
–
–
–
–
–
–
–
–
7.1%
8.0%
-8.1%
-71.0%
374.8%
20.0%
–
–
–
Dame
Angela
Strank5
26.6%
–
–
–
–
–
–
–
–
Stephen
Young6
12.6%
23.6%
-6.2%
–
–
–
–
–
–
1 Executive directors, joiners and leavers in the respective years have been excluded. The number of employees of the listed parent company is substantially less than 1% of the Group and as a
consequence any changes to the remuneration of an Executive Committee member or a particular single individual, a leaver or a new hire can have a marked effect on the year-on-year comparison.
Consequently, the percentage changes are highly variable
2 Andrew King’s salary as Group CEO from 1 April 2020 has been annualised
3 Mike Powell joined Mondi on 1 November 2020. Therefore, to provide a meaningful comparison his 2020 remuneration has been annualised. The 2021 reduction in taxable benefits for Mike Powell
reflects the annualisation of his 2020 value being greater than his 2021 value. In most of the Group the majority of benefits are provided through social security. Additional benefits represent less than
5% of the salary bill
4 Philip Yea was appointed to the Board on 1 April 2020. To enable comparison and to provide meaningful reflection of the annual percentage change, his fees for the year ended 31 December 2020 have
been annualised. The 2020 annualised figure includes a period as NED, prior to being appointed Chair. The 2021 figure represents a full year as Chair
5 Appointed as non-executive directors on 22 April 2021. To enable comparison and to provide meaningful reflection of the annual percentage change, the fees for the year ended 31 December 2021 have
been annualised respectively. Svein Richard Brandtzaeg is not resident in the UK and therefore in 2022 attended all meetings outside of his country of residence. Dame Angela Strank was appointed as
Chair of the committee in May 2022. Therefore, their aggregate NED fee for 2022 is higher in comparison to 2021
6 The increase for Stephen Young is a result of becoming SID in May 2021
7 The majority of the non-executive directors' increases result from an increase in fees for meetings held outside of the country of residence. Due to the COVID-19 pandemic, more meetings were held
in person in 2022 relative to 2021 and 2021 relative to 2020. Additionally, the majority of the non-executive directors' increases 2021 relative to 2020 were a result of the supplemental fees for chairing
committees, which had fallen significantly behind market levels, being market aligned in 2021 as part of the simplification of fees disclosed in the 2020 remuneration report
Relative importance of spend on pay
The table below shows the total remuneration paid across the Group together with the total dividends in respect of 2022 and 2021.
There have been no share buybacks during 2022 and 2021. The overall remuneration expenditure reflect our continuing operations
(excl. Russia).
€ million
Overall remuneration expenditure1
Dividends
1 Remuneration expenditure for all Mondi Group employees
2022
1,077
321
2021
1,025
298
% change
5%
8%
Mondi Group Integrated report and financial statements 2022 149
Statement of directors’ shareholdings and share interests (audited)
The CEO is required to achieve and maintain a Minimum Shareholding Requirement (MSR) equivalent to 300% of base salary, and
other executive directors a minimum shareholding of 250% of base salary. New appointees are required to meet the relevant requirement
within five years from appointment. Therefore, Andrew King and Mike Powell have until 31 March 2025 and 31 October 2025 to meet
their respective shareholding requirements. Until the shareholding guidelines are met, the executive's deferred bonus awards under the
BSP (after tax) will count towards the requirement. LTIP shares that have vested (after tax) and within the two-year post-vesting holding
period will count towards the holding requirement. As at 31 December 2022, Andrew King is in compliance with the minimum shareholding
requirement and Mike Powell, who joined Mondi in November 2020, is below the minimum shareholding requirement.
The beneficial and non-beneficial share interests of the directors and their connected persons as at 1 January 2022, and as at 31 December
2022 were as follows:
Executive directors (audited)
Andrew King
Mike Powell
Shares held
outright at
1 Jan 2022
132,515
11,172
Shares held
outright at
31 Dec 2022
Deferred BSP
shares net of tax
at 31 Dec 20222
Total shareholding
attributed to MSR
Total
shareholding as
multiple of base
salary1 (%)
Deferred
LTIP shares
outstanding at
31 Dec 20223
Deferred LTIP
shares as multiple
of base salary1 (%)
156,734
28,351
52,271
21,805
209,005
50,156
300%
113%
439,822
213,544
632%
481%
1 The one-month volume weighted average share price of £14.56 as at 31 December 2022 was used in calculating the percentage figures shown above divided by the executive's respective salary
as at 31 December 2022. Total shareholding as multiple of base salary includes BSP shares net of estimated tax of 45%
2 BSP shares subject to service condition, net of estimated tax of 45%. All shares shown in this column were awarded as nil-cost options
3 LTIP shares subject to service and performance conditions. All shares shown in this column were awarded as nil-cost options
Non-executive directors
Philip Yea
Svein Richard Brandtzaeg
Sue Clark
Tanya Fratto1
Saki Macozoma2
Dominique Reiniche
Dame Angela Strank
Stephen Young
1 Stepped down from the Board on 5 May 2022
2 Appointed to the Board on 6 May 2022
Shareholding at
1 Jan 2022
(or, if later,
on appointment)
Shareholding
at 31 Dec 2022
(or, at the date
of resignation,
if earlier)
25,000
25,000
1,250
4,000
1,000
500
1,000
271
2,026
1,250
4,000
1,000
500
1,000
899
2,026
There has been no change in the interests of the directors and their connected persons between 31 December 2022 and the date of this
report other than the amounts shown in the footnote to the 'SIP' table on page 150.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 150
Remuneration report
Annual report on remuneration continued
Share awards granted to executive directors (audited)
The following tables set out the share awards granted to the executive directors. All share awards are determined by the three-day
average share price commencing the day Mondi announces its results, unless stated otherwise.
Awards under BSP and LTIP
Andrew King
Awards held
at beginning
of year
Awards
granted
during year
Shares
lapsed
Awards
exercised
during year
19,619
—
—
—
—
—
—
—
31,921
26,758
—
—
—
—
—
—
Dividend
equivalents
Share price
at the date
of exercise
Awards held
as at
31 December
2022
Date of
award
Release
date
—
—
—
—
—
—
—
—
£14.07
Mar 2019
0
Mar 2022
—
—
—
Mar 2020
Mar 2021
Mar 2022
11,220
18,970
64,849
Mar 2023
Mar 2024
Mar 2025
£14.07
Mar 2019
0
Mar 2022
—
—
—
May 2020
140,758
Mar 2023
Mar 2021
128,675
Mar 2024
Mar 2022
170,389
Mar 2025
Status
Vested
Unvested
Unvested
Unvested
Vested
Unvested
Unvested
Unvested
19,619
11,220
18,970
—
—
—
—
64,849
58,679
140,758
128,675
—
—
—
—
170,389
Awards held
at beginning
of year
Awards
granted
during year
Shares
lapsed
Awards
exercised
during year
Dividend
equivalents
Share price
at the date
of exercise
Awards held
as at
31 December
2022
Date of
award
Release
date
Status
69,211
39,427
2,038
—
—
—
—
37,607
74,916
—
—
99,201
37,650
31,561
893
£14.07
Dec 2020
0
Mar 2022
Vested
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Dec 2020
39,427
Mar 2023
Mar 2021
Mar 2022
Mar 2021
Mar 2022
2,038
Mar 2024
37,607
74,916
99,201
Mar 2025
Mar 2024
Mar 2025
Unvested
Unvested
Unvested
Unvested
Unvested
Type of
award
BSP
BSP
BSP
BSP
LTIP1
LTIP2
LTIP3
LTIP4
Mike Powell
Type of
award
Buy-out
LTIP5
Buy-out
LTIP5
BSP
BSP
LTIP
LTIP
1 The performance conditions applying to the 2019 LTIP are set out on page 155 of the 2021 Integrated Report
2 The performance conditions applying to the 2020 LTIP are set out on page 146. These were awarded as nil-cost options
3 The performance conditions applying to the 2021 LTIP are set out on page 156 of the 2021 Integrated Report. These were awarded as nil-cost options
4 The performance conditions applying to the 2022 LTIP are set out on page 147. These were awarded as nil-cost options
5 Details of the buyout awards granted to Mike Powell are set out on page 142 of the 2020 Integrated Report. These were awarded as nil-cost options
All-employee share plans (audited)
The Group currently operates one HM Revenue & Customs approved all-employee share plan in the UK (the SIP).
Share Incentive Plan (SIP)
Employees resident in the UK are eligible to participate in the SIP. Contributions of up to £150 are taken from participants’ gross salary
and used to purchase ordinary shares in Mondi plc each month (Partnership Shares). Participants receive one matching Mondi plc ordinary
share free of charge for each share purchased (Matching Shares). The shares are placed in trust and the matching shares are forfeited
if participants resign from the Group’s employment within three years. If the shares remain in the trust for at least five years, they can
be removed free of UK income tax and National Insurance contributions.
SIP
Andrew King1
Mike Powell1
Shares held at
beginning of year
Partnership shares
acquired during
the year
Matching shares
awarded during
the year
Shares released
during year
Total shares held as at
31 December 2022
6,396
108
119
119
119
119
—
—
6,634
346
1 Since 1 January 2023 up to the date of this report Andrew King acquired 19 partnership shares and was awarded 19 matching shares and Mike Powell acquired 19 partnership shares and was awarded
19 matching shares
Mondi Group Integrated report and financial statements 2022
151
Statement of voting at Annual General Meeting
The Annual General Meeting was held on 5 May 2022. All resolutions were passed. The voting result in respect of the remuneration report
is given below. Overall in excess of 76% of the total Group shares were voted.
Resolution
Votes for
%
Votes against
%
Votes total
% of ISC voted
Votes withheld
To approve the remuneration report
(other than the DRP)
359,360,235
97.20
10,334,340
2.80
369,694,575
76.14%
909,348
The DRP was last approved at the AGM held on 7 May 2020, with a 92.81% vote for the resolution and 7.19% against, with 1,602,867
votes withheld.
Remuneration Committee governance
The Remuneration Committee
The Remuneration Committee is a formal committee of the Board (see composition of the Remuneration Committee on page 124).
Its remit is set out in terms of reference adopted by the Board. A copy of the terms of reference is available on the Group’s website at
www.mondigroup.com. The committee’s performance against these terms of reference is reviewed on an annual basis and the committee
is satisfied that it has acted in accordance with its terms of reference during the year.
The primary purposes of the committee, as set out in its terms of reference, are:
— to make recommendations to the Board on the Group’s framework of executive remuneration;
— to determine individual remuneration packages within that framework for the executive directors and certain senior executives;
— to determine the remuneration of the Board Chair; and
— to oversee the operation of the Group’s share schemes.
The committee is authorised to seek information from any director and employee of the Group and to obtain external advice.
The committee is solely responsible for the appointment of external remuneration advisers and for the approval of their fees and other
terms. No director or other attendee takes part in any discussion regarding his or her personal remuneration.
Deloitte was appointed by the Remuneration Committee as their independent remuneration consultant with effect from 29 September
2020, following a competitive tender process. Total fees paid to Deloitte for providing remuneration advice to the committee were
determined based on time and materials and amounted to £161,100 for the year ended 31 December 2022. Deloitte also provided other
tax and human consulting services to the Mondi Group during the year. All advice to the Remuneration Committee, received from Deloitte,
was objective and independent. Deloitte is a founder member of the Remuneration Consultants Group, and as such, voluntarily operates
under the Code of Conduct in relation to executive remuneration consulting in the UK.
The committee reviews the appointment of its advisers annually and is satisfied that the advice it receives is objective and independent.
Sums paid to third parties in respect of a director’s services
No consideration was paid or became receivable by third parties for making available the services of any person as a director of Mondi plc
(‘the Company’), or while a director of the Company, as a director of any of the Company’s subsidiary undertakings, or as a director of any
other undertaking of which he/she was (while a director of the Company) a director by virtue of the Company’s nomination, or otherwise
in connection with the management of the Company or any undertaking during the year to 31 December 2022.
Dame Angela Strank
Chair of the Remuneration Committee
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 152 Mondi Group
Integrated report and financial statements 2022
Other statutory information
For the purposes of the Companies Act 2006, the disclosures below, including those incorporated by reference, together with
the Corporate governance report set out on pages 84-123, form the Directors’ report.
In addition, disclosures relating to the following items, which also form part of the Directors’ report, have been included in the
Strategic report which can be found on pages 12-83:
— Dividends page 70
— Research and development activities pages 21, 29, 38-40
— Financial risk management objectives and policies pages 70-71
— Greenhouse gas (GHG) emissions and energy consumption
— Principal risks pages 72-81
— Likely future developments in the business pages 18-19, 22-29,
pages 44-45
— Employees pages 41-43
66-67
Information required to be disclosed under UK Listing Rule 9.8.4 R
The UK Listing Authority listing rules require the disclosure of certain specified information in the annual financial report of Mondi plc.
The information required under rule 9.8.4 (1) in relation to interest capitalised and related tax relief can be found on page 184.
The information required under rules 9.8.4 (12) and (13) in relation to dividend waivers can be found on page 200. This information
is incorporated by reference into this Directors’ report.
Besides the above, the information required to be disclosed under rule 9.8.4 R is not applicable to Mondi plc, and therefore no disclosures
have been made in this regard.
Employee and stakeholder engagement
Information relating to engagement with employees and other stakeholders, including customers and suppliers, can be found in the
Strategic report on pages 32-35 and in the Corporate governance report on pages 93-98.
Share Capital
Full details of Mondi’s share capital can be found in note 22 to the financial statements.
Substantial interests
As at 31 December 2022, Mondi plc had received notifications from the following parties in the voting rights of Mondi plc. The number
of voting rights and percentage interests shown are as disclosed at the date on which the holding was notified.
Shareholder
Public Investment Corporation Limited
BlackRock, Inc
Allan Gray Proprietary Limited
Ninety One UK Ltd (formerly known as Investec Asset Management Limited)
AXA S.A.
Standard Life Investments Limited
Old Mutual plc
Norges Bank
Sanlam Investment Management Proprietary Limited
1 Percentage provided was correct at the date of notification. No further notifications have been received under DTR Rule 5 as at the date of this report
Number of
voting rights
38,991,667
21,530,677
24,336,231
23,972,407
17,210,471
16,476,021
11,978,984
14,721,885
10,936,128
%1
8.03
5.86
5.01
4.94
4.69
4.49
3.26
3.03
3.00
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
153
Additional information for shareholders
The information for shareholders required pursuant to the Companies Act 2006 can be found on pages 249-250 of this report.
Political donations
No political donations were made during 2022, and it is Mondi’s policy not to make such donations.
Auditor
Each of the directors of Mondi plc at the date when this report was approved confirms that:
— so far as each of the directors is aware, there is no relevant audit information of which the Group’s auditor is unaware; and
— each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware
of any relevant audit information and to establish that the Group’s auditor is aware of that information.
PricewaterhouseCoopers LLP (PwC) has indicated its willingness to continue as auditor of Mondi plc. The Board has decided that
a resolution to reappoint PwC will be proposed at the Annual General Meeting scheduled to be held on 4 May 2023.
The reappointment of PwC has the support of the Audit Committee, which will be responsible for determining its audit fee on behalf
of the directors (see page 119 for more information).
Note 4 to the financial statements sets out the auditor’s fees both for audit and non-audit work.
Events occurring after 31 December 2022
Aside from the final dividend proposed for 2022, included in note 9 to the financial statements 2022, there has been the following material
reportable event since 31 December 2022:
— on 12 January 2023, the Group completed the acquisition of the Duino mill near Trieste (Italy) from the Burgo Group for a total
consideration of €40 million. The mill operated one paper machine producing lightweight coated mechanical paper. Mondi plans to
convert this paper machine to produce around 420,000 tonnes per annum of high-quality recycled containerboard for an estimated
investment of around €200 million.
Annual General Meeting
The Annual General Meeting will be held at 10:30 (UK time) on Thursday 4 May 2023 at Mercedes-Benz World, Brooklands Drive,
Weybridge, KT13 0SL, UK. The notice convening the meeting, which is sent separately to shareholders, provides further details including
the business to be considered and explanatory notes for each resolution. The notice is available on the Mondi Group website at:
www.mondigroup.com.
This Directors’ report was approved by the Board on 22 February 2023 and is signed on its behalf.
Jenny Hampshire
Company Secretary
Mondi plc
Ground Floor, Building 5
The Heights
Brooklands
Weybridge
Surrey
KT13 0NY
Registered No. 6209386
22 February 2023
154 Mondi Group
Integrated report and financial statements 2022
Ho w d o e s M o ndi
n u rtu re a c u l t u r e o f
s u s t a i n a b i l i t y?
Financial statements
Directors’ responsibility statement
Independent auditors’ report
Financial statements
Production statistics and exchange rates
Group financial record
Alternative Performance Measures
Additional information for shareholders
Shareholder information
Glossary of sustainability-related terms
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Support
Promoting mental health
and wellbeing
Commitment and collaboration relies on
a healthy, resilient and motivated workforce.
We promote this through a core focus
on our colleagues’ physical and mental
wellbeing, delivered in part through Mondi’s
Employee Assistance Programme. This is
a 100% confidential telephone hotline offering
free support from qualified counsellors and
advisers for employees and their families
free of charge and around the clock.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
155
Skills
Encouraging continuous
learning in the workplace
We believe that all colleagues should have
access to continuous learning. Our approach
is spearheaded by the Mondi Academy,
our global learning hub supported by local
academies in Czech Republic, Poland,
Slovakia, South Africa and the United
States. We run programmes and initiatives
to raise our colleagues’ awareness of our
sustainability challenges and strengthen the
competencies required to address them.
Diversity
Unlocking innovation
Diversity and inclusion (D&I) are critical
for unlocking the creativity that inspires
sustainable innovation. Diversity is a challenge
for our industry, with key demographics still
underrepresented in manufacturing. To help
reach our ambitious D&I targets, including
reaching 30% representation of women
across our global workforce by 2030, among
others, we have introduced the Curious
Community initiative. This is an opportunity
for colleagues to share their experiences,
hear from experts and brainstorm ideas
to accelerate change across our business.
156
Financial statements
Directors’ responsibility statement
Independent auditors' report to the members of Mondi plc
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements:
Note 1
Note 2
Basis of preparation
Operating segments
Notes 3–7
Notes to the consolidated income statement
Notes 8–9
Per share measures
Notes 10–19
Notes to the consolidated statement of financial position
Notes 20–23
Capital management
Note 24
Retirement benefits
Notes 25–28
Notes to the consolidated statement of cash flows
Notes 29–34
Other disclosures
Note 35
Accounting policies
Mondi plc parent company balance sheet
Mondi plc parent company statement of changes in equity
Notes to the Mondi plc parent company financial statements
157
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Mondi Group Integrated report and financial statements 2022 Directors’ responsibility statement
157
The directors are responsible for preparing the Integrated report and the financial statements 2022 in accordance with applicable law
and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared
the Group financial statements in accordance with UK-adopted international accounting standards and the Mondi plc parent company
financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). In preparing the Group financial statements, the
directors have also elected to comply with International Financial Reporting Standards issued by the International Accounting Standards
Board (IFRSs issued by IASB).
Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent company and of the profit or loss of the Group for that period. In preparing the financial
statements, the directors are required to:
— select suitable accounting policies and then apply them consistently;
— state whether applicable UK-adopted international accounting standards and IFRSs issued by IASB have been followed for the Group
financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the parent company
financial statements, subject to any material departures disclosed and explained in the financial statements;
— make judgements and accounting estimates that are reasonable and prudent; and
— prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company
will continue in business.
The directors are also responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and
enable them to ensure that the financial statements and the Directors’ Remuneration report comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the Group’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' confirmations
The directors consider that the Integrated report and financial statements 2022, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s and parent company’s position and performance, business
model and strategy.
Each of the directors, whose names and functions are listed in the Governance section of the Integrated report confirm that, to the best
of their knowledge:
— the Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards and
IFRSs issued by IASB, give a true and fair view of the assets, liabilities, financial position and profit of the Group;
— the parent company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets, liabilities and financial position of the Mondi plc parent company; and
— the Strategic report includes a fair review of the development and performance of the business and the position of the Group and
parent company, together with a description of the principal risks and uncertainties that it faces.
The Directors’ responsibility statement was approved by the Board on 22 February 2023 and is signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 158
Independent auditors’ report to the members of Mondi plc
Report on the audit of the financial statements
Opinion
In our opinion:
— Mondi plc’s Group financial statements and parent company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the parent company’s affairs as at 31 December 2022 and of the Group’s profit and the Group’s cash
flows for the year then ended;
— the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as
applied in accordance with the provisions of the Companies Act 2006;
— the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”, and applicable law);
and
— the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Integrated report and financial statements 2022 (the “Integrated Report”),
which comprise: the consolidated statement of financial position and the Mondi plc parent company balance sheet as at 31 December
2022; the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash
flows and the consolidated and Mondi plc parent company statements of changes in equity for the year then ended; and the notes to the
financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 4, we have provided no non-audit services to the parent company or its controlled undertakings in the
period under audit.
Mondi Group Integrated report and financial statements 2022 159
Our audit approach
Overview
Audit scope
— We identified three components (2021: three) as individually significant components, which required an audit of their complete financial
information due to their financial significance to the Group, and a further five components (2021: two) where we have concluded that the
component engagement leader is a Key Audit Partner (as defined under ISAs (UK)). These eight components (2021: five) are located in
Austria, the Czech Republic, Poland, Russia, Slovakia, Sweden and South Africa (2021: Austria, the Czech Republic, Poland, Russia and
South Africa). We obtained full scope audit reporting from an additional 19 components (2021: 24), including operating units and treasury
operations. Audit of specific financial statement line items was performed at a further five components (2021: 14) and group level
procedures on selected transactions or balances were performed at three components (2021: one).
— In aggregate, the locations subject to procedures represented 72% (2021: 80%) of the Group’s revenue from continuing operations.
Key audit matters
— Divestment of Russian operations (Group)
— Fair value of forestry assets (Group)
— Adoption of hyperinflation accounting related to subsidiaries in Turkey (Group)
— Disposal of Personal Care Components (“PCC”) (Group)
— Carrying value assessment of the parent company investment in subsidiaries (parent company)
Materiality
— Overall group materiality: €65 million (2021: €52 million) based on approximately 5% of profit before tax (“PBT”) from continuing
operations adjusted for special items (2021: based on approximately 5% of a three-year rolling-average of PBT adjusted for special items,
rounded up based on our professional judgement to remain consistent with the prior year overall materiality).
— Overall parent company materiality: €40 million (2021: €39 million) based on approximately 1% of total assets.
— Performance materiality: €49 million (2021: €39 million) (Group) and €30 million (2021: €29 million) (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Divestment of Russian operations, audit of the fair value of forestry assets, adoption of hyperinflation accounting related to subsidiaries in
Turkey and disposal of PCC are new key audit matters this year. Impairment of goodwill and property, plant and equipment and taxation,
which were key audit matters last year, are no longer included because of the lower audit risk associated with impairment due to the
Group’s financial performance and the disposal of goodwill balances allocated to PCC previously held within Engineered Materials and
lower audit risk associated with the Group’s tax position. The key audit matter in relation to the carrying value assessment of the parent
company investment in subsidiaries is consistent with last year.
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Independent auditors’ report to the members of Mondi plc continued
Key audit matter
How our audit addressed the key audit matter
Divestment of Russian operations (Group)
As described in note 26 of the financial statements, on
4 May 2022 the Board announced its decision to divest
the Group’s Russian operations, including its integrated
pulp, packaging paper and uncoated fine paper mill
located in Syktyvkar (Komi Republic). Subsequently, on
12 August 2022, the Group announced it had entered
into an agreement to sell its Syktyvkar mill, and on
15 December 2022, the Group announced that it had
entered into an agreement to sell its three Russian
packaging converting operations.
As at 31 December 2022, the carrying value of the
Russian operations was €1.1 billion at year-end
exchange rates.
As described in note 1 and note 26 the Group has
exercised a number of critical judgements in relation
to the accounting for its Russian operations, in relation
to the continued consolidation of the businesses,
the classification of the assets as held for sale, and
the classification of the businesses as discontinued
operations. As also described in note 1, the valuation of
the Russian assets as at 31 December 2022 represents
a key source of estimation uncertainty.
We identified the presentation and disclosure
associated with the Russian operations, including
management’s continued consolidation of the
businesses and their presentation as assets held for
sale and liabilities associated with assets held for sale,
and as discontinued operations, as a significant audit
risk given that the application of the requirements
of both IFRS 10 ‘Consolidated Financial Statements’
on consolidation and IFRS 5 ‘Non-current Assets
Held for Sale and Discontinued Operations’ on
their classification as held for sale and discontinued
operations is complex. We also determined that the
valuation of the Russian operations as at 31 December
2022 was part of this significant audit risk, given
the uncertainties associated with the ongoing sales
process.
We evaluated whether the Group has retained control over its Russian
operations throughout the year ended 31 December 2022 by review
of Board minutes, review of internal reporting received by the Group,
understanding changes in operating activities in the period, by discussion
with Group management and the component auditors and assessing the
Group’s ability to declare dividends from the Russian operations.
We assessed the appropriateness of management’s decision to classify
the operations in Russia as held for sale at 31 December 2022 based on
the criteria set out in IFRS 5, confirming the proposed transactions to the
sale and purchase agreement and Board minutes, as well as discussing
the current regulatory environment in Russia and the associated approvals
required from the Russian authorities with both management and its
advisors. We also considered management’s conclusion that the planned
divestment of the Russian operations satisfies the criteria to be recognised
as discontinued operations on the basis that it represents a separate major
geographical area of operations by analysing the historical contribution of
the Russian operations to the Group’s revenue and profits as a whole.
We evaluated management’s assessment of fair value for the businesses,
based on the requirements of IFRS 5 and IFRS 13 ‘Fair Value Measurement’
and inspected the terms of the sale and purchase agreements to identify
the assets and liabilities relating to the Russian operations. We issued
separate instructions to, and obtained reporting from, a component audit
team in Russia who audited the assets and liabilities of the Syktyvkar mill,
performing oversight procedures (including a review, performed remotely,
of certain working papers of the component audit team) to satisfy
ourselves as to the nature, timing and extent of the audit procedures
performed. We also discussed the risk of a change to the known fact
pattern for each planned transaction in the future, including potential
reductions to the agreed sales price as a result of ongoing approvals from
the Russian authorities, with both management and its advisors.
We considered the adequacy of the Group’s disclosures in respect of
the Russian operations, in particular in relation to the critical judgements
on control and classification as held for sale and as discontinued
operations, and the key source of estimation uncertainty surrounding the
valuation, which acknowledge that it is an evolving political and regulatory
environment, meaning there can be no certainty as to when the disposals
will be completed, or if the agreed terms could be amended for any
unknown reason.
As this is an area which had a significant effect on our
overall audit strategy and allocation of resources in
the planning for, and completion of, our audit, this was
determined to be a key audit matter.
Based on the procedures performed, and recognising the key estimation
uncertainty associated with the valuation of the Russian assets, we noted
no material issues in management’s accounting for, and disclosure of, the
Russian operations.
Refer to notes 1, 26 and 35 of the Group financial
statements, and the Audit Committee’s views set out
on page 114.
Mondi Group Integrated report and financial statements 2022 161
Key audit matter
How our audit addressed the key audit matter
Fair value of forestry assets (Group)
The valuation of the Group’s forestry assets, amounting
to €485 million (2021: €348 million), is dependent
upon various assumptions that are subject to significant
estimation and the fair value gain recorded in the year
is material.
The most significant assumptions included in the
valuation model relate to the determination of the
estimated net selling prices to be applied to the forestry
assets, the conversion factor used to convert hectares
of land under afforestation to tonnes of standing timber
and the risk premium applied to immature timber,
alongside any adjustments that are made outside the
underlying model.
The fair value gain of €169 million (2021: €7 million loss)
in the year ended 31 December 2022, which is recorded
in the consolidated income statement, has been
primarily driven by the increase in net selling prices,
resulting from the significant rise in the market price of
gum and pine.
Given the quantum of the gain, and the estimation
inherent in the determination of fair value, this matter
had a significant effect on our overall audit strategy
and the allocation of resources in the planning for, and
completion of, our audit, and was determined to be a
key audit matter.
Refer to notes 14 and 35, and the Audit Committee’s
views set out on page 116.
We evaluated the valuation model used for calculating the fair value of the
forestry assets against the criteria in IAS 41 ‘Agriculture’ and IFRS 13 ‘Fair
Value Measurement’.
In assessing the valuation of the forestry assets, our procedures (which
were performed by our component team in South Africa, with oversight
from the Group audit team in the UK) primarily consisted of substantive
tests of detail, where we assessed the appropriateness of the inputs
and the assumptions used in the valuation model taking into account
supporting evidence, and analytical procedures, where we compared
the inputs and assumptions in the 31 December 2021 valuation with the
31 December 2022 valuation. Our analytical procedures also focused on
comparisons of the assumptions and inputs with industry averages. In
addition, we also performed procedures over the mathematical accuracy
of the valuation model.
We compared the estimated net selling prices used in the model to third
party evidence and the inputs used in the conversion factor to convert
hectares of land under afforestation to tonnes of standing timber with
historical evidence, as well as benchmarking the conversion factor against
industry data. Forestry assets were physically verified on a sample basis.
We also assessed the risk premium applied in the valuation model to
immature and mature timber by comparing the factors taken into account
in the risk premium with historical experience, industry data and other
evidence provided by management. We also assessed whether the
climate change risks relevant to the valuation of the forestry assets were
appropriately included within the model, by comparison with historical data
and the climate risk assessments performed by Group management.
Adjustments to the underlying model have been tested through
challenging assumptions made by management, independently
reperforming the calculations and obtaining supporting evidence,
on a sample basis.
We evaluated the directors’ assessment of the sensitivity of the valuation
to reasonably possible changes in assumptions and we considered the
appropriateness of the related disclosures in note 14 and note 35 to the
financial statements.
Based on the procedures performed, we noted no material issues from
our work.
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Independent auditors’ report to the members of Mondi plc continued
Key audit matter
How our audit addressed the key audit matter
Adoption of hyperinflation accounting related to subsidiaries in Turkey (Group)
We assessed whether the initial adoption of IAS 29 was appropriate for
the Turkish subsidiaries of the Group and considered management’s
selection of its accounting policy and the methodology applied in the
calculation of the IAS 29 related adjustments, as well as the consistency
of application to all affected subsidiaries.
We verified the appropriateness of the index used to calculate the IAS 29
impact to publicly available market data.
We assessed the changes made to the Group’s consolidation system’s
configuration to validate that the income statement foreign currency
translation rules for the Turkish subsidiaries satisfied the requirement to
apply the year-end exchange rate. We also tested the exchange rates used
by management to translate the Turkish Lira results into Euros, the Group’s
presentation currency, to publicly available information.
We tested a sample of items in the underlying data used in the calculations
of the IAS 29 adjustments, as well as the accuracy of the calculations.
We also considered the appropriateness of the disclosures in the Group
financial statements.
Based on the procedures performed, we noted no material issues from
our work.
The IMF World Economic Outlook Report issued
in April 2022 designated the Turkish economy as
hyperinflationary, which requires entities with a Turkish
Lira functional currency to apply IAS 29 ‘Financial
Reporting in Hyperinflationary Economies’ for reporting
periods ending on or after 30 June 2022.
The application of IAS 29 required the financial
information of the Group’s Turkish subsidiaries to be
restated for changes in the general purchasing power
of the Turkish Lira, being the functional currency of
those subsidiaries.
The effect of IAS 29 is pervasive to the consolidated
income statement and applicable to all non-monetary
assets and liabilities in the consolidated statement of
financial position.
The adoption of IAS 29 has led to management
increasing brought forward total equity by €41 million
as at 1 January 2022. Prior year comparatives have not
been restated. For the year ended 31 December 2022,
the adjustments from hyperinflationary accounting
have resulted in an increase in total assets of €91
million, an increase in Group revenue of €125 million,
a decrease in underlying EBITDA of €44 million and a
net monetary gain of €17 million.
IAS 29 requires judgement to determine which general
price index to select and other approximations to be
made in order to prepare the financial statements of
affected subsidiaries and required complex calculations
to determine the impact of IAS 29 on implementation.
As this is a matter which had a significant effect on
our overall audit strategy and allocation of resources
in the planning for, and completion of, our audit, this
was determined to be a key audit matter.
Refer to notes 1, 7, 10, 12, 13, 22, 28 and 35 of the Group
financial statements, and the Audit Committee’s views
set out on page 116.
Mondi Group Integrated report and financial statements 2022 163
Key audit matter
How our audit addressed the key audit matter
Disposal of Personal Care Components (“PCC”) (Group)
On 30 June 2022, the Group completed the sale of its
PCC business to Nitto Denko Corporation, for cash
consideration of €657 million.
As a result of the sale, a post-tax gain on disposal of
€237 million arose, which has been treated as a special
item in the consolidated income statement. The net
assets disposed of included an allocation of goodwill
of €141 million to PCC, which previously sat within the
former Engineered Materials (“EM”) Business Unit, with
the balance of goodwill historically recorded in EM of
€73 million allocated to Functional Paper and Films
(“FPF”).
We tested the gain on disposal calculation by verifying the cash received
to bank statements, reading the signed sale and purchase agreement
(“SPA”) and agreeing the carrying value of the PCC business to the
underlying accounting records of the Group. We also tested the
associated transaction costs and agreed the cumulative translation reserve
that was recycled to the consolidated income statement on disposal to the
underlying accounting records.
We assessed the methodology applied to determine the allocation of
goodwill to PCC, based on the relative fair value of the disposed and
retained elements of the former EM Business Unit at the disposal date,
and recalculated the allocated amount of €141 million, testing key inputs
of the calculation to supporting evidence.
Following the completion of the sale of the PCC
business, the Group reorganised its operating
segments, with FPF, previously part of the EM Business
Unit, moved to Flexible Packaging (“FP”). Accordingly,
the Group has restated the previously reported
segment information to present the Group’s operations
under the new organisational structure.
We validated the alignment of the revised internal reporting to the Chief
Operating Decision Maker (“CODM”) as at 31 December 2022 to the
operating segments identified following the reorganisation. We obtained
evidence of the implementation of the segment reorganisation that led
to the change in operating segments, including the change in internal
reporting to the CODM from 30 June 2022 and related communications
of the restructuring.
Given the magnitude of the transaction, the associated
judgement on the allocation of the goodwill balance
and the impact of the associated reorganisation on
the Group’s operating segments, this is a matter which
had a significant effect on our overall audit strategy
and allocation of resources in the planning for, and
completion of, our audit, and this was determined
to be a key audit matter.
Refer to notes 1, 2, 3 and 27 of the Group financial
statements, and the Audit Committee’s views set
out on page 115.
We considered the appropriateness of the restatement of the operating
segments and related disclosures in note 2 of the Group financial
statements.
Based on the procedures performed, we noted no material issues from
our work.
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Key audit matter
How our audit addressed the key audit matter
Carrying value assessment of the parent company investment in subsidiaries (parent company)
We considered the adequacy of management’s impairment and
impairment reversal indicator analysis as at 31 December 2022 by
assessing it against the requirements of IAS 36 ‘Impairment of Assets’.
We also validated the accuracy of the data supporting the assessment.
We considered the appropriateness of the disclosures in the parent
company financial statements.
Based on the procedures performed, we noted no material issues from
our work.
The parent company holds an investment in Mondi
South Africa (Pty) Ltd with a carrying amount of
€666 million (2021: €666 million) with an accumulated
impairment of €117 million recognised in the year
ended 31 December 2020. No further impairment
charges have been recorded since that date.
Management has considered various internal and
external indicators of impairment in assessing whether
the investment might be impaired in 2022. No indicator
of impairment was identified based on consideration of
the qualitative and quantitative factors outlined in IAS
36 ‘Impairment of Assets’.
Management has also considered whether an indicator
of impairment reversal has arisen during 2022, given the
performance in the year, but concluded that this was
not the case.
Given the inherent judgement required and the
quantum of the balances in the parent company’s
balance sheet, this matter had a significant effect on
our overall audit strategy and allocation of resources in
the planning for, and completion of, our audit, and this
was determined to be a key audit matter.
Refer to notes 1 and 6 of the parent company financial
statements.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as
a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls, and the industry
in which they operate.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at components by
us, as the Group engagement team, or component auditors operating under our instruction.
We identified three components (2021: three) as significant components (as defined within ISAs (UK)) which, in our view, required an audit
of their complete financial information, due to their financial significance to the Group. Outside of these components, we obtained full
scope audit reporting from a further five components (2021: two), where we concluded that the component engagement leader is a Key
Audit Partner (as defined under ISAs (UK)), and an additional 19 components where full scope audits were performed (2021: 24). Together,
these components were in 11 countries (2021: 11), representing the Group’s principal businesses, and accounted for 62% (2021: 66%) of the
Group’s revenue from continuing operations. The Group engagement team performed work at two of these components, with component
auditors operating under our instruction performing the work on the other full scope components.
Audit of specific financial statement line items was performed at a further five (2021: 14) components, with the component auditors
operating under our instruction. In addition the Group engagement team performed specified procedures at three components (2021:
one) related to transactions or balances. Central testing was also performed on selected items, such as goodwill, primarily to ensure
appropriate audit coverage. In aggregate, the locations subject to procedures represented 72% (2021: 80%) of the Group’s revenue from
continuing operations.
The components included within our scope of audit were determined based on the individual component’s contribution to the Group’s
key financial statement line items (in particular revenue and profit before tax adjusted for special items), and considerations relating to
aggregation risk within the Group.
Mondi Group Integrated report and financial statements 2022 165
Where work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those
components to be able to conclude on whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the
Group financial statements as a whole.
We issued formal written instructions to all component auditors setting out the audit work to be performed by each of them and
maintained regular communication with them throughout the audit cycle. These interactions included attending certain component
audit clearance meetings, including through the use of video conferencing technologies, as well as reviewing and assessing any
matters reported. We also held a planning meeting with component auditors ahead of the year-end audit to agree on effective
working arrangements.
We issued separate instructions and held separate meetings with the component team in Russia, which is no longer part of the
PricewaterhouseCoopers network of firms, to ensure effective remote working arrangements given the travel restrictions in place.
We reviewed selected audit working papers for certain in-scope component teams, including all significant components and the further
five components where we concluded that the component engagement leader is a Key Audit Partner.
In addition, senior members of the Group engagement team visited component teams in Austria, the Czech Republic, Poland, Slovakia,
Sweden and Turkey. These visits included meetings with local management and with the component auditors, and typically involved
operating site tours.
The impact of climate risk on our audit
In planning our work, including identifying areas of audit risk and determining an appropriate response, we were mindful of the increased
focus on the impact of climate change risk on companies and their financial reporting, and also that the Group has identified climate
change as a principal risk. Climate change risk is expected to have a significant impact on the Group’s business as the operations and
strategy of the Group evolve to address the potential physical and transition risks that could arise and the opportunities associated
with climate change. Climate change initiatives and commitments impact the Group in a variety of ways, as described within the
Integrated Report.
The Board has made commitments to achieve Net-Zero GHG emissions reduction targets by 2050. As part of our audit we made
enquiries of management to understand the process management adopted to assess the extent of the potential impact of climate change
risk on the Group’s financial statements, including considering the Mondi Action Plan 2030 (“MAP2030”) science-based targets as detailed
within the Integrated Report.
We challenged the completeness of management’s climate risk assessment by reading external reporting made by management, including
the Sustainable Development Report and Carbon Disclosure Project submissions, and making management aware of any apparent
internal inconsistencies there may be in its climate reporting.
We also considered the key financial statement line items and estimates that are most likely to be impacted by climate risks, as set out
in note 1 of the Group financial statements. Given that the impact of climate change on the Group is likely, principally, to crystallise in the
medium to long-term, we concluded that the risks of material misstatement in the financial statements associated with climate change
related primarily to the valuation of forestry assets and estimates of future cash flows, which are used, for example, when testing assets
for impairment. It has been noted that the estimated financial impact of certain climate risks has increased due to the current economic
environment. Management considers that the impact of climate change does not give rise to a material financial statement impact.
We discussed with management the ways in which climate change disclosures should continue to evolve as the Group further develops its
response to the impact of climate change. We also considered the consistency of the disclosures in relation to climate change (including
the disclosures in the Task Force on Climate-related Financial Disclosures (TCFD) section) made in the other information within the
Integrated Report with the financial statements and our knowledge from our audit. This included:
— Understanding which models management has used in the TCFD scenario analysis and considering whether the assumptions in the
models are consistent with the assumptions used elsewhere in the financial statements; and
— Challenging the consistency of the disclosures given in the narrative reporting within the other information with the impact disclosed
within the financial statements.
Where applicable, our audit response to climate change risk is included in relevant key audit matters above. Refer also to notes 1, 12, 14 and
35 of the Group financial statements for disclosures related to climate change. Our procedures did not identify any material impact in the
context of our audit of the financial statements as a whole, or our key audit matters for the year ended 31 December 2022.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 166
Independent auditors’ report to the members of Mondi plc continued
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate, on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group
Financial statements – parent company
Overall materiality
€65 million (2021: €52 million).
€40 million (2021: €39 million).
How we determined it
Rationale for benchmark
applied
Approximately 5% of profit before tax (“PBT”) from
continuing operations adjusted for special items (2021:
based on approximately 5% of a three-year rolling-average
of PBT adjusted for special items, rounded up based on our
professional judgement to remain consistent with the prior
year overall materiality).
For overall group materiality, we chose profit before tax
from continuing operations adjusted for special items as
the benchmark. The adjusted profit before tax measure
removes the impact of significant items which do not
recur from year to year or otherwise significantly affect
the underlying trend of performance from continuing
operations. This is the metric against which the
performance of the Group is most commonly assessed
by management and reported to members. We chose 5%,
which is consistent with quantitative materiality thresholds
used for profit-oriented companies in this sector.
Approximately 1% of total assets.
For overall Mondi plc parent company
materiality, we determined the materiality
based on total assets, which is more
appropriate than a performance-related
measure as the parent company is an
investment holding company for the Group.
Using professional judgement, we determined
materiality for this year at €40 million (2021:
€39 million), which equates to approximately
1% of the current year’s total assets.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of
materiality allocated across components was between €3.5 million and €52 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to €49 million (2021: €39 million) for the Group financial
statements and €30 million (2021: €29 million) for the parent company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €3.5 million (Group
audit) (2021: €2.5 million) and €3.5 million (parent company audit) (2021: €2.5 million) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
Mondi Group Integrated report and financial statements 2022 167
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the parent company’s ability to continue to adopt the going concern basis
of accounting included:
— We assessed management’s going concern cash flow projections, agreeing them to the latest Board approved forecasts;
— We evaluated management’s future cash flows with reference to historical trading performance, market expectations from industry or
economic reports and management capital investment plans;
— We tested the available committed debt facilities to our year end audit work, including checking that the key terms were applied
appropriately in the going concern assessment related to the maturity dates of available committed debt facilities and satisfied ourselves
that there are no financial covenants in these facilities;
— We considered the potential downside sensitivities that management had applied and considered their likelihood and whether more
severe scenarios could arise and the associated impact on available liquidity;
— We assessed management’s reverse stress test and considered the likelihood of events arising that could erode liquidity within the
forecast period;
— We assessed the performance of the Group since year end and compared it with the Board approved cash flow forecast;
— We read the basis of preparation note to the financial statements and validated that it accurately described management’s going
concern considerations; and
— We tested the assumption that management’s assessment is performed on the basis of continuing operations only, excluding any cash
inflows from the divestment of the Russian operations.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s and the parent company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the parent
company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the Integrated Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform
procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters
as described below.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 168
Independent auditors’ report to the members of Mondi plc continued
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ Report
for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in accordance with applicable
legal requirements.
In light of the knowledge and understanding of the Group and parent company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:
— The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
— The disclosures in the Integrated Report that describe those principal risks, what procedures are in place to identify emerging risks and
an explanation of how these are being managed or mitigated;
— The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis
of accounting in preparing them, and their identification of any material uncertainties to the Group’s and parent company’s ability to
continue to do so over a period of at least twelve months from the date of approval of the financial statements;
— The directors’ explanation as to their assessment of the Group’s and parent company’s prospects, the period this assessment covers
and why the period is appropriate; and
— The directors’ statement as to whether they have a reasonable expectation that the parent company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group and parent company was substantially less in scope
than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is
consistent with the financial statements and our knowledge and understanding of the Group and parent company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
— The directors’ statement that they consider the Integrated Report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the Group’s and parent company’s position, performance, business model
and strategy;
— The section of the Integrated Report that describes the review of effectiveness of risk management and internal control systems; and
— The section of the Integrated Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the parent company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules
for review by the auditors.
Mondi Group Integrated report and financial statements 2022 169
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ responsibility statement, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations
related to breaches of environmental regulations, unethical and prohibited business practices and breaches of sanctions in relation
to Russia, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and relevant
tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase
revenue and management bias in accounting estimates and judgements. The Group engagement team shared this risk assessment with
the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the Group engagement team and/or component auditors included:
— Discussions with management, internal audit and the Group’s internal legal counsel, including consideration of potential instances
of non-compliance with laws and regulation and fraud and the Group’s processes for addressing sanctions risk in Russia;
— Assessment of matters reported through the Group’s whistleblowing helpline and the results of management’s investigation
of such matters;
— Testing controls in relation to certain IT systems within the Group, in part to identify if opportunities exist to carry out fraud through
inappropriate access to systems and data;
— Testing a sample of journal entries posted to revenue based on specific risk criteria; and
— Challenging assumptions and judgements made by management in its accounting estimates or judgements as a whole and assessing
whether there has been any management bias in aggregate.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of
not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw
a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 170
Independent auditors’ report to the members of Mondi plc continued
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
— we have not obtained all the information and explanations we require for our audit; or
— adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
— certain disclosures of directors’ remuneration specified by law are not made; or
— the parent company financial statements and the part of the Remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 11 May 2017 to audit the financial
statements for the year ended 31 December 2017 and subsequent financial periods. The period of total uninterrupted engagement
is six years, covering the years ended 31 December 2017 to 31 December 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over
whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS.
Simon Morley
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
22 February 2023
Mondi Group Integrated report and financial statements 2022 Consolidated income statement
for the year ended 31 December 2022
€ million
From continuing operations
Group revenue
Materials, energy and consumables used
Variable selling expenses
Gross margin
Maintenance and other indirect expenses
Personnel costs
Other net operating expenses
Gain on disposal of business, net of related
transaction costs
EBITDA
Depreciation, amortisation and impairments
Operating profit
Net profit from joint ventures
Net monetary gain arising from hyperinflationary
economies
Investment income
Foreign currency losses
Finance costs
Profit before tax
Tax (charge)/credit
Profit from continuing operations
From discontinued operations
Profit from discontinued operations
Profit for the year
Attributable to:
Non-controlling interests
Shareholders
Earnings per share (EPS) attributable to
shareholders
euro cents
From continuing operations
Basic EPS
Diluted EPS
Basic underlying EPS
Diluted underlying EPS
From continuing and discontinued operations
Basic EPS
Diluted EPS
Basic total EPS (prior to special items)
Diluted total EPS (prior to special items)
Notes
Underlying
2022
Special items
(note 3)
Total
Underlying
Restated 20211
Special items
(note 3)
2
5
27
2
15
1
6
6
6
7a
26
33
8
8
8
8
8
8
8
8
8,902
(4,728)
(741)
3,433
(346)
(1,077)
(162)
—
1,848
(405)
1,443
1
17
6
(5)
(144)
1,318
(296)
1,022
—
—
—
—
—
—
—
242
242
—
242
—
—
—
—
—
242
(5)
237
8,902
6,974
(4,728)
(3,663)
(741)
3,433
(346)
(547)
2,764
(328)
(1,077)
(1,025)
—
—
—
—
—
5
(162)
(254)
(2)
—
1,157
(375)
782
6
—
5
(2)
(86)
705
(154)
551
—
3
4
7
—
—
—
—
—
7
2
9
242
2,090
(405)
1,685
1
17
6
(5)
(144)
1,560
(301)
1,259
266
1,525
73
1,452
244.5
244.4
195.6
195.6
299.3
299.2
250.4
250.4
171
Total
6,974
(3,663)
(547)
2,764
(328)
(1,020)
(256)
—
1,160
(371)
789
6
—
5
(2)
(86)
712
(152)
560
213
773
17
756
112.0
111.9
110.1
110.0
155.9
155.8
154.0
153.9
Note:
1 The Group’s operations in Russia are presented as held for sale and classified as discontinued operations. Therefore, in accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued
Operations', the comparative figures for the year ended 31 December 2021 were restated to separate the net profit and cash flows associated with the Russian operations. As required by IFRS 5, the
comparatives in the consolidated statement of financial position were not restated. APMs, as defined on pages 242-248, were restated to exclude the effect of the Russian operations. Refer to notes 26
and 35 for further details
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
172
Consolidated statement of comprehensive income
for the year ended 31 December 2022
€ million
Profit for the year
Items that may subsequently be or have been reclassified
to the consolidated income statement
Fair value gains/(losses) arising from cash flow hedges of
continuing operations
Fair value gains arising from cash flow hedges of
discontinued operations
Exchange differences on translation of continuing non-euro
operations
Exchange differences on translation of discontinued non-
euro operations
Reclassification of foreign currency translation reserve to the
consolidated income statement on disposal of business
Share of other comprehensive income of joint ventures
Items that will not subsequently be reclassified to the
consolidated income statement
Remeasurements of retirement benefits plans of continuing
operations:
Return on plan assets
Actuarial gains arising from changes in demographic
assumptions
Actuarial gains arising from changes in financial
assumptions
Actuarial losses arising from experience adjustments
Remeasurements of retirement benefits plans of
discontinued operations
Other comprehensive income/(expense) for the year
Other comprehensive income/(expense) attributable to:
Non-controlling interests
Shareholders
Total comprehensive income attributable to:
Non-controlling interests
Shareholders
Total comprehensive income attributable to shareholders
arises from:
Continuing operations
Discontinued operations
Total comprehensive income for the year
2022
Restated 2021
Before tax
amount
Tax
charge
Net of tax
amount
Before tax
amount
Tax
charge
Net of tax
amount
1,525
773
1
1
35
72
(4)
—
8
(43)
7
58
(14)
1
114
—
—
—
—
—
—
1
1
35
72
(4)
—
(3)
5
—
(3)
1
111
6
105
79
1,557
1,217
340
1,636
(1)
—
(16)
42
—
1
11
(5)
—
16
—
1
38
—
—
—
—
—
—
(4)
—
(4)
(1)
—
(16)
42
—
1
7
1
34
(4)
38
13
794
538
256
807
Mondi Group Integrated report and financial statements 2022
Consolidated statement of financial position
as at 31 December 2022
€ million
Property, plant and equipment
Goodwill
Intangible assets
Forestry assets
Investments in joint ventures
Financial instruments
Deferred tax assets
Net retirement benefits asset
Other non-current assets
Total non-current assets
Inventories
Trade and other receivables
Current tax assets
Financial instruments
Cash and cash equivalents
Assets held for sale
Total current assets
Total assets
Short-term borrowings
Trade and other payables
Current tax liabilities
Provisions
Financial instruments
Liabilities directly associated with assets held for sale
Total current liabilities
Medium- and long-term borrowings
Net retirement benefits liability
Deferred tax liabilities
Provisions
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Own shares
Retained earnings
Other reserves
Total attributable to shareholders
Non-controlling interests in equity
Total equity
173
2021
4,870
926
76
348
17
33
43
26
1
6,340
1,099
1,333
12
4
473
2,921
—
2,921
9,261
(124)
(1,444)
(116)
(33)
(18)
(1,735)
—
(1,735)
(2,104)
(197)
(283)
(35)
(18)
(2,637)
(4,372)
2022
4,167
769
64
485
18
25
34
8
8
5,578
1,359
1,448
9
4
1,067
3,887
1,382
5,269
10,847
(102)
(1,525)
(137)
(22)
(10)
(1,796)
(325)
(2,121)
(1,970)
(155)
(307)
(27)
(13)
(2,472)
(4,593)
6,254
4,889
97
(16)
5,895
(182)
5,794
460
6,254
97
(18)
4,760
(341)
4,498
391
4,889
Notes
10
12
13
14
15
7b
24
16
17
28b
26
21
18
19
26
21
24
7b
19
22
22
33
The Group’s consolidated financial statements, including related notes 1 to 35, were approved by the Board and authorised for issue on
22 February 2023 and were signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
174
Consolidated statement of changes in equity
for the year ended 31 December 2022
€ million
At 1 January 2021
Total comprehensive income for the year:
Profit for the year
Other comprehensive income/(expense)
Transactions with shareholders in their capacity
as shareholders
Dividends
Purchases of own shares
Distribution of own shares
Mondi share schemes’ charge
Issue of shares under employee share schemes
Acquired through business combinations
Non-controlling interests bought out
Other movements
At 31 December 2021
Hyperinflation monetary adjustment (see note 1)
Restated balance at 1 January 2022
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Hyperinflation monetary adjustment (see note 1)
Transactions with shareholders in their capacity
as shareholders
Dividends
Purchases of own shares
Distribution of own shares
Mondi share schemes’ charge (see note 23)
Issue of shares under employee share schemes
Disposal of businesses (see note 27)
Other movements in non-controlling interests
Share
capital Own shares
Retained
earnings
Other
reserves
Equity
attributable
to
shareholders
Non-
controlling
interests
97
(18)
4,300
(377)
4,002
380
—
—
—
—
—
—
—
—
—
—
—
97
—
97
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7)
7
—
—
—
—
—
(18)
—
(18)
—
—
—
—
—
(7)
9
—
—
—
—
756
756
—
(298)
—
(7)
—
9
—
—
—
4,760
(11)
4,749
1,452
1,452
—
16
(321)
—
(9)
—
10
—
(2)
38
—
38
—
—
—
9
(9)
—
—
(2)
794
756
38
(298)
(7)
—
9
—
—
—
(2)
(341)
4,498
46
4,544
1,557
1,452
105
16
57
(284)
105
—
105
—
—
—
—
11
(10)
(4)
—
Total
equity
4,382
807
773
34
(304)
(7)
—
9
—
7
(3)
(2)
4,889
41
4,930
1,636
1,525
111
17
13
17
(4)
(6)
—
—
—
—
7
(3)
—
391
(5)
386
79
73
6
1
(321)
(9)
(330)
(7)
—
11
—
(4)
(2)
—
—
—
—
—
3
(7)
—
11
—
(4)
1
At 31 December 2022
97
(16)
5,895
(182)
5,794
460
6,254
Mondi Group Integrated report and financial statements 2022 Consolidated statement of cash flows
for the year ended 31 December 2022
€ million
Cash flows from operating activities
Cash generated from continuing operations
Dividends received from other investments
Income tax paid
Net cash generated from operating activities of discontinued operations
Net cash generated from operating activities
Cash flows from investing activities
Investment in property, plant and equipment
Investment in intangible assets
Investment in forestry assets
Investment in joint ventures
Proceeds from the disposal of property, plant and equipment
Proceeds from the disposal of financial asset investments
Acquisition of businesses, net of cash and cash equivalents
Proceeds from the disposal of business, net of cash and cash equivalents
Loans advanced to related and external parties
Interest received
Other investing activities
Net cash used in investing activities of discontinued operations
Net cash generated from/(used in) investing activities
Cash flows from financing activities
Proceeds from other medium- and long-term borrowings
Repayment of other medium- and long-term borrowings
Net repayment of short-term borrowings
Repayment of lease liabilities
Interest paid
Dividends paid to shareholders
Dividends paid to non-controlling interests
Purchases of own shares
Non-controlling interests bought out
Net cash outflow from debt-related derivative financial instruments
Other financing activities
Net cash used in financing activities of discontinued operations
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash movement in the year
Effects of changes in foreign exchange rates
Cash and cash equivalents at end of year
Notes
2022
175
Restated
2021
1,001
1
(138)
286
1,150
(481)
(16)
(45)
(1)
21
—
(63)
—
(1)
3
4
(91)
(670)
59
—
(4)
(21)
(67)
1,292
2
(196)
350
1,448
(508)
(12)
(49)
—
7
5
—
642
—
6
9
(68)
32
—
(53)
(9)
(21)
(60)
(321)
(298)
(9)
(7)
—
(83)
1
(10)
(572)
908
455
908
18
1,381
(6)
(7)
(3)
(12)
—
(13)
(372)
108
348
108
(1)
455
28a
26
13
14
15
25
27
26
28c
28c
28c
28c
28c
9
25
28c
26
28c
28c
28b
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
176
Notes to the consolidated financial statements
for the year ended 31 December 2022
1 Basis of preparation
These consolidated financial statements as at and for the year ended 31 December 2022 comprise Mondi plc and its subsidiaries (referred
to as 'the Group’), and the Group’s share of the results and net assets of its associates and joint ventures.
The Group’s consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The principal
accounting policies adopted are set out in note 35 and were applied consistently throughout the year and preceding year.
The Group also applies IFRS as issued by the International Accounting Standards Board (IASB), and there are no differences with applying
IFRS adopted for use in the UK which may significantly or materially affect the Group’s accounting policies.
The consolidated financial statements have been prepared on a going concern basis. The directors have reviewed the Group’s budget
and considered the assumptions contained in the budget, including the principal and emerging risks which may impact the Group’s
performance in the near term. The Group has a strong balance sheet. Continuing operations' net debt at 31 December 2022 was
€1,011 million, reduced from €1,689 million at 31 December 2021, reflecting the Group’s strong cash generation and ongoing investment
in the business. At 31 December 2022, the Group had a strong liquidity of €1,818 million, comprising €757 million of undrawn, committed
debt facilities and cash and cash equivalents held by the continuing operations of €1,061 million. The weighted average maturity of the
Group’s committed debt facilities was 3.8 years. The assessment of going concern is further described in the Strategic report as part of
the Viability statement under the heading Going concern on page 83, which is incorporated by reference into these financial statements.
Based on this evaluation, the Board considered it appropriate to prepare the consolidated financial statements on the going concern basis.
The consolidated financial statements have been prepared under the historical cost basis of accounting, as modified by forestry
assets, pension assets, certain financial assets and financial liabilities held at fair value through profit and loss and accounting in
hyperinflationary economies.
The Group presents certain measures of financial performance, position or cash flows that are not defined or specified according to IFRS.
These measures, referred to as Alternative Performance Measures (APMs), are defined on pages 242-248.
Since June 2022, the Group’s operations in Russia have satisfied the criteria to be classified as held for sale and are reported as
discontinued operations as at 31 December 2022 and for the year then ended (see note 26). For comparability purposes, the APMs based
on amounts recognised in the consolidated statement of financial position exclude the proportion of assets and liabilities attributable to
the Russian operations; however, as required by IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations', no restatement
of the IFRS consolidated statement of financial position has been made for such items as at 31 December 2021. APMs measuring the
profitability and cash flows of the Group are presented for continuing operations (i.e. excluding the results from the Russian discontinued
operations) and comparatives are presented on the same basis, consistent with the presentation of the IFRS consolidated income
statement and IFRS consolidated statement of cash flows. Where these changes have impacted the APMs for comparative periods, as
presented previously, these have been described as restated.
Mondi Group Integrated report and financial statements 2022 177
Critical accounting judgements and significant accounting estimates
The preparation of the Group’s consolidated financial statements includes the use of estimates and assumptions. Although the estimates
used are based on management’s best information about current circumstances and future events and actions, actual results may differ
from those estimates. The critical accounting judgements and significant accounting estimates with a significant risk of a material change
to the carrying value of assets and liabilities within the next year in terms of IAS 1, 'Presentation of Financial Statements', are:
Critical accounting judgements
— Accounting and presentation of the Russian discontinued operations – refer to note 26
Significant accounting estimates
— Fair value of forestry assets – refer to note 14
— Actuarial valuations of retirement benefit obligations – refer to note 24
— Valuation of the Russian assets – refer to note 26
Other areas of judgement and accounting estimates
The consolidated financial statements include other areas of judgement and accounting estimates. While these areas do not meet the
definition under IAS 1 of significant accounting estimates or critical accounting judgements, the recognition and measurement of certain
material assets and liabilities are based on assumptions and/or are subject to longer-term uncertainties. The other areas of judgement and
accounting estimates are:
— Taxation – refer to notes 7 and 35
— Residual values and useful economic lives of property, plant and equipment – refer to notes 10 and 35
— Hyperinflation accounting – refer to notes 1 and 35
— Accounting and presentation of the disposal of the Personal Care Components business – refer to note 27
Climate change
Management has considered the impact of climate change in preparing the consolidated financial statements, in particular in the context
of the disclosures included in the Strategic report, including the Group’s science-based Net-Zero GHG emission reduction targets as
detailed in the Mondi Action Plan 2030 (MAP2030) Taking Action on Climate section on pages 44-57. These considerations, which are
integral to the Group’s strategy, did not have a material impact on the accounting estimates and judgements, including the following areas:
— The estimates of future cash flows used in the impairment assessment of goodwill – refer to note 12
— The assumptions used in the fair value measurement of forestry assets – refer to note 14
— The assessment of residual values and estimated useful economic lives of property, plant and equipment – refer to note 35
— The fair value of assets acquired and liabilities assumed in business combinations – refer to note 25
While these considerations did not have a material impact on the areas set out above, this may change in future periods as management
evolves its understanding of climate change related impacts on the Group.
Hyperinflation accounting (see note 35)
Effective from 1 January 2022, the Group has applied IAS 29, 'Financial Reporting in Hyperinflationary Economies', for its subsidiaries in
Türkiye, whose functional currencies have experienced a cumulative inflation rate of more than 100% over the past three years. Prior to
translating the financial statements of the Turkish operations, the non-monetary assets and liabilities stated at historical cost are restated
to account for changes in the general purchasing power of the local currencies based on the consumer price index (TÜFE, 2003=100)
published by the Turkish Statistical Institute (TURKSTAT). The consumer price index for the year ended 31 December 2022 increased
by 64% from 687 at 31 December 2021 to 1,128 at 31 December 2022. For the year ended 31 December 2022, the adjustments from
hyperinflationary accounting have resulted in an increase in total assets of €91 million, an increase in Group revenue of €125 million, a
decrease in underlying EBITDA of €44 million and a net monetary gain of €17 million. Comparative amounts presented in euro were not
restated for subsequent changes in the price level or exchange rates.
IAS 29 requires judgement to determine when to apply hyperinflationary accounting and which general price index to select and other
approximations to be made in order to restate the financial statements of subsidiaries operating in a hyperinflationary economy.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 178
2 Operating segments
The Group generates revenue from the sale of manufactured products across the packaging and paper value chain. Revenue is generally
recognised at a point in time, typically when the goods have been delivered to a contractually agreed location in line with the shipment
terms agreed with customers. Customer payment terms vary within the Group due to its global operations and do not contain significant
financing components.
The Group provides transport services after control of certain goods has passed to the customer. The Group generated transport revenue
of €139 million (2021: €87 million) in the current financial year, which is recognised over time. The stage of completion is used to determine
the amount of revenue recognised, which is based on the transportation days completed at the reporting date relative to the total
expected delivery days.
The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the Executive Committee, the
chief operating decision-making body. The operating segments are managed based on the nature of the underlying products produced by
those businesses and comprise three (2021: four) distinct segments.
The Group’s operations in Russia, comprising its high-margin, cost-competitive, integrated pulp, packaging paper and uncoated fine paper
mill in Syktyvkar (Komi Republic) and three converting plants, are reported as discontinued operations. The discontinued operations' net
profit and cash flows are presented separately in the consolidated income statement and consolidated statement of cash flows for all
periods presented. Financial information relating to the discontinued operations is provided in note 26.
Effective from 30 June 2022 and following the completion of the sale of the Personal Care Components (PCC) business, the Group’s
operating segments were reorganised. Functional paper and films, previously part of the Engineered Materials operating segment, was
moved to Flexible Packaging to strengthen integration along the kraft paper value chain and further support the development of innovative
functional papers with barrier properties, fulfilling customers’ needs for sustainable packaging. The remaining part of the previously
reported Engineered Materials operating segment, namely the disposed PCC business (see note 27), has been reported in the Personal
Care Components (divested) operating segment up to the date of disposal.
Accordingly, the Group has restated the previously reported segment information to present the Group’s operations under the new
organisational structure.
The material product types from which the Group’s operating segments derive their internal and external revenues are as follows:
Operating segments
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Product types
Containerboard
Corrugated solutions
Kraft paper
Paper bags
Consumer flexibles
Functional paper and films
Pulp
Uncoated fine paper
Pulp
Personal Care Components (divested)
Personal care components
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 179
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine
Paper Corporate
Personal Care
Components
(divested)
Intersegment
elimination
Total
continuing
operations
Discontinued
operations
Intersegment
elimination3
Total
Group
Year ended 31 December 20221,2
€ million, unless otherwise stated
Segment revenue
Internal revenue
External revenue
Underlying EBITDA
2,991
4,299
1,613
(51)
(51)
(68)
2,940
4,248
1,545
—
—
—
662
797
427
(39)
Depreciation and impairments4
(133)
(181)
Amortisation
(7)
(8)
(70)
(2)
Underlying operating profit/(loss)
Special items before tax
522
—
608
355
—
—
(1)
—
(40)
—
Profit from discontinued operations
Capital employed5
2,162
3,035
1,091
(67)
—
Trailing 12-month average capital
employed
Additions to non-current non-
financial assets
Capital expenditure cash payments
Underlying EBITDA margin (%)
Return on capital employed (%)
Average number of employees
(thousands)6
2,062
2,916
1,022
(78)
175
235
212
22.1
25.3
242
223
18.5
20.9
115
64
26.5
34.7
—
—
—
—
9
9
0.6
(1.1)
6.4
11.5
2.9
0.1
0.5
Year ended 31 December 2021 (restated)1,2
€ million, unless otherwise stated
Segment revenue
Internal revenue
External revenue
Underlying EBITDA
2,349
3,292
1,194
(56)
(53)
(59)
2,293
3,239
1,135
543
567
—
—
—
(34)
(1)
—
(35)
—
335
(28)
307
26
(16)
(1)
9
—
55
(70)
(2)
(17)
—
Depreciation and impairments4
(112)
(160)
Amortisation
Underlying operating profit/(loss)
Special items before tax
Profit from discontinued operations
(5)
(8)
426
—
399
7
Capital employed5
1,907
2,745
965
(97)
372
Trailing 12-month average capital
employed
Additions to non-current non-
financial assets
Capital expenditure cash payments
Underlying EBITDA margin (%)
Return on capital employed (%)
Average number of employees
(thousands)6
1,754
2,667
983
(91)
359
258
189
23.1
24.3
174
182
17.2
15.2
133
85
4.6
(1.7)
6
2
—
—
5.9
11.2
3.0
0.1
24
23
7.8
2.5
0.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
181
(12)
169
1
(3)
—
(2)
242
(143)
8,941
143
(39)
8,902
1,848
(388)
(17)
1,443
242
6,221
266
1,044
(39) 8,902
39
—
— 8,902
— 1,848
—
—
(388)
(17)
— 1,443
—
—
242
266
— 7,265
6,097
1,020
— 7,117
601
508
20.8
23.7
—
—
601
508
— 20.8
— 26.0
21.4
5.3
—
26.7
(133)
7,037
133
(63)
6,974
1,157
(359)
(16)
782
7
5,892
5,672
595
481
16.6
13.9
213
760
677
(63) 6,974
63
—
— 6,974
— 1,157
—
—
—
—
(359)
(16)
782
7
213
— 6,652
— 6,349
—
—
595
481
— 16.6
— 16.9
21.1
5.3
—
26.4
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine
Paper Corporate
Personal Care
Components
(divested)
Intersegment
elimination
Total
continuing
operations
Discontinued
operations
Intersegment
elimination3
Total
Group
Notes:
1 The Group’s operations in Russia are presented as held for sale and classified as discontinued operations. Therefore, in accordance with IFRS 5, the comparative figures for the year ended 31 December
2021 were restated to separate the net profit and cash flows associated with the Russian operations. The comparatives in the consolidated statement of financial position were not restated. Refer to
notes 26 and 35 for further details
2 See pages 242-248 for definitions of APMs
3 Intersegment elimination of €39 million (2021: €63 million) relates to transactions with discontinued operations
4 Includes only impairments not classified as special items
5 Operating segment assets and operating segment net assets were replaced by capital employed in the table to further align the reporting of operating segments to be in a manner consistent with
internal reporting to the chief operating decision-making body
6 Presented on a full-time employee equivalent basis
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
180
2 Operating segments continued
External revenue by location of production and by location of customer1
€ million
Africa
South Africa
Rest of Africa
Africa total
Western Europe
Austria
Germany
UK
Rest of Western Europe
Western Europe total
Emerging Europe
Czech Republic
Poland
Türkiye2
Rest of emerging Europe2
Emerging Europe total
Russia1,3
North America
South America
Asia and Australia
Group total
External revenue
by location of production
External revenue
by location of customer
2022
667
74
741
Restated
2021
451
56
507
1,640
1,280
808
3
888
877
3
699
3,339
2,859
820
1,587
589
1,089
4,085
—
634
2
101
602
1,242
434
764
3,042
—
480
—
86
8,902
6,974
2022
498
436
934
203
1,188
230
1,988
3,609
286
851
693
629
2,459
30
1,000
157
713
8,902
Restated
2021
394
272
666
159
996
191
1,511
2,857
223
707
512
515
1,957
34
804
128
528
6,974
Notes:
1 Excludes external revenue of €1,178 million (2021: €749 million) generated by the discontinued operations (see note 26)
2 External revenue for Rest of emerging Europe by location of production and customer has been further analysed to what was presented previously to separately show revenue for Türkiye
3 External revenue to customers located in Russia is expected to cease in 2023
There were no external customers which account for more than 10% of the Group’s total external revenue in either year.
There are no material contract assets or contract liabilities as at 31 December 2022 and 31 December 2021. No contract costs were
capitalised in either year presented.
The Group does not disclose information about remaining performance obligations that have original expected durations of one year or
less, as permitted under IFRS 15.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 181
Net assets by location
€ million
Africa
South Africa
Rest of Africa
Africa total
Western Europe
Austria
Germany
UK
Rest of Western Europe
Western Europe total
Emerging Europe
Czech Republic
Poland
Türkiye1
Rest of emerging Europe1
Emerging Europe total
Russia2
North America
South America
Asia and Australia
Group total
2022
2021
Non-current
non-financial
assets
Segment
assets
Segment
net assets
Non-current
non-financial
assets
Segment
assets
Segment
net assets
922
68
990
470
347
33
631
1,133
176
1,309
1,070
571
41
868
1,015
170
1,185
797
488
40
763
778
62
840
471
657
34
608
898
118
1,016
937
943
60
780
805
114
919
665
806
57
695
1,481
2,550
2,088
1,770
2,720
2,223
926
759
182
873
2,740
—
181
13
87
1,044
1,112
420
1,087
3,663
—
421
19
170
843
933
320
847
878
723
76
913
2,943
2,590
—
368
19
157
753
161
7
100
958
991
301
1,081
3,331
921
363
10
164
846
850
191
876
2,763
814
317
10
150
5,492
8,132
6,760
6,221
8,525
7,196
Notes:
1 Non-current non-financial assets, segment assets and segment net assets for Rest of emerging Europe have been further analysed to show Türkiye separately
2 The Group’s assets and liabilities in Russia are classified as held for sale as at 31 December 2022 and its operations are reported as discontinued operations for the year then ended and the
comparatives for the year ended 31 December 2021. The comparatives in the consolidated statement of financial position have not been restated (see note 26)
Reconciliation of operating segment assets
€ million
Group total
Unallocated
Assets held for sale and liabilities directly associated with assets held for sale
(see note 26)
Investments in joint ventures
Deferred tax assets/(liabilities)
Other non-operating assets/(liabilities)
Group capital employed
Financial instruments/(net debt)
Total assets/equity
2022
2021
Segment
assets
Segment
net assets/
(liabilities)
Segment
assets
Segment
net assets/
(liabilities)
8,132
6,760
8,525
7,196
1,382
1,057
18
34
212
9,778
1,069
10,847
18
(273)
(297)
7,265
(1,011)
6,254
—
17
43
201
8,786
475
9,261
—
17
(240)
(321)
6,652
(1,763)
4,889
Other non-operating assets/(liabilities) include non-current financial instruments and current tax assets/(liabilities) as presented in
the consolidated statement of financial position, provisions for restructuring costs, employee-related and other provisions (see note
19), derivative financial instruments (see note 31d) and other non-operating receivables/(payables) of €175 million and €317 million,
respectively, as at 31 December 2022 (2021: €152 million and €324 million).
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
182
2 Operating segments continued
Average number of employees by principal location of employment1
thousands
South Africa
Rest of Africa
Western Europe
Emerging Europe
North America
Asia and Australia
Group total from continuing operations
Note:
1 Presented on a full-time employee equivalent basis
2022
1.5
0.4
6.7
10.5
1.6
0.7
21.4
Restated
2021
1.4
0.4
7.0
10.0
1.6
0.7
21.1
3 Special items
The Group separately discloses special items, an APM as defined on page 242, on the face of the consolidated income statement to assist
its stakeholders in understanding the underlying financial performance achieved by the Group on a basis that is comparable from year
to year.
€ million
Operating special items
Reversal of impairment of assets
Restructuring and closure costs:
Personnel costs
Other restructuring and closure costs
Gain on disposal of business, net of related transaction costs (see note 27)
Total special items before tax
Tax (charge)/credit (see note 7)
Total special items
2022
2021
—
—
—
242
242
(5)
237
4
5
(2)
—
7
2
9
The operating special items resulted in a cash outflow from operating activities of €8 million for the year ended 31 December 2022
(2021: €15 million). The net cash received from the sale of the PCC business totalled €642 million and is presented within cash flows from
investing activities.
To 31 December 2022
The special items during the year ended 31 December 2022 comprised:
— Personal Care Components (divested)
— €242 million gain on the sale of the PCC business to Nitto Denko Corporation. Transaction costs of €6 million were also recognised
in the prior year and were not treated as a special item. Further detail is provided in note 27.
To 31 December 2021
The special items during the year ended 31 December 2021 comprised:
— Flexible Packaging
— Release of restructuring and closure provision of €2 million, partly offset by additional restructuring costs of €1 million, and reversal of
impairment of assets of €1 million were recognised. All credit/(charges) related to special items from prior years.
— Release of restructuring and closure provision of €2 million and partial reversal of impairment of assets of €3 million were recognised
relating to the closure of a functional paper and films plant in the US. The credits are linked to a special item from prior years and were
classified within the Engineered Materials operating segment before restructuring (see note 2). Total costs now amount to €9 million.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
4 Auditors' remuneration
€ million
Fees payable to the auditors for the audit of Mondi plc’s annual financial statements
Fees payable to the auditors and their associates for the audit of Mondi plc’s subsidiaries1
Total audit fees
Audit-related services2
Other assurance services3
Other services
Total non-audit fees
Total fees
2022
1.9
4.1
6.0
0.4
0.7
—
1.1
7.1
Notes:
1 Audit fees related to discontinued operations of €0.3 million (2021: €0.2 million) are not included in the table above. The fees were payable to an associate of the auditors in 2021
2 The fees for audit-related services primarily relate to the recurring half year review engagement
3 The fees for other assurance services relate to reporting obligations associated with the divestment of the Group's Russian operations
5 Personnel costs
€ million, unless otherwise stated
Within underlying operating costs
Wages and salaries
Social security costs
Defined contribution retirement plan contributions (see note 24)
Defined benefit retirement plan service costs net of gain from settlement (see note 24)
Share-based payments (see note 23)
Total within underlying operating costs
Within special items
Personnel costs relating to restructuring (see note 3)
Within net finance costs
Retirement benefit medical plan net interest costs
Retirement benefit pension plan net interest costs
Total within net finance costs (see note 6)
Group total from continuing operations
Continuing operations' average number of employees (thousands)1
Note:
1 Presented on a full-time employee equivalent basis
183
Restated
2021
1.7
3.7
5.4
0.4
—
—
0.4
5.8
Restated
2021
831
170
13
2
9
2022
873
175
14
4
11
1,077
1,025
—
4
2
6
(5)
3
2
5
1,083
1,025
21.4
21.1
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
184
6 Net finance costs
€ million
Investment income
Investment income
Net foreign currency losses
Net foreign currency losses
Finance costs
Interest expense
Interest on bank overdrafts and loans
Interest on lease liabilities (see note 11)
Net interest expense on net retirement benefits liability (see note 24)
Total interest expense
Less: Interest capitalised
Total finance costs
Net finance costs
2022
Restated
2021
6
(5)
(133)
(7)
(6)
(146)
2
(144)
(143)
5
(2)
(75)
(6)
(5)
(86)
—
(86)
(83)
The weighted average interest rate applicable to capitalised interest on general borrowings for the year ended 31 December 2022 was
6.7% (2021: 2.9%) and was mainly related to qualifying assets in Finland and Poland (2021: Finland and Germany).
7 Taxation
(a) Analysis of tax charge for the year
The Group’s effective rate of tax before special items for the year ended 31 December 2022 was 22% (2021: 22%).
€ million
UK corporation tax at 19% (2021: 19%)
Overseas tax
Current tax in respect of prior years
Current tax
Deferred tax in respect of the current year
Deferred tax in respect of prior years
Deferred tax attributable to a change in the rate of domestic income tax
Tax charge before special items
Current tax on special items
Deferred tax on special items
Tax charge/(credit) on special items (see note 3)
Tax charge for the year
Current tax charge
Deferred tax charge/(credit)
2022
—
248
(8)
240
64
(4)
(4)
296
5
—
5
301
245
56
Restated
2021
—
160
4
164
(6)
(4)
—
154
(1)
(1)
(2)
152
163
(11)
As the Group operates in a number of countries, each with different tax systems, a degree of tax risk is inevitable, as tax laws are
complex and subject to changes in legislation and to differing interpretations. Consequently, provision has been made for such tax risk
exposures within current tax liabilities of €41 million (2021: €63 million), mainly in relation to transfer pricing risks arising from cross border
transactions. There is not expected to be any material change to the tax risk exposures or associated provisions within the next 12 months.
On 20 December 2021, the OECD released a framework for Pillar 2 Model Rules which will introduce a global minimum corporate tax rate
of 15% applicable to multinational enterprise groups with global revenue over €750 million. On 20 July 2022, HM Treasury released draft
UK legislation to implement the Pillar 2 rules. In the UK the Pillar 2 rules are expected to apply for accounting periods starting on or after
31 December 2023 (i.e. the year ending 31 December 2024 for the Group). Management is reviewing this draft legislation and monitoring
the status of implementation outside of the UK to understand the potential impact on the Group’s future tax position.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
185
Factors affecting tax charge for the year
The Group’s total tax charge for the year can be reconciled to the tax on the Group’s profit before tax at the UK corporation tax rate of
19% (2021: 19%), as follows:
€ million
Profit before tax
Tax on profit before tax, calculated at the UK corporation tax rate of 19% (2021: 19%)
Tax effects of:
Income/expenses not taxable/deductible for tax purposes
Special items not taxable
Other non-deductible expenses
Temporary difference adjustments
Fixed asset revaluation1
Changes in local tax rates2
Current year tax losses and other temporary differences not recognised
Prior year tax losses and other temporary differences not previously recognised
Other adjustments
Current tax prior year adjustments
Tax incentives3
Effect of differences between local rates and UK rate
Hyperinflation monetary adjustments4
Other adjustments
Tax charge for the year
2022
1,560
296
Restated
2021
712
135
(36)
(43)
7
(14)
(16)
(4)
10
(4)
55
(8)
(18)
45
15
21
301
4
—
4
(1)
(4)
—
7
(4)
14
4
(13)
10
—
13
152
Notes:
1 There has been a revaluation of fixed assets in Türkiye which has resulted in a tax uplift
2 There have been changes in tax rates in South Africa, Türkiye and Austria
3 The tax incentives relate principally to capital investments in Slovakia and the Czech Republic (2021: the Czech Republic and Türkiye)
4 The Group has adopted hyperinflation accounting for its subsidiaries in Türkiye effective from 1 January 2022 (see notes 1 and 35). Their results have been restated for changes in the general purchasing
power causing permanent tax differences
(b) Deferred tax
€ million
At 1 January
Hyperinflation monetary adjustment (see note 1)
Restated at 1 January
Credited/(charged) to the consolidated income statement
Charged to the consolidated statement of comprehensive income
Acquired through business combinations (see note 25)
Disposal of businesses (see note 27)
Reclassification to assets held for sale and liabilities directly associated
with assets held for sale (see note 26)
Reclassification
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December
Deferred tax assets
Deferred tax liabilities
2022
43
—
43
5
(2)
—
—
—
(6)
(4)
(2)
34
2021
39
—
39
4
—
—
—
—
—
—
—
43
2022
(283)
(7)
(290)
(61)
(1)
—
8
42
6
(1)
(10)
(307)
2021
(278)
—
(278)
5
(4)
(4)
—
—
—
—
(2)
(283)
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
186
7 Taxation continued
The amount of deferred tax (charged)/credited to the consolidated income statement comprises:
€ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses recognised
Other temporary differences
Total
Deferred tax comprises:
€ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses1
Other temporary differences
Total
2022
(16)
(33)
(25)
18
(56)
Restated
2021
(22)
6
1
26
11
Deferred tax assets
Deferred tax liabilities
2022
(26)
—
4
56
34
2021
(16)
—
11
48
43
2022
(249)
(127)
8
61
(307)
2021
(288)
(93)
26
72
(283)
Note:
1 Based on forecast data, the Group considers it probable that there will be sufficient future taxable profits available in the relevant jurisdictions to utilise these tax losses and other temporary differences
Deferred tax balances have been shown after offset when they relate to income taxes levied by the same tax authority and it is intended to
settle current assets and liabilities on a net basis.
The current expectation regarding the maturity of deferred tax balances is:
€ million
Recoverable/(payable) within 12 months
Recoverable/(payable) after 12 months
Total
Deferred tax assets
Deferred tax liabilities
2022
23
11
34
2021
29
14
43
2022
(1)
(306)
(307)
2021
(5)
(278)
(283)
The Group has the following amounts in respect of which no deferred tax asset has been recognised, as it is not considered probable that
there will be future profit streams or gains against which these could be utilised:
€ million
Tax losses - revenue
Tax losses - capital
Other temporary differences
Total
2022
1,443
16
27
2021
1,448
16
21
1,486
1,485
Of the total of €1,486 million (2021: €1,485 million), €1,269 million (2021: €1,272 million) relates to tax losses (with no expiry date) and other
timing differences not recognised in the UK and Luxembourg due to lack of future profit streams.
There were no significant changes during the year in the expected future profit streams or gains.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
Included in unrecognised tax losses are losses that will expire as follows:
€ million
Expiry date
Within one year
One to five years
After five years
No expiry date
Total
187
2022
2021
5
22
48
1,384
1,459
—
22
45
1,397
1,464
No deferred tax liability is recognised on gross temporary differences of €679 million (2021: €1,146 million) relating to the unremitted
earnings of overseas subsidiaries, as the Group is able to control the timing of the reversal of these temporary differences and it is
probable that they will not reverse in the foreseeable future. UK tax legislation largely exempts, from UK tax, overseas dividends received.
As a result, the gross temporary differences at 31 December 2022 represent only the unremitted earnings of those overseas subsidiaries
where remittance to the UK of those earnings would still result in a tax liability, principally as a result of dividend withholding taxes levied by
the overseas tax jurisdictions in which these subsidiaries operate and non-UK corporate taxes on dividends.
8 Earnings per share (EPS)
euro cents
From continuing operations
Basic EPS
Diluted EPS
Basic underlying EPS
Diluted underlying EPS
From discontinued operations
Basic EPS
Diluted EPS
From continuing and discontinued operations
Basic EPS
Diluted EPS
Basic total EPS (prior to special items)
Diluted total EPS (prior to special items)
Basic headline EPS
Diluted headline EPS
EPS attributable to shareholders
2022
244.5
244.4
195.6
195.6
54.8
54.8
299.3
299.2
250.4
250.4
264.3
264.2
Restated
2021
112.0
111.9
110.1
110.0
43.9
43.9
155.9
155.8
154.0
153.9
155.3
155.2
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 188
8 Earnings per share (EPS) continued
The calculation of basic and diluted EPS, basic and diluted total EPS (prior to special items) and basic and diluted headline EPS is based
on the following data:
€ million
Profit for the year attributable to shareholders
Arises from:
Continuing operations
Discontinued operations1
Special items attributable to shareholders (see note 3)
Related tax (see note 3)
Total earnings for the year (prior to special items)
Arises from:
Continuing operations
Discontinued operations1
Special items attributable to shareholders not excluded from headline earnings
(Gain)/loss on disposal of property, plant and equipment
Impairments not included in special items (see note 10)
Impairments included in profit from discontinued operations (see note 26)
Related tax
Headline earnings for the year
Note:
1 Profits from discontinued operations are wholly attributable to shareholders
Earnings
2022
1,452
1,186
266
(242)
5
1,215
949
266
—
(2)
11
57
1
Restated
2021
756
543
213
(7)
(2)
747
534
213
3
1
—
—
2
1,282
753
million
Basic number of ordinary shares outstanding
Effect of dilutive potential ordinary shares
Diluted number of ordinary shares outstanding
9 Dividends
Final dividend paid in respect of the prior year
Interim dividend paid in respect of the current year
Total dividends paid
2022
euro cents
per share
45.00
21.67
Final dividend proposed to shareholders
48.33
Weighted average number of shares
2022
485.1
0.1
485.2
2021
485.0
0.3
485.3
2021
euro cents
per share
41.00
20.00
45.00
€ million
201
97
298
218
€ million
218
103
321
234
The final dividend proposed in respect of the financial year ended 31 December 2022 has been recommended by the Board and is subject
to the approval of the shareholders of Mondi plc at the Annual General Meeting scheduled for 4 May 2023.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
189
Land and
buildings1
Plant and
equipment
Assets under
construction
Other
Total
1,256
2,621
37
72
(18)
(75)
4
133
10
1,419
2,405
(986)
17
1,436
43
(4)
(44)
(323)
(68)
(4)
45
26
60
1,167
2,031
(864)
18
212
(5)
(302)
—
378
34
2,956
7,824
(4,868)
15
2,971
100
(2)
(108)
(496)
(296)
(7)
207
20
94
2,483
7,077
(4,594)
621
—
237
—
—
—
(529)
7
336
353
(17)
1
337
393
(3)
(9)
(75)
—
—
(266)
2
19
398
415
(17)
143
2
43
(2)
(44)
—
16
1
159
471
(312)
1
160
39
(2)
(13)
(47)
(41)
—
11
2
10
119
386
(267)
4,641
57
564
(25)
(421)
4
(2)
52
4,870
11,053
(6,183)
34
4,904
575
(11)
(174)
(941)
(405)
(11)
(3)
50
183
4,167
9,909
(5,742)
10 Property, plant and equipment
€ million
Net carrying value
At 1 January 2021
Acquired through business combinations
Additions
Disposal of assets
Depreciation charge for the year
Impairment losses reversed
Reclassification
Currency movements
At 31 December 2021
Cost
Accumulated depreciation and impairments
Hyperinflation monetary adjustment (see note 1)
Restated balance at 1 January
Additions
Disposal of assets
Disposal of businesses (see note 27)
Reclassification to assets held for sale (see note 26)
Depreciation charge for the year
Impairment losses recognised
Reclassification
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December 2022
Cost
Accumulated depreciation and impairments
Note:
1 The land carrying value included in Land and buildings is €211 million (2021: €188 million)
Included in the additions above is €2 million (2021: €nil) of interest incurred on qualifying assets which has been capitalised during the
year. The amount is deductible for tax purposes either when incurred or included in the amount permitted to be deducted for capital
expenditure, depending on the jurisdiction in which they are capitalised.
The Group recognised income from insurance reimbursements relating to damages of property, plant and equipment of €7 million
(2021: €2 million) in other net operating expenses within the consolidated income statement.
The recoverable amount of property, plant and equipment is determined based on the use of the asset within the current business plans.
Any change in future intentions could result in an impairment of varying magnitude, depending on the assets affected.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
190
11 Leases
The Group has entered into various lease agreements. Leases over land and buildings have a weighted average term of 35 years
(2021: 40 years), plant and equipment a weighted average term of 12 years (2021: 13 years) and other assets a weighted average term
of 5 years (2021: 4 years). The decrease in the weighted average term for leases over land and buildings is mainly driven by the Russian
forestry leases, which have been reclassified to held for sale in June 2022.
The principal lease agreements in place include the following:
South African land lease
The Group entered into a land lease agreement on 1 January 2001 for a total term of 70 years. The lease commitment and annual
escalation rate is renegotiated every five years. The lease does not contain any clauses with regard to contingent rent or an option to
purchase the land at the end of the lease term, and does not impose any significant restrictions on the Group as a lessee.
Office building
The Group entered into an office building lease agreement in Vienna (Austria) for a total term of 20 years from October 2013. The lease
may only be terminated by the Group, after six months’ notice, in September 2023 and again in September 2028. Rent escalates on an
annual basis by the consumer price index of the local jurisdiction. The lease does not contain any option to purchase the building at the
end of the lease term, and does not impose any significant restrictions on the Group as a lessee. Variable lease payments are included in
the lease liability and calculated at the consumer price index. The Group does not intend to exercise the termination options, as described
above, and thus these were not considered in the calculation of the right-of-use asset.
Right-of-use assets
€ million
Land and buildings
Plant and equipment
Other
Total
Right-of-use assets
Depreciation charge
2022
61
43
15
119
2021
126
39
12
177
2022
(11)
(8)
(6)
(25)
Restated
2021
(10)
(7)
(5)
(22)
Additions to the right-of-use assets during 2022 were €36 million (2021: €37 million). The decrease in the right-of-use assets and
lease liabilities is mainly driven by the Russian forestry leases, which have been reclassified to assets held for sale and liabilities directly
associated with assets held for sale in June 2022.
Lease liabilities
€ million
Maturity analysis - contractual undiscounted cash flows
Less than one year
One to two years
Two to five years
More than five years
Total undiscounted cash flows
Total lease liabilities
Current
Non-current
The continuing operations' total cash outflow for leases during 2022 was €32 million (2021 (restated): €32 million).
Amounts recognised in the consolidated income statement
€ million
Depreciation charge
Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets
2022
2021
25
22
47
99
193
128
19
109
2022
(25)
(7)
(3)
(1)
31
27
63
328
449
204
20
184
Restated
2021
(22)
(6)
(2)
(2)
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
12 Goodwill
(a) Reconciliation
€ million
Net carrying value
At 1 January
Hyperinflation monetary adjustment (see note 1)
Restated balance at 1 January
Disposal of businesses (see note 27)
Reclassification to assets held for sale (see note 26)
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December
191
2021
923
—
923
—
—
—
3
926
2022
926
10
936
(141)
(34)
11
(3)
769
(b) Assumptions
Goodwill acquired through business combinations is allocated to the group of cash-generating units (CGUs) that are expected to benefit
from the synergies of the combination and represents the lowest level at which goodwill is monitored for internal management purposes.
As described further in the accounting policies in note 35, goodwill is assessed for impairment at least annually. In performing this
impairment test, the recoverable amounts of these groups of CGUs are the higher of fair value less costs to dispose and value in use.
Goodwill is allocated to three groups of CGUs, as follows:
2022/€ million, unless otherwise stated
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Total goodwill
Weighted
average
pre-tax discount
rate
9.9%
9.2%
10.2%
Growth rate
beyond year 3
Carrying value
3%
2%
0%
329
425
15
769
As a result of the reorganisation of the Group’s business units (see note 2), the Group has changed, based on the relative fair values in
accordance with IAS 36, the allocation of goodwill to its respective groups of CGUs, with three groups of CGUs being identified as the
lowest level at which goodwill is monitored for management purposes:
— Following the disposal of the PCC business in June 2022, €141 million of goodwill previously allocated to the Engineered Materials
group of CGUs was assigned to the divested PCC group of CGUs. The remaining goodwill of €73 million was moved to the Flexible
Packaging group of CGUs, together with the retained functional paper and films operations.
— Goodwill of €34 million previously allocated to the Corrugated Packaging, Flexible Packaging and Uncoated Fine Paper groups of
CGUs was moved to the Russian discontinued operations, where it has been reported as held for sale as at 31 December 2022.
In 2021, prior to the reorganisation, goodwill was allocated to four groups of CGUs as follows:
2021/€ million, unless otherwise stated
Corrugated Packaging
Flexible Packaging
Engineered Materials
Uncoated Fine Paper
Total goodwill
Weighted
average
pre-tax discount
rate
8.7%
8.7%
7.9%
10.7%
Growth rate
beyond year 3
Carrying value
3%
2%
2%
0%
341
341
214
30
926
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 192
12 Goodwill continued
Key assumptions for 2022
The key assumptions in the value-in-use calculations are as follows:
— Cash flow forecasts are derived from the budget most recently approved by the Board covering the three-year period to
31 December 2025.
— Sales volumes, sales prices and input cost assumptions in the budget period are derived from a combination of economic forecasts
for the regions in which the Group operates, industry forecasts for individual product lines, internal management projections, historical
performance and announced and expected industry capacity changes.
— The impact of climate change such as regulatory risks on carbon pricing, yield losses on plantations or the effects of droughts as well as
climate-change related opportunities in the budget period are considered in the cash flow forecasts. The Group’s climate change risks
and opportunities identified according to the TCFD recommendations are disclosed on pages 48-57 of this report.
— Cash flow projections in year four are based on internal management projections taking into consideration industry forecasts and
growth rates in the regions in which the Group operates. Growth rates (as per the table above) are applied to the groups of CGUs for all
years from year four onwards.
— Capital expenditure forecasts are based on historical experience and include expenditure necessary to maintain the assets in their
current condition.
The pre-tax discount rate is derived from the Group’s weighted average cost of capital. In determining the discount rate applicable to each
group of CGUs, adjustments are made to reflect the impacts of country risk.
Sensitivity analyses
Expected future cash flows are inherently uncertain and could change materially over time. They are affected by a number of factors,
including market and production estimates, together with economic factors such as prices, discount rates, currency exchange rates,
estimates of production costs and future capital expenditure. Risks associated with increased operating costs such as carbon pricing
mechanisms have also been considered.
Sensitivity analyses of reasonably possible changes in the underlying assumptions for each group of CGUs included:
— 100 bps increase in discount rate;
— 0% growth rate assumed for cash flow projections beyond three years in the Corrugated Packaging and Flexible Packaging groups
of CGUs;
— 5% decrease in sales prices of paper and pulp in the Corrugated Packaging and Flexible Packaging groups of CGUs; and
— 3% decrease in sales prices of paper and 5% decrease in sales prices of pulp in the Uncoated Fine Paper group of CGUs.
None of these downside sensitivity analyses indicated the need for an impairment.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 13 Intangible assets
€ million
Net carrying value
At 1 January
Hyperinflation monetary adjustment (see note 1)
Restated balance at 1 January
Acquired through business combinations
Additions
Disposal of businesses (see note 27)
Reclassification to assets held for sale (see note 26)
Impairment charge for the year
Amortisation charge for the year
Reclassification
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December
Cost
Accumulated amortisation and impairments
193
2022
2021
76
2
78
—
12
(2)
(7)
(2)
(18)
3
3
(3)
64
235
(171)
70
—
70
6
17
—
—
—
(18)
2
—
(1)
76
259
(183)
The intangible assets comprise mainly software development costs.
R&D expenditure incurred by the Group and charged to the consolidated income statement during the year amounted to €22 million
(2021 (restated): €22 million).
14 Forestry assets
€ million
At 1 January
Investment in forestry assets
Fair value gains/(losses)
Felling costs
Currency movements
At 31 December
Mature
Immature
2022
348
49
169
(78)
(3)
485
309
176
2021
372
45
(7)
(62)
—
348
217
131
The Group has 252,857 hectares (2021: 253,680 hectares) of owned and leased land available for forestry activities, all of which is in South
Africa. 80,227 hectares (2021: 80,854 hectares) are set aside for conservation activities and infrastructure needs. 1,045 hectares (2021: 1,044
hectares) relate to non-core activities. The balance of 171,585 hectares (2021: 171,782 hectares) are under afforestation, which forms the
basis of the valuation set out above.
Mature forestry assets are those plantations that are harvestable, while immature forestry assets have not yet reached that stage of
growth. Timber is harvested according to a rotation plan, once trees reach maturity. The maturity period ranges from 6.5 to 14.5 years,
depending on species, climate and location.
The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy, consistent with prior years.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
194
14 Forestry assets continued
The following assumptions have a significant impact on the valuation of the Group’s forestry assets:
— The net selling price, which is defined as the selling price less the costs of transport, harvesting, extraction and loading. The net selling
price is based on third-party transactions and is influenced by the species, maturity profile and location of timber. In 2022, the net selling
price used ranged from the South African rand equivalent of €14 per tonne to €47 per tonne (2021: €14 per tonne to €44 per tonne),
with a weighted average of €33 per tonne (2021: €24 per tonne).
— The conversion factor, which is used to convert hectares of land under afforestation to tonnes of standing timber, is dependent on the
species, the maturity profile of the timber, the geographic location and a variety of other environmental factors, such as the anticipated
impact of climate change on water scarcity and fire risks. In 2022, the conversion factors ranged from 7.9 to 23.9 (2021: 8.3 to 24.1).
— The risk premium on immature timber of 12.5% (2021: 12.9%) is based on an assessment of the risks associated with forestry assets
in South Africa and is applied for the years the immature timber has left to reach maturity. A risk premium on mature timber of 4.0%
(2021: 4.0%) was applied. The risk premium applied to immature and mature timber include factors for the anticipated impact of
climate change on water scarcity and fire risks. An increase in the severity and frequency of extreme weather events, such as higher
temperatures, changes in rainfall patterns and drought conditions, may result in higher timber losses in future years caused by stronger
winds, erosion, fires, pests and diseases.
The valuation of the Group’s forestry assets is determined in South African rand and converted to euro at the closing exchange rate on
31 December of each year.
Management has performed sensitivity analyses of reasonably possible changes in the significant assumptions and the EUR/ZAR
exchange rate. The sensitivity table is based on historical experience; however, the estimates may vary by greater amounts. Therefore, the
Board considers the forestry assets valuation to be a significant accounting estimate. The reported value of owned forestry assets would
change as follows should there be a change in these underlying assumptions on the basis that all other factors remain unchanged:
€ million
Effect of €5/tonne increase in net selling price
Effect of 1% increase in conversion factor (hectares to tonnes)
Effect of 1% increase in risk premium
Effect of 10% increase in EUR/ZAR exchange rate
15 Investments in joint ventures
€ million
At 1 January
Share of profit
Additions
At 31 December
2022
75
5
(7)
(44)
2022
17
1
—
18
2021
71
3
(5)
(32)
2021
10
6
1
17
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 195
2022
2021
18
7
35
60
639
153
507
1,299
1,359
20
4
8
32
499
134
434
1,067
1,099
174
165
2022
Restated
2021
(3,928)
(3,001)
(65)
40
50
(42)
30
62
2021
1,173
(29)
1,144
23
133
32
1
16 Inventories
€ million
Valued using the first-in, first-out cost formula
Raw materials and consumables
Work in progress
Finished products
Total valued using the first-in, first-out cost formula
Valued using the weighted average cost formula
Raw materials and consumables
Work in progress
Finished products
Total valued using the weighted average cost formula
Total inventories
Of which, held at net realisable value
Consolidated income statement
€ million
Within materials, energy and consumables used
Cost of inventories recognised as an expense
Write-down of inventories to net realisable value
Aggregate reversal of previous write-downs of inventories
Within other net operating expenses
Green energy sales and disposal of emissions credits
The reversal of previous write-downs of inventories relates to goods that had been written down to net realisable value and were
subsequently sold above their carrying value.
17 Trade and other receivables
€ million
Trade receivables
Credit loss allowance
Net trade receivables
Other receivables
Tax and social security
Prepayments
Accrued income
2022
1,250
(26)
1,224
20
158
46
—
Total trade and other receivables
1,448
1,333
Trade receivables: credit risk
The Group has a large number of unrelated customers and does not have significant credit risk exposure to any particular customer.
The Group considers that there is no significant geographical or customer concentration of credit risk.
Each business segment manages its own exposure to credit risk according to the economic circumstances and characteristics of the
relevant markets that it serves. The Group considers that management of credit risk on a decentralised basis enables it to assess and
manage credit risk more effectively. However, broad principles of credit risk management are observed across all business segments, such
as the use of credit rating agencies, credit guarantee insurance, where appropriate, and the maintenance of a credit control function.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
196
17 Trade and other receivables continued
€ million
Credit risk exposure
Gross trade receivables
Credit insurance
Net exposure to credit risk
2022
2021
1,250
(995)
255
1,173
(968)
205
In addition, the Group is in possession of bank guarantees and letters of credit securing trade and other receivables to the value of
€17 million (2021: €5 million).
Credit periods offered to customers vary according to the credit risk profiles of, and invoicing conventions established by, participants
operating in the various markets in which the Group operates. Interest is charged at appropriate market rates on balances which are
considered overdue in the relevant market.
To the extent that recoverable amounts are expected to be less than their associated carrying values, impairment charges have
been recorded in the consolidated income statement and the carrying values have been written down to their expected recoverable
amounts. The total gross carrying value of trade receivables that were subject to credit loss allowance during the year is €42 million
(2021: €45 million).
Included within the Group’s aggregate trade receivables balance are specific debtor balances, with customers totalling €173 million
(2021: €112 million) which are past due where the Group considers that their credit quality remains intact.
The expected credit loss allowance for trade receivables was determined as follows:
2022/€ million, unless otherwise stated
Within terms
<1 month
1-2 months
2-3 months
>3 months
Total
Past due by
Expected loss rate %
Trade receivables
Credit loss allowance
1
1,059
(8)
2
135
(3)
6
31
(2)
Past due by
14
7
(1)
67
18
(12)
1,250
(26)
2021/€ million, unless otherwise stated
Within terms
<1 month
1-2 months
2-3 months
>3 months
Total
Expected loss rate %
Trade receivables
Credit loss allowance
1
1,041
(9)
2
93
(2)
7
15
(1)
33
3
(1)
Movement in the credit loss allowance
€ million
At 1 January
Increase in allowance recognised in consolidated income statement
Amounts written off or recovered
Reclassification to assets held for sale (see note 26)
Currency movements
At 31 December
76
21
(16)
2022
29
10
(8)
(2)
(3)
26
1,173
(29)
2021
29
11
(7)
—
(4)
29
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 197
2021
823
56
71
60
419
15
1,444
2022
879
48
68
59
454
17
1,525
Restructuring
costs
Employee-related
provisions
Environmental
restoration
Other
Total
9
—
—
(4)
(2)
—
—
3
3
—
30
8
(2)
(6)
(1)
—
—
29
8
21
4
—
—
—
—
—
—
4
—
4
25
14
(2)
(11)
(1)
(14)
2
13
11
2
68
22
(4)
(21)
(4)
(14)
2
49
22
27
18 Trade and other payables
€ million
Trade payables
Capital expenditure payables
Tax and social security
Other payables
Accruals
Deferred income
Total trade and other payables
19 Provisions
€ million
At 1 January 2022
Charged to consolidated income statement
Released to consolidated income statement
Amounts used
Disposal of businesses (see note 27)
Reclassification to liabilities directly associated with
assets held for sale (see note 26)
Currency movements
At 31 December 2022
Current
Non-current
The provisions for restructuring costs are expected to be settled over the next year. Restructuring provisions include severance costs,
when management has made a formal decision to eliminate certain positions and this has been communicated to the groups of
employees affected, and other related costs that are typically expected to be incurred in the course of a restructuring programme.
Employee-related provisions comprise provisions for jubilee awards and other short-term benefits. Given the nature of jubilee provisions,
the amounts are likely to be settled over many years.
The Group provides for the costs of environmental remediation that have been identified at the time of plant closure, as part of acquisition
due diligence or in other circumstances where remediation by the Group is required and a probable outflow of economic resources
is identified. Judgement and experience is used by management in determining the expected timing, closure and decommissioning
methods, which can vary over time and between locations in response to the relevant legal requirements in each territory or the impact of
applying new technologies. As of 31 December 2022, such provisions totalled €4 million (2021: €4 million).
The Group does not provide for any potential future environmental remediation or asset retirement obligations in respect of plants that the
Group continues to own and operate into the foreseeable future based on the existing strategy of the Group, unless a legal or constructive
obligation exists at the reporting date.
Provisions may be identified at a future date if a change in strategy results in planned plant closure or disposal and the Group identifies the
need for future environmental remediation subject to the existence of a legal or constructive obligation.
Other provisions are mainly attributable to potential claims against the Group and onerous contracts, none of which is individually
significant. The Group expects to settle the majority of the provisions over the next year.
All non-current provisions are discounted using a discount rate relevant in the local countries, based on a pre-tax yield on long-
term bonds.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 198
20 Capital management
The Group defines its capital employed as equity, as presented in the consolidated statement of financial position, plus net debt.
€ million
Equity attributable to shareholders
Equity attributable to non-controlling interests
Total equity
Net debt (see note 28c)
Capital employed (see page 245)
2022
5,794
460
6,254
1,011
7,265
2021
4,498
391
4,889
1,763
6,652
Capital employed is managed on a basis that enables the Group to continue trading as a going concern, while delivering acceptable
returns to shareholders. The Group is committed to managing its cost of capital by maintaining an appropriate capital structure, with a
balance between equity and net debt.
The Group utilises its capital employed to fund the growth of the business and to finance its liquidity needs.
The primary sources of the Group’s net debt include its €2.5 billion Guaranteed Euro Medium Term Note Programme, its €750 million
Syndicated Revolving Credit Facility and financing from various banks and other credit agencies, thus providing the Group with access to
diverse sources of debt financing.
The principal loan arrangements in place are the following:
€ million
Financing facilities
Syndicated Revolving Credit Facility
€500 million Eurobond
€600 million Eurobond
€750 million Eurobond
European Investment Bank Facility
Maturity
Interest rate %
June 20271
April 2024
April 2026
April 2028
June 2025
EURIBOR + margin
1.500%
1.625%
2.375%
EURIBOR + margin
Long Term Facility Agreement
December 2026
EURIBOR + margin
Other
Total committed facilities
Drawn
Total committed facilities available
Various
Various
Note:
1 The Group has opted for a one-year extension on the facility, which moved the maturity from June 2026 to June 2027
2022
750
500
600
750
—
27
8
2021
750
500
600
750
33
70
57
2,635
(1,878)
757
2,760
(1,957)
803
The Group’s Eurobonds incur a fixed rate of interest. Swap agreements are utilised by the Group to raise non-euro-denominated currency
to fund subsidiaries' liquidity needs, thereby exposing the Group to floating interest rates.
The €750 million 5-year revolving multi-currency credit facility agreement (RCF) incorporates key sustainability targets linked to MAP2030,
classifying the facility as a Sustainability Linked Loan. Under the terms of the agreement, the margin will be adjusted according to the
Group’s performance against specified sustainability targets.
Short-term liquidity needs are met by cash and the RCF. As at 31 December 2022, the Group had no financial covenants in any of its
financing facilities.
The Group reviews its capital employed on a regular basis and makes use of several indicative ratios which are appropriate to the nature of
its operations and consistent with conventional industry measures. The principal ratios used include:
Pre-tax weighted average cost of capital (%)
Gearing (%) (see page 247)
Net debt to underlying EBITDA (times) (see page 247)
Return on capital employed from continuing operations (%) (see page 246)
2022
10.0
16.3
0.5
23.7
Restated
2021
10.0
28.7
1.5
13.9
In order to manage its cost of capital, maintain an appropriate capital structure and meet its ongoing cash flow needs, the Group may
issue new debt instruments; adjust the level of dividends paid to shareholders; issue new shares to, or repurchase shares from, investors;
or dispose of assets to reduce its net debt exposure.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
199
2022
2021
Current
Non-current
Total
Current
Non-current
Total
1
19
20
—
82
—
82
102
—
109
109
1,843
18
—
1,861
1,970
1
128
129
1,843
100
—
1,943
2,072
1,878
194
2
20
22
—
77
25
102
124
1
184
185
1,840
79
—
1,919
2,104
21 Borrowings
€ million
Secured
Bank loans and overdrafts
Lease liabilities (see note 11)
Total secured
Unsecured
Bonds
Bank loans and overdrafts
Other loans
Total unsecured
Total borrowings
Committed facilities drawn
Uncommitted facilities drawn
The Group’s borrowings as at 31 December are analysed by nature and underlying currency as follows:
2022/€ million
Euro
South African rand
Turkish lira
US dollar
Other currencies
Carrying value
Fair value
2021/€ million
Euro
Pounds sterling
South African rand
Turkish lira
US dollar
Russian rouble
Other currencies
Carrying value
Fair value
Floating rate
borrowings
Fixed rate
borrowings
Total carrying
value
30
—
33
—
2
65
65
1,906
1,936
23
41
14
23
2,007
1,891
23
74
14
25
2,072
Floating rate
borrowings
Fixed rate
borrowings
Total carrying
value
125
1,904
2,029
—
15
25
—
—
4
169
169
4
23
16
9
82
21
2,059
2,184
4
38
41
9
82
25
2,228
The fair values of the Eurobonds are estimated with reference to the last price quoted in the secondary market. 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.
3
204
207
1,840
156
25
2,021
2,228
1,957
271
Fair value
1,820
23
74
14
25
1,956
Fair value
2,154
4
38
41
9
82
25
2,353
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 200
21 Borrowings continued
The maturity analysis of the Group’s borrowings, presented net of interest, is as follows:
2022/€ million
Bonds
Bank loans and overdrafts
Lease liabilities (see note 11)
Total borrowings
Effective interest on borrowings net of amortised costs
and discounts
Total undiscounted cash flows
2021/€ million
Bonds
Bank loans and overdrafts
Lease liabilities
Other loans
Total borrowings
Effective interest on borrowings net of amortised costs
and discounts
Total undiscounted cash flows
<1 year
1–2 years
2–5 years
>5 years
—
83
19
102
51
153
499
7
17
523
37
560
598
11
35
644
80
724
746
—
57
803
51
854
<1 year
1–2 years
2–5 years
>5 years
—
79
20
25
124
51
175
—
25
16
—
41
46
87
1,096
55
33
—
1,184
111
1,295
744
—
135
—
879
221
1,100
Total1
1,843
101
128
2,072
219
2,291
Total1
1,840
159
204
25
2,228
429
2,657
Note:
1
It has been assumed that, where applicable, interest and foreign exchange rates prevailing at the reporting date will not vary over the time periods remaining for future cash outflows
In addition to the above, the Group swaps euro debt into other currencies through the foreign exchange market, as disclosed in note 31,
which has the effect of exposing the Group to the floating interest rate of those currencies.
22 Share capital and other reserves
Mondi plc is not restricted in the number of shares that can be issued. Any issue of shares is subject to shareholder approval. Mondi plc
ordinary shares issued on the London Stock Exchange and Johannesburg Stock Exchange have a nominal value of €0.20. All ordinary
shares are called up, allotted and fully paid.
2022 & 2021
Mondi plc €0.20 ordinary shares issued
Number of
shares
Share capital
in € million
485,553,780
97
Own shares
Own shares represent the cost of shares in Mondi plc purchased in the market to satisfy share awards under the Group’s employee share
schemes (see note 23). These costs are reflected in the consolidated statement of changes in equity.
at 31 December
Mondi Incentive Schemes Trust
Mondi Employee Share Trust
Own shares held
2022
2021
Number of
shares held
Average price
per share
Number of
shares held
Average price
per share
147,357
ZAR206.88
186,760
ZAR214.13
401,802
GBP14.69
426,230
GBP16.87
Dividend waivers are in place in respect of the shares held by the Mondi Incentive Schemes Trust and the Mondi Employee Share Trust.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
Other reserves
€ million
At 1 January 2021
Other comprehensive income/(expense)
for the year
Mondi share schemes’ charge
Issue of shares under employee share schemes
Other movements
At 31 December 2021
Hyperinflation monetary adjustment (see note 1)
Restated balance at 1 January 2022
Other comprehensive income
for the year
Mondi share schemes’ charge (see note 23)
Issue of shares under employee share schemes
Disposal of businesses (see note 27)
At 31 December 2022
Cumulative
translation
adjustment
reserve
Post-
retirement
benefits
reserve
Share-based
payment
reserve
Cash flow
hedge
reserve
(1,038)
(51)
16
31
—
—
—
(1,007)
54
(953)
98
—
—
(4)
8
—
—
—
(43)
3
(40)
5
—
—
—
(859)
(35)
—
9
(9)
—
16
—
16
—
11
(10)
—
17
—
(1)
—
—
—
(1)
—
(1)
2
—
—
—
1
Merger
reserve
667
Other
sundry
reserves
29
—
—
—
—
667
—
667
—
—
—
—
—
—
—
(2)
27
—
27
—
—
—
—
667
27
201
Total
(377)
38
9
(9)
(2)
(341)
57
(284)
105
11
(10)
(4)
(182)
Cumulative translation adjustment reserve
Exchange differences arising on the translation of the Group’s non-euro operations into the presentation currency of the Group are
recognised in other comprehensive income, as described in note 35, and accumulated in the cumulative translation adjustment reserve.
The cumulative amount is reclassified to profit or loss only on disposal or partial disposal of the non-euro operation.
Post-retirement benefits reserve
Actuarial gains and losses and the return on plan assets arising from the Group’s defined benefit pension and post-retirement medical
plans are recognised in other comprehensive income, as described in note 35, and accumulated in the post-retirement benefits reserve.
Remeasurements recorded in other comprehensive income are not recycled to the consolidated income statement, but those amounts
recognised in other comprehensive income may be transferred to retained earnings within equity.
Share-based payment reserve
The share-based payment reserve is used to recognise the grant date fair value of options issued to employees but not exercised and the
grant date fair value of shares awarded to employees but not yet vested, as described in note 35.
Cash flow hedge reserve
The cash flow hedge reserve is used to recognise the effective portion of changes in the fair value of derivative financial instruments that
are designated as hedges of future cash flows, as described in note 35.
Merger reserve
The merger reserve was recognised in respect of the demerger from Anglo American plc in 2007 and the simplification of the dual-listed
company structure in 2019.
Other sundry reserves
The other sundry reserves comprise various other reserves, which individually are not material and typically are not subject to
material changes.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 202
23 Share-based payments
Mondi share awards
The Group has established its own share-based payment arrangements to incentivise employees. Full details of the Group’s share
schemes are set out in the Remuneration report.
The fair values of the share awards granted under the Mondi schemes are calculated with reference to the facts and assumptions
presented below:
Date of grant
Vesting period (years)
Expected leavers p.a. (%)
Grant date fair value per instrument (GBP)
Grant date fair value per instrument (ZAR)
Number of shares conditionally awarded
Date of grant
Vesting period (years)
Expected leavers p.a. (%)
Grant date fair value per instrument (GBP)
ROCE component
TSR component2
Grant date fair value per instrument (ZAR)
ROCE component
TSR component2
Number of shares conditionally awarded
BSP 2022
BSP 2021
BSP 2020
10 March 2022
12 March 2021
26 March 2020
3
5
14.03
281.55
541,730
3
5
18.46
383.47
234,516
3
5
13.87
279.76
205,633
LTIP 2022
LTIP 2021
LTIP 20201
10 March 2022
12 March 2021
26 March 2020
3
5
14.03
3.51
281.55
70.39
614,253
3
5
18.46
4.62
383.47
95.87
506,519
3
5
14.42
3.60
279.76
69.94
534,276
Notes:
1 All participants, except the Group CEO and Group CFO, were granted an award on 26 March 2020. The Group CEO was granted an award on 11 May 2020 after the Remuneration policy approval
at the Mondi plc AGM. The Group CFO was granted an LTIP 2020 and an LTIP 2019 award on 2 December 2020. The weighted average grant date fair value is reflected in the table. All performance
requirements are identical for all 2020 LTIP awards
2 The base fair value has been adjusted for contractually determined market-based performance conditions
All of these scheme awards will be settled at the end of the vesting cycle in either the award of ordinary shares in Mondi plc or the award
of nil-cost options to ordinary shares in Mondi plc. The Group has no obligation to settle the awards made under these schemes in cash.
An amount equal to the dividends that would have been paid on Bonus Share Plan (BSP) and Long-Term Incentive Plan (LTIP) share
awards during the holding period is paid to participants upon vesting.
The total fair value charge in respect of all the Mondi share awards for the year ended 31 December is made up as follows:
€ million
Bonus Share Plan
Long-Term Incentive Plan
Total share-based payment expense
2022
5
6
11
2021
4
5
9
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
The weighted average share price of share awards that vested during the period is as follows:
Mondi plc - Johannesburg Stock Exchange
Mondi plc - London Stock Exchange
A reconciliation of share award movements for the Mondi share schemes is shown below:
number of shares
At 1 January 2021
Shares conditionally awarded
Shares vested
Shares lapsed
At 31 December 2021
Shares conditionally awarded
Shares vested
Shares lapsed
At 31 December 2022
203
2022
2021
ZAR280.33
ZAR377.46
GBP14.36
GBP17.97
BSP
631,073
234,516
(223,228)
(20,827)
621,534
541,730
(257,041)
(27,140)
LTIP
1,212,584
506,519
(157,767)
(233,729)
1,327,607
614,253
(186,227)
(257,295)
879,083
1,498,338
24 Retirement benefits
The Group operates post-retirement defined contribution, post-retirement defined benefit pension plans and post-retirement medical
plans for many of its employees.
Defined contribution plans
The assets of the defined contribution plans are held separately in independently administered funds. The charge in respect of these
plans of €14 million (2021 (restated): €13 million) is calculated on the basis of the contribution payable by the Group in the financial year.
There were no material outstanding or prepaid contributions recognised in relation to these plans as at the reporting dates presented.
The expected contributions to be paid to defined contribution plans during 2023 are €15 million.
Defined benefit pension plans and post-retirement medical plans
The Group operates in excess of 100 defined benefit retirement plans across its global operations. A large proportion of the Group’s
defined benefit plans are closed to new members.
The majority of these plans are unfunded and provide pensions and severance benefits to members of those plans.
The most significant unfunded defined benefit plans are operated in Austria and Germany, and funded plans are operated primarily
in the UK. These plans are established in accordance with applicable local labour legislation and/or collective agreements with
participating employees.
The benefits are based on a variety of factors, the most significant of which are a combination of pensionable service and final salary.
A number of these plans also provide additional benefits in the event of death in service, disability or ill-health retirement, which are
derived from the final salary benefit formula.
The assets of the funded plans are held separately in independently administered funds, in accordance with statutory requirements or local
practice where those funds are operated. The boards of trustees of these plans are required to act in the best interests of the plans and all
relevant stakeholders of the plans (active employees, inactive employees, retirees and employers), and are responsible for the Investment
policy with regard to the assets of the plans.
The post-retirement medical plans provide health benefits to retired employees and certain of their dependants. Eligibility for cover is
dependent upon certain criteria. The South African plan is unfunded and has been closed to new participants since 1 January 1999.
Except for the actuarial risks set out below, the Group has not identified any additional specific risks in respect of these plans.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 204
24 Retirement benefits continued
Defined benefit plans typically expose the Group to the following actuarial risks:
Investment risk (Asset volatility)
Interest risk
Longevity risk
Salary risk
The present value of the net retirement benefit liability/asset is calculated using a discount rate
determined by reference to high-quality bond yields. If the return on plan assets is below this
rate, it will create a plan deficit that needs to be funded/guaranteed by the employer.
A decrease in the bond interest rate will increase plan liabilities; however, this will be partially
offset by an increase in the value of the plan’s fixed rate debt instruments.
The present value of the net retirement benefit liability/asset is calculated by reference to the
best estimate of the mortality of plan participants both during and after their employment. An
increase in the life expectancy of the plan participants will increase the plan liabilities.
The present value of the net retirement benefit liability/asset is calculated by reference to the
expected future salaries of plan participants. An increase in the salary of the plan participants will
increase the plan liabilities.
Medical cost inflation risk
The present value of the post-retirement medical plans is calculated by reference to expected
future medical costs. An increase in medical cost inflation will increase the plan liabilities.
Independent qualified actuaries carry out full valuations every year using the projected unit credit method.
Actuarial assumptions
The weighted average principal assumptions used in the actuarial valuations are detailed below:
%
Discount rate
Rate of inflation
Rate of increase in salaries
Rate of increase of pensions in payment
Expected average increase of medical costs
South
Africa
11.3
6.6
7.6
—
8.7
2022
Europe
4.1
2.5
2.6
2.6
—
Other
regions
10.1
8.3
8.8
—
—
South
Africa
10.3
6.2
7.2
—
7.7
2021
Europe
1.3
2.5
2.6
2.8
—
Other
regions
10.2
6.7
8.1
2.3
—
The assumption for the discount rate for plan liabilities is based on AA corporate bonds which are of a suitable duration and currency.
In South Africa, the discount rate assumption has been based on the zero coupon government bond yield curve.
Mortality assumptions
The assumed remaining life expectancies on retirement at age 65 are:
years
Retiring today
Males
Females
Retiring in 20 years
Males
Females
2022
2021
Europe
Other
regions
South
Africa
Europe
Other
regions
13.6-23.2
15.0-20.7
17.5-25.5
17.0-25.3
13.6-25.4
15.3-20.0
17.5-26.1
17.7-25.3
16.3
20.4
22.0
26.1
13.6-23.2
15.3-20.7
17.5-25.5
17.7-25.3
13.6-25.5
15.3-20.0
17.5-27.8
17.7-25.3
South
Africa
16.3
20.4
18.7
23.0
The mortality assumptions have been based on published mortality tables in the relevant jurisdictions.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued The amounts recognised in the consolidated statement of financial position are determined as follows:
€ million
Present value of unfunded liabilities
Present value of funded liabilities
Present value of plan liabilities
Fair value of plan assets
Plan liabilities net of plan assets
Amounts reported in consolidated
statement of financial position
Defined benefit pension plans
Net retirement benefits asset
Defined benefit pension plans
Post-retirement medical plans
Net retirement benefits liability
South
Africa
(33)
—
(33)
—
(33)
—
—
—
(33)
(33)
2022
Europe
(91)
(80)
(171)
73
(98)
8
8
(106)
—
(106)
Other
regions
(16)
—
(16)
—
(16)
—
—
(16)
—
(16)
South
Africa
(37)
—
(37)
—
(37)
—
—
—
(37)
(37)
2021
Europe
(115)
(128)
(243)
131
(112)
26
26
(138)
—
(138)
Other
regions
(22)
—
(22)
—
(22)
—
—
(22)
—
(22)
Total
(140)
(80)
(220)
73
(147)
8
8
(122)
(33)
(155)
205
Total
(174)
(128)
(302)
131
(171)
26
26
(160)
(37)
(197)
The changes in the present value of defined benefit liabilities and fair value of plan assets are as follows:
€ million
At 1 January
Included in consolidated income statement
Current service cost
Past service cost
Gain from settlement
Interest
Included in consolidated statement of comprehensive income
Remeasurement gains
Return on plan assets
Acquired through business combinations
Disposal of businesses (see note 27)
Reclassification to assets held for sale and liabilities directly
associated with assets held for sale (see note 26)
Contributions paid by employer
Benefits paid
Currency movements
At 31 December
Defined benefit liabilities
Fair value of plan assets
Net liability
2022
(302)
2021
(327)
2022
131
2021
133
2022
(171)
2021
(194)
(4)
—
6
(8)
51
—
—
—
14
—
20
3
(5)
3
—
(7)
17
—
(2)
—
—
—
25
(6)
(220)
(302)
—
—
(6)
2
—
(43)
—
—
—
1
(7)
(5)
73
—
—
—
2
—
(5)
—
—
—
4
(12)
9
131
(4)
—
—
(6)
51
(43)
—
—
14
1
13
(2)
(5)
3
—
(5)
17
(5)
(2)
—
—
4
13
3
(147)
(171)
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
206
24 Retirement benefits continued
The expected maturity analysis of undiscounted retirement benefits is as follows:
€ million
Less than a year
Between one and two years
Between two to five years
After five years
2022
2021
Defined benefit
pension plans
Post-retirement
medical plans
9
9
25
138
4
4
13
182
Total
13
13
38
320
Defined benefit
pension plans
Post-retirement
medical plans
10
10
28
205
4
4
12
102
Total
14
14
40
307
The weighted average duration of the defined retirement benefits liability for South Africa is 7 years (2021: 8 years), Europe 10 years
(2021: 13 years) and other regions 12 years (2021: 13 years).
It is expected that the Group’s share of contributions will increase as the schemes’ members age. The expected contributions to be paid
to defined benefit pension plans and post-retirement medical plans during 2023 are €15 million.
The market values of the plan assets in these plans are detailed below:
€ million
External equity
Bonds
Insurance contracts
Cash
Liability-driven investment (LDI) portfolio
Fair value of plan assets
2022
2021
Quoted
Unquoted
Total
Quoted
Unquoted
Total
—
—
—
6
—
6
—
15
51
—
1
67
—
15
51
6
1
73
—
—
—
1
—
1
2
69
23
—
36
2
69
23
1
36
130
131
The majority of the Group’s plan assets are located in three UK pension schemes. As these schemes are closed and have no active
members, the long-term objective has been to improve the funding deficit and then transfer the liabilities to third parties and to eventually
close the schemes. The asset/liability matching/investing strategy in the UK is that the trustees invest in a combination of insured annuity
contracts, and gilts and bonds through pooled funds and insured annuities. In managing these schemes, trustees ensure that each plan
can continue to meet its benefit payments without exposing either the plan or the Group to an undue level of risk.
On 5 May 2022, Medway Packaging Pension Scheme trustees, which is the largest UK scheme used by the Group, completed a buy-in of
all its member liabilities with an insurance company. In this transaction, the scheme purchased an insurance policy that perfectly matches
all future pension liabilities (and associated cash flows) in respect of the members included within the policy.
The defined benefit obligations for these members on IAS 19 assumptions is less than that paid to the insurance company on 5 May
2022. This difference of €10 million is recognised through other comprehensive income in this year's IAS 19 disclosures as an asset
remeasurement loss.
There are no other financial instruments or property owned by the Group included in the fair value of plan assets.
The fair values of equity, bonds and insurance contracts are determined in accordance with IAS 19.
The actual return on plan assets in respect of defined benefit plans was a loss of €41 million (2021: loss of €3 million).
The market value of assets is used to determine the funding level of the plans and is sufficient to cover 91% (2021: 102%) of the benefits
which have accrued to members, after allowing for expected increases in future earnings and pensions. Companies within the Group
are paying contributions at rates agreed with the plans’ trustees and in accordance with local independent actuarial advice and
statutory provisions.
In certain jurisdictions, Group plans are subject to minimum funding requirements. At 31 December 2022, these minimum funding
requirements did not give rise to the recognition of any additional liabilities.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 207
Sensitivity analyses
The sensitivity analyses below have been determined based on reasonably possible changes to the respective assumptions occurring at
the end of the financial year, while holding all other assumptions constant.
The sensitivity analyses may not be representative of the actual changes in the net retirement benefits asset/(liability), as it is unlikely that
the changes in assumptions would occur in isolation of one another and some of the assumptions may be inter-related. The projected unit
credit method was used to calculate the sensitivity analyses below.
The sensitivity table is based on a 1% change by reference to the movement in actuarial assumptions in the tables above; however,
the estimates may vary by greater amounts. Therefore, the Board considers the retirement benefit obligations a significant
accounting estimate.
€ million
Discount rate
(Decrease)/increase in current service cost
(Decrease)/increase in net retirement benefits liability
Rate of inflation
Increase/(decrease) in current service cost
Increase/(decrease) in net retirement benefits liability
Rate of increase in salaries
Increase/(decrease) in current service cost
Increase/(decrease) in net retirement benefits liability
Rate of increase of pensions in payment
Decrease in current service cost
Increase/(decrease) in net retirement benefits liability
Medical cost trend rate
Decrease in aggregate of the current service cost and interest cost
Increase/(decrease) in net retirement benefits liability
Mortality rates
Decrease in current service cost
Increase in net retirement benefits liability
1% increase
1% decrease
1
24
(1)
(15)
(1)
(5)
—
(6)
—
(2)
(1)
(20)
—
17
—
6
—
7
—
2
1-year increase
(1)
3
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 208
25 Business combinations
To 31 December 2022
There were no business combinations during the year ended 31 December 2022.
No changes in the provisional amounts of the fair value of the assets acquired and liabilities assumed for the acquisition of Olmuksan
International Paper Ambalaj Sanayi ve Ticaret A.Ş (Olmuksan) on 31 May 2021 have been recognised.
To 31 December 2021
On 31 May 2021, the Group acquired 90.38% of the outstanding shares in Olmuksan for a total consideration of €66 million, which implies
an enterprise value of €88 million on a 100% basis. Olmuksan is a leading and well-established corrugated packaging producer in Türkiye,
listed on the Istanbul stock exchange. Its network of five plants provides a diverse customer base with high-quality sustainable packaging
for food, beverage, agriculture and industrial applications. On 26 July 2021, the Group completed a mandatory tender offer to acquire an
additional 1.62% of the outstanding shares for a total consideration of €3 million, resulting in a total ownership interest in Olmuksan of
92.00%.
Property, plant and equipment has been measured at fair value using relevant valuation methods accepted under IFRS 13, with related
deferred tax adjustments. The fair value uplift on intangible assets arises from long-lasting customer relationships.
Olmuksan's revenue for the year ended 31 December 2021 was €216 million, with a profit after tax of €18 million. Olmuksan's
revenue of €132 million and profit after tax of €10 million since the date of acquisition to 31 December 2021 have been included in the
consolidated income statement.
Details of the net assets acquired, as adjusted from book to fair value, are as follows:
€ million
Net assets acquired
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Income tax liabilities
Other current liabilities
Net retirement benefits liability
Deferred tax assets/(liabilities)
Total liabilities (excluding debt)
Short-term borrowings
Medium- and long-term borrowings
Debt assumed
Net assets acquired
Non-controlling interests in equity
Cash acquired net of overdrafts
Net cash paid per consolidated statement of cash flows
Book value
Revaluation
Fair value
24
—
27
62
3
116
(54)
(1)
(4)
(2)
3
(58)
(16)
(1)
(17)
41
33
6
—
—
—
39
—
—
—
—
(7)
(7)
—
—
—
32
57
6
27
62
3
155
(54)
(1)
(4)
(2)
(4)
(65)
(16)
(1)
(17)
73
(7)
(3)
63
Transaction costs of €4 million were charged to other net operating expenses into the consolidated income statement.
The fair values of assets acquired and liabilities assumed in business combinations are level 3 measures in terms of the fair value
measurement hierarchy. Management has considered the impact of environmental and climate risks on Olmuksan’s customers and the
estimated fair values of property, plant and equipment. These considerations did not have a material impact.
In respect of trade and other receivables, the gross contractual amounts receivable less the best estimates at the acquisition dates of the
contractual cash flows not expected to be collected approximate the book values as presented.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 209
26 Russian operations (discontinued operations)
The Group has significant operations in Russia. The most significant facility is a wholly owned integrated pulp, packaging paper and
uncoated fine paper mill located in Syktyvkar (Komi Republic). The Group also has three packaging converting plants in Russia. All these
facilities serve primarily the domestic market and have continued to operate throughout the year ended 31 December 2022.
On 4 May 2022, the Board decided to divest the Group’s Russian assets. Given progress with the divestment process, the Board
subsequently concluded, in June 2022, that the Russian operations satisfied the criteria to be classified as held for sale and that they should
also be classified as discontinued operations.
Syktyvkar mill
On 12 August 2022, the Group entered into an agreement denominated in Russian rouble to sell its Syktyvkar mill, comprising OJSC Mondi
Syktyvkar together with two affiliated entities, to Augment Investments Limited for a consideration of RUB 95 billion (€1.2 billion, at an
exchange rate of 78.43 Russian rouble versus euro as at 31 December 2022), payable in cash on completion.
The Syktyvkar assets to be transferred to Augment Investments Limited as part of the proposed disposal exclude a cash balance of
RUB 16 billion (€204 million, at an exchange rate of 78.43 Russian rouble versus euro as at 31 December 2022) to be paid by form of
dividend to Mondi before completion.
The disposal is conditional on the approval of the Russian Federation’s Government Sub-Commission for the Control of Foreign
Investments and customary antitrust approvals and, as a Class 1 transaction under the UK Listing rules, it is also conditional upon
the approval of Mondi's shareholders at a General Meeting. The disposal is being undertaken in an evolving political and regulatory
environment, there can be no certainty as to when the disposal will be completed. The agreement with Augment Investments Limited has
a long stop date of 12 May 2023 after which either party can terminate the agreement without recourse.
On 16 November 2022, OJSC Mondi Syktyvkar declared a dividend of RUB 16 billion (€252 million, at an exchange rate of 62.67 Russian
rouble versus euro) in favour of a Group subsidiary. RUB 4 billion (€63 million, at an exchange rate of 62.67 Russian rouble versus euro)
was settled on the date of declaration by way of set-off of an intercompany loan, and the residual amount of RUB 12 billion (€148 million,
at an exchange rate of 78.43 Russian rouble versus euro as at 31 December 2022) remained unpaid as at 31 December 2022, causing a
foreign currency loss of €36 million, which was recognised in profit from discontinued operations in the consolidated income statement.
The payment of the dividend outside Russia requires consent from the Ministry of Finance of the Russian Federation, and therefore the
dividend continues to expose the Group to Russian rouble exchange rate risk until it is paid and converted into euro.
Packaging converting plants
On 15 December 2022, the Group confirmed that it entered into an agreement denominated in Russian rouble to sell its three Russian
packaging converting operations to the Gotek Group for a consideration of RUB 1.6 billion (€20 million, at an exchange rate of 78.43
Russian rouble versus euro as at 31 December 2022), payable in cash on completion. The three packaging converting operations comprise
a corrugated solutions plant, LLC Mondi Lebedyan, and two consumer flexibles plants, LLC Mondi Aramil and LLC Mondi Pereslavl.
The disposal is conditional on the approval of the Russian Federation’s Government Sub-Commission for the Control of Foreign
Investments and customary antitrust approvals. The disposal is being undertaken in an evolving political and regulatory environment, there
can be no certainty as to when it will be completed.
Following the announcement, the related assets were impaired by €57 million to their estimated fair value less costs to sell. If the
operations had been disposed of as at 31 December 2022, the Group would have recognised an additional loss of €20 million from the
recycling of the foreign currency losses accumulated in the currency translation adjustment reserve in equity through the consolidated
income statement. The foreign currency loss that is ultimately recognised on disposal may differ from the position as at 31 December 2022,
as it is subject to future movement in the Russian rouble exchange rate.
Critical accounting judgements and significant accounting estimates
In the context of an increased level of uncertainty, the Board has exercised critical judgements in applying its accounting policies and has
used estimates and assumptions, as further described below.
Control assessment
The Board has applied its judgement in regard to whether the Group continues to control its Russian subsidiaries due to the restrictions
imposed by the Russian government or any other authority. Control exists when the Group is exposed, or has rights, to variable returns
from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The Russian
government has introduced various sanctions in recent months, including restrictions on the payment of dividends to shareholders
domiciled in 'unfriendly states' that require consent from the Ministry of Finance of the Russian Federation. Since the Group continued
to direct the operations and the Russian regulations currently do not prohibit the declaration and payment of dividends, the Board has
taken the view that the Group has retained control through the year ended 31 December 2022. Were the Board to conclude that the
Group no longer retains control, the Russian operations would be treated as if they had been disposed of, with the associated assets and
liabilities derecognised.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 210
26 Russian operations (discontinued operations) continued
Held for sale and discontinued operations
The Board has exercised critical judgement in determining if and when the businesses satisfied the requirements to be classified as held
for sale, and whether the Russian businesses should be presented as discontinued operations.
Assets are held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing
use, provided the assets are available for immediate sale in their present condition and a sale is highly probable. The divestment process
is operationally and structurally complex and is being undertaken in an evolving political and regulatory environment. There is uncertainty
as to when a transaction will be completed; however, the Board is committed to dispose of the Group's Russian operations, which is why
the Board has determined that a sale is highly probable within the next 12 months and that, therefore, it is appropriate to adopt the held for
sale presentation for the Group's assets and liabilities in Russia.
From the point at which this classification was first applied, in June 2022, depreciation on these Russian assets ceased.
Notwithstanding that the Board has concluded that it considers a sale is highly probable, the evolving political and regulatory environment
means that there can be no certainty as to whether a transaction will be concluded successfully. If the Board had concluded that a sale
was not highly probable, the assets and liabilities would have continued to be consolidated on a line-by-line basis, as they had been
historically, rather than being presented separately as assets held for sale and liabilities directly associated with assets held for sale.
As the assets and liabilities of the Russian operations have been classified as held for sale, the Board has to separately consider whether
these businesses also represent a discontinued operation, being a component of an entity that either has been disposed of or is classified
as held for sale, and which represents a separate major line of business or geographical area of operations, is part of a single coordinated
plan to dispose of a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a
view to resale. In 2021, prior to the decision to classify as discontinued operations, the Russian operations represented around 10% of
the Group's revenue by location of production and generated around 23% of the Group’s underlying EBITDA. Taking into account its
financial significance, the Board views the Russian operations as a distinct major geographical area of operations that, therefore, qualify for
classification as discontinued operations.
Hence, in accordance with IFRS 5, the Group has reported its Russian businesses as discontinued operations as at 31 December 2022 and
for the year then ended, with the comparative income statement and cash flow statement periods represented. Had the Board concluded
that the businesses were not discontinued operations, they would instead have continued to be reported as part of continuing operations.
Valuation of Russian assets
Effective 24 February 2022, when the war in Ukraine started, the Board performed an impairment trigger assessment in respect of its
Russian operations. Given the temporary deterioration of the Russian rouble and the sharp increase in interest rates, together with the
increased uncertainty relating to the operational and financial performance of its businesses due to sanctions imposed by international
governments and countermeasures implemented by the Russian state, the Board concluded that an impairment trigger existed and tested
its CGUs in Russia for impairment using value-in-use calculations in accordance with IAS 36, 'Impairment of Assets'.
The key assumptions reflected in the cash flow forecasts included sales volumes, sales prices and variable input cost assumptions derived
from a combination of economic and industry forecasts for individual product lines and the latest internal management projections
approved by the Board. The cash flow projections were prepared in Russian roubles and a post-tax discount rate of 15% (equivalent to a
pre-tax rate of 18%) was used for impairment testing.
Due to the increased uncertainty, no growth rate was assumed for the terminal value. At this time (at 24 February 2022), the carrying value
of the Russian CGUs totalled RUB 66 billion (€677 million, at an exchange rate of 97.47 Russian rouble versus euro). Due to the increased
level of uncertainty resulting from the war in Ukraine, the Board determined the recoverable amount of the CGUs based on three
probability-weighted scenarios. Aside from the base scenario derived from the then latest internal management projections, management
included a more optimistic and a pessimistic scenario in the calculation of the recoverable amount to address the uncertainty associated
with the cash flow forecasts. The impairment calculation is sensitive to changes in key assumptions, in particular in relation to cash flow
forecasts and the probability-weighting of scenarios. Sensitivity analyses were performed by increasing the weighting of the pessimistic
case and at the same time reducing the weighting of the optimistic case. At 24 February 2022, no impairment was identified.
Given, as described below, that in June the Board determined that the Russian assets satisfied the criteria to be classified as held for sale,
a further impairment test had to be performed. At this time (June 2022), the carrying value of the Russian CGUs totalled RUB 66 billion
(€1,079 million, at an exchange rate of 61.16 Russian rouble versus euro). This impairment test was again performed using three probability
weighted scenarios under a value-in-use calculation based on similar assumptions as described above for the test performed effective
24 February 2022. No impairment was identified.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 211
Upon classification as held for sale in June 2022, the Board also assessed the fair value less costs to sell of the businesses, as required by
IFRS 5 with no impairment identified.
At 31 December 2022, the fair value less costs to sell was reassessed. The Board has used a number of assumptions to estimate the fair
value less costs to sell as at 31 December 2022. While the Group agreed upon the sale of its Syktyvkar mill and its three Russian packaging
converting plants (as described above), there can be no certainty in this evolving political and regulatory environment as to when the
transaction will be completed.
In determining the fair value less costs to sell of the Russian CGUs, the Board has taken into account the sales prices agreed upon with
the buyers, the current status of and recent developments around the agreed transactions, the probability of government approval
and available market information. Despite the uncertainty inherent to the agreed sales, and in the absence of contrary correspondence
from the buyers and any government body, the Board has taken the view that the agreements signed with the buyers serve as the best
information to measure the fair value less costs to sell of the Syktyvkar mill and the packaging converting operations respectively. On that
basis, the Board concluded that no impairment of the Syktyvkar mill's assets was required as at 31 December 2022 and that an impairment
of €57 million was recognised in relation to the assets of the packaging converting operations.
If there was a change to the known fact pattern of the planned transactions in the future, the Board would need to reassess the
recoverability of the carrying value of the assets classified as held for sale as at 31 December 2022 based on that new fact pattern, and
if any impairment were subsequently identified it would be recognised in the consolidated income statement during the year ending
31 December 2023. The Board continues to actively monitor any actions or events that may impact the completion of the agreed
transactions, and hence the valuation of the Group's Russian CGUs.
Financial performance
The financial performance of the discontinued operations is set out below:
€ million
Total revenue
Internal revenue
External revenue
Operating expenses
EBITDA
Depreciation, amortisation and impairments2,3
Operating profit
Net finance costs4
Profit before tax
Related tax charge
Profit for the period from discontinued operations attributable to shareholders
Fair value gains arising from cash flow hedges of discontinued operations
Exchange differences on translation of discontinued operations
Remeasurements of retirement benefits plans of discontinued operations
Other comprehensive income from discontinued operations attributable
to shareholders
Total comprehensive income from discontinued operations attributable
to shareholders
2022
1,268
(90)
1,178
(688)
490
(86)
404
(46)
358
(92)
266
1
72
1
74
20211
961
(212)
749
(403)
346
(64)
282
(11)
271
(58)
213
—
42
1
43
340
256
Notes:
1 The Group’s operations in Russia are presented as held for sale and classified as discontinued operations. Accordingly, the consolidated income statement and associated notes for the year ended
31 December 2021 were restated by the amounts included in this table, which are now classified as profit from discontinued operations in the consolidated income statement
2 On classification as held for sale, property, plant and equipment and intangible assets are no longer depreciated or amortised. Depreciation and amortisation for the year ended 31 December 2022
covers the period until the classification as held for sale in June 2022
3 Includes impairment of assets of €57 million (2021: €nil), as explained in the commentary above
4 Includes foreign exchange loss of €36 million relating to an unpaid dividend, as explained in the commentary above (2021: €nil)
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 212
26 Russian operations (discontinued operations) continued
€ million
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents of discontinued operations
2022
350
(68)
(10)
272
2021
286
(91)
(13)
182
The assets and liabilities were reclassified as held for sale in June 2022. The table below shows the carrying values of these assets and
liabilities as at 31 December 2022.
€ million
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets held for sale
Borrowings
Trade and other payables
Current tax liabilities
Provisions
Net retirement benefits liability
Deferred tax liabilities
Total liabilities directly associated with assets classified as held for sale
The cumulative foreign exchange loss recognised in other comprehensive income in relation to the discontinued operations as at
31 December 2022 was €405 million and will be recycled through the consolidated income statement on the date of disposal.
2022
805
34
4
1
131
87
320
1,382
(102)
(131)
(14)
(14)
(12)
(52)
(325)
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 213
27 Disposal of businesses
To 31 December 2022
On 30 June 2022, the Group sold its Personal Care Components business (PCC) to Nitto Denko Corporation for an enterprise value of
€615 million. The sale enables the Group to simplify its portfolio and focus on its strategic priority to grow in sustainable packaging. PCC,
previously part of the Group’s Engineered Materials operating segment, manufactured a range of components for personal and home care
products needed in everyday life such as diapers, feminine care, adult incontinence and wipes.
The Board has applied judgement as to whether the disposal of the PCC business needs to be reported as a discontinued operation in
accordance with IFRS 5. The PCC business did not represent a major line of business of the Group due to its small size relative to the rest
of the Group and its limited integration with the Group’s packaging and paper value chain. The Board concluded that the PCC business
was not a discontinued operation, and therefore it is reported as part of the continuing operations.
€ million
Proceeds from the disposal of business per the consolidated statement of cash flows
Cash and cash equivalents disposed
Consideration in cash
Carrying amount of net assets disposed
Gain on reclassification of foreign currency translation reserve
Related transaction costs1
Gain on disposal of business, net of related transaction costs
Tax charge
Gain on disposal of business, net of related tax
Note:
1 Excludes transaction costs of €6 million recognised in the prior year, which were not treated as a special item
The carrying amounts of assets and liabilities as at the date of sale (30 June 2022) were:
€ million
Property, plant and equipment
Goodwill
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Provisions
Deferred tax liabilities
Other liabilities
Total liabilities
Carrying amount of net assets disposed
2022
642
15
657
(412)
4
(7)
242
(5)
237
2022
174
141
2
58
88
15
478
(49)
(4)
(8)
(5)
(66)
412
The carrying amount of net assets disposed includes an appropriate allocation of the goodwill previously allocated to the Engineered
Materials operating segment between the value of the PCC business that was disposed of and the retained functional paper and
films business.
To 31 December 2021
There were no disposals during the year ended 31 December 2021.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
214
28 Consolidated cash flow analysis
(a) Reconciliation of profit before tax to cash generated from operations
€ million
Profit before tax from continuing operations
Depreciation and amortisation
Impairment of property, plant and equipment (not included in special items)
Share-based payments
Net cash flow effect of current and prior year special items
Net finance costs
Net monetary gain arising from hyperinflationary economies
Net profit from joint ventures
Decrease in provisions
Decrease in net retirement benefits
Net movement in working capital
Increase in inventories
Increase in operating receivables
Increase in operating payables
Fair value (gains)/losses on forestry assets
Felling costs
Gain on disposal of property, plant and equipment
Proceeds from insurance reimbursements for property damages
Other adjustments
Cash generated from continuing operations
(b) Cash and cash equivalents
€ million
Cash and cash equivalents per consolidated statement of financial position
Bank overdrafts included in short-term borrowings
Cash and cash equivalents held by continuing operations (see note 28c)
Cash and cash equivalents classified as assets held for sale (see note 26)
Cash and cash equivalents per consolidated statement of cash flows
2022
1,560
394
11
11
(253)
143
(17)
(1)
(1)
(12)
(419)
(254)
(472)
307
(169)
78
(2)
(8)
(23)
Restated
2021
712
375
—
9
(22)
83
—
(6)
(7)
(15)
(195)
(232)
(310)
347
7
62
—
—
(2)
1,292
1,001
2022
1,067
(6)
1,061
320
1,381
2021
473
(18)
455
—
455
The cash and cash equivalents of €1,067 million (2021: €473 million) include money market funds of €595 million (2021: €340 million)
valued at fair value through profit and loss, with the remaining balance carried at amortised cost.
The fair value of cash and cash equivalents carried at amortised cost approximate their carrying values presented.
The Group operates in certain countries where the existence of exchange controls or access to hard currency may restrict the use of
certain cash balances outside of those countries. In particular, the cash and cash equivalents classified as assets held for sale as per the
table above are held by the Group’s Russian discontinued operations and are subject to regulatory restrictions and, therefore, may not
be available for general use by the other entities within the Group. These restrictions are not expected to have any material effect on the
Group’s ability to meet its ongoing obligations.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued Cash and
cash
equivalents
Current
financial asset
investments
Total assets
Debt due
within 1 year1
Debt due
after 1 year
Debt-related
derivative
financial
instruments
215
Total debt
Total net
debt
(2,140)
(1,791)
(20)
(35)
2
(17)
(2)
(25)
—
18
88
(35)
2
(17)
(2)
(25)
—
17
(2,219)
(1,763)
167
(50)
5
(2)
1,075
(50)
5
(2)
(80)
—
22
4
12
—
—
—
—
(25)
—
—
(9)
82
—
—
—
(80)
(80)
—
—
—
4
(2,069)
(7)
(2,175)
(793)
349
108
—
—
—
—
—
—
(1)
456
908
—
—
—
—
—
18
1,382
(94)
27
(9)
1
(16)
—
—
(39)
24
(2,050)
(59)
(26)
1
(1)
(2)
—
39
(6)
(106)
(2,104)
32
(15)
1
—
—
(21)
10
(99)
53
(35)
4
(2)
—
21
(6)
(c) Movement in net debt
The Group’s net debt position is as follows:
€ million
At 1 January 2021
Cash flow2,3
Additions to lease liabilities
Disposal of lease liabilities
Acquired through business
combinations
Movement in unamortised loan
costs
Net movement in fair value of
derivative financial instruments
Reclassification
Currency movements
At 31 December 2021
Cash flow2,3
Additions to lease liabilities
Disposal of lease liabilities
Movement in unamortised loan
costs
Net movement in fair value of
derivative financial instruments
Reclassification
Currency movements
At 31 December 2022
Reclassification to assets held
for sale and liabilities directly
associated with assets held for
sale (see note 26)
Net debt as at 31 December 2022
348
108
—
—
—
—
—
—
(1)
455
908
—
—
—
—
—
18
1,381
(320)
1,061
1
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
1
—
1
(320)
1,062
3
(96)
99
(1,970)
—
(7)
102
(218)
(2,073)
(1,011)
Notes:
1 Excludes bank overdrafts of €6 million as at 31 December 2022 (31 December 2021: €18 million; 1 January 2021: €34 million), which are included in cash and cash equivalents (see note 28b)
2 Includes cash and cash equivalents acquired net of overdrafts through business combinations of €nil (2021: €3 million) (see note 25)
3 Includes cash and cash equivalents disposed of €15 million (2021: €nil) (see note 27)
The Group expensed interest of €140 million relating to its bank overdrafts, loans and lease liabilities (2021 (restated): €81 million).
Included in this expense is €67 million (2021 (restated): €11 million) related to forward exchange rates on derivative contracts and interest
paid on borrowings of €60 million (2021 (restated): €67 million). The settlement of debt-related derivatives shown as cash flow in the table
above is recognised as net cash outflow from debt-related derivative financial instruments in the consolidated statement of cash flows.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
216
29 Capital commitments
Capital expenditure contracted for at the end of the financial year but not recognised as liabilities is as follows:
€ million
Intangible assets
Property, plant and equipment
Total capital commitments
2022
2
441
443
Restated
2021
1
273
274
30 Contingent liabilities
Contingent liabilities comprise aggregate amounts as at 31 December 2022 of €11 million (2021: €8 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 consolidated
statement of financial position for either year presented.
The Group is subject to certain legal proceedings, claims, complaints and investigations arising out of the ordinary course of business.
Legal proceedings may include, but are not limited to, alleged breach of contract and alleged breach of environmental, competition,
securities and safety and health laws. The Group may not be fully, or partly, insured in respect of such risks. The Group cannot predict the
outcome of individual legal actions or claims or complaints or investigations. The Group may settle litigation or regulatory proceedings
prior to a final judgment or determination of liability. The Group may do so to avoid the cost, management efforts or negative business,
regulatory or reputational consequences of continuing to contest liability, even when it considers it has valid defences to liability. The Board
considers that no material loss to the Group is expected to result from these legal proceedings, claims, complaints and investigations.
Provision is made for all liabilities that are expected to materialise through legal and tax claims against the Group.
31 Financial instruments
The Group’s trading and financing activities expose it to various financial risks that, if left unmanaged, could adversely impact current or
future earnings. Although not necessarily mutually exclusive, these financial risks are categorised separately according to their different
generic risk characteristics and include market risk (foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group
manages all of these financial risks in order to minimise their potential adverse impact on the Group’s financial performance.
The principles, practices and procedures governing the Group-wide financial risk management process have been approved by the Board
and are overseen by the Executive Committee. In turn, the Executive Committee delegates authority to a central treasury function (Group
treasury) for the practical implementation of the financial risk management process across the Group and for ensuring that the Group’s
entities adhere to specified financial risk management policies. Group treasury continually reassesses and reports on the financial risk
environment, identifying, evaluating and hedging financial risks by entering into derivative contracts with counterparties where appropriate.
The Group does not take speculative positions on derivative contracts.
(a) Financial instruments by category
2022/€ million
Financial assets
Trade and other receivables2
Financial asset investments
Derivative financial instruments
Cash and cash equivalents
Total
2021/€ million
Financial assets
Trade and other receivables2
Financial asset investments
Derivative financial instruments
Cash and cash equivalents
Total
Notes:
1 Fair value hierarchy level is disclosed for assets measured at fair value
2 Excludes tax, social security and prepayments
Fair value
hierarchy1
At amortised
cost
At fair value
through profit
or loss
Level 2
Level 2
Level 1
1,244
14
—
472
1,730
—
12
3
595
610
Fair value
hierarchy1
At amortised
cost
At fair value
through profit
or loss
Level 2
Level 2
Level 1
1,168
14
—
133
1,315
—
19
4
340
363
Total
1,244
26
3
1,067
2,340
Total
1,168
33
4
473
1,678
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
The fair values of financial assets investments represent the published prices of the securities concerned.
2022/€ million
Financial liabilities
Borrowings – bonds
Borrowings – loans and overdrafts
Borrowings – lease liabilities2
Trade and other payables3
Derivative financial instruments
Total
2021/€ million
Financial liabilities
Borrowings – bonds
Borrowings – loans and overdrafts
Borrowings – lease liabilities2
Trade and other payables3
Derivative financial instruments
Total
Fair value
hierarchy1
At amortised
cost
At fair value
through profit
or loss
At fair value
through OCI
(1,843)
(101)
(128)
(1,440)
—
(3,512)
—
—
—
—
(10)
(10)
—
—
—
—
—
—
Level 2
Fair value
hierarchy1
At amortised
cost
At fair value
through profit
or loss
At fair value
through OCI
(1,840)
(184)
(204)
(1,358)
—
(3,586)
—
—
—
—
(17)
(17)
—
—
—
—
(1)
(1)
Level 2
217
Total
(1,843)
(101)
(128)
(1,440)
(10)
(3,522)
Total
(1,840)
(184)
(204)
(1,358)
(18)
(3,604)
Notes:
1 Fair value hierarchy level is disclosed for liabilities measured at fair value
2 Lease liabilities are financial instruments outside of scope of IFRS 9 and are accounted for under IFRS 16 (see note 35)
3 Excludes tax, social security and deferred income
(b) Fair value measurement
There have been no transfers of assets or liabilities between levels of the fair value hierarchy during the year.
Except as detailed below, the carrying values of financial instruments at amortised cost as presented in the consolidated financial
statements approximate their fair values.
€ million
Financial liabilities
Borrowings
Carrying amount
2022
2021
Fair value
2022
2021
2,072
2,228
1,956
2,353
The fair values of the Eurobonds represent level 1 fair values and are estimated with reference to the last price quoted in the secondary
market. The fair values of all other borrowings represent level 3 fair values and 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.
(c) Financial risk management
Market risk
The Group’s activities expose it primarily to foreign exchange and interest rate risk. Both risks are actively monitored on a regular basis
and managed through the use of foreign exchange contracts and interest rate swaps as appropriate. Although the Group’s cash flows are
exposed to movements in key input and output prices, such movements represent the commercial rather than financial risks inherent to
the Group.
Foreign exchange risk
The Group operates globally and is exposed to foreign exchange risk in the normal course of its business. Multiple currency exposures
arise from commercial transactions denominated in foreign currencies, recognised financial assets and liabilities (monetary items)
denominated in foreign currencies and translational exposure on net investments in non-euro operations.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
218
31 Financial instruments continued
Foreign exchange contracts
The Group’s Treasury policy requires subsidiaries to actively manage foreign currency transactional exposures against their functional
currencies by entering into foreign exchange contracts. For segmental reporting purposes, each subsidiary enters into, and accounts
for, foreign exchange contracts with Group treasury or with counterparties that are external to the Group, whichever is more
commercially appropriate.
Only material balance sheet exposures and highly probable forecast capital expenditure transactions are hedged.
Foreign currency sensitivity analysis
Foreign exchange risk sensitivity analysis has been performed on the foreign currency exposures inherent in the Group’s financial assets
and financial liabilities at the reporting dates presented, net of related foreign exchange contracts. The sensitivity analysis provides an
indication of the impact on the Group’s reported earnings of reasonably possible changes in the currency exposures embedded within the
functional currency environments that the Group operates in. In addition, an indication is provided of how reasonably possible changes in
foreign exchange rates might impact on the Group’s equity, as a result of fair value adjustments to foreign exchange contracts designated
as cash flow hedges. Reasonably possible changes are based on an analysis of historical currency volatility, together with any relevant
assumptions regarding near-term future volatility.
Net monetary foreign currency exposures by functional currency zone for continuing operations
Net monetary foreign currency exposures – assets/(liabilities)1
€ million
Functional currency zones2
Euro3
South African rand
Egyptian pound
Czech koruna
Polish zloty
Russian rouble
Swedish krona
Turkish lira
Other
2022
EUR
—
1
(56)
(14)
2
—
(3)
—
(28)
Other
135
(6)
(4)
(2)
2
—
—
1
7
2021
EUR
Other
—
12
—
11
(13)
(1)
5
(1)
(46)
(6)
2
—
—
—
(4)
(1)
(4)
5
Notes:
1 Presented in euro, the presentation currency of the Group
2 Net monetary exposures represent financial assets less financial liabilities denominated in currencies other than the applicable functional currency, adjusted for the effects of foreign exchange risk
hedging, excluding cash flow hedging of non-monetary assets and liabilities
3 Included in the other net monetary exposure is €148 million worth of Russian rouble dividend receivable. See note 26 for the rouble dividend declared
Functional to foreign currency net monetary exposure sensitivity
Functional to foreign currency net monetary exposure sensitivity is €1 million or less for each major currency assuming a 5% appreciation
and/or depreciation of functional currency, with the exception of euro which has an exposure sensitivity of €7 million and Egyptian pound
of €3 million.
Interest rate risk
The Group holds cash and cash equivalents, which earn interest at a variable rate, and has variable and fixed rate debt in issue.
Consequently, the Group is exposed to interest rate risk. Although the Group has fixed rate debt in issue, the Group’s Accounting policy
stipulates that all borrowings be held at amortised cost. As a result, the carrying value of fixed rate debt is not sensitive to changes in credit
conditions in the relevant debt markets, and there is, therefore, no exposure to fair value interest rate risk.
Management of cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term highly liquid investments which have a
maturity of three months or less from the date of acquisition. Centralised cash pooling arrangements are in place, which ensure that cash
is utilised most efficiently for the ongoing working capital needs of the Group’s operating units and, in addition, to ensure that the Group
earns the most advantageous rates of interest available.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
219
Management of variable rate debt
The Group has multiple variable rate debt facilities, of which the most significant is the Syndicated Revolving Credit Facility (see note 20).
The Group’s cash and cash equivalents act as a natural hedge to movements in the relevant interbank lending rates on its variable rate
debt, subject to any interest rate differentials that exist between the Group’s corporate saving and lending rates.
Net variable rate debt sensitivity analysis
The net variable rate exposure represents variable rate debt less the future cash outflows swapped from variable to fixed via interest
rate swap instruments and cash and cash equivalents. Reasonably possible changes in interest rates have been applied to the net
variable rate exposure, denominated by currency, in order to provide an indication of the possible impact on the Group’s consolidated
income statement.
Interest rate risk sensitivities on variable rate debt
€ million
Total borrowings
Less:
Fixed rate borrowings
Lease liabilities
Cash and cash equivalents
Net variable rate debt and exposure
Interest rate risk exposures
2022
2021
EUR
1,936
(1,842)
(64)
(887)
(857)
Other
136
(37)
(64)
(180)
(145)
Total
2,072
(1,879)
(128)
(1,067)
(1,002)
EUR
2,029
(1,838)
(66)
(357)
(232)
Other
199
(17)
(138)
(116)
(72)
Total
2,228
(1,855)
(204)
(473)
(304)
Included in other is net variable exposure to various currencies, the most significant of which are Turkish lira and South African rand (2021:
Turkish lira and Russian rouble).
The potential impact on the Group’s consolidated equity resulting from the application of a 50 basis point increase to the variable interest
rate exposure would be a profit of €5 million and vice versa for a 50 basis point reduction.
In addition to the above, the Group swaps euro debt into other currencies through the foreign exchange market using foreign exchange
contracts, which has the effect of exposing the Group to the interest rates of these currencies. The currencies swapped into/(out of) and
the amounts as at 31 December were as follows:
€ million
Short-dated contracts with tenures of less than 12 months
South African rand
Czech koruna
Polish zloty
Russian rouble
Swedish krona
US dollar
Thai baht
Other
Total swapped against the euro
2022
2021
191
304
303
—
(18)
101
70
148
1,099
154
266
202
(37)
64
117
59
141
966
Credit risk
The Group’s principal credit risk is the risk of customers defaulting on sales invoices raised. The Group’s exposure to the credit risk
inherent in its trade receivables and the associated risk management techniques that the Group deploys in order to mitigate this risk are
discussed in note 17. Additionally, the Group has credit risk on the investment of cash with certain financial institutions. The Group treasury
manages the risk on these investments within approved credit limits.
Several Group entities have also issued certain financial guarantees to external counterparties in order to achieve competitive funding rates
for specific debt agreements entered into by other Group entities. None of these financial guarantees contractually obligates the Group to
pay more than the recognised financial liabilities in the entities concerned. As a result, these financial guarantee contracts have no bearing
on the credit risk profile of the Group as a whole.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 220
31 Financial instruments continued
Liquidity risk
Liquidity risk is the risk that the Group could experience difficulties in meeting its commitments to creditors as financial liabilities fall due
for payment. The Group manages its liquidity risk by using reasonable and retrospectively assessed assumptions to forecast the future
cash-generative capabilities and working capital requirements of the businesses it operates and by maintaining sufficient reserves,
committed borrowing facilities and other credit lines as appropriate.
The following table shows the amounts available to draw down on the Group’s committed loan facilities:
€ million
Expiry date
Within one year
One to two years
Two to five years
Above five years
Total committed facilities available (see note 20)
2022
3
—
750
4
757
2021
47
6
750
—
803
Forecast liquidity represents the Group’s expected cash inflows, generated principally from sales made to customers, less the Group’s
expected cash outflows, related principally to the payment of employees, supplier payments and the repayment of borrowings plus the
payment of any interest accruing thereon. The matching of these cash inflows and outflows rests on the expected ageing profiles of the
underlying assets and liabilities.
Short-term financial assets and financial liabilities are represented primarily by the Group’s trade receivables and trade payables.
The matching of the cash flows that result from trade receivables and trade payables typically takes place over a period of three to four
months from recognition in the consolidated statement of financial position and is managed to ensure the ongoing operating liquidity of
the Group.
Financing cash outflows may be longer-term in nature. The Group does not hold long-term financial assets to match against these
commitments, but is significantly invested in long-term non-financial assets which generate the sustainable future cash inflows, net of
future capital expenditure requirements, needed to service and repay the Group’s borrowings.
(d) Derivative financial instruments
At 31 December 2022, the Group recognised total derivative assets of €3 million (2021: €4 million) and derivative liabilities of €10 million
(2021: €18 million). The net liability of €7 million (2021: net liability of €14 million) will mature within one year.
The notional amount of €1,710 million (2021: €1,619 million) is the aggregate face value of all derivatives outstanding at the reporting
date. They do not indicate the contractual future cash flows of the derivative instruments held or their current fair value and, therefore,
do not indicate the Group’s exposure to credit or market risks. Of the €1,710 million (2021: €1,619 million) aggregate notional amount,
€1,698 million (2021: €1,608 million) relates primarily to the economic hedging of foreign exchange exposures on short-term inter-
company funding balances, which are fully eliminated on consolidation.
Derivative financial instruments are subject to International Swaps and Derivatives Association (ISDA) master netting agreements.
The amounts are not offset in the consolidated statement of financial position. The amount subject to an enforceable master netting
arrangement or similar agreement that is not netted off is €3 million (2021: €3 million).
Hedging
Cash flow hedges
The Group designates certain derivative financial instruments as cash flow hedges. The fair value gains/(losses) are reclassified from
the cash flow hedge reserve to the consolidated income statement in the period when the hedged transaction affects profit and loss.
For non-current non-financial assets, these gains/(losses) are included in the carrying value of the asset and depreciated over the same
useful life as the cost of the asset.
The Group designates both the spot and forward elements of forward foreign exchange contracts to hedge its currency risk and applies
a hedge ratio of 1:1. The Group determines the existence of an economic relationship between the hedging instrument and hedged item
based on the currency, amount and timing of their respective cash flows. The Group’s policy is for critical terms of the forward exchange
contracts to align with the hedged items and uses the same method to determine hedge ineffectiveness.
Fair value gains of €1 million (2021: gains of €2 million) were reclassified from the cash flow hedge reserve to property, plant and
equipment during the current year. There were fair value losses of €4 million (2021: €nil) due to ineffectiveness recognised in the profit
from discontinued operations in the consolidated income statement arising on cash flow hedges.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 221
32 Related party transactions
The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service transactions with
associated undertakings in which the Group has a material interest. The related party transactions entered into by the Group have been
contracted on an arm's-length basis.
Transactions between Mondi plc and its subsidiaries, which are related parties, and transactions between its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
€ million
Sales to related parties
Purchases from related parties
Trade and other receivables from related parties
Trade and other payables due to related parties
Loans receivable from related parties
Joint ventures
2022
8
715
1
112
10
2021
6
238
2
50
9
The increase in purchases from related parties and trade and other payables from related parties is mainly caused by wood purchases from
a joint venture in Poland and wood price increases in 2022. None of the joint ventures are assessed as being individually material to the
Group. For details of the aggregate amount of share of profit in joint ventures see note 15.
Compensation for the Board and key management
In accordance with IAS 24, ‘Related Party Disclosures’, key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, directly or indirectly, and includes directors (both executive and non-
executive) of Mondi plc. The Board and those members of the Group Executive Committee who are not directors comprise the key
management personnel of the Group. The remuneration of the directors is disclosed in the Remuneration report.
€ million
Salaries and short-term employee benefits
Non-executive directors
Defined contribution plan payments
Social security costs
Share-based payments
Total
2022
8.4
1.2
0.6
1.1
5.6
16.9
2021
8.3
1.2
0.6
0.8
4.3
15.2
Details of the transactions between the Group and its pension and post-retirement medical plans are disclosed in note 24.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 222
33 Group companies
Composition of the Group
The subsidiaries of the Group as at 31 December 2022 are set out in note 11 of the Mondi plc parent company financial statements. All of
these interests are consolidated within the Group’s financial statements.
The Group has no material joint ventures or associates.
Refer to Mondi’s global footprint on pages 8-9 of the overview to the Integrated report for more information on the places of operation.
A list of subsidiaries taking advantage of an exemption from audit under Section 479A of the Companies Act 2006 is disclosed in note 9
of the Mondi plc parent company financial statements.
Details of non-wholly-owned subsidiaries
€ million, unless otherwise stated
Mondi SCP, a.s. and its subsidiaries
Individually immaterial subsidiaries with
non-controlling interests
Total
Proportion of ownership interests
and voting rights held by
non-controlling interests (%)
2022
49
2021
49
Profit attributable to
non-controlling interests
Equity attributable to
non-controlling interests
2022
41
32
73
2021
(1)
18
17
2022
349
111
460
2021
306
85
391
Summarised financial information on the Group’s material non-wholly-owned subsidiaries is as follows:
Mondi SCP, a.s. and its subsidiaries
€ million
Statement of financial position
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Equity attributable to owners of the company
Equity attributable to non-controlling interests
Income statement and statement of comprehensive income
Revenue
Operating costs (including taxation)
Profit/(loss) for the year
Attributable to owners of the company
Attributable to non-controlling interests
Total comprehensive income/(expense) for the year
Attributable to owners of the company
Attributable to non-controlling interests
Statement of cash flows
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash (outflow)/inflow from financing activities
Net cash inflow
2022
2021
753
409
(313)
(129)
720
371
349
1,232
(1,148)
84
43
41
87
44
43
115
(31)
(23)
61
788
276
(264)
(167)
633
327
306
874
(877)
(3)
(2)
(1)
(3)
(2)
(1)
86
(79)
34
41
The summarised financial information represents amounts before intra-group eliminations. The subsidiary's registered office as set out in
note 11 of the Mondi plc parent company financial statements is also its principal place of business.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued
223
34 Events occurring after 31 December 2022
Aside from the final dividend proposed for 2022 (see note 9), there has been the following material reportable event since
31 December 2022:
— On 12 January 2023, the Group completed the acquisition of the Duino mill near Trieste (Italy) from the Burgo Group for a total
consideration of €40 million. The mill operated one paper machine producing lightweight coated mechanical paper. Mondi plans to
convert this paper machine to produce around 420,000 tonnes per annum of high-quality recycled containerboard for an estimated
investment of around €200 million.
35 Accounting policies
Basis of consolidation
The consolidated financial statements incorporate the revenues, expenses, assets, liabilities, equity and cash flows of Mondi plc and its
subsidiaries (the Group), and the Group’s share of associates and joint ventures drawn up to 31 December each year. All intra-group
balances and transactions are eliminated.
A subsidiary is an entity over which the Group has control. Control is evident where the Group is exposed to, or has rights to, variable
returns from its involvement with that entity and has the ability to affect those returns through its power over that entity.
The results of subsidiaries acquired or disposed of during the years presented are included in the consolidated income statement from the
effective date of acquiring control or up to the effective date of disposal.
Non-controlling interests are measured, at initial recognition, as the non-controlling proportion of the fair values of the assets and liabilities
recognised at acquisition.
After initial recognition, non-controlling interests are measured as the aggregate of the value at initial recognition and their subsequent
proportionate share of profits and losses less any distributions made.
Changes in the Group’s interests in subsidiaries that do not result in a change in control are accounted for as equity transactions.
Any resulting difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration
payable or receivable is recognised directly in equity and attributed to the shareholders.
Foreign currency transactions and translation
Foreign currency transactions
Foreign currency transactions are translated into the functional currency of the entity that has undertaken the transaction, using the
exchange rates ruling on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in
foreign currencies are translated at the rates prevailing on the reporting date. Gains and losses arising on translation are included in the
consolidated income statement and are classified as either operating or financing consistent with the nature of the monetary item giving
rise to them.
Translation of non-euro operations
The Group’s results are presented in euro, the currency in which most of its business is conducted. On consolidation, the assets and
liabilities of the Group’s non-euro operations are translated into the presentation currency of the Group at exchange rates prevailing
on the reporting date. Income and expense items, except those which arise in countries with hyperinflationary economies (see note 1),
are translated at the average exchange rates for the month in which they occur, where these approximate the rates on the dates of the
underlying transactions. Exchange differences, if any, are recognised directly in other comprehensive income, and accumulated in the
Group’s currency translation adjustment reserve in equity. Such translation differences are reclassified to profit or loss only on disposal or
partial disposal of the non-euro operation.
Fair value measurement
Assets and liabilities that are measured at fair value, or where the fair value of financial instruments has been disclosed in notes to the
consolidated financial statements, are based on the following fair value measurement hierarchy:
— Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
— Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices)
— Level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
The assets measured at fair value on level 3 of the fair value measurement hierarchy are the Group’s forestry assets, as set out in note 14.
The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are determined
using generally accepted valuation techniques. These valuation techniques maximise the use of observable market data and rely as little as
possible on Group-specific estimates.
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35 Accounting policies continued
Specific valuation methodologies used to value financial instruments include the following:
— The fair values of foreign exchange contracts are calculated as the present value of expected future cash flows based on observable
yield curves and exchange rates.
— The fair values of the Group’s commodity price derivatives are calculated as the present value of expected future cash flows based on
observable market data.
— Other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments.
Segmental reporting (note 2)
The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the Executive Committee, the
chief operating decision-making body. The operating segments are managed based on the nature of the underlying products produced
by those businesses and comprise three distinct segments. The number of reportable segments is the same as the number of identified
operating segments.
Measurement of operating segment revenues, profit or loss, assets and non-current non-financial assets
Each of the operating segments derives its income from the sale of manufactured products.
The operating segment measures adhere to the recognition and measurement criteria presented in the Group’s accounting policies
and are presented on an underlying basis, excluding special items. The Group has presented certain non-IFRS measures (Alternative
Performance Measures), as defined on pages 242-248, by segment to supplement the user’s understanding. All intra-group transactions
are conducted on an arm’s-length basis.
Revenue from contracts with customers (note 2)
Sale of goods
Revenue is recognised from the sale of goods and is measured at the amount of the transaction price received in exchange for transferring
goods. The transaction price is the expected consideration to be received, to the extent that it is highly probable that there will not be
a significant reversal of revenue in future, after deducting discounts, volume rebates, value added tax and other sales taxes. When the
period of time between delivery of goods and subsequent payment by the customer is less than one year, no adjustment for a financing
component is made.
Control of the goods is passed when title and insurance risk have passed to the customer, which is typically when the goods have been
delivered to a contractually agreed location.
The incremental costs of obtaining a contract are recognised as an expense when the period of amortisation over which the costs would
have been recognised is one year or less. If not, these costs are capitalised and amortised on a basis consistent with the transfer of goods
to the customer to which the asset relates.
Transport revenue
Transport revenue is considered distinct when the Group provides transport services after the point in time when control of goods has
passed to the customer. Such revenue is recognised over time.
Other income
Sale of green energy and CO2e credits (note 16)
Income generated from the sale of green energy and CO2e credits issued under international trading schemes are accounted for as
government grants and are measured at the consideration received in exchange for transferring such credits. The income is recorded
within other net operating expenses in the consolidated income statement when ownership rights pass to the buyer. Any unsold green
energy credits are recorded in inventory at cost, which is often at nil value.
Investment income (note 6)
Interest income, which is derived from cash and cash equivalents and other interest-bearing financial assets, is accrued on a time
proportion basis, by reference to the principal outstanding and at the applicable effective interest rate.
Taxation (note 7)
The tax expense represents the sum of the current tax charge and the deferred tax charge.
Current tax
The current tax charge is based on taxable profit for the year. The Group’s asset/liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the reporting date. The Group is regularly subject to routine tax audits. Provision is made
based on the tax laws in the relevant country and the expected outcomes of any negotiations or settlements. Current tax is presented as a
special item if the corresponding taxable income/expense is accounted for as a special item.
The Group is subject to corporate taxes in a number of jurisdictions and a degree of estimation and judgement is required in determining
the appropriate tax provision for transactions where the tax treatment is uncertain. In these circumstances, the Group recognises
provisions for taxes based on information available where the anticipated liability is both probable and estimable.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 225
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amount of assets and
liabilities in the Group’s consolidated financial statements and the corresponding tax bases used in the computation of taxable profits
and is accounted for using the balance sheet liability method. Deferred tax is presented as a special item if the corresponding temporary
difference arises from a special item.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition,
other than in a business combination, of other assets and liabilities in a transaction that affects neither the tax profit nor accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date. In considering their recoverability, the Group assesses the
likelihood of the assets being recoverable within a reasonably foreseeable timeframe, typically a three-year period consistent with the
period applied to the Group’s viability assessment. The carrying amount is reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the asset to be recovered. Similarly, it is increased to the extent that it becomes
probable that sufficient taxable profit will be available in the future for all or part of the deferred tax asset to be recovered.
Deferred tax is calculated at the tax rates that have been enacted or substantively enacted and which are expected to apply in the year
when the liability is settled or the asset is realised. Deferred tax is charged or credited to the consolidated income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same tax authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
The Group applies the initial recognition exemption model to account for any investment tax credits. Deferred tax is not recognised for
temporary differences relating to investment tax credits due to the availability of the initial recognition exemption.
Earnings per share (EPS) (note 8)
Basic EPS
The basic EPS is calculated by dividing net profit attributable to ordinary shareholders by the weighted average number of Mondi plc
shares in issue during the year, net of own shares.
Diluted EPS
For diluted EPS, the weighted average number of Mondi plc ordinary shares in issue, net of own shares, is adjusted to assume conversion
of all dilutive potential ordinary shares. At present these only include share awards granted to employees. Potential or contingent share
issues are treated as dilutive when their conversion to shares would decrease EPS.
The weighted average number of ordinary shares in issue is the weighted number of shares in issue throughout the year and excludes own
shares held by employee benefit trusts.
EPS, if relevant, are presented for both continuing and discontinued operations, on the face of the consolidated income statement.
Non-current non-financial assets excluding goodwill, deferred tax and net retirement benefit assets
Property, plant and equipment (note 10)
Property, plant and equipment principally comprise land and buildings, plant and equipment, assets under construction and other.
Property, plant and equipment is stated at cost less accumulated depreciation and impairment. Land and assets under construction
are carried at cost less impairment. Cost includes site preparation, the purchase price of the equipment and directly attributable labour
and installation costs. Borrowing costs are capitalised on qualifying assets. The capitalisation of costs ceases when the asset is in the
location and condition necessary for it to be capable of commercial operation. Start-up and ongoing maintenance costs are recognised
immediately as an expense.
Depreciation is charged to the consolidated income statement so as to write off the cost of assets, other than freehold land and assets
under construction, over their estimated useful lives on a straight-line basis to their estimated residual values of nil or scrap value.
Residual values and useful lives are reviewed at least annually. Depreciation commences when the assets are ready for their intended
use. An adjustment is made to the estimated useful lives of assets where climate change is anticipated to have a material impact.
Estimated useful lives range from 3 years to 25 years for items of plant and equipment and other categories and up to a maximum of 40
years for buildings.
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35 Accounting policies continued
Leases (note 11)
To the extent that a right of control exists over an asset subject to a lease, a right-of-use asset, representing the Group’s right to use
the underlying leased asset, is recognised within property, plant and equipment in the consolidated statement of financial position.
A corresponding lease liability, representing the Group’s obligation to make lease payments, is recognised, depending on the maturity of
the underlying lease payments, within short-term borrowings or medium- and long-term borrowings in the consolidated statement of
financial position at the commencement of the lease.
The right-of-use asset is measured initially at cost and includes the amount of initial measurement of the lease liability, any initial
direct costs incurred, including advance lease payments, and an estimate of the dismantling, removal and restoration costs required in
terms of the lease. Depreciation is charged to the consolidated income statement so as to depreciate the right-of-use asset from the
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease term
shall include the period of an extension option where it is reasonably certain that the option will be exercised. Where the lease contains
a purchase option, the asset is written off over the useful life of the asset when it is reasonably certain that the purchase option will
be exercised.
The lease liability is measured at the present value of the future lease payments, including variable lease payments that depend on an index
and the exercise price of purchase options where it is reasonably certain that the option will be exercised, discounted using the interest
rate implicit in the lease, if readily determinable. If the implicit interest rate cannot be readily determined, the lessee’s incremental borrowing
rate is used. Finance charges are recognised within finance costs in the consolidated income statement over the period of the lease.
Lease expenses for leases with a duration of one year or less and low-value assets are not recognised in the consolidated statement
of financial position, and are charged to the consolidated income statement when incurred. Low-value assets are determined based on
quantitative criteria.
Intangible assets and R&D expenditure (note 13)
Intangible assets are measured initially at purchase consideration and are amortised on a straight-line basis over their estimated useful
lives. Estimated useful lives vary between 3 years and 10 years and are reviewed at least annually.
Research expenditure is expensed in the year in which it is incurred. Development costs are capitalised when the completion of the asset
is both commercially and technically feasible and are amortised on a systematic basis over the economic life of the related development.
Development costs are recognised immediately as an expense if they do not qualify for capitalisation.
Impairment of property, plant and equipment and intangible assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine
whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is
estimated. If the recoverable amount of an asset, or cash-generating unit (CGU) to which the asset relates, is less than its carrying amount,
the carrying amount of the asset, or CGU, is reduced to its recoverable amount and an impairment recognised as an expense.
The recoverable amount of the asset, or CGU, is the higher of its fair value less costs to dispose and its value in use. In assessing value
in use, the estimated future cash flows generated by the asset are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows
have not been adjusted. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the smallest CGU to which the asset belongs.
Where the underlying circumstances change such that a previously recognised impairment subsequently reverses, the carrying amount
of the asset, or CGU, is increased to the revised estimate of its recoverable amount. Such a reversal is limited to the carrying amount
that would have been determined (taking into account depreciation or amortisation in the intervening period) had no impairment been
recognised for the asset, or CGU, in prior years. A reversal of an impairment is recognised in the consolidated income statement.
Agriculture – owned forestry assets (note 14)
Owned forestry assets are biological assets measured at fair value less costs to sell, calculated by applying the expected selling price,
less costs to harvest and deliver, to the estimated volume of timber on hand at each reporting date. The fair value less costs to sell is
determined using a market-based approach. The estimated volume of timber on hand is determined based on the maturity profile of the
area under afforestation, the species, the geographic location, climate and other environmental considerations and excludes future growth.
The product of these is then adjusted for risks associated with forestry assets.
Changes in fair value are recognised in the consolidated income statement within other net operating expenses. At point of harvest, the
carrying value of forestry assets is transferred to inventory and recorded as a felling cost reduction to the fair value of forestry assets.
Directly attributable costs incurred during the year of biological growth and investments in standing timber are capitalised and presented
within cash flows from investing activities.
Investments in joint ventures (note 15)
A joint venture is an entity in which the Group holds a long-term interest with contractually agreed sharing of control over the strategic,
financial and operating decisions with one or more other venturers. Typically, the Group owns between 20% and 50% of the voting equity
of its joint ventures. Investments in joint ventures are accounted for using the equity method, after initially being recognised at cost in the
consolidated statement of financial position.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 227
Non-current assets held for sale and discontinued operations (note 26)
Non-current assets, and disposal groups, are classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such assets (or disposal groups), and its sale must be highly
probable. Non-current assets, and disposal groups, classified as held for sale are measured at the lower of carrying amount and fair value
less costs to sell from the date on which these conditions are met. The deferred tax assets, assets arising from employee benefits and
financial assets are specifically exempt from this requirement.
Any resulting impairment is reported through the consolidated income statement. From the time of classification as held for sale, the
assets are no longer depreciated or amortised. Interest and other expenses attributable to the liabilities of a disposal group classified as
held for sale continue to be recognised. Comparative amounts in the consolidated statement of financial position are not adjusted.
Discontinued operations are either a separate major line of business or geographical area of operations that have been disposed of or are
part of a single coordinated plan for disposal which satisfy the held for sale criteria. Once an operation has been identified as discontinued,
its net profit or loss, other comprehensive income or expense and cash flows are presented separately in the consolidated income
statement, the consolidated statement of comprehensive income and the consolidated statement of cash flows, including related notes
to these statements, and comparative information is restated. Non-current assets classified as held for sale and the assets of a disposal
group classified as held for sale are presented separately from the other assets in the consolidated statement of financial position.
The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated statement of
financial position. The Group’s assets and liabilities related to comparative periods are not separated between continuing and discontinued
operations in the consolidated statement of financial position.
Business combinations (note 25)
Identifiable net assets
The identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values on the acquisition date. Assets and liabilities which cannot be measured reliably are recorded at
provisional fair values, which are finalised within 12 months of the acquisition date. Any non-controlling interest in the acquiree is recorded
at the non-controlling interest’s proportionate share of the acquired net assets.
Cost of a business combination
The cost of a business combination includes the fair value of assets provided, liabilities incurred or assumed and any equity instruments
issued by a Group entity, in exchange for control of an acquiree. The directly attributable costs associated with a business combination are
expensed as incurred and recognised within other net operating expenses into the consolidated income statement.
Goodwill (note 12)
Any excess of the consideration of the acquisition over the fair values of the identifiable net assets acquired is attributed to goodwill.
Goodwill is subsequently measured at cost less any impairment.
Impairment of goodwill
Goodwill acquired through business combinations is allocated to the group of CGUs that is expected to benefit from the synergies of the
combination and represents the lowest level at which goodwill is monitored for internal management purposes. The recoverable amount of
the group of CGUs to which goodwill has been allocated is tested for impairment annually in the fourth quarter of each financial year and
when events or changes in circumstances indicate that it may be impaired.
The recoverable amount of a group of CGUs is determined based on the higher of value in use or its fair value less costs of disposal.
Value-in-use calculations use cash flow projections based on financial budgets covering a three-year period that are based on the latest
forecasts for revenue and costs as approved by the Board. Projected revenues and costs are determined taking into consideration relevant
industry forecasts for individual product lines, climate change, internal management projections, historical performance and announced
industry capacity changes.
Cash flow projections beyond three years are based on internal management projections. Growth rates in the countries in which the
Group operates are determined with reference to published gross domestic product information, and for specific product lines are
determined with reference to published industry studies.
The discount rate is derived from the Group’s weighted average cost of capital using published market data and published borrowing rates
and adjusted for country risk and tax.
Any impairment is recognised in the consolidated income statement. Impairments of goodwill are not subsequently reversed.
Current non-financial assets
Inventories (note 16)
Inventories are valued at the lower of cost and net realisable value. Cost is determined on the first-in, first-out (FIFO) or weighted average
cost basis, as appropriate. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location and condition. Net realisable value is defined as the selling price less any
estimated costs to sell.
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35 Accounting policies continued
Equity instruments
Own shares (note 22)
The purchase by any Group entity of Mondi plc’s equity instruments results in the recognition of own shares. The consideration paid or
payable is deducted from equity. Where own shares are subsequently sold, reissued or otherwise disposed of, any consideration received
or receivable is included in equity attributable to the shareholders of Mondi plc, net of any directly attributable incremental transaction
costs and the related tax effects.
Dividend payments (note 9)
The dividend distributions to Mondi plc’s ordinary shareholders are recognised as a liability when the dividends are declared and approved.
Final dividends are accrued when approved by Mondi plc’s ordinary shareholders at its Annual General Meeting and interim dividends are
recognised when paid.
Share-based payments (note 23)
The Group operates a number of equity-settled, share-based compensation schemes. The fair value of the employee services received
in exchange for the grant of share awards is recognised concurrently as an expense and an adjustment to equity. The total amount to
be expensed over the vesting period is determined by reference to the fair value of the share awards granted, as adjusted for market
performance conditions and non-market vesting conditions. Vesting conditions are included in assumptions about the number of awards
that are expected to vest. At each reporting date, the Group revises its estimates of the number of share awards that are expected to
vest as a result of changes in non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the
consolidated income statement, with a corresponding adjustment to equity.
Financial instruments (note 31)
Financial assets and financial liabilities are recognised in the Group’s consolidated statement of financial position when the Group becomes
party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the
consolidated income statement.
Cash and cash equivalents (note 28b)
Cash and cash equivalents comprise cash on hand, money market funds, demand deposits and short-term, highly liquid investments of a
maturity of three months or less from the date of acquisition that are readily convertible to a known amount of cash and that are subject to
an insignificant risk of changes in value. The money market funds are held at fair value through profit and loss, with the remaining balance
of cash and cash equivalents carried at amortised cost. Bank overdrafts are shown within short-term borrowings in current liabilities in the
consolidated statement of financial position. Cash and cash equivalents presented in the consolidated statement of cash flows are net of
overdrafts and include cash and cash equivalents classified as assets held for sale.
Trade receivables (note 17)
Trade receivables are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest rate
method, less an allowance for impairment.
Impairment of trade receivables (note 17)
A simplified lifetime expected credit loss (ECL) model is used to assess trade receivables for impairment. ECL is the present value of
all cash shortfalls over the expected life of a trade receivable. Expected credit losses are based on historical loss experience on trade
receivables, adjusted to reflect information about current economic conditions and reasonable and supportable forecasts of future
economic conditions. At the date of initial recognition, the credit losses expected to arise over the lifetime of a trade receivable are
recognised as an impairment.
Trade payables (note 18)
Trade payables are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest rate method.
Borrowings (note 21)
Interest-bearing loans and overdrafts are initially recognised at fair value, net of direct transaction costs. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds, net of transaction costs, and the redemption value is recognised in the
consolidated income statement over the term of the borrowings using the effective interest rate method.
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued 229
Borrowing costs (note 6)
Interest on borrowings directly relating to the acquisition, construction or production of qualifying assets is capitalised until such time as
the assets are substantially ready for their intended use. Where funds have been borrowed specifically to finance a project, the amount
capitalised represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings,
the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the
construction period.
All other borrowing costs are recognised in the consolidated income statement in the period in which they are incurred.
Derivative financial instruments and hedge accounting (note 31d)
The Group enters into forward and swap contracts in order to hedge its exposure to foreign exchange, interest rate and commodity
price risks.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and subsequently measured at fair value in
the consolidated statement of financial position within financial instruments, and are classified as current or non-current depending on the
maturity of the derivative.
Changes in the fair value of derivative financial instruments that are not formally designated in hedge relationships are recognised
immediately in the consolidated income statement and are classified within operating profit or net finance costs, depending on the type of
risk to which the derivative relates.
Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated as hedges of future cash flows
are recognised directly in other comprehensive income and accumulated in equity. The gain or loss relating to the ineffective portion is
recognised immediately in the consolidated income statement. If the cash flow hedge of a forecast transaction results in the recognition
of a non-financial asset, then, at the time the asset is recognised, the associated gains or losses on the derivative that had previously been
recognised in the Group’s cash flow hedge reserve in equity are included in the initial measurement of the asset. For hedges that do not
result in the recognition of a non-financial asset, amounts deferred in the Group’s cash flow hedge reserve in equity are recognised in the
consolidated income statement in the same period in which the hedged item affects profit or loss on a proportionate basis.
Hedge accounting is discontinued when the hedge relationship is revoked or the hedging instrument expires, is sold, terminated, exercised
or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss deferred in equity remains in equity and is recognised
in the consolidated income statement when the forecast transaction is ultimately recognised. If a hedge transaction is no longer expected
to occur, the net cumulative gain or loss deferred in equity is included immediately in the consolidated income statement.
Retirement benefits (note 24)
The Group operates defined benefit pension plans and defined contribution pension plans for the majority of its employees as well as
post-retirement medical plans.
Defined contribution plans
For defined contribution plans, the amount charged to the consolidated income statement is the contributions paid or payable during the
financial year.
Defined benefit pension plans and post-retirement medical plans
For defined benefit pension and post-retirement medical plans, actuarial valuations are performed at each financial year end using the
projected unit credit method. The average discount rate for the plans’ liabilities is based on investment-grade-rated corporate bonds
or similar government bonds of a suitable duration and currency. Plans’ assets are measured using market values at the end of the
financial year.
The net retirement benefits liability recognised in the consolidated statement of financial position represents the present value of the
defined benefit liability as reduced by the fair value of any plan assets.
Any increase in the present value of plan liabilities expected to arise from employee service during the year is charged to personnel costs
as service costs. Past service costs resulting from plan amendments or curtailments and gains or losses on settlements are charged to
personnel costs. A net interest expense or net interest income is calculated by applying the discount rate, on a per plan basis, to the net
defined benefit liability or asset and recognised in the consolidated income statement within finance costs.
Remeasurements comprising actuarial gains and losses and the return on plan assets (after recognising the net finance charge)
are charged or credited to equity in other comprehensive income, net of deferred tax, in the financial year in which they occur.
Remeasurements recorded in other comprehensive income are not recycled to the consolidated income statement, but those amounts
recognised in other comprehensive income may be transferred within equity.
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35 Accounting policies continued
Provisions (note 19)
Provisions are recognised when the Group has a present obligation as a result of a past event, which it is probable it will be required to
settle. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date,
and are discounted to present value using country-specific discount rates for periods matching the duration of the underlying liability
where the effect of discounting is material.
Hyperinflation accounting (note 1)
Effective from 1 January 2022, the Group has applied IAS 29, 'Financial Reporting in Hyperinflationary Economies', to its subsidiaries in
Türkiye, whose functional currencies have experienced a cumulative inflation rate of more than 100% over the past three years. Assets,
liabilities, the financial position and results of non-euro operations in hyperinflationary economies are translated to euro at the exchange
rates prevailing on the reporting date. The exchange differences are recognised directly in other comprehensive income or expense, and
accumulated in the Group’s cumulative translation adjustment reserve in equity. Such translation differences are reclassified to profit or loss
only on disposal or partial disposal of the non-euro operation.
Prior to translating the financial statements of the Turkish operations, the non-monetary assets and liabilities stated at historical cost
are restated to account for changes in the general purchasing power of the local currencies based on the consumer price index (TÜFE,
2003=100) published by the Turkish Statistical Institute (TURKSTAT). On the date of first-time application, being 1 January 2022, the
adjustment of the carrying amounts of non-monetary assets and liabilities of €41 million was determined at the closing exchange rate and
allocated between retained earnings, other reserves and non-controlling interests in equity as presented in the consolidated statement
of changes in equity. This included €54 million recognised in the cumulative translation adjustment reserve (see note 22), in addition to
the remaining exchange differences arising on consolidation. The allocation of the opening balance adjustment is consistent with how the
current period impacts are reported. The subsequent gains or losses resulting from the restatement of non-monetary assets and liabilities
are recorded in the consolidated income statement as net monetary gain arising from hyperinflationary economies. Comparative amounts
presented in euro are not restated for subsequent changes in the price level or exchange rates. The results of the Turkish operations are
restated to the index level at the end of the period, with hyperinflationary gains and losses being reported in net monetary gain arising
from hyperinflationary economies.
The Group also operates a paper bags plant in Lebanon, which became a hyperinflationary economy in September 2020. IAS 29 has not
been applied to this subsidiary, as the impact from hyperinflation accounting is considered immaterial.
New accounting policies, early adoption and future requirements
Amendments to published Standards effective during 2022
The following amendments to Standards have been adopted for the financial year beginning on 1 January 2022, and have had no
significant impact on the Group’s results:
— Annual improvements to IFRS Standards 2018-2020 cycle
— Amendments to IAS 16 – Property, Plant and Equipment – Proceeds before Intended Use
— Amendments to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts – Cost of Fulfilling a Contract
— Amendments to IFRS 3 – Business Combinations – References to the Conceptual Framework
Amendments to published Standards effective for the financial year beginning on 1 January 2023
The following amendments to Standards will be effective for the financial year beginning on 1 January 2023 and were adopted by the UK
Endorsement Board in December 2022. The amendments are not expected to have a significant impact on the Group’s results:
— Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates
— Amendments to IAS 1 – Presentation of Financial Statements and IFRS Practice Statement 2 – Disclosure of Accounting Policies
— Amendments to IAS 12 – Income Taxes – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Mondi Group Integrated report and financial statements 2022Notes to the consolidated financial statementsfor the year ended 31 December 2022 continued Mondi plc parent company balance sheet
as at 31 December 2022
€ million
Fixed assets
Tangible assets
Shares in group undertakings
Current assets
Debtors: due within one year
Current liabilities
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Provisions for liabilities
Net assets
Capital and reserves
Called-up share capital
Profit and loss account
Merger reserve
Capital redemption reserve
Share-based payments reserve
Total shareholders’ funds
231
Notes
2022
2021
5
6
7
8
8
3
3,604
4
3,604
606
371
(10)
596
4,203
(4)
(1)
(9)
362
3,970
(4)
(1)
4,198
3,965
97
3,421
637
29
14
97
3,189
637
29
13
4,198
3,965
Mondi plc reported a profit of €550 million (2021: profit of €710 million) for the year ended 31 December 2022. The balance sheet and
statement of changes in equity of Mondi plc and related notes 1 to 11 were approved by the Board and authorised for issue on 22 February
2023 and were signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi plc company registered number: 6209386
Mondi plc parent company statement of changes in equity
for the year ended 31 December 2022
€ million
At 1 January 2021
Total comprehensive income for the year
Dividends
Mondi share schemes’ charge
Issue of shares under employee share
schemes
Purchases of own shares
At 31 December 2021
Total comprehensive income for the year
Dividends
Mondi share schemes’ charge
Issue of shares under employee share
schemes
Purchases of own shares
At 31 December 2022
Called-up
share capital
Profit and loss
account
97
—
—
—
—
—
97
—
—
—
—
—
2,775
710
(298)
—
9
(7)
3,189
550
(321)
—
10
(7)
Merger
reserve
637
Capital
redemption
reserve
29
—
—
—
—
—
—
—
—
—
—
637
29
—
—
—
—
—
—
—
—
—
—
97
3,421
637
29
Share-based
payments reserve
13
—
—
9
(9)
—
13
—
—
11
(10)
—
14
Total
equity
3,551
710
(298)
9
—
(7)
3,965
550
(321)
11
—
(7)
4,198
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
232
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2022
1 Accounting policies
Basis of preparation
Mondi plc meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting
Council. Accordingly, the financial statements have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced
Disclosure Framework’ (FRS 101), as issued by the Financial Reporting Council and the Companies Act 2006.
As permitted by FRS 101, Mondi plc has taken advantage of the disclosure exemptions available under that standard in relation to
share-based payments, financial instruments, capital management, presentation of comparative information in respect of certain items,
presentation of a cash flow statement, standards not yet effective, impairment of assets and related party transactions.
Where required, equivalent disclosures are given in the consolidated Group financial statements of Mondi plc, which are publicly available.
The results, assets and liabilities of Mondi plc are included in the publicly available consolidated Group financial statements.
Mondi plc has made use of the exemption from presenting a profit and loss account, in accordance with Section 408 of the Companies
Act 2006.
The financial statements have been prepared on a going concern basis. The assessment of going concern is disclosed in the Strategic
report as part of the viability statement under the heading Going concern on page 83, which is incorporated by reference into these
financial statements.
The financial statements are prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration
given in exchange for the assets. The principal accounting policies adopted are described below. They have all been applied consistently
throughout the year and the preceding year.
Principal accounting policies
The principal accounting policies applied by Mondi plc are the same as those presented in notes 1 and 35 to the Group’s consolidated
financial statements, to the extent that the Group’s transactions and balances are applicable to the company financial statements.
Principally, the accounting policies which are not directly relevant to the Mondi plc parent company financial statements are those relating
to consolidation accounting and the recognition and subsequent measurement of goodwill.
The accounting policy, which is additional to those applied by the Group, is stated as follows:
Shares in group undertakings
Shares in group undertakings are stated at cost, less, where appropriate, provisions for impairment.
Impairment reviews are performed when there is an indicator that the carrying value of the shares in group undertakings could exceed
their recoverable amounts based on their value in use or fair value less costs to dispose. Value in use is calculated by discounting future
expected cash flows. These calculations use cash flow projections based on Board-approved budgets and forecasts which reflect
management’s current experience and future expectations of the markets in which the Group undertaking operates.
Costs incremental and directly attributable to the acquisition of investments are capitalised.
Critical accounting judgements and significant accounting estimates
The preparation of the financial statements of Mondi plc includes the use of estimates and assumptions. Although the estimates used are
based on management’s best information about current circumstances and future events and actions, actual results may differ from those
estimates. No critical accounting judgements or significant accounting estimates were identified.
2 Auditors' remuneration and employee information
Disclosure of the audit fees payable to the auditors for the audit of Mondi plc’s financial statements is set out in note 4 of the
Group’s consolidated financial statements.
Mondi plc had 27 employees during the year (2021: 27).
3 Share-based payments
The share schemes and the underlying assumptions used to estimate the associated fair value charge are set out in note 23 of the
Group’s consolidated financial statements.
4 Deferred tax
No deferred tax asset is recognised on gross temporary differences of €15 million (2021: €17 million) relating to share-based payment
arrangements. Mondi plc has tax losses of €198 million (2021: €176 million) in respect of which no deferred tax asset has been recognised
due to the low probability of future taxable profit streams or gains against which these could be utilised. Although Mondi plc receives
dividend income from its subsidiaries, this dividend income is exempt from corporation tax.
5 Tangible assets
Mondi plc entered into an office building lease agreement for a total term of 10 years from 2 August 2021 and recognised a right-of-use
asset of €3 million (2021: €4 million) accordingly. The lease may only be terminated by Mondi plc after 5 years. Mondi plc does not intend
to exercise the termination option, and thus it was not considered in the calculation of the right-of-use asset.
Mondi Group Integrated report and financial statements 2022 6 Shares in group undertakings
€ million
Unlisted
Shares at cost
Accumulated impairment
Total shares in group undertakings
233
2022
2021
3,721
(117)
3,604
3,721
(117)
3,604
The shares in group undertakings are in Mondi Investments Limited (incorporated in the UK), a wholly owned subsidiary which acts as
an investment holding company, and Mondi South Africa (Pty) Limited (incorporated in South Africa), a wholly owned subsidiary which
manages forestry operations and manufactures pulp, uncoated fine paper and containerboard.
7 Debtors: due within one year
Amounts held on deposit in a cash pool facility with a subsidiary of €600 million (2021: €369 million) are included in debtors: due within
one year. No provision on expected credit losses is recognised at 31 December 2022 (2021: €nil).
8 Capital and reserves
Full disclosure of the called-up share capital of Mondi plc is set out in note 22 of the Group’s consolidated financial statements.
The merger reserve was recognised in respect of the simplification of the dual-listed company structure in 2019.
9 Financial guarantees
Mondi plc has issued financial guarantees in respect of the UK pension schemes of its subsidiaries, obligations incurred in the ordinary
course of business and the borrowings of other Group undertakings. The likelihood of these financial guarantees being called is
considered to be remote, and therefore the estimated financial effect of issuance is €nil (2021: €nil). The fair value of these issued financial
guarantees is deemed to be immaterial.
€ million
Pension scheme guarantees
Guarantees of obligations of subsidiaries of Mondi plc
Incurred in the ordinary course of business
In favour of banks and bondholders (restated)1
At 31 December (restated)1
2022
79
4
3,037
3,120
2021
83
3
3,130
3,216
Note:
1 Guarantees of obligations of subsidiaries of Mondi plc in favour of banks and bondholders disclosed as at 31 December 2021 were restated from €2,998 million to €3,130 million due to an
administrative error
The following subsidiaries have taken advantage of an exemption from audit under Section 479A of the Companies Act 2006. As the
ultimate parent, Mondi plc has provided a statutory guarantee for any outstanding liabilities of those subsidiaries. All subsidiary
undertakings have been included in the consolidation of the Group.
— Mondi Packaging Limited (registered number: 01846191)
— Mondi Packaging UK Holdings Limited (registered number: 03714255)
— Mondi Scunthorpe Limited (registered number: 01446927)
Mondi plc is subject to certain legal proceedings, claims, complaints and investigations arising out of the ordinary course of business.
Legal proceedings may include, but are not limited to, alleged breach of contract and alleged breach of environmental, competition,
securities and safety and health laws. Mondi plc may not be insured fully, or at all, in respect of such risks. Mondi plc cannot predict the
outcome of individual legal actions or claims or complaints or investigations. Mondi plc may settle litigation or regulatory proceedings
prior to a final judgment or determination of liability. Mondi plc may do so to avoid the cost, management efforts or negative business,
regulatory or reputational consequences of continuing to contest liability, even when it considers it has valid defences to liability. The Board
considers that no material loss to Mondi plc is expected to result from these legal proceedings, claims, complaints and investigations.
Provision is made for all liabilities that are expected to materialise through legal and tax claims against Mondi plc.
10 Events occurring after 31 December 2022
Aside from the final dividend proposed for 2022, included in note 9 of the Group’s consolidated financial statements, there have been no
material reportable events since 31 December 2022.
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 234
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2022 continued
11 List of subsidiaries and associated undertakings and other significant holdings as at 31 December 2022
All shares are held indirectly through a subsidiary or associated undertaking except where noted. Except where stated, the shares held are
ordinary shares.
Company
Austria
Mondi AG
Registered office
Principal activities
% of
shares
held by
Group
Company
Bulgaria
Registered office
Principal activities
% of
shares
held by
Group
Marxergasse 4A, 1030
Vienna
Holding, Corporate
100.00
Mondi Stambolijski E.A.D 1 Zavodska Street,
Stambolijski 4210,
Plovdiv Region
Production,
Flexible Packaging
100.00
Mondi Coating Zeltweg
GmbH
Bahnhofstrasse 3,
8740 Zeltweg
Mondi Consumer
Packaging GmbH
Marxergasse 4A, 1030
Vienna
Production,
Flexible Packaging
Holding,
Flexible Packaging
100.00
Colombia
100.00
Mondi Cartagena SAS
Mondi Corrugated
Holding Österreich
GmbH
Marxergasse 4A, 1030
Vienna
Holding,
Corrugated Packaging
100.00
Mondi Corrugated
Services GmbH
Marxergasse 4A, 1030
Vienna
Service,
Corrugated Packaging
Mondi Engineered
Materials GmbH
Marxergasse 4A, 1030
Vienna
Holding,
Flexible Packaging
100.00
100.00
Côte d'Ivoire
Mondi Abidjan S.A.
Czech Republic
LT No CA-4 Zona Franca la
Candelaria, Sector Cospique,
Zona Industrial Mamonal,
Cartagena, Bolivar
Production,
Flexible Packaging
100.00
Zone Industrielle de
Yopougon 01, Abidjan,
BP 5676
Production,
Flexible Packaging
50.00
Mondi Neusiedler GmbH Theresienthalstrasse 50,
3363 Ulmerfeld-Hausmening
Production,
Uncoated Fine Paper
51.00
Wood & Paper a.s.1
c.p. 138, 66491 Hlína
70.00
Egypt
Mondi Finance Europe
GmbH
Marxergasse 4A, 1030
Vienna
Mondi FlexPack Trading
GmbH
Marxergasse 4A, 1030
Vienna
Mondi Frantschach
GmbH
Frantschach 5,
9413 St. Gertraud
Mondi Grünburg GmbH Steyrtalstrasse 5,
4594 Grünburg
Mondi Holdings Austria
GmbH
Marxergasse 4A, 1030
Vienna
Service, Corporate
100.00
Distribution,
Flexible Packaging
Production,
Flexible Packaging
Production,
Corrugated Packaging
100.00
100.00
100.00
Holding, Corporate
100.00
Mondi Industrial Bags
GmbH
Marxergasse 4A, 1030
Vienna
Holding,
Flexible Packaging
Mondi Korneuburg
GmbH
Erwin Schrödinger Strasse 2,
2100, Korneuburg
Production,
Flexible Packaging
100.00
100.00
Mondi Oman Holding
GmbH
Marxergasse 4A, 1030
Vienna
Mondi Paper Sack
Zeltweg GmbH
Bahnhofstrasse 3,
8740 Zeltweg
Mondi Paper Sales
GmbH
Marxergasse 4A, 1030
Vienna
Mondi Release Liner
Austria GmbH
Waidhofnerstrasse 11,
3331 Hilm
Mondi Styria GmbH
Bahnhofstrasse 3,
8740 Zeltweg
Mondi Uncoated Fine &
Kraft Paper GmbH
Marxergasse 4A, 1030
Vienna
Papierholz Austria
GmbH1
Frantschach 5,
9413 St. Gertraud
Ybbstaler Zellstoff GmbH Theresienthalstrasse 50,
3363 Ulmerfeld-Hausmening
Holding,
Flexible Packaging
Distribution,
Flexible Packaging
Distribution,
Corrugated Packaging,
Flexible Packaging,
Uncoated Fine Paper
Production,
Flexible Packaging
Production,
Flexible Packaging
Holding,
Corrugated Packaging,
Flexible Packaging,
Uncoated Fine Paper
Service,
Flexible Packaging
Production,
Uncoated Fine Paper
100.00
100.00
100.00
100.00
100.00
25.00
51.00
Belgium
Mondi Poperinge N.V.
Nijverheidslaan 11,
8970 Poperinge
Production,
Flexible Packaging
100.00
EURO WASTE a.s.
Litoměřická 272, 41108 Štětí Service,
100.00
Flexible Packaging
Labe Wood s.r.o.1
Litoměřická 272, 41108 Štětí Production,
24.99
Flexible Packaging
Mondi Bags Štětí a.s.
Litoměřická 272, 41108 Štětí Production,
100.00
Flexible Packaging
Mondi Bupak s.r.o.
Papírenská 41, 37052 České
Budějovice
Production,
Corrugated Packaging
100.00
Mondi Coating Štětí a.s.
Litoměřická 272, 41108 Štětí Production,
100.00
Flexible Packaging
Mondi Štětí a.s.
Litoměřická 272, 41108 Štětí Production,
100.00
Flexible Packaging
Mondi Štětí White Paper
s.r.o
Litoměřická 272, 41108 Štětí Production,
100.00
Flexible Packaging
Service,
Flexible Packaging
Mondi Cairo for
Packaging Material
S.A.E.
El-motawer El-turky (Polaris)
Plots No. 7, 6th of October,
Giza
Production,
Flexible Packaging
Suez Bags Company
(S.A.E.)
K30 Maadi, Ein Soukhna
Road, 1002 Cairo
Production,
Flexible Packaging
Finland
Harvestia Oy
Selluntie 142, 70420 Kuopio Service,
Corrugated Packaging
Mondi Finland Services
Oy
Selluntie 142, 70420 Kuopio Holding,
Corrugated Packaging
Mondi Powerflute Oy
Selluntie 142, 70420 Kuopio Production,
100.00
Corrugated Packaging
France
Mondi Gournay Sarl
5 rue Vernet, 75008 Paris
Mondi Lembacel SAS
11 rue de Reims,
51490 Bétheniville
Service,
Flexible Packaging
Production,
Flexible Packaging
Mondi Paper Sales
France Sarl
22 Avenue Pierre 1er de
Serbie, 75016 Paris
Distribution,
Corrugated Packaging
100.00
100.00
100.00
46.50
100.00
98.30
100.00
100.00
Mondi Group Integrated report and financial statements 2022 235
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Company
Germany
Registered office
Principal activities
% of
shares
held by
Group
Company
Italy
Mondi Bad Rappenau
GmbH
Wilhelm-Hauff-Strasse 41,
74906 Bad Rappenau
Production,
Corrugated Packaging
100.00
Mondi Gradisac S.r.l.
Mondi Consumer
Packaging International
GmbH
Wielandstrasse 2, 33790
Halle
Holding,
Flexible Packaging
100.00
Mondi Italia S.r.l.
Registered office
Principal activities
Via dell´Industria 11, 34072
Gradisca d´Isonzo, Gorizia
Production,
Flexible Packaging
Via Balilla 32, 24058 Romano
di Lombardia, Bergamo
Production,
Flexible Packaging
Mondi Eschenbach
GmbH
Am Stadtwald 14,
92676 Eschenbach
Mondi Estonteco GmbH Wielandstrasse 2, 33790
Halle
Production,
Corrugated Packaging
Dormant,
Corrugated Packaging
Mondi Halle GmbH
Wielandstrasse 2, 33790
Halle
Production,
Flexible Packaging
Mondi Hammelburg
GmbH
Thüringenstrasse 1-3,
97762 Hammelburg
Production,
Flexible Packaging
100.00
100.00
100.00
100.00
Mondi Holding
Deutschland GmbH
Wielandstrasse 2, 33790
Halle
Holding, Corporate
100.00
Mondi Inncoat GmbH
Mondi Jülich GmbH
Angererstrasse 25,
83064 Raubling
Rathausstrasse 29,
52428 Jülich
Production,
Flexible Packaging
Production,
Flexible Packaging
100.00
100.00
Mondi Padova S.r.l.
Via Mazzini 21, 35010 San
Pietro in Gu, Padua
Production,
Flexible Packaging
Mondi Paper Sales Italia
S.r.l.
Via A. Locatelli 2, 20124
Milano
Distribution,
Corrugated Packaging,
Flexible Packaging,
Uncoated Fine Paper
Mondi Silicart S.r.l.
Via Mazzini 21, 35010 San
Pietro in Gu, Padua
Dormant,
Flexible Packaging
Mondi Tolentino S.r.l.
Via Giovanni Falcone 1,
62029 Tolentino, Macerata
Production,
Flexible Packaging
NATRO TECH S.r.l.
Via Copernico snc, 24053
Brignano Gera d'Adda
Service,
Flexible Packaging
Powerflute Italia S.r.l. in
liquidazione
Via Giacomo Matteotti 2,
21013 Gallarate
Dormant,
Corrugated Packaging
Japan
Mondi Paper Sales
Deutschland GmbH
Oberbaumbrücke 1,
20457 Hamburg
Distribution,
Corrugated Packaging
100.00
Mondi Tokyo KK
7th floor 14-5, Akasaka
2-chrome, Minato-ku, Tokyo
Service,
Flexible Packaging
100.00
Mondi Sendenhorst
GmbH
Thüringenstrasse 1-3,
97762 Hammelburg
Distribution,
Flexible Packaging
100.00
Jordan
Jordan Paper Sacks
Co. Ltd.
Al Salt, Industrial Area, P.O.
Box 119, 19374, Ain Al Basha
Production,
Flexible Packaging
67.74
Mondi Trebsen GmbH
Erich-Hausmann-Strasse 1,
04687 Trebsen
Production,
Flexible Packaging
Mondi Wellpappe
Ansbach GmbH
Robert-Bosch-Strasse 3,
91522 Ansbach
Production,
Corrugated Packaging
100.00
100.00
wood2M GmbH1
Hauptstrasse 16, 07366
Rosenthal am Rennsteig
Service, Corporate
50.00
Greece
Mondi Thessaloniki A.E. Sindos Industrial Zone –
Block 18, 57022 Thessaloniki
Distribution,
Flexible Packaging
100.00
Hungary
Republic of Korea
Krauzen Co., Ltd.
Mondi KSP Co., Ltd.
Lebanon
Mondi Lebanon SAL
Mondi Bags Hungária
Kft.
Tünde u. 2, 4400
Nyíregyháza
Production,
Flexible Packaging
100.00
Mondi Békéscsaba Kft.
Tevan Andor u. 2, 5600
Békéscsaba
Production,
Flexible Packaging
100.00
Luxembourg
Mondi Packaging S.à r.l.
Mondi Szada Kft.
Vasút u. 13, 2111 Szada
Production,
Flexible Packaging
100.00
Mondi S.à r.l.
Iraq
Mondi Kaso Iraq
Industrial Bags Ltd.
Takya, Bazian, Sulaimaniyah
Production,
Flexible Packaging
34.55
Mondi Services S.à r.l.
Malaysia
Mondi Kuala Lumpur
Sdn. Bhd.
48-29, 439 Hongandaero,
Dongang-gu, Anyang-si,
Gyunggi-do
48-29, 439 Hongandaero,
Dongang-gu, Anyang-si,
Gyunggi-do
Service,
Flexible Packaging
Distribution,
Flexible Packaging
100.00
95.00
7th Floor, Bloc C, Kassis
Building, Antelias Highway,
Antelias
Production,
Flexible Packaging
66.00
1, rue Hildegard von Bingen,
1282
1, rue Hildegard von Bingen,
1282
1, rue Hildegard von Bingen,
1282
Holding, Corporate
100.00
Holding, Corporate
100.00
Holding, Corporate
100.00
Lot Nos. PT 5034 & 5036,
Jalan Teluk Datuk 28/40,
40000 Shah Alam, Selangor
Production,
Flexible Packaging
62.00
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 236
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2022 continued
11 List of subsidiaries and associated undertakings and other significant holdings as at 31 December 2022 continued
Registered office
Principal activities
% of
shares
held by
Group
Company
Poland
Registered office
Principal activities
Company
Mexico
Caja de Ahorro de
Personal de Mondi
Mexico Servicios A.C.
Mondi Mexico S. de R.L.
de C.V.
Av. San Nicolás No. 249,
Colonia Cuauhtémoc, San
Nicolás de los Garza, Nuevo
Léon, 66450
Av. San Nicolás No. 249,
Colonia Cuauhtémoc, San
Nicolás de los Garza, Nuevo
Léon, 66450
Morocco
Ensachage Moderne Sarl Km 16, Route d´El Jadida,
Mondi Tanger S.A.
Casablanca
Lot N 28 Zone D'exploitation
de la Zone Franche,
D.Exploitation de Tanger
Automobile Cite Dite Tac 2,
Tanger, Jouamaa Province
Fahsanjra
Service,
Flexible Packaging
100.00
Agromasa Sp. z o.o.
ul. Bydgoska 1, 86-100
Świecie
Service,
Corrugated Packaging
Production,
Flexible Packaging
100.00
Dormant,
Flexible Packaging
Production,
Flexible Packaging
80.64
100.00
Fredonia Investments
Sp. z o.o.
ul. Bydgoska 1, 86-100
Świecie
Service,
Corrugated Packaging
Mondi Bags Mielec Sp.
z o.o.
ul. Wojska Polskiego 12,
39-300 Mielec
Production,
Flexible Packaging
Mondi Bags Świecie Sp.
z o.o.
ul. Bydgoska 12, 86-100
Świecie
Production,
Flexible Packaging
Mondi BZWP Sp. z o.o.
ul. Zamenhofa 36, 57-500
Bystrzyca Kłodzka
Production,
Corrugated Packaging
Mondi Corrugated
Świecie Sp. z o.o.
ul. Tucholska 9, 86-100
Świecie
Production,
Corrugated Packaging
Mondi Dorohusk Sp.
z o.o.
ul. Swierkowa 8, 22-174
Brzezno
Production,
Corrugated Packaging
Mondi Krapkowice Sp.
z o.o.
ul. Opolska 103, 47-300,
Krapkowice
Production,
Flexible Packaging
Pap Sac Maghreb SA
Km 16, Route d´El Jadida,
Casablanca
Production,
Flexible Packaging
80.64
Mondi Poznań Sp. z o.o.
ul. Wyzwolenia 34/36,
62-070 Dopiewo
Production,
Flexible Packaging
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Netherlands
Mondi Coating B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Flexible Packaging
Mondi Consumer Bags
& Films B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Flexible Packaging
Mondi Consumer Bags
& Films Benelux B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Distribution,
Flexible Packaging
Mondi Corrugated B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Corrugated Packaging
Mondi Corrugated
Poland B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Corrugated Packaging
Mondi Heerlen B.V.
Imstenraderweg 15, 6422
PM Heerlen
Production,
Flexible Packaging
Mondi Industrial Bags
B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Flexible Packaging
Mondi International
Holdings B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Corrugated Packaging
Mondi Maastricht N.V.
Fort Willemweg 1, 6219 PA
Maastricht
Production,
Flexible Packaging
Mondi MENA B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Flexible Packaging
Mondi Packaging Paper
B.V.
Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Flexible Packaging
Mondi Paper Sales
Netherlands B.V.
Bruynvisweg 14, 1531 AZ
Wormer
Distribution,
Corrugated Packaging,
Flexible Packaging,
Uncoated Fine Paper
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
70.00
100.00
100.00
Mondi SCP Holdings B.V. Fort Willemweg 1, 6219 PA
Maastricht
Holding,
Uncoated Fine Paper
100.00
Rådmann Sirasvei 1,
1712 Grålum
Distribution,
Flexible Packaging
100.00
Norway
Mondi Moss AS
Oman
Mondi Oman LLC
Mondi Recykling Polska
Sp. z o.o.
ul. Bydgoska 1, 86-100
Świecie
Service,
Corrugated Packaging
Mondi Simet Sp. z o.o.
Grabonóg 77, 63-820 Piaski Production,
100.00
Corrugated Packaging
Mondi Solec Sp. z o.o.
Solec 143, 05-532 Baniocha Production,
100.00
Flexible Packaging
Mondi Świecie S.A.
ul. Bydgoska 1, 86-100
Świecie
Production,
Corrugated Packaging
Mondi Szczecin Sp. z o.o. ul. Sloneczna 20, 72-123
Kliniska Wielkie
Production,
Corrugated Packaging
Mondi Warszawa Sp.
z o.o.
ul. Tarczyńska 98, 96-320
Mszczonów
Production,
Corrugated Packaging
Mondi Wierzbica Sp.
z o.o.
Kolonia Rzecków 76,
26-680 Wierzbica
Production,
Flexible Packaging
PLWD Sp. z o.o.1
ul. Bydgoska 1, 86-100
Świecie
Service,
Corrugated Packaging
Świecie Rail Sp. z o.o.
ul. Bydgoska 1, 86-100
Świecie
Service,
Corrugated Packaging
Świecie Recykling Sp.
z o.o.
ul. Bydgoska 1/417, 86-100
Świecie
Service,
Corrugated Packaging
100.00
100.00
100.00
100.00
50.67
100.00
100.00
Romania
Mondi Bucharest S.R.L. Olympia Tower, 25-29,
Decebal Blvd, 3rd Floor
(Level 4), 030971 Bucharest
Distribution,
Flexible Packaging
100.00
Russia
LLC Mondi Aramil
LLC Mondi Lebedyan
25 Klubnaya Street, 62400
Aramil, Sverdlovskii Region
Production,
Discontinued
operations
Lva Tolstogo, Building 80,
Office 52, 399612 Lebedyan,
Lipetsk Region
Production,
Discontinued
operations
LLC Mondi Pereslavl
Mendeleeva sq. 2, Building
55, 152025 Pereslavl-Zalesski
Production,
Discontinued
operations
Distribution,
Discontinued
operations
LLC Mondi Syktyvkar
Energy Company
pr. Bumazhnikov 2, 167026
Syktyvkar, Komi Republic
Service, Discontinued
operations
OJSC Mondi Syktyvkar2 pr. Bumazhnikov 2, 167026
Syktyvkar, Komi Republic
Production,
Discontinued
operations
100.00
100.00
100.00
100.00
100.00
100.00
Rusayl Industrial Estate, Road
20, P.O. Box 20, 124, Muscat
Governorate, Rusayl
Production,
Flexible Packaging
49.00
LLC Mondi Sales CIS
1st Tverskaya-Yamskaya, 21,
123047, Moscow
Mondi Group Integrated report and financial statements 2022 237
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
Registered office
Principal activities
% of
shares
held by
Group
Company
Spain
Registered office
Principal activities
Severna 4 No.2, 15000 Šabac Production,
100.00
Flexible Packaging
Company
Serbia
Mondi Šabac d.o.o.
Šabac
Singapore
Mondi Bags Ibérica
S.L.U.
Autovía A-2, Km 582,
08630 Abrera
Mondi Ibersac S.L.U.
Calle La Perenal 4,
48840 Güeñes, Bizcaia
Mondi Sales Ibérica S.L. Calle Blasco Garay nº94 5D,
28003 Madrid
Sweden
26.01
Mondi Dynäs AB
87381 Väja
51.00
Mondi Örebro AB
Papersbruksallen 3A,
Box 926, 70130 Örebro
Production,
Flexible Packaging
Production,
Flexible Packaging
Distribution,
Flexible Packaging
Production,
Flexible Packaging
Production,
Flexible Packaging
Switzerland
Dipeco AG
Thailand
Mondi Bangkok
Company, Limited
Mondi Coating (Thailand)
Co. Ltd.
Bruehlstrasse 5,
4800 Zofingen
Distribution,
Flexible Packaging
100.00
789/10 Moo 9 Bang Pla Sub-
District, Bang Phli District,
Bangkok, Samut Prakan
Province
Nr 888/100-101 Soi
Yingcharoen Moo 19,
Bangplee-Tamru Road,
Bangpleeyai, Bangplee,
Samutprakam 10540
Production,
Flexible Packaging
100.00
Service,
Flexible Packaging
100.00
Mondi TSP Company
Limited
110, Moo 3, Nong Chumphon
Nuea, Khao Yoi District,
Petchaburi Province, 76140
Production,
Flexible Packaging
97.55
Trinidad and Tobago
TCL Packaging Ltd.3
Southern Main Road,
Claxton Bay
Dormant,
Flexible Packaging
20.00
51.00
25.50
51.00
51.00
33.66
51.00
50.00
100.00
100.00
Türkiye
Doğal Kağıt
Hammaddeleri Sanayi ve
Ticaret Limited Şirketi
Esentepe Mahallesi Harman
1 sk.Nida Kule Levent Ap.
No:7/9/54 Şişli, İstanbul
Service,
Corrugated Packaging
84.65
Mondi Istanbul Ambalaj
Limited Şti.
No. 12A Türkgücü OSB Mah.
Yilmaz Alpaslan Caddesi
Corlu, Tekirdag, 59870
Production,
Flexible Packaging
100.00
100.00
Production,
Flexible Packaging
Production,
Corrugated Packaging
84.65
Mondi Kale Nobel
Ambalaj Sanayi Ve
Ticaret A.Ş.
Mondi Turkey Oluklu
Mukavva Kağıt ve
Ambalaj Sanayi Anonim
Şirketi
Ukraine
Sevketiye Cobancesme
Kavsagi, A2 Blok, No.
229/230 Yeşilköy, Bakirköy/
Istanbul
Toki Mahallesi, Hasan Tahsin
Caddesi, No. 28, Tire, Izmir
35900
Mondi Packaging Bags
Ukraine LLC
Fabrychna Street 20,
Zhydachiv, Lviv Region, 81700
Production,
Flexible Packaging
100.00
Mondi Packaging Paper
Sales Asia Pte. Ltd.
77 Robinson Road, #13-00,
Robinson 77, Singapore,
068896
Distribution,
Flexible Packaging
100.00
Slovakia
East Paper, spol. s.r.o.1
Mondi SCP, a.s.
Rastislavova 98,
04346 Kosice
Tatranská cesta 3,
03417 Ružomberok
Service,
Corrugated Packaging
Production,
Corrugated Packaging,
Flexible Packaging,
Uncoated Fine Paper
Obaly SOLO, s.r.o
Tatranská cesta 3,
03417 Ružomberok
Production,
Uncoated Fine Paper
RECOPAP, s.r.o.1
Bratislavska 18, 90051 Zohor Service,
Slovpaper Collection
s.r.o.
Tatranská cesta 3,
03417 Ružomberok
Slovpaper Recycling s.r.o. Tatranská cesta 3,
03417 Ružomberok
SLOVWOOD
Ružomberok a.s.
Tatranská cesta 3,
03417 Ružomberok
STRÁŽNA SLUŽBA
VLA-STA s.r.o.
Tatranská cesta 3,
03417 Ružomberok
South Africa
Corrugated Packaging
Service,
Corrugated Packaging
Service,
Corrugated Packaging
Distribution,
Uncoated Fine Paper
Service,
Uncoated Fine Paper
Arctic Sun Trading 17
Proprietary Limited3
380 Old Howick Road,
Mondi House, Hilton, 3245
Distribution,
Uncoated Fine Paper
Bongani Development
Close Corporation
Merebank Mill, Travencore
Drive, Merebank, 4052
Dormant,
Uncoated Fine Paper
380 Old Howick Road,
Mondi House, Hilton, 3245
Service,
Uncoated Fine Paper
Mondi Forests Partners
Programme Proprietary
Limited
Mondi Sacherie
Moderne Holdings
Proprietary Limited
Merebank Mill, Travencore
Drive, Merebank, 4052
Holding,
Uncoated Fine Paper
100.00
Mondi Senegal Holdings
(Pty) Ltd
Merebank Mill, Travencore
Drive, Merebank, 4052
Mondi South Africa (Pty)
Limited4
Merebank Mill, Travencore
Drive, Merebank, 4052
Holding, Corporate
100.00
Production,
Corrugated Packaging,
Uncoated Fine Paper
100.00
Mondi Timber (Wood
Products) Proprietary
Limited
Merebank Mill, Travencore
Drive, Merebank, 4052
Holding,
Uncoated Fine Paper
100.00
Mondi Zimele Job Funds
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton, 3245
Service,
Uncoated Fine Paper
Mondi Zimele Proprietary
Limited
380 Old Howick Road,
Mondi House, Hilton, 3245
Service,
Uncoated Fine Paper
MZ Business Services
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton, 3245
In liquidation,
Uncoated Fine Paper
MZ Technical Services
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton, 3245
In liquidation,
Uncoated Fine Paper
Professional Starch
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton, 3245
In liquidation,
Uncoated Fine Paper
Siyaqhubeka Forests
Proprietary Limited
Merebank Mill, Travencore
Drive, Merebank, 4052
Service,
Uncoated Fine Paper
Zimshelf Eight
Investment Holdings
Proprietary Limited
4th Floor, No 3 Melrose
Boulevard, Melrose Arch,
2196
In liquidation,
Uncoated Fine Paper
100.00
100.00
100.00
56.00
100.00
51.00
100.00
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report 238
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2022 continued
11 List of subsidiaries and associated undertakings and other significant holdings as at 31 December 2022 continued
Registered office
Principal activities
% of
shares
held by
Group
Company
USA
Company
UK
Frantschach Holdings UK
Limited
Hypac Limited
Medway Packaging
Pension Trustee Limited
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Dormant,
Flexible Packaging
100.00
Mondi Bags USA, LLC
Mondi Jackson LLC
Dormant,
Corrugated Packaging
100.00
Service,
Flexible Packaging
Mondi Aberdeen Limited Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Distribution,
Flexible Packaging
Registered office
Principal activities
251 Little Falls Drive,
Wilmington DE 19808
251 Little Falls Drive,
Wilmington DE 19808
Production,
Flexible Packaging
Production,
Flexible Packaging
Mondi Minneapolis, Inc.
220 South Sixth Street, Suite
2200, Minneapolis 55402
Service,
Flexible Packaging
Mondi Romeoville LLC
Mondi Tekkote LLC
251 Little Falls Drive,
Wilmington DE 19808
251 Little Falls Drive,
Wilmington DE 19808
Production,
Flexible Packaging
Production,
Flexible Packaging
Mondi U.S. Holdings LLC 251 Little Falls Drive,
Holding, Corporate
100.00
Wilmington DE 19808
100.00
100.00
100.00
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
Mondi Consumer Goods
Packaging UK Ltd
Mondi Finance plc
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Dormant,
Flexible Packaging
Service, Corporate
100.00
Notes:
1 Joint venture
2 These companies have ordinary and preference shares
3 Associate
4 These companies are held directly
Mondi Holcombe Limited Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Dormant,
Corrugated Packaging
100.00
Mondi Investments
Limited4
Mondi Packaging (Delta)
Limited
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Holding, Corporate
100.00
Dormant,
Corrugated Packaging
100.00
Mondi Packaging Limited Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Dormant,
Corrugated Packaging
100.00
Mondi Packaging UK
Holdings Limited
Mondi Pension Trustee
Limited4
Mondi Scunthorpe
Limited2
Mondi Services (UK)
Limited
Powerflute Group
Holdings Limited
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY
Dormant,
Corrugated Packaging
100.00
Service, Corporate
100.00
Dormant,
Flexible Packaging
100.00
Service, Corporate
100.00
Dormant,
Corrugated Packaging
100.00
Mondi Group Integrated report and financial statements 2022
Production statistics
Continuing operations
Containerboard
Kraft paper
Uncoated fine paper
Pulp
Internal consumption
Market pulp
Corrugated solutions
Paper bags
Consumer flexibles
Functional paper and films
Exchange rates
versus euro
South African rand (ZAR)
Czech koruna (CZK)
Polish zloty (PLN)
Pound sterling (GBP)
Russian rouble (RUB)
Turkish lira (TRY)1
US dollar (USD)
239
Restated
2021
2,375
1,253
1,068
3,398
3,007
391
2,052
5,928
2,057
3,383
2021
18.06
24.86
4.60
0.84
85.30
15.23
1.13
000 tonnes
000 tonnes
000 tonnes
000 tonnes
000 tonnes
000 tonnes
million m2
million units
million m2
million m2
2022
2,383
1,309
913
3,566
3,103
463
1,937
5,994
2,039
3,279
Average
Closing
2022
17.21
24.57
4.69
0.85
73.94
17.41
1.05
2021
17.48
25.64
4.57
0.86
87.15
10.51
1.18
2022
18.10
24.12
4.68
0.89
78.43
19.96
1.07
Note:
1 Hyperinflation accounting was adopted effective from 1 January 2022 to report the Group’s operations in Türkiye (see notes 1 and 35)
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
240
Group financial record
Financial performance 2013–2022
Since June 2022, the Group’s operations in Russia have satisfied the criteria to be classified as held for sale and are reported as
discontinued operations as at 31 December 2022 and for the year then ended (see notes 26 and 35). Therefore, in accordance with IFRS 5,
'Non-current Assets Held for Sale and Discontinued Operations', income, expenses and cash flows for the years ended 2022 and 2021 are
presented on a continuing basis and exclude the results from the Russian discontinued operations. Profit and cash flow measures for the
years ended 2013 to 2020 were not restated in the tables below. As required by IFRS 5, the comparatives in the consolidated statement of
financial position were not restated.
Consolidated income statement
€ million, unless otherwise stated
Group revenue
Underlying EBITDA
Corrugated Packaging
Flexible Packaging (restated)1
Uncoated Fine Paper
Corporate
Personal Care Components
(divested) (restated)1
Underlying operating profit
Special items before tax
Net finance costs (excluding financing
special item)
Underlying earnings
Basic earnings
Basic underlying EPS (euro cents)
Basic EPS (euro cents)
Total ordinary dividend per share
paid and proposed (euro cents)2
2022
8,902
1,848
662
797
427
Restated
2021
6,974
1,157
543
567
55
2020
2019
2018
2017
2016
2015
2014
2013
6,663
1,353
518
557
266
7,268
1,658
583
589
444
7,481
1,764
707
495
516
7,096
1,482
477
480
464
6,662
1,366
408
419
481
6,819
1,325
427
400
448
6,402
1,126
381
353
349
6,476
1,068
341
332
359
(39)
(34)
(30)
(34)
(32)
(37)
(34)
(34)
(32)
(30)
1
1,443
242
(143)
949
1,186
195.6
244.5
26
782
7
(83)
534
543
110.1
112.0
42
925
(57)
76
78
98
1,223
1,318
1,029
(16)
(126)
(61)
92
981
(38)
84
957
(57)
75
767
(52)
66
699
(87)
(95)
(104)
627
582
129.3
120.0
829
812
171.1
167.6
(88)
916
824
189.1
170.1
(85)
(101)
(105)
(97)
(115)
721
668
148.9
137.9
667
638
137.8
131.8
647
600
133.7
124.0
519
471
107.3
97.4
460
386
95.0
79.8
70.00
65.00
60.00
57.03
76.00
62.00
57.00
52.00
42.00
36.00
Notes:
1 Following the completion of the sale of the PCC business, Flexible Packaging and Personal Care Components (divested) have been restated due to the reorganisation of the operating segments (see
note 2)
2 A special dividend of 100 euro cents was paid in 2018 in addition to the 2017 ordinary dividend
Significant ratios
Underlying EBITDA growth/(decline)
(%)
Underlying EBITDA margin (%)
Underlying operating profit margin (%)
ROCE (%)
Net debt to underlying EBITDA
(times)
Dividend cover (times)
PE Ratio
Mondi plc (LSE) – Share price at end
of year (GBP pence per share)
Mondi plc (JSE) – Share price at end
of year (ZAR per share)
Restated
2021
2022
2020
2019
2018
2017
2016
2015
2014
2013
59.7
20.8
16.2
23.7
0.5
2.8
6.5
—
(18.4)
(6.0)
16.6
11.2
13.9
1.5
2.4
20.3
13.9
15.2
1.3
2.2
22.8
16.8
19.8
1.3
3.0
14.1
14.8
12.2
19.0
23.6
17.6
23.6
1.3
2.5
9.6
8.5
20.9
14.5
19.3
1.0
2.4
3.1
20.5
14.7
20.3
1.0
2.4
17.7
19.4
14.0
20.5
1.1
2.6
5.4
17.6
12.0
17.2
1.4
2.6
15.2
16.5
10.8
15.3
1.5
2.6
14.6
14.2
13.5
12.6
13.2
1,410
1,826
1,720
1,773
1,634
1,931
1,666
1,334
1,050
1,046
291
395
343
326
304
319
279
309
190
181
Market capitalisation (€ million)
7,738 10,555
9,342 10,165
8,901 10,523
9,457
8,803
6,563
6,081
Mondi Group Integrated report and financial statements 2022
241
Significant cash flows
€ million
Cash generated from continuing
operations
Working capital cash flows
Income tax paid
Capital expenditure cash outflows
Interest paid
Ordinary dividends paid to
shareholders1
Restated
2021
2022
2020
2019
2018
2017
2016
2015
2014
2013
1,292
1,001
1,485
1,635
1,654
1,363
1,401
1,279
1,033
1,036
(419)
(196)
(508)
(60)
(195)
(138)
(481)
(67)
125
(168)
(630)
(82)
35
(248)
(757)
(96)
(117)
(248)
(709)
(73)
(122)
(151)
(611)
(97)
68
(173)
(465)
(82)
9
(160)
(595)
(93)
(87)
(106)
(562)
(125)
(27)
(126)
(405)
(124)
(321)
(298)
(237)
(396)
(309)
(273)
(274)
(209)
(193)
(138)
Note:
1 A special dividend of €484 million was paid in 2018 in addition to the 2017 ordinary dividend
Consolidated statement of financial position
€ million
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
Property, plant and equipment
4,167
4,870
4,641
4,800
4,340
4,128
3,788
3,554
3,432
3,428
Goodwill
Working capital
Other assets1
Other liabilities2
Net assets excluding net debt
Equity
Non-controlling interests in equity
Net debt3
Capital employed
769
1,282
2,034
926
988
558
923
739
557
948
952
620
942
972
540
698
899
530
681
799
532
590
794
422
545
811
434
550
711
429
(987)
(690)
(687)
(728)
(749)
(716)
(721)
(675)
(715)
(653)
7,265
5,794
460
1,011
7,265
6,652
4,498
391
1,763
6,652
6,173
4,002
380
1,791
6,173
6,592
4,015
370
2,207
6,592
6,045
3,485
340
2,220
6,045
5,539
3,683
324
1,532
5,539
5,079
3,392
304
1,383
5,079
4,685
2,905
282
1,498
4,685
4,507
2,628
266
1,613
4,507
4,465
2,591
255
1,619
4,465
Includes assets held for sale of €1,382 million (2021: €nil)
Notes:
1
2 Includes liabilities directly associated with assets held for sale of €325 million (2021: €nil)
3 Excludes net cash from discontinued operations of €218 million (2021: €nil) classified as held for sale
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
242
Alternative Performance Measures
The Group presents certain measures of financial performance, position or cash flows in the consolidated financial statements that are not
defined or specified according to IFRS in order to provide additional performance-related measures to its stakeholders. These measures,
referred to as Alternative Performance Measures (APMs), are prepared on a consistent basis for all periods presented in this report.
By their nature, the APMs used by the Group are not necessarily uniformly applied by peer companies and therefore may not be
comparable with similarly defined measures and disclosures applied by other companies. Such measures should not be viewed in isolation
or as a substitute to the equivalent IFRS measure.
Internally, the Group and its operating segments apply the same APMs in a consistent manner in planning and reporting on performance
to management and the Board. Two of the Group’s APMs, underlying EBITDA and ROCE of continuing operations, link to the Group’s
strategic framework, as described on pages 30-31, and form part of the executive directors and senior management remuneration targets.
Since June 2022, the Group’s operations in Russia have satisfied the criteria to be classified as held for sale and are reported as
discontinued operations as at 31 December 2022 and for the year then ended (see note 26). For comparability purposes, the APMs based
on amounts recognised in the consolidated statement of financial position exclude the proportion of assets and liabilities attributable to
the Russian operations; however, no restatement of the IFRS consolidated statement of financial position has been made for such items
as at 31 December 2021. APMs measuring the profitability and cash flows of the Group are presented for continuing operations (i.e.
excluding the results from the Russian discontinued operations) and comparatives are presented on the same basis, consistent with the
presentation of the IFRS consolidated income statement and IFRS consolidated statement of cash flows. Where these changes have
impacted the APMs for comparative periods, as presented previously, these have been described as restated.
The most significant APMs used by the Group are described below, together with a reconciliation to the equivalent IFRS measure based
on Group figures. The reporting segment equivalent APMs are measured in a consistent manner.
APM description and purpose
Special items
Special items are generally material, non-recurring items that exceed €10 million. The Audit Committee
regularly assesses the monetary threshold of €10 million and considers the threshold in the context of
both the Group as a whole and individual operating segment performance.
The Group separately discloses special items on the face of the consolidated income statement to
assist its stakeholders in understanding the underlying financial performance achieved by the Group on
a basis that is comparable from year to year.
Subsequent adjustments to items previously recognised as special items continue to be reflected as
special items in future periods even if they do not exceed the quantitative reporting threshold.
Financial
statement
reference
Closest IFRS
equivalent
measure
Note 3
None
Underlying EBITDA
Operating profit before special items, depreciation, amortisation and impairments not recorded as
special items provides a measure of the cash-generating ability of the Group's continuing operations
that is comparable from year to year.
Consolidated
income
statement
Operating
profit
Underlying EBITDA margin
Underlying EBITDA expressed as a percentage of Group revenue (segment revenue for operating
segments) provides a measure of the cash-generating ability relative to revenue.
APM calculation:
€ million, unless otherwise stated
Underlying EBITDA (see consolidated income statement)
Group revenue from continuing operations (see consolidated income statement)
Underlying EBITDA margin from continuing operations (%)
None
Restated
2021
1,157
6,974
16.6
2022
1,848
8,902
20.8
Mondi Group Integrated report and financial statements 2022
APM description and purpose
Total EBITDA (prior to special items)
Operating profit before special items, depreciation, amortisation and impairments not recorded as
special items provides a measure of the cash-generating ability of the business that is comparable from
year to year.
Total EBITDA (prior to special items) is calculated to show the total from continuing and discontinued
operations as if the EBITDA of the Russian operations was not separately disclosed as arising from
discontinued operations.
APM calculation:
€ million, unless otherwise stated
EBITDA from continuing operations (see consolidated income statement)
EBITDA from discontinued operations (see note 26)
Special items (see consolidated income statement)
Total EBITDA (prior to special items)
Underlying operating profit
Operating profit from continuing operations before special items provides a measure of operating
performance that is comparable from year to year.
Underlying operating profit margin from continuing operations
Underlying operating profit expressed as a percentage of Group revenue (segment revenue for
operating segments) provides a measure of the profitability of the operations relative to revenue.
APM calculation:
€ million, unless otherwise stated
Underlying operating profit (see consolidated income statement)
Group revenue (see consolidated income statement)
Underlying operating profit margin (%)
Net interest expense
Net interest expense comprises interest expense on bank overdrafts, loans and lease liabilities net of
investment income.
Net interest expense provides an absolute measure of the net cost of borrowings.
APM calculation:
€ million
Investment income (see note 6)
Interest on bank overdrafts and loans (see note 6)
Interest on lease liabilities (see note 6)
Net interest expense
243
Financial
statement
reference
Closest IFRS
equivalent
measure
Operating
profit
2022
2,090
490
(242)
2,338
Restated
2021
1,160
346
(3)
1,503
Consolidated
income
statement
Operating
profit
None
Restated
2021
782
6,974
11.2
None
Restated
2021
5
(75)
(6)
(76)
2022
1,443
8,902
16.2
2022
6
(133)
(7)
(134)
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
244
Alternative Performance Measures continued
APM description and purpose
Underlying profit before tax
Profit before tax and special items for continuing operations. Underlying profit before tax provides a
measure of the Group’s profitability before tax that is comparable from year to year.
Financial
statement
reference
Closest IFRS
equivalent
measure
Consolidated
income
statement
Profit before
tax
Effective tax rate
Underlying tax charge expressed as a percentage of underlying profit before tax.
None
A measure of the Group’s tax charge relative to its profit before tax expressed on an underlying basis.
APM calculation:
€ million, unless otherwise stated
Tax charge before special items (see note 7a)
Underlying profit before tax (see consolidated income statement)
Effective tax rate (%)
2022
296
1,318
22
Restated
2021
154
705
22
Underlying earnings (and per share measure)
Net profit after tax attributable to shareholders from continuing operations, before special items.
Note 8
Underlying earnings (and the related per share measure based on the basic, weighted average number
of ordinary shares outstanding) provides a measure of the continuing operations’ earnings.
Total earnings (prior to special items) (and per share measure)
Net profit after tax attributable to shareholders, before special items, from continuing operations and
discontinued operations.
Note 8
Total earnings (and the related per share measure based on the basic, weighted average number of
ordinary shares outstanding), provides a measure of the Group’s earnings.
Profit for
the period
attributable to
shareholders
(and per share
measure)
Profit for
the period
attributable to
shareholders
(and per share
measure)
Mondi Group Integrated report and financial statements 2022
APM description and purpose
Headline earnings (and per share measure)
The presentation of headline earnings (and the related per share measure based on the basic, weighted
average number of ordinary shares outstanding) is mandated under the Listings Requirements of the
JSE Limited and is calculated in accordance with Circular 1/2021, ‘Headline Earnings’, as issued by the
South African Institute of Chartered Accountants.
Dividend cover
Basic underlying EPS from continuing operations divided by total ordinary dividend per share paid and
proposed provides a measure of the Group’s earnings relative to ordinary dividend payments.
The 2021 dividend cover is based on total EPS, as the dividend was paid prior to reclassifying the
Russian assets as held for sale and reporting them as discontinued operations.
APM calculation:
euro cents, unless otherwise stated
Basic underlying EPS (see note 8)
Total ordinary dividend per share (see note 9)
Dividend cover (times)
euro cents, unless otherwise stated
Basic total EPS (prior to special items) (see note 8)
Total ordinary dividend per share (see note 9)
Dividend cover (times)
245
Financial
statement
reference
Closest IFRS
equivalent
measure
Note 8
Profit for
the period
attributable to
shareholders
(and per share
measure)
None
2022
195.6
70.0
2.8
2021
154.0
65.0
2.4
Capital employed (and related trailing 12-month average capital employed)
Capital employed comprises total equity and net debt. Trailing 12-month average capital employed
is the average monthly capital employed over the last 12 months adjusted for spend on major capital
expenditure projects which are not yet in production.
These measures provide the level of invested capital in the business. Trailing 12-month average capital
employed is used in the calculation of return on capital employed.
Note 20
Total equity
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
246
Alternative Performance Measures continued
APM description and purpose
Return on capital employed (ROCE)
Trailing 12-month underlying operating profit, including share of associates' and joint ventures' net profit/
(loss), divided by trailing 12-month average capital employed. ROCE provides a measure of the efficient
and effective use of capital in the business and is presented on the basis of continuing operations for
comparability.
APM calculation:
€ million, unless otherwise stated
Underlying operating profit (see consolidated income statement)
Underlying net profit from joint ventures (see consolidated income statement)
Underlying profit from continuing operations and joint ventures
Trailing 12-month average capital employed (see note 2)
ROCE from continuing operations (%)
The ROCE from continuing operations and discontinued operations is calculated to show as if the net
profit of the Russian operations was not separately disclosed as arising from discontinued operations.
APM calculation:
€ million, unless otherwise stated
Underlying profit from continuing operations and joint ventures (see above)
Operating profit from discontinued operations (see note 26)
Profit from operations and joint ventures of the Group before special items (incl. discontinued
operations)
Trailing 12-month average capital employed of the Group (incl. discontinued operations) (see note 2)
ROCE from continuing and discontinued operations (%)
Net debt
A measure comprising short-, medium- and long-term interest-bearing borrowings and the fair value
of debt-related derivatives less cash and cash equivalents, net of overdrafts, and current financial
asset investments. Trailing 12-month average net debt is the average monthly net debt over the last 12
months. Net debt of continuing operations and trailing 12-month average net debt has been adjusted for
net debt of the discontinued operations for comparability.
Net debt provides a measure of the Group’s net indebtedness or overall leverage.
APM calculation:
€ million
Net debt (see note 28c)
Net debt of discontinued operations
Net debt of continuing operations
Financial
statement
reference
Closest IFRS
equivalent
measure
None
Restated
2021
782
6
788
5,672
13.9
Restated
2021
788
282
1,070
6,349
16.9
2022
1,443
1
1,444
6,097
23.7
2022
1,444
404
1,848
7,117
26.0
Note 28c
None
2022
1,011
—
1,011
Restated
2021
1,763
(74)
1,689
Mondi Group Integrated report and financial statements 2022
APM description and purpose
Net debt to underlying EBITDA
Net debt divided by trailing 12-month underlying EBITDA. A measure of the Group’s net indebtedness
relative to its cash-generating ability.
APM calculation:
€ million, unless otherwise stated
Net debt of continuing operations (see note 28c)
Underlying EBITDA (see consolidated income statement)
Net debt to underlying EBITDA (times)
Working capital as a percentage of revenue
Working capital, defined as the sum of trade and other receivables and inventories less trade and
other payables, expressed as a percentage of annualised Group revenue, which is calculated based
on an extrapolation of average monthly year-to-date revenue. A measure of the Group’s effective use
of working capital relative to revenue. Working capital has been adjusted for working capital of the
discontinued operations in comparative periods for comparability purposes.
APM calculation:
€ million, unless otherwise stated
Inventories (see note 16)
Trade and other receivables (see note 17)
Trade and other payables (see note 18)
Working capital
Working capital of discontinued operations
Working capital of continuing operations
Group revenue (see consolidated income statement)
Working capital as a percentage of revenue (%)
Gearing
Net debt expressed as a percentage of capital employed provides a measure of the financial leverage of
the Group. Net debt and capital employed is adjusted for the discontinued operations for comparability.
APM calculation:
€ million, unless otherwise stated
Net debt of continuing operations (see note 28c)
Capital employed of continuing operations
Gearing (%)
247
Financial
statement
reference
Closest IFRS
equivalent
measure
None
Restated
2021
1,689
1,157
1.5
None
Restated
2021
1,099
1,333
(1,444)
988
(44)
944
6,974
14
None
Restated
2021
1,689
5,892
28.7
2022
1,011
1,848
0.5
2022
1,359
1,448
(1,525)
1,282
—
1,282
8,902
14
2022
1,011
6,221
16.3
Mondi Group Integrated report and financial statements 2022OverviewFinancial statementsGovernanceStrategic report
248
Alternative Performance Measures continued
APM description and purpose
Cash flow generation
A measure of the Group’s cash generation before considering deployment of cash towards investment
in property, plant and equipment (‘capex’ or ‘capital expenditure’), acquisitions and disposals of
businesses, investment in associates and joint ventures, payment of dividends to shareholders,
acquisition or sale of non-controlling interests in a subsidiary and proceeds from and repayment of
borrowings. Cash flow generation is a measure of the Group’s ability to generate cash through the cycle
before considering deployment of such cash.
The cash flow generation is adjusted for the cash flows from the discontinued operations for
comparability and has been re-presented for the effect from non-controlling interests bought out of
€3 million for the year ended 31 December 2021.
APM calculation:
€ million
Net increase in cash and cash equivalents
Net increase in cash and cash equivalents from discontinued operations
Investment in property, plant and equipment
Acquisition of businesses, net of cash and cash equivalents
Proceeds from the disposal of business, net of cash and cash equivalents
Investment in joint ventures
Dividends paid to shareholders
Non-controlling interests bought out
Net repayment/(proceeds) of borrowings
Proceeds from other medium- and long-term borrowings
Repayment of other medium- and long-term borrowings
Net repayment of short-term borrowings
Repayment of lease liabilities
Cash flow generation
Financial
statement
reference
Closest IFRS
equivalent
measure
Net increase/
(decrease) in
cash and cash
equivalents
2022
908
(272)
508
—
(642)
—
321
—
83
—
53
9
21
906
Restated
2021
108
(182)
481
63
—
1
298
3
(34)
(59)
—
4
21
738
Mondi Group Integrated report and financial statements 2022
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
249
Additional information for shareholders
The disclosures below form part of the Directors’ report on pages 152-153 of this report.
Introduction
Set out below is a summary of certain provisions of Mondi’s articles of association (Articles) and applicable English law concerning
companies (the Companies Act 2006). This is a summary only, and the relevant provisions of the Articles and/or the Companies Act 2006
should be consulted (as applicable) if further information is required.
Share capital
Mondi’s issued share capital as at 31 December 2022 comprised 485,553,780 ordinary shares of 20 euro cents each (the Ordinary Shares)
representing 100% of the total share capital.
Purchase of own shares
Subject to the provisions of the Articles and the Companies Act 2006, Mondi may purchase, or may enter into a contract under which
it will or may purchase, any of its own shares of any class, including any redeemable shares. At the Annual General Meeting held on
5 May 2022, authority was given for Mondi to purchase, in the market, up to 24,277,689 Ordinary Shares. This authority will expire at the
conclusion of the Annual General Meeting to be held in 2023 and, in accordance with usual practice, a resolution to renew such authority
for the next year will be proposed.
Ordinary Shares
Dividends and distributions
Subject to the provisions of the Companies Act 2006, Mondi may, by ordinary resolution, from time to time declare dividends not
exceeding the amount recommended by the Board. The Board may pay interim dividends whenever the financial position of Mondi, in the
opinion of the Board, justifies such payment.
The Board may withhold payment of all, or any part of any dividends or other monies payable in respect of Mondi’s shares, from a person
with a 0.25% interest or more in nominal value of the issued shares, if such a person has been served with a notice after failure to provide
Mondi with information concerning interest in those shares required to be provided under the Companies Act 2006.
Voting rights and restrictions
Subject to the Articles generally and to any special rights or restrictions as to voting attached by or in accordance with the Articles to any
class of shares, at a general meeting, every member present in person has, upon a show of hands, one vote. Every duly appointed proxy
has, upon a show of hands, one vote unless the proxy is appointed by more than one member, in which case the proxy has one vote for
and one vote against if (i) the proxy has been instructed by one or more members to vote for the resolution and by one or more members
to vote against the resolution or (ii) the proxy has been instructed by one or more members to vote either for or against the resolution and
by one or more members to use their discretion as to how to vote. On a poll, every member who is present in person or by proxy has one
vote for every fully paid share of which they are the holder.
In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand
in the register of members in respect of the shares.
Under the Companies Act 2006, members are entitled to appoint a proxy, who need not be a member of Mondi, to exercise all or any
of their rights to attend and to speak and vote on their behalf at a general meeting or class meeting.
A member may appoint more than one proxy in relation to a general meeting or class meeting provided that each proxy is appointed to
exercise the rights attached to a different share or shares held by that member. A proxy is not entitled to delegate the proxy’s authority to
act on behalf of a member to another person. A member that is a corporation may appoint one or more individuals to act on its behalf at
a general meeting or class meeting as a corporate representative. Where a shareholder appoints more than one corporate representative
in respect of its shareholding, but in respect of different shares, those corporate representatives can act independently of each other,
and validly vote in different ways.
No member shall be entitled to vote either in person or by proxy at any general meeting or class meeting, or to exercise any other right
conferred by membership in relation to such meetings, in respect of any shares held by them, if any call or other sum then payable by them
to Mondi in respect of that share remains unpaid. In addition, no member shall be entitled to vote if they have been served with a notice
after failing to provide Mondi with information concerning interests in those shares required to be provided under the Companies Act 2006.
The Articles provide a deadline for submission of proxy forms of not less than 48 hours before the time appointed for the holding of the
meeting or adjourned meeting.
Variation of rights
Subject to the Companies Act 2006, the Articles specify that rights attached to any class of shares may be varied with the written consent
of the holders of not less than three-quarters in nominal value of the issued shares of that class, or with the sanction of a special resolution
passed at a separate general meeting of the holders of those shares. At every such separate general meeting, the quorum shall be two
persons holding, or representing by proxy, at least one-third in nominal value of the issued shares of the class (calculated excluding any
shares held as treasury shares). The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in
250 Mondi Group
Integrated report and financial statements 2022
Additional information for shareholders continued
the rights attaching to those shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.
Notwithstanding this, the relevant plan rules provide that any shares held by the trustee of the Mondi Share Incentive Plan from time to
time will not be voted.
Transfer of shares
All transfers of shares which are in certificated form may be effected by transfer in writing in any usual or common form or in any other
form acceptable to the directors. The instrument of transfer shall be signed by, or on behalf of, the transferor and (except in the case of
fully-paid shares) by, or on behalf of, the transferee and shall specify the name of the transferor, the name of the transferee and the number
of shares being transferred. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered
into the register of members in respect of those shares. Transfers of shares which are in uncertificated form are effected by means of
the CREST system.
The directors may refuse to register an allotment or transfer of shares (whether fully paid or not) in favour of more than four persons jointly.
If the directors refuse to register an allotment or transfer they shall, within two months after the date on which the letter of allotment or
transfer was lodged with Mondi, send to the allottee or transferee a notice of the refusal.
The directors may decline to register any instrument of transfer unless the instrument of the transfer: (i) is in respect of only one class
of share; (ii) is lodged at the transfer office (duly stamped if required), accompanied by the relevant share certificate(s) and such other
evidence as the directors may reasonably require to show the right of the transferor to make the transfer (and, if the instrument of transfer
is executed by some other person on their behalf, the authority of that person to do so); and (iii) is fully paid.
Subject to the Companies Act 2006 and regulations and applicable CREST rules, the directors may determine that any class of shares
may be held in uncertificated form and that title to such shares may be transferred by means of the CREST system, or that shares of any
class should cease to be so held and transferred.
A shareholder does not need to obtain the approval of Mondi, or of other shareholders of Mondi, for a transfer of shares to take place.
Notwithstanding the above, some of the Mondi employee share plans include restrictions on transfer of shares while the shares are
subject to such plan.
Directors
Directors shall be no less than four and no more than 20 in number. A director is not required to hold any shares of Mondi by way of
qualification. Mondi may by special resolution increase or reduce the maximum or minimum number of directors. Each director shall retire
at the Annual General Meeting held in the third calendar year following the year in which the director was elected or last re-elected by
Mondi, or at such earlier Annual General Meeting as the directors resolve. A retiring director shall be eligible for re-election.
The Board may appoint any person to be a director (so long as the total number of directors does not exceed the limit prescribed in the
Articles). Any such director shall hold office only until the next Annual General Meeting (or if the notice of the next Annual General Meeting
has already been sent at the time of such person’s appointment, the Annual General Meeting following that one) and shall then be eligible
for re-election.
Subject to the Articles, the Companies Act 2006 and any directions given by special resolution, the business of Mondi will be managed
by the Board who may exercise all the powers of Mondi.
The Board may exercise all the powers of Mondi to borrow money and to mortgage or charge any of its undertaking, property and
uncalled capital and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation
of Mondi or of any third party.
Indemnities
As at the date of this report, indemnities are in force under which Mondi has agreed to indemnify its directors, to the extent permitted
by law and the Articles in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities,
as directors of Mondi or any of its subsidiaries.
Significant agreements: change of control
All of Mondi’s employee share plans contain provisions relating to a change of control. Outstanding awards and options would normally
vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions at that time and under
certain plans, time pro-rating. The Group also has in place certain borrowing facilities and banking arrangements, some of which could
be cancelled, become immediately payable or subject to acceleration upon a change of control of Mondi. Of these arrangements,
only one facility agreement is considered to be significant to the Group. There are no other significant agreements that would take effect,
alter or terminate upon a change of control following a takeover bid.
Amendment of the Articles
Any amendments to the Articles may be made in accordance with the provisions of the Companies Act 2006 by way of special resolution.
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
251
Shareholder information
Mondi plc is a company registered in the UK. It has a premium listing on the London Stock Exchange and a secondary listing
on the JSE Limited.
Any shareholders still in possession of an old Mondi Limited share certificate should contact JSE Investor Services using the details below.
Financial calendar
May 2023
May 2023
May 2023
August 2023
September 2023
October 2023
2023 Annual General Meeting
Trading update
Payment date for 2022 final dividend
2023 half-year results announcement
2023 interim dividend payment
Trading update
Please go to www.mondigroup.com for the most up-to-date calendar
Analysis of shareholders
As at 31 December 2022, Mondi plc had 485,553,780 ordinary shares in issue, of which 197,462,290 were held on the South African
branch register.
By size of holding
Number of shareholders
% of shareholders
Size of shareholding
Number of shares
% of shares
1,726
362
460
422
94
258
3,322
51.95
10.90
13.85
12.70
2.83
7.77
100.00
1–500
501–1000
1,001–5,000
5,001–50,000
50,001–1,000,000
1,000,001– highest
338,864
262,121
1,105,780
8,165,800
6,875,089
468,806,126
485,553,780
0.07
0.05
0.23
1.68
1.42
96.55
100.00
Managing your shares
Registrars
To manage your shares or if you have any queries, please contact the relevant Registrar:
Shares held on the UK register
Shares held on the South African branch register
Registrar
Equiniti Limited
Postal address
Helpline number
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
+44 (0)371 384 2576 (Lines are open
08.30 to 17.30 (UK time), Monday to Friday
(excluding public holidays in England
and Wales))
Email
Online
customer@equiniti.com
www.shareview.co.uk
JSE Investor Services (Pty) Limited
(JSE Investor Services)
PO Box 4844
Johannesburg, 2000
South Africa
011 713 0800
(if calling from South Africa)
+27 11 713 0800
(if calling from outside South Africa)
info@jseinvestorservices.co.za
Not available
252 Mondi Group
Integrated report and financial statements 2022
Shareholder information continued
Sign up to email communications
Receiving shareholder information electronically is a faster way to stay informed and more environmentally friendly.
Shareholders on the UK register can sign up to email communications by contacting Equiniti or via their online portal, ShareView.
Shareholders on the South African branch register holding their shares in certificated form can sign up to email communications by
contacting JSE Investor Services or by emailing ecomms@jseinvestorservices.co.za. Shareholders on the South African branch register
with dematerialised shares should contact their Central Securities Depository Participant (CSDP) or broker.
You will be notified by email each time new financial reports, notices of shareholder meetings and other shareholder communications
are published on our website at: www.mondigroup.com.
Manage your shares online
Shareholders on the UK register can sign up to ShareView, a free secure online site provided by Equiniti, where you can manage your
shareholding quickly and easily. You can do the following:
— View your holding and get an indicative valuation
— Change your address
— Arrange to have dividends paid into your bank account
— Request to receive shareholder communications by email rather than post
— View your dividend payment history
— Make dividend payment choices
— Buy and sell shares and access stock market news and information
— Register your proxy voting instruction
— Download a Stock Transfer form
To register for ShareView just visit www.shareview.co.uk. All you need is your shareholder reference number, which can be found on your latest
dividend statement. Please note the shareholder reference number found on your share certificate may have been issued by the previous Registrar.
Shareholders on the South African branch register can sign up to ShareHub, the JSE’s new platform designed to enhance shareholder
experience. ShareHub will allow shareholders to access their dividend payment confirmations in real time and will enable you to
view, download or print the document from the ShareHub box at your convenience. You will have the option to opt out if you wish
to continue receiving dividend payment confirmations via normal post. As electronic post boxes will be opened for all certificated
shareholders on the ShareHub platform, we would encourage you to use these existing post boxes to receive all future shareholder
communications, including financial statements and meeting notices. For more information and to sign up, contact JSE Investor Services
at sharehubqueries@jseinvestorservices.co.za.
Dividends
A proposed final dividend for the year ended 31 December 2022 of 48.33 euro cents per ordinary share will be paid to shareholders
in accordance with the below timetable.
Payment of the final dividend is subject to the approval of shareholders at the Annual General Meeting scheduled for 4 May 2023.
Last date to trade shares cum-dividend
JSE Limited
London Stock Exchange
Shares commence trading ex-dividend
JSE Limited
London Stock Exchange
Record date
Tuesday 28 March
Wednesday 29 March
Wednesday 29 March
Thursday 30 March
Friday 31 March
Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by Central Securities Depository Participants
Thursday 6 April
Last date for DRIP elections to South African Transfer Secretaries by shareholders
Last date for DRIP elections to UK Registrar by shareholders
Payment date
DRIP purchase settlement dates
(subject to the purchase of shares in the open market):
South African Register
UK Register
Currency conversion dates
ZAR/euro
Euro/sterling
Tuesday 11 April
Tuesday 18 April
Friday 12 May
Thursday 18 May
Tuesday 16 May
Thursday 23 February
Thursday 20 April
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
253
Share certificates on Mondi plc’s South African register may not be dematerialised or rematerialised between Wednesday 29 March
2023 and Friday 31 March 2023, both dates inclusive, nor may transfers between the UK and South African registers take place between
Wednesday 22 March 2023 and Friday 31 March 2023, both dates inclusive.
Dividend tax will be withheld from the amount of the gross final dividend paid to shareholders on the South African branch register
at the rate of 20%, unless a shareholder qualifies for an exemption.
Your dividend currency
All dividends are declared in euro. Dividends are paid in euro with the following exceptions:
UK residents
South African residents
pound sterling
South African rand
Shareholders on the UK register resident in the UK may, however, elect to receive their dividends in euro, and shareholders on the
UK register resident outside the UK may elect to receive their dividends in pound sterling.
Shareholders on the UK register wishing to elect to receive their dividends in an alternative currency should contact Equiniti using the
details provided.
Payment of your dividends
Mondi encourages shareholders to have dividends paid directly into their bank accounts, meaning the payment will reach you more
securely and on the payment date, without the inconvenience of depositing a cheque.
Shareholders on the UK register:
— Shareholders wishing to receive dividends in euro or sterling can elect to receive dividends directly into their bank account
via ShareView or by contacting Equiniti.
— Shareholders wishing to receive another local currency may be able to take advantage of the Overseas Payment Service offered
by Equiniti. Find out more via ShareView or by contacting Equiniti.
Shareholders on the South African branch register:
— The 2019 interim dividend was the last dividend to be paid by cheque. Shareholders who previously received cheques should contact
JSE Investor Services, if they have not already done so, to provide their bank details and ensure they continue to receive their dividends.
— Shareholders without a South African bank account are encouraged to dematerialise their shares with a CSDP in South Africa, as
a CSDP is often able to pay dividends into foreign bank accounts. Find out more by contacting JSE Investor Services or any CSDP.
Reinvest your dividends
The dividend reinvestment plans (DRIPs) provide an opportunity for shareholders to have their cash dividends reinvested in Mondi plc
ordinary shares.
The plans are available to all ordinary shareholders (excluding those in certain restricted jurisdictions). Fees may apply.
If you wish to participate in the DRIPs, you can sign up via ShareView or by contacting either Equiniti in the UK or JSE Investor Services
in South Africa as appropriate.
South African dematerialisation
Mondi encourages shareholders on the South African branch register to consider dematerialising their shares. By surrendering your
share certificate, you will hold your shares electronically with a CSDP in South Africa, helping to prevent share fraud, theft and loss of share
certificates.
Find out more by contacting JSE Investor Services or any CSDP.
Taxation
Mondi is unable to advise shareholders on taxation. Your tax obligations will vary depending on your jurisdiction and financial
circumstances. With regard to your Mondi shareholding, we recommend all shareholders maintain records of dividend payments,
share purchases and sales. A dividend confirmation will be sent with all dividend payments. For further assistance, please speak to
an independent professional tax or financial adviser.
254 Mondi Group
Integrated report and financial statements 2022
Shareholder information continued
Donating shares to charity
If you have a small number of shares which would cost you more to sell than they are worth, there is the option to donate these unwanted
shares to charity free of charge. These shares are then aggregated, sold and the proceeds distributed to various charities. Donate your
shares or find out more using the relevant contact details below:
Shares held on the UK register
Shares held on the South African branch register
Postal address
ShareGift
PO Box 72253
London
SW1P 9LQ
UK
Helpline number
+44 (0)20 7930 3737
Email
Online
help@sharegift.org
www.sharegift.org
Strate Charity Shares
PO Box 78608
Sandton, 2146
South Africa
0800 202 363
(if calling from South Africa)
+27 11 870 8207
(if calling from outside South Africa)
charityshares@computershare.co.za
http://www.strate.co.za/wp-content/uploads/2020/11/strate_charity_
shares_donation_form_2020-1.pdf
Fraud
Shareholders should be aware that they may be targeted by certain organisations offering unsolicited investment advice or the opportunity
to buy or sell worthless or non-existent shares. Should you receive any unsolicited calls or documents to this effect, you are advised not to
give out any personal details or to hand over any money without ensuring that the organisation is authorised by the UK Financial Conduct
Authority (FCA) and doing further research.
If you are unsure or think you may have been targeted you should report the organisation to the FCA. For further information, please visit
the FCA’s website at www.fca.org.uk, email consumer.queries@fca.org.uk or call the FCA consumer helpline on 0800 111 6768 if calling
from the UK or +44 20 7066 1000 if calling from outside the UK.
Shareholders can also contact Equiniti in the UK or JSE Investor Services in South Africa using the contact details found above, or Mondi’s
company secretarial department on +44 (0) 1932 826300.
Account amalgamations
If you receive more than one copy of any documents sent out by Mondi or for any other reason you believe you may have more than one
Mondi plc account, please contact the relevant Registrar who will be able to confirm and, if necessary, arrange for the accounts to be
amalgamated into one.
Alternative formats
If you would like to receive this report in an alternative format, such as in large print, Braille or in audio format, please contact Mondi’s
company secretarial department on +44 (0) 1932 826300.
Mondi plc
Registered office
Ground Floor, Building 5
The Heights, Brooklands
Weybridge
Surrey
KT13 0NY
UK
Tel. +44 (0) 1932 826300
Registered in England and Wales
Registered No. 6209386
Website: www.mondigroup.com
Overview
Strategic report
Governance
Financial statements
Mondi Group
Integrated report and financial statements 2022
255
Glossary of sustainability-related terms
A full glossary of sustainability-related terms and partner organisations can be found in Mondi’s Sustainable Development report 2022.
Sustainable Development report
www.mondigroup.com/sd22
Certified wood
Certified wood is produced from wood
fibre which originates from sustainably
managed forest lands. The most recognised
forest certification schemes are:
FSCTM
Forest Stewardship CouncilTM is an
international not-for-profit, multi-stakeholder
organisation established in 1993 to promote
socially and environmentally responsible
management of the world’s forests by way
of standard setting, third-party certification
and labelling of forest products.
PEFC
Programme for the Endorsement of Forest
CertificationTM is an international not-
for-profit non-government organisation,
founded in 1999, dedicated to promoting
sustainable forest management through
independent third-party certification.
Circular economy
An industrial system that is restorative
or regenerative by intention and design.
It replaces the ‘end-of-life’ concept
with restoration, shifts towards the use
of renewable energy, eliminates the use
of toxic chemicals which impair reuse and
aims for the elimination of waste through
the superior design of materials, products,
systems, and within this, business models.
Chain-of-Custody
Chain-of-Custody is a tracking system
that allows manufacturers and traders
to demonstrate that wood comes from
a forest that is responsibly managed
in accordance with credible standards.
CO2e
Other greenhouse gases (such as CH4,
CFCs or N2O) can be converted into an
equivalent amount of CO2 according to
their global warming potential. Total GHG
emissions are the sum of the equivalent
amount of CO2 for each GHG, abbreviated
as CO2e.
Scope 1 emissions
Total direct GHG emissions from sources
owned or controlled by Mondi and its
subsidiaries. This includes CO2e from fossil
fuels and processes, company leased/
owned vehicles, waste and wastewater
treatment, make-up chemicals and other
GHGs.
Scope 2 emissions
Total indirect GHG emissions from sources
that are related to generation of purchased
energy outside the company boundaries.
Scope 3 emissions
Total indirect GHG emissions from the
production of fuel and raw materials;
business travel; raw materials; transport of
products and raw materials; and employee
commuting.
Specific
Measurement of emissions or consumption
normalised to volume, measured in saleable
production tonnes.
SDGs
The United Nations Sustainable
Development Goals, a set of universal goals
that meet the urgent environmental, political
and economic challenges facing our world.
TRCR
Total recordable case rate is calculated as
the number of total recordable cases (the
sum of fatalities, lost-time injuries, restricted
work cases and medical treatment cases),
multiplied by 200,000 and divided by the
total hours worked for the selected period.
TRS
Total reduced sulphur compounds are
generated in the pulping process and are
the sum of the reduced malodorous sulphur
compounds. It is a metric for emissions to
air and is measured in tonnes.
COD
Chemical oxygen demand is a measure
of the oxygen-consuming capacity of
inorganic and organic matter present
in waste water; it quantifies the amount
of oxidisable pollutants in water and is
measured in tonnes.
Controlled Wood
Controlled Wood is wood of known origin
with a minimum risk that it is harvested in
an unacceptable way. The Controlled Wood
system defines the minimum standards for
wood that can be mixed with FSC wood.
Products made from such material can use
the FSC Mix label.
GHG
Greenhouse gases (GHG) are gases that
have the property of absorbing infrared
radiation (net heat energy) emitted from
Earth’s surface and re-radiating it back
to Earth’s surface, thus contributing to
the greenhouse effect. The GHGs that
contribute to the greenhouse effect are
listed in the Kyoto Protocol of the United
Nations Framework Convention on Climate
Change (UNFCCC)
Human Rights Due Diligence (HRDD)
The process through which companies
identify, prevent, mitigate, and account for
how they address their actual and potential
adverse impacts on human rights, as an
integral part of decision-making and risk
management systems.
Net-Zero target
Net-Zero target setting supports the
rapid decline of a company´s value-chain
emissions to limit global temperature rise
to 1.5°C. Net-Zero covers the entire value
chain, including Scope 1, Scope 2 and
Scope 3 emissions.
Science-based target
A carbon emission target is defined as
‘science-based’ if it is in line with the scale
of reductions required to keep global
temperature rise to well-below 2°C above
pre-industrial levels and pursuing efforts
to limit warming to 1.5°C.
256 Mondi Group
Integrated report and financial statements 2022
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, market growth and developments, expectations of
growth and profitability and plans and objectives of management for future operations, are forward-looking statements. 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.
These forward-looking statements speak only as of the date on which they are made.
No 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;
and (3) general economic conditions, such as rates of economic growth in Mondi’s principal geographical markets or fluctuations of
exchange rates and interest rates.
Mondi 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 LSE.
This document includes market position estimates prepared by the Group based on industry publications and management estimates.
Main industry publication sources are: Fastmarkets RISI, Henry Poole Consulting, Eurosac, Freedonia, Alexander Watson Associates, PCI Wood Mackenzie,
EMGE, EURO-GRAPH, and Pulp and Paper Products Council.
Notes
Mondi Group
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY,
United Kingdom
+44 1932 826 300
www.mondigroup.com
Our 2022 suite of reports
Our full suite of 2022 reports is available to download at
www.mondigroup.com including our Sustainable Development report,
consolidated performance tables and supporting index reports.
www.mondigroup.com
Sustainable Development report 2022
A comprehensive view of our approach
to sustainable development and our
performance in 2022.
www.mondigroup.com/sd22
Printed on certified Mondi PERGRAPHICA® Classic Rough in 300gsm, 120gsm and 90gsm
Design and production: Radley Yeldar | www.ry.com
Printing: Park Communications | www.parkcom.co.uk