Mondi Group
Integrated report and financial statements 2023
Sustainable
by Design
Welcome
Integrated report 2023
Mondi’s Integrated report
and financial statements
2023 is our primary report
to shareholders, providing
an overview of the Group's
performance for the year
ended 31 December 2023.
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) and UK-adopted International
Accounting Standards. Refer to pages 238-241
for further details.
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 with further disclosures
made in our Sustainable Development report
and GRI & SASB Index as part of our 2023
suite of reports.
Our reporting suite
Visit our website for Mondi’s
complete 2023 Integrated
and Sustainable Development
reporting suite
www.mondigroup.com
Strategic report
Governance
Welcome
Introduction
2023 at a glance
The Mondi Way
Reasons to invest
Letter from the Chair
Our businesses
Where we operate
Market context
Our business model
Our strategy
Key performance indicators
Strategic review
Business unit trading review
Financial review
Stakeholder engagement and
Section 172
Mondi Action Plan 2030 (including
our TCFD disclosure)
Principal risks
Viability statement
i
1
2
4
5
6
8
10
12
14
20
22
24
30
34
38
42
69
80
The Strategic report was approved by the
Board on 21 February 2024 and is signed
on its behalf by:
Andrew King Mike Powell
Group CEO Group CFO
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
Financial
statements
Financial statements introduction
Directors’ responsibility statement
Independent auditors’ report
Financial statements (audited)
Production statistics
and exchange rates
Group financial record
Alternative Performance Measures
Additional information
for shareholders
Shareholder information
About this report
82
85
88
90
105
110
119
122
150
152
153
154
166
235
236
238
242
244
248
Non-financial and sustainability information statement
In accordance with Sections 414CA and 414CB of the Companies Act 2006 (as amended by
The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022), the
required non-financial and sustainability information disclosures, including the new requirements
to incorporate specific climate disclosures, can be found integrated throughout the Strategic
report. The table below sets out where our stakeholders can find more information about the
outcomes and related non-financial KPIs of the matters listed. Our policies can be found on
pages 42-68 and 119. A summary of key areas of disclosure is set out below:
Reporting requirement
Business model
Climate-related disclosures
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
Non-financial key performance indicators
Further information
Page 14-19
Page 51-64
Page 51-67
Page 48-50
Page 68
Page 67-68
Page 68
Page 69-79
Page 22-23, 44-68
Mondi Group Integrated report and financial statements 2023
1
We are a global leader in
sustainable packaging
and paper
Mondi makes packaging and paper solutions that are sustainable
by design. We operate an integrated business with expertise
spanning the entire value chain. With sustainability firmly
embedded in everything we do, our products and production
processes contribute towards the transition
to a circular economy.
Mondi Group Integrated report and financial statements 2023
2
2023 at a glance
Mondi delivered a resilient
performance against the
backdrop of an uncertain
global economic environment.
We remain well positioned
to capitalise on the
expected future growth
in the packaging markets
we serve, supported by our
leading market positions,
compelling sustainable
product portfolio and
through-cycle investment
in the business.
Andrew King
Group CEO
Strategic review
Page 24-29
Investing for value
accretive growth
€1.2 billion
of organic growth investments
Good progress made towards delivering these
investments on time and on budget. Our projects are
diversified across our packaging businesses and their value
chains, products and geographic reach. We expect our
projects to deliver through-cycle mid-teen returns when
fully operational.
Investing for value accretive growth
Page 26
Completed sale of Russian assets, concluding
the Group's exit from Russia. Net proceeds
distributed to shareholders on 13 February 2024
by way of a special dividend of €1.60 per share
and associated share consolidation.
Mondi Group Integrated report and financial statements 2023
3
A resilient performance with strong cash flow
Underlying EBITDA
€1,201 million
2022: €1,848 million
Cash generated from operations
€1,312 million
2022: €1,292 million
Return on capital employed
Leverage (net debt to underlying EBITDA)
12.8%
2022: 23.7%
Basic underlying earnings per share
107.8 euro cents
2022: 195.6 euro cents
Financial review
Page 34-37
0.3 times
2022: 0.5 times
Ordinary dividend per share
70.0 euro cents
2022: 70.0 euro cents
This section includes Alternative Performance Measures which are defined on pages 238-241.
All figures presented and commentary provided in this section are related to the Group’s continuing operations only unless otherwise specified.
Delivering on our sustainability commitments
through our MAP2030 framework
MAP2030
Page 42-68
85%
0.64
22%
of our packaging and paper
revenue is from products that are
reusable, recyclable or compostable
Total Recordable Case Rate, safety
performance among industry
leaders
reduction of our absolute Scope 1
and 2 GHG emissions against our
2019 baseline
Mondi Group Integrated report and financial statements 2023
4
The Mondi Way
Our shared purpose, consistent strategy and
entrepreneurial culture drive value for our stakeholders
The Mondi Way connects our 22,000 people around the world. Through our approach,
we nurture an environment in which high performance and collaboration thrives, empowering
us to drive progress against our strategic priorities in line with our purpose.
Strategic review
Page 24-29
MAP2030
Page 42-68
Mondi Group Integrated report and financial statements 2023
5
Reasons to invest
Mondi is a returns focused, cash generative business
delivering through-cycle value accretive growth
A market leader in sustainable
packaging and paper
Mondi is a leading producer of corrugated packaging in
Europe and a global leader in the production of kraft paper
and paper bags as well as a regional leader in uncoated
fine paper.
Robust financial position
Our strong cash generation through-cycle and robust
balance sheet with investment grade credit rating provides
strategic flexibility.
Broad product range drives innovation
and strengthens long-term customer
relationships
One of Mondi’s strengths is our ability to offer
customers a choice of paper, plastic or hybrid solutions
using barrier technology to deliver sustainable packaging
for our customers.
Investment through-cycle for value
accretive organic growth
Mondi invests to deliver value for all our stakeholders
whether through new capacity expansion projects,
to improve productivity and operational excellence,
or to deliver our sustainability targets.
Structurally growing markets underpinned
by increasing demand for eCommerce and
sustainable packaging
We operate in long-term structurally growing markets
driven by consumption and industrial production growth
underpinned by increasing demand for eCommerce
and sustainable packaging.
Disciplined capital allocation strategy
focused on returns
We have a balanced strategy of investing in both organic
and inorganic growth opportunities alongside returning
capital to shareholders.
Competitive advantage and resilience
from quality asset base and integrated
business model
Mondi operates high-quality, integrated assets which are
well invested with close proximity to low-cost sustainable
fibre and biomass, delivering significant cost advantages
and reduced volatility.
Contributing to a better world
Mondi is a recognised leader in sustainability.
Our MAP2030 framework is focused on delivering
circular driven solutions, created by empowered people,
taking action on climate supported by responsible
business practices.
Award winning product innovations
WorldStar Packaging Awards 2024
Hug&Hold
Category: non-alcoholic
beverages
Protector Bag
ExpandForm
Category: packaging
materials and components
Statorfold
Category: transit
MixBerry
Category: fresh fruits
and vegetables
Mondi Group Integrated report and financial statements 2023
6
Letter from the Chair
2023 was a year of continued geopolitical
instability and macroeconomic challenges.
More than ever, companies need to
build resilient business models, manage
supply chain risks and stay agile
in fast-changing environments.
Philip Yea
Chair
Welcome to Mondi’s Integrated report
for 2023. I have written in the past about
the resilience of Mondi, and it was evident
again in the past year in the face of
external challenges, most significantly the
uncertain global economic environment
where central banks and financial markets
were torn between the steps required
to reduce inflation and the risk of
self-inflicted recession. The geopolitical
environment became even more uncertain
given the continuing conflict in Ukraine
and the shocking and polarising events
in the Middle East in the last quarter.
Following the reversal of the energy
squeeze the industry faced in 2022, many
of our input costs have fallen, yet overall
the economic uncertainties have had a
significant impact on our margins as some
producers have chosen to reopen their
temporarily mothballed production facilities
in an environment where overall demand
has been cyclically soft. Market pricing has
generally been at significantly lower levels
than in 2022, falling more than input costs,
in part due to new capacity being brought
on stream at this relatively weak point
in the cycle.
A resilient performance
Mondi’s resilience is based on our scale,
our quality asset base, our integrated
model and the breadth and depth of our
customers and end-markets. So our
continuing businesses remained
appropriately profitable, although the
slowdown in global demand for goods
throughout 2023 put pressure on Mondi’s
performance, resulting in underlying
EBITDA of €1,201 million
(2022: €1,848 million). Cash flow remains
strong and our balance sheet robust,
enabling us to continue our capacity
expansion projects which remain on
track and on budget. ROCE was 12.8%
(2022: 23.7%).
Together with the Board, I would like to
thank all our colleagues who have worked
hard to continue delivering value for
all Mondi’s stakeholders against this
challenging backdrop. Thanks to them we
have continued to build strong relationships
with customers, improve efficiency and
productivity across our extensive asset
base, and make excellent progress with our
significant investment projects. I have no
doubt that their efforts ensure Mondi is
well positioned for a sustainable future.
Capital allocation focused
on returns
One of Mondi’s key strengths is the quality
of our through-cycle cash generation,
which remained strong with cash generated
from operations at €1,312 million
(2022: €1,292 million). Our robust financial
position, with leverage (net debt to
underlying EBITDA) of 0.3 times, and
disciplined capital allocation provide
us with strategic flexibility to continue
investing through-cycle for sustainable
growth and deliver attractive returns,
while supporting the ordinary dividend.
With our confidence in Mondi’s future,
the Board has recommended a final
dividend of 46.67 euro cents per share.
The final dividend, together with the
interim dividend, amounts to a total
ordinary dividend for the year of
70.0 euro cents per share.
It was a disappointment that the conditional
agreement to dispose of our operation in
Syktyvkar in Russia announced in August
2022 did not receive the requisite regulatory
approvals within the target timetable.
However, our management are to be
congratulated on delivering an acceptable
alternative. This, together with the sale of the
converting operations, created a loss on
disposal of €756 million which mainly
comprised the reclassification of the foreign
currency translation reserves and contributed
to an overall loss after tax for the Group,
attributable to shareholders, of €153 million.
Total cash proceeds of €806 million were
received before year end. Following
approval by shareholders, the net proceeds
were distributed by way of a special
dividend of €1.60 per share on 13 February
2024. Further details of the transaction can
be found in note 28 in the notes to
the consolidated financial statements.
Investing through-cycle for
value accretive growth
The Board is pleased with the progress made
in 2023 on our growth capital investment
programme, which will support an increase in
our capacity, lower our cost base and reduce
our environmental footprint.
As part of our capacity expansion pipeline,
we are making excellent progress on the
project to install our new kraft paper
machine at Štětí (Czech Republic) to
increase our kraft paper capacity and are
on track to commence operations in 2025.
Our two containerboard debottlenecking
projects in Kuopio (Finland) and Świecie
(Poland) will be contributing additional
capacity from 2024.
Mondi Group Integrated report and financial statements 2023
7
Acquisitions continue to be a key part
of our investment strategy. Opportunities
are rigorously assessed in terms of both
financial metrics and strategic fit, with
a focus on those opportunities that
complement our existing footprint and
capabilities. An important new opportunity
for us comes through the acquisition of the
Hinton Pulp mill in Alberta (Canada) in early
2024 which is now part of our Flexible
Packaging business unit. After the intended
investment in a new kraft paper machine,
Hinton will be capable of producing
low-cost, high-quality kraft paper for
industrial and eCommerce bags, and fully
integrate our North American paper bag
operations, strengthening our competitive
advantage and providing our customers
with security of supply (see page 41).
Contributing to a better world
Mondi has an ambitious purpose that
guides our decisions: to contribute to a
better world by making packaging and
paper solutions that are sustainable by
design. We are committed to leading the
way in circular driven solutions and are
focused on ensuring our customers have
sustainable packaging that is reusable,
recyclable or compostable.
Consequently, sustainability is at the heart
of our strategy. The Mondi Action Plan
2030 (MAP2030), our sustainability framework,
sets out how progress in our three key
action areas - Circular Driven Solutions,
Created by Empowered People,
Taking Action on Climate - can drive
the prosperity of the people, places and
ecosystems that matter to our business
and stakeholders.
Since the launch of MAP2030, Mondi
has continued to make good progress
in our commitments, and ownership of
our sustainability goals is widely shared
across the business.
Since 2019, the base year for our Net-Zero
targets, we have reduced our absolute
Scope 1 and 2 greenhouse gas (GHG)
emissions by 22% and our absolute Scope
3 GHG emissions by 21%. In the near term,
our targets commit us to reduce absolute
Scope 1 and 2 GHG emissions by 46.2%
and Scope 3 GHG emissions by 27.5%
by 2030 from a 2019 base year.
Advancing our offering of
sustainable products
One of Mondi’s strengths is our ability to
offer our customers a choice of paper,
plastic or hybrid solutions for their
packaging requirements, creating
partnerships with our customers on their
journey towards a circular economy.
Today, 85% of our paper and packaging
products are reusable, recyclable or
compostable and we continue the
necessary work towards our target
of 100%.
We are excited about the range of
innovative products released during the
year; for example, our paper MailerBAGs
support eCommerce customers looking to
transition away from plastic when shipping
goods worldwide, while Hug&Hold is a
paper-based solution that aims to replace
plastic shrink wrap for PET bottle bundle
packs (see page 28).
Empowering our people
Delivering value for our stakeholders relies
on a talented and motivated workforce and,
together with other members of the Board,
I have greatly benefitted from visiting our
operations during the year, including the
Richards Bay mill (South Africa) in
February 2023 and Świecie mill (Poland)
in June 2023, seeing first hand the
commitment and energy of our colleagues.
As part of her role leading employee
engagement on behalf of the Board,
non-executive director Sue Clark
participated in Mondi’s European
Communication Forum, alongside
representatives from our European plant
network, where she discussed Group
priorities and performance. We have
22,000 colleagues across more than
30 countries and we aim to be an employer
of choice, supporting our people
to realise their potential and contribute
to Mondi’s ongoing success.
The results of our Employee Survey in 2023
reiterated the feedback given to us on our
site visits. Colleagues across the Group
particularly value the sense of meaning
and purpose their jobs give them, and the
opportunities offered to learn and grow.
We know this as we measure progress
against our MAP2030 commitments,
represented by the Purposeful Workplace
Index (79%), Inclusiveness Index (77%)
and – for the first time in 2023 – our
Wellbeing Index (77%).
Keeping people safe is our top priority
and we have been building on our
traditional safety focus to address the
social psychology of risk, as well as
deepening our engagement with our
contractors. Although we are among the
safety leaders in our industry, most
regrettably we experienced a fatality
towards the end of the year at our
Ružomberok mill (Slovakia), which has left
the Board deeply saddened. A key part of
our philosophy is to ensure that every
incident is fully investigated and procedures
and practices further revised if we can
avoid the same or similar
situation recurring.
Board developments
The Board is committed to the highest
standards of corporate governance, a key
factor being the effective combination
of skills, experience and judgement
of our directors. In April, we welcomed
Anke Groth as an independent non-
executive director. Anke has a strong
financial and commercial background,
having operated in large international listed
companies across the energy and industrial
sectors. She brings valuable new insights
to the Board and strengthens the
Audit Committee.
Looking ahead
As we enter 2024, it is clear that
geopolitical uncertainties remain high and
that it is going to be another challenging
year for the world economy. However, I am
confident that Mondi has the resilience
to navigate these challenges. We intend
to push through the tough macroeconomic
environment relying on our scale, quality
asset base, integrated operations and
excellent customer proposition. Our strong
balance sheet provides the opportunity
to continue investing through-cycle, staying
alert to growth opportunities and ensuring
Mondi is well positioned to deliver
attractive returns long into the future.
Philip Yea
Chair
Ordinary dividend per share
70.0 (euro cents)
2023 ordinary dividend includes proposed
final ordinary dividend of 46.67 euro cents
per share.
576065707020192020202120222023 Mondi Group Integrated report and financial statements 2023
8
Our businesses
Packaging and paper that
is sustainable by design
Our business units
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Mondi is a leading producer of corrugated
packaging with a cost-competitive asset
base and strong customer offering focused
on quality and reliability. We are the leading
virgin containerboard producer in Europe
and the largest containerboard producer in
emerging Europe. Our virgin containerboard
is a high-quality product with excellent
properties for specialised end-use
applications, ideal to meet our customers'
needs around the globe.
We are also a leading corrugated solutions
producer across central and emerging
Europe. We leverage our integrated
production network and partner with
our customers to create fully recyclable
corrugated boxes and packaging.
Corrugated Packaging
Page 17 and 30
Leading positions
#1
virgin containerboard producer in
Europe
#1
containerboard producer in emerging
Europe
#1
corrugated solutions producer in
emerging Europe
We are a global flexible packaging producer,
integrated across the value chain with a
unique portfolio of solutions. As a global
leader in the production of kraft paper and
paper bags, our well-invested mills produce
high-quality kraft paper that is converted into
strong, lightweight paper-based packaging.
With our high level of integration across the
value chain, our customers come to us for
scale, security of supply and global reach.
We are also a leading producer of consumer
flexible packaging in Europe and have broad
coating capabilities which together provide
an extensive and unique range of paper,
plastic and hybrid packaging solutions.
Leading positions
#1
kraft paper producer globally
#1
paper bags producer in Europe
and a global leader
#3
consumer flexible packaging
producer in Europe
Flexible Packaging
Page 18 and 31
Our Uncoated Fine Paper business
produces a wide range of home, office,
converting and professional printing papers
at our mills in central Europe and South
Africa. We are the supplier of choice for our
customers, leveraging our leading positions
in these regions. In South Africa, we also
produce and sell market pulp to customers
around the world.
Uncoated Fine Paper
Page 19 and 32
Leading positions
#2
uncoated fine paper producer
in Europe
#1
uncoated fine paper producer
in South Africa
Mondi Group Integrated report and financial statements 2023
9
Business unit proportion
of Group total
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
The markets we serve
We offer our customers a unique and broad range
of sustainable packaging and paper products across
several end-markets.
Revenue
Consumer and retail (around 50% of Group revenue)
€7.3
billion
Underlying EBITDA
€1.2
billion
Capital employed
€6.5
billion
Product examples
– Food and beverage packaging
– Pet food packaging
– eCommerce packaging
– Retail shopper bags
Relevant business units
Building and construction (around 15% of Group revenue)
Product examples
– Cement bags
– Other paper-based building
material bags
Relevant business units
Industrial and agriculture (around 20% of Group revenue)
Product examples
– Packaging for the chemical industry
– Dairy powder, feed and seed packaging
– Automotive logistics packaging
– Industrial and pallet wrapping
Relevant business units
Paper for printing (around 15% of Group revenue)
Product examples
– Color Copy
– Pergraphica®
Relevant business units
Mondi Group Integrated report and financial statements 2023
10
Where we operate
Global network delivering for our customers
Mondi Group Integrated report and financial statements 2023
11
Revenue by
production
location
Revenue by
customer
location
Employees
Operating
segment
net assets
Emerging EuropeWestern EuropeNorth AmericaAfricaAsia and AustraliaSouth America Mondi Group Integrated report and financial statements 2023
12
Market context
Our structurally growing packaging markets
The global packaging market
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. Around 60% of the
global packaging market is directed
at consumer end-uses (including food,
drink, healthcare and cosmetics)
with the remaining 40% comprising
industrial, transport and other
applications.
Packaging demand is linked to
macroeconomic indicators such as
GDP and consumption trends which
form the majority of GDP in developed
markets. In addition, the increase
in demand for sustainable products
and the growth in eCommerce also
contribute to growth in the packaging
market, resulting in structural growth
through-cycle in the region of 2-4%.
In the past few years, growth has been
volatile. It was positive in 2020 and 2021
during the COVID-19 outbreak and
subsequent lockdowns when packaging
demand grew substantially, primarily as
a result of consumers prioritising the
purchase of goods over services and
inventory levels increasing following
heightened availability risks. After a
short period of normalised consumer
spending, the recent slowdown in
macroeconomic activity and customer
destocking have contributed to
weaker demand.
As a Group, we are strongly positioned.
We operate in faster growing
packaging segments of corrugated
(paper-based) and flexible (paper,
plastic and hybrid-based) packaging,
which benefit from structural growth
drivers, including the growing demand
for sustainable packaging. We see
opportunities to leverage our leading
market positions and innovation
capabilities to deliver sustainable
packaging solutions for our customers.
Global packaging by region (%)
Global packaging by material (%)
24%
23%
45%
8%
33%
7%
16%
21%
12%
4%
7%
Market sources: Smithers - The Future of Sustainable Packaging: Long-term Strategic Forecasts to 2032.
EuropeNorth AmericaAsia-PacificRest of worldBoardFlexible paperFlexible plasticRigid plasticMetalGlassOther Mondi Group Integrated report and financial statements 2023
13
Growing demand for sustainable solutions
Population growth and
economic development
are increasing
consumption, adding
pressure on natural
resources and driving
efforts to build circular
models. Climate change-
related concerns are
fuelling demand for
alternative solutions with
lower carbon emissions.
Consumer awareness
about how their choices
impact the environment
is pressuring companies
to deliver positive change.
These developments are
supporting the growing
demand for sustainable
products and practices
as our customers and
end-consumers make
more sustainable choices.
Recent developments
Our response
1. Rapidly evolving legislation
A number of legislative initiatives
under the EU Green Deal and
which are highly relevant to our
industry are driving the transition
to more sustainable products,
including the Packaging and
Packaging Waste Regulation
and Green Claims guidance.
2. Responsible and efficient production
Through Scope 3 emissions reporting
and the increased use of life
cycle-based product assessments,
the scrutiny of products will continue
to grow as suppliers and customers
demand responsibly sourced, carbon
efficient manufacturing across their
value chains.
With a focus on circular driven
solutions and delivering products
that are sustainable by design, we
remain well positioned to respond
to regulatory changes and continue
to help our customers make more
sustainable choices.
We have a long track record of
delivering against our sustainability
targets. As part of MAP2030, we
remain focused on keeping materials
in circulation, preventing waste and
reducing our emissions along the value
chain. Together with our innovation
efforts, we develop solutions with
superior sustainability credentials
as seen in our life cycle-based
product assessments.
3. Demand for renewable and recyclable materials
The demand for products containing
recycled content continues to grow.
However, in paper-based packaging,
some applications require a fresh fibre
(virgin) product due to its superior
strength and purity properties. For
other applications, recycled solutions
can be used which are more cost
effective. For plastic-based solutions,
most products are virgin based as the
availability of recycled plastic is limited.
We offer a broad range of solutions
including virgin and recycled
paper-based packaging, as well as
hybrid- and plastic-based packaging.
Our paper-based solutions are either
from renewable sources (fresh fibre
products) or contain recycled content
(recycled-based products). We are
also continuing our efforts to develop
mono-material plastic-based solutions
in order to increase recyclability.
4. Fit-for-purpose packaging
Optimal packaging is dependent
on the packaged goods' required
properties including shelf life, durability,
barrier properties and quality, which
in many cases can only be provided
by producers with the knowledge,
expertise and capacity to manufacture
at scale. In addition, overpacking
continues to be a challenge as goods
of varying sizes are packaged in
standardised solutions.
With a broad range of solutions,
we provide our customers with the
optimal solution that avoids waste
and protects the packaged goods.
Our innovation efforts are driving
the development of adaptable
and adjustable solutions to ensure
right-sizing of packaging.
Mondi Group Integrated report and financial statements 2023
14
Our business model
Creating value for all our stakeholders
We are a global leader in sustainable packaging and paper,
operating an integrated business across the value chain, producing
innovative solutions for consumer and industrial applications.
We support the
circular economy at
each stage of our
integrated value chain…
And build on
the competitive
advantages of our
three businesses…
To deliver on our
purpose and create
sustainable value for
our stakeholders.
Sustainable by design
Responsibly sourced
raw materials
Corrugated Packaging
Efficient
production
Flexible Packaging
Sustainable packaging
and paper solutions
Uncoated Fine Paper
Employees
We invest in the development
of our people, provide an inclusive,
safe working environment and
support a diverse, skilled and
committed workforce.
Customers
We deliver innovative sustainable
packaging and paper solutions to
our customers, with our continuous
focus on customer centricity.
Suppliers and contractors
We engage with our suppliers,
encouraging supply chain
transparency and fair working
conditions, and take action to
mitigate our risks.
Communities
We invest in local community
initiatives supporting health,
environmental protection,
education, local enterprise
and infrastructure development.
Investors
We offer our shareholders
long-term value accretion with
our disciplined approach to
capital allocation.
Partners and industry
associations
We collaborate with industry
associations and partners across
our value chain to find sustainable
solutions to the collective challenges
we face and bring about meaningful
change at scale.
Integrated value chain
Page 16
Business unit value chains
Page 17-19
Stakeholder engagement
Page 38-40
Mondi Group Integrated report and financial statements 2023
15
What we do
What makes us sustainable by design
Responsibly sourced
raw materials
Efficient production
– We require materials such as wood,
paper for recycling, chemicals and
resins, access to natural resources
(most notably water), and energy
in our manufacturing processes.
– Based on revenue, over 80% of our
packaging and paper solutions are
fibre based with wood as the primary
raw material.
– More than 90% of our wood is sourced in
the countries where our mills are located.
Our European mills procure wood
regionally from responsible external
sources while our South African mills
primarily source wood from our own
sustainably managed certified plantations.
– We use around 1.3 million tonnes
of paper for recycling for our recycled
fibre-based products.
– Our pulp and paper mills produce pulp,
containerboard, kraft paper and
uncoated fine paper.
– All of our key mills have integrated pulp
and paper processes which provide
efficient and cost-competitive
production as well as energy generation.
– Our box plants and other converting
operations use containerboard and kraft
paper respectively (sourced internally
and externally) together with resins,
chemicals and other raw materials to
produce a broad range of corrugated
and flexible packaging products.
– 100% of our wood is responsibly sourced
with 75% FSCTM- or PEFC-certified fibre
and the remainder meeting FSC's
Controlled Wood standard.
– We partner with scientific organisations
to promote climate-fit, resilient forests.
– We conduct water stewardship and
biodiversity assessments providing
insights on our impact and information
for developing subsequent action plans.
– 92% of the water we use is returned
back to the ocean or rivers after use
and treated in compliance with
regulatory quality standards.
– We engage with suppliers to promote
greater transparency, mitigate risk
and reduce our Scope 3 emissions
in our supply chain.
– 78% of fuels used by our mills are
biomass based, a renewable fuel
generated on site by our mills (63%)
and purchased externally (15%).
– Our training and upskilling programmes
support our employees to reach their
full potential and drive productivity
and efficiency gains.
– We remain focused on safety with
our Social Psychology of Risk approach
to drive continuous improvement in
our safety performance.
– We engage and support surrounding
communities to understand their
concerns and partner with them to find
solutions for our joint success.
– Our focus is on reducing air, water and
greenhouse gas emissions across our
production processes and supply chain
and eliminating waste.
Sustainable packaging
and paper solutions
– We produce a broad and unique
– We design products to have a
range of packaging and paper solutions
for consumer and industrial end-uses
including paper, plastic and hybrid
products.
– We partner with our customers to
understand their needs, providing an
opportunity to innovate and develop
new, fit-for-purpose solutions that
contribute to a circular economy.
– Our converted corrugated solutions and
flexible packaging products are
predominantly delivered to customers
regionally while the majority of our pulp,
containerboard, kraft paper and
uncoated fine paper is sold globally.
sustainable end-of-life.
– As a Group, we continue to increase
the proportion of our products that are
reusable, recyclable or compostable,
achieving 85% in 2023.
– Our continued engagement in
cross-value chain initiatives provides
an opportunity for us to contribute
towards the development of
industry-wide guidelines for recycling
and design for circularity.
– We identify opportunities to use waste
as a secondary raw material for other
industrial applications such as in the
cement industry and agricultural sector.
Mondi Group Integrated report and financial statements 2023
16
Our business model continued
Integrated value chain1
Our three business units produce a distinct range of sustainable products. Our collective strength provides competitive advantage including a
centralised cost-effective approach to responsible raw material sourcing, benchmarking performance and sharing best practice to optimise
productivity and performance, and offering our customers a unique and broad range of sustainable packaging and paper products.
Wood
12.8 million m3
Paper for recycling
1.3 million tonnes (mt)
Other
materials2
Resins
and films
Pulp
3.2 mt
Containerboard
2.3 mt
Kraft paper
1.1 mt
Uncoated fine paper
0.9 mt
Box plants
Converting plants
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Containerboard3
1.3 mt
Corrugated
solutions
1.9 billion m2
Kraft paper3
0.4 mt
Paper bags
5.4 billion bags
Uncoated fine
paper
0.9 mt
Market pulp3
0.3 mt
Consumer
flexibles
1.8 billion m2
Functional paper
and films
2.7 billion m2
1
Integrated value chain based on 2023 statistics.
2 While the Group procures some pulp, containerboard and kraft paper externally for commercial and logistic reasons, we continue to produce more than we consume.
3 Net exposure (calculated as the total volume produced that exceeds the total volume consumed by the Group).
n Responsibly sourced raw materials
n Efficient production
n Sustainable solutions
Mondi Group Integrated report and financial statements 2023
17
We produce virgin containerboard at our
mills in Świecie (Poland), Kuopio (Finland),
Richards Bay (South Africa) and
Ružomberok (Slovakia).
Recycled containerboard
Around 20% of our containerboard
production is recycled with most
production at our cost-competitive mill
in Świecie (Poland). We are integrated
with our corrugated solutions plants as
we produce the majority of the recycled
containerboard they need for converting,
which secures supply. Our ongoing capital
investment project at Duino (Italy) will
increase our recycled containerboard
production and integration to meet the
growing demand from our plant network
for sustainably produced recycled
containerboard in the region.
Corrugated solutions
We are a leading corrugated solutions
producer in the faster growing emerging
European region. Together with our
strong customer relationships and security
of supply, we create fully recyclable,
paper-based corrugated boxes and
packaging (made from virgin and recycled
containerboard) for our customers’
consumer, eCommerce, transit and
industrial packaging needs in the region.
We utilise a high percentage of recycled
content in our products.
Corrugated Packaging
Virgin containerboard
Mondi is the leading virgin
containerboard producer in Europe
with around 80% of our overall
containerboard production virgin based.
The European market is however
predominately recycled based with only
around 20% derived from virgin grades.
Virgin containerboard is made from
fresh fibres, and used for applications
requiring strength, moisture resistance,
hygiene and other unique properties
such as fresh fruit packaging and
transport packaging for heavy and
fragile goods. Most of our offering is
produced at our European mills which
are extremely cost competitive.
Our virgin containerboard product
offering is diverse with a range of
high-quality grades including unbleached
kraftliner, white top kraftliner and
semi-chemical fluting.
While the majority of our customer
base is in Europe, a significant amount
of our virgin containerboard is sold
to customers around the globe and
converted into a range of packaging
solutions by regional players.
Virgin containerboard
(million tonnes)
Recycled containerboard
(million tonnes)
Corrugated Packaging trading review
Page 30
1.8(0.3)1.5ProducedConsumedNet amount sold0.5(0.7)(0.2)ProducedConsumedNet amount purchased Mondi Group Integrated report and financial statements 2023
18
Our business model continued
Sack kraft paper
(million tonnes)
Speciality kraft paper
(million tonnes)
Flexible Packaging trading review
Page 31
As a global leader in both sack kraft
paper and paper bag production,
and with our high level of integration
across the value chain, our customers
come to us for scale, security of supply,
in-depth paper making expertise, quality,
reliability and global reach.
Speciality kraft paper
We produce a broad range of speciality
kraft paper that is versatile and strong,
and used in a wide range of end-uses
including paper-based consumer
products, retail shopper bags, pallet
wrapping and other industrial solutions.
Some of this paper is used in our
consumer-focused converting
operations (as outlined below);
however, the majority of our speciality
kraft paper is converted by our
customers across Europe.
Consumer flexibles and
functional paper and films
We are a leading producer of flexible
packaging products for consumer
end-uses with leading positions
in food and pet food applications
across Europe, and extensive customer
relationships with large FMCGs
and major retailers.
We are well positioned to meet our
customers’ needs and take advantage
of the growing demand for sustainable
packaging solutions with our unique
product portfolio. We can provide
paper- or hybrid-based products by
leveraging our paper making expertise
and extensive coating capabilities, or
mono-material plastic-based solutions,
ensuring we can deliver the optimal
solution that is sustainable by design.
Flexible Packaging
Our Flexible Packaging business unit
produces kraft paper and paper bags
(which together contribute around 60%
of the business unit’s revenue) as well
as consumer flexibles and functional
paper and films. Kraft paper, which
comprises sack kraft and speciality
kraft, is produced at our mills in
Štětí (Czech Republic), Frantschach
(Austria), Dynäs (Sweden), Stambolijski
(Bulgaria) and Ružomberok (Slovakia).
Our converting operations are located
across the globe and have leading
positions in the regions where
we operate.
Sack kraft paper and paper bags
We are the global leader in the sack
kraft paper and paper bag value chain.
Our well-invested European mills
produce kraft paper of which around
two-thirds is sack kraft paper, a niche
and high-quality product made from
fresh fibres that is strong, porous
and with high elasticity and high tear
resistance. These properties make it
an ideal solution for packaging of
medium to large goods which demand
strength and durability such as cement
and other building materials as well
as animal food, feed and seed.
More recently, the growth in
eCommerce has increased demand
for our MailerBAGs, a paper-based
flexible packaging solution for consumer
eCommerce packaging made of sack
kraft paper, which is providing an
additional growth driver for our business
as it replaces traditional plastic mailers.
Sack kraft paper is a globally traded
product which is converted by paper
bag plants located in close proximity
to their customers around the world.
As a Group, we have a global paper bag
plant footprint, with leading positions in
Europe, North America, the Middle East
and North Africa.
0.7(0.6)0.1ProducedConsumedNet amount sold0.4(0.1)0.3ProducedConsumedNet amount sold Mondi Group Integrated report and financial statements 2023
19
Market pulp
We produce and sell market pulp
to our customers around the world.
The majority of the Group’s market
pulp is produced at our mill in Richards
Bay (South Africa) which is accounted
for in the Uncoated Fine Paper business
unit. In addition to providing pulp
for packaging and paper production
to our South African operations, the
mill produces market pulp for sale both
into domestic and export markets.
Forestry assets
We own and manage forestry
landholdings in South Africa that
produce sufficient wood volumes
to meet our own requirements for
production in the country, thereby
securing our supply. We recognise
changes in the fair value of these
assets in the consolidated income
statement through the fair value gain
or loss on forestry assets.
Market pulp1
(million tonnes)
1 Based on the Group's market pulp volumes.
Uncoated Fine Paper trading review
Page 32
Uncoated Fine Paper
Uncoated fine paper
(Europe)
We are the second largest uncoated
fine paper producer in Europe.
The majority of our uncoated fine paper
production in this region is from our
integrated mill in Ružomberok (Slovakia).
As an integrated producer, we benefit
from a lower cost of production and
higher energy self-generation, which
provides cost competitiveness
compared to non-integrated producers.
Our Neusiedler operations (Austria)
complement our offering with highly
diversified, value added and sustainable
paper options enabling us to offer a full
range of products to our customers.
Together, and with our scale, reliability,
extensive operational capabilities and
financial strength, we continue to
be the supplier of choice with our
comprehensive customer offering.
Uncoated fine paper
(Southern Africa)
We are the leading uncoated fine
paper producer in the region, with
most competition coming from
import volumes. We operate one
paper machine at our Merebank mill
(South Africa) which produces
uncoated fine paper for our customers
in the region.
0.5(0.2)0.3SoldPurchasedNet Mondi Group Integrated report and financial statements 2023
20
Our strategy
Driving value accretive growth, sustainably
We drive value accretive
growth, sustainably
We prioritise profitable growth in our packaging businesses and leverage
our four strategic value drivers to create value for all of our stakeholders.
Sustainability is at the centre of our strategy and is embedded in
our investment and operational decisions. Our current sustainability
commitments and targets are set out in the Mondi Action Plan 2030
(MAP2030) which focuses on three action areas: Circular Driven Solutions,
Created by Empowered People, Taking Action on Climate.
2023 achievements
– Delivered a resilient performance in the year against an uncertain global
economic environment backdrop with underlying EBITDA of €1,201 million
and cash generated from operations of €1,312 million.
– Progressed against our MAP2030 commitments, including the reduction
of our absolute Scope 1 and 2 greenhouse gas emissions by 22% against
our 2019 baseline.
– Completed sale of previously owned Russian assets, concluding the Group’s exit
from Russia. Net proceeds distributed to shareholders in February 2024 by way of
a special dividend of €1.60 per share and associated share consolidation.
Medium-term priorities
– Deliver attractive returns over the long term supported by our strong
operational leverage, balance sheet and cash generation.
– Complete and ramp up new capacity from our organic growth
investments together with evaluating further organic and selective
inorganic growth opportunities.
– Progress on our MAP2030 commitments and targets.
– Continue to engage with our stakeholders to build trust and drive
positive change.
We identify and mitigate the potential impact of risks on our ability to
deliver our strategy by setting appropriate risk appetites. Our KPIs, outlined
in the pages that follow together with our MAP2030 targets, provide
a measure of our performance against our strategic objectives.
Principal risks
Page 69-79
Key performance indicators
Page 22-23
MAP2030
Page 42-68
Drive performance
along the value chain
We continually look for ways to optimise
productivity, enhance our efficiency and prevent
waste. Our initiatives span our entire business
and include continuous improvement and
operational excellence programmes, together
with keeping our processes lean, and focusing
on commercial excellence. We also invest in
rigorous benchmarking exercises across our
operations to share best practice and identify
emerging issues.
2023 achievements
– Continued to drive operational and
commercial excellence initiatives across the
value chain.
– Reduced our specific waste to landfill by 44%
compared to our 2020 baseline.
– Progressed on a number of digital and
operational initiatives to drive productivity
gains across the organisation.
Medium-term priorities
– Continue to evaluate, invest in and roll out
initiatives across our production network
to drive productivity and efficiency gains.
– Reduce costs, waste and emissions generated
during our production processes.
– Maintain quality standards and enhance
operational performance.
Relevant KPIs
– Underlying EBITDA
– Return on capital employed (ROCE)
– Total shareholder return (TSR)
– Scope 1 and 2 GHG emissions
– Waste to landfill
Related principal risks
Mondi Group Integrated report and financial statements 2023
21
Invest in assets with
cost advantage
Inspire our people
Partner with
customers for
innovation
We invest in our asset base through-cycle
to drive organic growth, strengthen cost
competitiveness, improve environmental
performance, and enhance our product
offering, quality and service to customers.
Our organic growth investments are directed
towards our packaging businesses which
operate in structurally growing markets.
In addition, and where appropriate, we
look to acquire businesses that produce
high-quality products with sustainable
competitive advantages.
2023 achievements
– Good progress made towards delivering
our €1.2 billion organic growth project
pipeline on time and on budget.
– Key projects within our pipeline include
starting up the Kuopio mill (Finland)
investment towards the end of the year and
making good progress on the €400 million
investment in a new kraft paper machine
at Štětí (Czech Republic).
We are committed to providing an inspiring,
inclusive, diverse and safe working
environment for our employees. We want
them to develop their skills and grow in
confidence which will unlock potential and
contribute to our success 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 keep our people safe.
We collaborate along the value chain to
produce high-quality sustainable packaging
and paper solutions for our customers.
Our efforts help us contribute towards a
circular economy, prevent waste and grow
with our customers by leveraging our strong
and long standing relationships with them.
Our unique range of products, together with
our paper making expertise and rigorous
quality management, positions us strongly
to be the supplier and partner of choice.
2023 achievements
– Developed our people’s skills through
training programmes and upskilling initiatives.
– Engaged with colleagues across the
2023 achievements
– Increased the proportion of our product
portfolio that is reusable, recyclable or
compostable, achieving 85% in the year.
organisation including the Group-wide
Employee Survey to provide insight into our
employee engagement and performance.
– Ongoing product development and
continuing to be externally recognised for
our award-winning sustainable solutions.
– Among industry leaders with a 0.64 Total
Recordable Case Rate performance.
– Customer survey conducted with over 1,700
customers taking part. Maintained 'best in
class' scores for being trustworthy, easy to
do business with and build relationships.
Medium-term priorities
– On-time and on-budget execution and ramp
up to full production of our organic growth
investments.
Medium-term priorities
– Continuous focus on improving our
safety performance and embedding a
behaviour-based safety mindset.
– Integrate the recently acquired Hinton Pulp
mill into our Flexible Packaging business
unit and further evaluate investment
opportunities to expand the mill.
– Continue to evaluate further organic and
selective inorganic investment opportunities.
– Review and develop action plans to tackle
areas identified as requiring improvement
in our 2023 Group-wide Employee Survey.
– Focus on talent attraction, retention and
diversity and inclusion initiatives to provide
a purposeful and inclusive environment
for all our employees.
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.
– Ongoing engagement with customers
to improve quality standards and overall
customer satisfaction.
Relevant KPIs
– Underlying EBITDA
– Return on capital employed (ROCE)
– Investment grade credit ratings
– Total shareholder return (TSR)
– Scope 1 and 2 GHG emissions
Relevant KPIs
– Total shareholder return (TSR)
– MAP2030 Empowered people targets
including Total Recordable Case Rate
(TRCR)
Relevant KPIs
– Underlying EBITDA
– Total shareholder return (TSR)
– MAP2030 Circular driven solutions targets
including the proportion of reusable,
recyclable or compostable products
Related principal risks
Related principal risks
Related principal risks
Mondi Group Integrated report and financial statements 2023
22
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.
Presentation basis
Financial KPIs are presented for a five-year period and based on
the Group’s continuing operations from 2021, while sustainability
metrics are presented from their respective baseline years and
therefore either cover a four- or five-year period (with all years,
including baselines, based on the Group’s continuing operations).
Underlying EBITDA
(€ million)
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.
2023 performance
Underlying EBITDA was lower at €1,201 million
due to lower sales volumes and selling prices
falling more than input costs. The Group’s
underlying EBITDA margin was 16.4%.
Link to strategy
Return on capital employed (ROCE)
% (12-month trailing)
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.
2023 performance
The Group achieved a ROCE of 12.8%, ahead
of cost of capital although lower than 2022,
reflecting the lower profitability in the year.
Link to strategy
Investment grade credit rating
(at 31 December 2023)
Standard & Poor’s
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.
2023 performance
The Group maintained its investment grade
credit ratings. In May 2023, Standard & Poor’s
upgraded the Group's credit rating from BBB+
to A- (stable outlook). Moody’s Investors
Service reaffirmed the Group's credit rating
at Baa1 (stable outlook) during the year.
Link to strategy
A+
A
A- BBB+ BBB BBB-
Moody’s Investors Service
A1
A2
A3
Baa1 Baa2 Baa3
Total shareholder return (TSR)
(%)
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.
2023 performance
The Group achieved a TSR of 14% in the year
and recommended a total ordinary dividend
per share for the year of 70.0 euro cents,
in line with last year.
Link to strategy
19.8%15.2%13.9%23.7%12.8%10.5%Return on capital employed (ROCE)Current estimated pre-tax weighted average cost of capital2019202020212022202314%0%14%Mondi plcMedian of peer group1-year3-year5-year-20—20401,6581,3531,1571,8481,20122.8%20.3%16.6%20.8%16.4%Underlying EBITDA margin20192020202120222023
Mondi Group Integrated report and financial statements 2023
23
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. Each KPI has been linked
to the relevant strategic value drivers below.
Aligning KPIs to remuneration
Our executive directors are assessed against specific performance
targets. For the LTIP, these performance measures, assessed over
a three-year period, are ROCE and TSR (and basic underlying
earnings per share from the performance period ending in 2025).
For the Group annual bonus, in which more than 3,000 employees
participate (including the Group CEO and Group CFO), performance is
assessed against ROCE, underlying EBITDA, sustainability metrics
(safety, GHG emissions and waste to landfill) and personal objectives.
Our strategy
Page 20-21
Remuneration report
Page 122-149
Scope 1 and 2 GHG emissions
(million tonnes CO2e)
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.
2023 performance
We have reduced our absolute Scope 1 and 2
GHG emissions by 22% compared to our
2019 baseline and remain on track to meet
our targets. Our GHG emission intensity
from our pulp and paper mills was higher at
0.39 t/t (or 0.43 t/t for the Group including
converters) mainly due to market-related
lower production volumes.
Link to strategy
baseline
(tonnes CO2e per tonne of saleable production)
Waste to landfill
(thousand tonnes)
baseline
Reusable, recyclable or compostable
products
(% of Group revenue)
baseline
Total Recordable Case Rate (TRCR)
(per 200,000 hours worked)
baseline
2020 baseline figure corrected and restated.
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.
2023 performance
We continue to make progress against
our ambition to eliminate waste to landfill
and have successfully reduced our specific
waste to landfill by 44% compared to our
2020 baseline.
Link to strategy
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.
2023 performance
We continue to make progress on our
ambitious target. In 2023, 85% of our revenue
was from products that were reusable,
recyclable or compostable, up from 74%
in 2020, our baseline year for this target.
Link to strategy
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 Social Psychology of Risk approach
supports our goal of sending everybody
home safely, every day.
2023 performance
Among industry leaders with a 0.64 Total
Recordable Case Rate performance. We
however deeply regret the fatality at our
Ružomberok facility (Slovakia) and in addition,
the four life-altering injuries at our operations
in the year.
Link to strategy
1211241166523.7923.4521.9313.28Specific (kg of waste per tonne of saleable production)202020212022202374%77%82%85%20202021202220232.702.412.412.182.100.460.410.400.360.39Intensity from our pulp and paper mills 201920202021202220230.670.710.630.642020202120222023
Mondi Group Integrated report and financial statements 2023
24
Strategic review
Mondi delivered a resilient performance in
2023 as a result of our compelling
customer service and delivery, supported
by our scale, quality asset base, integrated
model and breadth of products, customers
and end-markets. As always, my thanks
to colleagues around the world for
their commitment.
Underlying EBITDA
€1.2 billion
Cash generated from operations
€1.3 billion
Ordinary dividend per share
70.0 euro cents
Strong cash generation
While underlying EBITDA of €1,201 million
was lower than the very strong performance
in the prior year, our cash generation
remained ahead of last year at €1,312 million.
Investing for value accretive growth
This strong cash generation gives us the
strategic flexibility to continue investing in
our business through-cycle, supported by
our confidence in the long-term structural
growth of the markets we operate in and
our leading positions within them. We
continue to make good progress in
delivering our organic growth projects,
which remain on track and on budget. We
expect these projects to deliver a
meaningful EBITDA contribution from 2025.
Outlook
In the first quarter of 2024, selling prices
are generally lower than the averages
achieved in the second half of 2023.
However, we are seeing improvements in
our order books and are implementing
price increases across our range of paper
grades. Input costs remain elevated
compared to historical levels but have
broadly stabilised since the end of 2023.
We remain well positioned to capitalise as
demand improves with our strong
operational leverage and organic growth
investment projects.
Shareholder returns
It is our continued confidence in the future
of our business which has resulted in the
Board recommending a total ordinary
dividend for the year of 70.0 euro cents per
share, in line with 2022.
Andrew King
Group CEO
Mondi Group Integrated report and financial statements 2023
25
Group performance review
Mondi delivered underlying EBITDA of
€1,201 million in the year (2022:
€1,848 million). Group revenue was down
on lower selling prices and sales volumes
as a result of softer market demand and
the impact of customer destocking, which
abated over the course of the year. The
Group's underlying EBITDA margin was
16.4% (2022: 20.8%).
Corrugated Packaging delivered underlying
EBITDA of €310 million in the year, down
53% on the prior year (2022: €662 million).
Underlying EBITDA margin was lower at
13.6% as a result of selling prices declining
more than input costs. Containerboard
sales volumes were broadly stable despite
the backdrop of softer market demand,
while in Corrugated Solutions, good margin
management supported a stable year on
year financial performance.
Flexible Packaging's underlying EBITDA
was €637 million, 20% lower than the
previous year (2022: €797 million), mainly
as a result of lower sales volumes.
Underlying EBITDA margin was 16.5%.
Although profitability was lower than the
very strong performance in 2022, the
business showed resilience due to its high
level of integration across the kraft paper
and paper bag value chain together with its
exposure to consumer-focused markets.
Uncoated Fine Paper delivered underlying
EBITDA of €289 million in the year, down
32% (2022: €427 million) largely due to
lower selling prices. Underlying EBITDA
margin was 22.4%. Our geographic and
product diversification supported our
performance with higher uncoated fine
paper and pulp sales volumes in South
Africa mitigating lower European volumes.
Return on capital employed (ROCE) was
lower at 12.8% (2022: 23.7%), reflecting the
lower profitability in the year. This lower
profitability, together with lower net finance
costs, resulted in basic underlying earnings
per share of 107.8 euro cents (2022: 195.6
euro cents).
The Group continued to exhibit its strong
cash-generative characteristics with cash
generated from operations increasing in the
year to €1,312 million (2022: €1,292 million).
This strong through-cycle cash generation
continues to support our ongoing
investment in the business and ensures we
are well positioned to meet future demand
for sustainable packaging and paper
products.
Business unit trading review
Page 30-33
Financial review
Page 34-37
Investing at Kuopio for
sustainable growth
We recently started up our
€125 million modernisation
investment at our Kuopio mill in
Finland. The investment will increase
semi-chemical fluting capacity
by 55,000 tonnes per annum
and meet the growing demand
for the high-performing, top quality
containerboard grade produced
at the mill which is used in fresh
fruit and vegetable boxes and trays.
It will furthermore enhance product
quality and cost competitiveness.
The investment will also contribute
towards our ambitious MAP2030
sustainability commitments including
reduced greenhouse gas, noise,
odour and effluent emissions,
enhancing resource and energy
efficiency, and improving
occupational safety.
€125 million
modernisation investment
Mondi Group Integrated report and financial statements 2023
26
Strategic review continued
Investing for value accretive
growth
Our capital investment programme is focused
on meeting the growing demand for
sustainable packaging; enhancing our product
offering, quality and service to customers;
strengthening our cost competitiveness; and
improving our environmental footprint. Given
our confidence in the long-term structural
growth of the packaging markets we operate
in, and our leading positions within them, we
seek to invest through the cycle to deliver
value accretive growth.
We are making good progress on our €1.2
billion of approved investments in organic
growth projects, which remain on track and on
budget. These projects are diversified across
our value chain, products and geographic reach
and comprise €0.6 billion of investments in
Corrugated Packaging and €0.6 billion of
investments in Flexible Packaging. By the end
of 2024, we expect to have invested around
80% of the approved amount. We expect
these projects to deliver a meaningful EBITDA
contribution from 2025.
Investing for growth
Page 30-31
In Corrugated Packaging, most of these
projects are at, or close to, start up including
investments at our Kuopio mill (Finland),
Świecie mill (Poland) and Polish corrugated
solutions plants. Our Duino mill (Italy) is
expected to start up in 2025 as planned. In
Flexible Packaging, we continue to make
progress on our pipeline, with most projects,
including the new paper machine at Štětí
(Czech Republic), expected to ramp up from
2025. We expect our projects to take two to
three years to achieve full production
following their commissioning, delivering mid-
teen returns through-cycle when fully
operational.
In addition, we have recently completed the
acquisition of the Hinton Pulp mill in Alberta
(Canada) for a total consideration of USD 5
million. The mill has the capacity to produce
around 250,000 tonnes of pulp per annum
and will provide the Group with access to
local, high-quality fibre from a well-established
wood basket. We intend to invest in the mill
to improve productivity and sustainability
performance and, subject to pre-engineering
and permitting, expand the facility primarily
with a new kraft paper machine which will
integrate our paper bag operations in the
Americas and support future growth.
Section 172: Hinton Pulp mill
Page 41
Given our confidence in the
long-term structural growth
of the packaging markets we
operate in, and our leading
positions within them, we seek
to invest through the cycle to
deliver value accretive growth.
Organic growth investment pipeline
(€ billion)
€1.2
billion
Corrugated Packaging
Flexible Packaging
0.4
0.2
0.4
0.2
Corrugated PackagingPulp and paper millsConverting operationsFlexible PackagingPulp and paper millsConverting operations Mondi Group Integrated report and financial statements 2023
27
Prioritising growth in our
packaging businesses
In 2023, our packaging businesses
contributed 77% of the Group’s underlying
EBITDA (excluding corporate costs).
These businesses operate in structurally
growing packaging markets and are
supported by increasing demand for more
sustainable packaging solutions. To
capture this future growth, and build on
our leading market positions where
we operate, we invest in our asset
base through-cycle with our growth
investments directed towards packaging.
Over the past five years in our continuing
operations, total capital expenditure and
acquisitions have exceeded depreciation
and disposals by €1.2 billion. Over this
period, capital expenditure as a
percentage of depreciation was 163%,
with our organic growth capital
expenditure and all acquisitions focused
on the Group’s packaging businesses.
Acquisitions continue to be a key part
of our investment strategy. Opportunities
are rigorously assessed in terms of both
financial metrics and strategic fit, with
a focus on those opportunities that
complement our existing footprint
and capabilities.
Our current organic growth pipeline
is outlined on the previous page.
Capital expenditure as a
percentage of depreciation
2019-2023 (average)
198%154%121%163%DepreciationCorrugated PackagingFlexible PackagingUncoated Fine PaperGroup Mondi Group Integrated report and financial statements 2023
28
Circular Driven Solutions
We offer our customers a broad range
of sustainable packaging and paper
products. These contribute towards
addressing the global challenges of
climate change and plastic pollution
with the efficient use of natural
resources, to keep materials in
circulation and eliminate waste in a
circular bioeconomy. In 2023, 85% of
our packaging and paper revenue was
from reusable, recyclable or
compostable products, up from 74% in
2020, our baseline year for this target.
Our Corrugated Packaging and
Uncoated Fine Paper product portfolios
are already at 100%, while in Flexible
Packaging we currently have
sustainable packaging solutions
available, or identified and in
development, for 94% of their product
portfolio based on revenue, and are
continuing our efforts to develop
sustainable solutions for the small
number of remaining products.
In addition, we collaborate across our
business to identify opportunities to
achieve our long-term target of
eliminating waste to landfill from our
manufacturing processes. In 2023, we
successfully reduced our specific
waste to landfill by 44% compared to
the 2020 baseline mainly by finding
alternative uses for waste that was
previously landfilled.
Circular Driven Solutions
Page 45-47
Innovating to deliver
sustainable solutions
Our product innovation initiatives
focus on developing fit-for-purpose
packaging solutions for our
customers. We continue to receive
recognition for our products,
including being awarded four 2024
WorldStar Packaging Awards.
As one of our award-winning
products, Hug&Hold is a paper-
based and fully recyclable
packaging solution that replaces
plastic shrink wrap for PET
beverage bottle bundle packs. It
comprises a kraft paper sleeve and
a corrugated clip to secure the
bottles and offer a comfortable
handle for transportation.
As part of a critically reviewed life
cycle assessment, the carbon
footprint of Hug&Hold was 43%
less than plastic shrink wrap made
without recycled material and 15%
less than plastic shrink wrap made
from 100% recycled content.
43%
lower carbon footprint
from Hug&Hold
Strategic review continued
Progressing towards achieving
our MAP2030 sustainability
commitments
The Mondi Action Plan 2030 (MAP2030) is
our sustainability framework to 2030,
focusing on three action areas, and built on
our purpose of contributing to a better
world by making innovative packaging and
paper solutions that are sustainable by
design.
Reduction in specific waste to landfill
compared to 2020 baseline
44%
Total Recordable Case Rate
0.64
Reduction in absolute Scope 1
and 2 GHG emissions compared
to 2019 baseline
22%
Reduction in absolute Scope 3 GHG
emissions compared to 2019 baseline
21%
We continue to advance
our sustainability performance
and make good progress
on meeting our MAP2030
commitments and targets.
Mondi Group Integrated report and financial statements 2023
29
Created by Empowered People
Our goal is to be an employer of
choice by empowering our people to
realise their potential and contribute to
Mondi's ongoing success. Through
engagement, such as the Group-wide
Employee Survey and development
initiatives, including training and
upskilling programmes, we support our
employees to build skills that support
long-term employability and provide
purposeful employment in a diverse
and inclusive workplace.
The safety and health of our people
always comes first. We have
committed to reduce our Total
Recordable Case Rate (TRCR) by 15%
by 2030 against a 2020 baseline, along
with targets for zero fatalities and life-
altering injuries. We continue to be
among industry leaders with a 0.64
TRCR performance in 2023, which
represents a 4% improvement on our
2020 baseline. We however deeply
regret the fatality at our Ružomberok
facility (Slovakia) in late November. In
addition, there were four life-altering
injuries at our operations in the year.
Our thoughts go out to those involved,
and to their families, friends and work
colleagues. All incidents are
investigated and actions taken where
necessary to prevent reoccurrence.
Empowered People
Page 48-50
Taking Action on Climate
We have a long track record of
delivering on climate action and
continue to make good progress
towards achieving our Net-Zero
commitment by 2050. In the near
term, our targets, approved by the
Science Based Targets initiative,
commit us to reduce absolute
Scope 1 and 2 greenhouse gas
(GHG) emissions by 46.2% and
Scope 3 GHG emissions by 27.5%
by 2030 from a 2019 base year. In
2023, compared to our 2019
baseline, we have reduced our
absolute Scope 1 and 2 GHG
emissions by 22% and our Scope 3
emissions by 21%, on track to meet
our 2030 targets.
We continue to focus on climate
resilience, maintaining zero
deforestation in our wood supply,
sourcing wood responsibly, and
safeguarding biodiversity and water
resources in our operations and
beyond.
Taking Action on Climate
Page 51-64
Scope 3 GHG emissions
(thousand tonnes CO2e)
Engaging with our employees
During the year we completed our
latest Group-wide Employee Survey.
Conducted every two years, this survey
provides an opportunity to engage
with our employees and understand their
experiences and feelings towards Mondi.
Listening to our employees’ views helps
us to shape our culture by strengthening
efforts in the areas we are doing well
and taking action where we need
to improve.
We achieved an 80% response rate,
with feedback helping to measure and
support progress against our MAP2030
commitments and other aspects like
employee engagement.
Over 16,800
employees participated in the
2023 survey
1,759
201
330
158
18
5
55
2,526
* Other Scope 3 categories include capital
goods; waste generated in operations;
investments; processing, use and end-of-life
treatment of sold products.
Purchased goods and servicesFuel and energy-related activitiesUpstream transportation and distributionDownstream transportation and distributionEmployee commutingBusiness travelOther*Total Mondi Group Integrated report and financial statements 2023
30
Business unit trading review
Corrugated
Packaging
Underlying EBITDA
(€ million)
€310 million
(2022: €662 million)
Share of Group
underlying
EBITDA
What we produce
Mondi is a leading producer of corrugated
packaging with a cost-competitive asset
base and strong customer offering focused
on quality and reliability. We are the leading
virgin containerboard producer in Europe
and the largest containerboard producer in
emerging Europe. Our virgin
containerboard is a high-quality product
with excellent properties for specialised
end-use applications, ideal to meet our
customers' needs around the globe.
We are also a leading corrugated solutions
producer across central and emerging
Europe. We leverage our integrated
production network and partner with
our customers to create fully recyclable
corrugated boxes and packaging.
Performance during the year
Corrugated Packaging delivered underlying
EBITDA of €310 million in the year, down
53% on the prior year (2022: €662 million).
Underlying EBITDA margin was lower at
13.6% as a result of selling prices declining
more than input costs.
Examples of our products
Snug&Strong
A custom-made, fit-for-purpose
corrugated solution designed to
replace expanded polystyrene (EPS)
components in household appliance
packaging with a more sustainable
alternative.
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.
Containerboard sales volumes were broadly
stable despite the backdrop of softer
market demand and the impact from our
project-related shuts in the fourth quarter
of the year, a reflection of our strong cost
position, strength in niche products, and
global reach of our sales infrastructure.
Selling prices were lower in the year with
sharp declines during the first half followed
by a period of stabilisation in the second
half. In response to improved demand
reflected in strong order books, we
announced price increases in February
2024 across our range of containerboard
grades.
In Corrugated Solutions, good margin
management supported a stable year on
year financial performance despite 3%
lower box volumes compared to the prior
year in the face of lower demand.
Investing for growth
At the end of the year, we started up the
€125 million investment project at our
Kuopio mill (Finland). This project will
increase semi-chemical fluting capacity by
55,000 tonnes when fully ramped up,
enhance product quality, drive cost
competitiveness, and strengthen the mill’s
environmental performance.
We also have several other capital investment
projects that are expected to start up during
2024. These projects include our €95 million
debottlenecking project at Świecie (Poland)
which will increase capacity by 55,000 tonnes
per annum when fully ramped up, together
with expansion projects at our Simet and
Warsaw corrugated solutions plants in Poland
that will support growth and enhance our
product and service offering.
Our €200 million investment at Duino
(Italy) to convert the existing paper
machine into a high-quality, cost-
competitive recycled containerboard
machine with an annual capacity of 420,000
tonnes is ongoing. Start-up of the machine
is expected, as planned, for 2025.
This section includes Alternative Performance Measures
which are defined on pages 238-241.
Mondi Group Integrated report and financial statements 2023
31
Flexible
Packaging
Underlying EBITDA
(€ million)
€637 million
(2022: €797 million)
Share of Group
underlying
EBITDA
What we produce
We are a global flexible packaging
producer, integrated across the value chain
with a unique portfolio of solutions. As a
global leader in the production of kraft
paper and paper bags, our well-invested
mills produce high-quality kraft paper that
is converted into strong, lightweight paper-
based packaging. With our high level of
integration across the value chain, our
customers come to us for scale, security of
supply and global reach.
We are also a leading producer of
consumer flexible packaging in Europe and
have broad coating capabilities which
together provide an extensive and unique
range of paper, plastic and hybrid
packaging solutions.
Performance during the year
Flexible Packaging's underlying EBITDA
was €637 million, 20% lower than the
previous year (2022: €797 million), mainly
as a result of lower sales volumes.
Underlying EBITDA margin was 16.5%.
Although profitability was lower than the
very strong performance in 2022, the
business showed resilience due to its high
level of integration across the kraft paper
and paper bag value chain together with its
exposure to consumer-focused markets.
Examples of our products
MailerBAG
A sustainability-focused, patented
paper bag for eCommerce shipments
that offers cost efficiency and
customer experience. Available in
a wide range of designs and sizes.
FlexiBag Recyclable
A fully recyclable, mono-material bag
with convenient features and barrier
properties suited for dry food and
pet food.
Sales volumes across our kraft paper and
paper bag value chain were lower in the
year as a result of weaker demand in line
with softer economic conditions. While
prices declined over the course of the year,
our service and product offering, and high
level of integration resulted in 2023 pricing
remaining, on average, similar to 2022
levels. Current pricing is below average
2023 price levels. In kraft paper, we are
implementing price increases on the back
of improving order books which we expect
to take effect from the second quarter of
2024.
Consumer Flexibles and Functional Paper
and Films delivered a stable financial
performance as we continue to offer our
customers a broad range of innovative
packaging solutions.
Investing for growth
We continue to invest across our platform.
We are making good progress with our
€400 million investment in a new 210,000
tonne per annum kraft paper machine at
Štětí (Czech Republic) with start-up
expected in 2025 and ramp up to 2027,
together with a number of investments
across our converting plant network which
remain on track and on budget. These
projects include expanding and upgrading
the global reach of our paper bag network,
investments to consolidate our leading
position in European pet food packaging,
and projects to enhance our European
coating capabilities.
In addition, we have recently completed the
acquisition of the Hinton Pulp mill in Alberta
(Canada) for a total consideration of USD 5
million. The mill has the capacity to produce
around 250,000 tonnes of pulp per annum
and will provide the Group with access to
local, high-quality fibre from a well-
established wood basket.
Mondi Group Integrated report and financial statements 2023
32
Business unit trading review continued
Uncoated Fine
Paper
Underlying EBITDA
(€ million)
€289 million
(2022: €427 million)
Share of Group
underlying
EBITDA
What we produce
Our Uncoated Fine Paper business
produces a wide range of home, office,
converting and professional printing papers
at our mills in central Europe and South
Africa. We are the supplier of choice for
our customers, leveraging our leading
positions in these regions. In South Africa,
we also produce and sell market pulp to
customers around the world.
Performance during the year
Uncoated Fine Paper delivered underlying
EBITDA of €289 million in the year, down
32% (2022: €427 million) largely due to
lower selling prices. Underlying EBITDA
margin was 22.4%. Our geographic and
product diversification supported our
performance with higher uncoated fine
paper and pulp sales volumes in South
Africa mitigating lower European volumes.
European uncoated fine paper market
demand was significantly lower compared
to the prior year driven by weak economic
conditions. Selling prices declined during
the year, however the rate of decline
slowed as we progressed through the
period. We successfully implemented price
increases in early 2024.
In response to the ongoing structural
decline in demand for uncoated fine paper
in Europe, we streamlined production by
permanently closing an uncoated fine
paper machine at our unintegrated
Neusiedler operations in Austria during the
year.
In South Africa, uncoated fine paper market
conditions were broadly stable on the prior
year. The business received income from
an insurance claim in the year relating to
the floods in South Africa during 2022.
Pulp sales volumes were higher following
the start-up of the rebuilt recovery boiler at
our integrated Richards Bay mill (South
Africa) in the prior year. Market pulp prices
declined sharply during the year followed
by modest increases towards the end of
the year.
The non-cash forestry fair value gain was
lower in the year at €128 million (2022:
€169 million).
Our Uncoated Fine Paper business remains
well placed, with our customers valuing us
as a supplier of choice and recognising the
strength of our leadership positions,
underpinned by a broad product portfolio,
integrated asset base and excellent service.
Examples of our products
Color Copy original
The leading digital colour printing
paper, with an exceptional
environmental profile, offering
unbeatable quality from A4 to extra
long digital formats enabling endless
creative possibilities.
IQ ALLROUND ENVELOPE
Sustainably produced paper with
perfect runnability and consistent
quality, ideal for high-volume envelope
production.
Mondi Group Integrated report and financial statements 2023
33
Embedding sustainability across our business units
Sustainability is central to our strategy and intrinsic in the way we operate. We promote an entrepreneurial culture that empowers each
business unit to take the necessary actions to contribute towards meeting our ambitious MAP2030 sustainability targets. Some of our
recent initiatives include:
Turning residues into resources
Corrugated Packaging
We have an ambition to eliminate waste to landfill.
We aim to find alternative uses for by-products from
our manufacturing processes including as secondary raw
materials. At our Kuopio mill in Finland, we partnered with
Soilfood, a manufacturer of soil improvement products for
agriculture, to utilise the fibre residues produced by the mill
for landscaping, with around 42,000 tonnes of fibre residues
used in 2023.
Fo(u)r Safety programme at Štětí
Flexible Packaging
Our approach to safety includes physical, psychological
and cultural elements, ensuring we can anticipate,
prepare and react accordingly through balancing safety
controls, people and culture. During the year, our Štětí mill
in Czech Republic reviewed and updated its Fo(u)r Safety
programme by engaging with young colleagues from our
future leaders programme and selected line managers to
promote the programme and increase awareness of it.
Since the update, the participation rate in group intervention
and stopping each other from unsafe acts almost doubled,
contributing to an improvement in our culture across the mill.
Promoting sustainable forestry
in South Africa
Uncoated Fine Paper
In South Africa, we continue to maintain our FSC and PEFC
certification for 100% of our forestry landholdings and have
an opportunity to lead the way in developing best practice
silviculture and other forest management practices to
promote tree growth and resilience. We go beyond our
own landholdings and empower other landowners, especially
smallholders, through our Mondi Zimele programme. In 2023,
192,801 tonnes of wood were sourced from small growers
(1-10 ha. landholdings) and 2.4 million seedlings distributed
in the planting season.
Mondi Group Integrated report and financial statements 2023
34
Financial review
Strong cash generation and robust balance sheet
Mike Powell
Group CFO
Financial performance
€ million, except for percentages and per share measures
Group revenue
Underlying EBITDA
Underlying EBITDA margin (%)
Depreciation, amortisation and impairments (underlying)
Underlying operating profit
Special items (pre-tax)
Operating profit
Underlying operating profit
Net (loss)/profit from joint ventures
Impairment of investments in 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 attributable to shareholders
Basic earnings per share (euro cents)
Basic underlying earnings per share (euro cents)
ROCE (%)
Financial position
€ million
Property, plant and equipment
Goodwill
Working capital
Other assets1
Other liabilities2
Net assets excluding net debt
Equity
Non-controlling interests in equity
Net debt
Capital employed
Notes:
2023
2022
7,330
8,902
1,201
1,848
16.4%
20.8%
(411)
790
(27)
763
(405)
1,443
242
1,685
790
1,443
(5)
(5)
2
(73)
709
(167)
1
—
17
(143)
1,318
(296)
23.6%
22.5%
(19)
523
(73)
949
103.5
244.5
107.8
195.6
12.8%
23.7%
2023
4,619
765
1,084
673
2022
4,167
769
1,282
2,034
(626)
(987)
6,515
5,655
441
419
7,265
5,794
460
1,011
6,515
7,265
Includes assets held for sale of €nil (2022: €1,382 million).
1
2 Includes liabilities directly associated with assets held for sale of €nil (2022: €325 million).
This section includes Alternative Performance Measures which are defined on pages 238-241.
All figures presented and commentary provided in this section are related to the Group’s continuing operations
only unless otherwise specified.
Mondi Group Integrated report and financial statements 2023
35
The underlying tax charge for the year was
€167 million (2022: €296 million) giving an
effective tax rate of 23.6% (2022: 22.5%). In
2024, we expect an effective tax rate of
around 23-24%.
Basic underlying earnings per share were
107.8 euro cents (2022: 195.6 euro cents)
reflecting the lower profitability in the year
mitigated by lower net finance costs. After
taking the effect of special items into account,
basic earnings per share were 103.5 euro
cents (2022: 244.5 euro cents).
Group performance
Mondi delivered Group revenue of €7,330
million (2022: €8,902 million) and
underlying EBITDA of €1,201 million (2022:
€1,848 million) resulting in a lower
underlying EBITDA margin at 16.4% (2022:
20.8%).
Overall sales volumes and selling prices
were lower compared to the previous year.
So far in 2024, selling prices are lower than
average 2023 prices levels. We are seeing
improvements in our order books and
implementing price increases across our
range of paper grades.
Input costs were lower compared to the
prior year with higher wood unit costs more
than offset by lower energy and paper for
recycling costs. Wood prices declined over
the course of the year from their peak
levels recorded in early 2023 but remained,
on average, higher than the prior year.
Following record levels in 2022, energy
prices in Europe reduced and remained
materially lower in 2023. Paper for recycling
prices were also significantly lower. As we
enter 2024, input costs are broadly stable
compared to the end of 2023, and below
average 2023 price levels.
Personnel, maintenance and other net
operating expenses were lower in the year
with ongoing cost reduction initiatives and
insurance income more than offsetting
inflationary cost pressures. The non-cash
forestry fair value gain was €128 million
(2022: €169 million).
Depreciation, amortisation and impairment
underlying charges of €411 million were
broadly similar to the prior year (2022:
€405 million). We expect a charge in 2024
of around €425-450 million.
Net finance costs of €73 million were lower
than the prior year (2022: €143 million)
driven by an increase in investment income
as a result of higher cash balances and
interest rates, and currency mix effects. In
2024, following the special dividend
distribution and related decrease in
investment income, we expect net finance
costs of around €100 million.
The Group recognised a €27 million special
item charge (before tax) in the year in
respect of the closure of a paper machine
and streamlining capacity of the finishing
lines at the Neusiedler operations in Austria
(2022: €242 million gain before tax in
respect of the sale of the Personal Care
Components business).
Underlying EBITDA development
(€ million)
Movement in net debt
(€ million)
0.5x
Net debt to
underlying
EBITDA
0.3x
Net debt to
underlying
EBITDA
Investment in the business comprises capital expenditure (including forestry assets and intangible assets) and the Duino mill acquisition.
1,848(277)(435)106(41)1,201(411)(27)763Underlying EBITDA (2022)Sales volumesSales pricesCosts and otherForestry fair value gainUnderlying EBITDA (2023)Depreciation, amortisation and impairmentsOperating special itemsOperating profit(1,011)1,201229(931)(281)(345)(57)776(419)Net debt at 31 December 2022Underlying EBITDAWorking capital inflowInvestment in the businessTax and interestDividendsOtherNet proceeds on disposal of discontinued operationsNet debt at 31 December 2023 Mondi Group Integrated report and financial statements 2023
36
Financial review continued
Cash flow
Cash generated from operations was
€1,312 million (2022: €1,292 million),
reflecting the Group's continued strong
cash-generating capability. Working capital
improved with a net inflow of €229 million
in the year on the back of lower inventory
levels (2022: outflow of €419 million). As a
percentage of revenue, working capital
ended the year at 14.8% (2022: 14.4%),
slightly above our 12-14% through-cycle
range, as expected at this point in the
cycle.
Capital expenditure was in line with our
expectations, at €830 million (2022:
€508 million) as a result of investing in our
organic growth projects directed towards
growing our packaging businesses. We
expect our total capital expenditure in 2024
to be €800-900 million as we continue to
invest in our organic growth projects.
Thereafter, in the absence of further
significant organic growth opportunities, we
would expect capital expenditure to trend
towards depreciation levels following the
completion of our current approved
projects.
Tax paid was €178 million (2022: €196
million) and total interest paid was €103
million (2022: €127 million) including
derivative interest. We paid ordinary
dividends to shareholders of €345 million
(2022: €321 million) in the year.
The Group received proceeds of
€806 million from the disposal of its
Russian operations in the year. After taking
into account the associated transaction and
other costs, the Group distributed the net
proceeds by way of a €1.60 per share
special dividend to shareholders on 13
February 2024.
Discontinued operations'
disposal and distribution of net
proceeds with share
consolidation
The Group's previously owned Russian
operations were, since June 2022,
accounted for as discontinued operations.
In June 2023, the Group received proceeds
of €30 million following the completion of
the sale of its three Russian packaging
converting operations and in October 2023,
the Group completed the sale of the
Syktyvkar mill, its most significant facility in
the country, and received proceeds of
€776 million from the disposal. These
disposals concluded the Group's exit from
Russia.
The loss after tax from discontinued
operations was €655 million in the year.
This included a loss on disposal, net of
related transaction costs and tax, of
€756 million, of which €633 million related
to the reclassification of the foreign
currency translation reserve, which was
recycled through the income statement on
the date of disposal.
per share. The final dividend, together with
the interim dividend, amount to a total
dividend for the year of 70.0 euro cents
per share, in line with 2022 (70.0 euro cents
per share). Maintaining the dividend per
share in line with last year reflects our
strong cash flow, robust balance sheet and
the Board’s confidence in the future of the
business.
The net proceeds, comprising total
proceeds as outlined above of
€806 million, less the associated
transaction and other costs, were
distributed to shareholders on 13 February
2024 by way of a special dividend of €1.60
per share.
The final dividend is subject to the approval
of the shareholders of Mondi plc at the
Annual General Meeting scheduled for
Friday 3 May 2024 and, if approved, will be
paid on Tuesday 14 May 2024 to
shareholders on the register at the close of
business on Friday 5 April 2024.
Refer to note 28 in the notes to the
consolidated financial statements for
further information.
Following the approval of the special
dividend in early 2024, and in order to
maintain comparability of Mondi’s share
price before and after payment so far as
possible, the Group completed a share
consolidation on 29 January 2024 whereby
shareholders received 10 new ordinary
shares for every 11 existing ordinary shares
held.
Disciplined capital allocation
Strategic financial priorities
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.
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.
Ordinary 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.
The Board has recommended a final 2023
ordinary dividend of 46.67 euro cents
Managing our financial risks
Our capital structure
Capital employed is used to fund our
business and is managed on a basis that
enables the Group to continue trading as
a going concern, while delivering attractive
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. We have
diverse sources of funding with various
debt maturities.
The primary sources of the Group’s liquidity
include our €3 billion Guaranteed Euro
Medium Term Note Programme, our €750
million syndicated revolving credit facility
and financing from various banks and other
credit agencies, thus providing us with
access to diverse sources of debt financing
with varying debt maturities.
Liquidity, treasury and borrowings
Mondi retains a strong financial position.
Including receipt of the proceeds from the
disposal of the Group's Russian operations,
net debt at 31 December 2023 was
€419 million, with net debt to underlying
EBITDA at 0.3 times (31 December 2022:
€1,011 million, 0.5 times). Adjusting for the
special dividend paid in February 2024, the
pro-forma net debt and net debt to
underlying EBITDA was €1,195 million and
1.0 times, respectively.
At 31 December 2023, Mondi's liquidity
position was €2.3 billion, comprising €754
million of undrawn committed debt facilities
and cash and cash equivalents of €1,592
million. Adjusting for the special dividend
paid in February 2024, the Group retains a
strong liquidity position of €1.6 billion. The
weighted average maturity of the Group's
committed debt facilities was 2.8 years at
Mondi Group Integrated report and financial statements 2023
37
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 end of the year with the only significant
short-term repayment relating to the
Group's €500 million Eurobond that
matures in April 2024. Our financing
agreements do not contain financial
covenants.
The Group maintained its investment grade
credit ratings. In May 2023, Standard &
Poor’s upgraded the Group's credit rating
from BBB+ to A- (stable outlook). Moody’s
Investors Service reaffirmed the Group's
credit rating at Baa1 (stable outlook) during
the year.
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 committed capital
expenditure. We do not hedge our
exposures to projected future sales or
purchases. We do not take speculative
positions with derivative contracts.
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
Co-operation 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.
Debt maturity profile
at 31 December 2023 (€ million)
Debt composition
at 31 December 2023 (€ million)
559
24
1,386
50
1,845
49
125
Within 1 year 1-2 years2-5 years>5 yearsBondsBank loans and overdraftsLease liabilities Mondi Group Integrated report and financial statements 2023
38
Stakeholder engagement and Section 172
How stakeholder considerations
shape decision-making
Listening to and partnering with our diverse stakeholder groups helps us to better understand
external developments and market expectations as well as to identify opportunities and risks.
Our ongoing engagements support transparency and enable us to build strong, trusting relationships.
More than 16,800 employees participated
in our 2023 Employee Survey, providing
feedback on positive experiences and
areas for improvement. We continued
supporting individual career development,
with programmes such as the
International Graduate Programme,
NEXGEN and Mondi Academy.
Employees and contractors across Mondi
completed 503,000 hours of training.
Around 31% of all employees took part
in the Performance and Development
Review process.
We continued with D&I initiatives, such
as Curious Community and launched
Employee Resource Groups. Making a
Difference Day took place again across
most of Mondi’s locations. 94% of our
employees worldwide were able to access
the Employee Assistance Programme or
equivalent for support. Safety continued
to be a key priority, but sadly an employee
in our Świecie Corrugated plant (Poland)
and an employee in our Frantschach mill
(Austria) experienced a life-altering injury
this year.
Our employees
Key topics raised in 2023
and our response
Themes highlighted centred around
feedback and recognition, diversity
and inclusion, personal development
opportunities, and mental health.
In 2023, we conducted Product Impact
Assessments on 1,145 products and
calculated 146 product carbon footprints.
To deepen our understanding of our
customers’ expectations, over 1,700
customers took part in our Customer
Survey. Mondi hosted the ‘Let’s Paper the
World 2023 Summit’ in Sofia (Bulgaria),
with over 110 guests (including industry
professionals, equipment manufacturers,
brand owners, retailers and suppliers).
Mondi also convened the first ever
Roundtable for the Circularity of
Paper Bags in Madrid (Spain), with
representatives from the industry
and value chain. We continued our
customer collaboration to develop
solutions to meet customers’ sustainability
goals and maintained our ongoing
collaborations with multi-stakeholder
initiatives, such as 4evergreen, CEFLEX,
and the Ellen MacArthur Foundation.
We sadly report that during normal
operation, we experienced a fatality of a
contractor at Ružomberok (Slovakia) while
operating mobile equipment. A contractor
in our Świecie Corrugated plant (Poland)
and a contractor in our Ružomberok mill
(Slovakia) experienced a life-altering injury
during normal operation.
In 2023, we ran the Responsible
Procurement campaign with a pilot group
of 460 Mondi suppliers using EcoVadis.
We hosted our first Supplier Virtual Event
on Net-Zero and our Flexible Packaging
business organised an event on the
future for barrier materials. The safety
of our contractors remained a priority,
particularly during maintenance shuts.
Annual maintenance shuts saw over
22,000 contractors working on our sites,
during which we reported zero
life-altering injuries and more than
2.2 million hours worked.
Our customers
Key topics raised in 2023
and our response
Our customer engagement continued
to focus on topics including security
of supply, product quality, the circular
economy, legislative developments,
competitive advantage, carbon emissions
and life cycle-based assessments.
Our suppliers and contractors
Key topics raised in 2023
and our response
Local sourcing, secure contracts and fair
and transparent tender processes are key
topics for our supplier engagement.
There is increasing attention on the
environmental and social performance of
suppliers and contractors.
Mondi Group Integrated report and financial statements 2023
39
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
Mondi Świecie (Poland) established a
programme in which 36 local projects
received a grant. Together with the
Austrian Development Agency and other
partners, we supported the development
of a dual educational programme in
Côte d’Ivoire that combines theoretical
school education with practical training
in companies. We also hosted open
Stakeholder Engagement Conversations
with various local stakeholder groups
in our mill in Ružomberok (Slovakia).
Our discussions included the Group’s
organic investment projects to capture
future growth through capacity expansion
together with investments to improve
our sustainability performance and drive
productivity and efficiency gains.
Our mills continued to serve local
communities with power supply,
wastewater treatment and waste disposal
services. In 2023, following earthquakes in
Türkiye and Syria, Mondi produced over
200,000 corrugated boxes to help
governmental organisations providing
relief aid. We also donated €500,000
to help the UN World Food Programme’s
humanitarian aid work in affected areas.
In South Africa, Mondi Zimele continues
to support livelihoods, having helped
34 small and medium enterprises
and supported over 2,240 jobs to date.
In addition, the divestment of the Group’s
previously owned Russian assets were
discussed. The Group completed the
sale of its operations in the country
in October 2023 with net proceeds
distributed to shareholders in
February 2024 by way of a special
dividend of €1.60 per share.
The Board recommended a final ordinary
dividend for the year which, together with
the interim dividend was in line with last
year at 70.0 euro cents per share.
Our communities
Key topics raised in 2023
and our response
We invested €7.3 million in social initiatives
supporting health, environmental protection,
education, local enterprise and
infrastructure.
Our investors
Key topics raised in 2023
and our response
During investor meetings, discussions
focused on strategy, capital allocation,
the investment in new capacity expansion
projects and returns.
We maintained our membership of
the WBCSD’s Forest Solutions Group
and actively supported the development
of the forest sector nature positive
roadmap and catalogue of key
carbonisation actions.
The second version of 4evergreen’s
Circularity by Design Guideline for
fibre-based packaging was released,
which informed our Path to Circularity
Scorecard update, as well as its updated
Guidance on Collection and Sorting.
Partners and industry
associations
Key topics raised in 2023
and our response
Our partnerships aim to promote solutions
for climate change, biodiversity and water
stewardship, responsible sourcing, circular
economy and food waste.
We continued to engage with IUFRO,
focusing on a joint synthesis study on the
drivers for the future supply of forest
goods and services. In 2023, Mondi South
Africa launched a partnership with the
EWT and together worked on an initial
assessment of the biodiversity footprint
of Mondi’s South African plantations.
Together with industry associations such
as Cepi, FPE and FEFCO, we worked to
shape the industry position and advocacy
strategy towards the Packaging and
Packaging Waste Regulation.
Mondi Group Integrated report and financial statements 2023
40
Stakeholder engagement and Section 172 continued
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,
the Group's investment pipeline and approach to acquisitions.
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.
Two-way dialogue
Understanding the experience and views of employees
and keeping them abreast of the latest business
developments is a key area of focus for the Board.
Corporate governance report – Stakeholder engagement
Page 92-95
Mondi’s biennial Employee Survey is the primary tool for
the Board to gain cross-sectional, Company-wide insights
on employee views and issues. This is supported by a
number of engagement mechanisms at more regular
touchpoints which include: employee forums, site visits,
SpeakOut reports from the Group's anonymous
whistleblowing and grievance platform, a rolling programme
of Board presentations and safety reports. In addition
to this, and to further facilitate engagement, independent
non-executive director Sue Clark is responsible for leading
employee engagement on behalf of the Board.
As an example of our approach, during the year Sue Clark
participated in Mondi’s European Communication Forum,
a yearly event that includes employee representatives from
across our plant network in Europe. Senior management
gives presentations on key focus areas and answers
colleagues' questions on the priorities and performance
of the Group.
Topics of interest included the Group's:
– Russian operations (which were divested in 2023)
– Future growth prospects
– Focus on safety
– Approach to sustainability
Sue Clark attended the meeting to understand the views
of employees, later sharing these insights with other non-
executive directors to identify priority areas going forward.
Ongoing meetings were held throughout the year to monitor
developments and gauge progress.
Further details of how the Board approaches stakeholder
engagement can be found on pages 92-95 of the
Integrated report 2023 and on page 93 of the Sustainable
Development report 2023.
Sue Clark's biography
Page 87
Pages 38-41 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 2023. This includes a summary of who our key
stakeholders are, how we engage with them and how we respond to their interests.
Mondi Group Integrated report and financial statements 2023
41
What were the trade-offs?
– Investment at Hinton diverts capital from
Supporting growth in Mondi's Americas paper bags business
How did the decision account
What did the Board’s
for stakeholder interests?
decision entail?
In June 2023, the Mondi Board approved
The Board based its decision on an in-depth
review of the benefits expected:
the acquisition of the 250,000 tonne
per annum Hinton Pulp mill in Alberta,
Canada, from West Fraser Timber Co. Ltd.
The Group intends to invest in the mill
to improve productivity and sustainability
performance and, subject to
pre-engineering and permitting, expand
the facility primarily with a new kraft
paper machine which will integrate our
paper bag operations in the Americas
and support future growth.
What was the context
for the decision?
– Mondi operates in structurally growing
– Customers: Increased security of supply from
a reliable partner as well as shorter supply
chains that reduce the carbon footprint of
Mondi’s packaging products in the region.
Kraft paper produced at Hinton will have
the highest quality and strength parameters,
which, in combination with Mondi’s expertise,
helps meet customer demand for sustainable
packaging solutions.
investment provide employees and potential
new hires with a clear strategic vision for
the future, career development and training
opportunities.
the amount of market pulp that is sold
to customers as the majority of pulp
produced will be consumed in the
production of kraft paper.
– Consideration of changes in demand and
supply market dynamics and their impact
on prices.
– The additional workload for employees
and resources available to execute the
project in a remote area.
other potential projects due to the Board's
assessment of the benefits.
– Employees: The acquisition and intended
– The intended investment will reduce
What was the outcome
of the decision?
The directors approved the acquisition of the
Hinton pulp mill. The acquisition and intended
investment secure Hinton’s long-term future
through capital investment, expanded capacity,
enhanced product quality, and environmental
improvements. These benefits will contribute
positively to the Group’s overall performance,
and strengthen its position as the global leader
in kraft paper and paper bags.
packaging markets underpinned by demand
for sustainable packaging including industrial
bags for building materials, cement and food
products, and eCommerce MailerBAGs.
– Mondi is a global leader in the production of
paper bags. In the Americas, the Group has a
network of 10 paper bag plants which source
kraft paper from the Group's European mill
network and externally.
– Access to responsibly sourced and
cost-competitive fibre is a key strategic
focus for the Group to ensure it has security
of supply and remains competitive.
Our strategy
Page 20-21
– Investors: The acquisition and intended
investment will grow the business, deliver
attractive mid-teen returns through the cycle
and unlock growth opportunities for Mondi’s
paper bag operations in the Americas.
– Communities: As one of the largest
employers in the region, the intended
investment offers additional business
and job opportunities.
– Suppliers: Benefit from the continued
procurement of raw materials and services
by the mill to support production.
Mondi Group Integrated report and financial statements 2023
42
Mondi Action Plan 2030
Our sustainability framework
The Mondi Action Plan 2030 (MAP2030) sets out the actions, targets and milestones we need
to achieve to meet our ambitious 2030 sustainability commitments. It is a framework built on our
purpose of contributing to a better world by making innovative packaging and paper solutions
that are sustainable by design.
Our approach
By concentrating on circular driven solutions,
created by empowered people, taking action
on climate we can have the most positive
impact through our business.
These three action areas are supported
by a set of responsible business practices
covering human rights, communities,
responsible procurement and
environmental performance. Each area
has commitments and targets for 2030,
with some milestones set for 2025.
We engage with our stakeholders
to ensure we remain focused on the
most important topics, including through
our materiality process.
We conducted our most recent materiality
assessment in 2023, details of which can
be found on the next page.
Circular Driven Solutions
Page 45-47
Empowered People
Page 48-50
Taking Action on Climate
Page 51-64
Built on responsible business practices
Human Rights | Communities | Procurement | Environmental Performance
We are recognised as a leader in sustainability by external corporate ratings and indices
CDP
A list, with double 'A' score for
forests and water security and
an 'A-' score for climate change
MSCI ESG Rating
Top 'AAA' score for strong
resilience to environmental,
social and governance risks
ISS ESG
'Prime' rating as the highest
sector-specific score for ESG
performance
Sustainalytics
Ranked #1 in Paper and Forestry
industry out of 81 companies in
the sector (September 2023)
FTSE4Good Index Series
Member of Index Series,
demonstrating strong
ESG practices
EcoVadis
Platinum status as one
of the top 1% globally
in EcoVadis Corporate Social
Responsibility ratings
WBCSD's Reporting Matters
Included in ‘Top performer’
category since 2018 by WBCSD
and Radley Yeldar
Transition Pathway Initiative
Highest climate change score in
the paper sector
– Management Quality:
Level 4 rating
– Carbon performance aligned
with Paris Pledges
Mondi Group Integrated report and financial statements 2023
43
Our double materiality assessment
Focusing on what matters most
Our materiality approach helps us
to gain insights on our stakeholders’
views on key environmental, social
and governance topics. We respond
to and report on the most important
sustainability risks and opportunities
across our business.
In 2023, we conducted a double
materiality assessment to prepare
for the reporting requirements of
the European Union’s Corporate
Sustainability Reporting Directive
(CSRD). This new framework, based
on the European Sustainability
Reporting Standards (ESRS),
significantly expands the scope of
topics that companies must report
on and aligns with our longstanding
commitment to comprehensive
and transparent disclosure.
We consider sustainability topics as
material when they meet the criteria
under the double materiality concept
of being either or both:
– Impact material: our actual or
potential impacts on people
or the environment.
– Financially material: sustainability
information, risks and opportunities
which, if left out, misrepresented
or hidden, could influence
financial decisions.
Read more about our double
materiality process in our 2023
Sustainable Development report
www.mondigroup.com/sd23
External assurance
Environmental Resources Management
Certification and Verification Services
(ERM CVS) provides assurance on
selected information and KPIs, as
well as checking that our Sustainable
Development report is in accordance
with the GRI Universal Standards (2021)
and the SASB: Containers & Packaging
Industry Standard, and that information
included in our Integrated report is
consistent and comparable.
The signed ERM CVS Independent
Assurance Report will be found in our
2023 Sustainable Development report.
Methodology
The double materiality process involved
compiling an issues list, conducting
desk-based research, and engaging
with stakeholders to validate topics.
Circularity was most important topic
for our customers. They see Mondi as a
trusted supplier of fibre-based products
and rely on our policies for responsible
sourcing and human rights practices.
This included interviews with external
stakeholders and a survey with a
77% response rate from internal
and external parties. We conducted
a financial materiality assessment
to identify material effects for each
topic, considering impacts on our
resources and relationships. Outcomes
were reviewed with Mondi experts
to ensure they are aligned with their
understanding of our business.
Outcomes
Our material topics are relatively
consistent with our 2021 assessment,
but several have grown in importance,
such as working conditions and human
rights, and water.
We have identified 10 material topics:
six are environmental; the remaining
four are: working conditions
and human rights; diversity, equity
and inclusion; product safety
and quality; and business conduct.
Environmental topics are highlighted
in our outward impacts, given our
reliance on natural resources and
energy consumption in manufacturing.
Climate change mitigation was the top
priority, particularly for customers
and investors paying close attention
to our Net-Zero progress.
Material topics
Circular-Driven Solutions
– Circular economy
– Product quality and safety
Created by Empowered People
– Diversity, equity and inclusion
– Working conditions and human rights
Taking Action on Climate
– Climate change mitigation
– Climate change adaptation1
– Energy
– Biodiversity and fibre sourcing
– Water
Responsible Business Practices
– Business conduct1
1 Only financially material.
Our Sustainable Development
reporting suite
Visit our website to find our full suite of detailed
sustainability insights, including our 2023:
– Sustainable Development report
– Consolidated Performance data (pdf)
– Consolidated Performance data (spreadsheet)
– Sustainable Development Goals (SDGs) index
– GRI & SASB index
– GRI Biodiversity disclosures
– Stakeholder Engagement index
Sustainability reports and publications
www.mondigroup.com/sustainability/reports-and-
publications
Mondi Group Integrated report and financial statements 2023
44
Mondi Action Plan 2030 continued
2023 performance at a glance
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
2023 performance
2023 performance
2023 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 processes
Work with others to eliminate
unsustainable packaging
– Progress made through our
partnerships and stakeholder
engagement activities every year
Circular Driven Solutions
Page 45-47
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 48-50
Reduce our greenhouse gas emissions
in line with science-based Net-Zero
targets
– Reduce Scope 1 and 2 GHG
emissions by 46.2% by 2030
from a 2019 baseline
– Reduce Scope 3 GHG 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- or PEFC-certified
fibre procured by 2025 and the
remainder meeting the FSC
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 51-64
Key
Completed
On track
Behind target
Not on track
Mondi Group Integrated report and financial statements 2023
45
Our ambition is to keep materials in
circulation, eliminate waste and support a
regenerative, low-carbon circular economy.
We innovate and design products that
navigate the complexity of transitioning
to sustainable packaging.
Commitment: Make our packaging and paper solutions reusable, recyclable or compostable
Target
100% of our packaging and paper products
are reusable, recyclable or compostable
by 2025
Sustainability is at the centre of our
innovation and R&D. We develop
packaging and paper solutions with
a sustainable end-of-life to address
the global challenges of climate change
and plastic pollution by using natural
resources wisely, keeping materials
in circulation and eliminating waste.
As increasing regulation and customer
demand accelerate the transition to circular
solutions, we are doing everything in
our power to support this evolution.
We believe we can help drive a circular
economy for packaging and maximise our
impact by focusing on areas in our control.
In 2023, 85% of our products were
reusable, recyclable or compostable, based
on revenue (82% in 2022). Our focus is
on our Flexible Packaging business, as
our Corrugated Packaging and Uncoated
Fine Paper businesses are already at 100%.
By the end of 2023, we had a sustainable
alternative in place, or identified and
undergoing development, for 94% of
our Flexible Packaging products based on
revenue.
Performance against baseline
2021
2022
2023
This year at a glance
The percentage of reusable, recyclable or compostable
products based on revenue has increased to 85%, up
from 74% in 2020, our baseline year.
Nevertheless, several challenges remain,
and the speed of conversion to more
sustainable solutions in the market make
it challenging to achieve our target in 2025.
Contributing factors are: long qualification
times, such as shelf life testing for food
packaging, uncertainty related to evolving
legislation slowing down the adoption
of circular solutions and necessary
investments or retrofits to update older
packaging lines for circular alternatives
are slow in the face of high inflation
and slow economic growth.
For a Mondi product to be ‘circular,’ it must be
designed with a sustainable end-of-life, and
meet defined parameters. Our Sustainable
Design Principles support our innovation.
Our Path to Circularity Scorecard
measures our progress against our
reusable, recyclable or compostable
product commitment. We review and
update the scorecard annually to reflect
developments in technologies, industry
guidelines and legislation. We also
assess product impacts through our life
cycle-based tools.
The ‘European Green Deal’ action plan,
including the Packaging and Packaging
Waste Regulation and the Eco-Design
for Sustainable Products Regulation, aims
to make sustainable goods, services and
business models the norm. We believe
that a harmonised legal framework levels
the playing field and benefits companies
whose strategies integrate sustainability
into their business model, to create value
in a resilient, low-carbon circular economy.
Key initiatives and progress in 2023
– In 2023, the percentage of reusable,
recyclable or compostable products
based on revenue increased to 85%
(82% in 2022). Read more about our
Scorecard on page 25 of our 2023
Sustainable Development report.
Reusable, recyclable or compostable
products
(% of Group revenue)
Products assessed in our Product
Impact Assessment life cycle tool
1,145
baseline
74%77%82%85%2020202120222023
Mondi Group Integrated report and financial statements 2023
46
Mondi Action Plan 2030
Circular Driven Solutions continued
Key initiatives and progress in 2023
– We are enhancing our life cycle-based
tools to help our customers make
sustainable packaging choices. In 2023,
we conducted impact assessments (PIA)
on 1,145 products and calculated
146 product carbon footprints (PCF), a
significant increase to the previous year.
– In 2023, we engaged an independent
third-party organisation to critically
review our PCF and PIA tools, including
our calculation, data sources and process
approach. Our tools are confirmed to
be in accordance with ISO 14040/44,
ISO 14067 and the Greenhouse Gas
Protocol Product. Life Cycle Accounting
and Reporting Standard.
– We invested €21 million in research
and development to improve our
process technologies, energy and
material efficiency. We also benefit
from innovative research infrastructure
and capabilities at the Mondi Labs Food
Safety Laboratory and our in-house
recyclability testing laboratory at
Mondi Frantschach.
– In our 2023 Customer Survey, over
1,700 customers took part. Topics
perceived as important included
renewable materials, plastic reduction
and recyclability. Among the reasons
why customers value Mondi were quality,
reliability, product performance and
sustainability.
– We continue to support skills
development through our
sustainability-targeted training
programme, with 1,624 participants
(2022: 1,152) joining sustainability training
sessions in the Sustainable Development
Academy and the new Growth Gym
initiative within Flexible Packaging.
Our employees completed 3,141 hours
of training (2022: 2,122) on topics such
as recyclability of paper and plastic,
assessing product impacts, human
rights and our Net-Zero journey.
Read more on page 27 in our
Sustainable Development report.
Commitment: Avoid waste by keeping materials in circulation
Target
Eliminate waste to landfill from
our manufacturing processes
We view waste disposed to landfill
as a lost resource and have developed
a sophisticated waste management
system to avoid waste. This encompasses
a review of how we design our products,
to the selection of raw materials, to reuse
or recycling of by-products.
We are making progress towards our
ambition of eliminating waste to landfill
from our manufacturing. In 2023, we
achieved an exceptional performance and
reduced our total waste to landfill by
around 50,600 tonnes. Since 2020, we have
achieved a reduction of specific waste to
landfill of 44%, mainly by reusing the
effluent fibre from our Richards Bay mill
as landfill cover. We also adjusted
our lime kiln and recovery process
at our Ružomberok mill to avoid
landfilling lime mud and instead allow
reuse of the secondary raw material
by a cement producer.
The reuse of waste generated in our
production processes includes using
secondary raw materials within our own
organisation and through collaboration
with our customers.
Performance against baseline
2021
2022
2023
This year at a glance
In 2023, we achieved an exceptional performance to reduce
our total waste to landfill by around 50,600 tonnes, a 44%
reduction in specific waste to landfill since 2020.
During production, we investigate how
we can reuse secondary by-products as
potential raw materials, rather than sending
them to landfill and thus losing their value.
For example, biomass-based chemicals
such as tall oil (a by-product from the
wood pulp manufacturing process) can
be used as bio-based fuel for our own
energy generation or sold to other
industries. Tall oil is a renewable-based
chemical for biodiesel for energy
generation and can substitute fossil fuels.
We also explore and use alternatives
for the disposal of waste to landfill, such
as using ash from our bark boilers as a
secondary raw material in the production
of bricks.
In 2023, we completed our studies on
alternative raw material sources from
residues. Unfortunately, none of the new
raw materials investigated offered equal
or better performance with an improved
environmental impact; however, we will
continue our efforts to find ways to keep
materials in circulation and avoid waste.
Key initiatives and progress in 2023
– Our R&D teams have worked on a new
conversion technology to turn biogenic
residues into process energy, replacing
fossil fuels and reducing GHG emissions.
In 2023, we conducted pilot trials to
integrate this into a mill process.
– Reducing and eliminating green liquor
dregs is an ongoing challenge at our
mills. We have engineered calcium
carbonate-free filtration technologies for
two mills, which will reduce by half the
amount of green liquor dregs produced.
– We reuse fibre residues from the
wastewater treatment plant of our mill
in Richards Bay (South Africa) as landfill
cover and have found an alternative
use for waste lime mud from our mill
in Ružomberok (Slovakia) in the cement
production process.
Reduction of specific waste to
landfill from our manufacturing
processes since 2020
44%
Environmental performance
Page 65
Mondi Group Integrated report and financial statements 2023
47
Commitment: Work with others to eliminate unsustainable packaging
Target
Progress made through our partnerships
and stakeholder engagement activities
every year
Through collaboration with industry
associations and cross-value chain alliances,
we can drive progress at scale and support
the development of a circular economy.
We collaborate with customers and others
across the value chain to support the
transition to sustainable packaging.
We work together with our customers
to create packaging solutions that are
fit-for-purpose and sustainable by design,
leading the way in resource efficiency,
waste reduction and recyclability.
Eliminating food waste is key to this
commitment, and we are developing
suitable packaging to boost food shelf
life without compromising packaging
recyclability, preventing food from
spoiling before it is consumed.
We support and participate in many
external benchmarking initiatives to
promote transparency and improve our
performance. In 2023, Mondi was once
again recognised on CDP’s A List for
leading practices in forestry and water
security, and achieved an A– score in
climate change. We also retained our
platinum rating in the top 1% globally
for EcoVadis.
Performance against baseline
2021
2022
2023
This year at a glance
Collaborated in cross-value chain initiatives on design
guidelines for circularity, and with our industry association
partners on evolving legislation
Key initiatives and progress in 2023
– We are piloting a new collection and
recycling system for used paper bags
from construction sites in Spain. In
November 2023, Mondi convened the
first ever Roundtable for the Circularity
of Paper Bags, with representatives
from OHLA, Arpada, Saint Gobain, Alier
and others.
– In 2023, the third year of our partnership
with the World Food Programme (WFP),
we developed a Life Cycle Decision
Framework, which will help WFP to
make packaging decisions based on
both effectiveness and sustainability.
– We continued our active engagement
with the 4evergreen cross-value chain
alliance to boost the recyclability of
fibre-based packaging, and supported
the development of the updated
Design for Circularity Guidelines
and the guidance on improved collection
and sorting. Learnings have informed
our Path to Circularity Scorecard
update and our work in our
recyclability testing laboratory at
Mondi Frantschach (Austria).
– The Confederation of European Paper
Industries (Cepi) represents the forest
fibre and paper industry. Our CEO is part
of the Cepi Board and Mondi experts
engage in Cepi's committees, issue
groups and taskforce initiatives. In 2023,
we fed into evolving legislative drafts
and supported development of Cepi
positioning papers for legislative
engagement.
– FEFCO (European Federation of
Corrugated Board Manufacturers)
investigates and analyses economic,
financial, technical and policy issues
relevant to the corrugated packaging
industry. In 2023, Mondi was an active
member of the FEFCO Board, we joined
FEFCO’s Communications Committee
and actively engaged with FEFCO
on evolving the draft of the Packaging
and Packaging Waste Regulation.
– We are a a member of the Ellen
MacArthur Foundation and a signatory
of The Global Commitment, working
to eliminate plastic pollution and
create 100% reusable, recyclable or
compostable packaging by 2025.
Under The Global Commitment we
reported 29% (2022: 31%) of our plastic
packaging (based on weight) as
designed for recycling according
to the CEFLEX design guideline and
our Path to Circularity Scorecard.
What’s next in Circular Driven
Solutions?
– Work with our customers and
across our value chain to
accelerate the transition to more
sustainable solutions with our wide
portfolio of paper-based, flexible
plastic and hybrid products.
– Ensure sustainable alternatives are
in place for all packaging solutions
that are not yet recyclable or
compostable, using industry-wide
Design for Circularity Guidelines.
– Explore ways to eliminate waste
from production processes,
improve recyclability of hybrid
packaging solutions and valorise
waste for secondary raw materials.
– Work with cross-value chain
collaborators, industry associations
and other partners to develop
harmonised and improved
collection, sorting and recycling.
Mondi Group Integrated report and financial statements 2023
48
Mondi Action Plan 2030 continued
Mondi employs 22,000 people working in
more than 30 countries. We support our
people in realising their full potential through
upskilling programmes and career
development opportunities, equipping them
for our evolving industry and society.
Commitment: Build skills that support long-term employability
Target
Enable our employees to participate
in upskilling programmes
We aim to attract, develop and retain
the right people for each job and make
them feel respected, fairly treated
and empowered to excel in their careers.
Creating and providing lifelong learning
opportunities is part of our responsibility
as a global employer.
The Mondi Academy is our Group-wide
learning hub, featuring expert communities,
functional academies, internal trainers and
mentors. To support our employees’ job
fulfilment and long-term employability,
we provide access to tailored, on-demand
learning in digital, hybrid and face-to-face
formats, and upskilling opportunities
with external education, on-site and
on-the-job training.
Our learning and development
opportunities cover product portfolios,
business insights, people skills, innovation
and sustainability and we are continuously
increasing our pool of internal trainers and
mentors and updating our learning offering.
We are committed to offering consistent
and fair training, career development
and promotions, including for people
with disabilities.
We create different career opportunities
and targeted development programmes
to everyone at Mondi, irrespective
of position or career level.
Performance against baseline
2021
2022
2023
This year at a glance
Mondi colleagues participated in multiple people development
initiatives, including Mondi Academy, talent and graduate
programmes, and performance and development reviews
As well as a range of development
programmes for employees in the early
stages of their career, we provide
development opportunities for experienced
specialists, targeted training to develop
the required leadership skills for managers
at all levels, and specialised customer
engagement training.
We believe positive engagement,
transparency, assessment and feedback are
key to supporting personal development,
and we encourage a feedback culture
and proactive exchange with our
employees on individual strengths
and areas for improvement.
Performance and Development Reviews
and 360° feedback enable our employees
and their managers to reflect on
individual performance, give structured
feedback and set goals. There are a
number of performance-related pay
schemes that reward employees for the
pursuits and achievement of business
objectives, in which the majority of our
employees participate.
Stakeholder engagement
Page 38-40
Key initiatives and progress in 2023
– Employees and contractors across
Mondi completed 503,000 hours
of training (2022: 443,000) with 45%
of hours dedicated to safety.
– Our Sustainable Development Academy
includes new deep-dive sessions and
our Flexible Packaging business unit
launched the ‘Growth Gym’ initiative,
with sustainability as a core pillar.
– In 2023, 31% of our employees took
part in the online Performance
and Development Review process
(2022: 31%).
– Strengthened our talent pipeline through
a range of early career development
programmes including our 18-month
International Graduate Programme (IGP)
and NEXGEN which aims to identify,
connect, develop and inspire the next
generation of Mondi leaders.
– The 12-month Leadership Expedition
and Development Programme equips
mid-level managers with the tools
needed for new ways of working and
to address the challenges of leadership.
Mondi Group Integrated report and financial statements 2023
49
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
Employ 30% women across Mondi
At Mondi, a diverse and inclusive
workplace includes understanding,
accepting and valuing differences
between people. We promote a diverse
and inclusive work culture so our
employees feel they belong.
We engage regularly with our employees,
using formal and informal processes including
our intranet, local engagement sessions,
virtual events for all colleagues, management
dialogues and pulse surveys. We redesigned
our Group-wide Employee Survey to better
capture employee views through more
relatable questions and more effective
measurement indices. We have a new
baseline for our Purposeful Workplace Index,
Inclusiveness Index and – for the first time –
Wellbeing Index which support us in
measuring our progress towards our
MAP2030 commitments.
Our recruitment activities and our Diversity
and Inclusion (D&I) Policy are aligned to
promote diversity and maintain fair and
non-discriminatory work practices for
recruitment and succession planning.
Recruitment is based on skills and future
development potential, with conscious
reflection on biases and hidden talents
to give fair consideration to all applicants.
We aim to offer opportunities for
development that match individual
aspirations and the future needs
of our organisation.
Performance against baseline
2021
2022
2023
This year at a glance
A 79% score on the Purposeful Workplace Index was achieved
in our 2023 Employee Survey
A 77% score on the Inclusiveness Index was achieved in our
2023 Employee Survey
22.6% women employed across Mondi, representing a small
improvement since last year (2022: 22.1%)
There are significant variations in the
percentage of female colleagues and rate
of female hires across our different operations
and functions. We are at the beginning of
an ambitious journey to become a more
attractive employer for women, and our
initiatives will take time to show results.
Employee behaviour does not necessarily
change with one global standardised
approach, so we integrate D&I guidance
and awareness raising into all aspects of
work and encourage continuous learning
for all employees. The momentum across
Mondi to create a diverse workforce and
inclusive culture needs to involve everyone,
at every level.
Key initiatives and progress in 2023
– We achieved a 79% score in our Purposeful
Workplace Index covering questions about
development opportunities, recognition
and personal accomplishment.
– Our Inclusiveness Index covers respect,
fairness and trust and we achieved a score
of 77%. The majority of employees confirm
that we listen and care about what others
have to say. However, fewer employees felt
able to speak their minds or recognised for
their efforts and achievements. We have
identified psychological safety as a common
theme which we will work on in 2024.
– We launched eight Employee Resource
Groups in 2023. These are voluntary,
employee-led groups based on shared
identity, experiences, characteristics or
interests, which aim to support people
and be a positive resource at Mondi.
– The 'Curious Community' is an evolving
online community that connects more
than 350 members from 27 countries
to learn, grow and discuss their shared
interest in D&I.
– In 2023, we ran two workshops called
'Men Advocating Real Change'. The
approach supports the principle that all
genders benefit from more gender equity,
while men in particular have an important
role in making equality a reality.
– In 2023, we had 22.6% female employees
(2022: 22.1%) and 28.4% of all new
hires were women (2022: 30.9%).
The female representation on our
Executive Committee was 17%
(2022: 25%). This percentage of women
will increase to 29% with the new female
Chief People Officer joining in April
2024. The percentage of female direct
reports to the Executive Committee
was 30% (2022: 25%) and we had
4 (40%) female directors on the
Mondi Board (2022: 33%)
Nominations Committee
Page 105-109
Gender diversity 2023
Directors
Senior managers*
Employees***
Male
6
188
16,856
%
60.0%
81.4%
77.4%
Female
4
43
4,917
%
40.0%
18.6%
22.6%
Other**
0
0
1
%
0%
0%
0%
* As at 31 December 2023. 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.
** Not specified/prefer not to say.
*** Headcount of employees that are active or on leave as at 31 December 2023.
Mondi Group Integrated report and financial statements 2023
50
Mondi Action Plan 2030
Created by Empowered People continued
Commitment: Create an environment that enables a positive work-life
experience, valuing our safety, health and mental wellbeing
Performance against baseline
2021
2022
2023
Target
Zero fatalities
Zero life-altering injuries
15% reduction of Total Recordable Case Rate
This year at a glance
Sadly, a contractor was fatally injured at our Ružomberok mill
(Slovakia) while operating mobile equipment
We sadly had four life-altering injuries in 2023, with two in
our Świecie Corrugated plant (Poland) and one each in our
Ružomberok (Slovakia) and our Frantschach (Austria) mills
Among industry leaders with a 0.64 Total Recordable Case
Rate performance, a 4% reduction compared with our 2020
baseline, but an increase of 2% since last year
A 77% score for our new Wellbeing Index in the 2023
Employee Survey, reflecting our focus on developing a culture
where everyone feels safe to speak openly, and supporting
a positive work-life experience
Professional counselling accessible for 94% of our employees
through our Employee Assistance Programme (EAP) and
EAP-equivalent system for support and help
What’s next in
Empowered People?
– Encourage an inclusive leadership
approach and a sense of shared
ownership.
– Share good practices and
guidance for inclusive recruitment
and retention of women.
– Invest in activities to attract,
retain and develop employees,
focusing on expert career
development, and opportunities
to learn and exchange.
– Focus on shaping a culture
where employees feel it is
safe to speak up.
– Continue industry-leading Social
Psychology of Risk approach,
run training programmes and
build on modular safety and
health learning programme.
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 offer employees access to assistance
programmes and support, with a strong focus
on mental wellbeing.
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.
Key initiatives and progress in 2023
– We had 200 total recordable cases:
143 related to employees and 57
to contractors (2022: 189; 132 related
to employees and 57 to contractors).
– Our new Engagement Board is a platform
for our employees and contractors to
discuss safety and health issues, including
high-risk activities conducted by
contractors during annual shuts, and
major safety and health projects.
– In 2023, we had an average of 12,411
contractors across the Group (2022: 11,629).
We are deepening our engagement with
contractors to eliminate fatalities and
life-altering injuries.
– At Mondi Bags Ukraine, we are prioritising
the physical and mental safety of our
colleagues, including regular check-ins
and communication about safety, so our
employees feel supported, connected
and involved in a purposeful and engaging
environment.
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
We prioritise a working environment that
values safety, health and mental wellbeing,
with clear targets to hold us accountable.
Our operations involve high-risk activities,
and keeping people safe and healthy is
a moral and a business imperative for
everyone who works for and on behalf
of Mondi.
While we are one of the safety leaders
in our industry, we sadly experienced a
fatality of a contractor in our Ružomberok
mill (Slovakia) in November 2023. Relevant
details have been shared with all operations
to prevent reoccurrences.
Many injuries at our operations are related
to the unconscious mind of our employees
and contractors. We continuously promote
our ‘Work safe. Home safe. Everybody,
every day.’ slogan and strive to bring the
unconscious to the conscious – thinking
about the work we do before starting,
so that it is done safely.
To drive continuous improvement in our
culture and safety performance, we are
shifting our traditional safety approach
(based on controls) to the Social
Psychology of Risk (SPoR), which includes
psychological and cultural elements.
In 2023, we conducted 29,485 safety audits
to identify areas for safety improvements.
All our mills have scheduled annual
maintenance shuts when we maintain
and upgrade machinery and equipment.
Our learning and skills development
programmes cover safety and health in
different formats, from formal to on-the-job
training to engagement sessions, and also
feature relevant experts.
Mondi Group Integrated report and financial statements 2023
51
With the rise in average global temperature,
companies play a key role in delivering
tangible plans to phase out fossil fuels, cut
greenhouse gas (GHG) emissions, modernise
operations and invest in energy efficiency.
TCFD
Page 55-64
Commitment: Reduce our greenhouse gas emissions in line with science-based Net-Zero targets
Performance against baseline
2021
2022
2023
Targets*
Reduce our Scope 1 and 2 GHG emissions
by 46.2% by 2030 from a 2019 baseline
Reduce Scope 3 GHG emissions by 27.5%
by 2030 from a 2019 baseline
Reduce Scope 1, 2 and 3 emissions by 90%
by 2050 from a 2019 baseline
This year at a glance
Absolute Scope 1 and 2 emissions decreased by 22%
compared with our 2019 baseline, and 4% since last year
Absolute Scope 3 emissions decreased by 21% compared
with our 2019 baseline, and 9% since last year
Absolute Scope 1, 2 and 3 emissions decreased by 21%
compared with our 2019 baseline, and 7% since last year
* We are updating our Net-Zero targets following the disposal of our Russian operations and including recent acquisitions.
We have ambitious Net-Zero targets
to drive down GHG emissions throughout
our operations and our supply chain.
We were one of the first packaging and
paper companies with validated Net-Zero
targets and compared to our 2019 baseline
we have reduced our absolute Scope 1, 2
and 3 GHG emissions by 21%.
Our Scope 1 GHG emissions occur through
the combustion of fuels to generate energy
required for our manufacturing processes,
while our Scope 2 GHG emissions are
related to energy we purchase. Our Scope
3 indirect GHG emissions mainly arise from
purchased raw materials and logistics.
Our MAP2030 Climate and Environment
Working Groups have developed a
roadmap of action plans to deliver on
our Net-Zero targets. They keep track
of projects that support our transition
to a low-carbon economy and reduce
GHG emissions from our energy and
manufacturing facilities. We consider the
potential consequences of climate change
on nature by including biodiversity and
water stewardship in our action plans.
Actions to reduce our GHG emissions
Scope 1 and 2
– Continue to invest in our operational
infrastructure.
– By increasing primary GHG emissions
data from our suppliers, improve the
quality and accuracy of our Scope 3
GHG emissions reporting.
– Invest in energy and process efficiency
projects across our production sites.
Key projects that will contribute
towards meeting our GHG emissions
reduction targets include the installation
of a new recovery boiler at Richards Bay
(South Africa); an energy efficiency
project at Merebank (South Africa);
a new heat exchanger at Ružomberok
(Slovakia); and a modernisation project
at Dynäs (Sweden).
– Increase the share of renewables used
for energy generation and purchase
electricity from green energy providers.
Scope 3
– Collaborate with key suppliers on
decarbonisation and support them in
addressing their GHG reduction targets
and Net-Zero transition plans through
workshops and one-to-one meetings.
– Focus on raw material and fuel suppliers,
as well as logistics partners, to replace
carbon-intensive practices and materials
with innovative solutions.
– Promote the role of sustainable working
forests for carbon sequestration and
provision of renewable raw materials, in line
with our commitment to zero deforestation.
Key initiatives and progress in 2023
– At Mondi Corrugated Turkey, we installed
a new gas turbine and co-generation plant,
operating from 2022. The site is now
100% energy self-sufficient, significantly
reducing costs.
– We are continuing to reduce our GHG
emissions through energy efficiency.
A new back-pressure turbine at
Merebank will reduce Scope 2 GHG
emissions on site by 24% and effectively
double power generation.
– Our first Supplier Virtual Event
welcomed key suppliers and highlighted
their pivotal role in supporting us to
deliver against our Net-Zero targets.
We are intensifying our supply chain
collaboration on GHG reduction targets
and increasing the share of primary
GHG emissions data from our suppliers.
Mondi Group Integrated report and financial statements 2023
52
Mondi Action Plan 2030
Taking Action on Climate continued
In 2023, our performance included:
– GHG emissions increase of Scope 1
by 0.03 million tonnes and reduction of
Scope 2 by 0.11 million tonnes compared
to 2022. This is a 4% decrease in
absolute Scope 1 and 2 GHG emissions
and a 22% reduction since a 2019
baseline. Since 2004, we have reduced
our absolute Scope 1 and Scope 2
GHG emissions by 2.57 million tonnes
CO2e, a 55% reduction.
– We reduced the Group’s Scope 3
emissions by around 260,000 tonnes
CO2e, which is a reduction of 9% against
last year and a 21% reduction against
the 2019 baseline. The reduction is
mainly due to market-related lower
production volumes requiring fewer raw
materials. We recognise that making
progress in our Scope 3 emissions will
be a challenge. We will continue to work
with our suppliers to identify
opportunities to reduce GHG emissions
in our supply chain.
– As a member of the World Business
Council for Sustainable Development
(WBCSD) Forest Solutions Group,
we contributed to the development
of a catalogue of decarbonisation
actions for the forest sector.
TCFD
Page 55-64
GHG emissions of our pulp and paper mills
2023
2022
% change
2022-2023
3 %
-12%
1.59
1.63
0.33
0.29
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 2023 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
0.06
0.06
0.36
0.39
0.30
0.33
10%
—%
8%
to manufacturing (0.36 t/t) and to energy sales (0.03 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)
Our mills’ electricity self-sufficiency**
** Including energy generated for sale.
2023
2022
% change
2022-2023
18.45
19.72
-6%
1.18
1.15
3%
3.93
4.24
-7%
14.52
15.48
0.44
0.72
78%
0.52
0.84
81%
-6%
-15%
-14%
-3%
Energy consumption of Group (including converting plants and mills)‡
2023
2022
Mondi
Group
UK
operations†
Mondi
Group
UK
operations†
Total energy use (billion kWh)
Energy purchased (billion kWh)
27.15
1.58
Scope 1 emissions (million tonnes CO2e)
Scope 2 emissions (million tonnes CO2e)
† The Group did not own or operate any production sites in the UK in 2022 and 2023.
0.35
1.75
—
—
—
—
29.05
1.61
1.72
0.46
—
—
—
—
‡ This table fulfils the Group’s Streamlined Energy and Carbon Reporting (SECR) disclosure requirements.
Mondi Group Integrated report and financial statements 2023
53
Commitment: Maintain zero deforestation in our wood supply, sourcing from resilient forests
Performance against baseline
2021
2022
2023
This year at a glance
Maintained all certifications in our South African forestry
landholdings
The share of certified wood for all mills was 75%, with the
remainder being FSC Controlled Wood
Continued implementation of best management practices
in our plantation forests to support improved growth
and minimise disturbances
Key initiatives and progress in 2023
– Forest certification schemes, such as
PEFC and FSC, aim to increase
availability of sustainable fibre sources
and address emerging challenges in
forestry. We are enhancing certification
in our own forestry operations and in our
global wood fibre sourcing, as well as
proactively sharing our insights with
suppliers and partners in the forest
products value chain.
– The main threat to our forest landholdings
is from wildfires, which can occur as
frequent, high-intensity, small-scale fires
in South Africa. We mitigate the risk
of large-scale fires with a robust fire
prevention and management system.
We have developed a comprehensive
tree improvement programme, as
well as silviculture techniques, to
maintain healthy, resilient and productive
tree plantations.
– TEAMING UP 4 FORESTS, a platform
founded by the International Union for
Forest Research Organizations (IUFRO)
and Mondi, is now a professional
network of 100+ scientists, business
representatives and policymakers along
the forest sector. We aim to translate
scientific findings into practical solutions
for the sustainable provision of wood-
based products. In 2023, the preliminary
results of an IUFRO-Mondi synthesis
study were presented at the latest
Think Tank meeting. The study explores
ecological, policy, socio-economic
and technological drivers for the future
supply of fibre and other forest goods
and services.
Mondi's total wood consumption
12.8 million m3
Procurement
Page 66-68
Target
Maintain 100% FSCTM certification in our
own forest landholdings
Procure 100% responsibly sourced fibre with
75% FSC- or PEFC-certified fibre procured
by 2025 and the remainder meeting the FSC
Controlled Wood standard
Implement leading forestry measures to
ensure productive and resilient forests
Resilient forests are vital as a key source
of renewable, recyclable and compostable
material, and home to the vast majority
of the planet’s terrestrial biodiversity,
while absorbing carbon.
Wood fibre is our most important raw material
for producing our paper and packaging
solutions. We believe that the active and
sustainable management of forests, and
increasing the use of wood-based products,
will have a fundamental role in addressing
the climate crisis and in securing long-term
benefits for society.
In 2023, 100% of our wood fibre was
responsibly sourced, with 75% FSC*
(Forest Stewardship CouncilTM) or PEFC
(Programme for the Endorsement of Forest
Certification) certified, and the remainder
meeting the FSC Controlled Wood
standard. We source over 90% of our
wood fibre from countries where our pulp
and paper mills are located and aim to
make the best use of certified wood
from domestic markets.
We enable the uptake of sustainable forest
management practices and development
of resilient forest landscapes by collaborating
with partners, engaging with suppliers and
forest owners, and scaling up development
of forest certification. With significant debate
about the long-term forest strategy for
mitigating climate change and reversing
nature loss, between policymakers, the forest
sector, NGOs and scientific organisations, we
believe scientific research is crucial to inform
effective policies and management practices
in the EU and globally.
* The license number of Mondi Paper Sales GmbH –
Fibre Packaging/Paper is FSC-C012179 and Mondi
Paper Sales – Uncoated Fine Paper is FSC-C015522.
Mondi Group Integrated report and financial statements 2023
54
Mondi Action Plan 2030
Taking Action on Climate continued
Commitment: Safeguard biodiversity and water resources in our operations and beyond
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
We depend on well-functioning terrestrial
and freshwater ecosystems to operate
effectively. As part of our manufacturing
processes, we require access to natural
resources including wood and water.
Within our MAP2030 framework, we have
a comprehensive approach to climate
action and conserving natural resources.
In the forest sector, the most significant
biodiversity and water impacts and
dependencies occur upstream in forestry
landscapes and primary processing
facilities. We are committed to improving
our approach to biodiversity and water
management in our forestry operations
and mills, to limit our impacts and manage
our dependencies on natural resources.
We are conducting biodiversity status
reviews for all our pulp and paper mills
and forestry operations. Supported by
external experts, we have identified
important biodiversity sites around our
operations and evaluated environmental
aspects that potentially have an impact
on biodiversity.
We aim to manage water cycles effectively
and maintain the resilience of freshwater
ecosystems, especially in water-stressed
and water-scarce regions. Our Group
Water Stewardship Standard lists
all requirements related to our water
stewardship policy, plans and strategy,
as well as in relation to water, sanitation
and hygiene.
We collaborate with local environmental
NGOs and scientific institutions to increase
access to best available knowledge on
ecosystem stewardship, as well as to promote
communication and implementation of
effective science-based approaches
to manage biodiversity and natural capital
in our operational landscapes.
Performance against baseline
2021
2022
2023
This year at a glance
Completed assessments for 54% of our mills and forestry
operations, up from 38% in 2022
With all assessments finalised in 2021, we have developed
action plans for 54% of our mills and forestry operations,
up from 46% in 2022
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 GHG emissions.
Key initiatives and progress in 2023
– We are collaborating with our partners
to implement biodiversity action plans
(by 2025) and water impact assessments
(by 2030), developing context-specific
measures to address the most material
aspects in our operations, depending
on geographic location and value chain
position. In 2023, we conducted water
stewardship assessments for Mondi
mills in Tire (Türkiye) and Stambolijski
(Bulgaria). We have also assessed our
biodiversity impacts at Mondi mills
and have worked to develop action
plans, for example at Mondi Dynäs
(Sweden).
– As a member and co-chair of the
World Business Council for Sustainable
Development’s Forest Solutions Group,
we engage with major nature-related
frameworks, including the Taskforce
on Nature-related Financial Disclosures
(TNFD) and Science Based Targets
Network. In 2023, we engaged on the
development of the TNFD Additional
Forest Sector Guidance. The guidance,
which includes proposed disclosure
metrics, will support forest companies in
implementing the TNFD recommendations.
– Mondi South Africa’s three-year
partnership with the Endangered Wildlife
Trust aims to map biodiversity footprints
in our South African forestry operations.
We conducted ‘Species Field Days’
to track species using the ‘iNaturalist’ app
as one of the first partnership activities.
We also conducted a desk-based pilot
assessment of the biodiversity footprint
of our South African forestry landholdings.
GRI Biodiversity disclosure
www.mondigroup.com/en/sustainability
Mondi Group Integrated report and financial statements 2023
55
Mondi Action Plan 2030
Taking Action on Climate: TCFD
We continue to make progress
against our commitment to
reduce carbon emissions.
Our TCFD journey
We invest to drive more responsible and
sustainable practices and our ambitious
targets have paved the way for our success
over a number of years and set 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.
At Mondi, we are striving to reduce our
emissions in line with a 1.5°C scenario
by committing to achieve Net-Zero
greenhouse gas (GHG) emissions reduction
targets by 2050. In 2022, the Science
Based Targets initiative (SBTi) validated
our targets as science-based Scope 1, 2
and 3 Net-Zero targets. We are updating
our Net-Zero targets following the sale
of our Russian operations.
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 Group’s focus remains on risk
management and mitigation of our climate
change-related risks and maximising our
opportunities.
The timeline below shows how we have
integrated the TCFD recommendations
into our journey of taking action on climate,
and how we continue to reduce our
emissions since setting our first Group-
wide GHG reduction target in 2005 against
a 2004 baseline.
Taking Action on Climate
First Group-wide
GHG emissions
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)
First
Sustainability-
Linked Loan
signed
‘Triple A’ CDP
score (Climate,
Forest, Water)
Approval of
science-based
Net-Zero targets
by the SBTi in
line with a 1.5°C
scenario
CDP’s ‘A
List’ (A score for
Water and Forest
and A- score
for Climate)
Expanded
supplier
engagement
to support our
Scope 3
emissions
reduction
Launched our
Sustainability-
Linked Bond
Framework
CDP’s
‘A List’ (A score
for Water and
Forest and A-
score for
Climate)
2.57 million tonnes of CO2e reduction of absolute
Scope 1 and 2 emissions (2004 baseline)1
1 The absolute Scope 1 and 2 emissions exclude the impact of our disposed Russian operations.
Science-based
Net-Zero
targets:
Reduce our
Scope 1 and 2
emissions by
46.2% by 2030
from a 2019
baseline
Science-based
Net-Zero
target:
Reduce Scope 1,
2 and 3
emissions by
90.0% by 2050
from a 2019
baseline
Reduce Scope 3
emissions by
27.5% by 2030
from a 2019
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 2023
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.
Mondi Group Integrated report and financial statements 2023
56
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
TCFD recommendations and recommended disclosures
Governance
a) Describe the Board’s oversight of climate-related risks and opportunities
Page 57
Disclosure location
Further information
b) Describe management’s role in assessing and managing climate-related
Page 57
risks and opportunities
Strategy
a) Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long term
Page 59-62
b) Describe the impact of climate-related risks and opportunities on the
Page 58-59
organisation’s businesses, strategy and financial planning
Corporate governance report
Page 90-121
Taking Action on Climate
Page 51-64
Principal risks
Page 69-79
Our strategy
Page 20-21
Taking Action on Climate
Page 51-64
c) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
Page 58-59
Our strategy
Page 20-21
Taking Action on Climate
Page 51-64
Risk management
a) Describe the organisation’s processes for identifying and assessing
Page 63
climate-related risks
b) Describe the organisation’s processes for managing climate-related risks
Page 63
c) Describe how processes for identifying, assessing and managing climate-
related risks are integrated into the organisation’s overall risk management
Page 63
Metrics and 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 64
b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 GHG emissions,
Page 52
and the related risks
c) Describe the targets used by the organisation to manage climate-related
Page 51
risks and opportunities and performance against targets
Principal risks
Page 69-79
Principal risks
Page 69-79
Principal risks
Page 69-79
Key performance indicators
Page 22-23
Taking Action on Climate
Page 51-64
Environmental performance
Page 65
Taking Action on Climate
Page 51-64
Taking Action on Climate
Page 51-64
Remuneration report
Page 122-149
Mondi Group Integrated report and financial statements 2023
57
Governance
The Board
While the Board as a whole has
responsibility for overseeing our approach to
sustainability, the Sustainable Development
Committee (SD Committee), on behalf
of the Board, oversees and monitors our
sustainable development policies, practices
and progress against our MAP2030
commitments and targets. It provides
guidance in relation to sustainability matters,
including climate change-related issues,
and reviews updates of the Group’s
framework of sustainability policies and
strategies, taking into account global best
practice. The Board considers the impact
of climate change-related matters as
part of its decision-making in relation to
major capital expenditure, acquisitions
and disposals.
The relevant Board committees
The SD Committee met seven times during
2023, with climate change-related matters
discussed by the committee at all of these
meetings. Every Board member normally
attends each meeting of the SD Committee,
even if they are not a member of the
committee, providing context for
Board discussions.
The Chair of the SD Committee also reports
back to the Board after every meeting.
Read our Board members' biographies for
more information on their sustainability
skills and experience on pages 86-87.
Progress against our sustainability
commitments and targets, outlined in
MAP2030, was an integral part of the
SD 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 51-54.
Alongside this, the SD Committee also
spent time considering the climate
change-related risks and opportunities
facing the Group in the context of the
TCFD recommendations.
Each risk and opportunity was reviewed
and discussed, considering in particular
the potential impact in each case.
The SD 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.
Our Sustainability Governance Framework
Consisting of management frameworks, including the Sustainable Development Management System,
Corporate Governance Code and other management systems, policies and standards
Mondi Board
Relevant Board committees
Executive Committee
Chaired by independent non-executive directors
Chaired by the Group CEO
SD Committee
Audit Committee
Remuneration Committee
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
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
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
and the risk assessment
process, including
sustainability risks
Monitors the effectiveness
of the internal control
systems, including the
SpeakOut platform
Responsible for
recommending overall
remuneration policy
and setting of executive
and senior management
remuneration
Management responsibility
for sustainability performance
within operations guided by
the SD Committee
Responsible for remuneration
being appropriately aligned to
our MAP2030 commitments
Ensures that business unit
line management holds
primary responsibility
and accountability for
sustainability performance
Group functions and expert networks
Provide expert insights and support to business on topics such as sustainable development, legal, human resources,
communications, procurement and internal audit
Networks: Safety and occupational health; Social sustainability; Energy; Fire safety;
Environment; Product stewardship; Kraft recovery boiler; and Wood supply
Business
unit and
operational
level
responsibilities
Mondi Group Integrated report and financial statements 2023
58
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Sustainability-linked financing
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
performance reflects our commitment to
meeting our strategic sustainability targets.
During 2023, the Group launched its
Sustainability-Linked Bond Framework
(the SLB Framework). The SLB Framework
supports the future issuance of
Sustainability-Linked Bond transactions
and aligns bonds issued under it with our
ambitious sustainability targets which are:
– reduce absolute Scope 1 and 2 GHG
emissions by 46.2% in aggregate by
2030 compared to 2019; and
– reduce absolute Scope 3 GHG emissions
by 27.5% by 2030 compared to 2019.
Capital investments
Energy-related investments can drive
decarbonisation and enhance our asset
base. Since 2019, we have invested in and
approved around €500 million in energy
and process efficiency, including a new
stand-by boiler at Świecie (Poland), the
installation of a new recovery boiler and
power boiler at Richards Bay (South Africa),
an energy efficiency project at Merebank
(South Africa), a new heat exchanger at
Ružomberok (Slovakia) and a
modernisation project at Dynäs (Sweden).
Our investments aim to optimise energy
and process efficiency and replace fossil
fuel-based energy with renewable sources.
Our current commitments, outlined in
MAP2030, build on the progress we have
achieved so far and set ambitious near-
and long-term Net-Zero targets into
the future.
Governance continued
During 2023, the SD Committee also
addressed a number of other key matters
including safety performance and serious
incidents, sustainable development
governance and risks, stakeholder
relationships, environmental performance
and climate change, forestry, product
stewardship, responsible procurement
and people development and diversity.
Further details on the key matters
considered by the SD Committee during
the year can be found on page 121.
Additional governance oversight is provided
by the Audit Committee and Remuneration
Committee. The Audit Committee oversees
the Group’s corporate financial reporting,
annual planning process 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 112. 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
focus areas. Details on the key matters
considered by the Remuneration
Committee during the year can be
found on page 126.
The Executive Committee
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 SD Committee, including
those relating to climate change, are
reviewed and discussed by the Executive
Committee, prior to submission to the
SD 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 values and we have a
long-standing focus on reducing
greenhouse gas emissions. Since 2004,
the baseline year for our first Group-wide
GHG target, we have reduced our absolute
GHG emissions by 2.57 million tonnes
CO2e, which is a 55% 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 recognise 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.
Climate change in our financial
statements
The impact of climate change is considered
in the estimates of future cash flows used
in the impairment assessment of goodwill, as
detailed on pages 186-187. Climate change
is, as detailed on page 188, 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 202.
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 pages 220-221, and in relation
to the accounting policy applied for the
valuation of forestry assets and the
assessment of goodwill for impairment.
Mondi Group Integrated report and financial statements 2023
59
Our risks and opportunities
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 how the Group defines
what is material are detailed on page 43.
We evaluate and report on our short-
(up to three years), medium- (three to
seven years) and long-term (more than
seven 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 2023,
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) scenarios1, 2, 3.
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 60-62,
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 2022
Integrated report and our 2023 CDP
submission. For an overview of all our Group
principal risks, please refer to page 72.
1 The IPCC’s most optimistic scenario describes a
world where global CO2 emissions are cut to
Net-Zero by around 2050. The scenario meets the
Paris Agreement’s goal of keeping global warming
to around 1.5°C above pre-industrial temperatures,
with warming hitting 1.5°C but then dipping back
down and stabilising around 1.4°C by the end of
the century.
2 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.
3 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°C to 4.8°C and the
global mean sea level to rise by 0.45 metres to 0.82
metres by the late 21st century.
Climate change-related risks and opportunities
Climate change-related risks
Physical
risks
1. Higher wood procurement costs
2. Risk of flooding
3. South African plantation yield loss
4. Chronic changes in precipitation
5. Energy supply costs
6. GHG emissions regulatory changes
Transition
risks
(net impact)
7. Asset impairment risk
Total climate change-related risks
Climate change-related opportunities
1. Changing customer behaviour
2. Reduced operating costs through energy efficiency
3. Sale of by-products
Total climate change-related opportunities
Estimated financial
impact (€m)
Timeframe
Scenario sensitivity
Short
Medium
Long
1.5°C
2°C
BAU
90-180
15-85
15-20
10-15
60-150
30-85
10-30
230-565
120-240
15-25
15-20
150-285
Anticipated onset of
risk or opportunity
Estimated full impact
of risk or opportunity
High likelihood
Low likelihood
Mondi Group Integrated report and financial statements 2023
60
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Climate change-related risks: Physical risks
Risk
1. Higher wood
procurement
costs
Timeframe:
Long term
Risk description
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, which is reflected in the 2030
EU Forest Strategy.
How we manage and mitigate this risk
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.
Estimated
financial
impact
(€m)
90-180
2. Risk of
flooding
Timeframe:
Long term
3. South
African
plantation
yield loss
Timeframe:
Medium term
4. Chronic
changes in
precipitation
Timeframe:
Long term
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 considers mill
downtime due to wider local infrastructure damage
in the event of a significant flooding event.
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.
15-85
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.
Increased severity and frequency of extreme weather
events may result in disruptions and decreased
harvesting capacity of our managed plantation forests.
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.
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, under canopy biomass
management and investment in a modern firefighting fleet
and professional firefighters.
15-20
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.
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.
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.
10-15
Mondi Group Integrated report and financial statements 2023
61
Climate change-related risks: Transition risks
Risk
5. Energy
supply
costs
Timeframe:
Medium term
Risk description
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 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 costs risk quantification uses the
Group’s energy cost structure as a basis for calculation.
How we manage and mitigate this risk
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 78% 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 sourcing of energy 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.
Estimated
financial
impact
(€m)
60-150
6. GHG
emissions
regulatory
changes (net
impact)
Timeframe:
Medium term
7. Asset
impairment
risk
Timeframe:
Long term
10 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,
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. The South African carbon tax is currently
offset by our forestry-related sequestration allowance;
however, a small cost is anticipated from 2025 onwards.
Our risk quantification considered an EU ETS carbon
price range of €50 to €150 per tonne CO2 and includes
the anticipated South African carbon tax.
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.
We collect detailed information on GHG emissions from
our mills and consider the cost of carbon when making
investment decisions.
30-85
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.
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.
10-30
Total estimated financial impact of climate change-related risks
230-565
Mondi Group Integrated report and financial statements 2023
62
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
Climate change-related opportunities
Opportunity
1. Changing
customer
behaviour
Timeframe:
Short to
long term
2. Reduced
operating
costs through
energy
efficiency
Timeframe:
Medium term
3. Sale of
by-products
Timeframe:
Short term
Opportunity description
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
a better alternative when manufactured, used and
disposed of appropriately. Leveraging our unique
portfolio of paper-based, hybrid and flexible plastic
solutions, 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 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.
Renewable by-products of the kraft pulping process
include products such as tall oil. 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.
Estimated
financial
impact
(€m)
120-240
How we realise this opportunity
As a leading packaging producer, Mondi is well positioned
to leverage the Group’s innovation capabilities, leading
market positions and strong customer base.
We actively collaborate with our customers to develop
innovative solutions that are sustainable by design, taking
industry-wide design for circularity guidelines into
consideration.
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.
15-25
Investing in optimising energy and process efficiencies
in our operations has been a long-standing focus.
The Group’s current capital investment programme
continues to prioritise investments 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.
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.
15-20
Total estimated financial impact of climate change-related opportunities
150-285
Mondi Group Integrated report and financial statements 2023
63
Risk management
Climate change is specifically identified
as a standalone Group principal risk, as
detailed on page 75. Climate change risks,
and the related mitigating actions, are
reviewed and updated annually using
the input of the content reviewed by
the SD Committee and presented to
the Audit Committee along with all Group
principal risks. Read about the Group’s risk
management framework on pages 69-70.
A cross-functional climate risk 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 SD 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
2024-2026 plan (budget period).
Climate-related risk integration into our risk
management framework
Group risk
– Climate change is specifically identified as a standalone Group principal risk
– Detailed annual risk assessments performed across the Group
– Regular review of climate change-related matters by the SDC
Risk monitoring
– Monitor progress against our science-based Net-Zero targets for Scope 1, 2 and 3
emissions based on a 1.5°C global warming scenario
– Review of climate change-related risks and opportunities impact on budget planning
Operational mitigation and controls
– Invest to optimise energy and process efficiency and replace fossil fuel-based energy with
renewable sources
– Risk mitigation tools such as detailed flood management plans
Risk management framework
Page 69-70
Mondi Group Integrated report and financial statements 2023
64
Mondi Action Plan 2030
Taking Action on Climate: TCFD continued
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.
Given the strategic importance
of sustainability, the Group’s
executive directors’ and the
wider senior management’s
remuneration is linked to their
contribution to the overall
success of MAP2030, including
our GHG reduction targets.
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 and our value chain.
Our science-based Net-Zero targets
include both short-term and long-term
GHG emissions reduction targets and are
approved by the SBTi. Our existing Scope
1, Scope 2 and Scope 3 science-based
targets are ambitious and 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 51-64
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 2023 absolute Scope 1
and absolute Scope 2 GHG emissions data,
in accordance with ISO 14064-3, and to
a limited level of assurance our Scope 3
GHG data.
Given the strategic importance
of sustainability, the Group’s executive
directors' and the wider senior
management's 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 more than
3,000 employees across the Group,
is linked to sustainability objectives.
Remuneration report
Page 122-149
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
GHG emissions
Our approach
We report our performance against Scope 1, 2 and 3 emissions
Transition risks
Physical risks
Climate-related
opportunities
Capital deployment
Internal carbon prices
Remuneration
We report the potential financial impact for three transition risks,
as well as the mitigation measures in place
We report the potential financial impact for four physical risks,
as well as the mitigation measures in place
We report the potential financial impact for three opportunities
arising from climate change, including the impact on demand
for our products
We discuss our capital investment strategy deployed to mitigate
the impact of climate change
We consider the impact and cost of the Group’s GHG emissions
when evaluating our capital investment projects
Annual bonus incentives include a proportion associated
with GHG emissions
Climate-related
risk/opportunity
Risk 6
Risks 5, 6, 7
Risks 1, 2, 3, 4
Opportunities 1, 2, 3
Risks 2, 5, 6, 7
Risk 6
Further
information
Page 61
Page 61
Page 60
Page 62
Page 58-61
Page 61
Page 64
Mondi Group Integrated report and financial statements 2023
65
Responsible business practices
Delivering on responsible
business commitments
Our responsible business practices encompass environmental performance, human rights, community
and responsible procurement. Each area has its own commitments and targets to guide our actions.
Environmental performance
Commitment: We will continually work on improving the environmental performance of our
operations to minimise environmental impacts
Performance against baseline
2021
2022
2023
This year at a glance
Specific contact water consumption decreased by 4%
compared with our 2020 baseline. We reported a slight 1%
decrease against 2022
Specific COD emissions increased by 2% compared with
our 2020 baseline, and increased by 10% since last year,
due to operational challenges at the wastewater treatment
plants of two mills
Our specific NOx emissions were 10% lower compared
with our 2020 baseline, and 5% lower than last year.
This is mainly due to investments in energy efficiency
and modernisation of our energy plants at our mills
Specific waste to landfill decreased by 44% compared
with our 2020 baseline, and 39% compared to last year,
mainly due to projects in Richards Bay (South Africa)
and Ružomberok (Slovakia)
100% of our pulp and paper mills and 76% of our
converting operations are ISO 14001 certified. This is an
increase from 74% in 2022 to 79% across the Group
Target
Reduce specific contact water consumption
by 10% by 2030 from a 2020 baseline
Reduce specific effluent load (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
Human rights
Commitment: Strengthen governance systems to prevent human rights violations and remedy any
adverse impacts
Performance against baseline
2021
2022
2023
Target
Develop the due diligence and risk
assessment methodology and guidance
with the support of the Danish Institute
for Human Rights (DIHR) by the end of 2021
100% of operations with a completed Human
Rights Due Diligence and 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
This year at a glance
Completed this target in 2021 and continuously integrate
the learnings from the due diligence process to improve
our methodology
Implementation of the Human Rights Due Diligence
approach initiated in all our operations, through detailed
risk identification as a baseline for our action plan and
roadmap going forward
No adverse impacts identified in our operations. We will
continue to work on the improvement areas defined
to further mitigate our human rights risks
Key
Completed
On track
Behind target
Not on track
In development
Mondi Group Integrated report and financial statements 2023
66
Responsible business practices
Delivering on responsible
business commitments continued
Communities
Commitment: Maintain social investments in our communities to support sustainable development
aligned with local needs
Target
Report on our total social investment annually
Performance against baseline
2021
2022
2023
This year at a glance
In 2023 we spent €7.3 million on social investments
Procurement
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 against baseline
2021
2022
2023
This year at a glance
We introduced a robust third-party sustainability rating
tool, improving transparency and risk management in
our supply chain and strengthening our Responsible
Procurement process for scale up across our supply chain.
At year end, 1.1% of the 460 supplier production sites
screened in the pilot remain potential high-risk with clear
actions for risk mitigation defined.
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)
For high-risk countries, maintain 100% FSC-
certified fibre sourcing or implement
additional risk mitigation measures
100% PEFC- or FSC-certified market pulp
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
Performance against baseline
2021
2022
2023
This year at a glance
Achieved in 2023
Achieved in 2023
Achieved in 2023
Achieved in 2023
Mondi participated in the PEFC/SFI Joint Conference in
Canada, where members approved the PEFC strategy
* Total number of residual high-risk suppliers divided by the total number of suppliers screened.
Mondi Group Integrated report and financial statements 2023
67
Waste
To reduce our waste sent to landfill and
increase the circularity of our material flows,
we are exploring alternative solutions
involving recycling and reuse.
We monitor the volume of our operational
waste (by waste type and waste routes)
across all operations and are investigating
alternative routes to divert unavoidable
waste from going to landfill. In 2023, we
generated about 0.8 million tonnes of
waste in our manufacturing operations,
of which 74% was brought back into value
creation processes by recycling and reuse
of secondary raw materials. We disposed
of 65,000 tonnes of waste to landfill
(2022: 116,000 tonnes). Approximately 2%
of our total waste streams is hazardous
waste and in 2023, we sent around
600 tonnes of hazardous waste to landfill –
approximately 1% of our total waste
to landfill (2022: 4%).
Human rights
We respect human rights in our operations
and across our supply chain, and our human
rights approach is embedded into our
relevant practices and policies. We report
against the ten principles of the United
Nations Global Compact and publish a
Human Trafficking and Modern Slavery
Statement according to the UK Modern
Slavery Act annually. We have robust
internal processes and tools to facilitate
the reporting, investigation and resolution
of potential human rights violations.
Our priority human rights risk areas are
determined by and take into consideration
any inherent geographical risk, as well as
business processes, industry risks and
legislative requirements. We focus on
the most significant topics: fair working
conditions, freedom of association and
collective bargaining, indigenous and land
rights, modern slavery, child labour
and safeguarding our environment.
Our Environment Policy outlines the
requirement for cleaner production and
the drivers for our commitments. Our
Sustainable Development Management
System has environmental management
systems that support us to: meet
environmental protection standards;
comply with legislation; improve reporting
and transparency; and adhere to the
principles of resource efficiency.
Water
We aim to reduce our water consumption
and increase water recycling in our
operations. Managing water resources in an
efficient and sustainable way, and investing
in up-to-date water infrastructure, is a
priority – particularly in regions with high
water-related risks. In 2023, we reduced
our specific contact water consumption
by 4% from our 2020 baseline.
We monitor the water we withdraw by
source and report on water use in our
manufacturing and energy generation.
In 2023, we conducted water stewardship
assessments, focused on regions with
higher water risk. We have a focus at
each mill to tackle water consumption,
supported by experts in our Group
Technical & Sustainability teams.
Air emissions
Our main source of air emissions is on-site
energy generation in our boilers and lime
kilns. Air emissions associated with
combustion of fuels for energy production
include nitrogen oxide (NOx) emissions,
generated by fossil fuels and biomass
incineration. These substances can damage
forests, crops and other vegetation by
acidification of soils. We regularly monitor
SO2, NOx, total reduced sulphides (TRS)
and dust, and we calculate our GHG
emissions based on fuel consumption.
We strictly adhere to permitted limits
and are continuously investing in our
operations to minimise our air emissions.
For more information on our air emissions,
please see our GRI & SASB Index and
Consolidated Performance data
documents, available on our website.
Sustainability reports and publications
www.mondigroup.com/sustainability/
reports-and-publications
MAP2030, our
sustainability framework,
is built on a foundation
of responsible business
practices and created
around our purpose
of contributing to a
better world by making
innovative paper and
packaging solutions that
are sustainable by design.
Environmental performance
Our manufacturing processes depend
on natural resources, with environmental
impacts primarily from our pulp and paper
mills. We generate most of the energy we
use from biomass-based by-products, in
pulp manufacturing and from fossil fuels,
which result in greenhouse gases and other
air emissions. Our manufacturing processes
also use significant amounts of water
and generate waste.
By investing in our operations, efficiently
using water resources, working towards
zero waste and reducing air emissions,
we reduce our environmental impacts
and prevent environmental degradation.
We are implementing best available
techniques, modernising our energy
sources and manufacturing facilities to
reduce our water and air emissions. In turn,
this is helping us to run resource-efficient
operations, avoid disturbances and protect
the rights of our stakeholders. We engage
with external stakeholders to reduce our
environmental impacts, finding alternative
solutions in collaboration with industry
partners and innovating together
to support a circular economy.
Mondi Group Integrated report and financial statements 2023
68
Responsible business practices
Delivering on responsible
business commitments continued
Our Human Rights Due Diligence approach
is a continuous management process,
and we review our operational impacts
through regular stakeholder engagement,
collaborating with external human rights
experts, and engaging with our partners and
in our communities. We conducted in-depth
risk assessments across all operations in
2023, reflecting our prioritised human rights
risk focus areas and highlighting areas
to improve. The established baseline of
identified risk areas and mitigation processes
sets the foundation for our human rights
action plan and roadmap.
Through our anonymous whistleblowing
and grievance platform SpeakOut and
other channels, we received messages
relating to 90 incidents (2022: 47 incidents).
Topics encompassed allegations
concerning work-related harassment
and unfair treatment, labour rights and
safety and health matters.
Communities
We aim to maximise our positive impact
in local communities by supporting their
sustainable development. We engage
with our local stakeholders to understand
the needs of our communities and how
we impact them.
In 2023, we conducted Stakeholder
Engagement Conversations in our
Ružomberok (Slovakia) mill. These open
dialogues with a variety of stakeholders,
facilitated by an independent third party
inform our understanding and actions
in relation to our local impact.
Our voluntary investments include
contributions where we can make the
greatest difference, as well as employees
sharing their skills, time and networks.
We focus on initiatives related to education,
environmental protection, enterprise support
and job creation, as well as support for
community health care and infrastructure
development. Our social investments in
2023 were €7.3 million (2022: €8.9 million).
In times of crisis we provide special
donations to credible NGOs and aid
organisations to help their efforts.
Procurement
Continuously improving transparency and
sustainability in our supply chain is an
essential part of our responsible business
practice. We collaborate with our suppliers
to support responsible procurement,
manage supply chain risk and enhance our
suppliers’ own sustainability practices.
In 2023, our global supply chain included
around 12,000 suppliers in 69 countries.
We procured €6.2 billion worth of
goods and services from these suppliers
(2022: €7 billion), with 57% sourced
locally (2022: 58%).
To address specific wood and pulp
procurement requirements, our dedicated
Due Diligence Management System
(DDMS) verifies that we purchase all our
wood fibre from responsible sources in line
with our commitment to zero deforestation.
In 2023, 100% of our wood fibre was
compliant with FSC, PEFC or Controlled
Wood requirements.
For all other materials and services, we
identify sustainability risks and assess
supplier performance through our
Responsible Procurement process,
which improves transparency and supports
supplier engagement. In 2023, we began
collaborating with the global sustainability
rating company EcoVadis with a selected
pilot group of 460 Mondi suppliers:
36 suppliers with high sustainability
risk were invited to participate in an
individual assessment. From this,
5 suppliers were unresponsive or
declined our assessment invitation
and remain potential high-risk (1.1%).
Sustainable Development
report 2023
www.mondigroup.com/sd23
Sustainability governance
The Board is responsible for
sustainability governance and
delegates different areas of
responsibility to specific committees
and functions, including the
Sustainable Development
Committee, Audit Committee,
Remuneration Committee,
Executive Committee, Operational
Management team as well as
different Group functions and
networks. Our Sustainable
Development Management
System (SDMS) guides effective
governance of our activities and
the implementation of policies.
Our Business Code of Ethics
supports high ethical standards
across our organisation. 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.
All relevant employees must
complete mandatory business
integrity training each year, which
covers anti-corruption topics.
We follow strict guidelines and
procedures to ensure compliance
with applicable laws and regulations.
Read online
www.mondigroup.com/
sustainability/approach/governance
Sustainability-related
performance in remuneration
20% of the annual bonus awarded
to members of the Executive
Committee, which includes the
Group CEO and the Group CFO,
and more than 3,000 employees
across the Group, is linked to
sustainability targets. The
sustainability KPIs cover all three
MAP2030 action areas: reduction
of specific GHG emissions (5%);
reduction of specific waste to
landfill (5%); and safety (10%).
Remuneration report
Page 122-149
Mondi Group Integrated report and financial statements 2023
69
Principal risks
Managing our risks
Our Group risk management
framework and internal control
environment are designed to
address the risks that could
undermine our business model
and ability to execute our
strategy into the future.
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.
In combination with the Audit Committee,
the Board conducted, over the course
of the year, a robust assessment of the
Group’s principal and emerging risks to
which Mondi is exposed and it is satisfied
that the Group has effective systems and
controls in place to manage these risks
within the risk appetite levels established.
Our internal control
environment
Our internal controls aim to provide
reasonable assurance as to the accuracy,
reliability and integrity of our financial
information and 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
monitoring 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 2023 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.
Mondi Group Integrated report and financial statements 2023
70
Principal risks continued
Our risk management framework and internal control environment
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
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
Formulates risk management policies in terms of the approved risk management framework to ensure risks are managed considering
established risk appetite levels
Assesses and monitors risks on an ongoing basis
Executive Committee
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. controlling,
information technology, legal, procurement, safety and health,
sustainable development, tax and treasury)
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
– 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 review
– 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 (controlling, information
technology, safety and health, sustainable
development, tax and treasury) each have
Board-approved policies in place against which
conduct is regularly assessed.
Independent assurance
– 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, Sustainable Development report
assurance and information security programmes.
– The Group sustainable development key
performance indicators are externally verified.
Sustainable Development report
www.mondigroup.com/sd23
Risk management process
Continuous
improvement
strengthens our
processes in line with
our risk management
framework
Mondi Group Integrated report and financial statements 2023
71
Principal risks in 2023
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.
A detailed risk assurance map is used
to present our principal risks to the Board,
Audit Committee and Sustainable
Development Committee, facilitating
comprehensive discussions on risk.
The Group remains committed to
the continuous improvement of risk
assessment, risk management and
risk reporting.
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.
The pandemic risk has been removed
as a separate Group principal risk and
incorporated as part of the employee
and contractor health and safety risk,
though it is part of the risk consideration
embedded in all the principal risks.
The Group is making progress towards
our MAP2030 commitments. Further details
of our performance in this regard can be
found on page 44. Consequently, the
climate change risk was derated due to
the assessed impact on Mondi after climate
mitigation and adaptation initiatives are
considered. The assessment is supported
by the Group’s capital investment
programme which is focused on growing
capacity through more sustainable means
of production and is designed to help us
meet our science-based Net-Zero targets.
The tax risk was derated with an assessed
decrease in both impact and likelihood.
The assessed derating is supported by
initiatives taken in recent years to reduce
complexity in our legal structure and the
Group's risk occurrence track record.
During the year, the risk to energy security
and related input costs was derated with
an assessed decrease in both impact and
likelihood. Stabilisation of European energy
markets, which are adapting to the impact
of the war in Ukraine and a high inflationary
environment, and a proven operational and
financial performance through a period of
energy price and supply volatility in 2022
and 2023 support confidence in the
Group’s risk mitigating and planning
activities. Additionally, during the year
the Group implemented initiatives to
further reduce dependence on natural gas
to operate our mills.
Emerging risks
The Board continues to highlight the
execution of major capital expenditure
projects as an 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.
Risk appetite
A review of the Group’s approach to the
assessment of risk appetite was performed
during the year. The review considered
various risk appetite methodologies
and settled on an optimal approach which
enables risk owners to use and own
the risk appetite in a practical manner.
The Group utilises a four-point
risk appetite rating scale against which
the residual risk of each principal risk
can be considered. Where a difference is
identified between the risk appetite and
residual risk rating, the risk owner provides
an explanation for and a chosen approach
to address the differential to the Executive
Committee and the Board.
The Board, in combination with the Audit
Committee, is satisfied that the review
performed has enhanced the Group’s
approach to risk management.
Mondi Group Integrated report and financial statements 2023
Principal risks continued
Our principal risks
Strategic
Industry productive capacity
Product substitution
Fluctuations and variability in selling prices
or gross margins
Country risk
Climate change risks
Financial
Capital structure
Risk owner
Executive Committee
Link to strategy
● ●
●
●
● ●
●
Group Head of Sustainable Development ● ● ●
Group CFO
● ● ●
●
72
●
●
●
Currency risk
Tax risk
Group Treasurer
Group Head of Tax
Operational
Cost and availability of raw materials
Executive Committee
Energy security and related input costs
Technical integrity of our operating assets
Group Head of Operations
● ● ●
● ● ●
● ●
● ● ●
● ● ●
Environmental impact
Group Head of Sustainable Development ●
Employment and contractor health and safety Group Head of Safety & Health
Attraction and retention of key skills and talent
Group HR Director
Cyber security risk
Compliance
Reputational risk
Chief Information Officer
Executive Committee
●
●
●
●
● ● ● ● ●
●
● ● ●
Link to strategy
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
Group risk map
The 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 updated annually, with the
movement of risks reflecting changes
to principal risks during the year.
Risk movement in the year:
Mondi Group Integrated report and financial statements 2023
73
Strategy key
Driving value accretive
growth, sustainably
Drive performance
along the value chain
Invest in assets
with cost advantage
Inspire
our people
Partner with customers
for innovation
Risk trend key
Increased
No change
Decreased
Strategic risks
Industry productive capacity
Description
– 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.
Product substitution
Description
– 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,
lighter weighting 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 EU's Packaging and Packaging Waste Regulation (PPWR)
might further influence product substitution.
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
Link to
strategy
Key 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.
Key mitigation
– A wide portfolio of paper-based and flexible plastic-based solutions
provides protection from the effects of substitution.
– 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
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
products.
– Continuous focus on products enjoying positive substitution
dynamics and growing regional markets.
– Regular monitoring of trends and new developments in our product
Link to
strategy
markets.
– Continued collaboration with stakeholders across the value chain
such as the Ellen MacArthur Foundation, CEFLEX and Cepi.
– Providing product impact and life cycle analysis insights to
customers through our Product Impact Assessment tool, product
carbon footprints and other expert analysis on trade-offs.
Mondi Group Integrated report and financial statements 2023
74
Principal risks continued
Strategic risks continued
Fluctuations and variability in selling prices or gross margins
Description
– 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.
Country risk
Description
– The Group operates in a number of countries with differing political,
economic and legal systems. In some countries, such systems are
less predictable than in countries with more developed institutional
structures. Political or economic upheaval, 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 evident in many economies. Türkiye
is experiencing a hyperinflationary economic environment.
– In Egypt, foreign currency is prioritised to pay for essential goods
resulting in difficulties to source foreign currency to pay our foreign
suppliers.
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
Link to
strategy
Key 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.
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
Link to
strategy
Key mitigation
– Our geographic diversification and decentralised management
structure reduce our exposure to any specific jurisdiction.
Our operational management teams have strong localised
operational experience.
– Capital and debt are 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.
Mondi Group Integrated report and financial statements 2023
75
Strategic risks continued
Climate change risks
Description
– Climate change risks will likely impact our business in the medium
and long term.
– The energy we require to manufacture our products results in
Scope 1 and Scope 2 greenhouse gas (GHG) emissions. Our value
chain emissions contribute to our Scope 3 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 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.
Financial risks
Capital structure
Description
– A strong and stable financial position enables strategic flexibility
and provides the ability to take advantage of opportunities.
– 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.
Risk owner
Group Head of
Sustainable
Development
Risk trend
Link to
strategy
Key mitigation
– Reducing our GHG emissions through a combination of capital
investment and ongoing efficiency programmes to improve
our energy efficiency, increasing the use of biomass-based fuels
and decreasing 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.
– 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
Pages 55-64
Key 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.
– Compliance with treasury policies is monitored and we engage
external advisers to review the Treasury function at regular intervals.
Risk owner
Group CFO
Risk trend
Link to
strategy
Currency risk
Description
– We are exposed to the effect of changes in foreign currency rates;
Key mitigation
– Hedging is utilised for balance sheet exposures and material
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, Czech koruna and Swedish krona, 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, which can result in lower revenues
and earnings.
forecasted capital expenditures upon identification.
– Diversification of the Group’s currency exposure creates natural
hedges, and 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.
Risk owner
Group Treasurer
Risk trend
Link to
strategy
Mondi Group Integrated report and financial statements 2023
76
Principal risks continued
Financial risks continued
Tax risk
Description
– There is an increasing disclosure compliance burden in the
international tax environment, 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 intra-group charges, the basis for which
is subject to review during tax audits.
Operational risks
Cost and availability of raw materials
Description
– 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 raw material inputs 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, increased use of wood as biofuel,
alternative use of wood for heating and changes in demand for
wood as a building material.
– Climate change will 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,
particularly in the EU.
– Force majeure events can influence raw material supply and pricing,
directly affecting the market production and supply balance.
Key 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 intra-group
transactions in accordance with Organisation for Economic
Co-operation and Development (OECD) guidelines.
– External advisory opinions are obtained where relevant, including
major projects such as acquisitions and restructuring activities.
– Regular engagement with external advisers to stay up to date with
changes in tax legislation and tax practice.
Risk owner
Group Head of Tax
Risk trend
Link to
strategy
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
Link to
strategy
Key mitigation
– We are committed to acquiring our raw materials from responsible
sources and avoiding the use of any controversial or illegal supply.
Our Responsible Procurement process helps us to assess and
evaluate the performance of our suppliers and their adherence
to our policies.
– Multi-stakeholder processes address challenges in meeting demand
for sustainable fibre; we encourage legislation for the local collection
of recycled materials.
– Our operations use multiple suppliers and a centralised procurement
team works closely with our operations in actively pursuing
longer-term agreements with strategic suppliers; in Europe, wood
is sourced 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.
– Strong relationships 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.
– Where relevant, indexation clauses in revenue contracts allow
the pass-through of major raw material price movements.
– 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.
Mondi Group Integrated report and financial statements 2023
77
Operational risks continued
Energy security and related input costs
Description
– 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 and
could be intermittent, while renewable energy sources, such
as wind and solar, are subject to unpredictable physical weather
patterns. Competition for sources of renewable 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 renewable energy, either from sales
of certificates, subsidies or sales of renewable energy to the grid,
represents a source of income for various pulp and paper mills
and is 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.
Risk owner
Group Head of
Operations
Risk trend
Link to
strategy
Key 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.
– Optimised 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.
– Monitoring of renewable energy market fundamentals and changes
in legislation supported by contact with local energy regulators.
– Detailed compliance assessments regarding Industry Emissions
and Energy Efficiency Directives to determine future investment
requirements.
Technical integrity of our operating assets
Description
– Our four major mills, Świecie (Poland), Štětí (Czech Republic),
Ružomberok (Slovakia) and Richards Bay (South Africa), 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.
Key mitigation
– A 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.
Risk owner
Group Head of
Operations
Risk trend
– Detailed risk assessments of high-priority equipment are conducted
with specific processes and procedures in place for the ongoing
management and maintenance of such equipment.
– Production optimisation throughout the organisation by learning from
our best performing operations and identifying emerging issues early.
Link to
strategy
– Digital initiatives utilising advanced analytics, machine sensors and
process automation enable improved operational efficiency and
asset utilisation.
– All incidents are actively monitored with a formal reporting 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.
– A Fire Protection programme supported by external experts and
independent loss prevention audits with property insurance cover
for key risks.
Mondi Group Integrated report and financial statements 2023
78
Principal risks continued
Operational risks continued
Environmental impact
Description
– Our operations require water and energy 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.
Key mitigation
– Compliance with all applicable environmental requirements where
we operate and with our own policies and procedures, at or above
local policy requirements, supported by externally accredited
environmental management systems.
– A clean production philosophy to address the impact from emissions,
Risk owner
Group Head of
Sustainable
Development
Risk trend
Link to
strategy
discharge and waste.
– Conducting water stewardship assessments to address risks related
to water scarcity, and promotion of equitable use of water resources
among local stakeholders wherever we operate.
– Specialist internal networks share best practices and
comprehensively report and investigate major environmental
incidents to avoid reoccurrence.
– Monitoring and reporting of our environmental performance
indicators against our targets, with our Scope 1 and 2 GHG
emissions independently assured to a reasonable assurance level
and Scope 3 receiving limited assurance.
– Biodiversity assessments at our manufacturing and forestry
operations to evaluate our impact on biodiversity and ecosystems,
and action plans to manage impacts.
Employee and contractor health and safety
Description
– 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.
Key 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.
Risk owner
Group Head of
Safety & Health
Risk trend
– 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.
Link to
strategy
– Embedded safety management systems including, among others,
risk assessments, safety procedures and controls.
– Continuous focus on improving our 24-hour safety mindset
and developing 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.
– Continuously 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.
– 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.
Mondi Group Integrated report and financial statements 2023
79
Operational risks continued
Attraction and retention of key skills and talent
Description
– Access to the right skills, particularly management and technical
Key mitigation
– Our culture and values play a key role in empowering and inspiring
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.
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 which supports
our reputation and which assists in attracting and retaining our people.
– Investment in employer branding, fair and transparent recruitment
practices and having diversity and inclusion, labour and human rights
policies in place.
– Competitive compensation levels are maintained through
benchmarking and we 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.
– A Group-wide Employee Survey approximately every two years and
regular pulse surveys provide 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.
Risk owner
Group HR Director
Risk trend
Link to
strategy
Cyber security risk
Description
– 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.
Key mitigation
– A comprehensive IT Security Policy approved by the Board.
– Extensive training and awareness programmes are provided for all
our users.
– IT infrastructure is regularly tested and our systems are based on
well-proven products.
– Regular threat assessments utilising external providers.
– The Group’s core IT services are ISO 27001 certified.
– Established incident response and business contingency plans
are in place.
Risk owner
Chief Information
Officer
Risk trend
Link to
strategy
Compliance risk
Reputational risk
Description
– 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 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.
Key mitigation
– A comprehensive training and compliance programme, supported
by self-certification and reporting, with personal sanction for failure
to comply with Group policies.
– Engagement with local stakeholders through formal and informal processes.
– Perform screening of our suppliers for sustainability risk in accordance
with our Code of Conduct for Suppliers to better align with our risk criteria.
– Continuous assessment of our governance of human rights issues
and any potential risks in our operations and supply chain.
– 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 conduct that may be contrary to our values.
Risk owner
Executive
Committee
(oversight CEO)
Risk trend
Link to
strategy
Mondi Group Integrated report and financial statements 2023
80
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 strategy
are described in detail on pages 14-19
and 20-21 respectively. Our strategy is to
deliver value accretive growth sustainably.
We do this by building 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 22-29.
Mondi’s geographical footprint, with around
100 production sites across more than
30 countries, and broad product range help
mitigate potential risks of customer or
supplier liquidity issues. With our scale,
quality asset base, integrated operations
and excellent customer proposition, 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 2023, the Group had
€754 million of undrawn, committed debt
facilities. The weighted average maturity of
the Group’s committed debt facilities was
2.8 years. The principal loan arrangements
are disclosed in note 20 of the financial
statements. In addition, the Group had
€1,592 million of cash and cash equivalents
available, which include proceeds from
the disposal of discontinued operations
of €806 million.
Assessment of viability
The Board believes that the three years to
December 2026 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 discontinued operations
or proceeds from disposal are fully
excluded from the assessment. The net
proceeds from the sale of the Group's
Russian assets have been returned to the
shareholders by way of a special dividend
on 13 February 2024 and are hence
excluded from the viability 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 69-79 have been assessed for their
potential impact on the Group’s viability
over the next three years as part of the
risk assessment. Our structurally growing
packaging markets are described in
more detail on pages 12-13.
The Group’s three-year 2024-2026 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 principal 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 11% 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 3% 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.
Wood, gas and electricity prices in our major
European operations have been tested in
Scenario 3, based on internal management
assumptions. The impact of the other
input costs, which are usually passed on
through higher sales prices in the converting
operations, have been excluded from the
downside sensitivities, similar to prior years.
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.
Scenario testing
Scenario modelled
Scenario 1
Volume compression
Sales volume reduction across pulp and paper mills
and converting operations
Scenario 2
Scenario 3
Scenario 4
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
Currency risk
Volatility in foreign exchange rates
Link to principal risks
Industry productive capacity
Product substitution
Technical integrity of our operating assets
Fluctuations and variability in selling prices
or gross margins
Costs and availability of raw materials
Energy security and related input costs
Currency risk
Mondi Group Integrated report and financial statements 2023
81
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 we consider are
most likely to happen in combination.
The likelihood of other scenarios happening
in combination is considered remote.
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 Group’s formal planning horizon. Testing
compliance with financial covenants continues
not to be needed as none of the Group’s loan
agreements has a financial covenant.
While the Group’s going concern assessment
(as set out below) takes what the directors
consider to be a very cautious approach in
not assuming any renewal of the Group’s
Eurobond maturing in April 2024, in part in the
context of the short timeframe for that going
concern assessment, the Board notes that
the Group has a track record of successfully
accessing both the bank and debt capital
markets for funding, and the Group’s
management is expecting to be able
to refinance the facilities maturing during
the viability assessment period. 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
(A-, outlook stable), ensures the Group has
access to funding through the business cycle.
For this reason, for the purposes of assessing
viability over a longer period, the assessment
was carried out against the Group’s
committed debt facilities on the assumption
that the Group’s €500 million Eurobond
maturing in April 2024 and €600 million
Eurobond maturing in April 2026 will
be refinanced.
Taking into account the Group’s strategy,
principal risks and the results of the downside
scenario assessments, and on the assumption
that over the extended viability assessment
the Group will continue to be able to
successfully refinance its debt as it has done
it historically, 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 three year period
of the viability 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 assessment of going concern has been
based on the Group’s continuing operations.
Any impact from discontinued operations or
proceeds from disposal are fully excluded
from the assessment. The net proceeds from
the sale of the Group's Russian assets have
been returned to shareholders by way of a
special dividend on 13 February 2024 and are
hence excluded from the going concern
assessment.
The Group has a strong balance sheet. At
31 December 2023, the Group had a liquidity
position of €2,346 million, comprising €754
million of undrawn committed debt facilities
and cash and cash equivalents of €1,592
million available, which included proceeds
from the disposal of discontinued operations
of €806 million. As the Group’s debt facilities
and loan agreements contain no financial
covenants, in performing its going concern
assessment the directors have focused on
liquidity, which was adjusted to exclude the
net proceeds from the disposal of
discontinued operations, given that these
were distributed to shareholders by way of
a special dividend in February 2024.
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, being those arising over the 18
month going concern assessment period as
reflected in the Group’s 2024-2026 plan, 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 (consistent with the
sensitivities described in Scenarios 1 and 2 in
the viability statement) and was carried out
against Mondi’s current committed debt
facilities, and on 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 (which
is consistent with the assumption applied in
the longer-term viability assessment).
In the severe but plausible downside scenario,
including no assumed refinancing of the
Group’s debt, the Group has sufficient liquidity
headroom through the whole period covered
by the going concern assessment.
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 48% to the
planned underlying EBITDA in the period until
30 June 2025, well in excess of that
contemplated in the severe but 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 such as
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
2023.
Mondi Group Integrated report and financial statements 2023
82
Chair’s introduction
How has our governance framework
supported our progress in 2023?
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
82
85
88
90
105
110
119
122
150
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.
While 2023 was a year of ongoing
economic and geopolitical uncertainty,
Mondi’s well-established and robust
governance framework continued to
support the Board in its decision-making,
allowing it to lead the Group with integrity
and to keep our purpose and values at the
forefront, addressing the challenges this
uncertainty presented.
Effective governance and a culture of
transparency, openness and respect among
Board members and senior managers
continued to provide the foundation for
discussions and decision-making in the
boardroom. They remain key to ensuring
the long-term sustainable success of our
business, ensuring that the Board operates
effectively and that the voices of our
stakeholders are heard during the Board’s
deliberations.
Board composition
Ensuring that the composition of the
Board continues to give us the breadth
and diversity of knowledge, skills and
experience we need to achieve our
purpose and deliver our strategy is crucial
and remains under the constant scrutiny
of the Nominations Committee.
As outlined in last year's report, I am
pleased to confirm that Anke Groth joined
the Board as an independent non-
executive director in April 2023. Anke's
appointment followed a search focused on
strengthening the level of relevant financial
experience on the Audit Committee,
and it is already clear that Anke has been
a strong addition to the Board, bringing
new perspectives and insight.
The Nominations Committee continues
to focus on succession planning, not
only at Board level, but also at senior
management level, assessing the critical
skills required by the Group and how
we prepare for succession to key roles.
More information on the Nominations
Committee's work in this respect can
be found on page 106.
Mondi Group Integrated report and financial statements 2023
83
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.
The Board notes the publication
of revisions to the UK Corporate
Governance Code in January 2024.
Consideration is being given to the
revisions and any changes to our
practices required as a result.
Effective governance and a culture
of transparency, openness and respect
remain key to ensuring the long-term,
sustainable success of our business.
Philip Yea
Chair
More broadly, the Board continued
in its efforts to further its understanding
of the views of Mondi's employees,
taking the opportunity to engage with
a cross-section of employees during
site visits, and using the results of our
latest Group-wide Employee Survey
to give us insight into current sentiment
across the organisation.
Sue continued to undertake
engagement in a variety of formats,
using these opportunities to discuss
a wide range of issues, including safety,
culture, innovation, talent development
and retention. The insights we get from
such face-to-face engagement with
employees are valuable and we will
continue to focus on offering transparent
and open forums in which employees
can express their views. More
information relating to engagement
undertaken during the year can be
found on pages 92-93.
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 38-41
in our Section 172 statement.
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 Ružomberok mill (Slovakia) during
the second half of the year, and the four
life-altering injuries we experienced
in our operations.
Our thoughts go out to those involved,
and to their families, 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.
Acknowledging the role that mindset
and culture play in many of the safety
incidents that occur, our approach
to safety is increasingly focused on
the Social Psychology of Risk, and
the measures we can take to drive
continuous improvement in our safety
performance. This is a key focus for the
Sustainable Development Committee,
and it is pleasing to hear that safety is
regularly raised by employees as a topic
for discussion during the employee
engagement meetings undertaken
by Sue Clark, our nominated Board
member for employee engagement,
underlining the prominence given to
safe behaviour across the business.
More information regarding the actions
we are taking to improve safety can
be found on page 50.
Mondi Group Integrated report and financial statements 2023
84
Chair’s introduction continued
Strategy and long-term
sustainability
The long-term sustainability of Mondi's
strategy and the ability to achieve our
purpose continued to provide the central
tenets of the Board's discussions during the
year. The strategy is regularly challenged,
particularly during times of uncertainty,
to ensure it remains appropriate for our
stakeholders and is achievable in the long
term. We are conscious that our strategy
needs to evolve as external conditions
change and our understanding of the
impacts of our business is refined.
The Board's annual in-depth review
of Mondi's strategy was undertaken in this
context, with discussions focusing on
key drivers, including changing demand
for sustainable packaging and eCommerce
solutions. There was also particular focus
on our growth capital investment
programme, with the Board closely
monitoring the progress of a number
of our large capital expenditure projects
during the year, more details of which
can be found on page 26.
Sustainability remains at the centre of
Mondi's strategy and so these discussions
were undertaken with this in mind. During
the year, the Sustainable Development
Committee, on behalf of the Board, spent
time considering a wide range of issues,
including safety, diversity and inclusion,
climate-related risks and opportunities,
our progress towards science-based
greenhouse gas emissions reduction
targets, product stewardship and our
Responsible Procurement process.
The work being undertaken across the
organisation aimed at understanding and
managing these issues is extensive, and a
thorough understanding of this at Board
level is central to good 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 strategy review
can be found on page 99, and details of
the work of the Sustainable Development
Committee can be found on pages 119-121.
Looking forward
As we go into 2024, it is clear that the
external challenges facing businesses will
continue, and that scrutiny of the impact
we have on our environment and society
will only increase. The duty we have as a
Board to ensure that we take action to
manage these impacts therefore remains
as important as ever. I am confident that
Mondi has the right governance framework
and culture in place to meet this duty,
while, at the same time, supporting 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
2023, and I look forward to discussions
and engagement with our stakeholders
during 2024.
Philip Yea
Chair
SpeakOut
The Group has an anonymous
whistleblowing and grievance
platform 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 68.
Mondi Group Integrated report and financial statements 2023
85
Board of directors
The directors holding office at the date of this report, together with their biographical details
and an explanation of the skills and experience they bring to the Board, are set out below.
Composition of the Board
See biographies
Page 86
Diversity of the Board
Independent non-executive
director tenure
10 %
20 %
70 %
60 %
40 %
5
1
1
Nationalities represented on the Board
2
5
1
1
1
0-3 years 3-6 years 6-9 years South African British German French Norwegian ChairExecutive directorsIndependent non-executive directorsMale Female Mondi Group Integrated report and financial statements 2023
86
Board of directors continued
Philip Yea
Chair
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)
Andrew King
Group CEO
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)
Mike Powell
Group CFO
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)
Dominique Reiniche
Senior Independent Director
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
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 valuable insight to the
Board and are relevant 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.
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.
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 its 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).
Svein Richard Brandtzaeg
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 is a valuable
addition to Board discussions.
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 May 2022, Vice Chair of
Den Norske Bank ASA until April 2023
and Vice Chair of Swiss Steel Holding
AG until October 2023.
Current external appointments
Chair of dormakaba Holding AG and
non-executive director of Eramet
Norway.
Mondi Group Integrated report and financial statements 2023
87
Sue Clark
Non-executive director
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
Anke Groth
Non-executive director
Appointed to the Board
April 2023
Independent
Yes
Committee memberships
Audit, Nominations
Qualifications
Degree in Business Economics from
the University of Dortmund
Saki Macozoma
Non-executive director
Appointed to the Board
May 2022
Independent
Yes
Committee memberships
Audit, Nominations
Qualifications
BA in Economics and Politics from
the University of South Africa
Dame Angela Strank
Non-executive director
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
Stephen Young
Non-executive 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
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 Group'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 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.
Sue is the non-executive director
responsible for understanding the views
of employees.
Current external appointments
Senior Independent Director at Imperial
Brands plc and easyJet plc, and a
non-executive director of Britvic plc.
Skills and experience
Anke has a strong financial and
commercial background and extensive
leadership experience. Her experience
operating in large international listed
companies covering energy and
industrial sectors, and her strategic
and operationally focused knowledge
bring valuable insight and perspective
to the Board.
Anke began her career in the energy
industry, initially in business development
and mergers and acquisitions in two
regional energy companies, before
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.
Current external appointments
Member of the Supervisory Board at
E.ON SE and the Administrative Board
at DKV Mobility Group SE.
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.
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 and
harbours and South African Airways.
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.
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 experience
of international executive leadership in
the UK listed environment enables her to
bring guidance and challenge to her role
as Remuneration Committee Chair.
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
March 2022.
Current external appointments
Non-executive director of SSE plc and
Rolls-Royce Holdings plc.
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, a role he relinquished
in 2023 to support Mondi’s compliance
with new diversity requirements in the
UK Listing Rules.
Current external appointments
Non-executive director and Audit
Committee Chair at Weir Group plc.
Mondi Group Integrated report and financial statements 2023
88
Executive Committee and Company Secretary
Andrew King biography
Page 86
Mike Powell biography
Page 86
Diversity of the
Executive Committee
83%
17%
Nationalities represented on
the Executive Committee
2
1
1
1
1
Male Female South AfricanBritishAustrianGermanSwiss Mondi Group Integrated report and financial statements 2023
89
Markus Gärtner
CEO, Corrugated Packaging
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
Lars Mallasch
Group Technical & Sustainability
Director
Appointed to the Executive
Committee
September 2020
Qualifications
Graduated in Paper Technology
from the University of Applied Science
in Munich
Vivien McMenamin
CEO, Uncoated Fine Paper &
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
Thomas Ott
CEO, Flexible Packaging
Appointed to the Executive
Committee
January 2022
Qualifications
Graduated in Business Administration
from the WU-Vienna business school
Jenny Hampshire
Company Secretary
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.
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.
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 and in October
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.
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.
2023, she was appointed CEO,
Uncoated Fine Paper.
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, the
South African Association for Marine
Biological Research (SAAMBR)
and Durban Girls College.
Current external appointments
Non-executive director of KAP
Industrial Holdings Limited and of
Business Leadership South Africa.
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.
Skills and experience
Jenny, 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.
Mondi Group Integrated report and financial statements 2023
90
Corporate governance report
Board leadership and company purpose
Promoting long-term
sustainable success
The role businesses play in society
remained firmly in focus during the year,
with continued scrutiny of the impacts
they have on the environment in which they
operate and on wider stakeholders, and
the measures companies are taking to
manage and mitigate these impacts.
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 86-87.
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 14-19,
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 96-97.
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 2023, in addition to visits to sites
by individual directors, the Board visited
Mondi’s mill in Świecie (Poland), more
details of which can be found on page 94.
Corporate governance report
Pages 90-121
Mondi Group Integrated report and financial statements 2023
91
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 Group's
culture and values and support its long-term
sustainable success. While there were
no material changes to Mondi’s policies
as a result of this review during 2023, the
opportunity was taken to update Mondi's
Diversity & Inclusion Policy to align with
current practice.
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
2023 can be found on pages 92-93.
Corporate governance report
Page 90-121
Employee Survey results
The Board receives regular reports 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. Our global Employee Surveys
also help us to measure progress towards
our MAP2030 Created by Empowered
People commitments. The last Group-wide
survey, undertaken in the first half of 2023,
achieved an 80% response rate, with
more than 16,800 employees participating.
The results were used to calculate our
Purposeful Workplace Index, Inclusiveness
Index and Wellbeing scores, which provide
the Board with an objective way to assess
employee views in relation to, among other
things, respect, fairness, trust, recognition,
the working environment and mental
wellbeing. These indices also give us a way
of directly measuring and monitoring
aspects of culture over time, with targets in
respect of the Purposeful Workplace Index
and Inclusiveness Index scores forming part
of our MAP2030 Created by Empowered
People commitments. More information can
be found on pages 48-50.
Empowered People
Page 48-50
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.
SpeakOut
Mondi has an anonymous whistleblowing
and grievance platform 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 84.
SpeakOut
Page 84
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 100.
Division of responsibilities
Page 96-101
Employee Survey response rate
80%
Inclusiveness Index
77%
Purposeful Workplace Index
79%
Mondi Group Integrated report and financial statements 2023
92
Corporate governance report
Board leadership and company purpose continued
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 allows us to make
balanced judgements.
While the Board undertakes a 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 38-41.
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, including:
– 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 100 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;
– the outcome of the double materiality
assessment undertaken during the year,
which, among other things, identified
the sustainability issues of greatest
importance to our stakeholders.
The results were driven by inputs from
a range of sources, including surveys and
interviews with both internal and external
stakeholders, and will be used to guide
our key focus areas in the coming years.
Further details can be found on page 43;
– detailed review of the results of the
latest customer satisfaction survey; and
– updates and briefings in relation to
matters impacting the environment in
which we operate, including regulatory
changes and market developments.
In 2023, these included a briefing on
Mondi's approach to public affairs, the
key regulatory developments currently
impacting our customers and how we
engage in this respect, both directly
and via trade associations.
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 highlighted 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
issues that matter most to our stakeholders
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 92-95.
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.
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. Each year, Sue
undertakes a number of engagements with
a broad range of employees, the format of
which varies depending upon the location
and audience to ensure the sessions are
as productive and valuable as possible.
The subject matter is usually driven by the
employees and can cover topics ranging
from safety and strategy, to sustainability
and remuneration. Sue reports back to the
Board on the matters raised and the themes
emerging during these engagements.
Mondi Group Integrated report and financial statements 2023
93
As an example, in February 2023 during
a visit to Mondi's Richards Bay mill
(South Africa), Sue facilitated a roundtable
session with a cross-section of employees,
offering a forum for an open, two-way
discussion in relation to a broad range of
topics including safety, culture, innovation,
talent development and retention, diversity
and inclusivity. Particular insight was given
into the perceived barriers to increasing
diversity, within Mondi and across the
industry more broadly. The session was
also attended by Philip Yea, Chair of
the Board, Dame Angela Strank, Chair of
the Remuneration Committee, and Saki
Macozoma, a non-executive director, giving
attendees the opportunity to engage
directly with a number of Board members.
The discussions reinforced, among other
things, the need for the Board to continue
its focus on the promotion of diversity
and inclusion across the organisation
and the challenges faced in attracting
and retaining critical skills, matters that
will continue to form part of the Board's,
and its committees', agendas during
the coming year.
The level of engagement and open and
honest dialogue during these meetings
results 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 that the desired
culture is felt throughout the organisation
and that leadership in this regard
is effective.
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 and other Executive Committee
members and members of senior
management as appropriate.
The last meeting of the European
Communication Forum was held in
October 2023. The meeting was attended
by representatives from across Mondi’s
European operations, as well as the
Group CEO, the Group Head of Safety &
Health and senior representatives from the
Group HR and Legal functions. Sue Clark
also attended the meeting, 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; future growth prospects; safety;
and Mondi's approach to sustainability.
Matters raised during these meetings are
subject to subsequent follow-up where
appropriate, with further information provided
to participants where required.
A dinner was also held for participants,
allowing further opportunity for more informal
engagement outside of the meeting.
In addition to the above, the full Board
undertook visits to Mondi’s Świecie mill
(Poland) and the Group office in Vienna
(Austria) in June 2023 and January 2024
respectively, more details of which can
be found on page 94.
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:
– regular presentations from the Group HR
function, providing detailed updates on
engagement activities undertaken, the
views expressed by employees and any
actions being taken in response;
– 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, providing 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;
– leadership forums, incorporating the
Mondi Diamond Awards, usually
attended by the Chair of the Board
and held approximately every two
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 whistleblowing and grievance
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 84; and
– 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.
Mondi Group Integrated report and financial statements 2023
94
Corporate governance report
Board leadership and company purpose continued
How the Board has engaged
with investors
Board site visits
The June 2023 Board programme
was held at our Świecie mill (Poland).
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 Board was given insight into
the mill's product portfolio, financial
performance, sustainability initiatives
and measures taken to support the
local community, and was able to
see the progress made in respect
of recent investment at the mill.
Such visits are invaluable to the Board,
allowing the directors to experience
the culture and safety approach first
hand and to engage directly with
those on the ground in the operations.
A dinner with representatives from
the mill was also held, offering the
opportunity for direct and more informal
engagement with Board members.
In addition, a number of Board
members visited the Richards Bay mill
(South Africa) in February 2023, which
included tours of the mill, nursery and
harvesting operations, presentations
from local management and the
opportunity to see the results of
recent investment at the mill.
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.
The directors are kept informed of the
views raised, with feedback from investors,
particularly from the full- and half-year
investor roadshows, presented and
discussed at Board meetings. Details of the
key investor events that took place during
2023 can be found on page 95,
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.
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 directors 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.
Sue Clark also facilitated a roundtable
discussion with employees, details
of which can be found on page 93.
In January 2024, the 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.
with feedback from these events covering
investor views on a range of topics, including
Mondi's strategy, market developments and
the approach to sustainability. Analyst
reports are also shared regularly with the
Board and consideration given to any views,
both positive and negative, regarding the
Group’s performance and 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 Group Integrated report and financial statements 2023
95
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 disposal of
Mondi's Russian assets, Mondi's approach
to governance and culture, diversity and
progress against Mondi's MAP2030 targets.
In 2023, our Board also continued to engage
with a cross-section of shareholders on
developments and external expectations
relating to executive pay. As a consequence,
further meetings with investors were held
to discuss particular features of the Directors'
Remuneration Policy. Constructive feedback
from investors is taken into account in
determining the structure and operation
of our remuneration policy.
Mondi’s Annual General Meeting (AGM) also
presents an opportunity for shareholders
to question the directors about our activities,
performance and prospects and continues
to be a valuable opportunity for direct
engagement between the Board
and shareholders.
The AGM in 2023 was held as a fully
hybrid meeting. Those shareholders joining
virtually were able to hear the meeting,
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 2023, and we intend to
retain the hybrid format in 2024, 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
2024 AGM, and explanations of each
resolution to be proposed at the AGM,
can be found in the 2024 AGM notice,
which is contained in a separate circular
to be made available to all shareholders
in advance of the meeting.
2023 investor events
February
Preliminary results announcement
Johannesburg and Cape Town full-year results roadshow
March
UK full-year results roadshow
UBS Global Pulp & Paper Tour
April
Discussions with investors and advisory bodies
prior to Annual General Meeting
May
Annual General Meeting and trading update
US investor roadshow
BNP Paribas 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
November
UBS European Conference
Bank of America European Materials Conference
Mondi Group Integrated report and financial statements 2023
96
Corporate governance report
Division of responsibilities
Composition and independence
of the Board
The directors holding office during the
year ended 31 December 2023 are listed
below, together with their attendance
at Board meetings. Biographical details
for those in office at the date of this report
can be found on pages 86-87.
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.
Meetings between the Chair and
non-executive directors without
management present are held prior to
every Board meeting. Dominique Reiniche
as Senior Independent Director also
met with the other directors without
the Chair present to lead the review
of the Chair’s performance.
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’ and officers’ liability
insurance
Throughout the year to 31 December
2023, 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. No significant new
appointments were taken on by any
of Mondi’s directors during 2023.
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.
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 100 for more information).
Board attendance1
Directors
Philip Yea
Svein Richard Brandtzaeg
Sue Clark
Anke Groth2
Andrew King
9/9
9/9
9/9
7/7
9/9
Saki Macozoma
Mike Powell
Dominique Reiniche
Dame Angela Strank
Stephen Young
9/9
9/9
9/9
9/9
9/9
1 The maximum number of meetings held during the year that each director could attend is shown next to the
number attended.
2 Anke Groth joined the Board on 1 April 2023. Anke attended all meetings following her appointment.
Mondi Group Integrated report and financial statements 2023
97
Board leadership and governance
The Board
Chair Philip Yea
– Leads and manages the Board, setting the agenda,
– Ensures there is a constructive relationship between
– Oversees the induction, training and
providing direction and focus and ensuring effectiveness
and open and transparent debate
– Undertakes regular engagement with the Group CEO
in between meetings
the executive and non-executive directors
– Ensures high standards of corporate governance
and ethical behaviour and oversees the culture
of the Group
development of directors and the consideration
of succession
– Ensures effective communication with
shareholders and other stakeholders
– Ensures the Board receives accurate, timely
and clear information to support discussion
and decision-making
– Leads and manages the business
with 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
Group CEO Andrew King
– 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
– Together with the Group CFO, leads
the relationship with institutional
shareholders
Group CFO Mike Powell
– 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
Senior Independent Director
Dominique Reiniche
Independent non-executive directors
Svein Richard Brandtzaeg, Sue Clark, Anke Groth, Saki Macozoma, Dame Angela Strank, Stephen Young
– Provides support to, and acts as a sounding board for,
the Chair and the non-executive directors
– Provide independent oversight of the
Group’s activities
– Acts as a point of contact for shareholders
– Available as a trusted intermediary for other directors,
as necessary
– Manages chair succession
– Offer an external perspective to, and
constructively challenge, management
– Provide to the Board a diversity of
knowledge and experience
– Monitor management performance and the
development of the organisational culture
Board committees
– 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
Nominations Committee
Philip Yea, Svein Richard Brandtzaeg,
Sue Clark, Anke Groth, Saki
Macozoma, Dominique Reiniche, Dame
Angela Strank, Stephen Young
Oversees the composition of
the Board and committees and
considers succession planning and
diversity, making recommendations
to the Board
Audit Committee
Stephen Young, Svein Richard
Brandtzaeg, Sue Clark, Anke Groth, Saki
Macozoma
Oversees the Group’s corporate
financial reporting, the internal control
system, risk management and the
relationship with the external auditor
Remuneration Committee
Dame Angela Strank, Sue Clark,
Dominique Reiniche, Philip Yea
Responsible for recommending overall
remuneration policy and the setting
of executive and senior management
remuneration
Sustainable Development Committee
Dominique Reiniche, Svein Richard
Brandtzaeg, Andrew King, Dame Angela
Strank, Stephen Young
Oversees the Group’s strategy,
commitments, targets and performance
relating to safety, the environment,
climate-related matters and other
sustainable development issues
Nominations Committee report
Page 105
Audit Committee report
Page 110
Remuneration report
Page 122
Sustainable Development
Committee report
Page 119
Executive Committee
Disclosure Committee
Day-to-day management of the Group
Responsible for classifying and overseeing the prompt disclosure of inside
information and overseeing the creation of insider lists
Company Secretary Jenny Hampshire
– Supports the Chair in the delivery of accurate
and timely information ahead of each meeting
– Acts as a key point of contact for the Chair and
non-executive directors
– Ensures compliance with Board and
– Provides support to the Board and committees,
– Provides advice on legal, governance and listing
requirements, in particular relating to continuing
obligations and directors’ duties
committee procedures
and advises on governance, statutory and
regulatory requirements
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Corporate governance report
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.
Strategy key
We 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
Topic
Operational
performance
Activity
– 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
Link to strategy
at our mills in Kuopio (Finland), Štětí (Czech Republic) and Świecie (Poland), and at a number of our
converting sites (see page 26 for more information).
Stakeholders
impacted
– Investors
– Employees
– Customers
Strategy
formulation
and monitoring
Link to strategy
Stakeholders
impacted
– Investors
– Customers
– Communities
– Received presentations in relation to pulp and paper technology developments, and detailed insights into
research and development activities, improving the Board’s knowledge and providing context for capital
investment decisions.
– 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 page 99 for more information).
– Considered and approved the acquisition of the Hinton pulp mill (Canada), with the intention, subject to
pre-engineering and permitting, to invest in the expansion of the mill, primarily in a new kraft paper machine
which will fully integrate our paper bag operations in the Americas and support growth. Stakeholder interests
were core to this decision, more details of which can be found on page 41.
– In line with the decision taken in 2022 to divest the Group's Russian assets, approved the sale of the
Syktyvkar mill for a total cash consideration of RUB 80 billion. The sale was completed in October 2023,
concluding Mondi’s exit from Russia.
– Considered and approved a number of capital expenditure projects, including a €200 million investment
at our Duino mill (Italy) to convert the existing paper machine into a 420,000 tonne per annum recycled
containerboard machine, taking into account the sustainability impact of such investments and the interests
of Mondi’s key stakeholders (see page 26 for more information).
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99
Topic
Financial
performance,
funding and
capital
Link to strategy
Stakeholders
impacted
– Investors
Activity
– Reviewed and approved the full- and half-year results and trading updates.
– Reviewed and approved the Mondi Group Integrated report and financial statements, ensuring it is fair,
balanced and understandable (see page 116 for more information).
– Considered dividend recommendations and declarations in light of the Group’s stated dividend policy.
This resulted in the decisions to pay an interim ordinary dividend for 2023 in September 2023 and to
recommend a final ordinary dividend for payment in May 2024 (see page 36 for more information).
– Following completion of the sale of all our Russian operations, considered potential capital return options,
concluding that the net proceeds should be returned to shareholders by way of a special dividend, with
an associated share consolidation (see page 36 for more information).
– Reviewed and approved the Group business plan for 2024–2026, including the budget for 2024, 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.
– Considered the results of the customer satisfaction survey undertaken during the year, identifying the key
Link to strategy
areas of focus and actions required.
– Reviewed the interests of key stakeholders, agreeing that the current stakeholder groups remain appropriate
(see pages 38-39 for more information).
– Reviewed the output from the Board evaluation process and agreed an action plan (see page 104 for
more information).
Stakeholders
impacted
– Investors
– Employees
– Partners and
industry
associations
– Customers
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.
At the forefront was whether the
strategy remains capable of delivering
Mondi’s purpose to contribute to
a better world by making innovative
packaging and paper solutions that
are sustainable by design.
The strategy review is never an isolated,
one-off review. The discussions of the
Board and its committees during the
previous 12 months provide important
context and insight to the deliberations,
with this annual in-depth review a
culmination of the work undertaken
by the Board throughout the year.
The existing strategy was reviewed
in the context of key demand drivers,
including developing macroeconomic
conditions, demand for sustainable
packaging and eCommerce.
Of particular focus were the growth
opportunities available to the Group,
including the Group’s pipeline of
new projects.
The Group’s principal risks were also
factored into the Board’s discussions, with
consideration given to whether there had
been any material changes in the Group’s
risk profile that might impact Mondi’s
strategy. Alongside this, the evolving
regulatory landscape, particularly across
Europe from a sustainability perspective,
was considered.
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.
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100
Corporate governance report
Division of responsibilities continued
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.
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,
operational excellence and Mondi’s
strategy in respect of energy usage
and security.
Each of the business unit CEOs
provided updates on their areas
of responsibility within Mondi, focusing
on safety performance, market position
and dynamics, evolving customer
demands and financial performance
and people development.
In addition, the Group Head of Fibre
Sourcing presented Mondi’s
wood sourcing strategy, the Group
Head of Digital Excellence provided
an update on the Group’s digitalisation
journey, and the Group Communication
Director and Head of Public Affairs
provided insight into the Group’s
approach to public affairs.
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 current
risk areas, and formed the backdrop
to other discussions, including the
annual strategy review.
Activity
– Monitored safety performance across the Group, including the number, type and severity of incidents. There
was particular focus on understanding the events that tragically resulted in a fatality at Mondi’s Ružomberok
mill (Slovakia) and the four life-altering injuries in our operations (see page 50 for more information).
– Received updates on key sustainability regulatory and best 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 119-121.
Topic
Safety and
sustainability
Link to strategy
Stakeholders
impacted
– Employees
– Suppliers and
contractors
– Customers
– Our communities
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101
Activity
– Reviewed the Group’s risk management processes, plan and risk appetite 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, following consideration by the Audit Committee and approval by the
Board, including the removal of pandemic risk as a standalone risk (given its incorporation into our wider
employee and contractor health and safety risk), and the derating of a number of principal risks in light
of the mitigation measures in place and changes in external conditions (see page 71 for more information).
– Received half-yearly presentations on IT risks and cyber security (see page 111 for more information).
– Reviewed the Group's insurances, ensuring an appropriate balance of risk between the Group and our
external insurers.
Topic
Risk
management
Link to strategy
Stakeholders
impacted
– Employees
– Customers
– Investors
People and
culture
Link to strategy
– Received updates from Sue Clark, through the Sustainable Development Committee, in her role as the
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 pages 92-93
for more information).
– Reviewed reports received via Mondi’s anonymous whistleblowing and grievance platform, SpeakOut
Stakeholders
impacted
– Employees
– Customers
– Suppliers and
contractors
Leadership
Link to strategy
Stakeholders
impacted
– Employees
– Investors
(see page 84 for more information).
– Reviewed and approved the Group’s Human Trafficking and Modern Slavery Statement.
– Considered and approved the appointment of Anke Groth as an independent non-executive director (see page 107
for more information).
– Considered and approved the appointment of a new Chief People Officer and their appointment as a member
of the Executive Committee with effect from April 2024.
– 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.
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Corporate governance report
Composition, succession and evaluation
Induction, training
and development
Training and development are 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
Director induction process
to an online director handbook containing
documents including key policies and the
terms of reference for each committee.
Details of the induction programme
for Anke Groth, who joined the Board
in April 2023, are provided below.
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.
Further details can be found on page 94.
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.
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.
Inform
Engage
Support
Anke Groth's
induction
Following Anke's appointment to the
Board in April 2023, a number of
meetings and briefings were organised
in order to provide her with a detailed
overview of the Group, and to give
her the insight and knowledge
required to make as full and effective
a contribution as possible.
Meetings were held with each of the
Executive Committee members,
allowing Anke 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. Anke 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.
In addition, Anke met with other
members of senior management
during an induction visit to Mondi's
Group office in Vienna (Austria),
including the Group Controller and
Group Head of Internal Audit, both
directly relevant to her membership
of the Audit Committee, the
Chief Information Officer, given the
continued focus on cyber security
across the organisation, and Mondi's
General Counsel.
Site visits are also a crucial element
of the induction process, and early
on in her tenure, Anke was able to visit
Mondi's Świecie mill (Poland) as part
of the wider Board visit in June 2023.
Further information can be found
on page 94. Anke also visited Mondi's
Korneuburg plant (Austria) and Štětí
mill (Czech Republic) following her
appointment.
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103
Board evaluation process
Year 1 (2022)
External assessment
– Independent external evaluation
firm selected and appointed.
– Scope refined and agreed between
the Chair and evaluation firm.
– Questionnaires issued and one-
to-one interviews undertaken by
the evaluator with each director
and the Company Secretary.
– One-to-one calls between
the Chair and each director
to discuss the results.
– Results and actions discussed by
the Nominations Committee and
action plan agreed by the Board.
Years 2 and 3 (2023 and 2024)
Internal assessments
– Outcome from previous evaluation
and progress against each action
reviewed.
– External evaluation firm used for
the external evaluation appointed
to facilitate internal assessments,
providing continuity.
– Questionnaires issued to
directors, Company Secretary
and other regular Board
attendees.
– One-to-one calls between Chair
and directors to discuss results.
– Results and actions discussed by
the Nominations Committee and
action plan agreed by the Board.
In line with best practice, in 2022 we conducted an external Board evaluation. The process was facilitated 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 2022 evaluation
To expand the Board's regular reviews of the business units
to include greater detail concerning consumer trends and their
impact on Mondi's customers.
To expand the scope of the Board's review of the development
of major competitors and their strategies.
To increase the Board's visibility and understanding of key
regulatory developments, particularly in relation to sustainability.
To 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.
To continue to give in-depth consideration to executive director
succession.
Progress achieved
Each of the business unit reviews undertaken by the Board in
2023 has included discussion of key consumer trends, including
eCommerce and sustainability, the impact of these trends on
demand and market dynamics, and the resulting actions being
taken in response, including the impact on the types of products
being produced.
Relevant deep dives have been introduced into the rolling agenda.
Regular regulatory updates from a sustainability perspective are
provided at meetings of the Sustainable Development Committee,
which all Board members usually attend. Updates during 2023
have included a detailed overview of the Packaging & Packaging
Waste Regulation. An update on Mondi’s approach to public
affairs and the developing EU regulatory landscape in particular
was also provided to the Board in December 2023.
A review of diversity and inclusion initiatives, and developments
and trends in a range of diversity statistics, was undertaken in
June 2023 and remains high on the Board's agenda. More details
can be found on pages 107-109.
Detailed discussions were undertaken during the year to consider
potential internal successors for the Group CEO and CFO, their
development needs, and actions that can be taken to provide
further progression and development opportunities. Succession
plans for other key roles were also reviewed.
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Corporate governance report
Composition, succession and evaluation continued
2023 Board evaluation process
In 2023, the Board took the decision to undertake a questionnaire-based evaluation
facilitated by Lintstock. Given Lintstock carried out Mondi's external evaluation in 2022,
it was agreed that the follow-up support and insight Lintstock could offer would be
valuable. 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.
The review of the Chair was led by Dominique Reiniche as Senior Independent Director.
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
Report issued
Detailed report from Lintstock setting out the questionnaire findings issued and
reviewed with the Chair
One-to-one calls with directors
One-to-one calls undertaken by the Chair with each director to discuss findings
and individual performance and findings related to individual committees reviewed
and considered by committee chairs
Report considered
Report considered at a meeting of the Nominations Committee
Action plan recommended
Action plan recommended by the Nominations Committee and agreed by the Board
As a result of the process, the Board
concluded that it continues to operate
in an effective manner, benefitting 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:
– to arrange for the Board to hear
directly from major customers,
to supplement the insight already
provided to the Board in respect
of customer requirements through
presentations from management;
– to further develop and enhance the
Nominations Committee’s approach
to succession planning, particularly
in respect of the executive directors,
with support from the newly appointed
Chief People Officer; and
– to continue to identify opportunities
for interaction between the Board and
senior management on a less formal
basis, with the aim of supporting
succession planning discussions and
giving Board members deeper insight
into the organisation from both an
operational and cultural perspective.
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.
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Corporate governance report
Nominations Committee
Philip Yea
Chair of the Nominations Committee
While the committee remains confident that the
Board has the broad range of knowledge and
perspectives it needs, it is constantly assessing ways
in which to further strengthen its composition to
ensure it has the capability to fulfil its responsibilities.
Committee member since
April 2020
Composition and attendance1
Members throughout the year
Philip Yea, Chair
Svein Richard Brandtzaeg
Sue Clark2
Anke Groth3
Saki Macozoma
April 2021
April 2021
April 2023
May 2022
Dominique Reiniche
October 2015
Dame Angela Strank
Stephen Young
April 2021
May 2018
Meeting attendance
4/4
4/4
3/4
3/3
4/4
4/4
4/4
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 Sue Clark was unable to attend one meeting during the year due to an unavoidable
commitment.
3 Anke Groth joined the committee on 1 April 2023. Anke attended all meetings following
her appointment.
Other regular attendees
– Group CEO
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, Anke Groth joined
the committee upon her appointment
to the Board in April 2023.
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.
In April 2023, following a recruitment
process conducted through an external
search agency, and in line with our
commitment to strengthen the level of
relevant financial experience on the Audit
Committee, Anke Groth joined the Board
as an independent non-executive director.
Anke was appointed to the Audit Committee
at the same time, and I am pleased to
confirm that Anke has brought valuable
insight and experience to discussions.
In preparation for Dominique Reiniche
completing her nine-year term on the
Board during 2024, the committee has
now turned its attention to succession
planning for Dominique and how the
Board and committee memberships
may need to evolve as a result. This
will continue to be a priority for the
committee in 2024. There is particular
focus on Dominique's role as both
Senior Independent Director and
Chair of the Sustainable Development
Committee and the skills and experience
required to fulfil these roles. While the
committee remains confident that
the Board has the broad range of
knowledge and perspectives it needs,
it is constantly assessing ways in which
to further strengthen its composition
to ensure it has the capability to fulfil
its responsibilities.
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Corporate governance report
Nominations Committee continued
Alongside this, the committee continued
to consider succession planning in relation
to the Group CEO and CFO specifically,
as well as those in key management and
operational roles. While the committee
routinely reviews succession plans in this
regard, it is particularly focused on actions
required in the short and medium term
to develop and prepare potential internal
candidates for some of these critical roles.
While external candidates will always
be considered where appropriate, there
is a clear desire to identify opportunities
for Mondi employees to progress, and
to provide the support and encouragement
they need to succeed within the
organisation. Development actions discussed
by the committee included mentoring and
coaching, rotation into other roles within
the Group and external training.
The Group's commitment to increasing
levels of diversity across the organisation
was a key factor in these succession
planning discussions, with the committee
paying particular attention to where there
might be opportunities to create a more
diverse pipeline up to some of the key
roles discussed. While it is clear that there
is still a long way to go in this respect, and
that the MAP2030 target of 30% women
across the organisation by 2030 remains
challenging, it was encouraging to see the
significant work being undertaken in this
regard through the presentations given to
the Sustainable Development Committee.
More information can be found on pages
107-109. These insights will continue to
feed into the committee's succession
planning discussions in 2024.
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 104. 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.
Board and committee composition
– Following the conclusion of a
Succession planning
– Considered the Board’s succession
recruitment process facilitated by an
external search agency, recommended
to the Board the appointment of
Anke Groth as an independent
non-executive director.
– Considered and recommended to
the Board the proposed appointment
of a new Chief People Officer and
their appointment as a member of
the Executive Committee with effect
from April 2024.
– 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.
plans, in 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 woman 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.
Board evaluation
– Monitored progress against the agreed
action plan from the prior year’s
evaluation process (see page 103 for
more information).
– Considered and agreed the process
for the 2023 internal evaluation of
the Board, committees and individual
directors, to be facilitated by Lintstock
(see page 104 for more information).
Corporate governance and
other matters
– Considered, and recommended to the
Board, the re-election of the directors
at the AGM.
– Reviewed the committee’s terms
of reference, performance and work
programme for 2024.
– Considered, and agreed to, the
committee’s report for inclusion
in the Group’s Integrated report
and financial statements.
Mondi Group Integrated report and financial statements 2023
107
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 appointment of Anke Groth as an independent non-executive director in 2023
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 longlist of potential
candidates provided for consideration
which should include male and female candidates from a variety of backgrounds
Shortlist chosen from longlist
for interview by the Chair and at least one other appropriate director
Shortlist 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
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.
Russell Reynolds Associates does not
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.
Diversity and inclusion
Mondi has a well-established
commitment to encouraging and
promoting diversity and inclusion (D&I).
This is reflected in our behaviour and
in our culture and values.
As a global organisation operating in more
than 30 countries, D&I is integral to how
we do business. We are committed to
creating an inclusive working environment
that is fair and non-discriminatory, from
recruitment and people development
to reward and our approach to
talent management.
The Group’s D&I Policy, which was
approved by the Board, and updated
in January 2024, is intended to help
us meet these goals and support the
development of a diverse workforce.
It sets out guidelines for matters such
as recruitment, the use of search firms,
succession and annual reviews. You can
read the full policy on our website.
The policy can be found on
Mondi’s website
www.mondigroup.com/en/sustainability/
governance-of-sustainability
Mondi Group Integrated report and financial statements 2023
108
Corporate governance report
Nominations Committee continued
Diversity and inclusion continued
Key elements of the policy include:
At Board and committee level:
– The Board supports the
recommendations and targets outlined
in the FTSE Women Leaders Review,
and is committed to ensuring gender
diversity on the Board and its
committees, and among the Executive
Committee and its direct reports.
– The Board supports the Parker Review
principles in relation to ethnic diversity
on boards and among senior
management.
– For Board appointments, we will, where
possible, engage executive search firms
signed up to the Voluntary Code of
Conduct for Executive Search Firms.
– Search firms will be asked to include
a sufficient number of qualified female
candidates and candidates from a variety
of ethnic backgrounds.
– At least annually, the Nominations
Committee will review succession plans
for the Board, Executive Committee
and other senior managers in light
of Group D&I levels, skills, experience
and diversity requirements.
– Mondi commits to the UN ‘Women
Empowerment Principles’.
At employee level:
– Recruitment activities are aligned with
our D&I Policy and applicable 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 pipeline
of diverse candidates 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 suitable candidates.
– We aim to ensure fair and equal training
and development opportunities.
– We set targets where meaningful
and report on them as appropriate.
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 107.
In 2023, we reported to the FTSE Women
Leaders Review that as at 31 October 2023,
we had 17% female representation on our
Executive Committee and 30% in the
direct reports to the Executive Committee,
giving a combined total of 27%. As at
31 December 2023, our combined total
had marginally increased to 28%. While the
percentage of women on the Executive
Committee and in its direct reports has
increased compared to 2022 (2022: 25%),
indicating we are moving in the right
direction, we are not where we would
like to be. We have a diverse pool of
high-calibre employees who have been
identified as having the potential to be
appointed to Executive Committee roles
in the future and every effort is being
made to prepare these employees for
progression within Mondi. This is a key
focus during the committee's succession
planning discussions. The percentage of
women on the Executive Committee will
increase from 17% to 29% when our new
Chief People Officer joins in April 2024.
As at 31 December 2023, Mondi was in
compliance with the diversity targets set
out in Listing Rule 9.8.6(R)(9). There were
four female directors, representing 40%
of the composition of the Board, and
one director from an ethnic minority
background. Dominique Reiniche was
appointed as Senior Independent Director
in May 2023, satisfying the requirement
for one of the senior positions on the
Board to be held by a woman. Mondi
remained in compliance with the relevant
targets at the date of this report.
More detailed information relating to the
gender and ethnic diversity of Mondi’s
Board and executive management can be
found in the tables on page 109. The data
is provided in the form specified under
Listing Rule 9.8.6(R)(10) and was collected
directly from the individuals concerned.
In line with the Listing Rule definition,
'executive management' in this case
consists of Mondi's Executive Committee
members and the Company Secretary.
During 2023, we also reported to the
Parker Review that Mondi was in
compliance with the existing target of
having at least one ethnic minority director
on the Board. Mondi is fully supportive of
the objectives of the Parker Review and
the ambition to improve the diversity of
businesses. However, as a new initiative for
2023, the Parker Review has also requested
companies to set, and in due course report
progress against, an internal target in
relation to the ethnic diversity of our senior
management population. The Board has
carefully considered this new initiative
and, for a number of practical reasons,
will not be reporting a target, but instead
will continue to promote the recruitment
and development of a diverse workforce
through programmes suited to the
locations where we operate.
Mondi is a global organisation, with only
around 50 of our 22,000 people based
in the UK. The definition of 'ethnic minority'
used in the UK, and by the Parker Review,
is not appropriate for every country
in which we operate, with different
countries applying different definitions.
The availability of reliable census data in
relation to ethnicity (as defined in the UK
and by the Parker Review) also varies
significantly by country, with limited or no
reliable data available in some of our largest
jurisdictions. This means that setting
a realistic target reflecting the ethnic
make-up of the populations from which we
draw our employees is not practical. Legal
restrictions around the collection of data
relating to the ethnicity of our employees
also exist in a number of the more
significant countries in which we operate.
Mondi Group Integrated report and financial statements 2023
109
Instead, we continue to focus on promoting
all forms of diversity, including ethnicity,
and inclusiveness in order to build a diverse
pipeline up to senior management and
Board level. There are a number of ongoing
initiatives in this respect, many of which are
implemented at a local level to allow them
to be tailored to specific circumstances
and country requirements. Notably, in
South Africa, we have taken active steps
to meet the requirements of Broad-Based
Black Economic Empowerment (BBBEE),
including establishing transformation
committees 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 our website
www.mondigroup.com/investors/
corporate-governance/regulatory-
reports
More broadly, a governance framework
around D&I has been established in order
to focus our efforts. The Group D&I
function, forming part of the Group HR
function, supports the D&I agenda across
Mondi's operations, while a D&I Steering
Committee provides policy oversight
and facilitates the necessary stakeholder
engagement to ensure D&I is firmly
embedded across the organisation.
Mondi’s approach to D&I is focused on
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 350 members from 27 countries
who span all levels of seniority. It provides
a safe space for employees to connect,
learn and find inspiration and ideas to
implement at a local level. Key activities
in 2023 included monthly virtual events
with speakers, discussions relating to
a broad range of topics and listening
and reflection exercises.
We offer a broad range of leadership
development programmes and initiatives,
and we have made D&I a part of all
of them. Through training, coaching,
mentoring and reverse mentoring
programmes, we support our female
talent in their development and growth
throughout their careers.
In support of our commitment to D&I, a D&I
target is included in the Mondi Action Plan
2030 (MAP2030), and we have committed
to providing purposeful employment for all,
in a diverse and inclusive workplace.
Progress is measured by the Purposeful
Workplace Index and Inclusiveness Index
scores in our global Employee Survey
(each to reach 90% by 2030) 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%). 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. We therefore acknowledge that
meeting the target of 30% women will be
challenging. 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 page 49.
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.
Gender identity/sex of members of the Board and executive management
as at 31 December 20231
Board
members
Percentage
of the Board
6
4
—
60%
40%
—%
Senior
Board
positions
(CEO, CFO,
SID and Chair)
Executive
management
Percentage
of executive
management
3
1
—
5
2
—
71%
29%
—%
Men
Women
Not specified/prefer not to say
Ethnic background of members of the Board and executive management
as at 31 December 20231
White British or other White
(including minority White
groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic group, inc. Arab
Not specified/prefer not to say
Board
members
9
Percentage
of the Board
90%
Senior Board
positions
(CEO, CFO,
SID and Chair)
4
Executive
management
7
Percentage
of executive
management
100%
—
—
1
—
—
—%
—%
10%
—%
—%
—
—
—
—
—
—
—
—
—
—
—%
—%
—%
—%
—%
1 In line with the Listing Rule definition, 'executive management' consists of Mondi's Executive Committee members and
the Company Secretary.
Mondi Group Integrated report and financial statements 2023
110
Corporate governance report
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
In April 2023, Anke Groth was appointed
as a member of the committee. Anke
has significant financial and commercial
experience, making her 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.
We continue to keep the composition
of the committee under review to ensure
that, in the long term, it continues to have
the breadth of knowledge it requires.
Areas of focus
The committee’s primary responsibilities
are to oversee the Group’s corporate
financial reporting, including the
relationship with the external auditor,
to assist the Board with any judgements
required and to monitor the effectiveness
of the Group's risk management
processes. These remained the key focus
areas of the committee during the year.
Stephen Young
Chair of the Audit Committee
The committee continued to monitor the approach to
risk management, and the identification, assessment
and mitigation of the Group's principal risks. It was
particularly focused on the appetite level for each risk,
the actual risk exposure in each case and whether any
actions were required to close any gaps.
Composition and attendance1
Members throughout the year
Stephen Young, Chair2
Svein Richard Brandtzaeg
Committee member since
May 2018
April 2021
Sue Clark
Anke Groth3
Saki Macozoma
April 2021
April 2023
May 2022
Meeting attendance
5/5
5/5
5/5
4/4
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 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 Anke Groth joined the committee on 1 April 2023. Anke attended all meetings following
her 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
Mondi Group Integrated report and financial statements 2023
111
Alongside this, the committee continued to
monitor the approach to risk management,
and the identification, assessment and
mitigation of the Group's principal risks.
It particularly focused on the appetite level
for each risk, the actual risk exposure in
each case and whether any actions were
required to close any gaps that might exist.
After detailed discussion in this regard,
the committee was comfortable that there
are robust processes in place to identify,
measure and manage the Group's risk
exposure. More information relating to
Mondi's risk management framework can
be found on pages 69-70.
A more detailed overview of the key
matters considered by the committee
during the year can be found on page 112.
This report also aims to provide the
disclosures required by the new Minimum
Standard for Audit Committees introduced
by the Financial Reporting Council during
2023, and to demonstrate how we have
complied with the Minimum Standard.
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 104. 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
Areas of focus continued
In particular, the committee continued
to monitor the accounting implications
of the Board’s decision in 2022 to divest
the Group’s Russian assets and the
continuation and conclusion of the sales
process in 2023.
In the prior year, after consideration of the
detailed accounting rules, and with input
from management and Mondi’s external
auditor, PricewaterhouseCoopers LLP
(PwC), it was concluded in June 2022
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
presented as discontinued operations.
The committee remained comfortable
that these conclusions were appropriate
until completion of the sale of the
Russian assets, with the sale of the three
packaging converting operations completed
in June 2023 and the Syktyvkar mill
in October 2023. The committee also
concluded, prior to completion of the
sale of the Syktyvkar mill, that in light of
developments relating to the sale process
at the time, the assets of the Syktyvkar mill
in the six months to 30 June 2023 should
be impaired. A more detailed explanation
of the accounting treatment applied can
be found on pages 206-209.
The committee was required to consider
a number of other critical accounting
judgements during the year, including in
respect of the acquisition of the Duino mill
(Italy) in January 2023, and the continued
impact of hyperinflation in Türkiye. A more
detailed explanation of the significant
issues considered by the committee in
respect of the financial statements can
be found on pages 113-115.
The continued evolution of the Group's
Internal Audit function following the
appointment of a new Group Head of
Internal Audit towards the end of 2022 was
also high on the committee's agenda during
the year. While the committee has always
been satisfied with the effectiveness of the
Internal Audit function, the appointment
represented an opportunity to further
develop the function to ensure it remains
fit for purpose and is in the best position
possible to support the management of
the Group's risks and the achievement
of our strategy in the long term.
Developments have included the
appointment of relevant specialists to
the Internal Audit team, strengthening
the team's ability to respond to new and
evolving risks facing the Group, and
a refresh of the approach to reporting
to the committee, giving the committee
further comfort that the Internal Audit
function is focusing on key areas of risk
and responding appropriately to any issues
identified. More information relating to
Mondi's approach to internal audit can
be found on page 118.
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 committee continued to
receive half-yearly updates from the
Chief Information Officer covering matters
including measures taken in response to
the evolving risk landscape, the findings
of internal and external audits of Mondi's
IT infrastructure and the ongoing
strengthening and development of Mondi's
cyber defences. 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. More information
on Mondi’s approach to cyber security
can be found on page 79.
Mondi Group Integrated report and financial statements 2023
112
Corporate governance report
Audit Committee continued
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, the Group
Controlling team and PwC as
appropriate.
– Reviewed the Mondi Group
Integrated report 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 116 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,
Mondi's withdrawal from the
agreement to sell the Syktyvkar mill
to Augment Investments Limited and
the ultimate disposal of the mill
to Sezar Invest LLC (see pages
206-209 for more information).
– Considered the accounting
implications of the acquisition of the
Duino mill (Italy) (see page 202 for
more information) and the impact of
hyperinflation in Türkiye (see page 172
for more information).
– Reviewed and agreed the accounting
policies to be applied for the year
ending 31 December 2023.
– 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 80-81
for more information).
External audit matters
– Recommended to the Board that the
appointment of PwC for the 2023
audit be put to shareholders at the
Annual General Meeting.
– Reviewed the independence,
objectivity and effectiveness of PwC
(see page 117 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.
– Considered the implications of
Simon Morley's forthcoming rotation
as lead audit partner and agreed
the appointment of his replacement
for the 2024 audit (see page 117
for more information).
– 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
and plan, risk appetite levels and
principal risks. This resulted in the
recommendation of changes to
the Board, including the removal
of pandemic risk as a standalone risk
(given its incorporation into our wider
employee and contractor health
and safety risk), and the derating of
a number of principal risks. 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 71.
– 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 118
for more information).
– Undertook a review of the
effectiveness of the Internal Audit
function (see page 118 for more
information).
– Reviewed summaries of messages
from SpeakOut, providing insight into
the culture of the Group and issues
of particular concern to stakeholders.
– Held two meetings with the Group
Head of Internal Audit without
management present.
Governance and other
– Monitored the continued
implementation of those elements
of the Group’s Code of Business
Ethics reserved for review by
the committee.
– Undertook the annual review of
Mondi's Business Integrity Policy,
which, among other things, outlines
Mondi's zero tolerance approach to
bribery and corruption.
– Reviewed the compliance risks faced
by the Group, including in relation
to competition compliance.
– Considered the implications of
proposed governance and audit
reform in the UK, particularly in
respect of internal controls.
– Reviewed the committee’s terms
of reference, performance and
work programme.
Mondi Group Integrated report and financial statements 2023
113
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 69-70.
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. These 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 2023 financial statements were:
Matter considered
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 expense (before tax) for the year was €27
million (2022: income of €242 million), consisting of a closure of
a paper machine and streamlining of the capacity of the finishing
lines at the Neusiedler operations in Austria. Details of the special
items are included in note 3 of the financial statements.
On 12 January 2023, the Group completed the acquisition of the
Duino mill near Trieste (Italy) from the Burgo Group for total net
cash paid of €37 million. The purchase price allocation resulted
in a gain on bargain purchase of €2 million as the fair value of net
assets acquired was in excess of the consideration paid. The gain
on bargain purchase is attributable to the need for investment,
which corresponds with the Group’s investment plans to convert
the paper machine and the limited reusability of certain assets
after the conversion and the future costs associated with the mill
while the conversion is pending.
Details of the fair value of assets acquired and liabilities assumed
as a result of the business combination are included in note 25
of the financial statements.
Action
The committee has:
– critically reviewed the item presented by management as being
special to ensure that the item is in line with the Group’s
accounting policy;
– considered both the quantification and presentation of the
special item;
– reviewed the adequacy of the description of the special item
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 reports from management in relation to the acquisition;
– evaluated the management reports of the purchase price
allocation; and
– satisfied itself that the fair value of assets acquired and liabilities
assumed in the business combination are appropriate and
considered according to the Group’s accounting policy.
Mondi Group Integrated report and financial statements 2023
114
Corporate governance report
Audit Committee continued
Matter considered
In addition to property, plant and equipment of €4,619 million,
intangible assets of €68 million and goodwill of €765 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 are included in notes 10 and 12 of the
financial statements.
The Group has applied IAS 29, 'Financial Reporting in
Hyperinflationary Economies', for its subsidiaries in Türkiye
and Lebanon (2022: 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 2023, the adjustments from
hyperinflationary accounting have resulted in an accumulated
increase in total assets of €115 million, an increase in Group
revenue of €116 million, a decrease in underlying EBITDA
of €16 million and a net monetary gain of €2 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 2024-2026 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 or
intangible assets were required and impairments of property,
plant and equipment 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 2023; and
– satisfied itself that the assumptions, and the changes to
those assumptions when compared with the year ended
31 December 2022, were appropriate.
Mondi Group Integrated report and financial statements 2023
115
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 2022, were appropriate.
Mondi Group Integrated report and financial statements 2023
116
Corporate governance report
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 2023. 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 CFO, the Group controlling team and PwC.
– Reports from the Group Head of 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 CFO, the Group controlling team 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 2023, 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.
– The committee reported its findings to the Board, and recommended its conclusions to the
Board for approval.
Recommendation
Mondi Group Integrated report and financial statements 2023
117
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 2023 audit was PwC’s seventh
for Mondi and Simon Morley’s fourth as lead
audit partner. Given Simon was previously
a Key Partner Involved in the Engagement
since 2017, his maximum tenure was
a combined seven years. The 2023 audit
was therefore his last for Mondi.
Andrew Hammond will replace Simon as
the lead audit partner for the 2024 audit.
We are required to undertake a
mandatory audit tender process after
10 years and the decision on precisely
when 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 respect of the
31 December 2027 year-end.
The committee confirms its compliance for
the financial year ended 31 December 2023
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 Controlling team
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 it operates in
accordance with the ethical standards
required of audit firms.
– Confirmed the policies and
procedures it has in place to maintain
its independence.
Regulators
– The UK Financial Reporting Council’s
(FRC) 2022/23 report on Audit
Quality Inspections included a review
of audits carried out by PwC.
Key outputs
– The quality of the audit partners
and team was 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.
Mondi Group Integrated report and financial statements 2023
118
The effectiveness of the Group's Internal
Audit function is kept under close
review by the committee, with a formal
review undertaken annually. The last
comprehensive, external review of the
Internal Audit function was carried out in
2020 by Independent Audit (a consultancy
firm specialising in board evaluations
and effectiveness reviews). The overall
conclusions in respect of the effectiveness
of the Internal Audit function, its leadership
and its relationship with the Audit
Committee were positive, and all
recommendations have been addressed.
Towards the end of 2022, upon retirement
of the previous Group Head of Internal
Audit, a new Group Head of Internal
Audit was appointed. This change was
complemented by the recruitment of a
number of specialists into the department
and the development of a four-year
roadmap for the Internal Audit function.
An internal review was undertaken in 2023.
The committee has concluded following
the review that the Internal Audit function
remains effective in carrying out its remit.
Corporate governance report
Audit Committee continued
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.
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 and relevant business
processes 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 whistleblowing and grievance
platform, SpeakOut.
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, which is regularly reviewed,
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 €0.6 million, representing 9.8% of the
audit fee, with the vast majority of the
non-audit fees incurred relating to the
half-year review and other audit-related
assurance services.
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.
Mondi Group Integrated report and financial statements 2023
119
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 and practices
and progress against our sustainability
commitments and targets. It provides
guidance in relation to sustainability
matters, including climate change-related
issues and reviewing and approving
updates to the Group’s framework
of sustainability policies and strategies,
ensuring they are aligned with global
best practice.
Our sustainability policies include: Safety
and Occupational Health; Labour and
Human Rights; Sustainable Forestry;
Energy and Climate Change;
Environment; Supply Chain and
Responsible Procurement; Product
Stewardship; and Communities.
A summary report from the directors
on the Group’s sustainability practices
is set out on pages 42-68.
Areas of focus
The safety of all our employees
and contractors is a priority for the
committee. Safety performance
continues to be a focus at every meeting
to ensure our high standards are
maintained. We were deeply saddened
by the fatality of a contractor at our
Ružomberok mill (Slovakia) in November.
Unfortunately we also experienced four
life-altering injuries at our operations
during the year. Full investigations were
undertaken and the committee was kept
informed throughout. We understand
the significant impact that such incidents
have on families, friends and colleagues
and we look to take any lessons we can
to minimise the risk of a reoccurrence.
It was highly important that we spent
time understanding these events and
the underlying causes and actions to
be taken in response. Further details
of the actions being undertaken can
be found on page 50.
Dominique Reiniche
Chair of the Sustainable Development Committee
The committee critically reviewed the progress
against our target of making 100% of our packaging
and paper solutions reusable, recyclable or
compostable. The complexity in navigating the
transition to a circular economy was considered,
with a focus on the efforts that are being made
to ensure that a sustainable alternative is in place.
Composition and attendance1
Members throughout the year
Dominique Reiniche, Chair
Committee member since
May 2017
Svein Richard Brandtzaeg
April 2021
Andrew King
Dame Angela Strank2
Stephen Young
May 2020
April 2021
May 2018
Meeting attendance
7/7
7/7
7/7
6/7
7/7
1 The maximum number of scheduled meetings held during the year that each director
could attend is shown next to the number attended.
2 Dame Angela Strank 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
Mondi Group Integrated report and financial statements 2023
120
Corporate governance report
Sustainable Development Committee continued
The committee critically reviewed the
progress against our target of making 100%
of our packaging and paper solutions
reusable, recyclable or compostable.
The complexity in navigating the transition
to a circular economy was considered, with
a focus on the efforts that are being made
to ensure that a sustainable alternative is
in place, in particular to accelerate progress
in the flexible packaging business. More
information can be found on pages 45-47.
A more detailed overview of the 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 104. 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
Areas of focus continued
We continue to work hard to proactively
embed our safety culture across the Group.
During the year, priority safety focus areas
were reviewed. These included safety
support for annual maintenance shuts and
major capex projects, safety campaigns
and focused site visits. The Social
Psychology of Risk was reconfirmed as a
safety focus area, with the aim of focusing
on the psychological and cultural elements
that can pose a risk to safety, the
promotion of engagement across our sites
and increasing general personal awareness.
The safety of our people will remain at the
top of our agenda in 2024.
The committee also spent time reviewing
the double materiality assessment
undertaken in preparation for the
implementation of reporting requirements
under the European Union's Corporate
Sustainability Reporting Directive (CSRD).
The committee reviewed both the outcome
of the materiality assessment, which was
focused on the impact our business has
on the environment in which we operate
and the issues of greatest importance
to our stakeholders, and on the financial
materiality, which considered the potential
impact of key sustainability issues on
Mondi's business. The resulting double
materiality outcome was reviewed and
10 material topics were identified which are
aligned with our Mondi Action Plan 2030
(MAP2030) action areas. Further details
can be found on pages 42-43.
In January 2023, relevant MAP2030 targets
were updated to exclude Russian
operations. Progress made against the
MAP2030 commitments and targets
continued to be an area of focus for the
committee, and particular attention was
paid to upcoming investment projects
and their contribution to a reduction in
greenhouse gas (GHG) emissions. While
this will be a journey for Mondi, and
we acknowledge the extent of the work
required to achieve Net-Zero, the
committee was pleased to see the actions
being taken and progress made during
2023. More information can be found
on pages 51-64.
Alongside this, the committee reviewed
sustainability risks and opportunities.
Climate change mitigation remained
a priority 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 Disclosures,
can be found on pages 55-64. Mondi
is determined to minimise the impact
of its business on climate change through
robust governance combined with a
rigorous approach to reducing GHG
emissions across the value chain.
In 2022, the committee took over
responsibility for the people-related targets
from the Nominations Committee, and
discussions in this respect formed a key
part of the committee's agenda in 2023.
The committee reviewed the employee
statistics and the progress in respect
of diversity and inclusion targets, with
increasing the representation of females
in our workforce remaining a focus area.
The committee acknowledged that local
factors play a role and impact the
performance against our targets in this
respect. The Board, the committee and
the organisation as a whole remain
committed to making the changes
required. Further information on our
diversity and inclusion initiatives can
be found on pages 49 and 107-109.
The committee was pleased to see the
results of the 2023 Employee Survey, with
one of the highlights being that 80% of
respondents find meaning and purpose
in their job. The committee also discussed
potential areas for improvement, such as
promoting psychological safety to speak
up. Sue Clark, in her role as non-executive
director responsible for understanding
the views of employees, also provided an
overview of engagement undertaken during
the year and further insight into views of
a cross-section of our employees. More
information can be found on pages 92-93.
Mondi Group Integrated report and financial statements 2023
121
Sustainable Development Committee activity
Set out below are some of the key matters addressed by this committee.
Safety performance and
serious incidents
– Received detailed reports on the fatality
at the Ružomberok mill (Slovakia) and
the life-altering injuries, and follow-up
reports on the outcomes of the
investigations into these incidents.
– 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. Annual maintenance
shuts remained a key focus.
– Received an update on the Social
Psychology of Risk, with a continued
focus on bringing the unconscious to
the conscious, and the ways in which
culture can be influenced to promote
safe behaviour in the workplace.
– Considered and agreed the safety
milestones and leading and lagging
indicators for the next reporting period.
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 tools to assess the impact
of Mondi’s products and the partnerships
designed to support the achievement
of Mondi’s commitments. The committee
spent time understanding the challenges
that we face, along with our customers,
to transition to a circular economy.
– Reviewed the developing regulatory
landscape from a sustainability
perspective, focusing on those areas
of regulations likely to have the greatest
impact on Mondi and its stakeholders.
People development and diversity
– Received an update on the Group’s
approach to people management and
diversity in the context of the MAP2030
Created by Empowered People
commitments.
– Reviewed the performance against
MAP2030 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.
– Considered the results of the 2023
Employee Survey, looking at the areas
that received positive scores, those that
needed improvement and the resulting
actions being taken both on a global
and local level.
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 55-64
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.,
– Reviewed the Group’s performance
and progress to meet the MAP2030
milestones and key contributing factors.
– Discussed and agreed the sustainability
KPIs for inclusion in the 2024 cash
bonus (See page 68 for more details).
Nature and responsible wood
sourcing
– Received an update on forestry-related
sustainability topics, focusing in
particular on the MAP2030 forestry
and nature-related commitments and
targets and progress to date.
– Reviewed focus areas and actions being
taken to promote resilient forests in
Europe and South Africa.
Responsible procurement
– Reviewed the development of Mondi’s
Responsible Procurement process,
including the progress on rolling out a
supplier screening process designed to
identify and manage high-risk suppliers.
– Received an overview of supplier
engagement activities, particularly
focused on the work being undertaken
to increase awareness around GHG
emissions and reduction plans and
the data Mondi requires in this respect
to support progress on our Scope 3
GHG target.
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.
– Review of the Socio-Economic
Assessment Toolbox (SEAT) process
and proposals to transition to
Stakeholder Engagement Conversations,
allowing, among other things, greater
focus on site-specific topics. The
approach has been successfully piloted
at the Ružomberok mill (Slovakia).
– 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.
Sustainable development
governance and risks
– Reviewed the material sustainability
issues, risks and opportunities and the
double materiality assessment undertaken.
– Reviewed the annual Sustainable
Development report, and approved
the report for publication.
– 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.
– Received an update on the MAP2030
human rights commitment, which
confirmed that no human rights adverse
impacts or severe risks had been
reported by the operations through
the risk identification process. Areas
for improvement were reviewed and
action plans presented.
– Reviewed Group sustainable
development policies and approved
amendments to reflect best practice
and align with Mondi’s MAP2030
approach.
– Approved updates to relevant
MAP2030 targets to exclude the
Russian operations.
– Reviewed the committee’s terms of
reference and performance resulting
in minor changes to align the terms
with existing practice.
– Considered and agreed the committee’s
annual work programme.
Mondi Group Integrated report and financial statements 2023
122
Remuneration report
Statement from the Chair of the
Remuneration Committee
Dear Shareholder
I am pleased to present this report
on directors' remuneration as Chair
of the Remuneration Committee
(the committee).
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 the following resolution at the 2024
Annual General Meeting (AGM):
– an advisory vote on the Directors'
remuneration report excluding the
Directors' Remuneration Policy (DRP),
which provides details of the
remuneration earned by directors
for performance in the year ended
31 December 2023, and how the DRP
will be implemented for 2024.
The committee continues 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
continue to support Mondi’s success,
incentivising the management team
to deliver long-term sustainable
shareholder value.
Dame Angela Strank
Chair of the Remuneration Committee
The remuneration strategy is intended to be simple,
fair and transparent, leading to reward outcomes that
are reflective of wider business performance.
Composition and attendance
Members throughout the year
Dame Angela Strank, Chair
Committee member since
April 2021
Sue Clark
April 2021
Dominique Reiniche
October 2015
Philip Yea
April 2020
Meeting attendance1
4/4
4/4
4/4
4/4
1 The maximum number of scheduled meetings held during the year that each director
could attend is shown next to the number attended.
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
Mondi Group Integrated report and financial statements 2023
123
Performance in 2023
Context of remuneration
Mondi’s performance in 2023 reflected
the uncertain global economic environment
and its impact on the markets in which
we operate. Against this backdrop,
we delivered a resilient performance.
Underlying EBITDA was €1,201 million.
Cash generation remained strong at €1,312
million, and ahead of last year. We continue
to make good progress in delivering on our
growth projects.
Sustainability is at the heart of the strategy
and embedded into Mondi’s actions and
decisions. Clear and measurable progress
continued to be made over the course
of 2023 against the ambitious targets of
the Mondi Action Plan 2030 (MAP2030).
The strategic importance of our sustainability
agenda is reflected in the remuneration
structure and is a key component of
the Group's annual bonus, embedding
sustainability goals into the organisation.
Safety is our highest priority. We continue
to build on our Social Psychology of Risk
approach to safety, culture and behaviours,
in addition to our traditional assessment of
safety performance using Total Recordable
Case Rate (TRCR). Although we are
among the leading performers in safety
in our industry, we tragically experienced
a fatality towards the end of 2023 at our
Ružomberok mill (Slovakia). We ensure
that every incident is fully investigated, that
learnings are shared, and procedures
and practices revised, if appropriate,
to avoid the same or a similar situation
happening in the future.
The Board has recommended a total
ordinary dividend for the year of 70.00 euro
cents per share in line with 2022.
This reflects the Board’s confidence
in the future of the business.
Further details on performance in 2023
are set out on pages 2-3.
Remuneration outcomes
aligned to performance
Annual bonus
For the 2023 annual bonus, performance
was assessed against financial (60%), safety
(10%), greenhouse gas (GHG) emissions
(5%), waste to landfill (WtL) (5%) and
personal (20%) targets.
Annual bonuses of 29% and 30% of
maximum have been awarded in respect of
performance in 2023 for Andrew King and
Mike Powell respectively. The outturn, as a
percentage of the maximum opportunity, is
a fair reflection of the performance against
the components of the bonus scorecard.
– The majority of the bonus is assessed
against financial measures. Threshold
levels of financial performance were not
achieved (underlying EBITDA of €1,201
million and ROCE of 12.8%), resulting in
0% of the financial elements being
received.
– The Group's annual bonus is linked
to sustainability objectives, including
the binary targets of reduction in GHG
emissions and elimination of waste to
landfill, each accounting for 5% of the
total bonus opportunity. While the waste
to landfill target was achieved, the
GHG emissions target was not, due to
loss of production as a consequence of
market conditions, and this element of
the bonus was forfeited. As a result, the
bonus outturn for GHG and waste to
landfill was 5% out of a maximum of 10%.
Details are given on pages 140-141. We
continue to make good progress
towards achieving our MAP2030
commitments.
– The sustainability scorecard includes
safety targets. Lead and lag indicators
are used to monitor and improve safety
performance, with the intention to
mitigate risks proactively. The lead and
lag indicator each account for 5% of the
total bonus opportunity. The lag indicator
assesses the Total Recordable Case
Rate (TRCR). The TRCR outcome of
0.64 reflected fewer safety incidents
than the target of 0.65. The Executive
Committee individually and collectively
achieved all of the lead indicators, aimed
at reinforcing safety as our highest
priority, and our Social Psychology of
Risk approach. A formulaic assessment
of the safety performance against the
lead and lag indicators would have
resulted in 10% of the maximum bonus
being delivered.
– However, there was a fatality in 2023. This
was independently reviewed by the
Sustainable Development Committee and
the Remuneration Committee.
After careful deliberation of the specific
circumstances, the Remuneration
Committee determined that a downward
adjustment of three percentage points of
the lag indicator metric should be applied.
This resulted in 60% of the lag indicator
metric being forfeited. As a result, the
safety component of the scorecard
contributed 7% to the bonus outturn.
– The personal element of the bonus
(20% of maximum) reflected specific
operational and strategic objectives.
Excellent progress was made against
these objectives, set in the context
of the challenges of 2023. As a result
of this strong delivery, Andrew King and
Mike Powell were awarded 17% and 18%
respectively.
Further details are set out on pages 140 to 143.
The committee considered the
appropriateness of the overall bonus outturn,
in the context of the financial and operational
performance against targets. In challenging
markets, the business delivered strong cash
flow, and management made excellent
progress against their strategic objectives.
While other key metrics of financial
performance were below expectations, our
progress on long-term investment projects
will ensure that Mondi is well positioned for
a sustainable future. The committee considers
that annual bonus outturns for Andrew and
Mike of 29% and 30% of maximum respectively
are a fair reflection of the performance
of the business and their individual
performance against personal objectives.
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 2021
Long-Term Incentive Plan (LTIP) ended
on 31 December 2023. 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 2021, was
set at 12% to 18%. The average ROCE for
the three-year performance period was
17.8%, which resulted in performance
between threshold and stretch targets.
This resulted in vesting of 97.5% of this
element, which contributed to 48.75%
of the total LTIP outcome.
Mondi Group Integrated report and financial statements 2023
124
Remuneration report
Statement from the Chair of the
Remuneration Committee continued
Pension
Andrew King, Mike Powell and the majority
of Mondi plc's workforce receive a pension
allowance of 8% of base salary.
Variable pay
There are no proposed changes to the
structure or quantum of the annual bonus
and LTIP awards. For 2024, 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
The majority of the annual bonus is
assessed against financial measures.
ROCE and underlying EBITDA are key
performance indicators.
Given the strategic importance of
sustainability, 20% of the total bonus
opportunity is assessed against
sustainability measures (pages 42-68
of this report for further detail on our
MAP2030 framework). Half of the
sustainability metrics are assessed against
safety performance. The scorecard also
includes reduction in GHG emissions
and elimination of waste to landfill, each
with a weighting of 5% of maximum
bonus opportunity. These are assessed
against robust, quantifiable targets. These
scorecard metrics address the key focus
areas of MAP2030. In Mondi, we have
chosen to include the sustainability metrics
in the Group annual bonus plan rather than
the LTIP, as the annual bonus plan extends
deeper into the organisation.
The sustainability metrics are at the heart
of Mondi’s strategy. Together with ROCE
and underlying EBITDA, this provides a
well-rounded assessment of performance.
Details of the performance measures
and weightings are on page 129.
LTIP
For the 2024 LTIP grant, performance
will be assessed against ROCE, relative
TSR and cumulative EPS. Details of the
performance measures, weightings
and targets are on pages 129-130.
In 2023, we completed the sale of all
our Russian assets following the Board's
decision to exit Russia. The committee took
account of this in setting the targets for the
2024 LTIP awards, noting that the Russian
operations had typically contributed
approximately an additional 300 basis
points towards ROCE. The committee
determined that the threshold ROCE
performance level should be maintained
at 12% and the stretch performance level
should be set at 16%. This adjustment
of 200 basis points to the stretch target
does not fully reflect the lost contribution
from the Russian assets and the
committee therefore considers this target
to be stretching.
The EPS targets have been set on a
cumulative basis in the context of the
long-term financial plan and reflect the
basic underlying EPS, post-share
consolidation. The targets are considered
to be stretching against the backdrop of a
challenging global economic environment.
We will continue to review the opportunity,
performance measures, weightings
and targets of our variable pay plans
periodically, within the parameters of the
prevailing approved DRP. We appreciate
feedback from investors and have carefully
considered their comments at the
Remuneration Committee, as we
determined the 2024 performance targets.
Further details on the implementation of
the DRP for the 2024 financial year are
provided on page 129-130.
The Group’s TSR over the period was 2.17%,
which was at median performance among
the comparator group. This performance
resulted in 25% vesting for this element,
which contributed to 12.50% of the total
LTIP outcome.
As a result, 61.25% of the overall LTIP
award will vest in March 2024. For our
executive directors, their vested shares
will be subject to a two-year post-vesting
holding period until 2026. Further details
are set out on page 144.
Summary
The committee considers that the annual
bonus, taking into account the application
of downward discretion in respect of the
safety element, and LTIP outcomes, are
a fair reflection of the wider business
performance for the 2023 financial year and
over the longer term. These outcomes are
aligned to the shareholder experience.
Further information about the levels of
executive remuneration earned in 2023,
including details of performance against
the relevant targets for both bonus
and LTIP, is given on pages 139-145.
Remuneration in 2024
Base salary
At Mondi, the philosophy is to pay our
executive directors a total remuneration
package that attracts and retains the best
people, with salaries intended to be fair
and well positioned to the external market
and the wider workforce.
Acknowledging the need for appropriate
restraint for executive directors, Andrew King
and Mike Powell’s base salaries were
increased by 2.5% to £1,100,338 and £701,613
respectively, effective from 1 January 2024.
These were in line with, or below the
increases applied to the wider UK workforce
(typically 2.5% to 5%). As part of determining
the salary increases for our executive
directors, the committee was updated
and received a report on the pay and pay
practices for both senior management
and the wider workforce across all
of Mondi's key markets.
The committee considers that the salaries
for the executive directors are appropriate
for a global organisation of Mondi’s size
and complexity.
Mondi Group Integrated report and financial statements 2023
125
Executive director pay and the
wider workforce
Every year, the committee is presented
with an analysis of pay practices and
incentives across the Group. This review
extends across the global workforce in
all geographies and business units, and
includes details of the discretionary
pay increases being applied to senior
management and the wider workforce.
The majority of Mondi employees’ pay is
negotiated under local collective bargaining
agreements, details of which are shared
with the committee. This workforce salary
review ensures the committee understands
the wider workforce pay and practices.
This discussion precedes the consideration
of the discretionary pay increases for the
executive directors. The committee is well
positioned when determining executive
director pay, to take into account reward
for the wider workforce and all other
relevant information.
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 'at-risk'. The variable pay,
delivered under the short- and long-term
incentive plans is higher for executive
directors. The remuneration is also realised
over an extended time horizon.
The Board has designated a non-executive
director, Sue Clark, responsible for
engaging with employees and reporting
back to the Board on the relevant insights
and discussions. During these discussions
a variety of subjects were discussed, not
limited to remuneration-related topics.
The views of employees, shared with the
Board, contribute to the wider discussions
of the committee. We will continue to
engage with employees, both formally and
informally, to bring their views to the Board
and the Remuneration Committee.
For further details on wider employee
engagement, see pages 92-93.
Special dividend and share
consolidation
Over the course of 2023, we completed
the sale of all our Russian assets following
the Board's decision to exit Russia.
Following approval by shareholders, the net
proceeds from the sale were distributed to
shareholders on 13 February 2024 by way
of a special dividend of €1.60 per share,
with an associated share consolidation
taking effect on 29 January 2024. Further
information can be found on page 216.
It was agreed by the committee that
participants in the Bonus Share Plan (BSP)
and LTIP would not receive the special
dividend on unvested share awards, and
that the share consolidation would not
apply to their unvested awards/options.
This meant that there were no adjustments
to the number of shares these participants
may acquire under their current awards/
options, keeping the overall value of their
awards/options at a broadly similar level.
Shareholder engagement
In 2023, our Board continued to engage
with a cross-section of shareholders on
developments and external expectations
relating to executive pay. Early in the year,
we consulted with shareholders and proxy
agencies in relation to our revised DRP
and its implementation. This engagement
continued throughout the year. Feedback
from investors is welcome and has been
carefully considered by the Remuneration
Committee in determining the structure
and operation of our remuneration policy.
Conclusion
I should like to thank you for the
constructive feedback and strong support
you gave at last year's AGM for our DRP
and implementation of the policy. I very
much hope that you will continue to give
your support to the remuneration resolution
proposed at the 2024 AGM.
Finally, I should like to thank my fellow
committee members for their support
throughout the year.
Dame Angela Strank
Chair, Remuneration Committee
Mondi Group Integrated report and financial statements 2023
126
Remuneration report
Remuneration at a glance
Summary of our executive directors' remuneration policy and implementation for 2024
Implementation of DRP in 2024
Fixed pay
Base salary, pension
and benefits
Annual bonus
Short-term variable
remuneration
Salary
Group CEO:
£1,100,338 (2.5% increase);
Group CFO:
£701,613 (2.5% increase);
(in line with, or below the increases
applied to the wider UK workforce;
typically 2.5% to 5%).
Pension
8% of salary, aligned to the majority
of Mondi plc's workforce.
Benefits
Executive directors will continue to receive
benefits in line with policy, which include
car allowance, medical insurance, death
and disability insurance, and employment
taxation advice.
– 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 2024 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%).
Long-Term Incentive Plan
Long-term variable
remuneration
– 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 2024 will be ROCE (50%), relative TSR (25%) and cumulative EPS (25%).
Share ownership policy
– To align the interests of executive directors with those of shareholders.
– Minimum Shareholding Requirement (MSR) 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 concerning directors' remuneration
Conclusion of DRP, following
shareholder consultation
Further to the consultation with our key
shareholders and proxy agencies, our
revised DRP was taken to shareholders
and strongly supported at the 2023 AGM.
Impact of the fatality on 2023 annual
bonus outcomes
As a consequence of the fatality that
occurred during the year, the committee
determined that a downward adjustment
of three percentage points to the annual
bonus outcome for the executive directors
and the wider Group Executive Committee
was appropriate.
Vesting of 2021 LTIP award
As part of determining the vesting
outcomes, the committee considered the
formulaic outturns in the context of Mondi's
wider business performance.
Review of executive director salaries
Andrew King and Mike Powell's base
salaries increased by 2.5% on 1 January
2024. These increases were in line with,
or below the increases applied to the wider
UK workforce (typically 2.5% to 5%).
2024 LTIP targets
The committee considered the impact
of the sale of the Russian operations on
the ROCE target range, and the impact
of the share consolidation on EPS targets
(page 130).
Return of net proceeds from disposal
of Russian assets
It was agreed by the committee that
participants in the BSP and LTIP would
not receive the special dividend on
unvested awards, and that the share
consolidation would not apply to their
unvested awards/options.
Determination of remuneration for
new Executive Committee roles
The remuneration structure and quantum
were determined and approved for the
CEO Uncoated Fine Paper, following an
internal promotion, and the new Chief
People Officer, joining Mondi in April 2024.
Review of non-executive director fees
No increases are being applied to
non-executive directors, in respect
of base fees, committee Chair fees,
the attendance fee outside country
of residence (per meeting) or any
other supplemental fees.
Mondi Group Integrated report and financial statements 2023
127
Linking our reward and strategy
Our strategy:
Drive value accretive growth, sustainably
Underlying
EBITDA
35%
ROCE
25%
Sustainability
scorecard
20%
Personal
20%
Annual bonus
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
£1,073,500
Annual bonus
Outturn
0%
Outturn
0%
Outturn
12%
Outturn
17%/18%
TSR
50%
Outturn
12.50%
LTIP
Average 3-year ROCE
50%
Outturn
48.75%
Mike Powell
Base salary
£684,500
Annual bonus
Underlying
EBITDA
35%
Outturn
0%
ROCE
25%
Outturn
0%
Sustainability
scorecard
20%
Outturn
12%
Personal
20%
Outturn
17%
Underlying
EBITDA
35%
Outturn
0%
ROCE
25%
Outturn
0%
Sustainability
scorecard
20%
Outturn
12%
Personal
20%
Outturn
18%
29%
Total outturn
£575,934
50% deferred in shares
2021 LTIP
TSR
50%
Outturn
12.50%
ROCE
50%
Outturn
48.75%
61.25%
Total outturn
£1,233,525
two-year holding period
30%
Total outturn
£349,096
50% deferred in shares
2021 LTIP
TSR
50%
Outturn
12.50%
ROCE
50%
Outturn
48.75%
61.25%
Total outturn
£718,209
two-year holding period
Benefits, pension contributions and other
Benefits, pension contributions and other
£343,318
Total remuneration 2023
£3,226,277
Annual bonus
Page 140-143
£129,538
Total remuneration 2023
£1,881,343
Long-Term Incentive Plan (LTIP)
Page 144-145
Mondi Group Integrated report and financial statements 2023
128
Remuneration report
Remuneration at a glance continued
Fixed vs variable remuneration outcomes
Andrew King, Group CEO
Mike Powell, Group CFO
£3,226,277
£4,196,451
£3,497,506
£1,881,343
£2,101,525
£2,189,834
Time horizons of realised pay
The structure of the remuneration is to underpin the focus on
long-term performance that drives sustainable value for shareholders.
Actual shareholding against Minimum
Shareholding Requirement (MSR)
As at 31 December 2023, Andrew King exceeded the MSR. Mike
Powell is on track to meet the MSR within the timeframe permitted1.
The time period to realise each element of pay is illustrated below:
Andrew King, Group CEO
Year 1
Fixed pay1
Annual
bonus
LTIP
50% cash
50% in shares – deferred for three
years
Three-year performance period
Two-year post-vesting
holding period
Mike Powell1, Group CFO
1 Including Base Salary, Benefits and Pension.
Executive directors are required to hold shares equivalent to 300% and 250%
of salary respectively for the CEO and CFO. This requirement continues
for two-years post-employment.
1 Mike Powell joined the Board in November 2020. New appointees are
required to meet the relevant shareholding requirements within five years
from appointment.
The shares that are included for the purposes of the MSR include deferred BSP
shares, net of tax, and vested LTIP shares subject to a post-vesting holding
requirement. Unvested LTIP awards do not count towards the MSR.
396%179%300%250%Shareholding MSR 44%31%35%18%43%51%38%26%14%Salary, benefits, pension & otherBonusLTIP20232022202143%35%32%19%51%47%38%14%21%Salary, benefits, pension & otherBonusLTIP202320222021 Mondi Group Integrated report and financial statements 2023
129
Remuneration report
Statement of implementation of Directors’
Remuneration Policy in 2024
Base salary for 2024
Name
Andrew King
Mike Powell
Base salary
effective
1 Jan 2024
Previous
base salary
£1,100,338
£1,073,500
£701,613
£684,500
% change
2.5%
2.5%
Andrew King’s and Mike Powell's base salaries were each increased by 2.5%; increases for the executive directors were in line with,
or below the increases applied to the wider UK workforce (typically 2.5% to 5%).
Bonus Share Plan (BSP) for 2024
The bonus structure for 2024 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 Taking action on Climate
indicators in our MAP2030 framework.
One of our key circular driven solution
indicators in our MAP2030 framework.
An indicator of the contribution and impact
that each executive director is making to the
overall success of the management team.
Targets and ranges are set each year by
the committee taking account of required
progress towards strategic goals, and the
prevailing market conditions.
Both lead and lag targets are set each year by
the committee, based on the specific priorities
in our MAP2030 framework.
The committee considers input from the
Sustainable Development Committee, and sets
appropriate standards and goals to reduce waste
and GHG emissions.
Targets are set each year by the committee,
based on the specific priorities, milestones
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 2024 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 2024
LTIP awards that are to be made in 2024 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 2024. 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.
Metric
Average 3-year ROCE (50%)
TSR, relative to a peer group of competitors
(25%)
Basic underlying EPS, measured on a
3-year cumulative basis (25%)
Why chosen?
A key indicator of the
efficient and effective use
of capital.
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.
How targets are set
The committee sets threshold and stretch levels, aligned
to the Group’s strategic targets. ROCE targets for the LTIP
are detailed on the next page.
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 on the next page.
EPS targets are set in the context of the long-term financial
plan, reflecting basic 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 2023
130
Remuneration report
Statement of implementation of Directors’
Remuneration Policy in 2024 continued
The targets for the three-year performance period for the 2024 LTIP awards are as follows:
Measure
ROCE (average)
Mondi’s TSR relative to bespoke peer group
Cumulative EPS (euro cents per share)
Weighting
(%)
Threshold
(25% vesting)
Maximum
(100% vesting)
50%
25%
25%
12%
16%
Median
Upper quartile
365
446
Between threshold and maximum, the LTIP awards will vest on a straight-line basis.
In setting the targets for the 2024 LTIP, the committee noted that the Russian operations had typically contributed approximately an
additional 300 basis points towards ROCE. The committee determined that the threshold ROCE performance level should be maintained
at 12% and the stretch performance level should be set at 16%. This adjustment of 200 basis points does not fully reflect the lost
contribution from the Russian assets. Therefore the committee considers the 16% ROCE target to be stretching.
The EPS targets are considered to be stretching in a macroeconomic environment going into 2024 that remains challenging.
The TSR peer group for the 2024 LTIP awards consists of the following companies. These are peers who are subject to broadly the same
market forces and trading environment as Mondi.
BillerudKorsnäs
Huhtamaki
Mayr-Melnhof
Sappi
The Navigator Company
DS Smith
Holmen
International Paper
Metsä Board
Smurfit Kappa
UPM
Klabin
PCA
Stora Enso
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 are reviewed annually and, if appropriate, increased. Effective 1 January 2023, 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%. For 2024,
the fee levels are as set out in the table below and are being held at 2023 levels.
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 2024
Fees from
1 January 2023
£484,313
£81,870
£484,313
£81,870
£21,000
£22,000
£21,000
£21,000
£11,000
£2,680
£21,000
£22,000
£21,000
£21,000
£11,000
£2,680
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Remuneration report
Directors’ Remuneration Policy
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).
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 Minimum Shareholding Requirement (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
The remuneration of the executive directors is higher than that of senior management and the wider workforce of the Group, reflecting
their market value. Salaries are paid fairly in relation to the market value of the role, recognising local markets and collective bargaining
agreements for the wider workforce. Executive salary increases are made in line with, or below those of the wider Mondi plc workforce,
taking into account salary increases across the wider Mondi Group. 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. The majority 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 the most senior management participate in the LTIP,
in addition to the annual bonus.
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Remuneration report
Directors’ Remuneration Policy continued
Executive directors’ remuneration policy table
The tables below set out the DRP (available on the Group website at www.mondigroup.com/investors/results-reports-and-
presentations/?year=2022 in the Integrated report and financial statements 2022) for executive directors and non-executive directors
approved by shareholders on 4 May 2023 at the 2023 AGM. Awards made prior to the approval of this 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
Performance measures
Maximum opportunity
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.
Whilst no formal performance conditions apply, an individual’s performance in role is taken into account when
determining any salary increase.
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
Performance measures
Maximum opportunity
Pension
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.
Not applicable.
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.
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 2023
133
Bonus Share Plan (BSP)
Purpose and link to strategy To provide incentive and reward for annual performance achievements. To also provide sustained alignment with
Operation
Performance measures
Maximum opportunity
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 2024, the table on page 129 provides 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 (page 134).
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.
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
Operation
Performance measures
Maximum opportunity
alignment with shareholders through the use of shares.
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 2024, the tables on pages 129 to 130 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 (page 134).
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 2024, 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.
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 2023
134
Remuneration report
Directors’ Remuneration Policy continued
Executive directors’ remuneration policy table 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 the Company's 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 132 to 134);
– the choice and weighting of performance metrics (in accordance with the statements made in the DRP table on pages 132 to 134);
– 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 2023
135
Remuneration scenarios at different performance levels
CEO – Andrew King
CFO – Mike Powell
n Fixed pay n BSP cash n BSP shares n LTIP
n Fixed pay n BSP cash n BSP shares n LTIP
42%
17%
17%
24%
52%
14%
14%
20%
34%
14%
14%
38%
100%
34%
14%
14%
38%
100%
1
1
1
1
1
1
42%
17%
17%
24%
1
52%
14%
14%
20%
1
The charts above illustrate the total potential remuneration for each executive director at three performance levels.
Assumptions1:
Minimum = fixed pay only (salary + benefits + pension), resulting in £1,444,003 and £830,720 respectively.
On-target = 50% vesting of the annual bonus and LTIP awards, resulting in £3,727,205 and £2,163,783 respectively.
Maximum = 100% vesting of the annual bonus and LTIP awards, resulting in £6,010,406 and £3,496,847 respectively.
Share Price Growth = to reflect the impact of a share price increase between award and vesting, the LTIP value in the ‘Maximum’ column has been increased by 50%, resulting
in £7,275,795 and £4,233,540 respectively.
Salary levels (on which other elements of the package are calculated) are based on those applying on 1 January 2024.
Remuneration policy for non-executive directors
Element
Purpose and link to strategy
Operation
Non-executive board chair fee
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.
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.
Other non-executive fees
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,
and in respect of the role of 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.
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.
Maximum opportunity
MinimumTargetMaximumShare Price Growth£0£1,000,000£2,000,000£3,000,000£4,000,000£5,000,000£6,000,000£7,000,000MinimumTargetMaximumShare Price Growth£0£1,000,000£2,000,000£3,000,000£4,000,000£5,000,000£6,000,000£7,000,000 Mondi Group Integrated report and financial statements 2023
136
Remuneration report
Directors’ Remuneration Policy continued
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 is comprised 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.
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).
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 foregone 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 2023
137
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 remuneration of the executive directors and other senior colleagues is set, taking into appropriate account the pay, pay practices
and employment conditions of the wider workforce, on which the committee receives regular detailed updates. In determining the
proposed salary increases for the executive directors and individuals within the remit of the committee, the committee is well positioned
to consider the wider workforce increases as part of their decision-making.
There is no formal consultation with employees on the DRP; however, employees are encouraged to provide feedback, on remuneration
and wider topics, across a number of channels. A purposeful workplace is a key theme of MAP2030 and understanding the views of our
employees to address the things that matter to them is at the core.
During the year we completed our latest Group-wide Employee Survey, conducted every two years. The Board received reports on the
results of our Employee Survey, 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. The results were used to calculate our Purposeful
Workplace, Inclusiveness and Wellbeing scores, which provide the Board with an objective way to assess employee views. These
activities provide targeted insights and create further opportunities to engage with our global workforce.
During 2023, Sue Clark, our NED responsible for understanding the views of employees, participated in Mondi's annual European
Communication Forum meeting, alongside representatives from our European plant network. She also engaged with a cross-section
of employees during a number of site visits, more details of which can be found on page 94.
Over the course of the year, a session was run where the Remuneration Committee Chair engaged with employees from most of the
countries we operate in to discuss the role and responsibility of the Board at Mondi, and specifically the role of the Remuneration
Committee. Employees had the opportunity, and were encouraged, to ask questions and share their views.
The Board receives feedback from these, and other activities, to better understand the experience of a Mondi employee and to support
their decision making.
Statement of consideration of shareholder views
The committee takes into account the views of shareholders in the formulation of the Directors' Remuneration Policy and the
implementation of the policy. In early 2023 we consulted with our major shareholders as part of the process of updating our DRP
which shareholders voted in favour of at our 2023 AGM. Over the course of the year, the Chair, the Remuneration Committee Chair
and executive directors engaged with shareholders on a number of matters including remuneration with feedback presented to the
Board. Feedback received from shareholders at the Annual General Meeting is also considered. In the event that either the DRP
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 2023
138
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 100 Index, for the period between 31 December
2013 and 31 December 2023. The FTSE-All-Share Index had been used in previous reports. Mondi plc is a constituent of the FTSE 100
Index, which is why this index was considered a more appropriate Index for this report.
Total shareholder return – Mondi vs FTSE 100
This graph shows the value, by 31 December 2023 of £100 invested in Mondi plc on 31 December 2013, compared with the value of £100
invested in the FTSE 100 Index on the same date. TSR has been calculated on a three-month average basis.
Historical CEO remuneration
Year
2023
20221
2021
20202
2019
2018
20173
2016
2015
2014
CEO
Andrew King
Andrew King
Andrew King
Andrew King / Peter Oswald
Peter Oswald
Peter Oswald
Peter Oswald / David Hathorn
David Hathorn
David Hathorn
David Hathorn
Total remuneration
£3,226,277
% of maximum
bonus earned
29%
£4,196,451
£3,497,506
£3,559,580
£3,322,216
£3,906,849
£3,354,544
£4,867,142
£5,255,561
£5,859,585
96%
97%
42%
44%
88%
63%
69%
90%
92%
% of LTI
vested
61.25%
50.0%
45.6%
50.0%
67.2%
76.6%
72.5%
92.5%
100.0%
100.0%
1 The three-year performance cycle of the 2020 LTIP award ended on 31 December 2022. The award value shown in the 2022 Remuneration report was calculated using
the average share price, being £14.78. The actual share price on vesting was £14.17. The award values for 2022 have been restated on this basis.
2 Andrew King’s and Peter Oswald's 2020 total remuneration of £1,995,465 and £1,564,115 respectively is in respect of their tenure as Group CEO. Their salary and bonus have
been subject to a pro-rata time reduction. The bonus earned and LTIP vested were 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 total remuneration of £991,584 up to his retirement from the Boards (the simplification of Mondi's corporate
structure into a single holding company structure under Mondi plc became effective in 2019) on 11 May 2017, including the pro-rata CEO annual bonus, and Peter Oswald’s
total remuneration of £2,362,960, including base salary, pension, benefits and pro-rata CEO annual bonus, as well as the 2015 LTIP vesting amount, with effect from
11 May 2017.
Value (£)10 year Mondi plc10 year FTSE 100201320142015201620172018201920202021202220230100200300 Mondi Group Integrated report and financial statements 2023
139
2023 remuneration of directors (audited)
The remuneration policy operated as intended in 2023. The provisions of malus and clawback have not been applied in 2023.
The table below sets out the total remuneration for each person who served as a director in the years ended 31 December 2023
and 31 December 2022. A full breakdown of fixed pay and pay for performance in 2023 is detailed below.
Executive directors
Fixed pay
Pay for performance
Base salary
Benefits1
Pension
contribution7
Total fixed
remuneration
Annual bonus
including
grant value of
BSP award2
Value of LTIP
vesting in
respect of the
performance
period ended
in the year 3 4
Value of LTIP
vesting at
date of grant
Share price
gain on
vesting
LTIP award
between
grant and
vest dates
Other1
Total variable
remuneration
Total
2023
Andrew
King
Mike
Powell
2022
Andrew
King
Mike
Powell
£1,073,500 £255,638 £85,880 £1,415,018
£575,934 £1,233,525 £1,391,855
— £1,800 £1,811,259 £3,226,277
£684,500 £72,978 £54,760
£812,238
£349,096
£718,209 £810,364
— £1,800 £1,069,105 £1,881,343
£1,012,700 £207,865
£81,016 £1,301,581
£1,798,556 £1,094,514 £1,115,507
— £1,800 £2,894,870 £4,196,451
£645,750
£39,124
£51,660
£736,534
£1,064,842
£298,349 £273,630 £5,690 £1,800 £1,364,991
£2,101,525
Non-executive directors
Philip Yea
Svein Richard Brandtzaeg
Sue Clark
Anke Groth6
Saki Macozoma
Dominique Reiniche
Dame Angela Strank
Stephen Young
Year ended 31 December 2023
Fees
Other5
Total
Year ended 31 December 2022
Fees
Other5
Total
£484,313
—
£484,313
£461,250
—
£461,250
£100,630
£8,214
£108,844
£95,836
£3,456
£95,550
—
£95,550
£83,076
£74,803
£2,200
£77,003
—
£95,270
£495
£95,765
£61,477
£132,873
£4,521
£137,394
£108,180
£105,550
£111,004
—
—
£105,550
£96,281
£111,004
£124,076
—
—
£3,672
£2,971
—
—
£99,292
£83,076
—
£65,149
£111,151
£96,281
£124,076
1
Included in this column are accommodation costs, car allowance, life and health cover. For Andrew King, this figure also includes accommodation costs in Vienna for his
business travel of £48,614, a total of £32,454 for UK, South African and Austrian tax advice benefit, a total tax equalisation and other benefit gross-ups of £146,221 and a car
allowance of £19,300. For Mike Powell, this figure includes tax advice benefit of £21,962, a total tax equalisation and other benefit gross-ups of £24,955 and a car allowance
of £19,300.The column 'Other' shows matching SIP shares.
2 This is the total annual bonus amount awarded in respect of the financial year 2023, and includes both the upfront cash element and the deferred share award (pages 140 to 143).
3 For 2023, the three-year performance cycle of the 2021 LTIP ended on 31 December 2023 and the awards will vest in Q1 2024 and be subject to a two-year post vesting
holding period until 2026. The award value (including equivalent dividends on LTIP shares due to vest in March 2024 set out on page 144) shown is based on the average
share price over the last three months of the financial year ended 31 December 2023 of £13.98. The 2021 LTIP awards were granted on 12 March 2021, when the share price
was £17.66. This equated to a decrease in value of £3.68 per share. As a consequence a zero gain is shown. Andrew’s and Mike's loss due to share price depreciation was
£290,036 and £168,864 respectively.
4 In the 2022 remuneration report, the value of the 2020 LTIP awards vesting for which the three-year performance cycle ended on 31 December 2022 was calculated using
the average share price for the three months ended 31 December 2022, being £14.78 (including equivalent dividends on LTIP shares vested in March 2023). The actual share
price on vesting was £14.17. The award values for 2022 have been restated on this basis. Andrew King's award was granted on 11 May 2020, when the share price was
£15.85. This equated to a decrease in value of £1.68 per share. As a consequence a zero gain is shown for Andrew King. Andrew’s loss due to share price depreciation was
£118,332 (excluding dividend equivalents). 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 £0.29 per share.
5 Svein Richard Brandtzaeg, Anke Groth, Saki Macozoma and Dominique Reiniche received tax advice in the year, constituting taxable benefits to the gross values shown
in this column.
6 Anke Groth was appointed as non-executive director on 1 April 2023. The 2023 figures reflect her remuneration as a non-executive director from 1 April 2023
to 31 December 2023.
7 None of the non-executive directors have entitlements to pension-related benefits. Pension benefits of 8% of salary respectively are delivered as pension contribution
of £8,500 and cash allowance of £77,380 to Andrew King and as cash allowance of £54,760 to Mike Powell.
Mondi Group Integrated report and financial statements 2023
140
Remuneration report
Annual report on remuneration continued
Annual bonus
2023 bonus outcomes (audited)
For the annual bonus in respect of 2023 performance, the performance measures and total outcomes for each executive director were:
Weight (% max)
Outcomes:
Andrew King (% of max)
Mike Powell (% of max)
Underlying EBITDA
35
—
—
BSP performance measures
ROCE
25
—
—
Sustainability
scorecard
Personal objectives
20
12
12
20
17
18
Total
100
29
30
The majority of the 2023 annual bonus was assessed against financial measures; underlying EBITDA and ROCE.
The sustainability scorecard includes safety (10/20), reduction in GHG emissions (5/20) and elimination of waste to landfill (WtL) (5/20) measures.
The safety element of the scorecard includes lead and lag indicators:
– Five points relate to the achievement of lead indicators. This is reflective of Mondi’s values and proactive approach to safety.
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 in their entirety are not achieved,
then these five points lapse in full for all.
– A further five points relate to the lag indicator, assessed against an annually defined Total Recordable Case Rate. In the event of any
work-related fatality, the Remuneration Committee makes an assessment on a case-by-case basis and will utilise its discretion to
adjust any pay-outs under the bonus, if appropriate.
The remaining 20 points of the annual bonus are assessed against personal objectives (pages 142-143).
Mondi Group Integrated report and financial statements 2023
141
Financial and Sustainability elements and outcomes of the 2023 annual bonus (audited):
Threshold levels of performance were not met for either of the financial metrics, resulting in 0% of these elements being achieved.
The performance against the sustainability scorecard was partially achieved. While the waste to landfill target was achieved, contributing
5% to the bonus outturn, the GHG emissions target was not and this element of the bonus was forfeited. These outcomes contributed
to 5% out of a maximum of 10% to the bonus.
Performance against the safety lead and lag indicators would have resulted in the full 10% of the bonus being achieved. The Executive
Committee individually and collectively achieved all of the lead indicators, aimed at reinforcing safety as our highest priority, and our
Social Psychology of Risk approach.
There was a work-related fatality in 2023 at the Ružomberok mill in Slovakia. The Remuneration Committee and Sustainable Development
Committee independently reviewed the detailed investigation report of the incident and agreed with the findings. After careful deliberation
and discussion, the Remuneration Committee concluded that a downward adjustment of three percentage points of the lag indicator metric
was appropriate. This resulted in 60% of the lag indicator metric being forfeited.
Performance measure
Underlying EBITDA
ROCE
Sustainability scorecard
Safety lead indicators (SLI)
Safety lag (TRCR)
Greenhouse gas (GHG) emissions
Waste to landfill (WtL)
Weighting
Threshold
35% €1,239m
25%
14.6%
5%
5%
5%
5%
0.72
% of bonus payable
for threshold
performance
8.75%
6.25%
Binary
1 %
Binary
Binary
Maximum
€1,677m
19.8%
Outcome
€1,201m
12.8%
Binary Achieved in full
0.65
0.40 t/t
0.64
0.43 t/t
20.40 kg/t
13.28 kg/t
% of bonus
opportunity
achieved
0%
0%
5%
2%
0 %
5%
At or above maximum
Between threshold and maximum
Below threshold
CEO
Bonus outcome as percentage of maximum opportunity: 29%
Underlying EBITDA
ROCE
35%
(Max)
Sustainability scorecard
25%
(Max)
5% 2%
20%
(Max)
5%
SLI
TRCR
GHG WTL
Personal objectives
20%
(Max)
17%
Performance measure achieved
Sustainability performance measure achieved
Performance measure not achieved
CFO
Bonus outcome as percentage of maximum opportunity: 30%
Underlying EBITDA
ROCE
35%
(Max)
Sustainability scorecard
25%
(Max)
5% 2%
20%
(Max)
5%
SLI
TRCR
GHG WTL
Personal objectives
20%
(Max)
18%
Performance measure achieved
Sustainability performance measure achieved
Performance measure not achieved
Mondi Group Integrated report and financial statements 2023
142
Remuneration report
Annual report on remuneration continued
Achievement against personal objectives of executives for 2023 bonus (audited)
Key personal 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 2023, included:
Strategy development
and execution
– Continued investment in our business to drive profitable growth, enhance our product offering,
quality and service to customers, strengthen our cost competitiveness and improve our
environmental footprint including:
– Good progress with our €1.2 billion of organic growth investment projects which remain
on track and on budget including:
◦ Completed the acquisition of the Duino mill (Italy) in January 2023 and subsequently
approved plans to convert the existing paper machine into a high-quality, cost-competitive
recycled containerboard machine with an annual capacity of around 420,000 tonnes.
◦ Completed the €125 million project at Kuopio (Finland) in the fourth quarter of the year.
◦ Excellent progress on the €400 million investment in a new kraft paper machine at Štětí
(Czech Republic).
– Completed the acquisition of the Hinton Pulp mill in Alberta, Canada, with the intention to
invest in the mill to improve productivity and sustainability performance and, subject to pre-
engineering and permitting, invest in expanding the facility primarily with a new kraft paper
machine to integrate our paper bag operations in the Americas.
– Progressed against our MAP2030 sustainability targets and commitments, including:
– Increased the proportion of our products that are reusable, recyclable or compostable with
85% of our packaging and paper revenue meeting our requirements in 2023.
– Continued to reduce our greenhouse gas emissions and remain on target to achieve our
Net-Zero GHG emissions reduction targets. In 2023, we reduced our Scope 1 and 2
greenhouse gas emissions by 22% against our 2019 baseline.
– Continued product development and innovation activities, supporting customers transition
to more sustainable packaging solutions.
– Examples of our recent customer product launches include:
◦ A recyclable, premium protective packaging for NKE’s wind turbine components, designed
to eliminate damage during transport with integrated shock sensors providing real-time
feedback on the product’s condition before installation.
◦ A recyclable, mono-material plastic solution for Fressnapf’s dry pet food packaging with
strong barrier properties, designed to offer premium brand appeal and product protection.
◦ External validation of our product innovations including being awarded four of
the prestigious global 2024 WorldStar Packaging Awards and a number of other
national awards.
– Resilient performance with strong cash flow in challenging markets.
– Underlying EBITDA of €1,201 million, cash generation from operations of €1,312 million, basic
underlying earnings per share of 107.8 euro cents, and ROCE of 12.8%.
– Continued to drive operational and commercial excellence initiatives across the value chain.
– Increased the proportion of our product portfolio that is reusable, recyclable or compostable,
achieving 85% in the year.
– Ongoing product development and continuing to be externally recognised for our award-winning
sustainable solutions.
– 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 engagement with colleagues including the Group-wide
Employee Survey.
Operational and financial
performance
Mondi Group Integrated report and financial statements 2023
143
Financial efficiency
and financing
Completed the divestiture of all
the Group’s Russian assets
The overall personal ratings of
the executive directors were:
– Maintained strong financial position.
– Including receipt of the proceeds from the disposal of the Group's Russian operations, net debt
at 31 December 2023 was €419 million, with net debt to underlying EBITDA at 0.3 times
(31 December 2022:€1,011 million, 0.5 times). Adjusting for the special dividend paid in February
2024, the pro-forma net debt and net debt to underlying EBITDA was €1,195 million and 1.0
times, respectively.
– At 31 December 2023, Mondi's liquidity position was €2.3 billion, comprising €754 million of
undrawn committed debt facilities and cash and cash equivalents of €1,592 million. Adjusting
for the special dividend paid in February 2024, the Group retains a strong liquidity position of
€1.6 billion.
– The Group maintained its investment grade credit ratings. In May 2023, Standard & Poor’s
upgraded the Group's credit rating from BBB+ to A- (stable outlook). Moody’s Investors
Service reaffirmed the Group's credit rating at Baa1 (stable outlook) during the year.
– In June 2023, the Group received proceeds of €30 million following the completion of the sale
of its three Russian packaging converting operations.
– In October 2023, the Group completed the sale of the Syktyvkar mill, its most significant facility
in the country, and received proceeds of €776 million from the disposal.
– Following these disposals, the Group concluded its exit from Russia and announced the net
proceeds of both sales would be returned to shareholders by way of a Special Dividend valued
at €1.60 per share with an associated share consolidation.
– The Share Consolidation and Special Dividend payments were both completed early in 2024.
– Andrew King 17/20
– Mike Powell 18/20
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
£1,985,975
170% of salary
£1,163,650
29%
30%
Awarded
in cash
£287,967
£174,548
Awarded
in shares
£287,967
£174,548
Total
£575,934
£349,096
The committee reviewed performance against the targets of each scorecard measure. In addition, the overall bonus outturn was
considered in the context of the wider performance of the Group. In challenging markets, strong cash flow was delivered and excellent
progress was made against strategic objectives. The progress of long-term investment projects will ensure that Mondi is well-positioned
for a sustainable future.
As a consequence of the circumstances of the fatality, the committee applied its discretion and a three percentage points downward
adjustment to the bonus outcome was made. Overall, the committee considers that annual bonus outturns for Andrew and Mike of 29%
and 30% of maximum respectively, are a fair reflection of the performance of the business and their individual performance against
personal objectives.
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 2023 (audited)
On 6 March 2023 the committee made the following awards under the Group’s BSP to the following executive directors in relation
to the 2022 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
2022
2022
63,779
37,761
£14.10
£14.10
£899,284
£532,430
1 Being a three-day average share price commencing on the day of announcement of financial results.
Mondi Group Integrated report and financial statements 2023
144
Remuneration report
Annual report on remuneration continued
Long-Term Incentive Plan (LTIP) (audited)
Vesting of the 2021 awards
The LTIP awards that were granted in 2021, with a three-year performance period ending on 31 December 2023, will vest in Q1 2024
at 61.25% of maximum against the (equally weighted) relative TSR and ROCE performance conditions, as shown in the table below.
The committee considered the level of pay-out to be 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 (%)
50%
50%
Threshold
(25% vesting)
Maximum
(100% vesting)
Median Upper quartile
12% p.a.
18% p.a.
Actual
Median
17.8% p.a.1
Total vesting
(% of max)
Actual vesting
(% of max. LTIP
opportunity)
12.50%
48.75%
61.25%
1 The three-year average ROCE that was achieved was 17.8% (16.9% in 2021, 23.7% in 2022 and 12.8% in 2023).
Mondi plc achieved a TSR of 2.17%, over the three-year performance period, ranking 8th in the TSR peer group, equivalent to median
TSR performance and 25% vesting. Therefore 12.50% of the maximum 2021 LTIP award will vest as a result of the TSR performance.
Mondi plc achieved a three-year average ROCE of 17.8%. This resulted in vesting of 97.50% of this element. Therefore 48.75% of the
maximum 2021 LTIP award will vest as a result of the ROCE performance.
Taking into account both ROCE and TSR performance, in total, 61.25% of the maximum 2021 LTIP award will vest.
Details of 2021 LTIP vesting
Name
Andrew King
Mike Powell
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
128,675
74,916
61.25%
61.25%
78,814
45,887
9,421
5,487
88,235
51,374
£13.98
£1,233,525
£13.98
£718,209
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 2023 (audited)
On 6 March 2023, the committee made the following awards under the Group’s LTIP to the following executive directors:
Name
Type of award
Basis of award
Number of shares
Andrew King Nil-cost option
230% of salary
Mike Powell
Nil-cost option
210% of salary
175,110
101,947
Share price at
grant1
£14.10
£14.10
Face value of
shares
£2,469,051
£1,437,453
Vesting at
minimum
performance
25%
25%
End of performance
period
31/12/25
31/12/25
1 Being a three-day average share price commencing on the date of the announcement of the financial results.
The performance conditions, as summarised in the table below, are based on three performance measures – ROCE (50%), TSR, relative
to a peer group (25%) and cumulative EPS (25%) – measured over a three-year performance period ending on 31 December 2025.
This combination of metrics provides an appropriate means of aligning the operation of the LTIP with shareholders’ interests and the
Group’s strategy.
Measure
ROCE (average)
Mondi’s TSR relative to bespoke peer group
Cumulative EPS (euro cents per share)
Between threshold and maximum the LTIP awards will vest on a straight-line basis.
Weighting
(%)
50%
25%
25%
Threshold
(25% vesting)
12%
Maximum
(100% vesting)
18%
Median Upper quartile
541
443
Mondi Group Integrated report and financial statements 2023
145
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
Mayr-Melnhof
Sappi
The Navigator Company
DS Smith
Holmen
International Paper
Metsä Board
Klabin
PCA
Smurfit Kappa
Stora Enso
UPM
WestRock
The committee has discretion to amend the vesting outturn should the formulaic assessment not be reflective of the underlying business
performance. Where the provision is utilised the committee will seek to explain clearly the basis for this decision.
Payments to past directors (audited)
There were no 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 or past 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 for the three years 2021, 2022 and 2023.
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 Mondi plc employees. A snapshot date of 31 December 2023 was used. This group of employees
represents less than 1% of our global workforce.
Year
2023
2022
2021
2023
Salary
Total remuneration
Method
Option A
Option A
Option A
25th percentile
pay ratio
41:1
51:1
50:1
Median
pay ratio
22:1
35:1
36:1
75th percentile
pay ratio
14:1
20:1
24:1
CEO
£1,073,500
£3,226,277
25th percentile
£61,449
£78,436
Median
£105,078
£145,699
75th percentile
£210,000
£237,616
The Option A methodology, where the total annual pay for Mondi plc 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 in respect of the financial year
(unless stated otherwise). The bonus, BSP and LTIP values used are those received during the year ended 31 December 2023.
Throughout the Group, the approach is that remuneration is fair and market competitive in the context of the talent market for the
relevant role reflecting local market 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 by variable pay outcomes, and the share price for
equity settled awards, and may fluctuate significantly on a year-to-year basis. The ratio has fallen in 2023, as a consequence of the CEO
pay increase in 2023 being discounted by a third of that applied to the wider workforce, pension levels being aligned to the workforce,
LTIP and bonus opportunity levels being held and bonus outturns for 2023 being significantly lower than those of the previous two cycles.
Mondi Group Integrated report and financial statements 2023
146
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 2023
and the three 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 Chair fee, NED base fees, the attendance fee for meetings outside the country of residence (per meeting) and all supplemental fees
were increased by 5%, effective 1 January 2023. A supplemental fee for the role of the NED responsible for understanding the views
of employees was introduced.
Average
employee
Mondi plc1
Average
employee
Mondi
Group
Andrew
King3
Mike
Powell3 Philip Yea4
Svein
Richard
Brandtzaeg5
Sue Clark5
Saki
Macozoma6
Dominique
Reiniche7
Dame
Angela
Strank8
Stephen
Young9
7.8%
-1.3%
14.5%
-11.2%
-7.5%
1.2%
3.2%
9.2%
4.5%
3.6%
0.6%
6.0%
2.5%
1.9%
0.0%
6.0%
2.5%
0.0%
—
N/A
N/A
23.0%
86.5%
55.3%
59.7%
N/A -26.4%
-78.7%
-0.6%
N/A 238.3%
—
-9.1%
-18.8%
-68.0%
-67.2%
82.9%
22.3%
1.4%
3.6%
-28.9%
18.1%
164.6%
138.1%
-58.1%
5.2%
-5.5%
—
5.0%
2.5%
12.8%
—
—
—
—
—
—
—
—
—
5.0%
15.0%
1.9%
22.8%
9.6%
-10.5%
20.3%
9.2%
—
—
137.7%
11.3%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7.1%
8.0%
-8.1%
-91.1%
52.2%
—
—
—
—
—
—
—
-71.0%
374.8%
20.0%
—
—
—
—
26.6%
—
—
—
—
—
—
—
—
—
—
12.6%
23.6%
-6.2%
—
—
—
—
—
—
—
—
Salary/fees 2023
Taxable
benefits2
Annual
bonus
2022
2021
2020
2023
2022
2021
2020
2023
2022
2021
2020
Data for executive directors, joiners and leavers have been excluded in the relevant year. Anke Groth was appointed to the Board during
the year ended 31 December 2023 and, accordingly, has been excluded from the table above.
1 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, or a change in the profile of the employee group e.g leavers or new hires can have a marked effect on the year-on-year
comparison. Consequently, the percentage changes may be highly variable. The percentage for the Mondi plc employees reflects a 9% salary increase for 2023, noting that for new
hires in 2022 Q4, no further increase was applied for 2023.
2 Non UK tax resident non-executive directors receive tax return support. Taxable benefits for plc employees include healthcare, car allowance and SIP matching shares.
The majority of employees in the Group receive no taxable benefits beyond those provided through the local social security regime. Additional benefits represent less than
5% of the total remuneration.
3 To provide a meaningful year-on-year comparison, the salaries for Andrew King and Mike Powell were annualised in 2020. Andrew was appointed Group CEO from
1 April 2020 and Mike Powell joined Mondi on 1 November 2020.
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 Svein Richard Brandtzaeg and Sue Clark were appointed as non-executive directors on 22 April 2021. Respective fees in the year of appointment have been annualised. Sue
Clark's 2023 increase includes the introduction of a supplemental fee in relation to the role of the non-executive director responsible for understanding the views
of employees. Svein Richard Brandtzaeg is not resident in the UK and receives an additional fee for attendance at Board meetings outside his country of residence.
The increase in taxable benefits in 2023 for Svein Richard Brandtzaeg includes tax advice on the amendment of the 2021/22 UK tax return, 2022/23 UK tax return preparation
and foreign tax credit claim.
6 Saki Macozoma was appointed as non-executive director on 6 May 2022. To enable comparison and to provide meaningful reflection of the annual percentage change, the
fees shown for the year ended 31 December 2022 and the taxable benefits are annualised.
7 The percentage change for 2023 for Dominique Reiniche reflects the increases in NED fees and appointment to the role of the SID in May 2023. The increases in taxable
benefits for 2023 includes French social security notification review.
8 Dame Angela Strank was appointed as non-executive director on 22 April 2021 and as Chair of the committee in May 2022. Respective fees in the year of appointment have
been annualised.
9 The percentage change for 2023 for Stephen Young reflects his stepping down from the role of the SID in May 2023.
Relative importance of spend on pay
The table below shows the total remuneration paid across the Group together with the total dividends paid in 2023 and 2022. There have
been no share buybacks during 2023 and 2022.
€ million
Overall remuneration expenditure1
Ordinary dividends paid to shareholders
2023
1,087
345
2022
1,077
321
% change
0.9%
7.5%
1 Remuneration expenditure for all Mondi Group employees, reported as Personnel Costs in the Consolidated Income Statement.
Mondi Group Integrated report and financial statements 2023
147
Statement of directors’ shareholdings and share interests (audited)
The CEO and CFO are required to build and maintain a Minimum Shareholding Requirement (MSR) equivalent to 300% and 250% of
base salary respectively. 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.
Deferred bonus awards under the BSP (net of tax) and vested LTIP shares that are subject to the two-year post-vesting holding period
will count towards the holding requirement. As at 31 December 2023, Andrew King exceeded the MSR and Mike Powell, who joined
Mondi in November 2020, is on track to meet the requirement in the five-year timeframe.
The beneficial and non-beneficial share interests of the directors and their connected persons as at 1 January 2023, and as at
31 December 2023 were as follows:
Executive directors (audited)
Andrew King
Mike Powell
Shares held
outright at
1 Jan 2023
156,734
Shares held
outright at
31 Dec 2023
Deferred BSP
shares net of tax
at 31 Dec 20232
203,327
28,351
39,510
81,179
42,573
Total
shareholding
attributed to
MSR
284,506
82,083
Total
shareholding as
multiple of base
salary1 (%)
396%
179%
Deferred LTIP
shares
outstanding at
31 Dec 20233
474,174
276,064
Deferred LTIP
shares as multiple
of base salary1
(%)
659%
602%
1 The one-month volume weighted average share price of £14.93 as at 31 December 2023 was used in calculating the percentage figures shown above divided
by the executive's respective salary as at 31 December 2023. Total shareholding as a 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 (audited)
Philip Yea
Svein Richard Brandtzaeg
Sue Clark1
Anke Groth2
Saki Macozoma3
Dominique Reiniche
Dame Angela Strank
Stephen Young
Shareholding at
1 Jan 2023
(or, if later,
on appointment)
Shareholding
at 31 Dec 2023
(or, at the date
of resignation,
if earlier)
25,000
1,250
4,096
—
—
1,000
899
2,026
27,500
1,250
4,229
—
441
1,000
899
2,026
1 The shareholding shown at 1 January 2023 includes dividends reinvested into shares, personally by Sue Clark. The shareholding as at 1 January 2023 disclosed in the 2022
Integrated report (4,000 shares) did not include the shares calculated by dividend reinvestment. The shareholding as at 1 January 2023 has been adjusted to reflect the full
shareholding, including dividends reinvested.
2 Appointed to the Board on 1 April 2023.
3 A restated shareholding of zero shares at 1 January 2023. The shareholding disclosed in the 2022 Integrated report (500 shares) did not reflect the sale of the entire
shareholding by a person closely associated with Mr. Macozoma prior to appointment to the Mondi Board in May 2022.
There has been no change in the interests of the directors and their connected persons between 31 December 2023 and the date of this
report other than as a result of the share consolidation which took place on 29 January 2024 and the amounts shown in the footnote to
the 'SIP' table on page 148.
Mondi Group Integrated report and financial statements 2023
148
Remuneration report
Annual report on remuneration continued
Share awards granted to executive directors (audited)
The following tables set out the share awards granted as nil-cost options 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. The vested and exercised
shares in the table below are pre-consolidation effective 29 January 2024 (page 36).
Awards under BSP and LTIP
Andrew King
Awards
held at
beginning
of year
Type of award
Awards
granted
during year
Shares
lapsed
Awards
exercised
during year
Dividend
equivalents
Share price
at the date
of exercise Date of award
Awards
held as at
31 December
2023
Release date
Status
BSP
BSP
BSP
BSP
LTIP1
LTIP2
LTIP3
LTIP4
11,220
18,970
64,849
—
—
—
—
63,779
—
—
—
—
11,220
—
—
—
1,099
—
—
—
Mar 2020
£14.17
—
Mar 2021
— Mar 2022
— Mar 2023
0
Mar 2023
18,970 Mar 2024
Mar 2025
64,849
Mar 2026
63,779
140,758
128,675
170,389
—
— 70,379 70,379
—
—
—
—
—
—
—
—
175,110
6,870
—
—
—
£14.17 May 2020
—
Mar 2021
— Mar 2022
— Mar 2023
0
Mar 2023
128,675 Mar 2024
Mar 2025
170,389
Mar 2026
175,110
Vested and
exercised
Unvested
Unvested
Unvested
Vested and
exercised
Unvested
Unvested
Unvested
Mike Powell
Type of award
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 Date of award
Awards
held as at
31 December
2023
Release date
Status
Buy-out LTIP5
BSP
BSP
BSP
LTIP2
LTIP3
LTIP4
39,427
2,038
37,607
—
74,916
99,201
—
— 19,713
—
—
—
—
—
37,761
—
—
—
—
—
101,947
19,714
—
—
—
—
—
—
1,343
—
—
—
—
—
—
Dec 2020
£14.17
—
Mar 2021
— Mar 2022
— Mar 2023
—
Mar 2021
— Mar 2022
— Mar 2023
1 The performance conditions applying to the 2020 LTIP are set out on page 146 of the 2022 Integrated report.
2 The performance conditions applying to the 2021 LTIP are set out on page 144.
3 The performance conditions applying to the 2022 LTIP are set out on page 147 of the 2022 Integrated report.
4 The performance conditions applying to the 2023 LTIP are set out on pages 144-145.
5 Details of the buyout awards granted to Mike Powell are set out on page 142 of the 2020 Integrated report.
0
Mar 2023
2,038 Mar 2024
Mar 2025
37,607
37,761
Mar 2026
74,916 Mar 2024
Mar 2025
99,201
Mar 2026
101,947
Vested and
exercised
Unvested
Unvested
Unvested
Unvested
Unvested
Unvested
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 per month, 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.
Andrew King1
Mike Powell1
6,634
346
133
133
133
133
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 2023
6,900
612
—
—
1 Since 1 January 2024 up to the date of this report Andrew King acquired 21 partnership shares and was awarded 21 matching shares and Mike Powell acquired 21 partnership
shares and was awarded 21 matching shares.
Mondi Group Integrated report and financial statements 2023
149
Statement of voting at Annual General Meeting
The Annual General Meeting was held on 4 May 2023. All resolutions were passed. The voting result in respect of the DRP and the
remuneration report is given below. Overall in excess of 75% of the total Group shares were voted.
Resolution
To approve the DRP
Votes for
324,176,751
%
87.71
Votes against
45,432,126
%
12.29
Votes total
369,608,877
% of ISC voted
76.12%
Votes withheld
896,082
To approve the remuneration report
(other than the DRP)
330,156,268
90.17
36,010,448
9.83
366,166,716
75.41%
4,338,243
Remuneration Committee governance
The Remuneration Committee
The Remuneration Committee is a formal committee of the Board (composition of the Remuneration Committee on page 122). 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 determine and agree with the Board, the Group’s remuneration policy and the framework of executive and senior management
remuneration;
– to determine individual remuneration packages within that framework for the executive directors and certain other senior management;
– to determine the remuneration of the Board Chair;
– to determine the targets for any performance-related pay schemes in which the executive directors and senior management of the
Group participate;
– to oversee the operation of the Group’s share schemes; and.
– to agree the policy on shareholding requirements for executive directors, including post-employment requirements.
No director or other attendee takes part in any discussion regarding his or her personal remuneration.
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.
Deloitte was appointed by the Remuneration Committee as its 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 £87,225 for the year ended 31 December 2023 (£161,100 for 2022, which included advice
for the new DRP). Deloitte also provided other tax and payroll 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 2023.
Dame Angela Strank
Chair, Remuneration Committee
Mondi Group Integrated report and financial statements 2023
150
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 82-121, 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 starts on the inside front cover of this Integrated report and finishes on page 81:
– Dividends, page 36
– Research and development activities, pages 13, 21, 28, 45-47
– Financial risk management objectives and policies, pages 36-37
– Greenhouse gas (GHG) emissions and energy consumption,
– Principal risks, pages 69-79
– Likely future developments in the business, pages 12-13
page 52
– Employees, pages 48-50
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 178.
The information required under rules 9.8.4 (12) and (13) in relation to dividend waivers can be found on page 194. 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 38-41 and in the Corporate governance report on pages 92-95.
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 2023, 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
Coronation Fund Managers
Ninety One UK Ltd
AXA S.A.
Standard Life Investments Limited
Old Mutual plc
Sanlam Investment Management Proprietary Limited
Number of voting rights
48,760,707
32,794,248
29,173,827
28,872,418
23,972,407
17,210,471
16,476,021
11,978,984
10,936,128
%1
10.04
6.74
6.01
5.95
4.94
4.69
4.49
3.26
3.00
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, except as detailed below.
The following changes in interests have been notified between 1 January 2024 and the date of this report.
Date
5 January 2024
8 January 2024
10 January 2024
15 January 2024
18 January 2024
19 January 2024
31 January 2024
Shareholder
BlackRock Inc
BlackRock Inc
BlackRock Inc
BlackRock Inc
Coronation Fund Managers
BlackRock Inc
Public Investment Corporation Soc Limited
12 February 2024
Coronation Fund Managers
Number of voting rights
34,157,102
34,135,128
34,144,438
34,340,777
24,224,004
34,388,089
53,650,993
22,587,325
%
7.02
7.01
7.02
7.06
4.99
7.06
12.15
5.12
Mondi Group Integrated report and financial statements 2023
151
Additional information for shareholders
The information for shareholders required pursuant to the Companies Act 2006 can be found on pages 242-243 of this report.
Political donations
No political donations were made during 2023, 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 3 May 2024.
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 112 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 2023
Aside from the final ordinary dividend proposed for 2023 (see note 9), there have been the following material reportable events since
31 December 2023:
On 5 February 2024, the Group announced the completion of the acquisition of Hinton Pulp mill in Alberta (Canada) from West Fraser
Timber Co. Ltd (West Fraser) for a total consideration of USD 5 million. The mill has the capacity to produce around 250,000 tonnes
of pulp per annum and will provide the Group with access to local, high-quality fibre from a well-established wood basket as part of a
long-term partnership with West Fraser. The Group intends to invest in the mill to improve productivity and sustainability performance
and, subject to pre-engineering and permitting, expand the facility primarily with a new kraft paper machine which will integrate its paper
bag operations in the Americas and support future growth.
On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to shareholders by way of
a special dividend of €1.60 per existing ordinary share. In addition, in order to maintain the comparability, so far as possible, of Mondi plc’s
share price before and after the special dividend, the special dividend was accompanied by a share consolidation, which took effect on
29 January 2024, resulting in shareholders receiving 10 new ordinary shares for every 11 existing ordinary shares. See notes 9 and 22 for
further details.
Annual General Meeting
The Annual General Meeting will be held at 10:30 (UK time) on Friday 3 May 2024 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 21 February 2024 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
21 February 2024
Mondi Group Integrated report and financial statements 2023
152
Financial statements introduction
Financial statements
Directors’ responsibility statement
Independent auditors' report to the
members of Mondi plc
Financial statements
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 Basis of preparation
Note 2 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 25–27 Notes to the
consolidated statement of cash flows
Note 28 Russian operations
(discontinued operations)
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
Production statistics and exchange rates
Group financial record
Alternative Performance Measures
Additional information for shareholders
Shareholder information
153
154
166
167
168
169
170
171
172
177
182
184
192
197
202
206
209
217
225
226
227
235
236
238
242
244
Our strong through-cycle cash
generation and robust balance
sheet provides strategic
flexibility.
Mike Powell
Group CFO
Mondi Group Integrated report and financial statements 2023
153
Directors’ responsibility statement
The directors are responsible for preparing the Integrated report and financial statements 2023 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 also 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 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 2023, 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 they face.
The Directors’ responsibility statement was approved by the Board on 21 February 2024 and is signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi Group Integrated report and financial statements 2023
154
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 2023 and of the group’s loss 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 2023 (the “Integrated Report”),
which comprise: the consolidated statement of financial position and the Mondi plc parent company balance sheet as at 31 December
2023; 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 2023
155
Our audit approach
Overview
Audit scope
– We identified one component (2022: three) as an individually significant component, which required an audit of its complete financial
information due to its financial significance to the group, and a further seven components (2022: five) where we have concluded that
the component engagement leader is a Key Audit Partner (as defined under ISAs (UK)). These eight components (2022: eight) are
located in Austria, the Czech Republic, Poland, South Africa, Sweden and Russia (2022: Austria, the Czech Republic, Poland, Russia,
Slovakia, South Africa and Sweden). We obtained full scope audit reporting from an additional twenty components (2022: nineteen), including
operating units and treasury operations. An audit of specific financial statement line items was performed at a further ten components
(2022: five) and group level procedures on selected transactions or balances were performed at four components (2022: three).
– In aggregate, the locations subject to audit procedures represented 77% (2022: 72%) of the group’s revenue and 67% (2022: 76%)
of the group’s absolute profit before tax adjusted for special items from continuing operations. In addition, we received full scope
reporting on JSC Mondi Syktyvkar, the main component included in discontinued operations.
Key audit matters
– Divestment of Russian operations (group)
– Audit of the fair value of forestry assets (group)
– Application of hyperinflation accounting related to subsidiaries in Türkiye (group)
– Valuation of property, plant and equipment (group)
– Impairment indicator assessment of the parent company investment in subsidiaries (parent)
Materiality
– Overall group materiality: €35 million (2022: €65 million) based on approximately 5% of profit before tax (‘PBT’) from continuing
operations adjusted for special items (2022: based on approximately 5% of profit before tax ('PBT') from continuing operations
adjusted for special items).
– Overall parent company materiality: €47 million (2022: €40 million) based on approximately 1% of total assets.
– Performance materiality: €26 million (2022: €49 million) (group) and €35 million (2022: €30 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.
Valuation of property, plant and equipment is a new key audit matter this year. Disposal of Personal Care Components ("PCC") (group),
which was a key audit matter last year, is no longer included because of the disposal being completed in the prior year. Otherwise,
the key audit matters below are consistent with last year.
Mondi Group Integrated report and financial statements 2023
156
Independent auditors’ report to the members of Mondi plc continued
Key audit matter
Divestment of Russian operations (group)
How our audit addressed the key audit matter
On 30 June 2023, the group completed the sale of its three
Russian packaging converting operations to the Gotek Group for
a cash consideration of RUB 1.6 billion, resulting in cash proceeds
of €30 million, and a loss on disposal of €46 million.
Subsequently, on 4 October 2023, the group completed the sale
of its Syktyvkar mill ‘JSC Mondi Syktyvkar’ and two affiliated
entities to Sezar Invest LLC (Sezar Invest) for a total cash
consideration of RUB 80 billion, resulting in cash proceeds
of €776 million, and a loss on disposal of €710 million.
Given the quantum of the consideration received for the disposal
of the group’s Russian operations and the associated complexity
of the accounting for the disposal, we identified a significant audit
risk in relation to the accuracy of the calculation of the loss on
disposal, as well as the presentation and disclosure of the various
elements of the disposal in the financial statements, specifically
focused on the carrying amount of the net assets disposed and
the recycling of the foreign currency translation reserve.
Accordingly, this had a significant effect on our overall audit
strategy and allocation of resources in the planning for and
completion of our audit, and was, therefore, determined to
be a key audit matter.
Refer to notes 28 and 35 of the group financial statements,
and the Audit Committee’s views set out on page 111.
We tested the loss on disposal calculation by verifying the cash
received to bank statements, reading the signed sale and purchase
agreements (“SPAs”), and agreeing the carrying value of the
Russian businesses prior to disposal to the underlying accounting
records of the group.
We also tested the associated transaction costs and performed
a proof of the cumulative translation reserve, which was recycled
to the consolidated income statement on disposal, to the
underlying accounting records.
Given the quantum of profits, up to the date of disposal, and
the net assets disposed of in relation to JSC Mondi Syktyvkar, we
issued instructions to, and obtained reporting as at and for the
nine month period ended 30 September 2023 from, a third party
component auditor in Russia, who audited the assets and liabilities
of the Syktyvkar mill. We performed 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
considered potential movements between the component auditor’s
period end reporting date (30 September 2023) and the date of
completion of the disposal (4 October 2023) to satisfy ourselves
that the movement in the net asset position between the two
dates could not be material.
We considered the adequacy of the group’s disclosures in respect
of the disposed Russian operations and confirmed the resulting
loss on disposals had been recorded appropriately.
Based on the procedures performed, we noted no material issues
from our work.
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Key audit matter
Audit of the fair value of forestry assets (group)
The valuation of the group’s forestry assets, amounting to
€519 million as at 31 December 2023 (2022: €485 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 manual adjustments that are made outside the
underlying model.
The fair value gain in the year ended 31 December 2023
of €128 million (2022: €169 million), which is recorded in the
consolidated income statement, has been primarily driven
by the increase in net selling prices.
Given the quantum of the gain and the estimation inherent
in the determination of fair value, this was determined to be
a key audit matter.
Refer to notes 14 and 35, and the Audit Committee’s views set
out on page 114.
How our audit addressed the key audit matter
We evaluated the group’s 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 (where
available), and analytical procedures. We also compared the inputs
and assumptions in the 31 December 2022 valuation with the
31 December 2023 valuation to identify, and subsequently investigate,
any unexpected variances. Our analytical procedures also focused
on comparisons of the assumptions and inputs with industry
averages. In addition, we performed procedures over the
mathematical accuracy of the valuation model.
We compared the estimated net selling prices used in the model
with 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 in addition to using geospatial
imaging. 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 adjustment with historical
experience, industry data and other evidence provided by
management. We evaluated 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 outside 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 director’s 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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Key audit matter
Application of hyperinflation accounting related to subsidiaries in Türkiye (group)
How our audit addressed the key audit matter
In the year ended 31 December 2023, the group has applied
IAS 29, 'Financial Reporting in Hyperinflationary Economies', for
its subsidiaries in Türkiye and Lebanon (2022: Türkiye), whose
functional currencies have experienced a cumulative inflation
rate of more than 100% over the past three years.
The application of IAS 29 required the financial information
of these subsidiaries of the group to be restated for changes
in the general purchasing power of the local currency, 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.
For the year ended 31 December 2023, the adjustments from
hyperinflationary accounting have resulted in an increase in group
revenue of €116 million (2022: €125 million), a decrease in underlying
EBITDA of €16 million (2022: €44 million) and a net monetary gain
of €2 million (2022: €17 million) and an accumulated increase in
total assets of €115 million (31 December 2022: €91 million) from
the date of initial application to 31 December 2023.
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 complex
calculations to determine the impact of IAS 29. Given the
complexity of the accounting and the size of the group’s businesses
in Türkiye, this was determined to be a key audit matter.
Refer to notes 1, 7, 10, 12, 13, 22, 27 and 35 of the group financial
statements, and the Audit Committee’s views set out on page 114.
Given the relative size of the group’s businesses in Türkiye
and Lebanon, we focused our testing on the impact of IAS 29
on the operations in Türkiye.
We assessed the consistency of the application of the
methodology in the calculation of the IAS 29 related adjustments
to the group’s accounting policies as well as to the prior year for
all subsidiaries that were impacted materially.
We verified the appropriateness of the index used to calculate
the IAS 29 impact to publicly available market data.
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. These procedures were performed by our
component teams in Türkiye, with oversight from the group audit
team in the UK.
We assessed changes made to the configuration of the group’s
consolidation system during the year ended 31 December 2023
to validate that the newly implemented automation of certain
areas of hyperinflation accounting was in line with the group’s
established accounting policies and UK-adopted international
accounting standards. We also tested the exchange rates used by
management to translate the local currency results into Euros, the
group’s presentation currency, to publicly available information.
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.
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Key audit matter
Valuation of property, plant and equipment (group)
How our audit addressed the key audit matter
The group has property, plant and equipment (“PPE”) of
€4,619 million (2022: €4,167 million). Management has assessed
whether indicators of impairment or impairment reversal existed
in relation to PPE as at 31 December 2023, performed at the cash
generating units (“CGUs”) level, being the lowest level at which
largely independent cash inflows are generated.
The determination of appropriate CGUs is judgemental in nature.
Once the CGUs are identified, the determination of whether an
indicator of impairment or impairment reversal exists for a specific
CGU is also judgemental. Where an indicator of impairment or
impairment reversal is identified, management must estimate the
recoverable amount of the relevant CGU in order to assess the
recoverability of the carrying value of the CGU.
The determination of the recoverable amount, being the higher of
value in use (“VIU”) and fair value less costs to dispose (“FVLCD”),
requires judgement and estimation by management. This is because
the determination of recoverable amount reflects management’s
consideration of key internal inputs and external market conditions,
such as future paper prices, customer demand and forecast growth
rates, which all impact future cash flows, and the determination
of the most appropriate discount rate. Therefore, we considered
it to be a key audit matter.
Refer to notes 10 and 35 of the group financial statements,
and the Audit Committee’s views set out on page 114.
We satisfied ourselves as to the appropriateness of the
judgement related to the level at which impairment of these
assets is assessed, being the lowest level at which largely
independent cash inflows can be identified (the “CGU”).
We evaluated management’s assessment of impairment and
impairment reversal indicators by comparing actual performance
with the budget and considering other internal and external
factors, including those set out in IAS 36 ‘Impairment of Assets’.
In relation to the CGUs where impairment indicators were
identified, for certain CGUs we engaged our component teams
with oversight from the group audit team in the UK, and challenged
the basis for management’s estimates of growth rates and future
cash flows with reference to historical trading performance,
market expectations and management forecasts.
We used our internal valuation experts to independently
recalculate the discount rates and evaluate the long-term growth
assumptions applied by management. We also checked the
mathematical accuracy of management’s valuation models. Where
management had obtained independent, third party valuations to
determine the fair value less costs to dispose of individual assets
or specific CGUs, we assessed the external valuation reports
and the professional qualifications of these third party valuers.
Based on the procedures performed, we noted no material issues
from our work.
Impairment indicator assessment of the parent company investment in subsidiaries (parent)
We considered the adequacy and completeness of management’s
impairment and impairment reversal indicator analysis as at
31 December 2023 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 investment in Mondi South Africa (Pty) Limited held by
Mondi plc at 31 December 2023 amounts to €666 million
(FY22: €666 million), with an accumulated impairment of
€117 million. No further impairment charges have been recorded
in the year as there was no impairment trigger identified.
Management has also considered whether an indicator of
impairment reversal has arisen during 2023 but concluded
that this was not the case.
Management has considered various internal and external
indicators of impairment in assessing whether the investment
might be impaired in 2023. No indicator of impairment or
impairment reversal was identified based on consideration
of the qualitative and quantitative factors outlined in IAS 36
‘Impairment of Assets’.
Given the inherent judgement required and the quantum of
the balances in the parent company’s balance sheet, this matter
was determined to be a key audit matter.
Refer to notes 1 and 6 of the parent company financial statements.
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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 one component (2022: three) as a significant component (as defined within ISAs (UK)) which, in our view, required an audit
of its complete financial information, due to its financial significance to the group. Outside of this component, we obtained full scope
audit reporting from a further seven components (2022: five), where we concluded that the component engagement leader is a Key
Audit Partner (as defined under ISAs (UK)), and an additional 20 components where full scope audits were performed (2022: 19).
Together, these components were in 11 countries (2022: 11), representing the group’s principal businesses. 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.
An audit of specific financial statement line items was performed at a further ten (2022: five) components, with the component auditors
operating under our instruction. In addition, the group engagement team performed specified procedures at four components (2022:
three) 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 audit procedures represented 77% (2022: 72%) of the group’s revenue
from continuing operations.
The components included within the scope of our 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.
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, in person or by video conferencing, as well as reviewing and assessing any matters reported. We also held a virtual
planning meeting with component auditors ahead of the year-end audit to agree on effective working arrangements and key areas of
audit focus.
We issued separate instructions and held virtual meetings with the third party component team in Russia, to ensure effective remote
working arrangements. We reviewed selected audit working papers for certain in-scope component teams, including the significant
component and the seven 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, Sweden,
South Africa and Türkiye. 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, which are in the process of being re-submitted for validation following the divestment of the
Russian operations.
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. Management considers that the impact of climate change does not give rise to a material financial statement impact.
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We also considered the consistency of the disclosures in relation to climate change (including the disclosures in relation to the
Task Force on Climate-related Financial Disclosures (TCFD)) 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 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, 25
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 2023.
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:
Overall materiality €35 million (2022: €65 million).
Financial statements – group
Financial statements – parent company
€47 million (2022: €40 million).
How we
determined it
Rationale for
benchmark applied
based on approximately 5% of profit before tax (‘PBT’)
from continuing operations adjusted for special items
(2022: based on approximately 5% of profit before tax
('PBT') from continuing operations adjusted for
special items)
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% as this is consistent with the
quantitative materiality threshold typically used
for other profit-oriented companies.
based on approximately 1% of total assets (2022: based
on 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
€47 million (2022: €40 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 €2 million and €31.5 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% (2022: 75%) of overall materiality, amounting to €26 million (2022: €49 million) for the group
financial statements and €35 million (2022: €30 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 million (group audit)
(2022: €3.5 million) and €3 million (parent company audit) (2022: €3.5 million) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
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Independent auditors’ report to the members of Mondi plc continued
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, ensuring that
it excluded any proceeds from the Russian disposal.
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. 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.
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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.
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 2023 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, included within the Strategic report and the Corporate governance report, 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.
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Independent auditors’ report to the members of Mondi plc continued
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 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 IT systems within the group, in part to identify whether 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.
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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 seven years, covering the years ended 31 December 2017 to 31 December 2023.
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
21 February 2024
Mondi Group Integrated report and financial statements 2023
166
Consolidated income statement
for the year ended 31 December 2023
€ 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 businesses, net of related
transaction costs
EBITDA
Depreciation, amortisation and impairments
Operating profit
Net (loss)/profit from joint ventures
Impairment of investments in joint ventures
Net monetary gain arising from hyperinflationary
economies
Investment income
Foreign currency gains/(losses)
Finance costs
Profit before tax
Tax (charge)/credit
Profit from continuing operations
From discontinued operations
(Loss)/profit from discontinued operations
(Loss)/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
Notes
Underlying
2
7,330
(3,971)
(618)
2,741
(374)
5
(1,087)
(79)
—
1,201
(411)
790
(5)
(5)
2
45
1
(119)
709
(167)
542
26
2
2
15
15
1
6
6
6
7a
28
33
8
8
8
8
8
8
2023
Special items
(note 3)
Total
Underlying
2022
Special items
(note 3)
7,330
8,902
(3,971)
(4,728)
(618)
(741)
2,741
3,433
(374)
(346)
(1,096)
(1,077)
(93)
(162)
—
—
1,178
1,848
(405)
1,443
1
—
17
6
(5)
(144)
1,318
(296)
—
—
—
—
—
(9)
(14)
—
(23)
(4)
(27)
—
—
—
—
—
—
(27)
6
(21)
Total
8,902
(4,728)
(741)
3,433
(346)
(1,077)
(162)
—
—
—
—
—
—
—
242
242
242
2,090
—
(405)
242
1,685
—
—
—
—
—
—
1
—
17
6
(5)
(144)
242
1,560
(5)
(301)
(415)
763
(5)
(5)
2
45
1
(119)
682
(161)
521
(655)
(134)
19
(153)
103.5
103.5
107.8
107.8
(31.5)
(31.5)
1,022
237
1,259
266
1,525
73
1,452
244.5
244.4
195.6
195.6
299.3
299.2
Mondi Group Integrated report and financial statements 2023
167
Consolidated statement of comprehensive income
for the year ended 31 December 2023
€ million
(Loss)/profit for the year
Items that may subsequently be or have been reclassified to the
consolidated income statement
Fair value gains arising from cash flow hedges of continuing operations
Fair value gains arising from cash flow hedges of discontinued
operations (see note 28)
Exchange differences on translation of continuing non-euro operations
Exchange differences on translation of discontinued non-euro
operations (see note 28)
Reclassification of foreign currency translation reserve to the
consolidated income statement on disposal of businesses of continuing
operations (see note 26)
Reclassification of foreign currency translation reserve to the
consolidated income statement on disposal of businesses of
discontinued operations (see note 28)
Items that will not subsequently be reclassified to the consolidated
income statement
2023
2022
Before tax
amount
Tax
credit
Net of tax
amount
Before tax
amount
Tax
charge
Net of tax
amount
(134)
1,525
—
—
(70)
—
—
—
—
1
—
(70)
1
35
(227)
—
(227)
72
—
—
—
—
1
1
35
72
—
—
—
(4)
—
(4)
633
—
633
—
—
Remeasurements of retirement benefits plans of continuing operations:
(23)
7
(16)
8
(3)
Return on plan assets
Actuarial gains arising from changes in demographic assumptions
Actuarial (losses)/gains arising from changes in financial assumptions
Actuarial losses arising from experience adjustments
Remeasurements of retirement benefits plans of discontinued
operations (see note 28)
Other comprehensive income/(expense) for the year
Other comprehensive income/(expense) attributable to:
(3)
1
(4)
(17)
—
313
(43)
7
58
(14)
—
7
—
1
320
114
—
(3)
Non-controlling interests
Shareholders
Total comprehensive income attributable to:
Non-controlling interests
Shareholders
Total comprehensive income/(expense) attributable to shareholders
arises from:
Continuing operations
Discontinued operations
Total comprehensive income for the year
(3)
323
16
170
419
(249)
186
—
5
1
111
6
105
79
1,557
1,217
340
1,636
Mondi Group Integrated report and financial statements 2023
168
Consolidated statement of financial position
as at 31 December 2023
€ 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
Notes
10
12
13
14
15
7b
24
16
17
27b
28
21
18
19
28
21
24
7b
19
22
22
22
33
2023
4,619
765
68
519
8
28
24
5
5
6,041
1,049
1,254
14
14
1,592
3,923
—
3,923
9,964
(559)
(1,219)
(78)
(21)
(4)
(1,881)
—
(1,881)
(1,460)
(159)
(322)
(27)
(19)
(1,987)
(3,868)
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)
6,096
6,254
97
(17)
5,434
141
5,655
441
6,096
97
(16)
5,895
(182)
5,794
460
6,254
The Group’s consolidated financial statements on pages 166-224, including related notes 1 to 35, were approved by the Board
and authorised for issue on 21 February 2024 and were signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi plc company registered number: 6209386
Mondi Group Integrated report and financial statements 2023
169
Consolidated statement of changes in equity
for the year ended 31 December 2023
€ million
At 1 January 2022
Total comprehensive income for the year:
Profit for the year
Other comprehensive income
Hyperinflation monetary adjustment
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
Disposal of businesses
Other movements in non-controlling interests
At 31 December 2022
Total comprehensive income for the year:
(Loss)/profit for the year
Other comprehensive income/(expense)
Hyperinflation monetary adjustment (see note 1)
Transactions with shareholders in their capacity
as shareholders
Dividends (see note 9)
Purchases of own shares
Distribution of own shares
Mondi share schemes’ charge (see note 23)
Issue of shares under employee share schemes
Non-controlling interests bought out
Share
capital Own shares
Retained
earnings
Other
reserves
Equity
attributable to
shareholders
Non-
controlling
interests
Total
equity
97
(18)
4,749
(284)
4,544
386
4,930
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7)
9
—
—
—
—
1,452
1,452
—
16
(321)
—
(9)
—
10
—
(2)
97
(16)
5,895
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8)
7
—
—
—
(153)
(153)
—
16
(345)
—
(7)
—
7
21
105
—
105
—
—
—
—
11
(10)
(4)
—
(182)
323
—
323
(2)
—
—
—
9
(7)
—
1,557
1,452
105
16
79
73
6
1
1,636
1,525
111
17
(321)
(9)
(330)
(7)
—
11
—
(4)
(2)
—
—
—
—
—
3
(7)
—
11
—
(4)
1
5,794
460
6,254
170
(153)
323
14
(345)
(8)
—
9
—
21
16
19
(3)
1
(7)
—
—
—
—
186
(134)
320
15
(352)
(8)
—
9
—
(29)
(8)
At 31 December 2023
97
(17)
5,434
141
5,655
441
6,096
Mondi Group Integrated report and financial statements 2023
170
Consolidated statement of cash flows
for the year ended 31 December 2023
€ 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
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 businesses, net of cash and cash equivalents
Loans advanced to related and external parties
Interest received
Other investing activities
Notes
2023
2022
27a
28
2
13
14
25
26
1,312
2
(178)
223
1,359
(830)
(16)
(48)
25
2
(37)
—
(1)
38
17
368
(482)
—
16
(33)
(22)
(50)
(345)
(7)
(8)
(8)
(77)
—
(7)
(541)
1,292
2
(196)
350
1,448
(508)
(12)
(49)
7
5
—
642
—
6
9
(68)
32
(53)
44
(53)
(21)
(60)
(321)
(9)
(7)
—
(83)
1
(10)
(572)
336
908
1,381
336
(125)
1,592
455
908
18
1,381
Net cash generated from/(used in) investing activities of discontinued operations
28
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Repayment of other medium- and long-term borrowings
Proceeds from short-term borrowings1
Repayment of short-term borrowings1
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
27c
27c
27c
27c
27c
9
27c
28
27c
27c
27b
Note:
1 Net repayment of short-term borrowings as presented previously has been further analysed to separately show proceeds from, and repayment of, short-term borrowings.
Mondi Group Integrated report and financial statements 2023
171
Notes to the consolidated financial statements
for the year ended 31 December 2023
1 Basis of preparation
These consolidated financial statements as at and for the year ended 31 December 2023 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 International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board
(IASB), and there are no differences with applying IFRSs 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. At 31 December 2023, the Group had a liquidity position of
€2,346 million, comprising €754 million of undrawn committed debt facilities and cash and cash equivalents of €1,592 million, which
include proceeds from the disposal of discontinued operations of €806 million. As the Group’s debt facilities and loan agreements
contain no financial covenants, in performing its going concern assessment the directors have focused on liquidity, which was adjusted
to exclude the net proceeds from the disposal of discontinued operations, given that these were distributed to shareholders by way of
a special dividend in February 2024 (see notes 9 and 22). The assessment of going concern is further described in the Strategic report
under the heading Going concern on page 81, 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, assets acquired and liabilities
assumed in a business combination 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
IFRSs and UK-adopted International Accounting Standards. These measures, referred to as Alternative Performance Measures (APMs),
are defined on pages 238-241.
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:
Significant accounting estimates
– Fair value of forestry assets – refer to note 14
– Actuarial valuations of retirement benefit obligations – refer to note 24
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 include:
– Hyperinflation accounting – refer to notes 1 and 35
– Climate change – refer to note 1
– Taxation – refer to notes 7 and 35
– Residual values and useful economic lives of property, plant and equipment – refer to notes 10 and 35
– Fair value of assets acquired and liabilities assumed in business combinations - refer to notes 25 and 35
Climate change
Management has considered the impact of climate change in preparing these 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 51-64. 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:
– Estimates of future cash flows used in the impairment assessment of goodwill – refer to note 12
– Assumptions used in the fair value measurement of forestry assets – refer to note 14
– Residual values and useful economic lives of property, plant and equipment – refer to note 35
– Fair value of assets acquired and liabilities assumed in business combinations – refer to note 25
Mondi Group Integrated report and financial statements 2023
172
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
1 Basis of preparation continued
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)
The Group has applied IAS 29, 'Financial Reporting in Hyperinflationary Economies', for its subsidiaries in Türkiye and Lebanon
(2022: Türkiye), whose functional currencies have experienced a cumulative inflation rate of more than 100% over the past three years,
respectively. The consumer price index increased in Türkiye by 65% from 1,128 at 31 December 2022 to 1,859 at 31 December 2023
and in Lebanon by 212% from 1,917 at 31 December 2022 to 5,978 at 31 December 2023. For the year ended 31 December 2023,
the adjustments from hyperinflationary accounting have resulted in an increase in Group revenue of €116 million (2022: €125 million),
a decrease in underlying EBITDA of €16 million (2022: €44 million) and a net monetary gain of €2 million (2022: €17 million). As at
31 December 2023, the adjustments from hyperinflationary accounting have resulted in an accumulated increase in total assets of
€115 million (2022: €91 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.
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 €91 million (2022: €139 million), which was 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, consistent with prior year, comprise three distinct segments. In 2022, the Group disposed of its
Personal Care Components business.
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
The Group’s previously owned operations in Russia are reported as discontinued operations and no longer reported to the
Executive Committee, and hence not disclosed for all periods presented in this note. The discontinued operations' net (loss)/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 28.
Mondi Group Integrated report and financial statements 2023
173
Year ended 31 December 20231
€ million, unless otherwise stated
Segment revenue
Internal revenue2
External revenue
Underlying EBITDA
Depreciation and impairments3
Amortisation
Underlying operating profit/(loss)
Special items before tax
Capital employed
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)4
Year ended 31 December 20221
€ million, unless otherwise stated
Segment revenue
Internal revenue2
External revenue
Underlying EBITDA
Depreciation and impairments3
Amortisation
Underlying operating profit/(loss)
Special items before tax
Capital employed
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)4
Notes:
1 See pages 238-241 for definitions of APMs.
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine Paper
Corporate
Personal Care
Components
(divested)
Intersegment
elimination
Total
continuing
operations
2,280
3,866
1,292
(23)
(33)
(52)
2,257
3,833
1,240
310
(144)
(7)
159
—
2,318
2,057
379
326
13.6
7.7
6.5
637
(183)
(8)
446
—
3,167
3,068
427
425
16.5
14.4
11.6
289
(66)
(2)
221
(27)
1,095
1,075
129
79
22.4
20.6
2.8
—
—
—
(35)
(1)
—
(36)
—
(65)
(65)
—
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(104)
104
—
—
—
—
—
—
—
—
—
—
—
—
—
7,334
(4)
7,330
1,201
(394)
(17)
790
(27)
6,515
6,135
935
830
16.4
12.8
21.0
Corrugated
Packaging
Flexible
Packaging
Uncoated
Fine Paper
Corporate
Personal Care
Components
(divested)
Intersegment
elimination
Total
continuing
operations
2,991
4,299
(51)
(51)
2,940
4,248
662
(133)
(7)
522
—
2,162
2,062
235
212
22.1
25.3
6.4
797
(181)
(8)
608
—
3,035
2,916
242
223
18.5
20.9
11.5
1,613
(68)
1,545
427
(70)
(2)
355
—
1,091
1,022
115
64
26.5
34.7
2.9
—
—
—
(39)
(1)
—
(40)
—
(67)
(78)
—
—
—
—
0.1
181
(12)
169
1
(3)
—
(2)
242
—
175
9
9
0.6
(1.1)
0.5
(143)
143
—
—
—
—
—
—
—
—
—
—
—
—
—
8,941
(39)
8,902
1,848
(388)
(17)
1,443
242
6,221
6,097
601
508
20.8
23.7
21.4
2 Total continuing operations' internal revenue relates to transactions with discontinued operations.
3 Includes only impairments not classified as special items.
4 Presented on a full-time employee equivalent basis.
Mondi Group Integrated report and financial statements 2023
174
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
2 Operating segments continued
External revenue by location of production and by location of customer
€ 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
Türkiye
Rest of emerging Europe
Emerging Europe total
Russia
North America
South America
Asia and Australia
External revenue
by location of production
External revenue
by location of customer
2023
2022
2023
2022
656
95
751
1,301
579
3
792
2,675
657
1,275
426
887
3,245
—
561
3
95
667
74
741
1,640
808
3
888
3,339
820
1,587
589
1,089
4,085
—
634
2
101
495
395
890
159
954
192
1,691
2,996
252
722
486
521
1,981
5
825
94
539
498
436
934
203
1,188
230
1,988
3,609
286
851
693
629
2,459
30
1,000
157
713
Total Group revenue from continuing operations
7,330
8,902
7,330
8,902
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 2023 and 31 December 2022. 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 2023
175
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
Türkiye
Rest of emerging Europe
Emerging Europe total
North America
South America
Asia and Australia
Total
2023
2022
Non-current
non-financial
assets
Segment
assets
Segment
net assets
Non-current
non-financial
assets
Segment
assets
Segment
net assets
931
60
991
462
522
31
782
1,797
965
929
168
857
2,919
174
17
78
1,135
158
1,293
902
689
37
1,015
2,643
1,063
1,215
328
1,014
3,620
350
27
159
1,030
155
1,185
671
627
34
922
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
2,254
1,481
2,550
2,088
927
1,047
254
853
3,081
317
27
147
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
2,943
368
19
157
5,976
8,092
7,011
5,492
8,132
6,760
Mondi Group Integrated report and financial statements 2023
176
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
2 Operating segments continued
Reconciliation of operating segment assets
€ million
Group total
Unallocated
Investments in joint ventures
Deferred tax assets/(liabilities)
Other non-operating assets/(liabilities)
Intra-group balances with discontinued operations
Capital employed of continuing operations
Assets held for sale and liabilities directly associated with assets held for sale
(see note 28)
Intra-group balances with discontinued operations
Group capital employed
Financial instruments/(net debt)
Total assets/equity
2023
2022
Segment
assets
Segment
net assets/
(liabilities)
Segment
assets
Segment
net assets/
(liabilities)
8,092
7,011
8,132
6,760
8
24
236
—
8
(298)
(206)
—
18
34
212
13
18
(273)
(297)
13
8,360
6,515
8,409
6,221
—
—
—
—
1,382
1,057
(13)
(13)
8,360
6,515
9,778
7,265
1,604
(419)
1,069
(1,011)
9,964
6,096
10,847
6,254
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 €181 million and €316 million,
respectively, as at 31 December 2023 (2022: €175 million and €317 million).
Average number of employees by principal location of employment1
thousands
Africa2
Western Europe
Emerging Europe
North America
Asia and Australia
Total average number of employees of continuing operations
Notes:
1 Presented on a full-time employee equivalent basis.
2 South Africa and Rest of Africa, previously disclosed separately, are disclosed in aggregate under Africa.
2023
1.9
6.5
10.4
1.6
0.6
21.0
2022
1.9
6.7
10.5
1.6
0.7
21.4
Mondi Group Integrated report and financial statements 2023
177
3 Special items
The Group separately discloses special items, an APM as defined on page 238, 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
Impairment of assets
Restructuring and closure costs:
Personnel costs
Other restructuring and closure costs
Gain on disposal of businesses, net of related transaction costs (see note 26)
Total special items before tax
Tax credit/(charge) (see note 7)
Total special items
2023
2022
(4)
(9)
(14)
—
(27)
6
(21)
—
—
—
242
242
(5)
237
The operating special items resulted in a cash outflow from operating activities of €10 million for the year ended 31 December 2023
(2022: €8 million). In the prior year, the net cash received from the sale of the Personal Care Components business totalled €642 million
and was presented within cash flows from investing activities.
To 31 December 2023
The special items during the year ended 31 December 2023 comprised:
– Uncoated Fine Paper
– Closure of a paper machine and streamlining the capacity of the finishing lines at the Neusiedler operations in Austria. Restructuring
and closure costs of €23 million and related impairment of assets of €4 million were recognised.
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 26.
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 subsidiaries
Total audit fees
Audit-related services
Other assurance services
Other services
Total non-audit fees
Total fees
2023
2.0
4.1
6.1
0.6
—
—
0.6
6.7
2022
1.9
4.1
6.0
0.4
0.7
—
1.1
7.1
Mondi Group Integrated report and financial statements 2023
178
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
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 loss 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)
Total personnel costs
Continuing operations' average number of employees (thousands)1
Note:
1 Presented on a full-time employee equivalent basis.
6 Net finance costs
€ million
Investment income
Investment income
Net foreign currency gains/(losses)
Net foreign currency gains/(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
2023
2022
878
181
14
5
9
873
175
14
4
11
1,087
1,077
9
3
5
8
—
4
2
6
1,104
1,083
21.0
21.4
2023
2022
45
1
(115)
(7)
(8)
(130)
11
(119)
(73)
6
(5)
(133)
(7)
(6)
(146)
2
(144)
(143)
The weighted average interest rate applicable to capitalised interest on general borrowings for the year ended 31 December 2023
was 4.9% (2022: 6.7%) and was mainly related to qualifying assets in Czech Republic (2022: Finland and Poland).
Mondi Group Integrated report and financial statements 2023
179
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 2023 was 23.6% (2022: 22.5%).
€ million
UK corporation tax at 23.5% (2022: 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
Tax (credit)/charge on special items (see note 3)
Tax charge for the year
Current tax charge
Deferred tax charge
2023
—
135
(13)
122
62
(24)
7
167
(6)
(6)
161
116
45
2022
—
248
(8)
240
64
(4)
(4)
296
5
5
301
245
56
On 24 May 2021, legislation was substantively enacted in the UK to increase the corporate tax rate from 19% to 25% with effect from
1 April 2023. The 23.5% UK corporation tax rate referenced in the table above reflects the average tax rate that has applied during 2023.
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 €38 million (2022: €41 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.
The Group is within the scope of the OECD Pillar 2 model rules. As of 31 December 2023, the effective tax rate in the majority of
countries in which the Group operates exceeds the 15% minimum tax rate threshold required under Pillar 2. In certain jurisdictions, notably
in Bulgaria and Hungary, there are potential impacts from this tax, given their current statutory tax rates are 10% and 9% respectively. In
addition, it is expected that additional Pillar 2 tax may be triggered in jurisdictions in which the Group benefits from tax incentives on
capital investments or tax holidays but this will ultimately depend year on year on the quantum of tax incentives available to the Group.
Therefore, quantitative information to indicate potential exposure to Pillar 2 is currently not reasonably estimable. The Group continues
to progress on the assessment and expects to complete it in 2024.
Mondi Group Integrated report and financial statements 2023
180
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
7 Taxation continued
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 23.5% (2022: 19%), as follows:
€ million
Profit before tax
Tax on profit before tax, calculated at the UK corporation tax rate of 23.5% (2022: 19%)
Tax effects of:
Expenses/(income) not deductible/(taxable) for tax purposes
Special items not taxable
Other non-deductible expenses
Temporary difference adjustments
Fixed asset revaluation
Changes in local tax rates1
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 incentives2
Effect of differences between local rates and UK rate
Hyperinflation monetary adjustments (see note 1)
Other adjustments
Tax charge for the year
2023
682
160
2
—
2
(13)
(10)
7
14
(24)
12
(13)
(5)
(1)
19
12
2022
1,560
296
(36)
(43)
7
(14)
(16)
(4)
10
(4)
55
(8)
(18)
45
15
21
161
301
Notes:
1 There have been changes in tax rates in Czech Republic, Türkiye and Austria (2022: South Africa, Türkiye and Austria).
2 The tax incentives relate to a number of countries including Poland and Serbia (2022: Slovakia and Czech Republic).
(b) Deferred tax
€ million
At 1 January
(Charged)/credited to the consolidated income statement
Credited/(charged) to the consolidated statement of comprehensive
income
Disposal of businesses (see note 26)
Reclassification to assets held for sale and liabilities directly associated
with assets held for sale
Reclassification
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December
Deferred tax assets
Deferred tax liabilities
2023
34
(10)
3
—
—
(1)
(1)
(1)
24
2022
43
5
(2)
—
—
(6)
(4)
(2)
34
2023
(307)
(35)
4
—
—
1
—
15
(322)
2022
(290)
(61)
(1)
8
42
6
(1)
(10)
(307)
Mondi Group Integrated report and financial statements 2023
181
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/(utilised)
Other temporary differences
Total deferred tax charge
Deferred tax comprises:
€ million
Capital allowances in excess of depreciation
Fair value adjustments
Tax losses
Other temporary differences
Total
2023
(27)
(23)
24
(19)
(45)
Deferred tax assets
Deferred tax liabilities
2023
(34)
—
17
41
24
2022
(26)
—
4
56
34
2023
(265)
(135)
19
59
(322)
(307)
2022
(16)
(33)
(25)
18
(56)
2022
(249)
(127)
8
61
The key items within other temporary differences include retirement benefit obligations, inventory write-downs, other provisions
and accruals and elimination of intercompany profit in inventory.
Based on forecast data, the Group considers it probable that there will be sufficient future taxable profits available in the relevant
jurisdictions to utilise the tax losses and other temporary differences presented in the table above.
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
2023
2022
13
11
24
23
11
34
2023
—
(322)
(322)
2022
(1)
(306)
(307)
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
2023
1,401
16
56
2022
1,443
16
27
1,473
1,486
Of the total of €1,473 million (2022: €1,486 million), €1,248 million (2022: €1,269 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 2023
182
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
7 Taxation 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 unrecognised tax losses
2023
2022
7
42
45
1,323
1,417
5
22
48
1,384
1,459
No deferred tax liability is recognised on gross temporary differences of €622 million (2022: €679 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 2023 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 continuing and discontinued operations
Basic EPS
Diluted EPS
Basic headline EPS
Diluted headline EPS
EPS attributable to shareholders
2023
2022
103.5
103.5
107.8
107.8
(31.5)
(31.5)
145.3
145.3
244.5
244.4
195.6
195.6
299.3
299.2
264.3
264.2
Mondi Group Integrated report and financial statements 2023
183
The calculation of basic and diluted EPS, basic and diluted underlying EPS and basic and diluted headline EPS is based on the following data:
€ million
(Loss)/profit for the year attributable to shareholders
Arises from:
Continuing operations
Discontinued operations (see note 28)
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 operations (see note 28)
Gain on disposal of property, plant and equipment
Insurance reimbursements for property damages
Restructuring and closure costs (see note 3)
Impairments not included in special items (see note 10)
Loss on disposal of businesses from discontinued operations (see note 28)
Impairments included in loss/profit from discontinued operations (see note 28)
Related tax
Headline earnings for the year
million
Basic number of ordinary shares outstanding
Effect of dilutive potential ordinary shares
Diluted number of ordinary shares outstanding
Earnings
2023
(153)
502
(655)
27
(6)
(132)
523
(655)
(13)
(27)
(23)
3
756
113
28
705
2022
1,452
1,186
266
(242)
5
1,215
949
266
(2)
—
—
11
—
57
1
1,282
Weighted average number of shares
2023
485.1
—
485.1
2022
485.1
0.1
485.2
Underlying earnings, total earnings (prior to special items) and headline earnings represent APMs which are defined on pages 238-241.
On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to its shareholders by way of
a special dividend (see note 9). In addition, in order to maintain the comparability, so far as possible, of Mondi plc’s share price before
and after the special dividend, the special dividend was accompanied by a share consolidation, which took effect on 29 January 2024,
resulting in shareholders receiving 10 new ordinary shares for every 11 existing ordinary shares (see note 22). The weighted average
number of ordinary shares outstanding for 2023 and 2022, respectively, is based on the number of existing ordinary shares throughout
the relevant years (i.e. before share consolidation).
9 Dividends
Final ordinary dividend paid in respect of the prior year
Interim ordinary dividend paid in respect of the current year
Total ordinary dividends paid
2023
euro cents
per share
48.33
23.33
2022
euro cents
per share
45.00
21.67
€ million
231
114
345
€ million
218
103
321
Final ordinary dividend proposed to shareholders1
46.67
206
48.33
234
Note:
1 The 2023 final ordinary dividend proposed of 46.67 euro cents per share is based on the new ordinary shares issued after share consolidation, as described below.
Mondi Group Integrated report and financial statements 2023
184
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
9 Dividends continued
The final ordinary dividend proposed in respect of the financial year ended 31 December 2023 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 3 May 2024.
On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to shareholders by way of a
special dividend of €1.60 per existing ordinary share. In addition, in order to maintain the comparability, so far as possible, of Mondi plc’s
share price before and after the special dividend, the special dividend was accompanied by a share consolidation, which took effect
on 29 January 2024, resulting in shareholders receiving 10 new ordinary shares for every 11 existing ordinary shares (see note 22).
10 Property, plant and equipment
€ million
Net carrying value
At 1 January 2022
Additions
Disposal of assets
Disposal of businesses
Reclassification to assets held for sale
Depreciation charge for the year
Impairment losses recognised
Reclassification
Hyperinflation monetary adjustment
Currency movements
At 31 December 2022
Cost
Accumulated depreciation and impairments
Additions
Disposal of assets
Acquired through business combinations (see note 25)
Depreciation charge for the year
Impairment losses recognised
Reclassification
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December 2023
Cost
Accumulated depreciation and impairments
Land and
buildings1
Plant and
equipment
Assets under
construction
Other
Total
1,436
43
(4)
(44)
(323)
(68)
(4)
45
26
60
1,167
2,031
(864)
50
(7)
17
(65)
(1)
51
28
(22)
1,218
2,139
(921)
2,971
100
(2)
(108)
(496)
(296)
(7)
207
20
94
2,483
7,077
(4,594)
169
(4)
20
(292)
(6)
168
31
(41)
2,528
7,216
(4,688)
337
393
(3)
(9)
(75)
—
—
(266)
2
19
398
415
(17)
576
—
—
—
—
(234)
6
(2)
744
761
(17)
160
39
(2)
(13)
(47)
(41)
—
11
2
10
119
386
(267)
38
(7)
—
(34)
—
13
3
(3)
129
409
(280)
4,904
575
(11)
(174)
(941)
(405)
(11)
(3)
50
183
4,167
9,909
(5,742)
833
(18)
37
(391)
(7)
(2)
68
(68)
4,619
10,525
(5,906)
Note:
1 The land carrying value included in land and buildings is €227 million (2022: €211 million).
Included in the additions above is €11 million (2022: €2 million) 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 €27 million
(2022: €7 million) in other net operating expenses in the consolidated income statement with reimbursements received in cash
of €17 million (2022: €8 million) classified as other investing activities within the consolidated statement of cash flows.
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 2023
185
11 Leases
The Group has entered into various lease agreements. Leases over land and buildings have a weighted average term of 35 years
(2022: 35 years), plant and equipment a weighted average term of 12 years (2022: 12 years) and other assets a weighted average term
of 5 years (2022: 5 years).
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 are 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 (which did not occur) 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 option in September 2028, and thus it was 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
2023
61
39
16
116
2022
61
43
15
119
2023
(10)
(9)
(7)
(26)
2022
(11)
(8)
(6)
(25)
Additions to the right-of-use assets during 2023 were €34 million (2022: €36 million).
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
2023
2022
28
24
49
89
190
125
21
104
25
22
47
99
193
128
19
109
Lease liabilities are effectively secured as the rights to the leased assets recognised in the consolidated financial statements revert to the
lessor in the event of default. The continuing operations' total cash outflow for leases during 2023 was €31 million (2022: €32 million).
Amounts recognised in the consolidated income statement
€ million
Depreciation charge in respect of leases
Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets
2023
(26)
(7)
(1)
(1)
2022
(25)
(7)
(3)
(1)
Mondi Group Integrated report and financial statements 2023
186
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
12 Goodwill
(a) Reconciliation
€ million
Net carrying value
At 1 January
Disposal of businesses (see note 26)
Reclassification to assets held for sale (see note 28)
Hyperinflation monetary adjustment (see note 1)
Currency movements
At 31 December
2023
2022
769
—
—
11
(15)
765
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.
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 (see note 35 for further details).
Goodwill is allocated to three groups of CGUs, as follows:
€ million, unless otherwise stated
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Total goodwill
Weighted average
pre-tax discount rate
Growth rate
beyond year 3
Carrying value
2023
10.2%
9.2%
11.1%
2022
9.9%
9.2%
10.2%
2023
3%
2%
—%
2022
3%
2%
—%
2023
328
422
15
765
2022
329
425
15
769
Key assumptions for 2023
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 2026.
– 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 55-64 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 are applied to the groups of CGUs for all years from year four
onwards (as per the table above).
– 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.
Mondi Group Integrated report and financial statements 2023
187
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;
– 2% decrease in sales prices of paper in all years in the Corrugated Packaging group of CGUs;
– 1% decrease in sales prices of paper in 2024 in the Flexible Packaging group of CGUs; and
– 3% decrease in sales prices of paper in all years in the Uncoated Fine Paper group of CGUs.
None of these downside sensitivity analyses, in isolation, indicated the need for an impairment.
13 Intangible assets
€ million
Net carrying value
At 1 January
Additions
Acquired through business combinations (see note 25)
Disposal of businesses (see note 26)
Reclassification to assets held for sale (see note 28)
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
2023
2022
64
16
1
—
—
—
(17)
2
4
(2)
68
251
(183)
78
12
—
(2)
(7)
(2)
(18)
3
3
(3)
64
235
(171)
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 €21 million
(2022: €22 million).
Mondi Group Integrated report and financial statements 2023
188
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
14 Forestry assets
€ million
At 1 January
Investment in forestry assets
Fair value gains
Felling costs
Currency movements
At 31 December
Mature
Immature
2023
485
48
128
(87)
(55)
519
359
160
2022
348
49
169
(78)
(3)
485
309
176
The Group has 254,858 hectares (2022: 252,857 hectares) of owned and leased land available for forestry activities, all of which is in
South Africa. 80,614 hectares (2022: 80,227 hectares) are set aside for conservation activities and infrastructure needs. 1,044 hectares
(2022: 1,045 hectares) relate to non-core activities. The balance of 173,200 hectares (2022: 171,585 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
(2022: 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.
The following assumptions have a significant impact on the valuation of the Group’s forestry assets:
– The net selling price is defined as the selling price less the costs of transport, harvesting, extraction and loading, and all selling prices
and costs are denominated in South African rand. The net selling price is based on third-party transactions and is influenced by the
species, maturity profile and location of timber. In 2023, the net selling price used ranged from the South African rand equivalent
of €15 per tonne to €53 per tonne (2022: €14 per tonne to €47 per tonne), with a weighted average of €34 per tonne
(2022: €33 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 2023, the conversion factors ranged from 7.6 to 25.0 (2022: 7.9 to 23.9).
– The risk premium on immature timber of 12.4% (2022: 12.5%) 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%
(2022: 4.0%) was applied. The risk premium applied to immature and mature timber includes 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
2023
79
6
(8)
(47)
2022
75
5
(7)
(44)
Mondi Group Integrated report and financial statements 2023
189
15 Investments in joint ventures
€ million
At 1 January
Net (loss)/profit from joint ventures
Impairment losses recognised
At 31 December
2023
18
(5)
(5)
8
2022
17
1
—
18
The joint ventures of the Group as at 31 December 2023 are set out in note 11 of the Mondi plc parent company financial statements.
All of these interests are accounted for using the equity method. None of the joint ventures are assessed as being individually material
to the Group.
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
2023
2022
16
5
28
49
509
86
405
1,000
1,049
18
7
35
60
639
153
507
1,299
1,359
Of which, held at net realisable value
141
174
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
2023
2022
(3,575)
(3,928)
(77)
45
(65)
40
92
50
The reversal of previous write-downs of inventories relates to goods that had been written down to their estimated net realisable value
and were subsequently sold above their carrying value.
Mondi Group Integrated report and financial statements 2023
190
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
17 Trade and other receivables
€ million
Trade receivables
Credit loss allowance
Net trade receivables
Other receivables
Tax and social security
Prepayments
Total trade and other receivables
2023
995
(25)
970
45
148
91
2022
1,250
(26)
1,224
20
158
46
1,254
1,448
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.
€ million
Credit risk exposure
Gross trade receivables
Credit insurance
Net exposure to credit risk
2023
2022
995
(837)
158
1,250
(995)
255
In addition, the Group is in possession of bank guarantees and letters of credit securing trade and other receivables to the value
of €6 million (2022: €17 million).
Credit periods offered to customers vary according to the credit risk profiles of participants and invoicing conventions established 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 was €36 million
(2022: €42 million).
Included within the Group’s aggregate trade receivables balance are specific debtor balances with customers totalling €140 million
(2022: €173 million) which are past due and where the Group considers that their credit quality remains intact.
The expected credit loss allowance for trade receivables was determined as follows:
2023/€ million, unless otherwise stated
Expected loss rate %
Trade receivables
Credit loss allowance
Within terms
<1 month
1-2 months
2-3 months
>3 months
Total
Past due by
1
837
(7)
3
108
(3)
4
24
(1)
Past due by
14
7
(1)
68
19
(13)
995
(25)
2022/€ million, unless otherwise stated
Expected loss rate %
Trade receivables
Credit loss allowance
Within terms
<1 month
1-2 months
2-3 months
>3 months
Total
1
1,059
(8)
2
135
(3)
6
31
(2)
14
7
(1)
67
18
(12)
1,250
(26)
Mondi Group Integrated report and financial statements 2023
191
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 28)
Currency movements
At 31 December
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 2023
Charged to consolidated income statement
Released to consolidated income statement
Amounts used
Acquired through business combinations (see note 25)
Currency movements
At 31 December 2023
Current
Non-current
2023
2022
26
7
(6)
—
(2)
25
2023
633
60
59
66
387
14
1,219
29
10
(8)
(2)
(3)
26
2022
879
48
68
59
454
17
1,525
Total
49
31
(4)
(40)
13
(1)
48
21
27
Restructuring
costs
Employee-
related provisions
Environmental
restoration
Other
3
16
—
(12)
—
—
7
7
—
29
6
(1)
(7)
—
(1)
26
6
20
4
—
—
—
—
—
4
—
4
13
9
(3)
(21)
13
—
11
8
3
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 are 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 2023, such provisions totalled €4 million (2022: €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.
Mondi Group Integrated report and financial statements 2023
192
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
19 Provisions continued
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 are individually
material to the Group. 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.
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 27c)
Capital employed (see page 240)
2023
5,655
441
6,096
419
6,515
2022
5,794
460
6,254
1,011
7,265
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 its business.
The primary sources of the Group’s liquidity include its Guaranteed Euro Medium Term Note Programme, which the Group increased
from €2.5 billion to €3.0 billion in June 2023, 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:
Maturity
Interest rate %
2023
2022
€ million
Financing facilities
Syndicated Revolving Credit Facility
€500 million Eurobond
€600 million Eurobond
€750 million Eurobond
June 20281
April 2024
April 2026
April 2028
EURIBOR + margin
1.500%
1.625%
2.375%
Long Term Facility Agreement
December 2026
EURIBOR + margin
Other
Total committed facilities
Drawn
Total committed facilities available
Various
Various
750
500
600
750
20
4
2,624
(1,870)
754
750
500
600
750
27
8
2,635
(1,878)
757
In April 2023 the Group opted for a one-year extension on the facility, which moved the maturity from June 2027 to June 2028.
Note:
1
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 2023, the Group had no financial covenants in any of its
financing facilities.
Mondi Group Integrated report and financial statements 2023
193
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 241)
Net debt to underlying EBITDA (times) (see page 240)
Return on capital employed (%) (see page 240)
2023
10.5
6.4
0.3
12.8
2022
10.0
16.3
0.5
23.7
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.
21 Borrowings
€ million
Secured
Bank loans and overdrafts
Lease liabilities (see note 11)
Total secured
Unsecured
Bonds
Bank loans and overdrafts
Total unsecured
Total borrowings
Committed facilities drawn
Uncommitted facilities drawn
2023
2022
Current
Non-current
Total
Current
Non-current
Total
—
21
21
500
38
538
559
—
104
104
1,345
11
1,356
1,460
—
125
125
1,845
49
1,894
2,019
1,870
149
1
19
20
—
82
82
102
—
109
109
1,843
18
1,861
1,970
The Group’s borrowings as at 31 December are analysed by nature and underlying currency as follows:
2023/€ million
Euro
South African rand
Turkish lira
US dollar
Other currencies
Carrying value
Fair value
2022/€ million
Euro
South African rand
Turkish lira
US dollar
Other currencies
Carrying value
Fair value
Floating rate
borrowings
Fixed rate
borrowings
Total carrying
value
20
—
5
—
—
25
25
1,911
1,931
23
28
12
20
1,994
1,958
23
33
12
20
2,019
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
1
128
129
1,843
100
1,943
2,072
1,878
194
Fair value
1,895
23
33
12
20
1,983
Fair value
1,820
23
74
14
25
1,956
Mondi Group Integrated report and financial statements 2023
194
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
21 Borrowings continued
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.
The maturity analysis of the Group’s borrowings, presented net of interest, is as follows:
2023/€ 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
2022/€ million
Bonds
Bank loans and overdrafts
Lease liabilities
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
500
38
21
559
45
604
—
6
18
24
33
57
1,345
5
36
1,386
62
1,448
—
—
50
50
40
90
<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
Total1
1,845
49
125
2,019
180
2,199
Total1
1,843
101
128
2,072
219
2,291
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.
2023 & 2022
Mondi plc €0.20 ordinary shares issued
Number of
shares
485,553,780
Share capital
in € million
97
On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to shareholders by way of a special
dividend of €1.60 per existing ordinary share. In addition, in order to maintain the comparability, so far as possible, of Mondi plc’s share price
before and after the special dividend, the special dividend was accompanied by a share consolidation, which took effect on 29 January 2024,
resulting in shareholders receiving 10 new ordinary shares with a nominal value of €0.22 each for every 11 existing ordinary shares with a nominal
value of €0.20 each. To effect the share consolidation, the Group issued 3 additional ordinary shares prior to the record date for the share
consolidation, increasing the number of ordinary shares from 485,553,780 ordinary shares to 485,553,783 ordinary shares, so that the number
of the existing ordinary shares in issue at the time of the consolidation was exactly divisible by 11, such that there was no remaining fraction of
a share. Following the share consolidation, the total number of ordinary shares issued decreased by 44,141,253 ordinary shares from 485,553,783
ordinary shares to 441,412,530 ordinary shares, while the total nominal value of the share capital of the Group remained unchanged at €97 million.
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
2023
2022
Number of
shares held
128,478
492,184
Average price
per share
ZAR201.84
GBP14.10
Number of
shares held
147,357
401,802
Average price
per share
ZAR206.88
GBP14.69
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 2023
195
Other reserves
€ million
At 1 January 2022
Other comprehensive income for the year
Mondi share schemes’ charge
Issue of shares under employee share schemes
Disposal of businesses
At 31 December 2022
Other comprehensive income/(expense) for the
year
Hyperinflation monetary adjustment (see note 1)
Mondi share schemes’ charge (see note 23)
Issue of shares under employee share schemes
At 31 December 2023
Cumulative
translation
adjustment
reserve
Post-
retirement
benefits
reserve
Share-based
payment
reserve
Cash flow
hedge
reserve
Merger
reserve
Other
sundry
reserves
Total
(953)
(40)
98
—
—
(4)
5
—
—
—
(859)
(35)
339
(16)
—
—
—
(2)
—
—
(520)
(53)
16
—
11
(10)
—
17
—
—
9
(7)
19
(1)
2
—
—
—
1
—
—
—
—
1
667
27
(284)
—
—
—
—
—
—
—
—
105
11
(10)
(4)
667
27
(182)
—
—
—
—
—
—
—
—
323
(2)
9
(7)
667
27
141
A description of the nature and purpose of each reserve is provided below. The accounting policies applied to each reserve are further
described in note 35.
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 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 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.
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.
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 2023
196
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
23 Share-based payments
Mondi share awards
The Group has established its own share-based payment arrangements to incentivise employees. Further details of the Group’s share
schemes are set out in the Remuneration report on page 133.
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 component1
EPS component
Grant date fair value per instrument (ZAR)
ROCE component
TSR component1
EPS component
Number of shares conditionally awarded
BSP 2023
BSP 2022
BSP 2021
6 March 2023
10 March 2022
12 March 2021
3
5
13.98
306.00
596,448
3
5
14.03
281.55
541,730
3
5
18.46
383.47
234,516
LTIP 2023
LTIP 2022
LTIP 2021
6 March 2023
10 March 2022
12 March 2021
3
5
13.98
3.50
13.98
306.00
76.50
306.00
613,826
3
5
14.03
3.51
—
281.55
70.39
—
614,253
3
5
18.46
4.62
—
383.47
95.87
—
506,519
Note:
1 The base fair value has been adjusted for contractually determined market-based performance conditions.
For the 2023 LTIP grant, performance was assessed against ROCE, relative TSR and an additional EPS metric. The inclusion of this
growth metric, together with ROCE and relative TSR, provides a more rounded assessment of performance.
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
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
2023
2022
6
3
9
5
6
11
2023
2022
ZAR308.52
ZAR280.33
GBP14.00
GBP14.36
Mondi Group Integrated report and financial statements 2023
197
A reconciliation of share award movements for the Mondi share schemes is shown below:
number of shares
At 1 January 2022
Shares conditionally awarded
Shares vested
Shares lapsed
At 31 December 2022
Shares conditionally awarded
Shares vested
Shares lapsed
At 31 December 2023
BSP
LTIP
621,534
1,327,607
541,730
614,253
(257,041)
(186,227)
(27,140)
(257,295)
879,083
1,498,338
596,448
613,826
(159,633)
(226,044)
(85,841)
(389,797)
1,230,057
1,496,323
24 Retirement benefits
The Group operates post-retirement defined contribution, post-retirement defined benefit pension plans and post-retirement
medical plans.
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 (2022: €14 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 2024 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 2023
198
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
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
Medical cost inflation 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.
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
10.8
6.1
7.1
—
8.7
2023
Europe
3.6
2.5
2.7
2.7
—
Other
regions
18.1
14.8
15.9
—
—
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
—
—
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
South
Africa
16.3
20.4
18.7
23.0
2023
Europe
Other
regions
13.6-23.3
17.5-25.8
15.3-20.7
17.7-25.3
13.6-26.6
17.5-28.8
15.3-20.0
17.7-25.3
South
Africa
16.3
20.4
18.7
23.0
2022
Europe
Other
regions
13.6-23.2
17.5-25.5
15.0-20.7
17.0-25.3
13.6-25.4
17.5-26.1
15.3-20.0
17.7-25.3
The mortality assumptions have been based on published mortality tables in the relevant jurisdictions.
Mondi Group Integrated report and financial statements 2023
199
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
(29)
—
2023
Europe
(97)
(84)
Other
regions
Total
(14)
(140)
—
(84)
South
Africa
(33)
—
2022
Europe
(91)
(80)
(29)
(181)
(14)
(224)
(33)
(171)
—
(29)
70
(111)
—
70
(14)
(154)
—
(33)
73
(98)
Other
regions
(16)
—
(16)
—
Total
(140)
(80)
(220)
73
(16)
(147)
—
—
—
(29)
(29)
5
5
(116)
—
(116)
—
—
(14)
—
(14)
5
5
(130)
(29)
(159)
—
—
—
(33)
(33)
8
8
(106)
—
(106)
—
—
(16)
—
(16)
8
8
(122)
(33)
(155)
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
(Loss)/gain from settlement
Interest
Included in consolidated statement of comprehensive income
Remeasurement (losses)/gains
Return on plan assets
Acquired through business combinations (see note 25)
Reclassification to assets held for sale and liabilities directly
associated with assets held for sale (see note 28)
Contributions paid by employer
Benefits paid
Currency movements
At 31 December
Defined benefit liabilities
Fair value of plan assets
Net liability
2023
2022
(220)
(302)
2023
73
2022
2023
131
(147)
2022
(171)
(4)
(1)
(11)
(20)
—
(3)
—
—
28
7
(4)
6
(8)
51
—
—
14
—
20
3
(224)
(220)
—
—
3
—
(3)
—
—
2
(6)
1
70
—
(6)
2
—
(43)
—
—
1
(7)
(5)
(4)
(1)
(8)
(20)
(3)
(3)
—
2
22
8
(4)
—
(6)
51
(43)
—
14
1
13
(2)
73
(154)
(147)
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
2023
2022
Defined benefit
pension plans
Post-retirement
medical plans
10
10
29
148
3
3
11
135
Total
13
13
40
283
Defined benefit
pension plans
Post-retirement
medical plans
9
9
25
138
4
4
13
182
Total
13
13
38
320
Mondi Group Integrated report and financial statements 2023
200
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
24 Retirement benefits continued
The weighted average duration of the defined retirement benefits liability for South Africa is 7 years (2022: 7 years), Europe 10 years
(2022: 10 years) and other regions 15 years (2022: 12 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 2024 are €14 million.
The market values of the plan assets in these plans are detailed below:
€ million
Bonds
Insurance contracts
Cash
Liability-driven investment (LDI) portfolio
Fair value of plan assets
2023
2022
Quoted
Unquoted
Total
Quoted
Unquoted
Total
—
—
3
—
3
3
64
—
—
67
3
64
3
—
70
—
—
6
—
6
15
51
—
1
67
15
51
6
1
73
The majority of the Group’s plan assets are located in two UK pension schemes. These schemes are closed, have no active members
and have undertaken ‘buy-ins’ in 2022 and 2023 by purchasing insured annuity contracts to fund their future liabilities. The next stage
for these two schemes is to complete buy-outs by transferring their liabilities to third parties, followed by the closure of these schemes.
The purchased insured annuity contracts exactly fund the future payment benefits of the scheme, eliminating the risks for future
scheme deficits.
The fair values of plan assets are determined in accordance with IAS 19.
The actual return on plan assets in respect of defined benefit plans was €nil (2022: loss of €41 million).
The market value of assets is used to determine the funding level of the plans and is sufficient to cover 83% (2022: 91%) 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 2023, these minimum funding
requirements did not give rise to the recognition of any additional liabilities.
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.
Mondi Group Integrated report and financial statements 2023
201
€ 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
22
(1)
(13)
(1)
(7)
—
(7)
—
(2)
(1)
(19)
—
12
—
5
—
8
—
2
1-year increase
—
—
Mondi Group Integrated report and financial statements 2023
202
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
25 Business combinations
To 31 December 2023
On 12 January 2023, the Group completed the acquisition of the Duino mill near Trieste (Italy) from the Burgo Group. The mill operated
one paper machine producing lightweight coated mechanical paper. During the year, production was permanently stopped and a
€200 million investment to convert the existing paper machine into a 420,000 tonne per annum high-quality, cost-competitive recycled
containerboard machine commenced, with start-up expected in 2025. For the year ended 31 December 2023, the mill generated revenue
of €21 million and a loss after tax of €11 million, which have been included in the consolidated income statement. The loss is primarily
attributable to the annual depreciation of property, plant and equipment and expenses for the integration of the mill into the
Group’s structure.
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
Deferred tax asset
Inventories
Total assets
Net retirement benefits liability
Other provisions
Total liabilities
Net assets acquired
Gain on bargain purchase
Net cash paid per consolidated statement of cash flows
Book value
Revaluation
Fair value
39
1
1
4
45
(3)
—
(3)
42
(2)
—
(1)
13
10
—
(13)
(13)
(3)
37
1
—
17
55
(3)
(13)
(16)
39
(2)
37
Transaction costs of €2 million were charged to other net operating expenses in the consolidated income statement.
The purchase price allocation resulted in a gain on bargain purchase of €2 million as the fair value of net assets acquired was in excess
of the consideration paid. The gain on bargain purchase is attributable to the need for investment. This corresponds with the Group’s
investment plans to convert the paper machine and the limited reusability of certain assets after the conversion and the future costs
associated with the mill while the conversion is pending. The gain was recognised in other net operating expenses in 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. Property, plant and equipment has been measured at fair value using relevant valuation methods accepted under
IFRS 13, 'Fair Value Measurement', with related deferred tax adjustments. Management has considered the impact of environmental and
climate risks on the estimated fair values of Duino's property, plant and equipment. These considerations did not have a material impact.
To 31 December 2022
There were no business combinations during the year ended 31 December 2022.
Mondi Group Integrated report and financial statements 2023
203
26 Disposal of businesses
To 31 December 2023
There were no disposals of businesses from continuing operations during the year ended 31 December 2023. Refer to note 28 for
disclosures on the disposal of the Russian discontinued operations.
To 31 December 2022
On 30 June 2022, the Group sold its Personal Care Components (PCC) business to Nitto Denko Corporation for an enterprise value of
€615 million. The sale enabled the Group to simplify its portfolio and focus on its strategic priority to grow in sustainable packaging. PCC
manufactured a range of components for personal and home care products needed in everyday life such as diapers, feminine care, adult
incontinence and wipes.
€ 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 2021, 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
30 June 2022
174
141
2
58
88
15
478
(49)
(4)
(8)
(5)
(66)
412
Mondi Group Integrated report and financial statements 2023
204
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
27 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 loss/(profit) from joint ventures
Impairment of investments in joint ventures
Decrease in provisions
Decrease in net retirement benefits
Net movement in working capital
Decrease/(increase) in inventories
Decrease/(increase) in operating receivables
(Decrease)/increase in operating payables
Fair value gains on forestry assets
Felling costs
Net gain on disposal of property, plant and equipment
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 27c)
Cash and cash equivalents classified as assets held for sale (see note 28)
Cash and cash equivalents per consolidated statement of cash flows
2023
682
408
3
9
17
73
(2)
5
5
(17)
(19)
229
389
56
(216)
(128)
87
(13)
(17)
(10)
2022
1,560
394
11
11
(253)
143
(17)
(1)
—
(1)
(12)
(419)
(254)
(472)
307
(169)
78
(2)
(8)
(23)
1,312
1,292
2023
1,592
—
1,592
—
1,592
2022
1,067
(6)
1,061
320
1,381
The cash and cash equivalents of €1,592 million (2022: €1,067 million) include money market funds of €840 million (2022: €595 million)
valued at fair value through profit and loss, with the remaining balance carried at amortised cost.
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. These restrictions are not expected to have any material effect on the Group’s ability
to meet its ongoing obligations.
The fair values of cash and cash equivalents carried at amortised cost approximate their carrying values presented.
Mondi Group Integrated report and financial statements 2023
205
(c) Movement in net debt
The Group’s net debt position is as follows:
€ million
At 1 January 2022
Cash flow
Cash movement from continuing
operations
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash outflow from debt-related
derivative financial instruments
Discontinued operations
Additions to lease liabilities
Disposal of lease liabilities
Movement in unamortised loan costs
Net movement in fair value of
derivative financial instruments
Reclassification
Assets and liabilities classified as held
for sale
Currency movements
At 31 December 2022
Cash flow
Cash movement from continuing
operations
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash outflow from debt-related
derivative financial instruments
Discontinued operations
Additions to lease liabilities
Disposal of lease liabilities
Movement in unamortised loan costs
Net movement in fair value of
derivative financial instruments
Reclassification
Elimination of assets and liabilities
previously classified as held for sale
Currency movements
At 31 December 2023
Cash and
cash
equivalents
Current
financial
asset
investments1
Subtotal
Debt due
within 1 year2
Debt due
after 1 year
Debt-related
derivative
financial
instruments1
455
908
636
—
—
—
—
272
—
—
—
—
—
(320)
18
1,061
336
(248)
—
—
—
—
584
—
—
—
—
—
320
(125)
1,592
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
456
908
636
—
—
—
—
272
—
—
—
—
—
(320)
18
1,062
336
(248)
—
—
—
—
584
—
—
—
—
—
320
(125)
(106)
(2,104)
32
53
—
(44)
53
21
—
2
(15)
1
—
—
(21)
3
10
—
—
53
—
—
—
(35)
4
(2)
—
21
99
(6)
(96)
(1,970)
40
—
(16)
33
22
—
1
(14)
2
(1)
—
(519)
(1)
30
—
—
—
—
—
—
—
(18)
6
(2)
—
519
(23)
28
1,593
(559)
(1,460)
(9)
82
—
—
—
—
83
(1)
—
—
—
(80)
—
—
—
(7)
77
—
—
—
—
77
—
—
—
—
(63)
—
—
—
7
Subtotal
Total net
debt
(2,219)
(1,763)
167
1,075
—
(44)
106
21
83
1
(50)
5
(2)
(80)
—
636
(44)
106
21
83
273
(50)
5
(2)
(80)
—
102
(218)
4
22
(2,073)
(1,011)
117
453
—
(16)
33
22
77
1
(32)
8
(3)
(63)
—
(24)
58
(2,012)
(248)
(16)
33
22
77
585
(32)
8
(3)
(63)
—
296
(67)
(419)
Notes:
1
Included in financial instruments in the consolidated statement of financial position.
2 Excludes bank overdrafts of €nil (2022: €6 million), which are included in cash and cash equivalents (see note 27b).
Mondi Group Integrated report and financial statements 2023
206
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
27 Consolidated cash flow analysis continued
The Group incurred interest expense of €122 million (2022: €140 million) in relation to bank overdrafts, loans and lease liabilities. Included
in this expense is €53 million (2022: €67 million) relating to forward exchange rates on derivative contracts and interest paid on
borrowings of €50 million (2022: €60 million).
28 Russian operations (discontinued operations)
On 4 May 2022, the Board decided to divest the Group’s Russian assets and 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.
With the completion of the disposal of its Russian packaging converting operations and its Syktyvkar mill on 30 June 2023 and
4 October 2023 respectively, as further described below, the Group has concluded its exit from Russia and the net proceeds from the
sale of its Russian assets were distributed to shareholders on 13 February 2024 by way of a special dividend (see notes 9, 22 and 34
for further details).
Syktyvkar mill
On 12 August 2022, the Group entered into an agreement to sell its Syktyvkar mill, comprising JSC Mondi Syktyvkar together with two
affiliated entities, to Augment Investments Limited (Augment).
On 5 June 2023, following discussions with Augment on its lack of progress in gaining the necessary approval from the Russian
Federation’s Government Sub-Commission for the Control of Foreign Investments to complete this transaction, the Group withdrew
from the agreement with Augment.
At that time, the Board remained committed to the divestment of the Syktyvkar mill. Following the withdrawal, the Group entered into
dialogue with a number of potential buyers and the Group had received conditional offers for the Syktyvkar mill. In approximating a fair
value less costs to sell as at 30 June 2023 in the context of the Group’s half-year results for the period then ended, the Board considered
the offers received to date and also obtained an independent valuation by an authorised valuer in Russia. As reported at the half year,
the available information suggested a range of fair values, and there were ongoing negotiations with the potential buyers about various
aspects of their offers which meant that the final offer price and the associated assets within the perimeter of the transaction were not,
in the case of all offers, clearly defined. Based on all information available at the time of the half-year results being published, the Group
impaired the Syktyvkar mill by €97 million, net of related tax, to its estimated fair value less costs to sell as at 30 June 2023.
On 17 September 2023, the Group announced that it had entered into an agreement to sell its Syktyvkar mill to Sezar Invest LLC (Sezar
Invest) for a total cash consideration of RUB 80 billion. The disposal was completed and ownership of the Syktyvkar mill was transferred
to Sezar Invest on 4 October 2023 after the Group had received RUB 57 billion (€547 million) into its London bank account and a letter
of credit for the remaining RUB 23 billion. The final two instalments of the consideration for RUB 23 billion (€229 million) were received
in November and December 2023 respectively, resulting in total proceeds received in cash of €776 million.
€ million
Proceeds from the disposal of business, net of cash and cash equivalents
Cash and cash equivalents disposed
Consideration in cash
Carrying amount of net assets disposed
Loss on reclassification of foreign currency translation reserve
Related transaction costs1
Loss on disposal of business, net of related transaction costs and tax
Note:
1 Excludes transaction costs of €4 million already recognised in the prior year.
2023
389
387
776
(875)
(599)
(12)
(710)
Mondi Group Integrated report and financial statements 2023
207
The carrying amounts of assets and liabilities of the Syktyvkar mill as at the date of sale (4 October 2023) were:
€ million
Property, plant and equipment
Intangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Borrowings
Trade and other payables
Current tax liabilities
Provisions
Net retirement benefits liability
Deferred tax liabilities
Total liabilities
Carrying amount of net assets disposed
4 October 2023
584
4
93
47
387
1,115
(77)
(94)
(17)
(9)
(10)
(33)
(240)
875
Packaging converting operations
On 30 June 2023, the Group completed the sale of its three Russian packaging converting operations to the Gotek Group for a
consideration of RUB 1.6 billion resulting in proceeds of €30 million. 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.
€ million
Proceeds from the disposal of business, net of cash and cash equivalents
Cash and cash equivalents disposed
Consideration in cash
Carrying amount of net assets disposed
Loss on reclassification of foreign currency translation reserve
Related transaction costs
Loss on disposal of business, net of related transaction costs and tax
2023
12
18
30
(40)
(34)
(2)
(46)
The carrying amounts of assets and liabilities of the Russian packaging converting operations as at the date of sale (30 June 2023) were:
€ million
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Trade and other payables
Current tax liabilities
Deferred tax liabilities
Total liabilities
Carrying amount of net assets disposed
30 June 2023
18
33
18
69
(24)
(2)
(3)
(29)
40
Mondi Group Integrated report and financial statements 2023
208
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
28 Russian operations (discontinued operations) continued
Financial performance
The financial performance and cash flow information of the discontinued operations are set out in the tables below and cover the period
until the respective dates of disposal in 2023:
€ million
External revenue
Expenses1
Profit before tax
Related tax charge1
Profit for the year of discontinued operations
Loss on sale of business, net of related transaction costs and tax
(Loss)/profit from discontinued operations attributable to shareholders
Fair value gains arising from cash flow hedges of discontinued operations
Exchange differences on translation of discontinued non-euro operations
Reclassification of foreign currency translation reserve to consolidated income statement on disposal of
businesses of discontinued operations
Remeasurements of retirement benefits plans of discontinued operations
Other comprehensive income from discontinued operations attributable
to shareholders
Total comprehensive (expense)/income from discontinued operations attributable
to shareholders
2023
709
(561)
148
(47)
101
(756)
(655)
—
(227)
633
—
406
2022
1,178
(820)
358
(92)
266
—
266
1
72
—
1
74
(249)
340
Note:
1
Includes impairment of assets of €97 million (2022: €57 million), comprising impairment of €113 million (2022: €57 million) and related deferred tax credit of €16 million (2022: €nil).
Earnings per share (EPS) from discontinued operations attributable to shareholders
euro cents
Basic EPS
Diluted EPS
Cash flow statement
€ million
Net cash generated from operating activities
Net cash generated from/(used in) investing activities1
Net cash used in financing activities
Net increase in cash and cash equivalents of discontinued operations
Note:
1
Includes proceeds from the sale of the Russian operations of €806 million (2022: €nil) less cash disposed of €405 million (2022: €nil).
2023
(135.0)
(135.0)
2023
223
368
(7)
584
2022
54.8
54.8
2022
350
(68)
(10)
272
Mondi Group Integrated report and financial statements 2023
209
Assets and liabilities classified as held for sale
The following assets and liabilities were classified as held for sale in relation to the discontinued operations:
€ 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
2023
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2022
805
34
4
1
131
87
320
1,382
(102)
(131)
(14)
(14)
(12)
(52)
(325)
The cumulative foreign exchange loss recognised in other comprehensive income in relation to the discontinued operations as at
31 December 2023 was €nil (2022: loss of €405 million).
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
2023
2
632
634
2022
2
441
443
30 Contingent liabilities
The Group’s contingent liabilities as at 31 December 2023 were €3 million (2022: €11 million). No acquired contingent liabilities have been
recorded in the Group’s consolidated statement of financial position for either year presented.
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.
Mondi Group Integrated report and financial statements 2023
210
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
31 Financial instruments continued
(a) Financial instruments by category
2023/€ million
Financial assets
Trade and other receivables2
Financial asset investments
Derivative financial instruments
Cash and cash equivalents
Total
2022/€ million
Financial assets
Trade and other receivables2
Financial asset investments
Derivative financial instruments
Cash and cash equivalents
Total
Fair value
hierarchy1
Level 2
Level 2
Level 1
Fair value
hierarchy1
Level 2
Level 2
Level 1
At amortised
cost
At fair value
through profit or
loss
1,015
16
—
752
1,783
—
13
13
840
866
At amortised
cost
At fair value
through profit or
loss
1,244
14
—
472
1,730
—
12
3
595
610
Notes:
1 Fair value hierarchy level is disclosed for financial assets measured at fair value through profit or loss.
2 Excludes tax, social security and prepayments.
The fair values of financial assets investments represent the published prices of the securities concerned.
2023/€ million
Financial liabilities
Borrowings – bonds
Borrowings – loans and overdrafts
Borrowings – lease liabilities2
Trade and other payables3
Derivative financial instruments
Total
2022/€ 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
(1,845)
(49)
(125)
(1,146)
—
(3,165)
—
—
—
—
(4)
(4)
At amortised
cost
At fair value
through profit or
loss
(1,843)
(101)
(128)
(1,440)
—
(3,512)
—
—
—
—
(10)
(10)
Level 2
Fair value
hierarchy1
Level 2
Notes:
1 Fair value hierarchy level is disclosed for financial liabilities measured at fair value through profit or loss.
2 Lease liabilities are financial instruments outside of scope of IFRS 9, 'Financial Instruments', and are accounted for under IFRS 16, 'Leases' (see note 35).
3 Excludes tax, social security and deferred income.
Total
1,015
29
13
1,592
2,649
Total
1,244
26
3
1,067
2,340
Total
(1,845)
(49)
(125)
(1,146)
(4)
(3,169)
Total
(1,843)
(101)
(128)
(1,440)
(10)
(3,522)
Mondi Group Integrated report and financial statements 2023
211
(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
2023
2022
Fair value
2023
2022
2,019
2,072
1,983
1,956
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.
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.
Mondi Group Integrated report and financial statements 2023
212
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
31 Financial instruments continued
Net monetary foreign currency exposures by functional currency zone for continuing operations
€ million
Functional currency zones2
Euro3
South African rand
Egyptian pound
Czech koruna
Polish zloty
Swedish krona
Turkish lira
Other
Net monetary foreign currency exposures – assets/(liabilities)1
2023
EUR
—
1
(79)
(3)
(5)
(11)
6
(42)
Other
(17)
(7)
1
—
2
2
1
(2)
2022
EUR
—
1
(56)
(14)
2
(3)
—
(28)
Other
135
(6)
(4)
(2)
2
—
1
7
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 €nil (2022: €148 million) worth of Russian rouble dividend receivable.
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 €1 million (2022: €7 million)
and Egyptian pound of €4 million (2022: €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 are 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.
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.
Mondi Group Integrated report and financial statements 2023
213
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
2023
2022
EUR
1,931
(1,844)
(67)
(985)
(965)
Other
88
(25)
(58)
(607)
(602)
Total
2,019
EUR
1,936
(1,869)
(125)
(1,592)
(1,567)
(1,842)
(64)
(887)
(857)
Other
136
(37)
(64)
(180)
(145)
Total
2,072
(1,879)
(128)
(1,067)
(1,002)
Included in other is net variable exposure to various currencies, the most significant of which is Turkish lira (2022: Turkish lira and
South African rand).
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 €8 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
Czech koruna
Great British pound
Polish zloty
South African rand
Swedish krona
Thai baht
US dollar
Other
2023
2022
514
107
552
212
61
70
413
160
304
8
303
191
(18)
70
101
140
Total swapped against the euro
2,089
1,099
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.
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.
Mondi Group Integrated report and financial statements 2023
214
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
31 Financial instruments continued
The following table shows the amounts available to draw down on the Group’s committed loan facilities:
€ million
Expiry date
Within one year
Two to five years
Above five years
Total committed facilities available (see note 20)
2023
2022
—
750
4
754
3
750
4
757
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 2023, the Group recognised total derivative assets of €13 million (2022: €3 million) and derivative liabilities of €4 million
(2022: €10 million). The net asset of €9 million (2022: net liability of €7 million) will mature within one year.
The notional amount of €2,678 million (2022: €1,710 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 €2,678 million (2022: €1,710 million) aggregate notional amount,
€2,643 million (2022: €1,698 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 €4 million (2022: €3 million).
Hedging
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 losses of €1 million (2022: gains of €1 million) were reclassified from the cash flow hedge reserve to property, plant
and equipment during the current year. There were no fair value losses in the current year (2022: losses of €4 million) arising on
cash flow hedges due to ineffectiveness which were charged to the (loss)/profit from discontinued operations in the consolidated
income statement.
Mondi Group Integrated report and financial statements 2023
215
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. These related party transactions 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
2023
7
663
1
86
11
2022
8
715
1
112
10
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
2023
6.1
1.4
0.5
1.1
3.6
12.7
2022
8.4
1.2
0.6
1.1
5.6
16.9
Details of the transactions between the Group and its pension and post-retirement medical plans are disclosed in note 24.
33 Group companies
Composition of the Group
The subsidiaries of the Group as at 31 December 2023 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.
Refer to Mondi’s global footprint on pages 10-11 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 (%)
2023
49
2022
49
Profit attributable to
non-controlling interests
Equity attributable to
non-controlling interests
2023
3
16
19
2022
41
32
73
2023
328
113
441
2022
349
111
460
Mondi Group Integrated report and financial statements 2023
216
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
33 Group companies continued
Summarised financial information on the Group’s material non-wholly-owned subsidiaries is as follows:
Mondi SCP, a.s. and its subsidiaries
The summarised financial information represents amounts before elimination of intra-group transactions conducted in the ordinary course
of business. The results of the subsidiary on the stand-alone basis may differ from those included in the Group. The subsidiary's
registered office as disclosed in note 11 of the Mondi plc parent company financial statements is also its principal place of business.
Statement of financial position
€ million
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Equity attributable to non-controlling interests
Income statement and statement of comprehensive income
€ million
Revenue
Operating costs (including taxation)
Profit for the year
Attributable to non-controlling interests
Total comprehensive income for the year
Attributable to non-controlling interests
Statement of cash flows
€ million
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net cash (outflow)/inflow
2023
676
230
(150)
(79)
677
328
2023
735
(733)
2
3
2
3
2023
29
(34)
(31)
(36)
2022
753
409
(313)
(129)
720
349
2022
1,232
(1,148)
84
41
87
43
2022
115
(31)
(23)
61
Mondi AG acquired 100% of the shares in Mondi Neusiedler GmbH and Ybbstaler Zellstoff GmbH for a purchase price of €10 each from
Mondi SCP, a.s. and Obaly SOLO, s.r.o. respectively on 27 February 2023, thereby increasing the Group's effective ownership from 51%
to 100% with no changes in the Group's ownership of Mondi SCP, a.s. and Obaly SOLO, s.r.o.
34 Events occurring after 31 December 2023
Aside from the final ordinary dividend proposed for 2023 (see note 9), there have been the following material reportable events since
31 December 2023:
– On 5 February 2024, the Group announced the completion of the acquisition of Hinton Pulp mill in Alberta (Canada) from West Fraser
Timber Co. Ltd (West Fraser) for a total consideration of USD 5 million. The mill has the capacity to produce around 250,000 tonnes
of pulp per annum and will provide the Group with access to local, high-quality fibre from a well-established wood basket as part of a
long-term partnership with West Fraser. The Group intends to invest in the mill to improve productivity and sustainability performance
and, subject to pre-engineering and permitting, expand the facility primarily with a new kraft paper machine which will integrate its
paper bag operations in the Americas and support future growth.
– On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to shareholders by way of
a special dividend of €1.60 per existing ordinary share. In addition, in order to maintain the comparability, so far as possible, of
Mondi plc’s share price before and after the special dividend, the special dividend was accompanied by a share consolidation, which
took effect on 29 January 2024, resulting in shareholders receiving 10 new ordinary shares for every 11 existing ordinary shares.
See notes 9 and 22 for further details.
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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 are 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.
Hyperinflation accounting (note 1)
The Group has applied IAS 29, 'Financial Reporting in Hyperinflationary Economies', to its subsidiaries in Türkiye and Lebanon, 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 and Lebanese 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 (Turkish operations: TÜFE, 2003=100; Lebanese operations: CPI 2013=100) published by the Turkish Statistical Institute (TURKSTAT)
and Central Administration of Statistics of the Lebanese Republic, respectively. Gains or losses resulting from the restatement of
non-monetary assets and liabilities are recorded in the consolidated income statement as a net monetary gain or loss 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 and Lebanese operations are restated to the index level at the end of the period, with
hyperinflationary gains and losses being reported in net monetary gain or loss arising from hyperinflationary economies.
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)
Mondi Group Integrated report and financial statements 2023
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Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
35 Accounting policies continued
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,
and certain assets acquired and liabilities assumed in a business combination (see note 25).
The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) require a
degree of estimation and judgement and 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.
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 238-241, 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 or receivable 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 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.
Insurance reimbursements (note 10)
Compensation for insurance reimbursements, including compensation for business interruptions and for the loss or impairment of property, plant
and equipment, is recognised within other net operating expenses in the consolidated income statement when receipt is virtually certain.
Fair value gains/(losses) from forestry assets (note 14)
Changes in the fair value of forestry assets are recognised within other net operating expenses in the consolidated income statement.
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.
Mondi Group Integrated report and financial statements 2023
219
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.
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
and does not give rise to equal taxable and deductible temporary differences.
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.
The OECD Pillar 2 rules have been enacted in the United Kingdom and are effective for accounting periods beginning on or after
31 December 2023, except for the Undertaxed Payments Rule (UTPR) which is still in draft and expected to be effective after
31 December 2024 at the earliest. The Group is therefore within the enacted Pillar 2 rules from 1 January 2024. In light of recent
amendments to IAS 12, 'Income Taxes', which clarify that Pillar 2 related balances are not within the scope of IAS 12 for deferred tax
purposes, the Group has applied the exemption to recognising and disclosing information about deferred tax assets and liabilities arising
from the implementation of the Pillar 2 rules. The Group’s ongoing assessment of the OECD Pillar 2 rules is provided in note 7.
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. A share consolidation combined with a special dividend reduces the weighted average
number of ordinary shares in issue in the period when the transaction occurs from the date the special dividend is recognised.
Mondi Group Integrated report and financial statements 2023
220
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
35 Accounting policies continued
EPS, if relevant, is presented separately for continuing operations and in total from 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. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency
purchases of property, plant and equipment. 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 operating in the manner intended by management. 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.
Depreciation commences when the assets are ready for their intended use.
Residual values and useful lives are reviewed and adjusted, if appropriate, at least annually. 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.
Insurance reimbursements for the loss or impairment of property, plant and equipment are recognised within other net operating
expenses in the consolidated income statement when receipt is virtually certain.
Leases (note 11)
To the extent that a right of control exists over an identified 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.
Mondi Group Integrated report and financial statements 2023
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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.
The Group’s share of the profit or loss of joint ventures is recognised in net profit/(loss) from joint ventures. Any impairment is presented
adjacent to the share of the joint venture’s results in impairment of investments in joint ventures in the consolidated income statement.
Non-current assets held for sale and discontinued operations (note 28)
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. The discontinued operations' net profit or loss,
other comprehensive income or expense and cash flows for current and comparative periods 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. 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.
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. If the initial accounting for assets and liabilities is incomplete by the end of
the reporting period in which the combination occurs, the Group reports provisional fair values. The measurement period ends no later
than 12 months from 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.
Mondi Group Integrated report and financial statements 2023
222
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
35 Accounting policies continued
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.
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.
Mondi Group Integrated report and financial statements 2023
223
Cash and cash equivalents (note 27b)
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.
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 or
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.
Mondi Group Integrated report and financial statements 2023
224
Notes to the consolidated financial statements
for the year ended 31 December 2023 continued
35 Accounting policies continued
Retirement benefits (note 24)
The Group operates post-retirement defined contribution plans, post-retirement defined benefit pension plans and post-retirement
medical plans for many of its employees.
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.
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.
New accounting policies, early adoption and future requirements
Amendments to published Standards effective during 2023
The following new Standards and the amendments to Standards have been adopted for the financial year beginning on 1 January 2023,
and have had no significant impact on the Group’s results:
– IFRS 17 – Insurance Contracts, including Amendments to IFRS 17
– 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
– Amendments to IAS 12 – Income Taxes – International Tax Reform – Pillar 2 Model Rules
Amendments to published Standards effective for the financial year beginning on 1 January 2024
The following amendments to Standards will be effective for the financial year beginning on 1 January 2024. The amendments are not
expected to have a significant impact on the Group’s results:
– Amendments to IAS 1 – Presentation of Financial Statements – Non-current Liabilities with Covenants
– Amendments to IAS 1 – Presentation of Financial Statements – Classification of Liabilities as Current or Non-current
– Amendments to IFRS 16 – Leases – Lease Liability in a Sale and Leaseback
– Amendments to IAS 7 and IFRS 7 – Statement of Cash Flows and Financial instruments: Disclosures - Supplier Finance Arrangements
Mondi Group Integrated report and financial statements 2023
225
Mondi plc parent company balance sheet
as at 31 December 2023
€ 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
Notes
2023
2022
5
6
7
3
3
3,604
3,604
1,138
606
(10)
1,128
4,735
(3)
(2)
(10)
596
4,203
(4)
(1)
4,730
4,198
8
8
8
8
97
3,951
637
29
16
97
3,421
637
29
14
4,730
4,198
Mondi plc reported a profit of €876 million (2022: profit of €550 million) for the year ended 31 December 2023.
The balance sheet and statement of changes in equity of Mondi plc and related notes 1 to 11 on pages 225-234 were approved
by the Board and authorised for issue on 21 February 2024 and were signed on its behalf by:
Andrew King
Director
Mike Powell
Director
Mondi plc company registered number: 6209386
Mondi Group Integrated report and financial statements 2023
226
Mondi plc parent company statement of changes in equity
for the year ended 31 December 2023
€ million
At 1 January 2022
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
Total comprehensive income for the year
Dividends (see note 9 of the Group's
consolidated financial statements)
Mondi share schemes’ charge (see note 3)
Issue of shares under employee share
schemes
Purchases of own shares
At 31 December 2023
Called-up
share capital
Profit and loss
account
97
—
—
—
—
—
97
—
—
—
—
—
97
3,189
550
(321)
—
10
(7)
3,421
876
(345)
—
7
(8)
Merger
reserve
637
—
—
—
—
—
637
—
—
—
—
—
Capital
redemption
reserve
Share-based
payments reserve
29
—
—
—
—
—
29
—
—
—
—
—
29
13
—
—
11
(10)
—
14
—
—
9
(7)
—
16
Total
equity
3,965
550
(321)
11
—
(7)
4,198
876
(345)
9
—
(8)
4,730
3,951
637
Mondi Group Integrated report and financial statements 2023
227
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2023
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 81, 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, the recognition and subsequent measurement of goodwill and accounting in hyperinflationary economies.
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 28 employees during the year (2022: 27).
Mondi Group Integrated report and financial statements 2023
228
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2023 continued
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 €21 million (2022: €15 million) relating to share-based payment
arrangements. Mondi plc has tax losses of €197 million (2022: €198 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 (2022: €3 million) accordingly. Corresponding lease liabilities are included in creditors and further split by maturity as
presented in the balance sheet. 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.
6 Shares in Group undertakings
€ million
Unlisted
Shares at cost
Accumulated impairment
Total shares in Group undertakings
2023
2022
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 €1,131 million (2022: €600 million) are included in debtors: due within
one year. No provision on expected credit losses is recognised at 31 December 2023 (2022: €nil). The carrying amount of such deposits
held at amortised cost approximated their fair value at 31 December 2023 and at 31 December 2022.
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.
The capital redemption reserve is a statutory, non-distributable reserve into which amounts are transferred following the redemption
or purchase of own shares out of distributable profits or, in certain circumstances, from the proceeds of a fresh issue of shares.
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.
Mondi Group Integrated report and financial statements 2023
229
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 (2022: €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
Total exposure from financial guarantees
2023
69
4
3,061
3,134
2022
79
4
3,037
3,120
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 Consumer Goods Packaging UK Limited (registered number: 05188170)
– Mondi Packaging Limited (registered number: 01846191)
– Mondi Packaging UK Holdings Limited (registered number: 03714255)
– Mondi Scunthorpe Limited (registered number: 01446927)
10 Events occurring after 31 December 2023
Aside from the final ordinary dividend proposed for 2023, included in note 9 of the Group’s consolidated financial statements, there has
been the following material reportable event since 31 December 2023:
On 13 February 2024, the Group returned the net proceeds from the sale of the Group's Russian assets to shareholders by way of
a special dividend of €1.60 per existing ordinary share. In addition, in order to maintain the comparability, so far as possible, of Mondi plc’s
share price before and after the special dividend, the special dividend was accompanied by a share consolidation, which took effect on
29 January 2024, resulting in shareholders receiving 10 new ordinary shares for every 11 existing ordinary shares. See notes 9 and 22
of the Group’s consolidated financial statements for further details.
Mondi Group Integrated report and financial statements 2023
230
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2023 continued
11 List of subsidiaries, associated undertakings and other significant holdings
The subsidiaries, associated undertakings and other significant holdings of Mondi plc at 31 December 2023 are set out below.
Except where noted, all shares are held indirectly through a subsidiary or associated undertaking and the shares held are ordinary shares.
Registered office
Principal activities
% of
shares
held by
Group
Company
Registered office
Principal activities
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Bulgaria
Mondi Stambolijski
E.A.D
Canada
Mondi Hinton Inc.
Colombia
Mondi Cartagena
SAS
Côte d'Ivoire
Mondi Abidjan S.A.
Czech Republic
EURO WASTE a.s.
1 Zavodska Street,
Stambolijski 4210,
Plovdiv Region
Production, Flexible
Packaging
100.00
600-12220 Stony Plain Rd
NW, Edmonton AB T5N
3Y4
Dormant, Flexible
Packaging
100.00
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
Litoměřická 272, 41108
Štětí
Service, Flexible
Packaging
Litoměřická 272, 41108
Štětí
Production, Flexible
Packaging
Production, Flexible
Packaging
Production, Corrugated
Packaging
100.00
Holding, Corporate
100.00
Labe Wood s.r.o.3
Marxergasse 4A, 1030
Vienna
Holding, Flexible
Packaging
100.00
Mondi Bags Štětí
a.s.
Litoměřická 272, 41108
Štětí
Production, Flexible
Packaging
Production, Flexible
Packaging
100.00
Mondi Bupak s.r.o.
Papírenská 41, 37052
České Budějovice
Production, Corrugated
Packaging
100.00
Company
Austria
Mondi AG
Mondi Coating
Zeltweg GmbH
Mondi Consumer
Packaging GmbH
Mondi Corrugated
Holding Österreich
GmbH
Holding, Corporate
100.00
Marxergasse 4A, 1030
Vienna
Bahnhofstrasse 3,
8740 Zeltweg
Marxergasse 4A, 1030
Vienna
Production, Flexible
Packaging
Holding, Flexible
Packaging
Marxergasse 4A, 1030
Vienna
Holding, Corrugated
Packaging
Mondi Corrugated
Services GmbH
Marxergasse 4A, 1030
Vienna
Service, Corrugated
Packaging
Mondi Engineered
Materials GmbH
Marxergasse 4A, 1030
Vienna
Holding, Flexible
Packaging
Mondi Finance
Europe GmbH
Marxergasse 4A, 1030
Vienna
Service, Corporate
100.00
Mondi FlexPack
Trading GmbH
Marxergasse 4A, 1030
Vienna
Distribution, Flexible
Packaging
Mondi Frantschach
GmbH
Mondi Grünburg
GmbH
Mondi Holdings
Austria GmbH
Mondi Industrial
Bags GmbH
Mondi Korneuburg
GmbH
Mondi Neusiedler
GmbH & Co KG1
Mondi Neusiedler
Verwaltungs GmbH2
Frantschach 5,
9413 St. Gertraud
Steyrtalstrasse 5,
4594 Grünburg
Marxergasse 4A, 1030
Vienna
Erwin Schrödinger
Strasse 2, 2100,
Korneuburg
Theresienthalstrasse 50,
3363 Ulmerfeld-
Hausmening
Theresienthalstrasse 50,
3363 Ulmerfeld-
Hausmening, Austria
Production, Uncoated
Fine Paper
100.00
Service, Uncoated Fine
Paper
100.00
Mondi Oman
Holding GmbH
Marxergasse 4A, 1030
Vienna
Holding, Flexible
Packaging
Mondi Paper Sack
Zeltweg GmbH
Mondi Paper Sales
GmbH
Bahnhofstrasse 3,
8740 Zeltweg
Marxergasse 4A, 1030
Vienna
Mondi Release Liner
Austria GmbH
Waidhofnerstrasse 11,
3331 Hilm
Mondi Styria GmbH Bahnhofstrasse 3,
Mondi Uncoated
Fine & Kraft Paper
GmbH
8740 Zeltweg
Marxergasse 4A, 1030
Vienna
Papierholz Austria
GmbH
Frantschach 5,
9413 St. Gertraud
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
70.00
100.00
100.00
100.00
100.00
100.00
25.00
Belgium
Mondi Poperinge
N.V.
Nijverheidslaan 11,
8970 Poperinge
Production, Flexible
Packaging
100.00
100.00
24.99
100.00
100.00
100.00
100.00
46.50
Mondi Coating Štětí
a.s.
Litoměřická 272, 41108
Štětí
Production, Flexible
Packaging
Litoměřická 272, 41108
Štětí
Production, Flexible
Packaging
Litoměřická 272, 41108
Štětí
Production, Flexible
Packaging
c.p. 138, 66491 Hlína
Service, Flexible
Packaging
Mondi Štětí a.s.
Mondi Štětí White
Paper s.r.o
Wood & Paper a.s.3
Egypt
Mondi Cairo for
Packaging Material
S.A.E.
El-motawer El-turky
(Polaris) Plots No. 7, 6th
of October, Giza
Production, Flexible
Packaging
100.00
Suez Bags
Company (S.A.E.)
K30 Maadi, Ein Soukhna
Road, 1002 Cairo
Production, Flexible
Packaging
98.30
Finland
Harvestia Oy
Mondi Finland
Services Oy
Selluntie 142, 70420
Kuopio
Selluntie 142, 70420
Kuopio
Service, Corrugated
Packaging
Holding, Corrugated
Packaging
100.00
100.00
Mondi Powerflute
Oy
Selluntie 142, 70420
Kuopio
Production, Corrugated
Packaging
100.00
France
Mondi Gournay Sarl
22 Avenue Pierre 1er de
Serbie 75016 Paris
Service, Flexible
Packaging
Mondi Lembacel
SAS
Mondi Paper Sales
France Sarl
11 rue de Reims,
51490 Bétheniville
22 Avenue Pierre 1er de
Serbie, 75016 Paris
Production, Flexible
Packaging
Distribution, Corrugated
Packaging
100.00
100.00
100.00
Mondi Group Integrated report and financial statements 2023
231
Company
Registered office
Principal activities
% of
shares
held by
Group
Wilhelm-Hauff-Strasse
41, 74906 Bad Rappenau
Wielandstrasse 2,
33790 Halle
Production, Corrugated
Packaging
100.00
Holding, Flexible
Packaging
100.00
Germany
Mondi Bad
Rappenau GmbH
Mondi Consumer
Packaging
International GmbH
Mondi Eschenbach
GmbH
Mondi Estonteco
GmbH
Am Stadtwald 14,
92676 Eschenbach
Wielandstrasse 2,
33790 Halle
Mondi Halle GmbH Wielandstrasse 2,
Mondi Hammelburg
GmbH
Mondi Holding
Deutschland GmbH
Mondi Inncoat
GmbH
33790 Halle
Thüringenstrasse 1-3,
97762 Hammelburg
Wielandstrasse 2,
33790 Halle
Angererstrasse 25,
83064 Raubling
Mondi Jülich GmbH Rathausstrasse 29,
52428 Jülich
Schauenburgerstraße 49,
20095, Hamburg,
Germany
Production, Corrugated
Packaging
100.00
Dormant, Corrugated
Packaging
Production, Flexible
Packaging
Production, Flexible
Packaging
100.00
100.00
100.00
Holding, Corporate
100.00
Production, Flexible
Packaging
Production, Flexible
Packaging
100.00
100.00
Distribution, Corrugated
Packaging
100.00
Thüringenstrasse 1-3,
97762 Hammelburg
Erich-Hausmann-Strasse
1, 04687 Trebsen
Distribution, Flexible
Packaging
Production, Flexible
Packaging
100.00
100.00
Robert-Bosch-Strasse 3,
91522 Ansbach
Production, Corrugated
Packaging
100.00
Hauptstrasse 16, 07366
Rosenthal am Rennsteig
Service, Corporate
50.00
Sindos Industrial Zone –
Block 18, 57022
Thessaloniki
Distribution, Flexible
Packaging
100.00
Mondi Paper Sales
Deutschland GmbH
Mondi Sendenhorst
GmbH
Mondi Trebsen
GmbH
Mondi Wellpappe
Ansbach GmbH
wood2M GmbH3
Greece
Mondi Thessaloniki
A.E.
Hungary
Mondi Bags
Hungária Kft.
Tünde u. 2, 4400
Nyíregyháza
Production, Flexible
Packaging
Mondi Békéscsaba
Kft.
Tevan Andor u. 2, 5600
Békéscsaba
Production, Flexible
Packaging
Mondi Szada Kft.
Vasút u. 13, 2111 Szada
Production, Flexible
Packaging
100.00
100.00
100.00
Iraq
Mondi Kaso Iraq
Industrial Bags Ltd.
Italy
Mondi Duino S.r.l.2
Takya, Bazian,
Sulaimaniyah
Production, Flexible
Packaging
34.55
S.Giovanni di Duino, 24/
D, 34011, Duino Aurisina
(TS)
Production, Corrugated
Packaging
100.00
Mondi Gradisac S.r.l. Via dell´Industria 11, 34072
Gradisca d´Isonzo, Gorizia
Production, Flexible
Packaging
Mondi Italia S.r.l.
Via Balilla 32, 24058
Romano di Lombardia,
Bergamo
Production, Flexible
Packaging
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
Service, Flexible
Packaging
Mondi Tolentino
S.r.l.
Via Giovanni Falcone 1,
62029 Tolentino,
Macerata
Production, Flexible
Packaging
100.00
100.00
100.00
100.00
100.00
100.00
Company
Registered office
Principal activities
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
% of
shares
held by
Group
100.00
100.00
Japan
Mondi Tokyo KK
Jordan
Jordan Paper Sacks
Co. Ltd.
7th floor 14-5, Akasaka
2-chrome, Minato-ku,
Tokyo
Service, Flexible
Packaging
100.00
Al Salt, Industrial Area,
P.O. Box 119, 19374, Ain
Al Basha
Production, Flexible
Packaging
67.74
Republic of Korea
Krauzen Co., Ltd.
48-29, 439 Hongandaero,
Dongang-gu, Anyang-si,
Gyunggi-do
Dormant, Flexible
Packaging
100.00
Mondi KSP Co., Ltd. 48-29, 439 Hongandaero,
Dongang-gu, Anyang-si,
Gyunggi-do
Distribution, Flexible
Packaging
95.00
Lebanon
Mondi Lebanon SAL 7th Floor, Bloc C, Kassis
Luxembourg
Mondi Packaging
S.à r.l.
Mondi S.à r.l.
Mondi Services S.à r.l.
Malaysia
Mondi Kuala Lumpur
Sdn. Bhd.4
Mexico
Caja de Ahorro de
Personal de Mondi
Mexico Servicios
A.C.
Mondi Mexico S. de
R.L. de C.V.
Morocco
Ensachage Moderne
Sarl
Mondi Tanger S.A.
Building, Antelias
Highway, Antelias
1, rue Hildegard von
Bingen, 1282
1, rue Hildegard von
Bingen, 1282
1, rue Hildegard von
Bingen, 1282
Lot Nos. PT 5034 &
5036, Jalan Teluk Datuk
28/40, 40000 Shah Alam,
Selangor
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
Production, Flexible
Packaging
66.00
Holding, Corporate
100.00
Holding, Corporate
100.00
Holding, Corporate
100.00
Production, Flexible
Packaging
100.00
Service, Flexible
Packaging
100.00
Production, Flexible
Packaging
100.00
Km 16, Route d´El Jadida,
Casablanca
Dormant, Flexible
Packaging
Production, Flexible
Packaging
Lot N 28 Zone
D'exploitation de la Zone
Franche, D.Exploitation
de Tanger Automobile
Cite Dite Tac 2, Tanger,
Jouamaa Province
Fahsanjra
80.64
100.00
Pap Sac Maghreb
SA
Km 16, Route d´El Jadida,
Casablanca
Production, Flexible
Packaging
80.64
Mondi Group Integrated report and financial statements 2023
232
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2023 continued
11 List of subsidiaries, associated undertakings and other significant holdings continued
Company
Registered office
Principal activities
Mondi Świecie S.A.
ul. Bydgoska 1, 86-100
Świecie
Production, Corrugated
Packaging
% of
shares
held by
Group
100.00
Mondi Szczecin Sp.
z o.o.
ul. Sloneczna 20, 72-123
Kliniska Wielkie
Production, Corrugated
Packaging
100.00
Mondi Warszawa
Sp. z o.o.
ul. Tarczyńska 98, 96-320
Mszczonów
Production, Corrugated
Packaging
100.00
Mondi Wierzbica
Sp. z o.o.
PLWD Sp. z o.o.3
Świecie Rail Sp.
z o.o.
Romania
Mondi Bucharest
S.R.L.
Kolonia Rzecków 76,
26-680 Wierzbica
Production, Flexible
Packaging
ul. Bydgoska 1, 86-100
Świecie
Service, Corrugated
Packaging
ul. Bydgoska 1, 86-100
Świecie
Service, Corrugated
Packaging
100.00
50.67
100.00
Olympia Tower, 25-29,
Decebal Blvd, 3rd Floor
(Level 4), 030971
Bucharest
Distribution, Flexible
Packaging
100.00
Senegal
Mondi Senegal S.A.2 Zone Economique
speciale integree.
Commune de Diass.
Thies - Senegal
Production, Flexible
Packaging
70.00
Severna 4 No.2, 15000
Šabac
Production, Flexible
Packaging
100.00
77 Robinson Road,
#13-00, Robinson 77,
Singapore, 068896
Distribution, Flexible
Packaging
100.00
Serbia
Mondi Šabac d.o.o.
Šabac
Singapore
Mondi Packaging
Paper Sales Asia
Pte. Ltd.
Slovakia
East Paper, spol.
s.r.o.3
Mondi SCP, a.s.
Rastislavova 98,
04346 Kosice
Tatranská cesta 3,
03417 Ružomberok
Obaly SOLO, s.r.o
RECOPAP, s.r.o.3
Tatranská cesta 3,
03417 Ružomberok
Bratislavska 18, 90051
Zohor
Slovpaper
Collection s.r.o.
Slovpaper Recycling
s.r.o.
SLOVWOOD
Ružomberok a.s.
STRÁŽNA SLUŽBA
VLA-STA s.r.o.
Tatranská cesta 3,
03417 Ružomberok
Tatranská cesta 3,
03417 Ružomberok
Tatranská cesta 3,
03417 Ružomberok
Tatranská cesta 3,
03417 Ružomberok
Service, Corrugated
Packaging
Production, Corrugated
Packaging, Flexible
Packaging, Uncoated
Fine Paper
26.01
51.00
Holding, Uncoated Fine
Paper
51.00
Service, Corrugated
Packaging
Service, Corrugated
Packaging
Service, Corrugated
Packaging
25.50
51.00
51.00
Service, Uncoated Fine
Paper
33.66
Service, Uncoated
Fine Paper
51.00
Company
Registered office
Principal activities
Netherlands
Mondi Coating B.V.
Mondi Consumer
Bags & Films B.V.
Mondi Consumer
Bags & Films
Benelux B.V.
Fort Willemweg 1, 6219
PA Maastricht
Holding, Flexible
Packaging
Fort Willemweg 1, 6219
PA Maastricht
Holding, Flexible
Packaging
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.
Mondi Industrial
Bags B.V.
Imstenraderweg 15, 6422
PM Heerlen
Fort Willemweg 1, 6219
PA Maastricht
Production, Flexible
Packaging
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
% of
shares
held by
Group
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.
Norway
Mondi Moss AS
Oman
Mondi Oman LLC
Poland
Agromasa Sp. z o.o.
Fredonia
Investments Sp.
z o.o.
Mondi Bags Mielec
Sp. z o.o.
Fort Willemweg 1, 6219
PA Maastricht
Holding, Uncoated
Fine Paper
100.00
Rådmann Sirasvei 1,
1712 Grålum
Distribution, Flexible
Packaging
100.00
Rusayl Industrial Estate,
Road 20, P.O. Box 20,
124, Muscat Governorate,
Rusayl
Production, Flexible
Packaging
49.00
ul. Bydgoska 1, 86-100
Świecie
Service, Corrugated
Packaging
ul. Bydgoska 1, 86-100
Świecie
Service, Corrugated
Packaging
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.
Mondi Corrugated
Świecie Sp. z o.o.
ul. Zamenhofa 36, 57-500
Bystrzyca Kłodzka
Production, Corrugated
Packaging
100.00
ul. Tucholska 9, 86-100
Świecie
Production, Corrugated
Packaging
100.00
Mondi Dorohusk Sp.
z o.o.
ul. Swierkowa 8, 22-174
Brzezno
Production, Corrugated
Packaging
100.00
Mondi Krapkowice
Sp. z o.o.
ul. Opolska 103, 47-300,
Krapkowice
Production, Flexible
Packaging
Mondi Poznań Sp.
z o.o.
Mondi Recykling
Polska Sp. z o.o.
Mondi Simet Sp.
z o.o.
Mondi Solec Sp.
z o.o.
ul. Wyzwolenia 34/36,
62-070 Dopiewo
Production, Flexible
Packaging
ul. Bydgoska 1, 86-100
Świecie
Service, Corrugated
Packaging
Grabonóg 77, 63-820
Piaski
Production, Corrugated
Packaging
100.00
Solec 143, 05-532
Baniocha
Production, Flexible
Packaging
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Mondi Group Integrated report and financial statements 2023
233
Company
Registered office
Principal activities
% of
shares
held by
Group
South Africa
Arctic Sun Trading
17 Proprietary
Limited5
380 Old Howick Road,
Mondi House, Hilton,
3245
Distribution, Uncoated
Fine Paper
66.67
Bongani
Development Close
Corporation
Merebank Mill,
Travencore Drive,
Merebank, 4052
Mondi Forests
Partners Programme
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton,
3245
Mondi Sacherie
Moderne Holdings
Proprietary Limited
Merebank Mill,
Travencore Drive,
Merebank, 4052
Mondi Sahel
Holdings (Pty) Ltd
Mondi South Africa
(Pty) Limited6
Merebank Mill,
Travencore Drive,
Merebank, 4052
Merebank Mill,
Travencore Drive,
Merebank, 4052
Mondi Timber
(Wood Products)
Proprietary Limited
Merebank Mill,
Travencore Drive,
Merebank, 4052
Dormant, Uncoated
Fine Paper
Service, Uncoated
Fine Paper
Holding, Uncoated
Fine Paper
100.00
100.00
100.00
Holding, Corporate
100.00
Production, Corrugated
Packaging, Uncoated
Fine Paper
Holding, Uncoated
Fine Paper
100.00
100.00
100.00
100.00
Mondi Zimele Job
Funds Proprietary
Limited
380 Old Howick Road,
Mondi House, Hilton,
3245
Mondi Zimele
Proprietary Limited
380 Old Howick Road,
Mondi House, Hilton,
3245
Service, Uncoated
Fine Paper
Service, Uncoated
Fine Paper
MZ Technical
Services Proprietary
Limited
Professional Starch
Proprietary Limited
128 Lansdowne Road,
Jacobs, 4052
In liquidation, Uncoated
Fine Paper
56.00
380 Old Howick Road,
Mondi House, Hilton,
3245
In liquidation, Uncoated
Fine Paper
100.00
Siyaqhubeka
Forests Proprietary
Limited
Merebank Mill,
Travencore Drive,
Merebank, 4052
Service, Uncoated
Fine Paper
51.00
Zimshelf Eight
Investment Holdings
Proprietary Limited
4th Floor, No 3 Melrose
Boulevard, Melrose Arch,
2196
In liquidation, Uncoated
Fine Paper
100.00
Spain
Mondi Bags Ibérica
S.L.U.
Autovía A-2, Km 582,
08630 Abrera
Mondi Ibersac S.L.U. Calle La Perenal 4,
Mondi Sales Ibérica
S.L.
48840 Güeñes, Bizcaia
Calle Blasco Garay nº94
5D, 28003 Madrid
Production, Flexible
Packaging
Production, Flexible
Packaging
Distribution, Flexible
Packaging
100.00
100.00
100.00
Company
Registered office
Principal activities
Sweden
Mondi Dynäs AB
87381 Väja
Production, Flexible
Packaging
Mondi Örebro AB
Papersbruksallen 3A,
Box 926, 70130 Örebro
Production, Flexible
Packaging
% of
shares
held by
Group
100.00
100.00
Switzerland
Dipeco AG
Thailand
Mondi Bangkok
Company, Limited
Mondi Coating
(Thailand) Co. Ltd.
Mondi TSP
Company Limited
Türkiye
Doğal Kağıt
Hammaddeleri
Sanayi ve Ticaret
Limited Şirketi
Mondi Istanbul
Ambalaj Limited Şti.
Mondi Kale Nobel
Ambalaj Sanayi Ve
Ticaret A.Ş.
Mondi Turkey Oluklu
Mukavva Kağıt ve
Ambalaj Sanayi
Anonim Şirketi
Ukraine
Mondi Packaging
Bags Ukraine LLC
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
110, Moo 3, Nong
Chumphon Nuea, Khao
Yoi District, Petchaburi
Province, 76140
Esentepe Mahallesi
Harman 1 sk.Nida Kule
Levent Ap. No:7/9/54
Şişli, İstanbul
No. 12A Türkgücü OSB
Mah. Yilmaz Alpaslan
Caddesi Corlu, Tekirdag,
59870
Sevketiye Cobancesme
Kavsagi, A2 Blok, No.
229/230 Yeşilköy,
Bakirköy/Istanbul
Toki Mahallesi, Hasan
Tahsin Caddesi, No. 28,
Tire, Izmir 35900
Production, Flexible
Packaging
100.00
Production, Flexible
Packaging
100.00
Production, Flexible
Packaging
97.55
Service, Corrugated
Packaging
84.65
Production, Flexible
Packaging
100.00
Production, Flexible
Packaging
100.00
Production, Corrugated
Packaging
84.65
Fabrychna Street 20,
Zhydachiv, Lviv Region,
81700
Production, Flexible
Packaging
100.00
Mondi Group Integrated report and financial statements 2023
234
Notes to the Mondi plc parent company financial statements
for the year ended 31 December 2023 continued
11 List of subsidiaries, associated undertakings and other significant holdings continued
Company
Registered office
Principal activities
% of
shares
held by
Group
100.00
Dormant, Flexible
Packaging
Service, Flexible
Packaging
100.00
Distribution, Flexible
Packaging
100.00
Company
Registered office
Principal activities
USA
Mondi Bags USA,
LLC
251 Little Falls Drive,
Wilmington DE 19808
Production, Flexible
Packaging
Mondi Jackson
LLC
251 Little Falls Drive,
Wilmington DE 19808
Production, Flexible
Packaging
Mondi Minneapolis,
Inc.
220 South Sixth Street,
Suite 2200, Minneapolis
55402
Service, Flexible
Packaging
Mondi Romeoville
LLC
251 Little Falls Drive,
Wilmington DE 19808
Production, Flexible
Packaging
Mondi Tekkote
LLC
251 Little Falls Drive,
Wilmington DE 19808
Production, Flexible
Packaging
% of
shares
held by
Group
100.00
100.00
100.00
100.00
100.00
Dormant, Flexible
Packaging
100.00
Mondi U.S.
Holdings LLC
251 Little Falls Drive,
Wilmington DE 19808
Holding, Corporate
100.00
Notes:
1 % of shares held by the Group in 2022: 51%.
2 % of shares held by the Group in 2022: nil.
3 Joint venture accounted for using the equity method.
4 % of shares held by the Group in 2022: 62%.
5 Associate accounted for using the equity method.
6 These companies are held directly.
7 These companies have ordinary and preference shares.
Service, Corporate
100.00
Dormant, Corrugated
Packaging
100.00
Holding, Corporate
100.00
Dormant, Corrugated
Packaging
100.00
Dormant, Corrugated
Packaging
100.00
Dormant, Corrugated
Packaging
100.00
Service, Corporate
100.00
Dormant, Flexible
Packaging
100.00
Service, Corporate
100.00
Dormant, Corrugated
Packaging
100.00
UK
Frantschach
Holdings UK
Limited
Medway Packaging
Pension Trustee
Limited
Mondi Aberdeen
Limited
Mondi Consumer
Goods Packaging
UK Ltd
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
Mondi Finance plc Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13
0NY
Mondi Holcombe
Limited
Mondi Investments
Limited6
Mondi Packaging
(Delta) Limited
Mondi Packaging
Limited
Mondi Packaging
UK Holdings
Limited
Mondi Pension
Trustee Limited6
Mondi Scunthorpe
Limited7
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
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
Mondi Group Integrated report and financial statements 2023
235
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)
Note:
1 The Group has applied hyperinflation accounting for its subsidiaries in Türkiye (see notes 1 and 35).
2023
2022
000 tonnes
000 tonnes
000 tonnes
000 tonnes
000 tonnes
000 tonnes
million m2
million units
million m2
million m2
2,312
1,085
855
3,218
2,741
477
1,880
5,414
1,818
2,667
Average
Closing
2023
19.96
24.00
4.54
0.87
92.47
25.76
1.08
2022
17.21
24.57
4.69
0.85
73.94
17.41
1.05
2023
20.35
24.72
4.34
0.87
100.00
32.65
1.11
2,383
1,309
913
3,566
3,103
463
1,937
5,994
2,039
3,279
2022
18.10
24.12
4.68
0.89
78.43
19.96
1.07
Mondi Group Integrated report and financial statements 2023
236
Group financial record
Financial performance 2014–2023
On 4 May 2022, the Board decided to divest the Group’s Russian assets and 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
(see note 28). Income, expenses and cash flows for the years ended 2021 and thereafter are presented on a continuing basis and exclude
the results from the Russian discontinued operations. Profit and cash flow measures for the years ended 2014 to 2020 include the results
from Russian discontinued operations.
Consolidated income statement
€ million, unless otherwise stated
Group revenue
Underlying EBITDA
Corrugated Packaging
Flexible Packaging
Uncoated Fine Paper
Corporate
Personal Care Components
(divested)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
7,330 8,902 6,974 6,663 7,268 7,481 7,096 6,662 6,819 6,402
1,201 1,848
1,157
1,353
1,658
1,764
1,482
1,366
1,325
1,126
310
662
543
518
583
707
477
408
427
637
797
567
557
589
495
480
419
400
289
427
55
266
444
516
464
481
448
381
353
349
(35)
(39)
(34)
(30)
(34)
(32)
(37)
(34)
(34)
(32)
—
1
26
42
76
78
98
92
84
75
Underlying operating profit
790
1,443
782
925
1,223
1,318
1,029
981
957
767
Special items before tax
Net finance costs (excluding financing
special item)
Underlying earnings
Basic earnings
(27)
242
7
(57)
(16)
(126)
(61)
(38)
(57)
(52)
(73)
(143)
(83)
(95)
(104)
523
949
534
627
829
(88)
916
(85)
721
(101)
(105)
(97)
667
647
502
1,186
543
582
812
824
668
638
600
519
471
Basic underlying EPS (euro cents)
107.8
195.6
110.1
129.3
171.1
189.1 148.9
137.8
133.7
107.3
Basic EPS (euro cents)
Total ordinary dividend per share
paid and proposed (euro cents)1
103.5 244.5
112.0
120.0
167.6
170.1
137.9
131.8
124.0
97.4
70.00 70.00 65.00 60.00 57.03 76.00 62.00 57.00 52.00 42.00
Note:
1 A special dividend of €1.60 per existing ordinary share was paid on 13 February 2024 to return the net proceeds from the sale of the Russian assets to the Group’s
shareholders (see notes 9, 22 and 34 for further details).
Significant ratios
Underlying EBITDA (decline)/growth (%)1
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)
2023
(35.0)
16.4
10.8
12.8
0.3
1.5
16.4
2022
59.7
20.8
16.2
23.7
0.5
2.8
8.1
2021
n/a
16.6
11.2
13.9
1.5
2.4
14.1
2020
(18.4)
20.3
13.9
15.2
1.3
2.2
14.8
2019
(6.0)
22.8
16.8
19.8
1.3
3.0
12.2
2018
19.0
23.6
17.6
23.6
1.3
2.5
9.6
2017
8.5
20.9
14.5
19.3
1.0
2.4
14.6
2016
3.1
20.5
14.7
20.3
1.0
2.4
14.2
2015
17.7
19.4
14.0
20.5
1.1
2.6
13.5
2014
5.4
17.6
12.0
17.2
1.4
2.6
12.6
1,538
1,410
1,826
1,720
1,773
1,634
1,931
1,666
1,334
1,050
363
291
395
343
326
304
319
279
309
190
Market capitalisation (€ million)
8,590 7,738 10,555 9,342 10,165 8,901 10,523 9,457 8,803 6,563
Note:
1 EBITDA change (%) 2021 is not applicable as 2021 EBITDA is presented on a continuing basis while 2020 EBITDA includes the result from Russian discontinued operations.
Mondi Group Integrated report and financial statements 2023
237
Significant cash flows
€ million
Cash generated from continuing
operations
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
1,312
1,292
1,001
1,485
1,635
1,654
1,363
1,401
1,279
1,033
Working capital cash flows
229
(419)
(195)
125
35
(117)
(122)
68
9
(87)
Income tax paid
(178)
(196)
(138)
(168)
(248)
(248)
(151)
(173)
(160)
(106)
Capital expenditure cash payments
(830)
(508)
(481)
(630)
(757)
(709)
(611)
(465)
(595)
(562)
Interest paid
Ordinary dividends paid to
shareholders1
(50)
(60)
(67)
(82)
(96)
(73)
(97)
(82)
(93)
(125)
(345)
(321)
(298)
(237)
(396)
(309)
(273)
(274)
(209)
(193)
Note:
1 A special dividend of €1.60 per existing ordinary share was paid on 13 February 2024 to return the net proceeds from the sale of the Russian assets to the Group’s
shareholders (see notes 9, 22 and 34 for further details).
Consolidated statement of financial position
€ million
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Property, plant and equipment
4,619 4,167 4,870 4,641 4,800 4,340 4,128 3,788 3,554 3,432
Goodwill
765
769
926
923
948
942
698
681
590
545
Working capital
Other assets1
Other liabilities2
Net assets excluding net debt
1,084
1,282
988
739
952
972
899
799
794
811
673 2,034
558
557
620
540
530
532
422
434
(626)
(987)
(690)
(687)
(728)
(749)
(716)
(721)
(675)
(715)
6,515 7,265 6,652 6,173 6,592 6,045 5,539 5,079 4,685 4,507
Equity
5,655 5,794 4,498 4,002 4,015 3,485 3,683 3,392 2,905 2,628
Non-controlling interests in equity
441
460
391
380
370
340
324
304
282
266
Net debt
Capital employed
419
1,011
1,763
1,791 2,207 2,220
1,532
1,383
1,498
1,613
6,515 7,265 6,652 6,173 6,592 6,045 5,539 5,079 4,685 4,507
Notes:
1
Includes assets held for sale of €nil (2022: €1,382 million).
2 Includes liabilities directly associated with assets held for sale of €nil (2022: €325 million).
Mondi Group Integrated report and financial statements 2023
238
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 IFRSs and UK-adopted International Accounting Standards 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 IFRSs measure.
Internally, the Group and its operating segments apply the same APMs in a consistent manner in planning and reporting on performance
to management, the Executive Committee and the Board. Three of the Group’s APMs, underlying EBITDA, basic underlying EPS and
ROCE, link to the Group’s strategy, as described on pages 22-23, and form part of the executive directors' and senior management's
remuneration targets.
The most significant APMs used by the Group are described below, together with a reconciliation to the equivalent IFRSs.
The reconciliations are based on Group figures and represent the continuing operations of the Group, unless otherwise stated.
The reporting segment equivalent APMs are measured in a consistent manner.
Financial
statement
reference
Closest IFRS
equivalent
measure
Note 3
None
APM description and purpose
Special items
Special items are generally material, non-recurring items from continuing operations that exceed
€10 million. The Audit Committee regularly assesses the monetary threshold of €10 million on a net
basis 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.
Examples of special item charges or credits include, but are not limited to, significant restructuring
programmes, impairment of assets or cash-generating units, profits or losses from the disposal of
businesses, and the settlement of significant litigation or claims.
Subsequent adjustments to items previously recognised as special items, including any related credits
received subsequently, continue to be reflected as special items in future periods even if they do not
exceed the quantitative reporting threshold. Subsequent adjustments to items, or charges and credits
on items that are closely related, which previously did not qualify for reporting as special items, continue
to be reported in the underlying result even if the cumulative net charge/credit over the years exceeds
the €10 million quantitative reporting threshold.
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 of the Group's continuing operations
relative to revenue.
APM calculation:
€ million, unless otherwise stated
Underlying EBITDA (see consolidated income statement)
Group revenue (see consolidated income statement)
Underlying EBITDA margin (%)
Underlying operating profit
Operating profit before special items provides a measure of operating performance of the Group's
continuing operations that is comparable from year to year.
None
2022
1,848
8,902
20.8
2023
1,201
7,330
16.4
Consolidated
income
statement
Operating
profit
Mondi Group Integrated report and financial statements 2023
239
APM description and purpose
Underlying operating profit margin
Underlying operating profit expressed as a percentage of Group revenue (segment revenue for
operating segments) provides a measure of the profitability of the Group's continuing 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 (%)
Underlying profit before tax
Profit before tax and special items. Underlying profit before tax provides a measure of the Group’s
continuing operations' profitability before tax that is comparable from year to year.
Effective tax rate
Underlying tax charge expressed as a percentage of underlying profit before tax.
A measure of the tax charge of the Group's continuing operations 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 (%)
Underlying earnings (and per share measure)
Net profit after tax before special items arising from the Group's continuing operations
that is attributable to shareholders.
Underlying 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 continuing operations’ earnings.
Total earnings (prior to special items)
Net profit after tax before special items arising from the Group's continuing and discontinued operations
that is attributable to shareholders.
Total earnings provides a measure of the Group’s earnings.
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 1/2023, ‘Headline Earnings’, as issued by the
South African Institute of Chartered Accountants.
Financial
statement
reference
Closest IFRS
equivalent
measure
None
2022
1,443
8,902
16.2
2023
790
7,330
10.8
Consolidated
income
statement
Profit before
tax
None
2022
296
1,318
22.5
2023
167
709
23.6
Note 8 Profit for the
period
attributable to
shareholders
(and per
share
measure)
Note 8 Profit for the
period
attributable to
shareholders
Note 8 Profit for the
period
attributable to
shareholders
(and per share
measure)
Mondi Group Integrated report and financial statements 2023
240
Alternative Performance Measures continued
APM description and purpose
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 final ordinary dividend per share proposed in respect of the financial year ended 31 December 2023
is based on the new ordinary shares after the share consolidation which took effect on 29 January 2024,
whereas basic underlying EPS, the interim dividend per share paid in respect of the current year and the
comparative information are based on the existing ordinary shares before the share consolidation
(see note 9).
APM calculation:
euro cents, unless otherwise stated
Basic underlying EPS (see note 8)
Total ordinary dividend per share (see note 9)
Dividend cover (times)
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.
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 the Group's
continuing operations for comparability.
APM calculation:
€ million, unless otherwise stated
Underlying operating profit (see consolidated income statement)
Underlying net (loss)/profit from joint ventures (see consolidated income statement)
Underlying profit from operations and joint ventures
Trailing 12-month average capital employed of continuing operations (see note 2)
ROCE (%)
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.
Net debt provides a measure of the Group’s net indebtedness or overall leverage.
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 (see note 27c)
Underlying EBITDA (see consolidated income statement)
Net debt to underlying EBITDA (times)
Financial
statement
reference
Closest IFRS
equivalent
measure
None
2023
107.8
70.0
1.5
2022
195.6
70.0
2.8
Note 20
Total equity
None
2022
1,443
1
1,444
6,097
23.7
2023
790
(5)
785
6,135
12.8
Note 27c
None
None
2022
1,011
1,848
0.5
2023
419
1,201
0.3
Mondi Group Integrated report and financial statements 2023
241
APM description and purpose
Net debt and net debt to underlying EBITDA at 31 December 2023 include the proceeds received
from the disposal of the Group's previously owned Russian operations in 2023 but exclude the special
dividend distributed on 13 February 2024. The Group therefore presents pro-forma net debt
and net debt to underlying EBITDA for 2023 which is calculated as follows:
Financial
statement
reference
Closest IFRS
equivalent
measure
APM calculation:
€ million, unless otherwise stated
Net debt (see note 27c)
Net proceeds on disposal of discontinued operations
Pro-forma net debt
Underlying EBITDA (see consolidated income statement)
Pro-forma 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 continuing
operations' effective use of working capital relative to revenue.
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
Group revenue (see consolidated income statement)
Working capital as a percentage of revenue (%)
Gearing
Net debt expressed as a percentage of capital employed of continuing operations provides a measure
of the financial leverage of the Group's continuing operations.
APM calculation:
€ million, unless otherwise stated
Net debt (see note 27c)
Capital employed of continuing operations
Gearing (%)
2023
419
776
1,195
1,201
1.0
None
2022
1,359
1,448
(1,525)
1,282
8,902
14.4
None
2022
1,011
6,221
16.3
2023
1,049
1,254
(1,219)
1,084
7,330
14.8
2023
419
6,515
6.4
Mondi Group Integrated report and financial statements 2023
242
Additional information for shareholders
The disclosures below form part of the Directors’ report on pages 150-151 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 2023 comprised 485,553,780 ordinary shares of 20 euro cents each (the Ordinary Shares)
representing 100% of the total share capital. As at the date of this Integrated report, the issued share capital comprised 441,412,530
ordinary shares of 22 euro cents each, following implementation of the share consolidation approved by shareholders at the General
Meeting held on 15 January 2024. The share consolidation took effect on 29 January 2024.
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 4 May 2023, authority was
given for Mondi to purchase, in the market, up to 24,277,689 Ordinary Shares. At the General Meeting held on 15 January 2024 to approve the
payment of a special dividend and implementation of an associated share consolidation, this authority was replaced with a new authority allowing
Mondi to purchase, in the market, up to 22,070,626 Ordinary Shares. This authority will expire at the conclusion of the Annual General Meeting
to be held in 2024 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).
Mondi Group Integrated report and financial statements 2023
243
The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in 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 which 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. In addition, a subsidiary of the Company is a party to a significant
agreement (being a supply agreement) entitling the counterparty to terminate such agreement in certain circumstances if there is a
change of control of the Company following a takeover. 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.
Mondi Group Integrated report and financial statements 2023
244
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 2024
May 2024
May 2024
August 2024
September/October 2024
October 2024
2024 Annual General Meeting
Trading update
Payment date for 2023 final dividend
2024 half-year results announcement
2024 interim dividend payment1
Trading update
If one is declared.
1
Please go to www.mondigroup.com for the most up-to-date calendar.
Analysis of shareholders
As at 31 December 2023, Mondi plc had 485,553,780 ordinary shares in issue, of which 220,945,651 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
1,687
345
453
411
282
46
3,224
52.32
10.70
14.05
12.75
8.75
1.43
100.00
1–500
501–1,000
1,001–5,000
5,001–50,000
50,001–1,000,000
1,000,001–highest
330,642
249,156
1,084,043
7,947,060
71,052,992
404,889,887
485,553,780
0.07
0.05
0.22
1.64
14.63
83.39
100.00
Managing your shares
Registrars
To manage your shares or if you have any queries, please contact the relevant Registrar:
Registrar
Postal address
Helpline number
Email
Online
Shares held on the UK register
Equiniti Limited
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))
customer@equiniti.com
Shares held on the South African branch register
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
www.shareview.co.uk
Not available
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 its 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.
Mondi Group Integrated report and financial statements 2023
245
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; and
– 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 the
shareholder experience. ShareHub allows you to access your dividend payment confirmations in real time and enables 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 2023 of 46.67 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 3 May 2024.
Last date to trade shares cum-dividend
JSE Limited
London Stock Exchange
Shares commence trading ex-dividend
JSE Limited
London Stock Exchange
Record date
Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by Central Securities Depository
Participants
Last date for DRIP elections to South African Transfer Secretaries by shareholders
Last date for DRIP elections to UK Registrar by shareholders
Annual General Meeting
Payment date
DRIP purchase settlement dates (subject to the purchase of shares in the open market):
UK Register
South African Register
Currency conversion dates
ZAR/euro
Euro/sterling
Tuesday 2 April
Wednesday 3 April
Wednesday 3 April
Thursday 4 April
Friday 5 April
Thursday 11 April
Friday 12 April
Friday 19 April
Friday 3 May
Tuesday 14 May
Thursday 16 May
Monday 20 May
Thursday 22 February
Tuesday 23 April
Mondi Group Integrated report and financial statements 2023
246
Shareholder information continued
Dividends continued
Share certificates on Mondi plc’s South African register may not be dematerialised or rematerialised between Wednesday 3 April 2024
and Friday 5 April 2024, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place
between Wednesday 27 March 2024 and Friday 5 April 2024, 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.
Mondi Group Integrated report and financial statements 2023
247
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 and 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
Helpline number
ShareGift
PO Box 72253
London
SW1P 9LQ
UK
+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 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
Mondi Group Integrated report and financial statements 2023
248
About this report
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 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.
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, Eurosac, Freedonia, Alexander Watson Associates, PCI Wood Mackenzie, EMGE, EURO-GRAPH, and Pulp and Paper Products Council.
OUR REPORTING SUITE
Integrated report
Our Integrated report provides a clear, consistent and
comprehensive overview of our financial and non-financial
performance against our strategy, sustainable development
commitments, policies and governance framework.
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.
Integrated Report 2023
www.mondigroup.com/ir23
Sustainable Development Report 2023
www.mondigroup.com/sd23
GRI & SASB Index
The report has been produced in accordance with the GRI
Universal Standards and the SASB Containers & Packaging
Industry Standard.
Consolidated Performance data
A comprehensive data file is available in excel or pdf for
download, which shows our sustainability key performance
indicators in line with MAP2030 for the period 2019 to 2023
(unless otherwise indicated).
Stakeholder Engagement Index
This index provides detailed information about our
stakeholder engagement, including why we engage
different groups, how we engage with them, what topics
we engage on and the action we have taken.
Sustainable Development Goals Index
This index maps the UN Sustainable Development Goals
(SDGs) and their respective targets against the contents
of the Sustainable Development report, where further
information about our contribution can be found.
GRI Biodiversity disclosures
We provide a separate GRI biodiversity disclosure document.
Reports and publications
www.mondigroup.com/investors/results-reports-and-
presentations
Mondi Group
Ground Floor, Building 5,
The Heights, Brooklands,
Weybridge, Surrey, KT13 0NY,
United Kingdom
+44 1932 826 300
www.mondigroup.com
Printed on certified Mondi PERGRAPHICA® Classic Rough in 300gsm,
120gsm and 90gsm
Design and production: Design Portfolio | www.design-portfolio.co.uk
Printing: Park Communications | www.parkcom.co.uk