Mondi plc
(Incorporated in England and
Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
LSE share code: MNDI ISIN:
GB00B1CRLC47
JSE share code: MNP
23 February 2023
Full year results for the year ended
31 December 2022
"Strong performance in 2022;
delivering our strategy"
Mondi, a global leader in sustainable packaging and paper, today
announces its results for the 12 months to
31 December 2022. Performance from the Group's continuing
operations exclude its Russian operations.
Highlights
- Strong financial performance from continuing operations
- Underlying EBITDA of €1,848 million, up 60% (2021: €1,157
million), with underlying EBITDA margin of 20.8% (2021: 16.6%)
- Profit before tax of €1,560 million, up 119% (2021: €712
million)
- Basic underlying earnings per share of 195.6 euro cents, up 78% (2021: 110.1 euro cents per share)
- Cash generated from operations of €1,292 million, up 29% (2021:
€1,001 million); strong balance sheet with leverage (net debt to
underlying EBITDA) of 0.5 times
- Return on capital employed (ROCE) of 23.7% (2021: 13.9%)
- €1 billion expansionary capital investment pipeline on track
to deliver growth across our packaging businesses
- Good progress made on our sustainability roadmap, Mondi
Action Plan 2030 (MAP2030)
- Science-based Net-Zero targets validated
- Completed sale of the Personal Care Components
business
- Agreed sale of Russian assets, with regulatory approval
process ongoing
- Recommended full year dividend of 70.0 euro cents per share, up 8% (2021:
65.0 euro cents
per share)
- Our unique platform, cash generation and strong balance
sheet positions us to meet growing customer demand for sustainable
packaging and invest to strengthen our leading market positions, in
line with our strategy to deliver sustainable value accretive
growth.
Financial summary1,2
€ million,
except for percentages and per share measures |
Year
ended 31 December 2022 |
Year
ended 31 December 2021 |
Change
% |
Six
months ended 31 December 2022 |
Six
months ended 31 December 2021 |
Change
% |
From
continuing operations
(excluding Russian operations) |
|
|
|
|
|
|
Group revenue |
8,902 |
6,974 |
28 |
4,397 |
3,691 |
19 |
Underlying
EBITDA1 |
1,848 |
1,157 |
60 |
906 |
591 |
53 |
Underlying operating
profit1 |
1,443 |
782 |
85 |
695 |
397 |
75 |
Operating profit |
1,685 |
789 |
114 |
691 |
398 |
74 |
Profit before tax |
1,560 |
712 |
119 |
627 |
358 |
75 |
|
|
|
|
|
|
|
Basic underlying
earnings per share1 (euro cents) |
195.6 |
110.1 |
78 |
|
|
|
Basic earnings per
share (euro cents) |
244.5 |
112.0 |
118 |
|
|
|
|
|
|
|
|
|
|
Total dividend per
share (euro cents) |
70.0 |
65.0 |
8 |
|
|
|
|
|
|
|
|
|
|
Cash generated from
operations |
1,292 |
1,001 |
29 |
|
|
|
Net
debt1 |
1,011 |
1,689 |
|
|
|
|
|
|
|
|
|
|
|
Underlying EBITDA
margin1 |
20.8% |
16.6% |
|
|
|
|
Return on capital
employed (ROCE)1 |
23.7% |
13.9% |
|
|
|
|
|
|
|
|
|
|
|
From continuing and
discontinued operations (including Russian operations) |
|
|
|
|
|
|
Total EBITDA (prior to
special items)1 |
2,338 |
1,503 |
56 |
|
|
|
Basic total earnings
per share (prior to special items)1 (euro cents) |
250.4 |
154.0 |
63 |
|
|
|
Return on capital
employed (ROCE)1 |
26.0% |
16.9% |
|
|
|
|
Notes:
1 The Group presents certain
measures of financial performance, position or cash flows that are
not defined or specified according to International Financial
Reporting Standards (IFRS). These measures, referred to as
Alternative Performance Measures (APMs), are defined at the end of
this document and where relevant, reconciled to IFRS measures in
the notes to the condensed consolidated financial statements.
2 The Group's operations in
Russia have been classified as
discontinued operations and reported as held for sale. The measures
presented based on continuing operations therefore exclude the
Group's Russian operations. Refer to note 15 in the condensed
consolidated financial statements for further information.
Andrew
King, Mondi Group Chief Executive Officer, said:
"Mondi delivered a strong performance across the business in
2022. Underlying EBITDA from continuing operations of €1,848
million was up 60% as we continue to successfully partner with our
customers to deliver innovative and sustainable packaging and paper
solutions. Our integrated business model and strong operational
performance enabled us to manage inflationary pressures and expand
margins through price increases.
My sincere thanks go to all our
colleagues for their excellent delivery and continued
professionalism, agility and commitment in what has been a year
impacted by significant external challenges.
Cash generated from continuing operations of €1,292
million, up 29% on 2021, led to a further strengthened balance
sheet, ending the year with leverage of 0.5 times. This gives us
the strength and strategic flexibility to continue to invest
through the cycle, in turn reflecting our confidence in the
long-term growth of the markets in which we operate and our leading
positions within them.
We continue to accelerate our growth
ambitions, making good progress with our significant expansionary
capital investment pipeline. Projects focus on expanding capacity
to serve growing markets, productivity improvements, enhancing cost
competitiveness and delivering sustainability benefits.
Particularly pleasing is the strong
growth we are seeing in our market-leading Flexible Packaging
business. Our innovative product offering means we can use paper
where possible and plastic when useful to provide customers with a
uniquely broad choice of flexible packaging solutions to meet their
needs.
We are widely recognised as a leader
in sustainability including maintaining our AAA rating from MSCI,
being recognised in CDP’s A List for leading practices in forestry
and water security, and among the top 10 ranked companies globally
in the World Benchmarking Alliance’s inaugural nature benchmark. We
continue to make good progress across our Mondi Action Plan 2030
(MAP2030) sustainability framework. We are developing
fit-for-purpose solutions, set apart by our broad product offering
and innovative capabilities, as we work towards making all our
packaging and paper solutions reusable, recyclable or compostable
by 2025. We have accelerated our climate ambition, being among the
first packaging and paper companies to have Net-Zero targets
validated by the Science Based Targets initiative. Engaging,
developing and safeguarding our people continues to be a priority
as we look to build skills and promote a diverse and inclusive work
culture, while ensuring everyone returns home safely every day.
With our strong financial position and confidence in the
future of the business, the Board has recommended an increase in
the final dividend to 48.33
euro cents per share. This represents a total dividend of
70.00 euro cents per share, an
increase of 8% over last year."
Outlook
As we enter 2023, significant geopolitical and macro-economic
uncertainties remain. Whilst a number of input costs are starting
to decline, we continue to see an environment of softer demand and
pricing, with destocking expected to continue through the first
quarter. Notwithstanding these challenges, we remain confident of
our compelling product portfolio and resilient business model. Our
cash generation and strong balance sheet provide strategic
flexibility, enabling us to meet growing customer demand for
sustainable products and continue to invest to strengthen our
leading market positions. We remain well positioned to deliver
attractive returns and sustainable value accretive growth.
Performance review (continuing
operations)
Mondi delivered a strong financial and operational performance
across all key metrics. Underlying EBITDA was €1,848 million, up
60%, and ROCE increased to 23.7%. Our businesses achieved higher
average selling prices which more than offset materially higher
input costs. Corrugated Packaging increased underlying EBITDA by
22% to €662 million (2021: €543 million) and Flexible Packaging
grew underlying EBITDA 41% to €797 million (2021: €567 million).
Uncoated Fine Paper significantly improved underlying EBITDA,
delivering €427 million in the year (2021: €55 million), in part
due to a higher non-cash forestry fair value gain of €169 million
(2021: loss of €7 million).
Group revenue of €8,902 million was up 28% on the prior year. We
saw volume growth in containerboard, kraft paper and pulp sales
following continued investment across our portfolio, with lower
volumes in corrugated solutions and uncoated fine paper. Selling
price increases were achieved in all businesses in response to
tight market conditions and inflationary pressures.
Input costs increased materially year-on-year. Energy costs
increased sharply during the year, driven predominantly by higher
European gas and electricity prices. We were able to mitigate the
impact of these higher costs as most of our pulp and paper mills
generate the majority of their energy needs internally, with around
80% of the fuels used in this process from biomass sources, and
only around 10% of our fuel sourced from natural gas. Following
record European energy prices in the third quarter of 2022, these
fell sharply in the fourth quarter but were, on average,
sequentially higher in the second half of the year. European energy
prices are currently lower than 2022 averages.
Wood costs in central and eastern Europe were also materially higher on the
comparable prior year period. Increasing demand for firewood as an
alternative energy source to fossil fuels, coupled with reduced
supply due to less calamity wood on the market and the impact of
sanctions on the availability of Russian and Belarusian timber
contributed to the market tightness impacting both cost and
availability. Wood prices remain at elevated levels but are
expected to soften as the year progresses.
Fixed costs, excluding a higher non-cash forestry fair value
gain of €169 million (2021: loss of €7 million), were well
controlled although increased year-on-year. The impact of planned
maintenance shuts on underlying EBITDA in 2022 was around €90
million (2021: €140 million), which is lower than prior
year due to the prolonged project-related shut at Richards Bay
(South Africa) in the fourth
quarter of 2021. Based on prevailing market conditions, we estimate
that the impact of planned maintenance shuts in 2023 will be
similar to 2022.
Currency movements had a net positive impact on underlying
EBITDA of around €90 million versus the prior year, due to the
effect of the stronger US dollar relative to the euro on our
export-oriented businesses.
Depreciation, amortisation and impairment underlying charges of
€405 million (2021: €375 million) were higher year-on-year mainly
due to our capital investment programme.
Underlying operating profit of €1,443 million was up 85% on
2021. After special items, relating to the gain on disposal of the
Personal Care Components business, operating profit was €1,685
million, up 114%.
Basic earnings per share of 244.5
euro cents were up 118% compared to 2021.
Investing for future growth
Our capital investment programme is focused on meeting our
customers’ growing demand for sustainable packaging and paper
solutions. Our investments enhance our product offering, quality
and service to customers; strengthen our cost competitiveness;
improve our environmental footprint; and deliver growth. We seek to
invest through the cycle given our confidence in the long-term
growth of the markets we operate in and our leading positions
within them.
We continue to make good progress in executing on our previously
announced €1 billion pipeline of expansionary capital projects.
These investments, which are outlined below, are diversified across
the value chain and also in terms of product and geography.
In Corrugated Packaging, we are investing €220 million in our
pulp and paper mills. This comprises €125 million in our Kuopio
(Finland) mill which will increase
semi-chemical fluting capacity by around 55,000 tonnes, enhance
product quality, drive cost competitiveness and strengthen the
mill’s environmental performance. Start-up is expected in the
fourth quarter of 2023. We are also investing €95 million to
debottleneck kraftliner production by 55,000 tonnes at our state of
the art Swiecie mill (Poland),
with commissioning expected during 2024.
In our Corrugated Solutions' converting operations, we are
investing €185 million across our central and eastern European
plant network to strengthen our leading market positions, support
growth in eCommerce and enhance our product and service
offering.
In Flexible Packaging, we have approved a €400 million
investment in a new 210,000 tonne per annum kraft paper machine at
our flagship Steti mill (Czech
Republic). This machine will meet the growing demand for
sustainable paper-based flexible packaging and help us to better
serve our customers, as well as improve productivity and energy
efficiency. Start-up is expected in 2025 with full production
ramp-up by 2027.
We are also investing €190 million across our Flexible Packaging
converting network. In Paper Bags, we are continuing to expand the
global reach of our business, ramping up production at our
Cartagena (Colombia) and new Tangier (Morocco) plants, upgrading the capabilities in
our Mexican plants and expanding our capacity in paper-based
flexible packaging solutions for eCommerce across Europe and the US. We are investing €65
million to consolidate our leading position in the European pet
food packaging market and plan to invest €50 million to enhance our
coating capabilities and meet our customers' growing demand for
innovative, sustainable paper-based packaging with the necessary
barrier properties.
Adding to this pipeline of capital investment projects, in
January 2023 we completed the
acquisition of the Duino mill near Trieste (Italy) for a total consideration of €40
million. We plan to convert the existing paper machine into a
high-quality, cost-competitive recycled containerboard machine with
an annual capacity of around 420,000 tonnes for an estimated
capital investment cost of €200 million. The mill is ideally
located to source paper for recycling, supply the Group’s
Corrugated Solutions plants in central Europe and Turkiye as well as to serve the
growing local Italian market. The converted machine is expected to
start-up in 2025.
We continue to actively evaluate further growth opportunities in
the packaging markets in which we operate, leveraging the
structural growth drivers, our leading market positions and
high-quality, cost-advantaged asset base.
Mondi Action Plan 2030 (MAP2030)
Our MAP2030 sustainability framework is built on our purpose of
contributing to a better world by making innovative packaging and
paper products that are sustainable by design. It focuses on three
action areas: circular driven solutions, created by empowered
people and taking action on climate. These are supported by a set
of responsible business practices covering environmental
performance, human rights, communities and procurement.
Our targets are ambitious, but we continue to make good progress
with sustainability firmly embedded across the organisation and,
thanks to our determination and philosophy of working with others
across the value chain, to drive positive change at scale.
Circular driven solutions
Packaging plays a vital role in getting products safely from
where they are produced to where they are needed. We make it
possible to do this in the most efficient way while preventing loss
or damage and minimising environmental impacts. For our business,
it means making packaging that is fit-for-purpose and contributes
to a circular economy. This helps us to play our part in tackling
some of the world’s biggest sustainability challenges - from food
loss to plastic pollution, nature loss and climate change - by
delivering packaging solutions that are designed at the outset with
sustainability in mind. In 2022, 82% of our revenue was from
packaging and paper products that are reusable, recyclable or
compostable (2021: 77%).
Our innovation efforts are widely recognised, including eight
2023 WorldStar Packaging Awards which celebrate the best ideas,
innovations and technologies on the market, with a focus on
sustainability, product protection and end-user convenience.
We continue to collaborate across our business to identify
opportunities to achieve our long-term aspirational target of
eliminating waste to landfill from our manufacturing processes and
have successfully reduced our absolute waste to landfill by 4%
compared to the 2020 baseline.
Empowered people
Our goal is to be an employer of choice by engaging and
developing our people to realise their potential and contribute to
Mondi's ongoing success. By inspiring our global workforce,
building skills and promoting a diverse and inclusive work culture,
we can support long-term employability and provide purposeful
employment. We also want to create a positive work-life experience
that helps us to attract and retain talent, and safeguard the
physical and mental wellbeing of our employees.
The safety and health of our people always comes first. We embed
clearly defined methodologies, procedures and robust controls
across our operations and production processes. Our safety approach
centres on a 24-hour safety mindset and managing our top risks. We
regretfully experienced one fatality at our Frantschach mill
(Austria) in the year and two
life-altering injuries at our operations. All incidents are
investigated and actions taken where necessary to prevent
recurrence. As part of our MAP2030 commitments, we are committed to
reduce our Total Recordable Case Rate (TRCR) by 15% against a 2020
baseline, along with targets for zero fatalities and life-altering
injuries. In 2022, our TRCR was 0.63, representing an 8%
improvement on our 2020 baseline.
Taking action on climate
We have a longstanding focus on climate action and are committed
to play our part in the transition to a low-carbon, circular
economy. Following the Group’s commitment to transition to Net-Zero
by 2050, we were among the first companies in the packaging and
paper sector to have our Net-Zero targets validated by the Science
Based Targets initiative. These science-based targets cover
greenhouse gas (GHG) emissions from our operations and supply chain
(Scopes 1, 2 and 3) and are consistent with a reduction required to
keep global warming to 1.5°C.
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. Our long-term target is to reduce
absolute Scope 1, 2 and 3 GHG emissions by 90% by 2050.
We continue to reduce our absolute Scope 1 and 2 GHG emissions,
achieving a 17% reduction in 2022 against our 2019 baseline.
Reducing our GHG emissions has been a longstanding focus for us.
Since 2004, our first baseline year for emission reduction targets,
we have reduced our Scope 1 and 2 GHG emissions by 3 million
tonnes, equating to a 44% reduction. The contribution of
biomass-based renewable energy to the total fuel consumption of our
mills is currently 80%, made possible through consistent capital
investment across our mill network, making us more energy efficient
and less reliant on fossil fuels.
Nature-based solutions play an important role in climate change
mitigation. As part of our MAP2030 framework, we will 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. In
2022, 100% of our fibre was responsibly sourced, with 75% FSC or
PEFC certified and the remainder meeting the FSC Controlled Wood
standard.
Dividend
We have a disciplined capital allocation policy ensuring we can
invest in the business through the cycle for long-term growth and
deliver attractive returns, while supporting the ordinary dividend
within a targeted dividend cover range of two to three times over
the cycle.
With our strong financial position and confidence in the future
of the business, the Board has recommended an increase in the final
2022 dividend to 48.33 euro cents
per share. The final dividend, together with the interim
dividend, amount to a total dividend for the year of
70.00 euro cents per share, an increase of 8% on the 2021
total dividend.
The final dividend is subject to the approval of the
shareholders of Mondi plc at the Annual General Meeting scheduled
for 4 May 2023 and, if approved, is
payable on 12 May 2023 to
shareholders on the register on 31 March
2023.
Corrugated Packaging (continuing
operations)
Mondi is a leading corrugated
packaging player, with a well-invested, cost competitive asset
base. Our mills are largely energy self-sufficient, and our
production processes integrated, which keeps costs low and provides
us with a competitive advantage. We are the leading virgin
containerboard producer in Europe
and the largest containerboard producer in emerging Europe. We are also a leading corrugated
solutions producer across our central and emerging European
network, partnering with our customers to create innovative, fully
recyclable corrugated packaging that is sustainable by design.
€ million |
Year
ended 31 December 2022 |
Year
ended 31 December 2021 |
Change
% |
Six
months ended 31 December 2022 |
Six
months ended 31 December 2021 |
Change
% |
Segment revenue |
2,991 |
2,349 |
27 |
1,427 |
1,312 |
9 |
Underlying EBITDA |
662 |
543 |
22 |
287 |
325 |
(12) |
Underlying EBITDA
margin |
22.1% |
23.1% |
|
20.1% |
24.8% |
|
Underlying operating
profit |
522 |
426 |
23 |
214 |
262 |
(18) |
Capital expenditure
cash payments |
212 |
189 |
|
126 |
100 |
|
Capital employed |
2,162 |
1,907 |
|
|
|
|
ROCE |
25.3% |
24.3% |
|
|
|
|
Corrugated Packaging delivered strongly in the year driven by
significantly higher average selling prices which more than offset
materially higher input costs. We grew underlying EBITDA in the
first half of the year by implementing selling price increases to
compensate for rising costs. In the second half, continued
inflationary cost pressures, alongside softer demand, led to
downward pressure on margins, although still at good levels.
Containerboard sales volumes were marginally up on the prior
year supported by our broad, high-quality product portfolio, sharp
focus on customer service and investment in the business. In
Corrugated Solutions, industry demand was softer compared to the
strong volume growth delivered in the prior year. Our box volumes
were down 3% on the prior year.
We implemented price increases across all containerboard grades
during 2022, leading to significantly higher average selling prices
year-on-year, with the magnitude of the increases varying by grade.
Average benchmark European selling prices for unbleached kraftliner
and recycled containerboard were up around 30% while average
benchmark white top kraftliner and semi-chemical fluting prices,
which are typically more stable over time, were up around 20%. On
the back of reduced cost support and destocking, containerboard
prices declined towards the end of the year and are today lower
than 2022 averages.
Corrugated Solutions was successful in passing on higher input
paper and other costs through box price increases over the course
of the year.
With the exception of paper for recycling, input costs were
significantly higher year-on-year, in particular energy, wood,
transport and chemical costs. Average benchmark European paper for
recycling prices were flat on 2021 averages with prices higher in
the first half offset by declines in the second half. We mitigated
the impact of higher European energy costs on our business by
leveraging our broad geographic footprint, integration and
high-level of energy self-generation. Wood costs remain elevated
while we are currently seeing softer input costs across most other
categories. Fixed costs were well managed although increased due to
inflationary effects.
We remain confident in our expansionary investment pipeline,
encompassing both our containerboard and corrugated solutions
network, together with our plans to convert the paper machine at
the recently acquired Duino mill in Italy. These projects will leverage our
integrated platform and deliver volume growth, enhance our product
and service offering, drive cost competitiveness and strengthen our
environmental performance.
Flexible Packaging (continuing
operations)
Mondi is uniquely positioned to
support our customers’ packaging requirements including moisture
resistant barriers, strength, durability, flexibility and
recyclable properties using paper where possible and plastic when
useful. Our broad range of products allows us to look holistically
to find the optimal, fit-for-purpose solution for our customers. We
are a leading global producer of kraft paper and paper bag
production with our customers coming to us for scale, security of
supply and global reach. We are also a leading producer of consumer
flexible packaging in Europe and
we have extensive coating capabilities that add functional barriers
to paper solutions that can be recycled. The growth of Flexible
Packaging is underpinned by the demand for sustainable packaging
solutions primarily for consumer and eCommerce applications.
€ million |
Year
ended 31 December 2022 |
Year
ended 31 December 2021 |
Change
% |
Six
months ended 31 December 2022 |
Six
months ended 31 December 2021 |
Change
% |
Segment revenue |
4,299 |
3,292 |
31 |
2,217 |
1,698 |
31 |
Underlying EBITDA |
797 |
567 |
41 |
381 |
272 |
40 |
Underlying EBITDA
margin |
18.5% |
17.2% |
|
17.2
% |
16.0% |
|
Underlying operating
profit |
608 |
399 |
52 |
280 |
187 |
50 |
Special items before
tax |
— |
7 |
|
— |
2 |
|
Capital expenditure
cash payments |
223 |
182 |
|
138 |
84 |
|
Capital employed |
3,035 |
2,745 |
|
|
|
|
ROCE |
20.9% |
15.2% |
|
|
|
|
Flexible Packaging achieved volume growth and successfully
implemented price increases to recover significantly higher input
costs.
Volume growth was supported by our innovative and sustainable
packaging portfolio. Kraft paper sales volumes were up 4% on the
prior year, benefiting from the increasing demand from customers
for sustainable paper-based flexible packaging and recently
completed capital investments. Paper bags and consumer flexibles'
volumes were stable supported by resilient customer demand. Our
Functional Paper and Films business continues to leverage its
coating capabilities to integrate barrier properties into
paper-based solutions.
We continue to see good demand from customers across our broad
range of sustainable packaging solutions, as we leverage our unique
product portfolio and in-depth technical expertise to drive product
development initiatives with our customers in support of a circular
economy.
Prices in the kraft paper value chain increased significantly in
the first half and into the third quarter, and stabilised
thereafter. Following demand growth in the first half of 2022 and
industry supply disruptions, which supported meaningful price
increases, slowing economic activity and destocking, particularly
in Europe, dampened demand in the
second half and into the first quarter of 2023.
In our converting operations, we were successful in achieving
price increases during the year to pass through the higher input
costs, supported by our broad product offering and pricing
discipline.
Input costs were materially up year-on-year, with higher wood,
energy, plastic resin, chemical and transport costs. Moving into
2023, input costs are generally softer except for wood costs which
remain elevated. Fixed costs were well controlled although
increased due to higher maintenance costs, additional personnel to
serve growing customer demand, and inflationary effects.
We continue to invest across our platform. We approved the
investment in a new kraft paper machine at Steti (Czech Republic) which will meet the growing
demand for sustainable paper-based flexible packaging. In addition,
our investments in our converting operations are diversified across
our global network and will drive organic growth underpinned by the
structural growth drivers in our markets.
Uncoated Fine Paper (continuing
operations)
We produce home, office and
professional printing papers at our mills in central and eastern
Europe and Southern Africa. By leveraging our leading
market positions in these regions, supported by our cost
competitive assets, we remain the supplier of choice to our
customers. Our integrated mills, which produce pulp and paper,
generate significant energy from biomass, a renewable by-product
from the pulp manufacturing process, which keeps costs low and
provides significant environmental benefits.
€ million |
Year
ended 31 December 2022 |
Year
ended 31 December 2021 |
Change
% |
Six
months ended 31 December 2022 |
Six
months ended 31 December 2021 |
Change
% |
Segment revenue |
1,613 |
1,194 |
35 |
820 |
604 |
36 |
Underlying EBITDA |
427 |
55 |
676 |
256 |
(3) |
— |
Underlying EBITDA
margin |
26.5% |
4.6% |
|
31.2% |
(0.5%) |
|
Underlying operating
profit |
355 |
(17) |
— |
220 |
(39) |
— |
Capital expenditure
cash payments |
64 |
85 |
|
26 |
47 |
|
Capital employed |
1,091 |
965 |
|
|
|
|
ROCE |
34.7% |
(1.7%) |
|
|
|
|
Uncoated Fine Paper successfully implemented price increases
which more than offset materially higher input costs. We recorded a
higher non-cash forestry fair value gain and benefited from shorter
planned project-related maintenance shuts. Our business remains
well placed, continuing to benefit from our cost competitiveness,
broad product portfolio and excellent customer service.
Uncoated fine paper sales volumes were lower in the year due to
softening European demand towards the end of the year, temporary
tightness in European wood availability and the impact from
flooding in Durban (South Africa) which affected production at the
Merebank mill for most of the second quarter. Pulp sales volumes
were up in the year following the start-up of the rebuilt recovery
boiler at Richards Bay (South
Africa) in the first quarter and successful ramp-up during
the year.
On the back of increasing costs, we implemented price increases
during the year. Average benchmark European uncoated fine paper
selling prices and average benchmark European bleached hardwood
pulp prices were both up more than 40% year-on-year. While Southern
African uncoated fine paper prices have remained broadly flat in
early 2023, European uncoated fine paper and pulp prices have come
under downward pressure.
Input costs were up with significantly higher energy, wood and
chemical costs. While wood prices remain elevated, most other input
costs are declining as we enter 2023. Fixed costs were stable, with
strong cost control and shorter maintenance shuts mitigating
inflationary cost pressures.
We recorded a higher non-cash forestry fair value gain in the
year of €169 million (2021: loss of €7 million) reflecting
materially higher market prices for timber.
Special items
Special items (before tax) amounted to a net income of €242
million as a result of the gain on disposal of the Personal Care
Components business.
Tax
The underlying tax charge from continuing operations for the
year was €296 million (2021: €154 million) giving an effective tax
rate of 22% (2021: 22%), in line with our expectation.
Cash flow
Cash generated from continuing operations was €1,292 million
(2021: €1,001 million), reflecting the Group's continued strong
cash generating capability. Working capital at 31 December 2022 was 14% (2021: 14%) of revenue,
giving rise to an investment in working capital of €419 million for
the year (2021: €195 million).
Capital expenditure was €508 million (2021:
€481 million) as we continue to pursue value accretive growth
by investing in our asset base. On the back of our investment
programme, our capital expenditure in 2023 and 2024 is expected to
be around €800-850 million per annum.
We also completed the disposal of the Personal Care Components
business for an enterprise value of €615 million.
Tax paid was €196 million (2021: €138 million) and interest
paid, including derivative interest, was €127 million (2021: €78
million). We are pleased to have paid dividends to shareholders of
€321 million (2021: €298 million) in the year.
Treasury and borrowings
Mondi retains a strong financial position. Continuing
operations' net debt at 31 December 2022 was €1,011 million,
reduced from €1,689 million at 31 December
2021, reflecting the Group's strong cash generation and
proceeds from the disposal of the Personal Care Components
business. Net debt to underlying EBITDA ended the year at 0.5 times
(31 December 2021: 1.5 times).
At 31 December 2022, Mondi had a strong liquidity position
of €1,818 million, comprising €757 million of undrawn committed
debt facilities and cash and cash equivalents held by continuing
operations of €1,061 million. The weighted average maturity of our
committed debt facilities was 3.8 years. The Group's financing
agreements do not contain financial covenants.
As expected, net finance costs of €143 million were higher than
the prior year driven by higher interest rates, in particular in
the Czech Republic, Poland and South
Africa, and currency mix effects.
The Group's investment grade credit ratings were unchanged with
Standard & Poor’s at BBB+ (stable outlook) and Moody’s
Investors Service at Baa1 (stable outlook).
Russian operations (discontinued
operations)
Divestiture of Russian operations
In May 2022, the Board decided to
divest the Group’s Russian assets. Given progress with the
divestment process, the Board subsequently concluded, in
June 2022, that the Russian
operations satisfied the criteria to be classified as held for sale
and that they should also be classified as discontinued
operations.
In August 2022, the Group entered
into an agreement to sell its most significant facility in
Russia, Joint Stock Company Mondi
Syktyvkar, together with two affiliated entities (together
'Syktyvkar') to Augment Investments Limited for a consideration of
RUB 95 billion (€1.2 billion, at an
exchange rate of 78.43 Russian rouble versus euro as at
31 December 2022), payable in cash on
completion. The disposal excludes a cash balance of RUB 16 billion (€204 million, at an exchange rate
of 78.43 Russian rouble versus euro as at 31
December 2022) which is planned to be distributed by form of
dividend to Mondi before completion. Remittance of this dividend
requires the approval of the Ministry of Finance of the
Russian Federation. The agreement
with Augment Investments Limited has a long stop date of
12 May 2023 after which either party
can terminate the agreement without recourse.
In addition, in December 2022, the
Group confirmed it had entered into an agreement to sell its three
Russian packaging converting operations to the Gotek Group for a
consideration of RUB 1.6 billion (€20
million, at an exchange rate of 78.43 Russian rouble versus euro as
at 31 December 2022), payable in cash
on completion.
The disposals are conditional on the buyers' receiving approval
from the Russian Federation’s Government Sub-Commission for the
Control of Foreign Investments and customary antitrust approvals.
The Syktyvkar disposal is also subject to the approval of Mondi’s
shareholders at a General Meeting. These approval processes remain
ongoing. As the disposals are being undertaken in an evolving
political and regulatory environment, there can be no certainty as
to when they will be completed.
As previously announced, it is intended that the net proceeds
from the disposals and the above mentioned dividend will be
distributed to Mondi’s shareholders as soon as reasonably
practicable following receipt.
Refer to note 15 in the condensed consolidated financial
statements for further information on the divestiture of Russian
operations.
Trading review
The Russian operations generated a profit after tax of €266
million for the year (2021: €213 million).
The operations benefited from higher selling prices which
mitigated the impact of higher input costs and inflationary
impacts. Sales volumes were lower driven predominantly by the
cessation of containerboard exports to Europe which were partly redirected to the
local market.
As previously announced, all significant capital expenditure
projects at the Group's Russian operations were suspended.
Principal risks
The Board is responsible for the effectiveness of the Group's
risk management activities and internal control processes. It has
put procedures in place for identifying, evaluating, and managing
the risks faced by the Group. In combination with the Audit
Committee, the Board has conducted a robust assessment of the
Group’s principal and emerging risks and is satisfied that the
Group has effective systems and controls in place to manage these
risks within the risk appetite levels established.
Risk management is by its nature a dynamic and ongoing process.
Risk management is of key importance given the diversity of the
Group’s locations, markets and production processes. Our internal
controls aim to provide reasonable assurance as to the accuracy,
reliability and integrity of our financial information,
non-financial disclosures and the Group's compliance with
applicable laws, regulations and internal policies as well as the
effectiveness of internal processes.
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 emerging risks.
During the year, we improved our internal risk management
processes. A revised risk assessment approach was used to update
our principal risks, providing further detail and clearer
articulation of risk within the Group. An enhanced risk assurance
map was developed and used to present our principal risks to the
Board, Audit Committee and Sustainable Development Committee,
facilitating detailed discussions on risk. The Group remains
committed to the continuous improvement of risk assessment, risk
management and risk reporting.
The key significant changes identified during 2022 are set out
below.
During the year, the risk to energy security and related input
costs was increased. As the transition to cleaner energy sources
accelerates, accompanied by increased regulation, the energy supply
portfolio in the regions in which we operate is undergoing profound
long term changes (e.g. higher demand for external biomass) which
increases the risk of more volatility in pricing and major energy
interruptions. Additionally, the impact of the war in Ukraine on global and specifically European
energy markets is acute and has driven significant increases in
pricing and raised the risk of access to critical energy
supplies.
Climate change continues to drive long-term structural changes
to pricing and availability of wood. The impact of the war in
Ukraine and related sanctions has
restricted the movement of raw materials, including Russian and
Belarusian wood. In addition, the European energy supply balance
has been disrupted resulting in increasing demand for wood for
heating purposes. Consequently, the cost and availability of raw
materials risk was updated to reflect an increase in the
anticipated likelihood of occurrence of the risk.
Given the Group’s commitment to divest its Russian assets and
the subsequent agreements entered into to divest these assets, the
principal risks have been prepared and presented excluding our
Russian operations. The exclusion of Russia from our risk assessment has not
significantly impacted the risk exposure scores presented on the
risk map.
Emerging risks
The Board has highlighted the execution of major capital
expenditure projects as a continued emerging risk. The emerging
risk is managed through mitigating activities such that the
residual risk exposure is not considered significant. All capital
expenditure projects are planned in detail with contingency plans
in place in order to avoid cost overruns, 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.
Pandemic risk
A pandemic can impact the way we do business due to various
health, social and economic measures implemented by authorities
around the world. The health, safety and welfare of the Group’s
employees and our communities is our top priority.
Actions and other monitoring techniques developed during the
COVID-19 pandemic enable the Group to be dynamic in its reaction to
the risk of a pandemic as it develops.
Strategic risks
The industries and geographies in which we operate expose us to
specific long-term risks which are accepted by the Board as a
consequence of the Group’s chosen strategy and
operating footprint.
We continue to monitor recent capacity announcements, demand
developments and how consumers are demanding more sustainable
packaging. We continue to develop our understanding of climate
change risks and its impact whilst continuing to improve our
disclosures and improve our responses.
The Executive Committee and Board monitor our exposure to these
risks and evaluate investment decisions against our overall
exposures so that our strategic capital allocation takes advantage
of the opportunities arising from our deliberate exposure to
such risks.
Our principal strategic risks relate to the following:
- Industry productive capacity
- Fluctuations and variability in selling prices or gross
margins
Financial risks
We aim to maintain an appropriate capital structure and to
manage our financial risk exposures in compliance with all laws and
regulations.
An attentive approach to financial risk management remains in
response to increased scrutiny of the tax affairs of multinational
companies and ongoing short-term currency volatility.
Our principal financial risks relate to the following:
Operational risks
As a Group we focus on operational excellence and investment in
our people and are committed to the responsible use of
resources.
Our investments to improve our energy efficiency, engineer out
our most significant safety risks and improve operating
efficiencies reduce the likelihood of operational risk events.
Supply of wood fibre and energy within the EU are anticipated to
have an operational impact on the Group, driven by the war in
Ukraine and physical and
transitional risks arising due to climate change.
Our principal operational risks relate to the following:
- Cost and availability of raw materials
- Energy security and related input costs
- Technical integrity of our operating assets
- Employee and contractor health and safety
- Attraction and retention of key skills and talent
Compliance risk
We have a zero tolerance approach to non-compliance. Our strong
culture and values underpin our approach. These are emphasised in
every part of our business with a focus on integrity, honesty and
transparency.
Our principal compliance risk relates to Reputational risk.
A more detailed description of our principal risks can be found
in the Group's 2021 Integrated Report. The 2022 Integrated Report
is planned to be published at the end of March 2023.
Going concern
The directors have reviewed the Group’s budget, considered the
assumptions contained in the budget, including consideration of the
principal risks which may impact the Group’s performance in the 18
months following the balance sheet date and considerations of the
period immediately thereafter. The going concern assessment has
been based on the Group's continuing operations. Any impact from
the discontinued operations or expected proceeds from disposal are
fully excluded from the assessment.
The Group has a strong balance sheet. Continuing operations' net
debt at 31 December 2022 was €1,011
million, reduced from €1,689 million at 31
December 2021, reflecting the Group's strong cash generation
and proceeds from the disposal of the Personal Care Components
business. At 31 December 2022, the
Group had a strong liquidity position of €1,818 million, comprising
€757 million of undrawn committed debt facilities and cash and cash
equivalents held by continuing operations of €1,061 million. The
weighted average maturity of our committed debt facilities was 3.8
years.
The current and possible future impact from the macroeconomic
environment on the Group’s activities and performance has been
considered by the Board in preparing its going concern assessment.
The base case forecasts for the Group's continuing operations were
sensitised to reflect a severe but plausible downside scenario on
Group performance. The scenario testing assumed severe but
plausible volume and margin reductions happening in combination and
was carried out against Mondi’s current committed debt facilities,
with the assumption that the Group's €500 million Eurobond maturing
in April 2024 will not be refinanced.
However, the Group has a track record of successfully accessing
both the bank and debt capital markets for funding and is expecting
to be able to refinance the facilities if needed. In the severe but
plausible downside scenario, the Group has sufficient liquidity
headroom through the whole period covered.
In addition to its modelled downside going concern scenario, the
Board has reverse stress tested the model to determine the extent
of downturn which would result in no liquidity headroom. A decline
of 84% to the planned underlying EBITDA in the period until
30 June 2024, well in excess of that
contemplated in the plausible downside scenario, would need to
persist throughout the observed period to result in no liquidity
headroom, which is considered very unlikely. This reverse stress
test also does not incorporate mitigating actions like reductions
and deferrals of capital and operational expenditure or cash
preservation responses, which the Group would implement in the
event of a severe and extended revenue decline.
Following its assessment, the directors have formed a judgement,
at the time of approving the condensed 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 condensed consolidated
financial statements 2022.
Enquiries
Investors/analysts:
Fiona Lawrence
+44
742 587 8683
Mondi Group Head of Investor
Relations
Media:
Kerry Cooper
+44 788 145 5806
Mondi Group Communication Director
Richard
Mountain
+44 790 968 4466
FTI Consulting
Audiocast and dial-in conference call
details
Please see below details for the audiocast and conference call
that will be held at 09:00 (GMT), 10:00 (CET), 11:00 (SAST)
today.
Audiocast
An audiocast of the presentation will be accessible via
https://www.mondigroup.com/en/investors/. A PDF of the slides will
be available to download from the above website 30 minutes before
the audiocast commences. Written questions can be submitted via the
audiocast platform. If you wish to ask a question verbally, please
connect via the dial-in conference call (details below).
For queries regarding access to the audiocast please e-mail
group.communication@mondigroup.com. A recording of the presentation
will be available on Mondi’s website during the afternoon of
23 February 2023.
Dial-in conference call
To access the facility please register your name and contact
details:
https://register.vevent.com/register/BI05574318313e4db4accfbb8dfe2079a0
Directors’ responsibility
statement
The Group annual financial statements have been audited in
accordance with the applicable requirements of the Companies Act
2006.
The responsibility statement has been prepared in connection
with the Group’s Integrated report and financial statements 2022,
extracts of which are included within this announcement.
The directors confirm that to the best of their knowledge:
- the condensed consolidated financial statements are derived
from the audited consolidated financial statements of the Group,
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 (they do
not contain sufficient information to comply with IFRS);
- the Group’s consolidated financial statements, prepared in
accordance with UK-adopted International Accounting Standards, give
a true and fair view of the assets, liabilities, financial position
and profit of the Group;
- the Strategic report included within the Group’s Integrated
report and financial statements 2022 includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties it faces;
- the Integrated report and financial statements 2022, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy;
- there have been no significant individual related party
transactions during the year; and
- there have been no significant changes in the Group’s related
party relationships from that reported in the half-year results for
the six months ended 30 June
2022.
The Group’s condensed consolidated financial statements, and
related notes, including this responsibility statement, were
approved by the Board and authorised for issue on 22 February 2023 and were signed on its behalf
by:
Andrew
King
Mike Powell
Director
Director
Audited financial information
The condensed consolidated financial statements and notes 1 to
22 for the year ended 31 December 2022 are derived from the
Group annual financial statements which have been audited by
PricewaterhouseCoopers LLP. The unmodified audit report is
available for inspection at the Group’s registered office.
Condensed consolidated income
statement
for the year ended 31 December 2022
|
|
|
Restated1 |
|
|
2022 |
2021 |
€ million |
Notes |
Underlying |
Special items (Note 4) |
Total |
Underlying |
Special items (Note 4) |
Total |
From continuing
operations |
|
|
|
|
|
|
|
Group
revenue |
3 |
8,902 |
— |
8,902 |
6,974 |
— |
6,974 |
Materials, energy and
consumables used |
|
(4,728) |
— |
(4,728) |
(3,663) |
— |
(3,663) |
Variable selling
expenses |
|
(741) |
— |
(741) |
(547) |
— |
(547) |
Gross
margin |
|
3,433 |
— |
3,433 |
2,764 |
— |
2,764 |
Maintenance and other
indirect expenses |
|
(346) |
— |
(346) |
(328) |
— |
(328) |
Personnel costs |
|
(1,077) |
— |
(1,077) |
(1,025) |
5 |
(1,020) |
Other net operating
expenses |
|
(162) |
— |
(162) |
(254) |
(2) |
(256) |
Gain on disposal of
business, net of related transaction costs |
16 |
— |
242 |
242 |
— |
— |
— |
EBITDA |
|
1,848 |
242 |
2,090 |
1,157 |
3 |
1,160 |
Depreciation,
amortisation and impairments |
|
(405) |
— |
(405) |
(375) |
4 |
(371) |
Operating
profit |
3 |
1,443 |
242 |
1,685 |
782 |
7 |
789 |
Net profit from joint
ventures |
|
1 |
— |
1 |
6 |
— |
6 |
Net monetary gain
arising from hyperinflationary economies |
1 |
17 |
— |
17 |
— |
— |
— |
Investment income |
6 |
6 |
— |
6 |
5 |
— |
5 |
Foreign currency
losses |
6 |
(5) |
— |
(5) |
(2) |
— |
(2) |
Finance costs |
6 |
(144) |
— |
(144) |
(86) |
— |
(86) |
Profit before
tax |
|
1,318 |
242 |
1,560 |
705 |
7 |
712 |
Tax
(charge)/credit |
7 |
(296) |
(5) |
(301) |
(154) |
2 |
(152) |
Profit from
continuing operations |
|
1,022 |
237 |
1,259 |
551 |
9 |
560 |
From discontinued
operations |
|
|
|
|
|
|
|
Profit from
discontinued operations |
15 |
|
|
266 |
|
|
213 |
Profit for the
year |
|
|
|
1,525 |
|
|
773 |
Attributable to: |
|
|
|
|
|
|
|
Non-controlling
interests |
|
|
|
73 |
|
|
17 |
Shareholders |
|
|
|
1,452 |
|
|
756 |
|
|
|
|
|
|
|
|
Earnings per share
(EPS) attributable to shareholders |
|
|
|
|
|
|
|
euro cents |
|
|
|
|
|
|
|
From continuing
operations |
|
|
|
|
|
|
|
Basic EPS |
8 |
|
|
244.5 |
|
|
112.0 |
Diluted EPS |
8 |
|
|
244.4 |
|
|
111.9 |
Basic underlying
EPS |
8 |
|
|
195.6 |
|
|
110.1 |
Diluted underlying
EPS |
8 |
|
|
195.6 |
|
|
110.0 |
From continuing and
discontinued operations |
|
|
|
|
|
|
|
Basic EPS |
8 |
|
|
299.3 |
|
|
155.9 |
Diluted EPS |
8 |
|
|
299.2 |
|
|
155.8 |
Basic total EPS (prior
to special items) |
8 |
|
|
250.4 |
|
|
154.0 |
Diluted total EPS
(prior to special items) |
8 |
|
|
250.4 |
|
|
153.9 |
Note:
1 The Group’s operations in Russia are presented as held for sale and
classified as discontinued operations. Therefore, in accordance
with IFRS 5, 'Non-current Assets Held for Sale and Discontinued
Operations', the comparative figures for the year ended
31 December 2021 were restated to
separate the net profit and cash flows associated with the Russian
operations. As required by IFRS 5, the comparatives in the
condensed consolidated statement of financial position were not
restated. APMs, as defined at the end of this document, were
restated to exclude the effect of the Russian operations. Refer to
notes 1 and 15 for further details
Condensed consolidated statement of
comprehensive income
for the year ended 31 December 2022
|
|
|
|
Restated |
|
2022 |
2021 |
€ million |
Before
tax amount |
Tax
charge |
Net of
tax amount |
Before
tax amount |
Tax
charge |
Net of
tax amount |
Profit for the
year |
|
|
1,525 |
|
|
773 |
|
|
|
|
|
|
|
Items that may
subsequently be or have been reclassified to the condensed
consolidated income statement |
|
|
|
|
|
|
Fair value
gains/(losses) arising from cash flow hedges of continuing
operations |
1 |
— |
1 |
(1) |
— |
(1) |
Fair value gains
arising from cash flow hedges of discontinued operations |
1 |
— |
1 |
— |
— |
— |
Exchange differences
on translation of continuing non-euro operations |
35 |
— |
35 |
(16) |
— |
(16) |
Exchange differences
on translation of discontinued non-euro operations |
72 |
— |
72 |
42 |
— |
42 |
Reclassification of
foreign currency translation reserve to the condensed consolidated
income statement on disposal of business |
(4) |
— |
(4) |
— |
— |
— |
Share of other
comprehensive income of joint ventures |
— |
— |
— |
1 |
— |
1 |
Items that will not
subsequently be reclassified to the condensed consolidated income
statement |
|
|
|
|
|
|
Remeasurements of
retirement benefits plans of continuing operations |
8 |
(3) |
5 |
11 |
(4) |
7 |
Remeasurements of
retirement benefits plans of discontinued operations |
1 |
— |
1 |
1 |
— |
1 |
|
|
|
|
|
|
|
Other comprehensive
income/(expense) for the year |
114 |
(3) |
111 |
38 |
(4) |
34 |
|
|
|
|
|
|
|
Other comprehensive
income/(expense) attributable to: |
|
|
|
|
|
|
Non-controlling
interests |
|
|
6 |
|
|
(4) |
Shareholders |
|
|
105 |
|
|
38 |
|
|
|
|
|
|
|
Total comprehensive
income attributable to: |
|
|
|
|
|
|
Non-controlling
interests |
|
|
79 |
|
|
13 |
Shareholders |
|
|
1,557 |
|
|
794 |
|
|
|
|
|
|
|
Total comprehensive
income attributable to shareholders arises from: |
|
|
|
|
|
|
Continuing
operations |
|
|
1,217 |
|
|
538 |
Discontinued
operations |
|
|
340 |
|
|
256 |
|
|
|
|
|
|
|
Total comprehensive
income for the year |
|
|
1,636 |
|
|
807 |
Condensed consolidated statement of
financial position
as at 31 December 2022
€ million |
Notes |
2022 |
2021 |
Property, plant and
equipment |
|
4,167 |
4,870 |
Goodwill |
10 |
769 |
926 |
Intangible assets |
|
64 |
76 |
Forestry assets |
11 |
485 |
348 |
Investments in joint
ventures |
|
18 |
17 |
Financial
instruments |
|
25 |
33 |
Deferred tax
assets |
|
34 |
43 |
Net retirement
benefits asset |
|
8 |
26 |
Other non-current
assets |
|
8 |
1 |
Total non-current
assets |
|
5,578 |
6,340 |
Inventories |
|
1,359 |
1,099 |
Trade and other
receivables |
|
1,448 |
1,333 |
Current tax
assets |
|
9 |
12 |
Financial
instruments |
|
4 |
4 |
Cash and cash
equivalents |
17b |
1,067 |
473 |
|
|
3,887 |
2,921 |
Assets held for
sale |
15 |
1,382 |
— |
Total current
assets |
|
5,269 |
2,921 |
Total
assets |
|
10,847 |
9,261 |
|
|
|
|
Short-term
borrowings |
13 |
(102) |
(124) |
Trade and other
payables |
|
(1,525) |
(1,444) |
Current tax
liabilities |
|
(137) |
(116) |
Provisions |
|
(22) |
(33) |
Financial
instruments |
|
(10) |
(18) |
|
|
(1,796) |
(1,735) |
Liabilities directly
associated with assets held for sale |
15 |
(325) |
— |
Total current
liabilities |
|
(2,121) |
(1,735) |
Medium- and long-term
borrowings |
13 |
(1,970) |
(2,104) |
Net retirement
benefits liability |
14 |
(155) |
(197) |
Deferred tax
liabilities |
|
(307) |
(283) |
Provisions |
|
(27) |
(35) |
Other non-current
liabilities |
|
(13) |
(18) |
Total non-current
liabilities |
|
(2,472) |
(2,637) |
Total
liabilities |
|
(4,593) |
(4,372) |
|
|
|
|
Net assets |
|
6,254 |
4,889 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
97 |
97 |
Own shares |
|
(16) |
(18) |
Retained earnings |
|
5,895 |
4,760 |
Other reserves |
|
(182) |
(341) |
Total attributable
to shareholders |
|
5,794 |
4,498 |
Non-controlling
interests in equity |
|
460 |
391 |
Total
equity |
|
6,254 |
4,889 |
The Group’s condensed consolidated financial statements,
including related notes 1 to 22, were approved by the Board and
authorised for issue on 22 February
2023 and were signed on its behalf by:
Andrew
King
Mike Powell
Director
Director
Condensed consolidated statement of
changes in equity
for the year ended 31 December 2022
€ million |
Equity
attributable to shareholders |
Non-controlling interests |
Total
equity |
At 1 January 2021 |
4,002 |
380 |
4,382 |
Total comprehensive
income for the year: |
794 |
13 |
807 |
Profit for the
year |
756 |
17 |
773 |
Other comprehensive
income/(expense) |
38 |
(4) |
34 |
Transactions with
shareholders in their capacity as shareholders |
|
|
|
Dividends |
(298) |
(6) |
(304) |
Purchases of own
shares |
(7) |
— |
(7) |
Mondi share schemes’
charge |
9 |
— |
9 |
Acquired through
business combinations |
— |
7 |
7 |
Non-controlling
interests bought out |
— |
(3) |
(3) |
Other movements |
(2) |
— |
(2) |
At 31 December
2021 |
4,498 |
391 |
4,889 |
Hyperinflation
monetary adjustment (see note 1) |
46 |
(5) |
41 |
Restated balance at 1
January 2022 |
4,544 |
386 |
4,930 |
Total comprehensive
income for the year: |
1,557 |
79 |
1,636 |
Profit for the
year |
1,452 |
73 |
1,525 |
Other comprehensive
income |
105 |
6 |
111 |
Hyperinflation
monetary adjustment (see note 1) |
16 |
1 |
17 |
Transactions with
shareholders in their capacity as shareholders |
|
|
|
Dividends |
(321) |
(9) |
(330) |
Purchases of own
shares |
(7) |
— |
(7) |
Mondi share schemes’
charge |
11 |
— |
11 |
Disposal of businesses
(see note 16) |
(4) |
— |
(4) |
Other movements in
non-controlling interests |
(2) |
3 |
1 |
At 31 December
2022 |
5,794 |
460 |
6,254 |
Equity attributable to
shareholders
€ million |
2022 |
2021 |
At 1
January 2021 |
Share capital |
97 |
97 |
97 |
Own shares |
(16) |
(18) |
(18) |
Retained earnings |
5,895 |
4,760 |
4,300 |
Cumulative translation
adjustment reserve |
(859) |
(1,007) |
(1,038) |
Post-retirement
benefits reserve |
(35) |
(43) |
(51) |
Share-based payment
reserve |
17 |
16 |
16 |
Cash flow hedge
reserve |
1 |
(1) |
— |
Merger reserve |
667 |
667 |
667 |
Other sundry
reserves |
27 |
27 |
29 |
Total |
5,794 |
4,498 |
4,002 |
Condensed consolidated statement of
cash flows
for the year ended 31 December 2022
|
|
|
Restated |
€ million |
Notes |
2022 |
2021 |
Cash flows from
operating activities |
|
|
|
Cash generated from
continuing operations |
17a |
1,292 |
1,001 |
Dividends received
from other investments |
|
2 |
1 |
Income tax paid |
|
(196) |
(138) |
Net cash generated
from operating activities of discontinued operations |
15 |
350 |
286 |
Net cash generated
from operating activities |
|
1,448 |
1,150 |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Investment in
property, plant and equipment |
|
(508) |
(481) |
Investment in
intangible assets |
|
(12) |
(16) |
Investment in forestry
assets |
11 |
(49) |
(45) |
Investment in joint
ventures |
|
— |
(1) |
Proceeds from the
disposal of property, plant and equipment |
|
7 |
21 |
Proceeds from the
disposal of financial asset investments |
|
5 |
— |
Acquisition of
businesses, net of cash and cash equivalents |
|
— |
(63) |
Proceeds from the
disposal of business, net of cash and cash equivalents |
16 |
642 |
— |
Loans advanced to
related and external parties |
|
— |
(1) |
Interest received |
|
6 |
3 |
Other investing
activities |
|
9 |
4 |
Net cash used in
investing activities of discontinued operations |
15 |
(68) |
(91) |
Net cash generated
from/(used in) investing activities |
|
32 |
(670) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Proceeds from other
medium- and long-term borrowings |
17c |
— |
59 |
Repayment of other
medium- and long-term borrowings |
17c |
(53) |
— |
Net repayment of
short-term borrowings |
17c |
(9) |
(4) |
Repayment of lease
liabilities |
17c |
(21) |
(21) |
Interest paid |
17c |
(60) |
(67) |
Dividends paid to
shareholders |
9 |
(321) |
(298) |
Dividends paid to
non-controlling interests |
9 |
(9) |
(6) |
Purchases of own
shares |
|
(7) |
(7) |
Non-controlling
interests bought out |
|
— |
(3) |
Net cash outflow from
debt-related derivative financial instruments |
17c |
(83) |
(12) |
Other financing
activities |
|
1 |
— |
Net cash used in
financing activities of discontinued operations |
15 |
(10) |
(13) |
Net cash used in
financing activities |
|
(572) |
(372) |
|
|
|
|
Net increase in
cash and cash equivalents |
|
908 |
108 |
|
|
|
|
Cash and cash
equivalents at beginning of year |
|
455 |
348 |
Cash movement in the
year |
17c |
908 |
108 |
Effects of changes in
foreign exchange rates |
17c |
18 |
(1) |
Cash and cash
equivalents at end of year |
17b |
1,381 |
455 |
Notes to the condensed consolidated financial
statements
for the year ended 31 December 2022
1 Basis of preparation
These condensed consolidated financial statements as at and for
the year ended 31 December 2022 comprise Mondi plc and its
subsidiaries (referred to as 'the Group’), and the Group’s share of
the results and net assets of its associates and joint
ventures.
The Group’s condensed consolidated financial statements have
been derived from the audited consolidated financial statements of
the Group, 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 Group’s condensed consolidated financial statements do not
contain sufficient information to comply with IFRS.
The financial information set out in these condensed
consolidated financial statements does not constitute the Company’s
statutory accounts for the years ended 31 December 2022 or
2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Registrar of Companies, and those
for 2022 will be delivered in due course. The auditors have
reported on those accounts; their report was (i) unqualified, (ii)
did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006. Copies of the unqualified auditors'
report on the Integrated report and financial statements 2022 are
available for inspection at the registered office of Mondi plc.
The condensed consolidated financial statements have been
prepared on a going concern basis as discussed in the commentary
under the heading ‘Going concern’ which is incorporated by
reference into these condensed consolidated financial
statements.
The condensed consolidated financial statements have been
prepared under the historical cost basis of accounting, as modified
by forestry assets, pension assets, certain financial assets and
financial liabilities held at fair value through profit and loss
and accounting in hyperinflationary economies.
2 Accounting policies
The same accounting policies and alternative performance
measures (APMs), methods of computation and presentation have been
followed in the preparation of the condensed consolidated financial
statements for the year ended 31 December 2022 as were applied
in the preparation of the Group’s annual financial statements for
the year ended 31 December 2021, except as follows:
- Non-current assets held for sale and discontinued
operations
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 condensed
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 condensed consolidated
statement of financial position are not adjusted.
Discontinued operations are either a separate major line of
business or geographical area of operations that have been disposed
of or are part of a single coordinated plan for disposal which
satisfy the held for sale criteria. Once an operation has been
identified as discontinued, its net profit or loss, other
comprehensive income or expense and cash flows are presented
separately in the condensed consolidated income statement, the
condensed consolidated statement of comprehensive income and the
condensed consolidated statement of cash flows, including related
notes to these statements, and comparative information is restated.
Non-current assets classified as held for sale and the assets of a
disposal group classified as held for sale are presented separately
from the other assets in the condensed consolidated statement of
financial position. The liabilities of a disposal group classified
as held for sale are presented separately from other liabilities in
the condensed consolidated statement of financial position. The
Group’s assets and liabilities related to comparative periods are
not separated between continuing and discontinued operations in the
condensed consolidated statement of financial position.
- Hyperinflation accounting
Effective from 1 January 2022, the
Group has applied IAS 29, 'Financial Reporting in Hyperinflationary
Economies', for its subsidiaries in Turkiye, whose functional
currencies have experienced a cumulative inflation rate of more
than 100% over the past three years. Assets, liabilities, the
financial position and results of non-euro operations in
hyperinflationary economies are translated to euro at the exchange
rates prevailing on the reporting date. The exchange differences
are recognised directly in other comprehensive income or expense,
and accumulated in the Group’s cumulative translation adjustment
reserve in equity. Such translation differences are reclassified to
profit or loss only on disposal or partial disposal of the non-euro
operation.
Prior to translating the financial statements of the Turkish
operations, the non-monetary assets and liabilities stated at
historical cost are restated to account for changes in the general
purchasing power of the local currencies based on the consumer
price index (TUFE, 2003=100) published by the Turkish Statistical
Institute (TURKSTAT). On the date of first-time application, being
1 January 2022, the adjustment of the carrying amounts of
non-monetary assets and liabilities of €41 million was determined
at the closing exchange rate and allocated between retained
earnings, other reserves and non-controlling interests in equity as
presented in the condensed consolidated statement of changes in
equity. This included €54 million recognised in the cumulative
translation adjustment reserve, in addition to the remaining
exchange differences arising on consolidation. The allocation of
the opening balance adjustment is consistent with how the current
period impacts are reported. The subsequent gains or losses
resulting from the restatement of non-monetary assets and
liabilities are recorded in the condensed consolidated income
statement as net monetary gain arising from hyperinflationary
economies. Comparative amounts presented in euro are not restated
for subsequent changes in the price level or exchange rates. The
results of the Turkish operations are restated to the index level
at the end of the period, with hyperinflationary gains and losses
being reported in net monetary gain arising from hyperinflationary
economies.
The consumer price index for the year ended 31 December 2022
increased by 64% from 687 at 31 December 2021 to 1,128 at
31 December 2022. For the year ended 31 December 2022,
the adjustments from hyperinflationary accounting have resulted in
an increase in total assets of €91 million, an increase in Group
revenue of €125 million, a decrease in underlying EBITDA of €44
million and a net monetary gain of €17 million. Comparative amounts
presented in euro were not restated for subsequent changes in the
price level or exchange rates.
IAS 29 requires judgement to determine when to apply
hyperinflationary accounting and which general price index to
select and other approximations to be made in order to restate the
financial statements of subsidiaries operating in a
hyperinflationary economy.
- A number of amendments to IFRS became effective for the
financial period beginning on 1 January
2022, but the Group did not have to change its accounting
policies or make any retrospective adjustments as a result of
adopting these amendments.
Alternative Performance Measures
The Group presents certain measures of financial performance,
position or cash flows in the condensed consolidated financial
statements that are not defined or specified according to IFRS.
These measures, referred to as APMs, are defined at the end of this
document and where relevant reconciled to IFRS in the notes to the
condensed consolidated financial statements, and are prepared on a
consistent basis for all periods presented.
Since June 2022, the Group’s
operations in Russia have
satisfied the criteria to be classified as held for sale and are
reported as discontinued operations as at 31 December 2022 and
for the year then ended (see note 15). For comparability purposes,
the APMs based on amounts recognised in the condensed consolidated
statement of financial position exclude the proportion of assets
and liabilities attributable to the Russian operations; however, as
required by IFRS 5, 'Non-current Assets Held for Sale and
Discontinued Operations', no restatement of the IFRS condensed
consolidated statement of financial position has been made for such
items as at 31 December 2021. APMs measuring the profitability
and cash flows of the Group are presented for continuing operations
(i.e. excluding the results from the Russian discontinued
operations) and comparatives are presented on the same basis,
consistent with the presentation of the IFRS condensed consolidated
income statement and IFRS condensed consolidated statement of cash
flows. Where these changes have impacted the APMs for comparative
periods, as presented previously, these have been described as
restated.
3 Operating segments
The Group’s operating segments are reported in a manner
consistent with the internal reporting provided to the Executive
Committee, the chief operating decision-making body. The operating
segments are managed based on the nature of the underlying products
produced by those businesses and comprise three (2021: four)
distinct segments.
The Group’s operations in Russia, comprising its high-margin,
cost-competitive, integrated pulp, packaging paper and uncoated
fine paper mill in Syktyvkar (Komi Republic) and three converting
plants, are reported as discontinued operations. The discontinued
operations' net profit and cash flows are presented separately in
the condensed consolidated income statement and condensed
consolidated statement of cash flows for all periods presented.
Financial information relating to the discontinued operations is
provided in note 15.
Effective from 30 June 2022 and
following the completion of the sale of the Personal Care
Components (PCC) business, the Group’s operating segments were
reorganised. Functional paper and films, previously part of the
Engineered Materials operating segment, was moved to Flexible
Packaging to strengthen integration along the kraft paper value
chain and further support the development of innovative functional
papers with barrier properties, fulfilling customers’ needs for
sustainable packaging. The remaining part of the previously
reported Engineered Materials operating segment, namely the
disposed PCC business (see note 16), has been reported in the
Personal Care Components (divested) operating segment up to the
date of disposal.
Accordingly, the Group has restated the previously reported
segment information to present the Group’s operations under the new
organisational structure.
Year ended 31 December
20221, 2
€ million,
unless otherwise stated |
Corrugated Packaging |
Flexible Packaging |
Uncoated Fine Paper |
Corporate |
Personal Care Components (divested) |
Intersegment elimination |
Total
continuing operations |
Discontinued operations |
Intersegment elimination3 |
Total
Group |
Segment revenue |
2,991 |
4,299 |
1,613 |
— |
181 |
(143) |
8,941 |
|
(39) |
8,902 |
Internal revenue |
(51) |
(51) |
(68) |
— |
(12) |
143 |
(39) |
|
39 |
— |
External revenue |
2,940 |
4,248 |
1,545 |
— |
169 |
— |
8,902 |
|
— |
8,902 |
Underlying EBITDA |
662 |
797 |
427 |
(39) |
1 |
— |
1,848 |
|
— |
1,848 |
Depreciation and
impairments4 |
(133) |
(181) |
(70) |
(1) |
(3) |
— |
(388) |
|
— |
(388) |
Amortisation |
(7) |
(8) |
(2) |
— |
— |
— |
(17) |
|
— |
(17) |
Underlying operating
profit/(loss) |
522 |
608 |
355 |
(40) |
(2) |
— |
1,443 |
|
— |
1,443 |
Special items before
tax |
— |
— |
— |
— |
242 |
— |
242 |
|
— |
242 |
Profit from
discontinued operations |
|
|
|
|
|
|
|
266 |
— |
266 |
Capital
employed5 |
2,162 |
3,035 |
1,091 |
(67) |
— |
— |
6,221 |
1,044 |
— |
7,265 |
Trailing 12-month
average capital employed |
2,062 |
2,916 |
1,022 |
(78) |
175 |
— |
6,097 |
1,020 |
— |
7,117 |
Additions to
non-current non-financial assets |
235 |
242 |
115 |
— |
9 |
— |
601 |
|
— |
601 |
Capital expenditure
cash payments |
212 |
223 |
64 |
— |
9 |
— |
508 |
|
— |
508 |
Underlying EBITDA
margin (%) |
22.1 |
18.5 |
26.5 |
— |
0.6 |
— |
20.8 |
|
— |
20.8 |
Return on capital
employed (%) |
25.3 |
20.9 |
34.7 |
— |
(1.1) |
— |
23.7 |
|
— |
26.0 |
Average number of
employees (thousands)6 |
6.4 |
11.5 |
2.9 |
0.1 |
0.5 |
— |
21.4 |
5.3 |
— |
26.7 |
Notes:
1 The Group’s operations in Russia are presented as held for sale and
classified as discontinued operations. Therefore, in accordance
with IFRS 5, the comparative figures for the year ended
31 December 2021 were restated to
separate the net profit and cash flows associated with the Russian
operations. The comparatives in the consolidated statement of
financial position were not restated. Refer to notes 1 and 15 for
further details
2 See definitions of APMs at the end of this document
3 Intersegment elimination of €39 million (2021: €63
million) relates to transactions with discontinued operations
4 Includes only impairment not classified as special
items
5 Operating segment assets and operating segment net
assets were replaced by capital employed in the table to further
align the reporting of operating segments to be in a manner
consistent with internal reporting to the chief operating
decision-making body
6 Presented on a full-time employee equivalent basis
Year ended 31 December 2021
(restated)1, 2
€ million,
unless otherwise stated |
Corrugated
Packaging |
Flexible
Packaging |
Uncoated Fine
Paper |
Corporate |
Personal Care
Components (divested) |
Intersegment elimination |
Total
continuing operations |
Discontinued
operations |
Intersegment elimination3 |
Total
Group |
Segment revenue |
2,349 |
3,292 |
1,194 |
— |
335 |
(133) |
7,037 |
|
(63) |
6,974 |
Internal revenue |
(56) |
(53) |
(59) |
— |
(28) |
133 |
(63) |
|
63 |
— |
External revenue |
2,293 |
3,239 |
1,135 |
— |
307 |
— |
6,974 |
|
— |
6,974 |
Underlying EBITDA |
543 |
567 |
55 |
(34) |
26 |
— |
1,157 |
|
— |
1,157 |
Depreciation and
impairments4 |
(112) |
(160) |
(70) |
(1) |
(16) |
— |
(359) |
|
— |
(359) |
Amortisation |
(5) |
(8) |
(2) |
— |
(1) |
— |
(16) |
|
— |
(16) |
Underlying operating
profit/(loss) |
426 |
399 |
(17) |
(35) |
9 |
— |
782 |
|
— |
782 |
Special items before
tax |
— |
7 |
— |
— |
— |
— |
7 |
|
— |
7 |
Profit from
discontinued operations |
|
|
|
|
|
|
|
213 |
|
213 |
Capital
employed5 |
1,907 |
2,745 |
965 |
(97) |
372 |
— |
5,892 |
760 |
— |
6,652 |
Trailing 12-month
average capital employed |
1,754 |
2,667 |
983 |
(91) |
359 |
— |
5,672 |
677 |
— |
6,349 |
Additions to
non-current non-financial assets |
258 |
174 |
133 |
6 |
24 |
— |
595 |
|
— |
595 |
Capital expenditure
cash payments |
189 |
182 |
85 |
2 |
23 |
— |
481 |
|
— |
481 |
Underlying EBITDA
margin (%) |
23.1 |
17.2 |
4.6 |
— |
7.8 |
— |
16.6 |
|
— |
16.6 |
Return on capital
employed (%) |
24.3 |
15.2 |
(1.7) |
— |
2.5 |
— |
13.9 |
|
— |
16.9 |
Average number of
employees (thousands)6 |
5.9 |
11.2 |
3.0 |
0.1 |
0.9 |
— |
21.1 |
5.3 |
— |
26.4 |
Notes:
1 The Group’s operations in Russia are presented as held for sale and
classified as discontinued operations. Therefore, in accordance
with IFRS 5, the comparative figures for the year ended
31 December 2021 were restated to
separate the net profit and cash flows associated with the Russian
operations. The comparatives in the consolidated statement of
financial position were not restated. Refer to notes 1 and 15 for
further details
2 See definitions of APMs at the end of this document
3 Intersegment elimination of €39 million (2021: €63
million) relates to transactions with discontinued operations
4 Includes only impairment not classified as special
items
5 Operating segment assets and operating segment net
assets were replaced by capital employed in the table to further
align the reporting of operating segments to be in a manner
consistent with internal reporting to the chief operating
decision-making body
6 Presented on a full-time employee equivalent basis
External revenue by location of
production and by location of customer1
|
External revenue
by location of production |
External revenue
by location of customer |
|
|
Restated |
|
Restated |
€ million |
2022 |
2021 |
2022 |
2021 |
Africa |
|
|
|
|
South Africa |
667 |
451 |
498 |
394 |
Rest of Africa |
74 |
56 |
436 |
272 |
Africa total |
741 |
507 |
934 |
666 |
Western Europe |
|
|
|
|
Austria |
1,640 |
1,280 |
203 |
159 |
Germany |
808 |
877 |
1,188 |
996 |
UK |
3 |
3 |
230 |
191 |
Rest of Western
Europe |
888 |
699 |
1,988 |
1,511 |
Western Europe
total |
3,339 |
2,859 |
3,609 |
2,857 |
Emerging Europe |
|
|
|
|
Czech Republic |
820 |
602 |
286 |
223 |
Poland |
1,587 |
1,242 |
851 |
707 |
Turkiye |
589 |
434 |
693 |
512 |
Rest of emerging
Europe2 |
1,089 |
764 |
629 |
515 |
Emerging Europe
total |
4,085 |
3,042 |
2,459 |
1,957 |
Russia1,
3 |
— |
— |
30 |
34 |
North America |
634 |
480 |
1,000 |
804 |
South America |
2 |
— |
157 |
128 |
Asia and
Australia |
101 |
86 |
713 |
528 |
Group
total |
8,902 |
6,974 |
8,902 |
6,974 |
Notes:
1 Excludes external revenue of €1,178 million (2021: €749
million) generated by the discontinued operations (see note 15)
2 External revenue for Rest of emerging Europe by location of production and customer
has been further analysed to what was presented previously to
separately show revenue for Turkiye
3 External revenue to customers located in Russia is expected to cease in 2023
4 Special items
The Group separately discloses special items, an APM as defined
at the end of this document, on the face of the condensed
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 |
2022 |
2021 |
Operating special
items |
|
|
Reversal of impairment
of assets |
— |
4 |
Restructuring and
closure costs: |
|
|
Personnel costs |
— |
5 |
Other restructuring
and closure costs |
— |
(2) |
Gain on disposal of
business, net of related transaction costs (see note 16) |
242 |
— |
Total special items
before tax |
242 |
7 |
Tax (charge)/credit
(see note 7) |
(5) |
2 |
Total special
items |
237 |
9 |
The operating special items resulted in a cash outflow from
operating activities of €8 million for the year ended
31 December 2022 (2021: €15 million). The net cash
received from the sale of the PCC business totalled €642 million
and is presented within cash flows from investing activities.
To 31 December 2022
The special items during the year ended 31 December 2022
comprised:
- Personal Care Components (divested)
- €242 million gain on the sale of the PCC business to Nitto
Denko Corporation. Transaction costs of €6 million were also
recognised in the prior year and were not treated as a special
item. Further detail is provided in note 16.
To 31 December 2021
The special items during the year ended 31 December 2021
comprised:
- Release of restructuring and closure provision of €2 million,
partly offset by additional restructuring costs of €1 million, and
reversal of impairment of assets of €1 million were recognised. All
credit/(charges) related to special items from prior years.
- Release of restructuring and closure provision of €2 million
and partial reversal of impairment of assets of €3 million were
recognised relating to the closure of a functional paper and films
plant in the US. The credits are linked to a special item from
prior years and were classified within the Engineered Materials
operating segment before restructuring (see note 2). Total costs
now amount to €9 million.
5 Write-down of
inventories to net realisable value
|
|
Restated |
€ million |
2022 |
2021 |
Within materials,
energy and consumables used |
|
|
Write-down of
inventories to net realisable value |
(65) |
(42) |
Aggregate reversal of
previous write-downs of inventories |
40 |
30 |
6 Net finance costs
|
|
Restated |
€ million |
2022 |
2021 |
Investment
income |
|
|
Investment income |
6 |
5 |
Net foreign
currency losses |
|
|
Net foreign currency
losses |
(5) |
(2) |
Finance
costs |
|
|
Interest expense |
|
|
Interest on bank
overdrafts and loans |
(133) |
(75) |
Interest on lease
liabilities |
(7) |
(6) |
Net interest expense
on net retirement benefits liability |
(6) |
(5) |
Total interest
expense |
(146) |
(86) |
Less: Interest
capitalised |
2 |
— |
Total finance
costs |
(144) |
(86) |
Net finance costs |
(143) |
(83) |
7 Taxation
The Group’s effective rate of tax before special items for the
year ended 31 December 2022 was 22% (2021: 22%).
|
|
Restated |
€ million |
2022 |
2021 |
UK corporation tax at
19% (2021: 19%) |
— |
— |
Overseas tax |
248 |
160 |
Current tax in respect
of prior years |
(8) |
4 |
Current
tax |
240 |
164 |
Deferred tax in
respect of the current year |
64 |
(6) |
Deferred tax in
respect of prior years |
(4) |
(4) |
Deferred tax
attributable to a change in the
rate of domestic income tax |
(4) |
— |
Tax charge before
special items |
296 |
154 |
Current tax on special
items |
5 |
(1) |
Deferred tax on
special items |
— |
(1) |
Tax credit on
special items (see note 4) |
5 |
(2) |
Tax charge for the
year |
301 |
152 |
Current tax
charge |
245 |
163 |
Deferred tax
charge/(credit) |
56 |
(11) |
|
|
|
8 Earnings per share
(EPS)
|
EPS attributable to shareholders |
|
|
Restated |
euro cents |
2022 |
2021 |
From continuing
operations |
|
|
Basic EPS |
244.5 |
112.0 |
Diluted EPS |
244.4 |
111.9 |
Basic underlying
EPS |
195.6 |
110.1 |
Diluted underlying
EPS |
195.6 |
110.0 |
From discontinued
operations |
|
|
Basic EPS |
54.8 |
43.9 |
Diluted EPS |
54.8 |
43.9 |
From continuing and
discontinued operations |
|
|
Basic EPS |
299.3 |
155.9 |
Diluted EPS |
299.2 |
155.8 |
Basic total EPS (prior
to special items) |
250.4 |
154.0 |
Diluted total EPS
(prior to special items) |
250.4 |
153.9 |
Basic headline
EPS |
264.3 |
155.3 |
Diluted headline
EPS |
264.2 |
155.2 |
The calculation of basic and diluted EPS, basic and diluted
total EPS (prior to special items) and basic and diluted headline
EPS is based on the following data:
|
Earnings |
|
|
Restated |
€ million |
2022 |
2021 |
Profit for the year
attributable to shareholders |
1,452 |
756 |
Arises from: |
|
|
Continuing
operations |
1,186 |
543 |
Discontinued
operations1 |
266 |
213 |
Special items
attributable to shareholders (see note 4) |
(242) |
(7) |
Related tax (see note
4) |
5 |
(2) |
Total earnings for
the year (prior to special items) |
1,215 |
747 |
Arises from: |
|
|
Continuing
operations |
949 |
534 |
Discontinued
operations1 |
266 |
213 |
Special items
attributable to shareholders not excluded from headline
earnings |
— |
3 |
(Gain)/loss on
disposal of property, plant and equipment |
(2) |
1 |
Impairments not
included in special items |
11 |
— |
Impairments included
in profit from discontinued operations (see note 15) |
57 |
— |
Related tax |
1 |
2 |
Headline earnings
for the year |
1,282 |
753 |
Note:
1 Profits from discontinued operations are wholly
attributable to shareholders
|
Weighted average number of shares |
million |
2022 |
2021 |
Basic number of
ordinary shares outstanding |
485.1 |
485.0 |
Effect of dilutive
potential ordinary shares |
0.1 |
0.3 |
Diluted number of
ordinary shares outstanding |
485.2 |
485.3 |
9 Dividends
An interim dividend for the year ended 31 December 2022 of
21.67 euro cents per ordinary share
was paid on Thursday 29 September 2022 to those
shareholders on the register of Mondi plc on Friday
26 August 2022.
A proposed final dividend for the year ended 31 December
2022 of 48.33 euro cents per ordinary
share will be paid on Friday 12 May 2023 to those shareholders
on the register of Mondi plc on Friday 31
March 2023.
The final dividend proposed has been recommended by the Board
and is subject to shareholder approval at the Annual General
Meeting scheduled for 4 May 2023.
|
2022 |
2021 |
|
euro
cents per share |
€ million |
euro
cents per share |
€ million |
Final dividend paid in
respect of the prior year |
45.00 |
218 |
41.00 |
201 |
Interim dividend paid
in respect of the current year |
21.67 |
103 |
20.00 |
97 |
Total dividends
paid |
|
321 |
|
298 |
|
|
|
|
|
Final dividend
proposed to shareholders |
48.33 |
234 |
45.00 |
218 |
Dividend timetable
The proposed final dividend for the year ended 31 December
2022 of 48.33 euro cents
per share will be paid in accordance with the following
timetable:
Last date to trade
shares cum-dividend |
|
JSE Limited |
Tuesday
28 March 2023 |
London Stock
Exchange |
Wednesday 29 March 2023 |
Shares commence
trading ex-dividend |
|
JSE Limited |
Wednesday 29 March 2023 |
London Stock
Exchange |
Thursday
30 March 2023 |
Record
date |
Friday
31 March 2023 |
Last date for
receipt of Dividend Reinvestment Plan (DRIP) elections by Central
Securities Depository Participants |
Thursday
6 April 2023 |
Last date for DRIP
elections to UK Registrar and South African Transfer
Secretaries |
|
South African
Register |
Tuesday
11 April 2023 |
UK Register |
Tuesday
18 April 2023 |
Payment
date |
Friday
12 May 2023 |
DRIP purchase
settlement date (subject to market conditions and the purchase of
shares in the open market) |
|
UK Register |
Tuesday
16 May 2023 |
South African
Register |
Thursday
18 May 2023 |
Currency conversion
date |
|
ZAR/euro |
Thursday
23 February 2023 |
Euro/sterling |
Thursday
20 April 2023 |
Share certificates on Mondi plc’s South African register may not
be dematerialised or rematerialised between Wednesday 29 March 2023 and Friday 31 March 2023, both dates inclusive, nor may
transfers between the UK and South African registers of Mondi plc
take place between Wednesday 22 March
2023 and Friday 31 March 2023,
both dates inclusive.
Information relating to the dividend tax to be withheld from
Mondi plc shareholders on the South African branch register will be
announced separately, together with the ZAR/euro exchange rate to
be applied, on or shortly after Thursday 23
February 2023.
10 Goodwill
€ million |
2022 |
2021 |
Net carrying
value |
|
|
At 1 January |
926 |
923 |
Hyperinflation
monetary adjustment (see note 1) |
10 |
— |
Restated balance at 1
January |
936 |
923 |
Disposal of businesses
(see note 16) |
(141) |
— |
Reclassification to
assets held for sale (see note 15) |
(34) |
— |
Hyperinflation
monetary adjustment (see note 1) |
11 |
— |
Currency
movements |
(3) |
3 |
At 31
December |
769 |
926 |
11 Forestry assets
€ million |
2022 |
2021 |
At 1 January |
348 |
372 |
Investment in forestry
assets |
49 |
45 |
Fair value
gains/(losses) |
169 |
(7) |
Felling costs |
(78) |
(62) |
Currency
movements |
(3) |
— |
At
31 December |
485 |
348 |
Mature |
309 |
217 |
Immature |
176 |
131 |
|
|
|
The fair value of forestry assets is a level 3 measure in terms
of the fair value measurement hierarchy (see note 20), consistent
with prior years. The fair value of forestry assets is determined
using a market based approach.
12 Leases
The Group has entered into various lease agreements. The Group’s
right-of-use assets were €119 million at 31 December 2022
(2021: €177 million) and the related depreciation charge was €25
million (2021 (restated): €22 million).The decrease in the
right-of-use assets is mainly driven by the Russian forestry
leases, which have been reclassified to assets held for sale in
June 2022.
13 Borrowings
The principal loan arrangements in place are the following:
€ million |
Maturity |
Interest rate
% |
2022 |
2021 |
Financing
facilities |
|
|
|
|
Syndicated Revolving
Credit Facility |
June
20271 |
EURIBOR + margin |
750 |
750 |
€500 million
Eurobond |
April 2024 |
1.500% |
500 |
500 |
€600 million
Eurobond |
April 2026 |
1.625% |
600 |
600 |
€750 million
Eurobond |
April 2028 |
2.375% |
750 |
750 |
European Investment
Bank Facility |
June 2025 |
EURIBOR + margin |
— |
33 |
Long Term Facility
Agreement |
December 2026 |
EURIBOR + margin |
27 |
70 |
Other |
Various |
Various |
8 |
57 |
Total committed
facilities |
|
|
2,635 |
2,760 |
Drawn |
|
|
(1,878) |
(1,957) |
Total committed
facilities available |
|
|
757 |
803 |
Note:
1 The Group has opted for a one-year extension on the
facility, which moved the maturity from June
2026 to June 2027
The Group’s Eurobonds incur a fixed rate of interest. Swap
agreements are utilised by the Group to raise non-euro-denominated
currency to fund subsidiaries liquidity needs thereby exposing the
Group to floating interest rates.
The €750 million 5-year revolving multi-currency credit facility
agreement (RCF) incorporates key sustainability targets linked to
MAP2030, classifying the facility as a Sustainability Linked Loan.
Under the terms of the agreement, the margin will be adjusted
according to the Group’s performance against specified
sustainability targets.
Short-term liquidity needs are met by cash and the RCF. As at
31 December 2022, the Group had no financial covenants in any
of its financing facilities.
|
2022 |
2021 |
€ million |
Current |
Non-current |
Total |
Current |
Non-current |
Total |
Secured |
|
|
|
|
|
|
Bank loans and
overdrafts |
1 |
— |
1 |
2 |
1 |
3 |
Lease liabilities |
19 |
109 |
128 |
20 |
184 |
204 |
Total
secured |
20 |
109 |
129 |
22 |
185 |
207 |
Unsecured |
|
|
|
|
|
|
Bonds |
— |
1,843 |
1,843 |
— |
1,840 |
1,840 |
Bank loans and
overdrafts |
82 |
18 |
100 |
77 |
79 |
156 |
Other loans |
— |
— |
— |
25 |
— |
25 |
Total
unsecured |
82 |
1,861 |
1,943 |
102 |
1,919 |
2,021 |
Total
borrowings |
102 |
1,970 |
2,072 |
124 |
2,104 |
2,228 |
Committed facilities
drawn |
|
|
1,878 |
|
|
1,957 |
Uncommitted facilities
drawn |
|
|
194 |
|
|
271 |
|
|
|
|
|
|
|
14 Retirement benefits
All assumptions related to the Group’s defined benefit schemes
and post-retirement medical plan liabilities were re-assessed
individually for the year ended 31 December 2022. Due to
changes in assumptions and exchange rate movements, the net
retirement benefits liability decreased by €42 million and the net
retirement benefits asset decreased by €18 million. The assets
backing the defined benefit scheme liabilities reflect their market
values as at 31 December 2022. Net remeasurement gains arising
from changes in assumptions and return on plan assets amounting to
€5 million have been recognised in the condensed consolidated
statement of comprehensive income.
15 Russian operations
(discontinued operations)
The Group has significant operations in Russia. The most significant facility is a
wholly owned integrated pulp, packaging paper and uncoated fine
paper mill located in Syktyvkar (Komi Republic). The Group also has
three packaging converting plants in Russia. All these facilities serve primarily
the domestic market and have continued to operate throughout the
year ended 31 December 2022.
On 4 May 2022, the Board decided
to divest the Group’s Russian assets. Given progress with the
divestment process, the Board subsequently concluded, in
June 2022, that the Russian
operations satisfied the criteria to be classified as held for sale
and that they should also be classified as discontinued
operations.
Syktyvkar mill
On 12 August 2022, the Group
entered into an agreement denominated in Russian rouble to sell its
Syktyvkar mill, comprising OJSC Mondi Syktyvkar together with two
affiliated entities, to Augment Investments Limited for a
consideration of RUB 95 billion (€1.2
billion, at an exchange rate of 78.43 Russian rouble versus euro as
at 31 December 2022), payable in cash
on completion.
The Syktyvkar assets to be transferred to Augment Investments
Limited as part of the proposed disposal exclude a cash balance of
RUB 16 billion (€204 million, at an exchange rate of 78.43
Russian rouble versus euro as at 31 December
2022) to be paid by form of dividend to Mondi before
completion.
The disposal is conditional on the approval of the Russian
Federation’s Government Sub-Commission for the Control of Foreign
Investments and customary antitrust approvals and, as a Class 1
transaction under the UK Listing rules, it is also conditional upon
the approval of Mondi's shareholders at a General Meeting. The
disposal is being undertaken in an evolving political and
regulatory environment, there can be no certainty as to when the
disposal will be completed. The agreement with Augment Investments
Limited has a long stop date of 12 May
2023 after which either party can terminate the agreement
without recourse.
On 16 November 2022, OJSC Mondi
Syktyvkar declared a dividend of RUB 16
billion (€252 million, at an exchange rate of 62.67 Russian
rouble versus euro) in favour of a Group subsidiary. RUB 4 billion (€63 million, at an exchange rate
of 62.67 Russian rouble versus euro) was settled on the date of
declaration by way of set-off of an intercompany loan, and the
residual amount of RUB 12 billion
(€148 million, at an exchange rate of 78.43 Russian rouble versus
euro as at 31 December 2022) remained
unpaid as at 31 December 2022,
causing a foreign currency loss of €36 million, which was
recognised in profit from discontinued operations in the
consolidated income statement. The payment of the dividend outside
Russia requires consent from the
Ministry of Finance of the Russian
Federation, and therefore the dividend continues to expose
the Group to Russian rouble exchange rate risk until it is paid and
converted into euro.
Packaging converting plants
On 15 December 2022, the Group
confirmed that it entered into an agreement denominated in Russian
rouble to sell its three Russian packaging converting operations to
the Gotek Group for a consideration of RUB
1.6 billion (€20 million, at an exchange rate of 78.43
Russian rouble versus euro as at 31 December
2022), payable in cash on completion. The three packaging
converting operations comprise a corrugated solutions plant, LLC
Mondi Lebedyan, and two consumer flexibles plants, LLC Mondi Aramil
and LLC Mondi Pereslavl.
The disposal is conditional on the approval of the Russian
Federation’s Government Sub-Commission for the Control of Foreign
Investments and customary antitrust approvals. The disposal is
being undertaken in an evolving political and regulatory
environment, there can be no certainty as to when it will be
completed.
Following the announcement, the related assets were impaired by
€57 million to their estimated fair value less costs to sell. If
the operations had been disposed of as at 31
December 2022, the Group would have recognised an additional
loss of €20 million from the recycling of the foreign currency
losses accumulated in the currency translation adjustment reserve
in equity through the consolidated income statement. The foreign
currency loss that is ultimately recognised on disposal may differ
from the position as at 31 December
2022, as it is subject to future movement in the Russian
rouble exchange rate.
Critical accounting judgements and
significant accounting estimates
In the context of an increased level of uncertainty, the Board
has exercised critical judgements in applying its accounting
policies and has used estimates and assumptions, as further
described below.
Control assessment
The Board has applied its judgement in regard to whether the
Group continues to control its Russian subsidiaries due to the
restrictions imposed by the Russian government or any other
authority. Control exists when the Group is exposed, or has rights,
to variable returns from its involvement with the subsidiary and
has the ability to affect those returns through its power over the
subsidiary. The Russian government has introduced various sanctions
in recent months, including restrictions on the payment of
dividends to shareholders domiciled in 'unfriendly states' that
require consent from the Ministry of Finance of the Russian Federation. Since the Group continued
to direct the operations and the Russian regulations currently do
not prohibit the declaration and payment of dividends, the Board
has taken the view that the Group has retained control through the
year ended 31 December 2022. Were the
Board to conclude that the Group no longer retains control, the
Russian operations would be treated as if they had been disposed
of, with the associated assets and liabilities derecognised.
Held for sale and discontinued
operations
The Board has exercised critical judgement in determining if and
when the businesses satisfied the requirements to be classified as
held for sale, and whether the Russian businesses should be
presented as discontinued operations.
Assets are held for sale if their carrying amounts will be
recovered principally through a sale transaction rather than
through continuing use, provided the assets are available for
immediate sale in their present condition and a sale is highly
probable. The divestment process is operationally and structurally
complex and is being undertaken in an evolving political and
regulatory environment. There is uncertainty as to when a
transaction will be completed; however, the Board is committed to
dispose of the Group's Russian operations, which is why the Board
has determined that a sale is highly probable within the next 12
months and that, therefore, it is appropriate to adopt the held for
sale presentation for the Group's assets and liabilities in
Russia.
From the point at which this classification was first applied,
in June 2022, depreciation on these
Russian assets ceased. Notwithstanding that the Board has concluded
that it considers a sale is highly probable, the evolving political
and regulatory environment means that there can be no certainty as
to whether a transaction will be concluded successfully. If the
Board had concluded that a sale was not highly probable, the assets
and liabilities would have continued to be consolidated on a
line-by-line basis, as they had been historically, rather than
being presented separately as assets held for sale and liabilities
directly associated with assets held for sale.
As the assets and liabilities of the Russian operations have
been classified as held for sale, the Board has to separately
consider whether these businesses also represent a discontinued
operation, being a component of an entity that either has been
disposed of or is classified as held for sale, and which represents
a separate major line of business or geographical area of
operations, is part of a single coordinated plan to dispose of a
separate major line of business or geographical area of operations
or is a subsidiary acquired exclusively with a view to resale. In
2021, prior to the decision to classify as discontinued operations,
the Russian operations represented around 10% of the Group's
revenue by location of production and generated around 23% of the
Group’s underlying EBITDA. Taking into account its financial
significance, the Board views the Russian operations as a distinct
major geographical area of operations that, therefore, qualify for
classification as discontinued operations.
Hence, in accordance with IFRS 5, the Group has reported its
Russian businesses as discontinued operations as at 31 December 2022 and for the year then ended,
with the comparative income statement and cash flow statement
periods represented. Had the Board concluded that the businesses
were not discontinued operations, they would instead have continued
to be reported as part of continuing operations.
Valuation of Russian assets
Effective 24 February 2022, when
the war in Ukraine started, the
Board performed an impairment trigger assessment in respect of its
Russian operations. Given the temporary deterioration of the
Russian rouble and the sharp increase in interest rates, together
with the increased uncertainty relating to the operational and
financial performance of its businesses due to sanctions imposed by
international governments and countermeasures implemented by the
Russian state, the Board concluded that an impairment trigger
existed and tested its CGUs in Russia for impairment using value-in-use
calculations in accordance with IAS 36, 'Impairment of Assets'.
The key assumptions reflected in the cash flow forecasts
included sales volumes, sales prices and variable input cost
assumptions derived from a combination of economic and industry
forecasts for individual product lines and the latest internal
management projections approved by the Board. The cash flow
projections were prepared in Russian roubles and a post-tax
discount rate of 15% (equivalent to a pre-tax rate of 18%) was used
for impairment testing.
Due to the increased uncertainty, no growth rate was assumed for
the terminal value. At this time (at 24
February 2022), the carrying value of the Russian CGUs
totalled RUB 66 billion (€677 million, at an
exchange rate of 97.47 Russian rouble versus euro). Due to the
increased level of uncertainty resulting from the war in
Ukraine, the Board determined the
recoverable amount of the CGUs based on three probability-weighted
scenarios. Aside from the base scenario derived from the then
latest internal management projections, management included a more
optimistic and a pessimistic scenario in the calculation of the
recoverable amount to address the uncertainty associated with the
cash flow forecasts. The impairment calculation is sensitive to
changes in key assumptions, in particular in relation to cash flow
forecasts and the probability-weighting of scenarios. Sensitivity
analyses were performed by increasing the weighting of the
pessimistic case and at the same time reducing the weighting of the
optimistic case. At 24 February 2022, no impairment was
identified.
Given, as described below, that in June the Board determined
that the Russian assets satisfied the criteria to be classified as
held for sale, a further impairment test had to be performed. At
this time (June 2022), the carrying
value of the Russian CGUs totalled RUB 66 billion
(€1,079 million, at an exchange rate of 61.16 Russian rouble
versus euro). This impairment test was again performed using three
probability weighted scenarios under a value-in-use calculation
based on similar assumptions as described above for the test
performed effective 24 February 2022.
No impairment was identified.
Upon classification as held for sale in June 2022, the Board also assessed the fair value
less costs to sell of the businesses, as required by IFRS 5 with no
impairment identified.
At 31 December 2022, the fair
value less costs to sell was reassessed. The Board has used a
number of assumptions to estimate the fair value less costs to sell
as at 31 December 2022. While the
Group agreed upon the sale of its Syktyvkar mill and its three
Russian packaging converting plants (as described above), there can
be no certainty in this evolving political and regulatory
environment as to when the transaction will be completed.
In determining the fair value less costs to sell of the Russian
CGUs, the Board has taken into account the sales prices agreed upon
with the buyers, the current status of and recent developments
around the agreed transactions, the probability of government
approval and available market information. Despite the uncertainty
inherent to the agreed sales, and in the absence of contrary
correspondence from the buyers and any government body, the Board
has taken the view that the agreements signed with the buyers serve
as the best information to measure the fair value less costs to
sell of the Syktyvkar mill and the packaging converting operations
respectively. On that basis, the Board concluded that no impairment
of the Syktyvkar mill's assets was required as at 31 December
2022 and that an impairment of €57 million was recognised in
relation to the assets of the packaging converting operations.
If there was a change to the known fact pattern of the planned
transactions in the future, the Board would need to reassess the
recoverability of the carrying value of the assets classified as
held for sale as at 31 December 2022
based on that new fact pattern, and if any impairment were
subsequently identified it would be recognised in the consolidated
income statement during the year ending 31
December 2023. The Board continues to actively monitor any
actions or events that may impact the completion of the agreed
transactions, and hence the valuation of the Group's Russian
CGUs.
Financial performance
The financial performance of the discontinued operations is set
out below:
€ million |
2022 |
20211 |
Total revenue |
1,268 |
961 |
Internal revenue |
(90) |
(212) |
External
revenue |
1,178 |
749 |
Operating
expenses |
(688) |
(403) |
EBITDA |
490 |
346 |
Depreciation,
amortisation and impairments2, 3 |
(86) |
(64) |
Operating
profit |
404 |
282 |
Net finance
costs4 |
(46) |
(11) |
Profit before
tax |
358 |
271 |
Related tax
charge |
(92) |
(58) |
Profit for the
period from discontinued operations attributable to
shareholders |
266 |
213 |
Fair value gains
arising from cash flow hedges of discontinued operations |
1 |
— |
Exchange differences
on translation of discontinued operations |
72 |
42 |
Remeasurements of
retirement benefits plans of discontinued operations |
1 |
1 |
Other
comprehensive income from discontinued operations
attributable
to shareholders |
74 |
43 |
Total
comprehensive income from discontinued operations
attributable
to shareholders |
340 |
256 |
Notes:
1 The Group’s operations in Russia are presented as held for sale and
classified as discontinued operations. Accordingly, the
consolidated income statement and associated notes for the year
ended 31 December 2021 were restated
by the amounts included in this table, which are now classified as
profit from discontinued operations in the consolidated income
statement
2 Includes foreign exchange loss of €36 million relating
to an unpaid dividend, as explained in the commentary above (2021:
€nil)
3 On classification as held for sale, property, plant and
equipment and intangible assets are no longer depreciated or
amortised. Depreciation and amortisation for the year ended
31 December 2022 covers the period
until the classification as held for sale in June 2022
4 Includes impairment of assets of €57 million (2021:
€nil), as explained in the commentary above
€ million |
2022 |
2021 |
Net cash generated
from operating activities |
350 |
286 |
Net cash used in
investing activities |
(68) |
(91) |
Net cash used in
financing activities |
(10) |
(13) |
Net increase in
cash and cash equivalents of discontinued operations |
272 |
182 |
The assets and liabilities were reclassified as held for sale in
June 2022. The table below shows the
carrying values of these assets and liabilities as at
31 December 2022.
€ million |
2022 |
Property, plant and
equipment |
805 |
Goodwill |
34 |
Intangible assets |
4 |
Deferred tax
assets |
1 |
Inventories |
131 |
Trade and other
receivables |
87 |
Cash and cash
equivalents |
320 |
Total assets held
for sale |
1,382 |
Borrowings |
(102) |
Trade and other
payables |
(131) |
Current tax
liabilities |
(14) |
Provisions |
(14) |
Net retirement
benefits liability |
(12) |
Deferred tax
liabilities |
(52) |
Total liabilities
directly associated with assets classified as held for
sale |
(325) |
The cumulative foreign exchange gain recognised in other
comprehensive income in relation to the discontinued operations as
at 31 December 2022 was €405 million and will be recycled
through the condensed consolidated income statement on the date of
disposal.
16 Disposal of
businesses
To 31 December 2022
On 30 June 2022, the Group sold
its Personal Care Components business (PCC) to Nitto Denko
Corporation for an enterprise value of €615 million. The sale
enables the Group to simplify its portfolio and focus on its
strategic priority to grow in sustainable packaging. PCC,
previously part of the Group’s Engineered Materials operating
segment, manufactured a range of components for personal and home
care products needed in everyday life such as diapers, feminine
care, adult incontinence and wipes.
The Board has applied judgement as to whether the disposal of
the PCC business needs to be reported as a discontinued operation
in accordance with IFRS 5. The PCC business did not represent a
major line of business of the Group due to its small size relative
to the rest of the Group and its limited integration with the
Group’s packaging and paper value chain. The Board concluded that
the PCC business was not a discontinued operation and therefore it
is reported as part of the continuing operations.
€ million |
2022 |
Proceeds from the
disposal of business per the consolidated statement of cash
flows |
642 |
Cash and cash
equivalents disposed |
15 |
Consideration in
cash |
657 |
Carrying amount of net
assets disposed |
(412) |
Gain on
reclassification of foreign currency translation reserve |
4 |
Related transaction
costs1 |
(7) |
Gain on disposal of
business, net of related transaction costs |
242 |
Tax charge |
(5) |
Gain on disposal of
business, net of related tax |
237 |
Note:
1 Excludes transaction costs of €6 million recognised in
the prior year, which were not treated as a special item
The carrying amounts of assets and liabilities as at the date of
sale (30 June 2022) were:
€ million |
2022 |
Property, plant and
equipment |
174 |
Goodwill |
141 |
Intangible assets |
2 |
Inventories |
58 |
Trade and other
receivables |
88 |
Cash and cash
equivalents |
15 |
Total
assets |
478 |
Trade and other
payables |
(49) |
Provisions |
(4) |
Deferred tax
liabilities |
(8) |
Other liabilities |
(5) |
Total
liabilities |
(66) |
Carrying amount of
net assets disposed |
412 |
The carrying amount of net assets disposed includes an
appropriate allocation of the goodwill previously allocated to the
Engineered Materials operating segment between the value of the PCC
business that was disposed of and the retained functional paper and
films business.
To 31 December 2021
There were no disposals during the year ended 31 December
2021.
17 Consolidated cash flow
analysis
(a) Reconciliation of
profit before tax to cash generated from operations
|
|
Restated |
€ million |
2022 |
2021 |
Profit before tax
from continuing operations |
1,560 |
712 |
Depreciation and
amortisation |
394 |
375 |
Impairment of
property, plant and equipment (not included in special items) |
11 |
— |
Share-based
payments |
11 |
9 |
Net cash flow effect
of current and prior year special items |
(253) |
(22) |
Net finance costs |
143 |
83 |
Net monetary gain
arising from hyperinflationary economies |
(17) |
— |
Net profit from joint
ventures |
(1) |
(6) |
Decrease in
provisions |
(1) |
(7) |
Decrease in net
retirement benefits |
(12) |
(15) |
Net movement in
working capital |
(419) |
(195) |
Increase in
inventories |
(254) |
(232) |
Increase in operating
receivables |
(472) |
(310) |
Increase in operating
payables |
307 |
347 |
Fair value
(gains)/losses on forestry assets |
(169) |
7 |
Felling costs |
78 |
62 |
Gain on disposal of
property, plant and equipment |
(2) |
— |
Proceeds from
insurance reimbursements for property damages |
(8) |
— |
Other adjustments |
(23) |
(2) |
Cash generated from
continuing operations |
1,292 |
1,001 |
(b) Cash and cash
equivalents
€ million |
2022 |
2021 |
Cash and cash
equivalents per condensed consolidated statement of financial
position |
1,067 |
473 |
Bank overdrafts
included in short-term borrowings |
(6) |
(18) |
Cash and cash
equivalents held by continuing operations (see note 17c) |
1,061 |
455 |
Cash and cash
equivalents classified as assets held for sale (see note 15) |
320 |
— |
Cash and cash
equivalents per condensed consolidated statement of cash
flows |
1,381 |
455 |
The cash and cash equivalents of €1,067 million (2021: €473
million) include money market funds of €595 million (2021:
€340 million) valued at fair value through profit and loss,
with the remaining balance carried at amortised cost.
The fair value of cash and cash equivalents carried at amortised
cost approximate their carrying values presented.
The Group operates in certain countries where the existence of
exchange controls or access to hard currency may restrict the use
of certain cash balances outside of those countries. In particular,
the cash and cash equivalents classified as assets held for sale as
per the table above are held by the Group’s Russian discontinued
operations and are subject to regulatory restrictions and,
therefore, may not be available for general use by the other
entities within the Group. These restrictions are not expected to
have any material effect on the Group’s ability to meet its ongoing
obligations.
(c) Movement in net
debt
The Group’s net debt position is as follows:
€ million |
Cash
and
cash
equivalents |
Current financial asset investments |
Debt
due within 1 year1 |
Debt
due
after 1 year |
Debt-related derivative financial instruments |
Total
net
debt |
At 1 January 2021 |
348 |
1 |
(94) |
(2,050) |
4 |
(1,791) |
Cash flow2,
3 |
108 |
— |
27 |
(59) |
12 |
88 |
Additions to lease
liabilities |
— |
— |
(9) |
(26) |
— |
(35) |
Disposal of lease
liabilities |
— |
— |
1 |
1 |
— |
2 |
Acquired through
business combinations |
— |
— |
(16) |
(1) |
— |
(17) |
Movement in
unamortised loan costs |
— |
— |
— |
(2) |
— |
(2) |
Net movement in fair
value of derivative financial instruments |
— |
— |
— |
— |
(25) |
(25) |
Reclassification |
— |
— |
(39) |
39 |
— |
— |
Currency
movements |
(1) |
— |
24 |
(6) |
— |
17 |
At 31 December
2021 |
455 |
1 |
(106) |
(2,104) |
(9) |
(1,763) |
Cash flow2,
3 |
908 |
— |
32 |
53 |
82 |
1,075 |
Additions to lease
liabilities |
— |
— |
(15) |
(35) |
— |
(50) |
Disposal of lease
liabilities |
— |
— |
1 |
4 |
— |
5 |
Movement in
unamortised loan costs |
— |
— |
— |
(2) |
— |
(2) |
Net movement in fair
value of derivative financial instruments |
— |
— |
— |
— |
(80) |
(80) |
Reclassification |
— |
— |
(21) |
21 |
— |
— |
Currency
movements |
18 |
— |
10 |
(6) |
— |
22 |
At 31 December
2022 |
1,381 |
1 |
(99) |
(2,069) |
(7) |
(793) |
Reclassification to
assets held for sale and liabilities directly associated with
assets held for sale (see note 15) |
(320) |
— |
3 |
99 |
— |
(218) |
Net debt as at 31
December 2022 |
1,061 |
1 |
(96) |
(1,970) |
(7) |
(1,011) |
Notes:
1 Excludes bank overdrafts of €6 million as at
31 December 2022 (31 December 2021: €18 million;
1 January 2021: €34 million), which
are included in cash and cash equivalents (see note 17b)
2 Includes cash and cash equivalents acquired
net of overdrafts through business combinations of €nil (2021: €3
million)
3 Includes cash and cash equivalents disposed
of €15 million (2021: €nil) (see note 16)
The Group expensed interest of €140 million relating to its bank
overdrafts, loans and lease liabilities (2021 (restated): €81
million). Included in this expense is €67 million (2021 (restated):
€11 million) related to forward exchange rates on derivative
contracts and interest paid on borrowings of €60 million (2021
(restated): €67 million). The settlement of debt-related
derivatives shown as cash flow in the table above is recognised as
net cash outflow from debt-related derivative financial instruments
in the condensed consolidated statement of cash flows.
18 Capital commitments
Capital expenditure contracted for at the end of the financial
year but not recognised as liabilities is as follows:
|
|
Restated |
€ million |
2022 |
2021 |
Intangible assets |
2 |
1 |
Property, plant and
equipment |
441 |
273 |
Total capital
commitments |
443 |
274 |
19 Contingent
liabilities
Contingent liabilities comprise aggregate amounts as at
31 December 2022 of €11 million (2021: €8 million) in respect
of loans and guarantees given to banks and other third parties. No
acquired contingent liabilities have been recorded in the Group’s
condensed consolidated statement of financial position for either
year presented.
The Group is subject to certain legal proceedings, claims,
complaints and investigations arising out of the ordinary course of
business. Legal proceedings may include, but are not limited to,
alleged breach of contract and alleged breach of environmental,
competition, securities and safety and health laws. The Group may
not be fully, or partly, insured in respect of such risks. The
Group cannot predict the outcome of individual legal actions or
claims or complaints or investigations. The Group may settle
litigation or regulatory proceedings prior to a final judgment or
determination of liability. The Group may do so to avoid the cost,
management efforts or negative business, regulatory or reputational
consequences of continuing to contest liability, even when it
considers it has valid defences to liability. The Board considers
that no material loss to the Group is expected to result from these
legal proceedings, claims, complaints and investigations. Provision
is made for all liabilities that are expected to materialise
through legal and tax claims against the Group.
20 Fair value
measurement
Assets and liabilities that are measured at fair value, or where
the fair value of financial instruments has been disclosed in the
notes to the condensed consolidated financial statements, are based
on the following fair value measurement hierarchy:
- Level 1 – quoted prices (unadjusted) in active markets for
identical assets or liabilities
- Level 2 – inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices)
- Level 3 – inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs)
The assets measured at fair value on level 3 of the fair value
measurement hierarchy are the Group’s forestry assets as set out in
note 11.
There have been no transfers of assets or liabilities between
levels of the fair value hierarchy during the year.
The fair values of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) are
determined using generally accepted valuation techniques. These
valuation techniques maximise the use of observable market data and
rely as little as possible on Group specific estimates.
Specific valuation methodologies used to value financial
instruments include the following:
- The fair values of interest rate swaps and 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.
Except as detailed below, the carrying values of financial
instruments at amortised cost as presented in the condensed
consolidated financial statements approximate their fair
values.
|
Carrying amount |
Fair value |
€ million |
2022 |
2021 |
2022 |
2021 |
Financial
liabilities |
|
|
|
|
Borrowings |
2,072 |
2,228 |
1,956 |
2,353 |
21 Related party
transactions
The Group and its subsidiaries, in the ordinary course of
business, enter into various sale, purchase and service
transactions with associated undertakings in which the Group has a
material interest. The related party transactions entered into by
the Group have been contracted on an arm's-length basis.
Transactions between Mondi plc and its subsidiaries, which are
related parties, and transactions between its subsidiaries have
been eliminated on consolidation and are not disclosed in this
note.
|
Joint ventures |
€ million |
2022 |
2021 |
Sales to related
parties |
8 |
6 |
Purchases from related
parties |
715 |
238 |
Trade and other
receivables from related parties |
1 |
2 |
Trade and other
payables due to related parties |
112 |
50 |
Loans receivable from
related parties |
10 |
9 |
The increase in purchases from related parties and trade and
other payables from related parties is mainly caused by wood
purchases from a joint venture in Poland and wood price increases in 2022. None
of the joint ventures are assessed as being individually material
to the Group.
22 Events occurring after
31 December 2022
Aside from the final dividend proposed for 2022 (see note 9),
there has been the following material reportable event since
31 December 2022:
- On 12 January 2023, the Group
completed the acquisition of the Duino mill near Trieste
(Italy) from the Burgo Group for a
total consideration of €40 million. The mill operated one paper
machine producing lightweight coated mechanical paper. Mondi plans
to convert this paper machine to produce around 420,000 tonnes per
annum of high-quality recycled containerboard for an estimated
investment of around €200 million.
Production statistics
|
|
|
Restated |
|
|
2022 |
2021 |
Continuing
operations |
|
|
|
Containerboard |
000 tonnes |
2,383 |
2,375 |
Kraft paper |
000 tonnes |
1,309 |
1,253 |
Uncoated fine
paper |
000 tonnes |
913 |
1,068 |
Pulp |
000 tonnes |
3,566 |
3,398 |
Internal
consumption |
000 tonnes |
3,103 |
3,007 |
Market pulp |
000 tonnes |
463 |
391 |
Corrugated
solutions |
million
m2 |
1,937 |
2,052 |
Paper bags |
million units |
5,994 |
5,928 |
Consumer
flexibles |
million
m2 |
2,039 |
2,057 |
Functional paper and
films |
million
m2 |
3,279 |
3,383 |
Exchange rates
|
Average |
Closing |
versus
euro |
2022 |
2021 |
2022 |
2021 |
South African rand
(ZAR) |
17.21 |
17.48 |
18.10 |
18.06 |
Czech koruna
(CZK) |
24.57 |
25.64 |
24.12 |
24.86 |
Polish zloty
(PLN) |
4.69 |
4.57 |
4.68 |
4.60 |
Pound sterling
(GBP) |
0.85 |
0.86 |
0.89 |
0.84 |
Russian rouble
(RUB) |
73.94 |
87.15 |
78.43 |
85.30 |
Turkish lira
(TRY)1 |
17.41 |
10.51 |
19.96 |
15.23 |
US dollar (USD) |
1.05 |
1.18 |
1.07 |
1.13 |
Note:
1 Hyperinflation accounting was adopted effective from
1 January 2022 to report the Group’s
operations in Turkiye (see note 1)
Alternative Performance Measures
The Group presents certain measures of financial performance,
position or cash flows in the condensed consolidated financial
statements that are not defined or specified according to IFRS in
order to provide additional performance-related measures to its
stakeholders. These measures, referred to as Alternative
Performance Measures (APMs), are prepared on a consistent basis for
all periods presented in this report.
By their nature, the APMs used by the Group are not necessarily
uniformly applied by peer companies and therefore may not be
comparable with similarly defined measures and disclosures applied
by other companies. Such measures should not be viewed in isolation
or as a substitute to the equivalent IFRS measure.
Internally, the Group and its operating segments apply the same
APMs in a consistent manner in planning and reporting on
performance to management and the Board. Two of the Group’s APMs,
total EBITDA and ROCE of continuing and discontinued operations,
link to the Group’s strategic framework and form part of the
executive directors and senior management remuneration targets.
Since June 2022, the Group’s
operations in Russia have
satisfied the criteria to be classified as held for sale and are
reported as discontinued operations as at 31 December 2022 and
for the year then ended (see note 15). For comparability purposes,
the APMs based on amounts recognised in the condensed consolidated
statement of financial position exclude the proportion of assets
and liabilities attributable to the Russian operations; however, no
restatement of the IFRS condensed consolidated statement of
financial position has been made for such items as at
31 December 2021. APMs measuring the profitability and cash
flows of the Group are presented for continuing operations (i.e.
excluding the results from the Russian discontinued operations) and
comparatives are presented on the same basis, consistent with the
presentation of the IFRS condensed consolidated income statement
and IFRS condensed consolidated statement of cash flows. Where
these changes have impacted the APMs for comparative periods, as
presented previously, these have been described as restated.
The most significant APMs used by the Group are described below,
together with a reconciliation to the equivalent IFRS measure based
on Group figures. The reporting segment equivalent APMs are
measured in a consistent manner.
APM description and purpose |
Financial statement reference |
Closest IFRS equivalent measure |
Special
items |
Special
items are generally material, non-recurring items that exceed €10
million. The Audit Committee regularly assesses the monetary
threshold of €10 million and considers the threshold in the context
of both the Group as a whole and individual operating segment
performance.
The Group separately discloses special items on the face of the
condensed consolidated income statement to assist its stakeholders
in understanding the underlying financial performance achieved by
the Group on a basis that is comparable
from year to year.
Subsequent adjustments to items previously recognised as special
items continue to be reflected as special items in future
periods even if they do not exceed the quantitative reporting
threshold. |
Note 4 |
None |
|
|
|
Underlying EBITDA |
Operating profit
before special items, depreciation, amortisation and impairments
not recorded as special items provides a measure of the
cash-generating ability of the Group's continuing operations that
is comparable from year to year. |
Condensed consolidated
income statement |
Operating profit |
|
|
|
Underlying EBITDA margin |
Underlying EBITDA
expressed as a percentage of Group revenue (segment revenue for
operating segments) provides a measure of the cash-generating
ability relative to revenue. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Underlying EBITDA (see
condensed consolidated income statement) |
1,848 |
1,157 |
Group revenue (see
condensed consolidated income statement) |
8,902 |
6,974 |
Underlying EBITDA
margin (%) |
20.8 |
16.6 |
|
|
|
Total EBITDA (prior
to special items) |
|
|
Operating profit before special items, depreciation, amortisation
and impairments not recorded as special items provides a measure of
the cash-generating ability of the business that is comparable from
year to year.
Total EBITDA (prior to special items) is calculated to show the
total from continuing and discontinued operations as if the EBITDA
of the Russian operations was not separately disclosed as arising
from discontinued operations. |
|
Operating profit |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
EBITDA from continuing
operations (see condensed consolidated income statement) |
2,090 |
1,160 |
EBITDA from
discontinued operations (see note 15) |
490 |
346 |
Special items (see
condensed consolidated income statement) |
(242) |
(3) |
Total EBITDA (prior
to special items) |
2,338 |
1,503 |
|
|
|
Underlying
operating profit |
|
|
Operating profit from
continuing operations before special items provides a measure of
operating performance that is comparable from year to year. |
Condensed consolidated
income statement |
Operating profit |
|
|
|
Underlying operating profit margin from continuing
operations |
Underlying operating
profit expressed as a percentage of Group revenue (segment revenue
for operating segments) provides a measure of the profitability of
the operations relative to revenue. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Underlying operating
profit (see condensed consolidated income statement) |
1,443 |
782 |
Group revenue (see
condensed consolidated income statement) |
8,902 |
6,974 |
Underlying
operating profit margin (%) |
16.2 |
11.2 |
|
|
|
Net
interest expense |
Net
interest expense comprises interest expense on bank overdrafts,
loans and lease liabilities net of investment income.
Net interest expense provides an absolute measure of the net cost
of borrowings. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million |
2022 |
Restated
2021 |
Investment income (see
note 6) |
6 |
5 |
Interest on bank
overdrafts and loans (see note 6) |
(133) |
(75) |
Interest on lease
liabilities (see note 6) |
(7) |
(6) |
Net interest
expense |
(134) |
(76) |
|
|
|
Underlying profit before tax |
Profit before tax and
special items for continuing operations. Underlying profit before
tax provides a measure of the Group’s profitability before tax that
is comparable from year to year. |
Condensed consolidated
income statement |
Profit before tax |
|
|
|
Effective tax rate |
Underlying tax charge expressed as a percentage of underlying
profit before tax.
A measure of the Group’s tax charge relative to its profit before
tax expressed on an underlying basis. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Tax charge before
special items (see note 7) |
296 |
154 |
Underlying profit
before tax (see condensed consolidated income statement) |
1,318 |
705 |
Effective tax rate
(%) |
22 |
22 |
|
|
|
Underlying earnings (and per share measure) |
Net
profit after tax attributable to shareholders from continuing
operations, before special items.
Underlying earnings (and the related per share measure based on the
basic, weighted average number of ordinary shares outstanding)
provides a measure of the continuing operations’ earnings. |
Note 8 |
Profit for the period
attributable to shareholders (and per share measure) |
|
|
|
Total earnings
(prior to special items) (and per share measure) |
|
|
Net
profit after tax attributable to shareholders, before special
items, from continuing operations and discontinued operations.
Total earnings (and the related per share measure based on the
basic, weighted average number of ordinary shares outstanding),
provides a measure of the Group’s earnings. |
Note 8 |
Profit for the period
attributable to shareholders (and per share measure) |
|
|
|
Headline earnings (and per share measure) |
The presentation of
headline earnings (and the related per share measure based on the
basic, weighted average number of ordinary shares outstanding) is
mandated under the Listings Requirements of the JSE Limited and is
calculated in accordance with Circular 1/2021, ‘Headline Earnings’,
as issued by the South African Institute of Chartered
Accountants. |
Note 8 |
Profit for the period
attributable to shareholders (and per share measure) |
|
|
|
Dividend cover |
Basic
underlying EPS from continuing operations divided by total ordinary
dividend per share paid and proposed provides a measure of the
Group’s earnings relative to ordinary dividend payments.
The 2021 dividend cover is based on total EPS, as the dividend was
paid prior to reclassifying the Russian assets as held for sale and
reporting them as discontinued operations. |
|
None |
|
|
|
APM
calculation: |
|
|
euro cents, unless
otherwise stated |
|
2022 |
Basic underlying EPS
(see note 8) |
|
195.6 |
Total ordinary
dividend per share (see note 9) |
|
70.0 |
Dividend cover
(times) |
|
2.8 |
|
|
|
euro cents, unless
otherwise stated |
|
2021 |
Basic total EPS (prior
to special items) (see note 8) |
|
154.0 |
Total ordinary
dividend per share (see note 9) |
|
65.0 |
Dividend cover
(times) |
|
2.4 |
|
|
|
Capital
employed (and related trailing 12-month average capital
employed) |
Capital
employed comprises total equity and net debt. Trailing 12-month
average capital employed is the average monthly capital employed
over the last 12 months adjusted for spend on major capital
expenditure projects which are not yet in production.
These measures provide the level of invested capital in the
business. Trailing 12-month average capital employed is used in the
calculation of return on capital employed. |
Note 3 |
Total equity |
|
|
|
Return
on capital employed (ROCE) |
Trailing 12-month
underlying operating profit, including share of associates' and
joint ventures' net profit/(loss), divided by trailing 12-month
average capital employed. ROCE provides a measure of the efficient
and effective use of capital in the business and is presented on
the basis of continuing operations for comparability. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
2021 |
Trailing 12-month
underlying operating profit (see condensed consolidated income
statement) |
1,443 |
782 |
Trailing 12-month
underlying net profit from joint ventures (see condensed
consolidated income statement) |
1 |
6 |
Trailing 12-month
underlying profit from operations and joint ventures |
1,444 |
788 |
Trailing 12-month
average capital employed (see note 3) |
6,097 |
5,672 |
ROCE from
continuing operations (%) |
23.7 |
13.9 |
|
|
|
The ROCE from
continuing operations and discontinued operations is calculated to
show as if the net profit of the Russian operations was not
separately disclosed as arising from discontinued operations. |
|
|
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Underlying profit from
continuing operations and joint ventures (see above) |
1,444 |
788 |
Operating profit from
discontinued operations (see note 15) |
404 |
282 |
Profit from operations
and joint ventures of the Group before special items (incl.
discontinued operations) |
1,848 |
1,070 |
Trailing
12-month average capital employed of the Group (incl. discontinued
operations)
(see note 3) |
7,117 |
6,349 |
ROCE from
continuing and discontinued operations (%) |
26.0 |
16.9 |
|
|
|
Net
debt |
A
measure comprising short-, medium- and long-term interest-bearing
borrowings and the fair value of debt-related derivatives less cash
and cash equivalents, net of overdrafts, and current financial
asset investments. Trailing 12-month average net debt is the
average monthly net debt over the last 12 months. Net debt of
continuing operations and trailing 12-month average net debt has
been adjusted for net debt of the discontinued operations for
comparability.
Net debt provides a measure of the Group’s net indebtedness or
overall leverage. |
Note 17c |
None |
|
|
|
APM
calculation: |
|
|
€ million |
2022 |
Restated
2021 |
Net debt (see note
17c) |
1,011 |
1,763 |
Net debt of
discontinued operations |
— |
(74) |
Net debt of
continuing operations |
1,011 |
1,689 |
|
|
|
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. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Net debt of continuing
operations (see note 17c) |
1,011 |
1,689 |
Underlying EBITDA (see
condensed consolidated income statement) |
1,848 |
1,157 |
Net debt to
underlying EBITDA (times) |
0.5 |
1.5 |
|
|
|
Working
capital as a percentage of revenue |
Working capital,
defined as the sum of trade and other receivables and inventories
less trade and other payables, expressed as a percentage of
annualised Group revenue, which is calculated based on an
extrapolation of average monthly year-to-date revenue. A measure of
the Group’s effective use of working capital relative to revenue.
Working capital has been adjusted for working capital of the
discontinued operations in comparative periods for comparability
purposes. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Inventories (see
condensed consolidated statement of financial position) |
1,359 |
1,099 |
Trade and other
receivables (see condensed consolidated statement of financial
position) |
1,448 |
1,333 |
Trade and other
payables (see condensed consolidated statement of financial
position) |
(1,525) |
(1,444) |
Working capital |
1,282 |
988 |
Working capital of
discontinued operations |
— |
(44) |
Working capital of
continuing operations |
1,282 |
944 |
Group revenue (see
condensed consolidated income statement) |
8,902 |
6,974 |
Working capital as
a percentage of revenue (%) |
14 |
14 |
|
|
|
Gearing |
Net debt expressed as
a percentage of capital employed provides a measure of the
financial leverage of the Group. Net debt and capital employed is
adjusted for the discontinued operations for comparability. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2022 |
Restated
2021 |
Net debt (see note
17c) |
1,011 |
1,689 |
Capital employed of
continuing operations |
6,221 |
5,892 |
Gearing
(%) |
16.3 |
28.7 |
|
|
|
Cash
flow generation |
A
measure of the Group’s cash generation before considering
deployment of cash towards investment in property, plant and
equipment (‘capex’ or ‘capital expenditure’), acquisitions and
disposals of businesses, investment in associates and joint
ventures, payment of dividends to shareholders, acquisition or sale
of non-controlling interests in a subsidiary and proceeds from and
repayment of borrowings. Cash flow generation is a measure of the
Group’s ability to generate cash through the cycle before
considering deployment of such cash.
The cash flow generation is adjusted for the cash flows from the
discontinued operations for comparability and has been re-presented
for the effect from non-controlling interests bought out of
€3 million for the year ended 31 December 2021. |
|
Net
increase/(decrease) in cash and cash equivalents |
|
|
|
APM
calculation: |
|
|
€ million |
2022 |
Restated
2021 |
Net increase in
cash and cash equivalents |
908 |
108 |
Net increase in cash
and cash equivalents from discontinued operations |
(272) |
(182) |
Investment in
property, plant and equipment |
508 |
481 |
Acquisition of
businesses, net of cash and cash equivalents |
— |
63 |
Proceeds from the
disposal of business, net of cash and cash equivalents |
(642) |
— |
Investment in joint
ventures |
— |
1 |
Dividends paid to
shareholders |
321 |
298 |
Non-controlling
interests bought out |
— |
3 |
Net
repayment/(proceeds) of borrowings |
83 |
(34) |
Proceeds from other
medium- and long-term borrowings |
— |
(59) |
Repayment of other
medium- and long-term borrowings |
53 |
— |
Net repayment of
short-term borrowings |
9 |
4 |
Repayment of lease
liabilities |
21 |
21 |
|
|
|
Cash flow
generation |
906 |
738 |
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. Any reference to future
financial performance included in this announcement has not been
reviewed or reported on by the Group’s auditors.
Editors’ notes
Mondi is a global leader in packaging and paper, contributing to
a better world by making innovative solutions that are sustainable
by design. Our business is integrated across the value chain – from
managing forests and producing pulp, paper and films, to developing
and manufacturing sustainable consumer and industrial packaging
solutions using paper where possible, plastic when useful.
Sustainability is at the centre of our strategy, with our ambitious
commitments to 2030 focused on circular driven solutions, created
by empowered people, taking action on climate.
In 2022, Mondi had revenues of €8.9 billion and underlying
EBITDA of €1.8 billion from continuing operations, and employed
22,000 people worldwide. Mondi has a premium listing on the London
Stock Exchange (MNDI), where the Group is a FTSE100 constituent,
and also has a secondary listing on the JSE Limited (MNP).
mondigroup.com
Sponsor in South Africa:
Merrill Lynch South Africa Proprietary Limited t/a BofA
Securities.