Mondi plc
(Incorporated in England and
Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
LSE share code: MNDI ISIN:
GB00B1CRLC47
JSE share code: MNP
3 March 2022
Full year results for the year ended
31 December 2021
Highlights
- Strong financial performance
- Underlying EBITDA of €1,503 million, up €150 million
year-on-year (11%), with second half up 29%
- Profit before tax of €983 million, up 28%
- Basic underlying earnings per share of 154.0 euro cents, up 19%
- ROCE up at 16.9%
- Continued good cash generation and strong balance sheet of 1.2x
net debt to underlying EBITDA
- Recommended full year dividend of 65.0
euro cents per share, up 8%
- Good progress on all elements of our sustainability roadmap,
Mondi Action Plan 2030 (MAP2030)
- Successful execution and delivery of key
investments
- Strong pipeline of capital investment projects to further
capture growth in our packaging markets, building on our leading
market positions and long track record of disciplined capital
allocation, including €1 billion of expansionary projects
approved or under advanced evaluation
- Accelerated climate plans - committed to transition to
Net-Zero by 2050, in line with a 1.5°C scenario
- Agreed sale of Personal Care Components business in
February 2022 to deliver greater
focus
- Well-positioned for the future, with unique portfolio of
leading sustainable packaging solutions, cost-advantaged asset base
and strong financial position
Financial summary1
€ million,
except for percentages and per share measures |
Year
ended 31 December 2021 |
Year
ended 31 December 2020 |
Change
% |
Six
months ended 31 December 2021 |
Six
months ended 31 December 2020 |
Change
% |
Group revenue |
7,723 |
6,663 |
16 |
4,096 |
3,211 |
28 |
Underlying
EBITDA1 |
1,503 |
1,353 |
11 |
794 |
615 |
29 |
Underlying operating
profit1 |
1,064 |
925 |
15 |
567 |
401 |
41 |
Operating profit |
1,071 |
868 |
23 |
568 |
350 |
62 |
Profit before tax |
983 |
770 |
28 |
522 |
304 |
72 |
|
|
|
|
|
|
|
Basic underlying
earnings per share1 (euro cents) |
154.0 |
129.3 |
19 |
|
|
|
Basic earnings per
share (euro cents) |
155.9 |
120.0 |
30 |
|
|
|
|
|
|
|
|
|
|
Total dividend per
share (euro cents) |
65.0 |
60.0 |
8 |
|
|
|
|
|
|
|
|
|
|
Cash generated from
operations |
1,339 |
1,485 |
(10) |
|
|
|
Net
debt1 |
1,763 |
1,791 |
|
|
|
|
|
|
|
|
|
|
|
Underlying EBITDA
margin1 |
19.5% |
20.3% |
|
|
|
|
Return on capital
employed (ROCE)1 |
16.9% |
15.2% |
|
|
|
|
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.
Andrew
King, Mondi Group Chief Executive Officer, said:
"Mondi delivered strongly in 2021 and
we see good opportunity to accelerate growth in sustainable
packaging. Underlying EBITDA of €1,503 million was up 11% and ROCE
up at 16.9%. We grew our packaging businesses and saw a recovery in
uncoated fine paper markets. Our vertical integration, the agility
of our operations and collaboration with our customers ensured we
met surging demand at a time when supply chains were under pressure
around the world. We implemented price increases across all our
businesses and, against a backdrop of rising commodity input costs,
we exhibited good cost control. Our focus on safety and protecting
the wellbeing of our people remains our priority.
All this cannot be achieved without
the dedication, stamina and ongoing commitment of our people. My
sincere thanks go to all of my colleagues.
I am particularly proud of how we
continue to lead the way in sustainability. We have accelerated our
climate plans by committing to transition to Net-Zero by 2050 in
line with a 1.5°C scenario, and made strong progress on all
elements of MAP2030, our sustainability roadmap for the next 10
years, which we launched in early 2021.
Sustainable packaging continues to be a key priority for our
customers and wider society. With our unique product portfolio,
technical know-how, expertise in understanding the best material
choices and leading innovation capabilities, we are supporting our
customers to achieve their environmental goals with circular driven
solutions that are sustainable by design.
Our capital investments to generate
value accretive growth, enhance our cost competitiveness and drive
sustainability benefits continue to deliver. We successfully
started up investments in key pulp and paper mills providing
incremental total capacity of around 350,000 tonnes when in full
operation. Projects are also underway at a number of our converting
operations enhancing our production capabilities and product
offering to further support our customers.
We continue to explore opportunities
to accelerate growth across our packaging businesses supporting our
customers and strengthening our leading market positions in
structurally growing markets, underpinned by demand for eCommerce
and sustainable packaging solutions. We have an ambitious
expansionary capital investment programme to further capture this
growth. In this context, our pipeline currently includes around €1
billion of expansionary projects already approved or under advanced
evaluation, which we anticipate will generate mid-teen returns when
in full operation. We continue to actively consider further capital
investments for growth in the packaging markets where we
operate.
I am pleased we agreed the sale of our
Personal Care Components business in February 2022. By simplifying our portfolio, the
transaction will enable us to focus on our core packaging and paper
businesses and enhance our ability to pursue our strategic priority
to grow in sustainable packaging.
Looking forward, we expect to make
progress in the year. There are significant geopolitical and
macro-economic uncertainties and we anticipate continued
inflationary pressures on our cost base. However, we also expect to
realise the full benefit of the price increases implemented in 2021
and early 2022, shorter planned maintenance shuts and the
contribution from our capital investment programme.
Underpinned by the Group's integrated
cost-advantaged asset base, high-performance culture, portfolio of
sustainable packaging solutions and the strategic flexibility
offered by our strong cash generation and financial position, the
Group remains well-placed to deliver sustainably into the
future."
Update on Ukraine / Russia
The humanitarian crisis unfolding in Ukraine is of great concern. Our thoughts are
with all those impacted by these tragic events, including some of
Mondi’s employees.
We have significant operations in Russia, representing around 12% of the Group's
revenue by location of production in 2021, including our
high-margin, cost-competitive, integrated pulp, packaging paper and
uncoated fine paper mill located in Syktyvkar (Komi Republic). Over
the last three years our Russian operations have generated around
20% of the Group’s underlying EBITDA. Our businesses primarily
serve the domestic market and have continued to operate through
this time of heightened geopolitical tension. We are actively
monitoring this rapidly evolving situation, the international
response and the implications for the Group.
Group performance review
Mondi delivered strongly in 2021, with underlying EBITDA of
€1,503 million, up €150 million on the prior year (11%), driven
mainly by higher sales volumes and significantly higher selling
prices in the face of inflationary cost pressures.
Group revenue was up 16% due to a combination of increased sales
volumes and significantly higher selling prices. We drove volume
growth in Corrugated Packaging and Flexible Packaging, on the back
of our integrated value chain, our unique portfolio of innovative
and sustainable packaging solutions and our attention to quality
and service. Uncoated fine paper volumes were also up, with our
customers recognising the stability of a long-term supplier, the
sustained quality of our products and our reliable and consistent
service. Selling prices were up across the entire business, and
most significantly in Corrugated Packaging.
Input costs increased materially year-on-year, in particular
energy, resins, paper for recycling and transport costs. Energy
costs gradually increased during the first half of the year from
the very low levels seen in 2020, before rising sharply at the end
of the third quarter as a result of significant increases in the
price of European gas and electricity. We expect energy costs to
remain elevated for some time. Our pulp and paper mills generate
most of their energy needs internally, with biomass sources
accounting for around 65% of the fuels used in this process,
thereby mitigating the impact of the significant surge in external
fuel costs. Resin and paper for recycling costs increased sharply
in the first half and have remained stable at high levels. We are
currently seeing rising wood and chemical costs and generally
expect cost pressures to continue.
Cash fixed costs were higher year-on-year driven by higher
maintenance costs, additional resources required to serve surging
demand from our customers and general inflation, mitigated by our
strong cost control. The impact of planned maintenance and
project-related shuts on underlying EBITDA in 2021 was around €165
million (2020: €100 million). Based on prevailing market
conditions, we estimate that the impact of planned maintenance
shuts on underlying EBITDA in 2022 will be around
€110 million, of which the first half year effect is estimated
at around €60 million (2021: €50 million).
Currency movements had a net negative impact on underlying
EBITDA of around €63 million versus the prior year as a result of
the impact on certain of our export-oriented businesses of a weaker
US dollar, notably in the first half of the year; coupled with
losses on translation from a weaker Russian rouble and Turkish lira
relative to the euro.
The non-cash forestry fair value movement recognised was €34
million lower than the prior year.
Depreciation and amortisation charges were slightly higher
year-on-year mainly due to the effects of our capital investment
programme.
Underlying operating profit of €1,064 million was up 15% on
2020. After taking the effect of special items into account,
operating profit of €1,071 million, was up 23%. Basic earnings of
155.9 euro cents per share were up
30% compared to 2020.
Mondi retains a strong financial position. Net debt at
31 December 2021 was €1,763 million, reduced from
€1,791 million at 31 December 2020, reflecting the
Group's strong cash generating capacity while continuing to support
investment in the business. Capital expenditure for the period was
€573 million, 1.4 times depreciation, and the acquisition of
Olmuksan added around €83 million to net debt. Net debt to
underlying EBITDA ended the year at 1.2 times (2020: 1.3
times).
Given our strong financial position and confidence in the future
of the business, the Board has recommended an increase in the final
2021 dividend to 45.00 euro cents per
share. The final dividend, together with the interim dividend,
amount to a total dividend for the year of 65.00 euro cents
per share, an increase of 8% on the 2020 total dividend.
In February 2022, we entered into
an agreement to sell our Personal Care Components business ('PCC')
to Nitto Denko Corporation for an enterprise value of €615 million.
Mondi’s strategic focus to grow in packaging and the limited
overlap of PCC with the rest of its business, has led us to
conclude that the next phase of PCC’s development will be better
undertaken outside of the Group. Simplifying our portfolio will
enable us to focus on our core packaging and paper businesses and
enhance our ability to pursue our strategic priority to grow in
sustainable packaging.
The transaction is subject to competition clearance and other
customary closing conditions, with completion expected in the
second half of 2022. Following the planned completion, the
remaining portion of Engineered Materials, namely Functional Paper
and Films, will be merged into the Flexible Packaging business
unit. This will strengthen integration along the kraft paper value
chain and foster innovation to continue developing functional
papers with the necessary barriers to meet increasing customer
demand for sustainable packaging.
A decision regarding the use of the net cash proceeds from the
sale of PCC will be taken post completion.
Mondi Action Plan 2030 (MAP2030)
Sustainability is at the centre of our purpose, culture and
strategy. We recognise the importance of working with others across
the value chain to drive positive change. We believe that being
part of the solution to global sustainability challenges will
secure the long-term success of our business and benefit our
stakeholders.
At the start of 2021 we launched our new sustainability roadmap
MAP2030, which builds on the strong progress we have made to date
and sets out the actions we need to take over the next decade to
achieve our ambitious goals. We can have the most impact by
focusing our efforts on circular driven solutions, created by
empowered people, taking action on climate. Each of these action
areas has three high-level commitments underpinned by more detailed
targets. The framework is founded on responsible business practices
spanning business ethics and governance, human rights, communities,
procurement and environmental impact.
Circular driven solutions
Demand for sustainable products has never been higher, with
brands and consumers wanting to contribute to a low carbon,
circular economy. Our conversations with customers focus on how to
design solutions that are efficient, fit-for-purpose and help to
convey and deliver their sustainability commitments. Our unique
product portfolio, expertise in understanding the best material
choices and customer-focused innovation capabilities mean we can
create packaging solutions that are sustainable by design. This
helps us to eliminate unsustainable packaging, lead the transition
to a circular economy and grow our customer base of
forward-thinking brands.
Our customers value our EcoSolutions partnership approach to
help achieve their environmental goals. This includes everything
from reducing raw material use, to designing for recycling or
compostability at end of life, and clarifying the often complex
trade-offs of various solutions. As a leading producer of
paper-based packaging, we prioritise the use of paper-based
solutions to replace unnecessary plastic packaging because paper is
made from a renewable resource and has the highest recycling rates
across our markets. When more specialised functional barriers are
required (for example to reduce food waste), lightweight
plastic-based flexible packaging can be the most sustainable choice
so long as it is manufactured, used and disposed of appropriately.
Here we are working on recyclable mono-material plastic solutions
and increased recycled plastic content to ensure our packaging is
designed to be part of a circular economy.
Highlights of our innovation initiatives this year include our
first recyclable functional barrier paper bag for salads with
French brand Les Crudettes. Our solution, which is 95% paper with a
functional barrier layer, keeps the salad fresh for up to 10 days -
the same as the previous plastic packaging - and it is verified as
recyclable in the domestic waste paper stream. Another functional
barrier paper success is our partnership with UK's leading frozen
food specialist Iceland across a
number of their ranges, reducing the amount of plastic used per
year across these products by 80% and making it easy for consumers
to recycle. In kraft paper, we developed Advantage StretchWrap, our
innovative wrapping system for pallets that uses paper instead of
plastic. The independent life cycle assessment found that it has
62% lower greenhouse gas (GHG) emissions when compared to virgin
plastic stretch film. As part of our multi-format sustainable
eCommerce packaging solutions offering, we launched our eGrocery
portfolio, a range of sustainable corrugated packaging solutions
for the growing online grocery delivery services.
Our objective is to identify the best solutions for our
customers, consumers and the planet. Our efforts again received
widespread recognition, including in this year's WorldStar
Packaging Awards which celebrate the best ideas, innovations and
technologies on the market. Mondi won an outstanding nine awards,
with three of our six corrugated solutions winners coming from our
eCommerce offering, reinforcing the great opportunities we are
seeing to serve our customers in this area.
In 2021, our three-year partnership with the United Nations
World Food Programme - to help address food waste to support the
fight to eliminate world hunger - made progress on a number of our
projects, with our expertise and resources helping ensure their
packaging is safe, sustainable, and fit for purpose.
Our manufacturing sites, R&D and sustainable development
teams are working together to identify opportunities to achieve our
ambitious target of eliminating waste to landfill from our
manufacturing processes. In 2021 waste to landfill per tonne of
saleable production decreased by 22% compared to the prior
year.
Empowered people
Our role as an employer is one of our main contributions to
society and strong teams are key to our ongoing success as a
business. By inspiring our global workforce to build skills that
support long-term employability and embrace new ways of working, we
can support our employees to realise their individual potential and
recognise their contribution to Mondi’s purpose. A diverse
workforce thinks more creatively and responds better to local
contexts and changing environments. In 2021, we focused on
diversity and inclusion (D&I) initiatives and developing
leaders as D&I change agents.
The safety and health of our people always comes first. Our
safety approach centres on a 24-hour safety mindset and managing
top risks. We are expanding our focus from traditional safety,
which focuses mainly on controls, to addressing social psychology
and cultural elements to drive continuous improvement in our safety
performance. We had zero fatalities during the year and the Total
Recordable Case Rate (TRCR) was 0.62, achieving the milestone we
set for 2021 to allow for a prolonged planned shut at Richards Bay
(South Africa). Furthermore, we
look to create a positive work-life experience that enables our
teams to deliver their potential, attract and retain talent, and
support the physical and mental health of our employees.
The social, economic and environmental health of local
communities is important to our long-term success. Building open
relationships is important to build trust, identify opportunities
and mitigate risks. Our long-standing commitment to invest in
community development is increasingly focused on impact through
strategic collaborations and partnerships. With MAP2030, we
formalised our commitment to invest a minimum of 1% of
profit-before-tax annually in social investments with a focus on
science, technology, engineering and maths education, environmental
protection, enterprise support and job creation. In 2021, our total
community investment was €11.8 million (2020: €11.5 million)
equating to 1.2% of profit before-tax, above our target.
Taking action on climate
We have a long-standing focus on reducing our carbon emissions.
In 2021, our greenhouse gas (GHG) emission intensity (per tonne of
saleable production) was 0.63, a 25% reduction against our 2014
baseline, equating to a 46% reduction since 2004, our first
baseline year for emission reduction targets. The contribution of
biomass-based renewable energy to the total fuel consumption of our
mills has increased from 59% in 2014 to 65% in 2021. These
improvements have been made possible through consistent capital
investment across our mill network, making us more energy efficient
and less reliant on fossil fuels. Since 2015, we have commissioned
energy-related investment projects totalling around €650
million.
Building on almost two decades of progress, including
science-based targets approved by the Science Based Targets
initiative (SBTi) in 2019, we have accelerated our climate plans by
committing to transition to Net-Zero by 2050. Our Net-Zero
commitment has been developed to align with the SBTi's new
Net-Zero Standard and commits Mondi to reducing GHG emissions
across scopes 1, 2 and 3 in line with a 1.5°C scenario. While we
work with the SBTi to validate our new targets, we are taking
action today and we have a clear roadmap to achieve our 2025
milestones.
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 from healthy and resilient
forests, and safeguarding biodiversity and water resources in our
operations and beyond.
We are particularly proud to have been recognised by CDP for a
second year as one of only 14 companies worldwide with a ‘Triple A’
score on its environmental performance related to climate, forests
and water security.
In July we announced a three-year partnership with the
International Union of Forest Research Organizations (IUFRO) to
collaborate more actively with the scientific community to address
climate change challenges to forests, gain broad access to
research, and convert this into practical applications and improved
operations.
For more details on MAP2030 including a video with the Group CEO
and other senior leaders please visit
www.mondigroup.com/en/sustainability/approach.
Capital investments
Mondi's packaging markets are growing, underpinned by the
structural growth drivers of eCommerce and the demand for more
sustainable packaging. Our capital investment programme is focused
on driving organic growth, enhancing our product offering, quality
and service to customers, strengthening our cost competitiveness,
and improving our environmental footprint. This ongoing investment
in our cost-advantaged, high-quality asset base enables us to
continue to capture future opportunity.
The Group's disciplined approach to investigating, approving and
executing capital projects is one of our key strengths and plays an
important role in successfully delivering strong returns
through-the-cycle. Our capital investment programme continues to
deliver. In January 2021, we started
up an investment in a new 300,000 tonne per annum kraft top white
machine at Ruzomberok (Slovakia)
and a converted speciality kraft paper machine in Steti
(Czech Republic). We also
progressed key steps in the modernisation of our Richards Bay mill
(South Africa), including
upgrading the energy and chemical plants to improve reliability and
environmental performance; as well as the programme at Syktyvkar
(Russia) to debottleneck
production and maintain competitiveness. At the end of 2021, we
commissioned the new evaporation plant and are currently finalising
the pulp dryer upgrade. We expect to generate around a further
€50 million of incremental underlying EBITDA contribution from
projects in 2022.
Looking forward, we see an opportunity to accelerate growth
across our packaging businesses supporting our customers and
strengthening our leading market positions in our growing markets.
We have an ambitious expansionary capital investment programme to
further capture this growth. In this context, our pipeline
currently includes around €1 billion of expansionary projects
already approved or under advanced evaluation, which we anticipate
will generate mid-teen returns when in full operation. These
investments, which include the projects below, will deliver volume
growth, lower our cost base and enhance our environmental
footprint. We continue to actively evaluate further capital
investments for growth in the packaging markets in which we
operate, leveraging our high-quality, cost-advantaged asset
base.
In Corrugated Packaging we are investing €125 million in
our Kuopio mill (Finland) to
increase semi-chemical fluting capacity by around 55,000 tonnes,
enhance product quality, drive cost competitiveness and strengthen
the mill’s environmental performance, with start-up expected in the
fourth quarter of 2023. We have approved a €95 million investment
to debottleneck kraftliner production by 55,000 tonnes at our state
of the art Swiecie mill (Poland),
with commissioning expected during 2024.
To strengthen our leading market position, support growth in
eCommerce and enhance our product and service offering, around €185
million will be invested across our central and eastern European
Corrugated Solutions plant network.
In Flexible Packaging, to meet growing demand for
sustainable paper-based flexible packaging, we are well-advanced in
the evaluation of an investment in a new 200,000 tonne kraft paper
machine at one of our cost-advantaged facilities for an anticipated
total of around €350 million. We expect to be in a position to make
a final decision on the investment during 2022.
We continue to expand the global reach of our leading Paper Bags
business, ramping up production at our new plant in Cartagena (Colombia), investing in a new plant in
Morocco, upgrading the
capabilities in our Mexican plants and expanding our capacity of
paper-based flexible packaging solutions for eCommerce across
Europe and the US.
We plan to invest around €50 million to enhance our coating
capabilities and meet our customers' growing demand for innovative,
sustainable paper-based packaging with the necessary barrier
properties. We are also investing €65 million in our consumer
flexibles plants, cementing our leading position in the fast
growing pet food packaging market.
On the back of this programme, our capital expenditure is
expected to be around €700-800 million in 2022 and around
€900-1,000 million in 2023.
Corrugated Packaging
€ million |
Year
ended 31 December 2021 |
Year
ended 31 December 2020 |
Change
% |
Six
months ended 31 December 2021 |
Six
months ended 31 December 2020 |
Change
% |
Segment revenue |
2,510 |
1,879 |
34 |
1,404 |
910 |
54 |
Underlying EBITDA |
670 |
518 |
29 |
402 |
251 |
60 |
Underlying EBITDA
margin |
26.7% |
27.6% |
|
28.6% |
27.6% |
|
Underlying operating
profit |
529 |
397 |
33 |
326 |
190 |
72 |
Capital expenditure
cash payments |
223 |
249 |
|
117 |
125 |
|
Operating segment net
assets |
2,338 |
2,087 |
|
|
|
|
ROCE |
26.1% |
22.5% |
|
|
|
|
Corrugated Packaging delivered very strongly in the year, driven
by higher volumes, significantly higher average prices and the
contribution from recently completed capital investments and
acquisitions.
Demand was very strong throughout the year with growth across
all end-uses, and most notably in eCommerce and FMCG applications.
Containerboard sales volumes were up on the prior year supported by
our broad, high-quality product portfolio. Corrugated Solutions
grew volumes 13% organically year-on-year, a notable achievement
enabled by our value chain integration, ongoing investment in the
business and our sharp focus on innovation and customer
service.
We implemented price increases across all containerboard grades
during the year, leading to 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 24% and 45%, respectively;
while average benchmark white top kraftliner and semi-chemical
fluting prices, which are typically more stable over time, were up
8% and 13%, respectively.
We were successful in passing on higher input paper costs
through box price increases over the course of the year.
Input costs were higher year-on-year, in particular paper for
recycling, energy and transport costs. Following a period of sharp
increases, paper for recycling costs have remained stable at
elevated levels since the second quarter. Average European
benchmark prices for the year were around 2.5 times higher than the
prior year.
Cash fixed costs were up due to higher maintenance costs,
additional personnel to serve growing customer demand and
inflationary effects, mitigated by our cost control
initiatives.
In May 2021, we completed the
acquisition of a 90% interest in Olmuksan. With this transaction,
we significantly strengthened our position in the fast-growing
Turkish corrugated market, expanding our offering to existing and
new customers in the region. Integration is progressing well and
the business delivered ahead of our expectations.
Flexible Packaging
€ million |
Year
ended 31 December 2021 |
Year
ended 31 December 2020 |
Change
% |
Six
months ended 31 December 2021 |
Six
months ended 31 December 2020 |
Change
% |
Segment revenue |
2,889 |
2,667 |
8 |
1,504 |
1,290 |
17 |
Underlying EBITDA |
526 |
519 |
1 |
255 |
239 |
7 |
Underlying EBITDA
margin |
18.2% |
19.5% |
|
17.0% |
18.5% |
|
Underlying operating
profit |
367 |
362 |
1 |
174 |
160 |
9 |
Special items before
tax |
2 |
(8) |
|
3 |
(2) |
|
Capital expenditure
cash payments |
176 |
162 |
|
83 |
76 |
|
Operating segment net
assets |
2,632 |
2,475 |
|
|
|
|
ROCE |
15.0% |
14.5% |
|
|
|
|
Flexible Packaging achieved good volume growth and successfully
implemented price increases to recover significantly higher input
costs.
Volume growth was supported by our innovative and sustainable
packaging portfolio. We saw strong growth in retail end-uses, in
particular paper-based shopping and eCommerce bags as well as
consumer applications, such as food and pet food, where we have
leading market positions. Demand for building materials,
construction and other specialised applications remained good
during the period.
Kraft paper sales volumes were significantly up on the prior
year, in particular in our range of speciality kraft papers which
has grown by 190,000 tonnes over the last three years, benefiting
from the increasing demand from customers for paper-based
sustainable packaging, our product development initiatives and
capital investments completed early in the year. Paper bag sales
volumes were up 9%, with growth in all regions supported by good
demand in traditional industrial end-uses and growing demand in new
applications; for example, our fully recyclable, lightweight and
flexible MailerBAG, used by our eCommerce customers and now
accounting for around 3% of total paper bag volumes. Consumer
flexibles volumes were up year-on-year and the business focused on
successfully passing on higher resins and other input costs.
Prices in the kraft paper value chain were modestly up
year-on-year following price increases implemented during 2021. On
the back of continued strong order books and tight market
conditions, we implemented further price increases across our range
of kraft papers and paper bags at the start of 2022. Average kraft
paper prices in Q1 2022 are up between 20% to 25% on average
compared to average 2021 price levels.
We continue to drive innovation to support our customers'
transition to more sustainable packaging, and to partner along the
value chain to create products for a circular economy,
incorporating paper where possible, developing recyclable flexible
plastic-based packaging solutions and increasing recycled content
in our packaging.
Input costs were materially up year-on-year, with higher plastic
resin, energy and transport costs. While cash fixed costs were
higher due to increased costs to service our customers' incremental
volumes and inflationary effects, this was mitigated by our strong
cost control initiatives.
Engineered Materials
€ million |
Year
ended 31 December 2021 |
Year
ended 31 December 2020 |
Change
% |
Six
months ended 31 December 2021 |
Six
months ended 31 December 2020 |
Change
% |
Segment revenue |
876 |
801 |
9 |
447 |
377 |
19 |
Underlying EBITDA |
71 |
80 |
(11) |
33 |
35 |
(6) |
Underlying EBITDA
margin |
8.1% |
10.0% |
|
7.4% |
9.3% |
|
Underlying operating
profit |
43 |
44 |
(2) |
19 |
17 |
12 |
Special items before
tax |
5 |
(49) |
|
(2) |
(49) |
|
Capital expenditure
cash payments |
33 |
74 |
|
13 |
28 |
|
Operating segment net
assets |
632 |
589 |
|
|
|
|
ROCE |
7.4% |
7.5% |
|
|
|
|
Engineered Materials' performance stabilised in 2021 in line
with our expectations. The business saw generally good demand in
consumer end-uses, and a strong recovery in most industrial and
specialised end-uses, in particular in Functional Paper and Films,
which serves a broad range of applications including graphic arts,
tapes and industrial.
We completed the transformation of the Personal Care Components
area during the year. As anticipated, volumes were lower as a key
product matures and we implement certain technology changes, while
we saw the benefits of our product development and restructuring
initiatives.
Input costs were higher on average, due to higher resin, energy,
speciality kraft paper and transport costs. Cash fixed costs were
lower as a result of restructuring initiatives and ongoing strong
cost control.
The expertise and coating technologies of Functional Paper and
Films provide real advantage to Flexible Packaging’s speciality
kraft paper business, working closely with our customers to develop
further innovative sustainable packaging solutions.
Uncoated Fine Paper
€ million |
Year
ended 31 December 2021 |
Year
ended 31 December 2020 |
Change
% |
Six
months ended 31 December 2021 |
Six
months ended 31 December 2020 |
Change
% |
Segment revenue |
1,652 |
1,485 |
11 |
842 |
711 |
18 |
Underlying EBITDA |
270 |
266 |
2 |
121 |
102 |
19 |
Underlying EBITDA
margin |
16.3% |
17.9% |
|
14.4% |
14.3% |
|
Underlying operating
profit |
160 |
153 |
5 |
66 |
47 |
40 |
Capital expenditure
cash payments |
139 |
145 |
|
72 |
65 |
|
Operating segment net
assets |
1,595 |
1,582 |
|
|
|
|
ROCE |
11.9% |
11.3% |
|
|
|
|
Trading in Uncoated Fine Paper improved over the course of 2021.
Driven by higher average selling prices and higher volumes,
underlying EBITDA was up despite longer planned maintenance shuts
(€30 million year-on-year effect), materially higher input costs,
and a lower forestry fair value movement (down €34 million).
Uncoated fine paper sales volumes grew 11% in the period. Our
customers value us as a supplier of choice while capacity leaves
the market, recognising the strength of our strategic position,
underpinned by a broad product portfolio, excellent customer
service and superior cost competitiveness. We increased our market
share in all the key markets where we operate. In Europe, we estimate market demand increased
6-7% year-on-year showing a good recovery. Our own sales in the
region were up 14%.
On the back of improving demand and increasing costs we
implemented a series of price increases, most notably in the second
half of the year, as well as in early 2022. While in 2021 the
average benchmark European uncoated fine paper selling prices were
broadly flat year-on-year, prices are today 20-22% higher than the
2021 average.
Input costs were up with significantly higher energy and
transport costs. Cash fixed costs were higher, with strong cost
control mitigating higher maintenance costs and inflationary cost
pressures.
Lower export prices and a strong South African rand during the
period resulted in a non-cash forestry fair value loss of €7
million, down €34 million compared to the prior year gain. Based on
current market conditions, we expect a forestry fair value gain in
2022.
Special items
Special items before tax during the period amounted to a net
income of €7 million mainly relating to reversal of impairments and
net release of provisions for costs initially recognised as special
items in prior years (2020: €57 million net charge).
Tax
The underlying tax charge for the year was €212 million
(2020: €180 million) giving an effective tax rate of 22%
(2020: 22%), in line with our expectations.
Cash flow
Cash generated from operations of €1,339 million (2020: €1,485
million), reflects the continued strong cash generating capability
of the Group. This included the impact of an increase in working
capital on the back of strong turnover growth in the year. The net
cash outflow from the movement in working capital was
€205 million (2020: €125 million inflow). As a percentage
of revenue, working capital was in line with our expected range of
12% to 14% at 12.8% (2020: 11.1%).
Capital expenditure was €573 million (2020:
€630 million). Tax paid was €190 million (2020: €168
million).
In May 2021 we completed the
acquisition of a 90.4% interest in Olmuksan for a consideration of
€66 million which implies an enterprise value of €88 million on a
100% basis. Pursuant to local stock exchange rules, in July 2021 we completed a mandatory tender offer,
leading to the acquisition of an additional 1.6% of the outstanding
shares in the company for a total consideration of
€3 million.
Interest paid was €78 million (2020: €82 million). We
are pleased to have paid dividends to shareholders of €298 million
(2020: €237 million) in the year.
Treasury and borrowings
Mondi retains a strong financial position. Net debt at
31 December 2021 was €1,763 million, reduced from
€1,791 million at 31 December 2020. Net debt to
underlying EBITDA ended the year at 1.2 times (2020: 1.3
times).
In June 2021, the Group entered
into a new €750 million 5-year revolving multi-currency credit
facility agreement ('RCF') to refinance the existing €750 million
facility that was due to mature in July
2022. The agreement includes options to extend the RCF by
one or two years with each bank's approval. The RCF incorporates
key sustainability targets linked to MAP2030, classifying the
facility as a Sustainability Linked Loan. There are no financial
covenants included in the RCF or any other Group facility.
At 31 December 2021, Mondi had a strong liquidity position
of around €1.3 billion, comprising €803 million of undrawn
committed debt facilities and cash and cash equivalents of €455
million. The weighted average maturity of our committed debt
facilities was 4.7 years.
Underlying net finance costs of €94 million were slightly down
on the previous year. Average net debt of €1,875 million was lower
(2020: €2,012 million) while the effective interest rate was
slightly higher at 4.6% (2020: 4.5%) due to higher cash
balances.
The Group's credit ratings were unchanged with Standard &
Poor’s at BBB+ (stable outlook) and Moody’s Investors Service at
Baa1 (stable outlook).
Dividend
The Board aims to offer shareholders long-term ordinary dividend
growth within a targeted dividend cover range of two to three times
on average over the cycle.
Given our strong financial position and confidence in the future
of the business, the Board has recommended an increase in the final
2021 dividend to 45.00 euro cents per
share. The final dividend, together with the interim dividend,
amount to a total dividend for the year of 65.00 euro cents
per share, an increase of 8% on the 2020 total dividend.
The final dividend is subject to the approval of the
shareholders of Mondi plc at the Annual General Meeting scheduled
for 5 May 2022 and, if approved, is
payable on 16 May 2022 to
shareholders on the register on 8 April
2022.
Outlook
Looking forward, we expect to make progress in the year. There
are significant geopolitical and macro-economic uncertainties and
we anticipate continued inflationary pressures on our cost base.
However, we also expect to realise the full benefit of the price
increases implemented in 2021 and early 2022, shorter planned
maintenance shuts and the contribution from our capital investment
programme.
Underpinned by the Group's integrated cost-advantaged asset
base, high-performance culture, portfolio of sustainable packaging
solutions and the strategic flexibility offered by our strong cash
generation and financial position, the Group remains well-placed to
deliver sustainably into the future.
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
control environment is designed to safeguard the assets of the
Group and to provide reasonable assurance that the Group’s business
objectives will be achieved.
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. The key significant changes identified during
2021 are set out below.
During the year, we enhanced our understanding of the risks and
implications related to climate change and identified it as a
driver to create long-term structural changes to pricing and
availability of timber. Consequently, the cost and availability of
raw materials risk was updated to reflect an increase in
anticipated likelihood of occurrence of the risk. The risk to
energy security and related input costs was rated higher due to an
increase in volatility in energy pricing and supply. This is driven
by long-term changes in the energy supply portfolio in the regions
in which we operate, such as higher demand for renewable energy,
due to the accelerated transition to cleaner energy sources and an
accompanying increase in regulation enacted to deter the impact of
climate change. The information technology risk was removed as a
principal risk. Subsequent to the annual review of our risks and
related mitigating actions, our currency risks and reputational
risk were updated to reflect the Group's current exposure. Country
risk is a strategic risk to the Group. We are actively monitoring
the rapidly evolving situation in Ukraine, the international response and the
implications for the Group.
Emerging risks
The Board has highlighted the execution of major capital
expenditure projects as a continued notable 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. COVID-19
continues to impact our ability to plan and execute some of our
major capital expenditure projects as we carefully plan the number
of contractors and other non-operating people on our sites and
adapt to local restrictions and unpredictable international travel
restrictions. We will continue to monitor potential risks relating
to executing major capital expenditure projects in the year ahead
including, but not limited to, the effects of COVID-19.
Pandemic risk
COVID-19 continues to impact the way we do business due to
various health, social and economic measures implemented by
authorities around the world to combat the pandemic. The health,
safety and welfare of the Group’s employees and our communities
remain our top priority.
The Executive Committee and Board continue to monitor our
exposure and the impact of COVID-19 on the Group and evaluate
actions to mitigate the risk, and where possible, identify
opportunities that have arisen. In future, these actions and other
monitoring techniques which we have developed, will 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 have significant operations in Russia, representing around 12% of the Group's
revenue by location of production in 2021, including our
high-margin, cost-competitive, integrated pulp, packaging paper and
uncoated fine paper mill located in Syktyvkar (Komi Republic). Over
the last three years our Russian operations have generated around
20% of the Group’s underlying EBITDA. Our businesses primarily
serve the domestic market and have continued to operate through
this time of heightened geopolitical tension. In Ukraine Mondi has one paper bag plant located
in Lviv, west of the country, employing approximately 100 people.
Production is currently suspended. We are actively monitoring this
rapidly evolving situation, the international response and the
implications for the Group.
We continue to track capacity announcements, demand developments
and how consumers are demanding more sustainable packaging. We
continue to increase our understanding of climate change-related
risks and its impact whilst continuing to improve our disclosures
and develop 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
- Product substitution
- Fluctuations and variability in selling prices or gross
margins
- Country risk
- Climate change-related risks
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:
- Capital structure
- Currency risk
- Tax risk
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 continues to reduce the likelihood of operational risk
events. Physical and transitional risks arising due to climate
change are anticipated to have an operational impact on the Group,
particularly on supply of wood fibre and energy within the EU.
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
- Environmental impact
- Employee and contractor health and safety
- Attraction and retention of key skills and talent
- Cyber security risk
Compliance risk
We have a zero tolerance approach to our compliance risk. Our
strong culture and values, emphasised in every part of our
business, with a focus on integrity, honesty, and transparency,
underpin our approach.
Our principal compliance risk relates to Reputational risk.
A more detailed description of our principal risks can be found
in the Group's 2020 Integrated Report. The 2021 Integrated Report
is planned to be published at the end of March 2022.
Going concern
The directors have reviewed the Group’s 2022-2024 budget,
considered the assumptions contained in the budget, including
consideration of the principal risks which may impact the Group’s
performance in the 12 months following the date of approval of the
financial statements and consideration of the period immediately
thereafter.
At 31 December 2021, the Group had €803 million of
undrawn, committed debt facilities. The weighted average maturity
of the Group's committed debt facilities was 4.7 years. The
principal loan arrangements are disclosed in note 12 of the
condensed consolidated financial statements. In addition, the Group
had €455 million of cash and cash equivalents available to fund its
short-term needs. In 2021, the covenant on net debt to underlying
EBITDA performance has been removed from the European Investment
Bank Facility and the new Revolving Credit Facility has no
financial covenant hence the going concern assessment is focused on
available liquidity during the assessment period.
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 were sensitised to reflect a severe but
plausible downside scenario on Group performance. In the severe but
plausible downside scenario, the Group has sufficient liquidity
headroom through the whole period covered. A decline of 67% to the
budgeted underlying EBITDA would need to persist throughout the
assessment period for the liquidity headroom to come to zero, which
is considered very unlikely. This 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
2021.
Furthermore, the directors have assessed the impact of the
potential sale of Mondi’s Personal Care Components business
announced on 17 February 2022 on the
Group’s going concern status and the directors confirm that the
conclusion set out above remains unchanged.
Enquiries
Investors/analysts:
Clara Valera
+44
193 282 6357
Mondi Group Head of Strategy and Investor
Relations
Media:
Kerry
Cooper
+44 788 145 5806
Mondi Group Head of External Communication
Richard Mountain (FTI
Consulting)
+44 790 968 4466
Webcast and conference call
details
Please see below details of our webcast and dial-in conference
call which will be held at 09:00 (UK) and 11:00 (SA)
today.
Dial-in numbers are:
UK
0800 279 6619
South
Africa 0800
014 552
Other
+44 2071 928338
Conference ID 6106528
A webcast will be available via
https://www.mondigroup.com/en/investors/
A presentation will be available to download from the above
website 30 minutes before the webcast commences. Questions can be
submitted via the dial-in conference call or via the webcast
facility. If you wish to ask a question verbally, please connect
via the dial-in conference call.
Should you have any issues on the day with accessing the dial-in
conference call, please call +44 2071 928338.
For queries regarding access to the webcast, please e-mail
group.communication@mondigroup.com and you will be contacted as
soon as possible.
A recording of the presentation will be available on Mondi’s
website during the afternoon of 3 March
2022.
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 2021,
extracts of which are included within this announcement.
The directors confirm that to the best of their knowledge:
- the condensed consolidated financial statements have been
prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards (IFRS)
and 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 IFRS, give a true and fair view of the assets,
liabilities, financial position and profit of the Group;
- the Strategic report 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 2021, taken as a
whole, are fair, balanced and understandable and provide 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
2021.
The Group’s condensed consolidated financial statements, and
related notes, including this responsibility statement, were
approved by the Board and authorised for issue on 2 March 2022 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
20 for the year ended 31 December 2021 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 2021
|
|
2021 |
2020 |
€ million |
Notes |
Underlying |
Special items (Note 4) |
Total |
Underlying |
Special items (Note 4) |
Total |
Group
revenue |
3 |
7,723 |
— |
7,723 |
6,663 |
— |
6,663 |
Materials, energy and
consumables used |
|
(3,777) |
— |
(3,777) |
(3,120) |
— |
(3,120) |
Variable selling
expenses |
|
(639) |
— |
(639) |
(558) |
— |
(558) |
Gross
margin |
|
3,307 |
— |
3,307 |
2,985 |
— |
2,985 |
Maintenance and other
indirect expenses |
|
(391) |
— |
(391) |
(346) |
— |
(346) |
Personnel costs |
|
(1,107) |
5 |
(1,102) |
(1,051) |
(21) |
(1,072) |
Other net operating
expenses |
|
(306) |
(2) |
(308) |
(235) |
(10) |
(245) |
EBITDA |
|
1,503 |
3 |
1,506 |
1,353 |
(31) |
1,322 |
Depreciation,
amortisation and impairments |
|
(439) |
4 |
(435) |
(428) |
(26) |
(454) |
Operating
profit |
3 |
1,064 |
7 |
1,071 |
925 |
(57) |
868 |
Net profit/(loss) from
joint ventures |
|
6 |
— |
6 |
(3) |
— |
(3) |
Investment income |
|
6 |
— |
6 |
5 |
— |
5 |
Foreign currency
losses |
|
(2) |
— |
(2) |
— |
— |
— |
Finance costs |
|
(98) |
— |
(98) |
(100) |
— |
(100) |
Profit before
tax |
|
976 |
7 |
983 |
827 |
(57) |
770 |
Tax
(charge)/credit |
7 |
(212) |
2 |
(210) |
(180) |
12 |
(168) |
Profit for the
year |
|
764 |
9 |
773 |
647 |
(45) |
602 |
Attributable to: |
|
|
|
|
|
|
|
Non-controlling
interests |
|
17 |
— |
17 |
20 |
— |
20 |
Shareholders |
|
747 |
9 |
756 |
627 |
(45) |
582 |
|
|
|
|
|
|
|
|
Earnings per share
(EPS) attributable to shareholders |
|
|
|
|
|
|
|
euro cents |
|
|
|
|
|
|
|
Basic EPS |
8 |
|
|
155.9 |
|
|
120.0 |
Diluted EPS |
8 |
|
|
155.8 |
|
|
120.0 |
Basic underlying
EPS |
8 |
|
|
154.0 |
|
|
129.3 |
Diluted underlying
EPS |
8 |
|
|
153.9 |
|
|
129.3 |
Condensed consolidated statement of
comprehensive income
for the year ended 31 December 2021
|
2021 |
2020 |
€ million |
Before
tax amount |
Tax
charge |
Net of
tax amount |
Before
tax amount |
Tax
charge |
Net of
tax amount |
Profit for the
year |
|
|
773 |
|
|
602 |
|
|
|
|
|
|
|
Items that may
subsequently be reclassified to the condensed consolidated income
statement |
|
|
|
|
|
|
Fair value
(losses)/gains arising from cash flow hedges |
(1) |
— |
(1) |
4 |
— |
4 |
Exchange differences
on translation of foreign operations |
26 |
— |
26 |
(367) |
— |
(367) |
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 |
12 |
(4) |
8 |
(2) |
(3) |
(5) |
|
|
|
|
|
|
|
Other comprehensive
income/(expense) for the year |
38 |
(4) |
34 |
(365) |
(3) |
(368) |
|
|
|
|
|
|
|
Other comprehensive
income/(expense) attributable to: |
|
|
|
|
|
|
Non-controlling
interests |
|
|
(4) |
|
|
(9) |
Shareholders |
|
|
38 |
|
|
(359) |
|
|
|
|
|
|
|
Total comprehensive
income attributable to: |
|
|
|
|
|
|
Non-controlling
interests |
|
|
13 |
|
|
11 |
Shareholders |
|
|
794 |
|
|
223 |
|
|
|
|
|
|
|
Total comprehensive
income for the year |
|
|
807 |
|
|
234 |
Condensed consolidated statement of
financial position
as at 31 December 2021
€ million |
Notes |
2021 |
2020 |
Property, plant and
equipment |
|
4,870 |
4,641 |
Goodwill |
|
926 |
923 |
Intangible assets |
|
76 |
70 |
Forestry assets |
10 |
348 |
372 |
Investments in joint
ventures |
|
17 |
10 |
Financial
instruments |
|
33 |
31 |
Deferred tax
assets |
|
43 |
39 |
Net retirement
benefits asset |
|
26 |
21 |
Other non-current
assets |
|
1 |
— |
Total non-current
assets |
|
6,340 |
6,107 |
Inventories |
|
1,099 |
849 |
Trade and other
receivables |
|
1,333 |
1,006 |
Current tax
assets |
|
12 |
11 |
Financial
instruments |
|
4 |
11 |
Cash and cash
equivalents |
15b |
473 |
382 |
Assets held for
sale |
|
— |
1 |
Total current
assets |
|
2,921 |
2,260 |
Total
assets |
|
9,261 |
8,367 |
|
|
|
|
Short-term
borrowings |
12 |
(124) |
(128) |
Trade and other
payables |
|
(1,444) |
(1,116) |
Current tax
liabilities |
|
(116) |
(85) |
Provisions |
|
(33) |
(55) |
Financial
instruments |
|
(18) |
(6) |
Total current
liabilities |
|
(1,735) |
(1,390) |
Medium and long-term
borrowings |
12 |
(2,104) |
(2,050) |
Net retirement
benefits liability |
13 |
(197) |
(215) |
Deferred tax
liabilities |
|
(283) |
(278) |
Provisions |
|
(35) |
(35) |
Other non-current
liabilities |
|
(18) |
(17) |
Total non-current
liabilities |
|
(2,637) |
(2,595) |
Total
liabilities |
|
(4,372) |
(3,985) |
|
|
|
|
Net assets |
|
4,889 |
4,382 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
97 |
97 |
Own shares |
|
(18) |
(18) |
Retained earnings |
|
4,760 |
4,300 |
Other reserves |
|
(341) |
(377) |
Total attributable
to shareholders |
|
4,498 |
4,002 |
Non-controlling
interests in equity |
|
391 |
380 |
Total
equity |
|
4,889 |
4,382 |
The Group’s condensed consolidated financial statements,
including related notes 1 to 20, were approved by the Board and
authorised for issue on 2 March 2022
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 2021
€ million |
Equity
attributable to shareholders |
Non-controlling interests |
Total
equity |
At 1 January 2020 |
4,015 |
370 |
4,385 |
Total comprehensive
income for the year |
223 |
11 |
234 |
Profit for the
year |
582 |
20 |
602 |
Other comprehensive
expense |
(359) |
(9) |
(368) |
Transactions with
shareholders in their capacity as shareholders: |
|
|
|
Dividends |
(237) |
(4) |
(241) |
Purchases of own
shares |
(6) |
— |
(6) |
Distribution of own
shares |
1 |
— |
1 |
Mondi share schemes’
charge |
8 |
— |
8 |
Other movements in
non-controlling interests |
(2) |
3 |
1 |
At 31 December
2020 |
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 (see note 14) |
— |
7 |
7 |
Non-controlling
interests bought out (see note 14) |
— |
(3) |
(3) |
Other movements |
(2) |
— |
(2) |
At 31 December
2021 |
4,498 |
391 |
4,889 |
Equity attributable to
shareholders
€ million |
2021 |
2020 |
At 1
January 2020 |
Share capital |
97 |
97 |
97 |
Own shares |
(18) |
(18) |
(25) |
Retained earnings |
4,760 |
4,300 |
3,963 |
Cumulative translation
adjustment reserve |
(1,007) |
(1,038) |
(680) |
Post-retirement
benefits reserve |
(43) |
(51) |
(52) |
Share-based payment
reserve |
16 |
16 |
20 |
Cash flow hedge
reserve |
(1) |
— |
(4) |
Merger reserve |
667 |
667 |
667 |
Other sundry
reserves |
27 |
29 |
29 |
Total |
4,498 |
4,002 |
4,015 |
Condensed consolidated statement of
cash flows
for the year ended 31 December 2021
€ million |
Notes |
2021 |
2020 |
Cash flows from
operating activities |
|
|
|
Cash generated from
operations |
15a |
1,339 |
1,485 |
Dividends received
from other investments |
|
1 |
1 |
Income tax paid |
|
(190) |
(168) |
Net cash generated
from operating activities |
|
1,150 |
1,318 |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Investment in
property, plant and equipment |
|
(573) |
(630) |
Investment in
intangible assets |
|
(17) |
(18) |
Investment in forestry
assets |
10 |
(45) |
(43) |
Investment in joint
ventures |
|
(1) |
— |
Proceeds from the
disposal of property, plant and equipment |
|
22 |
12 |
Proceeds from the
disposal of financial asset investments |
|
— |
1 |
Acquisition of
businesses, net of cash and cash equivalents |
14 |
(63) |
— |
Loans advanced to
related and external parties |
|
(1) |
(1) |
Interest received |
|
4 |
4 |
Other investing
activities |
|
4 |
— |
Net cash used in
investing activities |
|
(670) |
(675) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Proceeds from
Eurobonds |
15c |
— |
744 |
Repayment of
Eurobonds |
15c |
— |
(500) |
Proceeds from other
medium and long-term borrowings |
15c |
59 |
— |
Repayment of other
medium and long-term borrowings |
15c |
— |
(86) |
Net repayment of
short-term borrowings |
15c |
(4) |
(136) |
Repayment of lease
liabilities |
15c |
(23) |
(24) |
Interest paid |
|
(78) |
(82) |
Dividends paid to
shareholders |
9 |
(298) |
(237) |
Dividends paid to
non-controlling interests |
9 |
(6) |
(4) |
Purchases of own
shares |
|
(7) |
(6) |
Non-controlling
interests bought out |
14 |
(3) |
— |
Net cash
(outflow)/inflow from debt-related derivative financial
instruments |
15c |
(12) |
59 |
Other financing
activities |
|
— |
4 |
Net cash used in
financing activities |
|
(372) |
(268) |
|
|
|
|
Net increase in
cash and cash equivalents |
|
108 |
375 |
|
|
|
|
Cash and cash
equivalents at beginning of year |
|
348 |
(7) |
Cash movement in the
year |
15c |
108 |
375 |
Effects of changes in
foreign exchange rates |
15c |
(1) |
(20) |
Cash and cash
equivalents at end of year |
15b |
455 |
348 |
Notes to the condensed consolidated financial
statements
for the year ended 31 December 2021
1 Basis of preparation
These condensed consolidated financial statements as at and for
the year ended 31 December 2021 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 prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards (IFRS).
They 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 above does not constitute the
Company’s statutory accounts for the years ended 31 December
2021 or 2020 but is derived from those accounts. Statutory accounts
for 2020 have been delivered to the Registrar of Companies, and
those for 2021 will be delivered in due course. The auditor has
reported on those accounts; its report was (i) unqualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis without qualifying its report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006. Copies of the unqualified auditor’s report
on the Integrated report and financial statements 2021 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, financial assets and financial
liabilities held at fair value through profit and loss and assets
acquired and liabilities assumed in a business combination.
Impact of COVID-19 on the condensed
consolidated financial statements at 31 December 2021
Management continued to consider the impact of the COVID-19
pandemic on the estimates and judgements it has to exercise in
applying the accounting policies, including impairment of property,
plant and equipment and goodwill, recoverability of trade
receivables and net realisable value of inventories. No material
adjustments have been made to the carrying values of the Group’s
assets and liabilities for the year ended 31 December 2021 as
a result of the COVID-19 pandemic.
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 2021 as were applied
in the preparation of the Group’s annual financial statements for
the year ended 31 December 2020, except for further amendments
to IFRS becoming effective for the financial period beginning on
1 January 2021. The Group did not
have to change its accounting policies or make retrospective
adjustments as a result of adopting these new 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.
3 Operating segments
Year ended 31 December
20211
€ million,
unless otherwise stated |
Corrugated Packaging |
Flexible Packaging |
Engineered Materials |
Uncoated
Fine Paper |
Corporate |
Intersegment elimination |
Total |
Segment revenue |
2,510 |
2,889 |
876 |
1,652 |
— |
(204) |
7,723 |
Internal revenue |
(40) |
(94) |
(37) |
(33) |
— |
204 |
— |
External revenue |
2,470 |
2,795 |
839 |
1,619 |
— |
— |
7,723 |
Underlying EBITDA |
670 |
526 |
71 |
270 |
(34) |
— |
1,503 |
Depreciation and
impairments2 |
(134) |
(151) |
(27) |
(108) |
(1) |
— |
(421) |
Amortisation |
(7) |
(8) |
(1) |
(2) |
— |
— |
(18) |
Underlying operating
profit/(loss) |
529 |
367 |
43 |
160 |
(35) |
— |
1,064 |
Special items before
tax |
— |
2 |
5 |
— |
— |
— |
7 |
Operating segment
assets |
2,722 |
3,200 |
773 |
1,933 |
7 |
(110) |
8,525 |
Operating segment net
assets |
2,338 |
2,632 |
632 |
1,595 |
(1) |
— |
7,196 |
Trailing 12-month
average capital employed |
2,025 |
2,485 |
580 |
1,350 |
(91) |
— |
6,349 |
Additions to
non-current non-financial assets |
293 |
166 |
36 |
188 |
6 |
— |
689 |
Capital expenditure
cash payments |
223 |
176 |
33 |
139 |
2 |
— |
573 |
Underlying EBITDA
margin (%) |
26.7 |
18.2 |
8.1 |
16.3 |
— |
— |
19.5 |
Return on capital
employed (%) |
26.1 |
15.0 |
7.4 |
11.9 |
— |
— |
16.9 |
Average number of
employees (thousands)3 |
7.5 |
10.5 |
2.1 |
6.2 |
0.1 |
— |
26.4 |
Notes:
1 See definitions of APMs at the end of
this document
2 Includes only impairment not
classified as special items
3 Presented on a full time
employee equivalent basis
Year ended 31 December
20201
€ million,
unless otherwise stated |
Corrugated Packaging |
Flexible Packaging |
Engineered Materials |
Uncoated
Fine Paper |
Corporate |
Intersegment elimination |
Total |
Segment revenue |
1,879 |
2,667 |
801 |
1,485 |
— |
(169) |
6,663 |
Internal revenue |
(32) |
(66) |
(31) |
(40) |
— |
169 |
— |
External revenue |
1,847 |
2,601 |
770 |
1,445 |
— |
— |
6,663 |
Underlying EBITDA |
518 |
519 |
80 |
266 |
(30) |
— |
1,353 |
Depreciation and
impairments2 |
(115) |
(146) |
(27) |
(111) |
(1) |
— |
(400) |
Amortisation |
(6) |
(11) |
(9) |
(2) |
— |
— |
(28) |
Underlying operating
profit/(loss) |
397 |
362 |
44 |
153 |
(31) |
— |
925 |
Special items before
tax |
— |
(8) |
(49) |
— |
— |
— |
(57) |
Operating segment
assets |
2,331 |
2,942 |
695 |
1,873 |
5 |
(96) |
7,750 |
Operating segment net
assets |
2,087 |
2,475 |
589 |
1,582 |
(3) |
— |
6,730 |
Trailing 12-month
average capital employed |
1,764 |
2,468 |
590 |
1,349 |
(96) |
— |
6,075 |
Additions to
non-current non-financial assets |
268 |
178 |
73 |
183 |
— |
— |
702 |
Capital expenditure
cash payments |
249 |
162 |
74 |
145 |
— |
— |
630 |
Underlying EBITDA
margin (%) |
27.6 |
19.5 |
10.0 |
17.9 |
— |
— |
20.3 |
Return on capital
employed (%) |
22.5 |
14.5 |
7.5 |
11.3 |
— |
— |
15.2 |
Average number of
employees (thousands)3 |
6.7 |
10.4 |
2.2 |
6.3 |
0.1 |
— |
25.7 |
Notes:
1 See definitions of APMs at the end of
this document
2 Includes only impairment not
classified as special items
3 Presented on a full time
employee equivalent basis
Reconciliation of operating segment
assets
|
2021 |
2020 |
€ million |
Segment
assets |
Segment
net assets/ (liabilities) |
Segment
assets |
Segment
net assets/ (liabilities) |
Group
total |
8,525 |
7,196 |
7,750 |
6,730 |
Unallocated |
|
|
|
|
Investments in joint
ventures |
17 |
17 |
10 |
10 |
Deferred tax
assets/(liabilities) |
43 |
(240) |
39 |
(239) |
Other non-operating
assets/(liabilities)1 |
201 |
(321) |
177 |
(328) |
Group capital
employed |
8,786 |
6,652 |
7,976 |
6,173 |
Financial
instruments/(net debt) |
475 |
(1,763) |
391 |
(1,791) |
Total
assets/equity |
9,261 |
4,889 |
8,367 |
4,382 |
Note:
1 Includes non-current financial instruments, current tax
assets/(liabilities), provisions for restructuring costs, employee
related and other provisions, derivative financial instruments and
other non-operating receivables/(payables)
External revenue by location of
production and by location of customer
|
External revenue
by location of production |
External revenue
by location of customer |
€ million |
2021 |
2020 |
2021 |
2020 |
Africa |
|
|
|
|
South Africa |
441 |
409 |
394 |
309 |
Rest of Africa |
56 |
55 |
272 |
254 |
Africa total |
497 |
464 |
666 |
563 |
Western Europe |
|
|
|
|
Austria |
1,134 |
1,062 |
159 |
140 |
Germany |
882 |
766 |
996 |
863 |
United Kingdom |
3 |
28 |
193 |
179 |
Rest of western
Europe |
699 |
641 |
1,517 |
1,344 |
Western Europe
total |
2,718 |
2,497 |
2,865 |
2,526 |
Emerging Europe |
|
|
|
|
Czech Republic |
602 |
520 |
223 |
178 |
Poland |
1,243 |
983 |
707 |
548 |
Rest of emerging
Europe |
1,198 |
833 |
1,055 |
791 |
Emerging Europe
total |
3,043 |
2,336 |
1,985 |
1,517 |
Russia |
899 |
796 |
703 |
622 |
North America |
480 |
481 |
804 |
731 |
South America |
— |
— |
128 |
107 |
Asia and
Australia |
86 |
89 |
572 |
597 |
Group
total |
7,723 |
6,663 |
7,723 |
6,663 |
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 |
2021 |
2020 |
Operating special
items |
|
|
Impairment of
assets |
— |
(27) |
Reversal of impairment
of assets |
4 |
1 |
Restructuring and
closure costs: |
|
|
Personnel costs |
5 |
(21) |
Other restructuring
and closure costs |
(2) |
(9) |
Settlement of claim
relating to the 2012 Nordenia acquisition |
— |
(1) |
Total special items
before tax |
7 |
(57) |
Tax credit (see note
7) |
2 |
12 |
Total special
items |
9 |
(45) |
The operating special items resulted in a cash outflow of €15
million for the year ended 31 December 2021 (2020:
€28 million).
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 the
prior year, of which total costs now accumulate to €9 million.
To 31 December 2020
The special items during the year ended 31 December 2020
comprised:
- Closure of two consumer flexibles plants in the UK. Additional
restructuring and closure costs of €8 million and related reversal
of impairment of assets of €1 million were recognised. These
costs were a continuation of the special item from prior year with
total costs amounting to €12 million.
- Additional costs of €1 million for the settlement of a claim
relating to the 2012 Nordenia acquisition were recognised. The
costs related to a special item from prior years with total costs
amounting to €17 million.
- Closure of a functional paper and films plant in the US.
Restructuring and closure costs of €5 million and related
impairment of assets of €9 million were recognised with total costs
amounting to €14 million.
- Restructuring of the personal care components focused
operations in Gronau (Germany).
Restructuring costs of €17 million and related impairment of assets
of €18 million were recognised with total costs amounting to €35
million.
5 Write-down of
inventories to net realisable value
€ million |
2021 |
2020 |
Within materials,
energy and consumables used |
|
|
Write-down of
inventories to net realisable value |
(46) |
(41) |
Aggregate reversal of
previous write-downs of inventories |
33 |
23 |
6 Net finance costs
€ million |
2021 |
2020 |
Investment
income |
|
|
Investment income |
6 |
5 |
Net foreign
currency losses |
|
|
Net foreign currency
losses |
(2) |
— |
Finance
costs |
|
|
Interest expense |
|
|
Interest on bank
overdrafts and loans |
(80) |
(83) |
Interest on lease
liabilities |
(13) |
(12) |
Net interest expense
on net retirement benefits liability |
(5) |
(6) |
Total interest
expense |
(98) |
(101) |
Less: Interest
capitalised |
— |
1 |
Total finance
costs |
(98) |
(100) |
Net finance costs |
(94) |
(95) |
Net interest expense, as defined at the end of this document,
for the year was €87 million (2020: €90 million).
7 Taxation
The Group’s effective rate of tax before special items for the
year ended 31 December 2021 was 22% (2020: 22%).
€ million |
2021 |
2020 |
UK corporation tax at
19% (2020: 19%) |
— |
— |
Overseas tax |
216 |
155 |
Current tax in respect
of prior years |
4 |
5 |
Current
tax |
220 |
160 |
Deferred tax in
respect of the current year |
(4) |
26 |
Deferred tax in
respect of prior years |
(4) |
(6) |
Tax charge before
special items |
212 |
180 |
Current tax on special
items |
(1) |
(5) |
Deferred tax on
special items |
(1) |
(7) |
Tax credit on
special items (see note 4) |
(2) |
(12) |
Tax charge for the
year |
210 |
168 |
The Group’s current tax charge for the year was €219 million
(2020: €155 million) and the deferred tax credit for the year
was
€9 million (2020: deferred tax charge of €13 million).
8 Earnings per share
(EPS)
|
EPS attributable to shareholders |
euro cents |
2021 |
2020 |
Basic EPS |
155.9 |
120.0 |
Diluted EPS |
155.8 |
120.0 |
Basic underlying
EPS |
154.0 |
129.3 |
Diluted underlying
EPS |
153.9 |
129.3 |
Basic headline
EPS |
155.3 |
123.9 |
Diluted headline
EPS |
155.2 |
123.9 |
The calculation of basic and diluted EPS, basic and diluted
underlying EPS and basic and diluted headline EPS is based on the
following data:
|
Earnings |
€ million |
2021 |
2020 |
Profit for the year
attributable to shareholders |
756 |
582 |
Special items
attributable to shareholders (see note 4) |
(7) |
57 |
Related tax (see note
4) |
(2) |
(12) |
Underlying earnings
for the year |
747 |
627 |
Special items
attributable to shareholders not excluded from headline
earnings |
3 |
(31) |
Loss/(gain) on
disposal of property, plant and equipment |
1 |
(2) |
Related tax |
2 |
7 |
Headline earnings
for the year |
753 |
601 |
|
Weighted average number of shares |
million |
2021 |
2020 |
Basic number of
ordinary shares outstanding |
485.0 |
484.9 |
Effect of dilutive
potential ordinary shares |
0.3 |
— |
Diluted number of
ordinary shares outstanding |
485.3 |
484.9 |
9 Dividends
An interim dividend for the year ended 31 December 2021 of
20.00 euro cents per ordinary share
were paid on Thursday 30 September 2021 to those
shareholders on the register of Mondi plc on Friday
27 August 2021.
A proposed final dividend for the year ended 31 December
2021 of 45.00 euro cents per ordinary
share will be paid on Monday 16 May
2022 to those shareholders on the register of Mondi plc on
Friday 8 April 2022.
The final dividend proposed has been recommended by the Board
and is subject to shareholder approval at the Annual General
Meeting scheduled for 5 May 2022.
euro cents per
share |
2021 |
2020 |
Final dividend paid
(in respect of prior year) |
41.00 |
— |
Interim dividend
paid |
20.00 |
48.75 |
Paid in respect of the
prior year |
— |
29.75 |
Paid in respect of
current year |
20.00 |
19.00 |
|
|
|
|
|
|
Final dividend
proposed |
45.00 |
41.00 |
€ million |
2021 |
2020 |
Final dividend paid
(in respect of prior year) |
201 |
— |
Total interim dividend
paid |
97 |
237 |
Paid in respect of the
prior year |
— |
145 |
Paid in respect of
current year |
97 |
92 |
|
|
|
Total dividends
paid |
298 |
237 |
|
|
|
Final dividend
proposed |
218 |
199 |
Declared by Group
companies to non-controlling interests |
6 |
4 |
Dividend timetable
The proposed final dividend for the year ended 31 December
2021 of 45.00 euro cents per share
will be paid in accordance with the following timetable:
Last date to trade
shares cum-dividend |
|
JSE Limited |
Tuesday
5 April 2022 |
London Stock
Exchange |
Wednesday 6 April 2022 |
Shares commence
trading ex-dividend |
|
JSE Limited |
Wednesday 6 April 2022 |
London Stock
Exchange |
Thursday
7 April 2022 |
Record
date |
Friday 8
April 2022 |
Last date for
receipt of Dividend Reinvestment Plan (DRIP) elections by Central
Securities Depository Participants |
Thursday
14 April 2022 |
Last date for DRIP
elections to UK Registrar and South African Transfer
Secretaries |
|
South African
Register |
Tuesday
19 April 2022 |
UK Register |
Tuesday
26 April 2022 |
Payment
Date |
Monday
16 May 2022 |
DRIP purchase
settlement dates (subject to market conditions and the purchase of
shares in the open market) |
|
UK Register |
Wednesday 18 May 2022 |
South African
Register |
Friday
20 May 2022 |
Currency conversion
date |
|
ZAR/euro |
Thursday
3 March 2022 |
Euro/sterling |
Tuesday
3 May 2022 |
Share certificates on Mondi plc’s South African register may not
be dematerialised or rematerialised between Wednesday 6 April 2022 and Friday 8
April 2022, both dates inclusive, nor may transfers between
the UK and South African registers of Mondi plc take place between
Wednesday 30 March 2022 and Friday
8 April 2022, 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 3 March 2022.
10 Forestry assets
€ million |
2021 |
2020 |
At 1 January |
372 |
411 |
Investment in forestry
assets |
45 |
43 |
Fair value
(losses)/gains |
(7) |
27 |
Felling costs |
(62) |
(59) |
Currency
movements |
— |
(50) |
At
31 December |
348 |
372 |
Mature |
217 |
227 |
Immature |
131 |
145 |
|
|
|
The fair value of forestry assets is a level 3 measure in terms
of the fair value measurement hierarchy (see note 18), consistent
with prior years. The fair value of forestry assets is determined
using a market based approach.
11 Leases
The Group has entered into various lease agreements. The Group’s
right-of-use assets were €177 million at 31 December 2021
(2020: €162 million) and the related depreciation charge was €25
million (2020: €23 million).
12 Borrowings
Group liquidity is provided through a range of committed debt
facilities. The principal loan arrangements in place include the
following:
€ million |
Maturity |
Interest rate % |
2021 |
2020 |
Financing
facilities |
|
|
|
|
Syndicated Revolving
Credit Facility |
July
2022 |
EURIBOR/LIBOR + margin |
— |
750 |
Syndicated Revolving
Credit Facility |
June
2026 |
EURIBOR
+ margin |
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 |
43 |
Long Term Facility
Agreement |
December
2026 |
EURIBOR
+ margin |
70 |
70 |
Other |
Various |
Various |
57 |
59 |
Total committed
facilities |
|
|
2,760 |
2,772 |
Drawn |
|
|
(1,957) |
(1,903) |
Total committed
facilities available |
|
|
803 |
869 |
The effective interest rate was 4.6% (2020: 4.5%) based on
trailing 12-month average net debt of €1,875 million (2020:
€2,012 million).
On 3 June 2021, the Group entered
into a new €750 million 5-year revolving multi currency credit
facility agreement (RCF) to refinance the existing €750 million
facility that was due to mature in July
2022. It includes options to extend the RCF by one or two
years with each bank's approval. The new RCF has no financial
covenant and the facility was not drawn at 31 December 2021.
The RCF incorporates key sustainability targets linked to MAP2030
(Mondi's Action Plan to meet its ambitious 2030 sustainability
goals), 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 from cash and the RCF. As at
31 December 2021, the Group had no financial covenants in any
of its financing facilities.
|
2021 |
2020 |
€ million |
Current |
Non-current |
Total |
Current |
Non-current |
Total |
Secured |
|
|
|
|
|
|
Bank loans and
overdrafts |
2 |
1 |
3 |
2 |
3 |
5 |
Lease liabilities |
20 |
184 |
204 |
18 |
169 |
187 |
Total
secured |
22 |
185 |
207 |
20 |
172 |
192 |
Unsecured |
|
|
|
|
|
|
Bonds |
— |
1,840 |
1,840 |
— |
1,838 |
1,838 |
Bank loans and
overdrafts |
77 |
79 |
156 |
86 |
39 |
125 |
Other loans |
25 |
— |
25 |
22 |
1 |
23 |
Total
unsecured |
102 |
1,919 |
2,021 |
108 |
1,878 |
1,986 |
Total
borrowings |
124 |
2,104 |
2,228 |
128 |
2,050 |
2,178 |
Committed facilities
drawn |
|
|
1,957 |
|
|
1,903 |
Uncommitted facilities
drawn |
|
|
271 |
|
|
275 |
|
|
|
|
|
|
|
13 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 2021. Due to
changes in assumptions and exchange rate movements, the net
retirement benefits liability decreased by €18 million and the net
retirement benefits asset increased by €5 million. The assets
backing the defined benefit scheme liabilities reflect their market
values as at 31 December 2021. Net remeasurement gains arising
from changes in assumptions and return on plan assets amounting to
€8 million have been recognised in the condensed consolidated
statement of comprehensive income.
14 Business
combinations
To 31 December 2021
On 31 May 2021, Mondi acquired
90.38% of the outstanding shares in Olmuksan International Paper
Ambalaj Sanayi ve Ticaret A.S (Olmuksan) for a total consideration
of €66 million, which implies an enterprise value of €88 million on
a 100% basis. Olmuksan is a leading and well-established corrugated
packaging producer in Turkey,
listed on the Istanbul stock
exchange. Its network of five plants provides a diverse customer
base with high-quality sustainable packaging for food, beverage,
agriculture and industrial applications. On 26 July 2021, Mondi completed a mandatory tender
offer to acquire an additional 1.62% of the outstanding shares for
a total consideration of €3 million resulting in a total ownership
interest in Olmuksan of 92.00%.
Property, plant and equipment has been measured at fair value
using relevant valuation methods accepted under IFRS 13, with
related deferred tax adjustments. The fair value uplift on
intangible assets arises from long lasting customer
relationships.
Olmuksan's revenue for the year ended 31 December 2021 was
€216 million with a profit after tax of €18 million. Olmuksan's
revenue of €132 million and profit after tax of €10
million since the date of acquisition have been included in the
condensed consolidated income statement.
Details of the net assets acquired, as adjusted from book to
fair value, are as follows:
€ million |
Book
value |
Revaluation |
Fair
value |
Net assets
acquired |
|
|
|
Property, plant and
equipment |
24 |
33 |
57 |
Intangible assets |
— |
6 |
6 |
Inventories |
27 |
— |
27 |
Trade and other
receivables |
62 |
— |
62 |
Cash and cash
equivalents |
3 |
— |
3 |
Total
assets |
116 |
39 |
155 |
Trade and other
payables |
(54) |
— |
(54) |
Income tax
liabilities |
(1) |
— |
(1) |
Other current
liabilities |
(4) |
— |
(4) |
Net retirement
benefits liability |
(2) |
— |
(2) |
Deferred tax
assets/(liabilities) |
3 |
(7) |
(4) |
Total liabilities
(excluding debt) |
(58) |
(7) |
(65) |
Short-term
borrowings |
(16) |
— |
(16) |
Medium and long-term
borrowings |
(1) |
— |
(1) |
Debt
assumed |
(17) |
— |
(17) |
|
|
|
|
Net assets
acquired |
41 |
32 |
73 |
Non-controlling
interests in equity |
|
|
(7) |
Cash acquired net of
overdrafts |
|
|
(3) |
Net cash paid per
consolidated statement of cash flows |
|
|
63 |
Transaction costs of €4 million were charged to other net
operating expenses into the condensed consolidated income
statement.
The fair values of assets acquired and liabilities assumed in
business combinations are level 3 measures in terms of the fair
value measurement hierarchy. Management has considered the impact
of environmental and climate risks on Olmuksan’s customers and the
estimated fair values of property, plant and equipment. These
considerations did not have a material impact.
The fair value accounting of this acquisition is provisional
pending final determination of the fair value of the assets and
liabilities acquired. In particular, the fair values of the assets
and liabilities disclosed above have only been determined
provisionally, because the independent valuations have not been
finalised. If necessary, any adjustments to the fair values
recognised will be made within 12 months of the acquisition
date.
In respect of trade and other receivables, the gross contractual
amounts receivable less the best estimates at the acquisition dates
of the contractual cash flows not expected to be collected
approximate the book values as presented.
To 31 December 2020
There were no business combinations during the year ended
31 December 2020.
15 Consolidated cash flow
analysis
(a) Reconciliation of
profit before tax to cash generated from operations
€ million |
2021 |
2020 |
Profit before
tax |
983 |
770 |
Depreciation and
amortisation |
439 |
428 |
Share-based
payments |
9 |
8 |
Net cash flow effect
of current and prior year special items |
(22) |
29 |
Net finance costs |
94 |
95 |
Net (profit)/loss from
joint ventures |
(6) |
3 |
(Decrease)/increase in
provisions |
(7) |
3 |
Decrease in net
retirement benefits |
(15) |
(12) |
Net movement in
working capital |
(205) |
125 |
(Increase)/decrease in
inventories |
(238) |
68 |
(Increase)/decrease in
operating receivables |
(334) |
8 |
Increase in operating
payables |
367 |
49 |
Fair value
losses/(gains) on forestry assets |
7 |
(27) |
Felling costs |
62 |
59 |
Loss/(gain) on
disposal of property, plant and equipment |
1 |
(2) |
Other adjustments |
(1) |
6 |
Cash generated from
operations |
1,339 |
1,485 |
(b) Cash and cash
equivalents
€ million |
2021 |
2020 |
Cash and cash
equivalents per condensed consolidated statement of financial
position |
473 |
382 |
Bank overdrafts
included in short-term borrowings |
(18) |
(34) |
Cash and cash
equivalents per condensed consolidated statement of cash
flows |
455 |
348 |
The cash and cash equivalents of €473 million (2020: €382
million) include money market funds of €340 million (2020:
€136 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 may restrict the use of certain cash balances
outside of those countries. These restrictions are not expected to
have any material effect on the Group’s ability to meet its ongoing
obligations.
(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 one year1 |
Debt
due
after one
year |
Debt-related derivative financial instruments |
Total
net
debt |
At 1 January 2020 |
(7) |
1 |
(699) |
(1,496) |
(6) |
(2,207) |
Cash flow |
375 |
— |
660 |
(658) |
59 |
436 |
Additions to lease
liabilities |
— |
— |
(5) |
(17) |
— |
(22) |
Disposal of lease
liabilities |
— |
— |
1 |
2 |
— |
3 |
Movement in
unamortised loan costs |
— |
— |
— |
(2) |
— |
(2) |
Net movement in fair
value of derivative financial instruments |
— |
— |
— |
— |
(49) |
(49) |
Reclassification |
— |
— |
(71) |
71 |
— |
— |
Currency
movements |
(20) |
— |
20 |
50 |
— |
50 |
At 31 December
2020 |
348 |
1 |
(94) |
(2,050) |
4 |
(1,791) |
Cash flow |
108 |
— |
27 |
(59) |
12 |
88 |
Additions to lease
liabilities |
— |
— |
(9) |
(26) |
— |
(35) |
Disposal of lease
liabilities |
— |
— |
1 |
1 |
— |
2 |
Acquired through
business combinations (see note 14)2 |
— |
— |
(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) |
Notes:
1 Excludes bank overdrafts of €18
million as at 31 December 2021 (31 December 2020: €34
million, 1 January 2020: €81 million)
which are included in cash and cash equivalents (see note
15b).
2 Cash acquired net of overdrafts
through business combinations included in ‘Cash flow’ is €3 million
(2020: €nil) (see note 14).
(d) Cash flow
generation
€ million |
2021 |
2020 |
Net increase in
cash and cash equivalents |
108 |
375 |
Investment in
property, plant and equipment |
573 |
630 |
Acquisition of
businesses, net of cash and cash equivalents |
63 |
— |
Investment in joint
ventures |
1 |
— |
Dividends paid to
shareholders |
298 |
237 |
Net
(proceeds)/repayment of borrowings |
(32) |
2 |
Proceeds from
Eurobonds |
— |
(744) |
Repayment of
Eurobonds |
— |
500 |
Proceeds from other
medium and long-term borrowings |
(59) |
— |
Repayment of other
medium and long-term borrowings |
— |
86 |
Net repayment of
short-term borrowings |
4 |
136 |
Repayment of lease
liabilities |
23 |
24 |
|
|
|
Cash flow
generation |
1,011 |
1,244 |
16 Capital commitments
Capital expenditure contracted for at the end of the reporting
period but not recognised as liabilities is as follows:
€ million |
2021 |
2020 |
Intangible assets |
2 |
3 |
Property, plant and
equipment |
353 |
288 |
Total capital
commitments |
355 |
291 |
17 Contingent
liabilities
Contingent liabilities comprise aggregate amounts as at
31 December 2021 of €8 million (2020: €3 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 health and safety 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 Group 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.
18 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);
and
- 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 10 and certain assets acquired or liabilities assumed in
business combinations as set out in note 14.
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 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; and
- 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 |
2021 |
2020 |
2021 |
2020 |
Financial
liabilities |
|
|
|
|
Borrowings |
2,228 |
2,178 |
2,353 |
2,361 |
19 Related party
transactions
The Group and its subsidiaries, in the ordinary course of
business, enter into various sale, purchase and service
transactions with associated undertakings in which the Group has a
material interest. These transactions are under terms that are no
less favourable than those arranged with third parties. These
transactions, in total, are not considered to be significant.
Transactions between Mondi plc and its subsidiaries, which are
related parties, and transactions between its subsidiaries have
been eliminated on consolidation. There have been no significant
changes to related parties as disclosed in note 28 of the Group’s
annual financial statements for the year ended 31 December
2020.
20 Events occurring after
31 December 2021
Aside from the final dividend proposed for 2021 (see note 9),
there have been the following material reportable events since
31 December 2021.
- On 16 February 2022, the Group
agreed to sell its Personal Care Components business (PCC) to Nitto
Denko Corporation for an enterprise value of €615 million (the
Transaction), which is also the approximate cash consideration
payable to Mondi at completion. By simplifying its portfolio, the
sale will enable the Group to focus on its core packaging and paper
businesses and enhance its ability to pursue the Group’s strategic
priority to grow in sustainable packaging. PCC, part of the Group’s
Engineered Materials business unit, manufactures a range of
components for personal and home care products needed in everyday
life such as diapers, feminine care, adult incontinence and wipes.
For the financial year ended 31 December 2021, PCC generated
an underlying EBITDA of €27 million and as at 31 December
2021, its gross assets were €444 million, including an
appropriate allocation of part of the goodwill that is currently
recorded in the Engineered Materials business unit. Prior to the
disposal agreement being reached, the Group assessed, based on the
criteria in IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations, whether the relevant assets and
liabilities (the disposal group) were required to be classified as
held for sale as at 31 December 2021.
For this to be the case, the disposal group must have been, at that
date, available for immediate sale and the sale must have been
highly probable. Management has applied judgement in assessing
whether the sale was highly probable at the balance sheet date.
Taking into account that discussions at that time with potential
buyers were in their early stages, a number of stakeholder matters
had to be resolved, the perimeter of the Transaction was uncertain
and that it was not considered highly probable that any sale would
proceed as at 31 December 2021, management concluded that the
held for sale classification criteria were not met as at
31 December 2021. The Transaction remains subject to
competition clearance and other customary closing conditions, with
completion expected in the second half of 2022. A profit on
disposal is expected to arise on completion.
- We have significant operations in Russia, representing around 12% of the Group's
revenue by location of production in 2021, including our
high-margin, cost-competitive, integrated pulp, packaging paper and
uncoated fine paper mill located in Syktyvkar (Komi Republic). Over
the last three years our Russian operations have generated around
20% of the Group’s underlying EBITDA. Our businesses primarily
serve the domestic market. In Ukraine Mondi has one paper bag plant located
in Lviv, west of the country, employing approximately 100 people.
We are actively monitoring this rapidly evolving situation, the
international response and the implications for the Group.
Production statistics
|
|
2021 |
2020 |
Containerboard |
000
tonnes |
2,724 |
2,525 |
Kraft paper |
000
tonnes |
1,253 |
1,145 |
Uncoated fine
paper |
000
tonnes |
1,564 |
1,422 |
Newsprint |
000
tonnes |
164 |
169 |
Pulp |
000
tonnes |
4,432 |
4,484 |
Internal
consumption |
000
tonnes |
3,953 |
3,767 |
Market pulp |
000
tonnes |
479 |
717 |
Corrugated
solutions |
million
m2 |
2,187 |
1,771 |
Paper bags |
million
units |
5,928 |
5,435 |
Consumer
flexibles |
million
m2 |
2,629 |
2,472 |
Engineered
materials |
million
m2 |
4,844 |
5,068 |
Exchange rates
|
Average |
Closing |
versus
euro |
2021 |
2020 |
2021 |
2020 |
South African rand
(ZAR) |
17.48 |
18.77 |
18.06 |
18.02 |
Czech koruna
(CZK) |
25.64 |
26.46 |
24.86 |
26.24 |
Polish zloty
(PLN) |
4.57 |
4.44 |
4.60 |
4.56 |
Pound sterling
(GBP) |
0.86 |
0.89 |
0.84 |
0.90 |
Russian rouble
(RUB) |
87.15 |
82.72 |
85.30 |
91.47 |
Turkish lira
(TRY) |
10.51 |
8.05 |
15.23 |
9.11 |
US dollar (USD) |
1.18 |
1.14 |
1.13 |
1.23 |
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. Underlying EBITDA and
ROCE, two of the Group’s APMs, link to the Group’s strategic
framework and form part of the executive directors and senior
management remuneration targets. The Group has not adjusted its
APMs for the impact of the COVID-19 pandemic.
The most significant APMs used by the Group are described below,
together with a reconciliation to the equivalent IFRS measure. The
reconciliations are based on Group figures.
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 business 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 |
2021 |
2020 |
Underlying EBITDA (see
condensed consolidated income statement) |
1,503 |
1,353 |
Group revenue (see
condensed consolidated income statement) |
7,723 |
6,663 |
Underlying EBITDA
margin (%) |
19.5 |
20.3 |
|
|
|
Underlying operating profit |
Operating profit
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 |
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 |
2021 |
2020 |
Underlying operating
profit (see condensed consolidated income statement) |
1,064 |
925 |
Group revenue (see
condensed consolidated income statement) |
7,723 |
6,663 |
Underlying
operating profit margin (%) |
13.8 |
13.9 |
|
|
|
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 |
2021 |
2020 |
Investment income (see
note 6) |
6 |
5 |
Interest on bank
overdrafts and loans (see note 6) |
(80) |
(83) |
Interest on lease
liabilities (see note 6) |
(13) |
(12) |
Net interest
expense |
(87) |
(90) |
|
|
|
Effective interest rate |
Trailing
12-month net interest expense expressed as a percentage of trailing
12-month average net debt.
Effective interest rate provides a measure of the net cost of
borrowings. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2021 |
2020 |
Net interest expense
(see above) |
87 |
90 |
Trailing 12-month
average net debt |
1,875 |
2,012 |
Effective interest
rate (%) |
4.6 |
4.5 |
|
|
|
Underlying profit before tax |
Profit before tax and
special items. 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 |
2021 |
2020 |
Tax charge before
special items (see note 7) |
212 |
180 |
Underlying profit
before tax (see condensed consolidated income statement) |
976 |
827 |
Effective tax rate
(%) |
22 |
22 |
|
|
|
Underlying earnings (and per share measure) |
Net
profit after tax attributable to shareholders, 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 Group’s earnings that is comparable from
year to year. |
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
divided by total ordinary dividend per share paid and proposed
provides a measure of the Group’s earnings relative to ordinary
dividend payments. |
|
None |
|
|
|
APM
calculation: |
|
|
euro cents, unless
otherwise stated |
2021 |
2020 |
Basic underlying EPS
(see note 8) |
154.0 |
129.3 |
Total ordinary
dividend per share (see note 9) |
65.00 |
60.00 |
Dividend cover
(times) |
2.4 |
2.2 |
|
|
|
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. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2021 |
2020 |
Trailing 12-month
underlying operating profit (see condensed consolidated income
statement) |
1,064 |
925 |
Trailing 12-month
underlying net profit/(loss) from joint ventures (see condensed
consolidated income statement) |
6 |
(3) |
Trailing 12-month
underlying profit from operations and joint ventures |
1,070 |
922 |
Trailing 12-month
average capital employed (see note 3) |
6,349 |
6,075 |
ROCE (%) |
16.9 |
15.2 |
|
|
|
Net
debt |
A measure
comprising short, medium, and long-term interest-bearing borrowings
and the fair value of debt-related derivatives less cash and cash
equivalents, net of overdrafts, and current financial asset
investments.
Net debt provides a measure of the Group’s net indebtedness or
overall leverage. |
Note 15c |
None |
|
|
|
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 |
2021 |
2020 |
Net debt (see note
15c) |
1,763 |
1,791 |
Trailing 12-month
underlying EBITDA (see condensed consolidated income
statement) |
1,503 |
1,353 |
Net debt to
underlying EBITDA (times) |
1.2 |
1.3 |
|
|
|
Operating segment assets and operating segment net
assets |
Operating segment assets and operating segment net assets comprise
total assets (excluding financial instruments) and capital employed
respectively but exclude investments in associates and joint
ventures, deferred tax assets and liabilities and other
non-operating assets and liabilities.
Operating segment assets and operating segment net assets provide a
measure of the assets and net assets required in the daily
operation of the business. |
Note 3 |
Total
assets
Net assets |
|
|
|
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. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2021 |
2020 |
Inventories (see
condensed consolidated statement of financial position) |
1,099 |
849 |
Trade and other
receivables (see condensed consolidated statement of financial
position) |
1,333 |
1,006 |
Trade and other
payables (see condensed consolidated statement of financial
position) |
(1,444) |
(1,116) |
Working capital |
988 |
739 |
Group revenue (see
condensed consolidated income statement) |
7,723 |
6,663 |
Working capital as
a percentage of revenue (%) |
12.8 |
11.1 |
|
|
|
Gearing |
Net debt expressed as
a percentage of capital employed provides a measure of the
financial leverage of the Group. |
|
None |
|
|
|
APM
calculation: |
|
|
€ million,
unless otherwise stated |
2021 |
2020 |
Net debt (see note
15c) |
1,763 |
1,791 |
Capital employed (see
note 3) |
6,652 |
6,173 |
Gearing
(%) |
26.5 |
29.0 |
|
|
|
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 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. |
Note 15d |
Net
increase/(decrease) in cash and cash equivalents |
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 packaging and paper solutions
that are sustainable by design. Our business is integrated across
the value chain – from managing forests and producing pulp, paper
and plastic films, to developing and manufacturing effective
industrial and consumer packaging solutions. Sustainability is at
the centre of our strategy and intrinsic in the way we do business.
We lead the industry with our customer-centric approach,
EcoSolutions, where we ask the right questions to find the most
sustainable solution. In 2021, Mondi had revenues of €7.7 billion
and underlying EBITDA of €1.5 billion.
Mondi has a premium listing on the London Stock Exchange (MNDI),
and a secondary listing on the JSE Limited (MNP). Mondi is a FTSE
100 constituent, and has been included in the FTSE4Good Index
Series since 2008 and the FTSE/JSE Responsible Investment Index
Series since 2007.
Sponsor in South Africa:
Merrill Lynch South Africa Proprietary Limited t/a BofA
Securities.