Wrap Text
Full year results for the year ended 31 December 2017
Mondi Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/013038/06)
JSE share code: MND ISIN: ZAE000156550
Mondi plc
(Incorporated in England and Wales)
(Registered number: 6209386)
LEI: 213800LOZA69QFDC9N34
JSE share code: MNP ISIN: GB00B1CRLC47
LSE share code: MNDI
2 March 2018
As part of the dual listed company structure, Mondi Limited and Mondi plc (together 'Mondi Group') notify both the JSE Limited and
the London Stock Exchange of matters required to be disclosed under the Listings Requirements of the JSE Limited and/or the
Disclosure Guidance and Transparency and Listing Rules of the United Kingdom Listing Authority.
This announcement contains inside information.
Full year results for the year ended 31 December 2017
Highlights
- Robust financial performance
- Revenue of EUR7,096 million, up 7%
- Underlying EBITDA of EUR1,444 million, up 6%
- Underlying operating profit of EUR1,018 million, up 4%
- Underlying basic earnings of 149.5 euro cents per share, up 8%
- Profit before tax of EUR887 million, up 5%
- Over EUR750 million of approved major capital expenditure projects in progress, securing a strong growth pipeline
- Acquisitions totalling over EUR400 million completed or announced, expanding the Group's product offering to
better serve our customers
- Delivered against our 2020 Growing Responsibly model commitments and renewed our WWF partnership
- Recommended full year ordinary dividend of 62.0 euro cents per share, up 9%
- In addition, recommended special dividend of 100.0 euro cents per share
Financial Summary
Six months Six months
Year ended Year ended ended ended
31 December 31 December Change 31 December 31 December Change
EUR million, except for percentages and per share measures 2017 2016 % 2017 2016 %
Group revenue 7,096 6,662 7 3,514 3,350 5
Underlying EBITDA 1 1,444 1,366 6 734 652 13
Underlying operating profit 1 1,018 981 4 521 452 15
Operating profit 957 943 1 455 414 10
Profit before tax 887 843 5 425 361 18
Per share measures
Basic underlying earnings per share 1 (euro cents) 149.5 137.8 8
Basic earnings per share (euro cents) 138.6 131.8 5
Total ordinary dividend per share (euro cents) 62.0 57.0 9
Special dividend per share (euro cents) 100.0 -
Cash generated from operations 1,325 1,401 (5)
Net debt 1,326 1,383
Group return on capital employed (ROCE) 2 19.7% 20.3%
Notes:
1 The Group presents underlying EBITDA, underlying operating profit and related per share information as non-IFRS measures which exclude
special items in order to provide a more effective comparison of the underlying financial performance of the Group and its operating segments
between financial reporting periods. This is consistent with the way financial performance is measured by management and reported to the Boards
and the DLC executive committee. A reconciliation of Group underlying EBITDA and underlying operating profit to profit before tax is provided
in note 3 of the condensed combined and consolidated financial statements. Special items are disclosed in note 4 of the condensed combined and
consolidated financial statements and defined in the glossary of terms at the end of this announcement
2 ROCE is underlying operating profit expressed as a percentage of the average capital employed for the year, adjusted for spend on major capital
expenditure projects which are not yet in operation. ROCE provides a measure of the efficient and effective use of capital in the business and
is monitored by the Boards and the DLC executive committee
Peter Oswald, Mondi Group Chief Executive Officer, said:
"I am pleased to report another successful year for Mondi, with underlying operating profit up 4% to EUR1,018 million. We
benefited from good demand and higher average selling prices in most of our businesses, while our continuous drive for
operational performance improvements mitigated the inflationary pressures on our cost base caused by the general
economic recovery.
We continue to make good progress in securing future growth and the ongoing cost competitiveness of our operations
through delivery on our capital expenditure programme. Of the two largest projects currently in progress, the EUR335
million modernisation of our kraft paper facility in Steti (Czech Republic) remains on track, and work to upgrade the pulp
mill at our Ruzomberok mill (Slovakia) has commenced, while we await final permits to proceed with our investment in a
300,000 tonne kraft top white machine at the same site. In addition, we are making good progress on smaller
expansionary capital expenditure projects at a number of our packaging operations. These projects are expected to
contribute to earnings from 2019.
Supported by ongoing good demand, we have seen strong upward momentum in pricing across our key product
segments in Packaging Paper and Fibre Packaging over the course of 2017 and into early 2018. We expect continued, but
manageable pressure on the cost base across the Group, a consequence of the turn in the commodity price cycle and the
general economic recovery we are seeing in many of the regions in which we operate. The recent US dollar weakness
coupled with stronger emerging market currencies, most notably the South African rand, are current headwinds.
Our outlook for the business is positive and we remain confident that our consistent and focused strategy, robust
business model centred around our cost advantaged assets, and firm focus on driving performance will sustain our track
record of delivering value accretive growth. The special dividend of 100.0 euro cents per share recommended by our
Boards in addition to the full year ordinary dividend of 62.0 euro cents per share reflects the strength of our financial
position and our continued confidence in the Group's cash generating capacity."
Group performance review
Our strong performance in 2017 builds on our track record of value accretive growth. Our consistent and focused strategy, robust
business model, integrated approach to sustainability and firm commitment to drive performance all continue to contribute to our
results.
Group revenue of EUR7,096 million was up 7% on the prior year. Excluding the impact of acquisitions, revenue was up 4% due to
higher average selling prices across all our businesses. While volume growth in the paper businesses, Packaging Paper and
Uncoated Fine Paper, was limited due to capacity constraints, we saw good growth in Fibre Packaging, most notably in
Corrugated Packaging, which achieved like-for-like growth of around 6%. Volumes in Consumer Packaging were impacted by a
combination of the ongoing challenging trading conditions and a targeted approach to exiting lower margin business.
Underlying operating profit of EUR1,018 million was up 4% on the prior year. Higher selling prices and marginally higher volumes
more than offset higher operating costs, a lower fair value gain on forestry assets (down EUR21 million year-on-year), the impact of
maintenance shuts (up EUR20 million year-on-year) and negative currency effects (estimated around EUR32 million). After taking into
consideration the impact of special items of EUR61 million (2016: EUR38 million), operating profit of EUR957 million was up 1%
(2016: EUR943 million).
Packaging Paper benefited from higher average selling prices across all key grades only partly offset by higher costs and negative
currency effects. In our Fibre Packaging business, strong volume growth and higher average selling prices were more than offset
by higher packaging paper input costs, negative currency translation effects and ongoing restructuring costs related to our
initiatives to optimise our Industrial Bags network. We continue to make good progress in Consumer Packaging despite the difficult
trading environment, with improved product mix and a positive contribution from acquisitions more than offsetting lower volumes,
marginally higher fixed costs and negative currency effects. In Uncoated Fine Paper, higher average selling prices and stable
volumes during the period were offset by the lower forestry fair value gain and higher costs.
Our passion for performance will always be central to the way we run our business - from our focus on commercial excellence and
lean processes, to rigorous quality management and operational excellence programmes that enhance productivity and efficiency.
We invest in our existing operations and, where appropriate, in acquisitions. We aim to acquire businesses that responsibly
produce high-quality products with sustainable competitive advantage and the potential to achieve world class operating
standards. This enables us to generate synergies through integration, enhance our product and service offering and/or extend our
geographic reach to better serve our customers.
In February 2017 we acquired Excelsior Technologies, further supporting the development of Consumer Packaging and in
December 2017 we signed an agreement to acquire Powerflute, an integrated pulp and paper mill in Kuopio (Finland) with an
annual production capacity of 285,000 tonnes of high-performance semi-chemical fluting for EUR365 million on a debt and cash-free
basis. Powerflute's semi-chemical fluting is sold to a diverse range of customers, primarily for packaging fresh fruit and vegetables,
but also other end-uses such as electronics, chemicals and pharmaceuticals. Around half of the company's production is sold in
Europe, while the remainder is exported globally. We anticipate completion of this transaction in the first half of 2018, subject to
competition clearance and customary closing conditions.
The impact of maintenance shuts on underlying operating profit in 2017 was around EUR95 million (2016: EUR75 million), slightly above
our previous expectation of EUR90 million. Based on prevailing market prices, we estimate that the impact of maintenance
shuts on underlying operating profit in 2018 will be around EUR110 million, of which the first half effect is estimated at around
EUR55 million (2017: EUR40 million). This includes the effects of a prolonged shut at our Richards Bay facility (South Africa)
following a technical incident in mid-February, which halted production for three weeks longer than was planned for the annual
maintenance shut.
We saw input cost inflation across our businesses as a consequence of a general rise in commodity prices and the economic
upturn in many of the markets in which we operate. Wood costs were generally higher in local currency terms in central Europe
and Russia, compounded by stronger emerging market currencies when translated into euros. Wood supply was disrupted in
northern and central Europe due to wet weather conditions during the fourth quarter of 2017 and into the first quarter of 2018.
While the situation is expected to normalise as weather conditions improve, any prolonged disruption is likely to have a negative
impact on logistics costs and wood availability in the region in the short term. Average benchmark paper for recycling costs were
up around 12% on 2016. Prices increased during the first three quarters of the year on the back of strong demand, but declined
sharply during the fourth quarter due to lower demand from China following policy changes affecting paper for recycling imports.
Energy input costs were higher than the prior year due to higher average crude oil and gas prices. Polyethylene prices were stable
year-on-year, with slightly lower average prices during the second half. Labour costs were higher, particularly in central and
eastern Europe, Russia and South Africa. Looking forward, rising commodity input costs, temporary wood supply disruptions in
northern and central Europe and the ongoing economic growth and related inflationary pressures in a number of regions in which
we operate are expected to continue to put upward pressure on our cost base.
Currency movements had a net negative impact on underlying operating profit. The net positive impact of a stronger rouble on
translation of our domestically focused Uncoated Fine Paper business was more than offset by the impact of the stronger South
African rand and various central European currencies on margins from our export oriented businesses in these regions. The
weaker US dollar had a net negative impact on our second half results.
Cash generated from operations of EUR1,325 million (2016: EUR1,401 million), including the impact of an increase in working capital,
reflects the continued strong cash generating capability of the Group. Net debt reduced by EUR57 million to EUR1,326 million or 0.9
times net debt to 12-month trailing underlying EBITDA.
Underlying basic earnings of 149.5 euro cents per share were up 8% compared to 2016. After taking the effect of special items into
account, basic earnings of 138.6 euro cents per share were up 5% compared to 2016.
Our Boards have recommended payment of a final ordinary dividend of 42.90 euro cents per share, bringing the total ordinary
dividend for the year to 62.0 euro cents per share, an increase of 9% on 2016.
Given our strong financial position and confidence in the Group's cash generating capacity, the Boards have recommended a
special dividend of 100.0 euro cents per share, in addition to the recommended final ordinary dividend.
Packaging Paper
Six months Six months
Year ended Year ended ended ended
31 December 31 December Change 31 December 31 December Change
EUR million 2017 2016 % 2017 2016 %
Segment revenue 2,292 2,103 9 1,151 1,038 11
Underlying EBITDA 629 527 19 333 253 32
Underlying operating profit 482 397 21 257 186 38
Underlying operating profit margin 21.0% 18.9% 22.3% 17.9%
Special items 3 - (2) -
Capital expenditure 283 175 161 97
Net segment assets 2,101 1,876
ROCE 26.3% 23.1%
Packaging Paper's underlying operating profit was up 21% on the prior year driven by significantly higher average selling prices
and sales volume growth in higher value added products, partly offset by higher costs and negative currency effects.
Strong demand, limited industry capacity additions and lower kraftliner imports drove up European containerboard prices over the
course of the year, although the magnitude of the increases varied by grade. Average benchmark European prices for unbleached
kraftliner were up 13% year-on-year, and up 16% in the second half when compared to the first half of the year, while benchmark
recycled containerboard prices were up around 10% over the same period. By contrast, white top kraftliner prices and semi-
chemical fluting were up in the range of 2% to 3% year-on-year.
In response to continued strong demand driven by a generally positive economic environment and ongoing growth in e-commerce,
price increases in the range of EUR30 to EUR50 per tonne were implemented in Europe across all containerboard grades during January
and February 2018.
We saw good demand across our kraft paper grades during the year, while sack kraft paper prices were up around 5% to 6% on
average year-on-year. Given good demand, particularly in export markets, we implemented sack kraft paper price increases in all markets
from the beginning of 2018, resulting in increases in the range of 8% to 9% compared to average 2017 price levels.
Demand across our range of speciality kraft papers was good and prices were, on average, higher than in the prior year.
Input costs were generally higher than the prior year with higher paper for recycling, wood, chemical, energy and transport costs.
Cash fixed costs also increased on higher maintenance costs and inflationary cost pressures. As a result of recent capital
investments, the depreciation charge was higher than the comparable period.
We completed a project-related shut at our Swiecie mill (Poland) and a planned maintenance shut at our Syktyvkar mill (Russia)
during the first half of the year. A further planned maintenance shut at Swiecie and the majority of our kraft paper mill shuts were
completed in the second half. Maintenance shuts are planned at our Syktyvkar and Richards Bay mills for the first half of 2018 while
the majority of the remaining shuts are scheduled for the second half of the year, including an extended shut at our Steti mill as we
progress to commission the major capital project at that operation.
Fibre Packaging
Six months Six months
Year ended Year ended ended ended
31 December 31 December Change 31 December 31 December Change
EUR million 2017 2016 % 2017 2016 %
Segment revenue 2,055 1,929 7 1,024 961 7
Underlying EBITDA 189 194 (3) 91 100 (9)
Underlying operating profit 111 123 (10) 51 64 (20)
Underlying operating profit margin 5.4% 6.4% 5.0% 6.7%
Special items - (13) - (13)
Capital expenditure 115 107 68 57
Net segment assets 1,063 1,006
ROCE 11.3% 13.5%
Fibre Packaging's underlying operating profit was down 10% on the prior year to EUR111 million. Strong volume growth, higher
average selling prices and the positive impact from our 2016 acquisitions in Corrugated Packaging were more than offset by higher
packaging paper input costs, negative currency translation effects and restructuring costs related to our initiatives to optimise our
Industrial Bags network in Europe and North America.
Corrugated Packaging achieved strong organic volume growth of 6%, driven by good market growth across the central and
eastern European region, continued growth in e-commerce activity and a recovery in Turkey. Our recently completed capital
investments across our corrugated operations to broaden our capabilities to meet our customers increasingly sophisticated product
and service needs were instrumental in achieving this growth. Good progress was made during the year in implementing price
increases required to compensate for the significantly higher paper costs. Our efforts in this area are ongoing. We anticipate
continued short-term margin pressure, given the normal delay in passing on paper price increases compounded by the
containerboard price increases implemented early in 2018.
Industrial Bags sales volumes were up 2% on average, driven by strong growth in eastern Europe, Russia, Africa and South East
Asia, partly offset by weaker western European and North American volumes. Price increases were achieved in the early part of
the year to compensate for higher paper input costs, although margins came under pressure during the second half as higher
paper prices, following mid-year increases, could not be fully passed on to customers given the majority of industrial bag contracts
are fixed on an annual basis. Strong cost management and the benefit of recent rationalisation activities resulted in significant fixed
cost savings during the period. We continue to work on optimising our production network to serve our customers more efficiently.
During the year we closed two plants in Europe and a plant in the US, while continuing to serve our customers from other sites. To
further expand our network in the fast growing Middle East region, we signed an agreement to buy a control position in a plant near
Cairo in Egypt. The acquisition is expected to complete during the first half of 2018. Annual contracts for 2018 have been finalised,
with price increases implemented that largely reflect the full impact on the cost base of the recent paper price increases.
Consumer Packaging
Six months Six months
Year ended Year ended ended ended
31 December 31 December Change 31 December 31 December Change
EUR million 2017 2016 % 2017 2016 %
Segment revenue 1,646 1,562 5 807 797 1
Underlying EBITDA 215 198 9 109 98 11
Underlying operating profit 132 121 9 69 57 21
Underlying operating profit margin 8.0% 7.7% 8.6% 7.2%
Special items (49) (19) (49) (19)
Capital expenditure 91 91 55 49
Net segment assets 1,313 1,270
ROCE 10.4% 10.5%
Underlying operating profit increased 9% on the prior year to EUR132 million, with improved product mix, one-off gains and a positive
contribution from acquisitions more than offsetting lower like-for-like sales volumes, higher fixed costs and negative currency
effects.
During the year we continued with our initiatives to improve the product mix by focusing on increasing our sales in value-added
segments while exiting lower margin business, although this was hindered by declining volumes in personal care components.
We also benefited from the successful integration of Kalenobel in Turkey and Uralplastic in Russia, both acquired in July 2016,
and Excelsior Technologies in the UK, acquired in early 2017, further supporting the development of this business.
Our focus to drive Consumer Packaging's performance continues in what remains a challenging trading environment. During the
year we closed a release liner plant in the US and in the second half we launched a programme to restructure the cost base and
align capacity to current market requirements. This included the closure of a plant in Poland, streamlining the UK operations and
reducing the fixed cost base across the business. We are also making good progress on our various commercial excellence and
innovation initiatives, aimed at improving our product and service offering to our customers.
The environmental impact of Mondi's plastic-based flexible packaging offering is important for us. In line with Mondi's Growing
Responsibly model, we have worked on improving our energy efficiency and waste to landfill. We are also working with our
customers to find innovative solutions that improve the sustainability of their products and packaging. Our commitment to work
collaboratively with other stakeholders has led us to join the Ellen MacArthur Foundation's New Plastics Economy Initiative this
year. This is an ambitious, three-year initiative to mobilise the transition towards a global plastics system, based on circular
economy principles.
Uncoated Fine Paper
Six months Six months
Year ended Year ended ended ended
31 December 31 December Change 31 December 31 December Change
EUR million 2017 2016 % 2017 2016 %
Segment revenue 1,832 1,720 7 885 867 2
Underlying EBITDA 449 481 (7) 217 218 -
Underlying operating profit 331 375 (12) 159 163 (2)
Underlying operating profit margin 18.1% 21.8% 18.0% 18.8%
Special items (15) (6) (15) (6)
Capital expenditure 122 92 73 48
Net segment assets 1,446 1,466
ROCE 27.8% 32.3%
Our Uncoated Fine Paper business delivered another strong performance, generating underlying operating profit of EUR331 million
and ROCE of 27.8%. Higher average selling prices were achieved across all regions on stable volumes, partly offsetting the negative
impact of a lower fair value gain on our forestry assets (down EUR21 million year-on-year) and higher costs.
We estimate European market demand was flat year-on-year, above our expected long-term trend of 1% to 2% decline per annum.
Demand in Russia and South Africa was in line with our long-term estimate of 0% to 1% growth per annum.
Average benchmark European uncoated fine paper selling prices were similar to the prior year and 2% up in the second half of the
year compared to the first half following the implementation of price increases during the period. Supported by steady demand,
reduced imports, supply disruptions in Europe and cost pressures, a price increase of up to 5% was implemented in January 2018.
Uncoated fine paper domestic selling prices were increased in Russia and South Africa towards the end of 2017 to offset domestic
inflation. Further price increases have been announced across our range of uncoated fine papers in Europe, Russia and South Africa
for implementation from the end of March 2018. Discussions are underway and the actual price increase achieved remains subject to
individual negotiations with customers.
Generally rising commodity prices saw an increase in input costs, most notably for wood and energy in Europe and South Africa.
Higher maintenance costs, inflationary cost pressures on the cash fixed cost base and a higher depreciation charge were also
seen across the business, mitigated by our continued focus on driving operational excellence.
Due to the accelerated rate of local demand decline, we ceased production of newsprint at our Merebank mill (South Africa) at the
end of the year. During the third quarter we restarted an idled uncoated fine paper machine at the same site which will produce
annually around 70,000 tonnes of uncoated fine paper to serve the local market.
The forestry assets fair value is dependent on a variety of external factors over which we have limited control, the most significant
being the export price of timber and the exchange rate. Moderate increases in export prices, resulted in a fair value gain of EUR43
million being recognised in the year, EUR21 million lower than the unusually high gain recognised in the prior year. While difficult to
estimate, should the current strength in the South Africa rand prevail, we would expect a significantly lower fair value gain in 2018.
Planned maintenance shuts were completed at Syktyvkar in the first half of the year, and at Ruzomberok and Neusiedler (Austria)
in the second half of the year. In 2018, our Syktyvkar and Richards Bay shuts are planned for the first half of the year and the
remaining shuts are scheduled for the second half.
Special items
The net special item charge of EUR61 million before tax (2016: EUR38 million) comprised the following by business unit:
- Packaging Paper: partial impairment of kraft paper assets in the US of EUR16 million and partial reversal of the impairment
of a kraft paper mill in Bulgaria of EUR14 million. Release of restructuring and closure provisions of EUR5 million on finalisation
of the sale of a kraft paper mill in Finland.
- Consumer Packaging: restructuring and closure costs of EUR22 million and related impairment of EUR28 million as a result of
the restructuring of this business. Recognition of a EUR1 million gain on the release of a restructuring and closure provision
following the finalisation of a release liner plant closure in the US.
- Uncoated Fine Paper: restructuring costs of EUR7 million and related impairment of EUR8 million following the closure of a
newsprint machine at our Merebank mill.
Further detail is provided in note 4 of our condensed combined and consolidated financial statements.
Tax
Based on our geographic profit mix and the applicable tax rates, we would expect our tax rate to be around 22%. However, we
benefited from tax incentives related to our capital investments mainly in Poland and Russia. In addition, we recognised deferred
tax assets related to previously unrecognised tax losses which we now expect to be able to utilise in the coming years. As such,
our underlying tax charge for 2017 of EUR181 million (2016: EUR166 million) reflects an effective tax rate of 19%, consistent with 2016.
Tax relief on special items amounted to EUR8 million (2016: EUR9 million).
Tax paid in 2017 of EUR151 million (2016: EUR173 million) is lower than the 2017 charge due to final tax payments for 2017 becoming
payable in 2018.
Going forward, assuming a similar profit mix, we would anticipate upward pressure on the tax rate over the next three years as it
moves towards the expected tax rate of 22%.
Cash flow
Cash generated from operations of EUR1,325 million (2016: EUR1,401 million), including the impact of an increase in working capital,
reflects the continued strong cash generating capability of the Group.
Working capital as a percentage of revenue was 12.7%, marginally up on the prior year (12.0%). The net cash outflow from
movements in working capital during the year was EUR122 million (2016: inflow of EUR68 million).
We paid dividends of EUR273 million to external shareholders (2016: EUR274 million). Interest paid of EUR83 million
(2016: EUR82 million) was in line with the prior year.
In 2017, capital expenditure amounted to EUR611 million (2016: EUR465 million) and we completed the acquisition of Excelsior
Technologies Limited with a total purchase price, on a debt and cash-free basis, of EUR40 million.
In April 2017, we paid the final coupon and redeemed the 5.75% 2017 EUR500 million Eurobond on maturity.
Capital investments
Investing in our cost advantaged asset base to maintain and enhance our competitiveness is of particular importance for our pulp
and paper operations where products are generally more standardised and relative cost competitiveness is a key value driver. We
focus on enhancing our cost competitiveness, improving energy efficiency, reducing waste and emissions and driving organic
growth.
Our 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. Over the last four years, our major capital projects have
contributed around EUR175 million of incremental operating profit, including EUR25 million in 2017. We expect to generate a further
EUR15 million in 2018.
In the first half of 2017, we commissioned the final phase of our EUR260 million investment programme in Swiecie. This project
provides an additional 100,000 tonnes per annum of softwood kraft pulp forward integrated to 80,000 tonnes per annum of light-
weight kraftliner and an increased share of kraft top liner. We continue to see progress in ramping up production of the requisite
quality at our rebuilt paper and inline coating machine at Steti although technical challenges remain.
We have a strong major capital expenditure project pipeline totalling over EUR750 million, securing future growth:
- We are making good progress on the EUR335 million modernisation of our Steti mill to replace the recovery boiler, rebuild the
fibre lines and debottleneck the existing packaging paper machines. Start-up is anticipated in late 2018. During the year
we also completed the EUR41 million woodyard upgrade and bleaching line modernisation at this mill.
- The European Commission approved EUR49 million in tax incentives for our EUR310 million investment in a new 300,000 tonne
per annum kraft top white machine and related pulp mill upgrade at our Ruzomberok mill. Work on the pulp mill upgrade
has commenced, with start-up expected in late 2019. The investment in the paper machine remains subject to obtaining
necessary permitting with start-up expected in 2020.
- As part of our plan to maintain Syktyvkar's competitiveness and increase saleable production by around 100,000 tonnes per annum in the
medium term, we are investing to debottleneck production and avoid unplanned shutdowns.
- We continue to invest in our Fibre Packaging and Consumer Packaging businesses to enhance our product and service offering.
Our major capital projects in Czech Republic, Slovakia and Russia will increase our current saleable pulp and paper
production by around 9% when in full operation.
Given the approved project pipeline and in the absence of any other major investment, our capital expenditure is expected to be in
the range of EUR700-800 million per annum in 2018 and 2019 as expenditure on these large projects accelerates.
Treasury and borrowings
Net debt at 31 December 2017 was down EUR57 million at EUR1,326 million (2016: EUR1,383 million), reflecting our strong cash generating
capacity despite our ongoing capital expenditure programme.
The Group's liquidity position remains robust. At the end of the year, EUR791 million of our EUR2.0 billion committed debt facilities
remained undrawn. The weighted average maturity of committed debt facilities was 3.8 years at 31 December 2017. Gearing at the
same date was 24.7% and our net debt to 12-month trailing underlying EBITDA ratio was 0.9 times, well within our key financial
covenant requirement of 3.5 times.
In the second half of the year, Moody's Investors Service upgraded the Group's credit rating from Baa2 to Baa1 (stable outlook).
Our BBB credit rating from Standard & Poor's was reaffirmed and put on positive outlook during the year.
Net finance costs of EUR71 million were EUR30 million lower than the previous year, primarily due to the repayment in April of the 5.75%
2017 EUR500 million Eurobond and lower average net debt. Average net debt of EUR1,376 million was 7% lower than the prior year and
our effective interest rate was 4.5% (2016: 6.2%).
Growing Responsibly
Our people are important to us, and we want to develop a fair, safe and diverse workplace that supports us in delivering our
strategy. We want to inspire innovation and creativity in our people, and to ensure that everyone returns home safely to their
families every day.
We are deeply saddened to have had two fatalities in 2017 and one employee missing (presumed deceased) in our Syktyvkar
operation. In February, a contractor lost his life in our South African forestry operations following a timber vehicle incident; and in
August, an employee lost his life at our Tire Box operation (Turkey) during electrical fault finding activities at a bundle-strapping
machine. We also regret that we had three life-altering injuries during the year.
With zero harm our ultimate goal, we continue to work very hard to eliminate fatal and life-altering injuries. Our focus on the top
fatal risks at all operations has allowed us to better anticipate and manage our highest risk activities - which usually occur during
annual maintenance shuts and project implementation. We remain determined to focus on top risks so that fatalities and life-
altering injuries are not a part of our future. In 2017, we introduced a new 24-hour mindset approach, designed to help shape a
culture where we act safely in everything we do. It is encouraging that the steps we have taken resulted in an improved Total
Recordable Case Rate in 2017 to 0.60 from 0.66 in 2016 and a 21% reduction against our 2015 baseline of 0.76 (which has been
adjusted to include acquisitions).
We believe that being part of the solution to global sustainability challenges will secure the long-term success of our business and
the wellbeing of our communities and other stakeholders. We address the risks and opportunities that arise from global
environmental and societal trends, so that we retain our competitive edge and generate value for our stakeholders long into the
future.
We have a strong track record of delivering on our sustainability commitments, as reflected in our performance across the 10
action areas of our Growing Responsibly model, which saw excellent improvements in safety, increasing sustainable fibre, and
reducing carbon emissions, other air and water emissions, and waste. Built on our past achievements and designed for our future
success, our Growing Responsibly model provides the business with a formal structure to demonstrate, monitor and improve the
way sustainability is embedded in the business. The model includes 16 commitments to 2020 (the climate commitment runs to
2030) across 10 action areas.
In addition to committing to clear sustainability targets, we also believe that working collaboratively with stakeholders across the
entire value chain is key to ensuring long-term value creation and addressing shared challenges. In 2014, Mondi entered into a
three-year global partnership with WWF, focusing on promoting environmental stewardship in the packaging and paper sector. In
2017, we extended this global partnership by a further three years to 2020. Phase II of the partnership will embed and extend
Mondi's stewardship of forests, climate and energy and freshwater.
With the resultant strong focus on a safe, fair and diverse workforce, working towards a more transparent and responsible supply
chain, and continued commitment to minimising our climate footprint, we are able to address risks and opportunities across our
business. A number of our current and planned capital expenditure projects will contribute to meeting our Growing Responsibly
commitments, particularly those relating to greenhouse gas emissions and waste reduction. We are pleased our total specific CO2e
emissions (in tonnes per tonne of saleable production) have declined to 0.72, a 15% reduction against the 2014 baseline, as we
continue to make progress in making our business less carbon intensive. The contribution of biomass-based renewable energy to
the total fuel consumption of our mills has increased from 59% in 2014 to 65% in 2017. We have adopted a new science-based
greenhouse gas target to reduce our production related total scope 1 and 2 GHG emission intensity to 0.25 tonnes of CO2e per
tonne of saleable production by 2050 against a 2014 baseline of 0.59.
Dividend
The boards of Mondi Limited and Mondi plc's aim is to offer shareholders long-term ordinary dividend growth within a targeted
dividend cover range of two to three times over the business cycle. Given our strong financial position and the Boards' stated
objective to increase distributions to shareholders through the ordinary dividend, the Boards have recommended an increase in the
final ordinary dividend to 42.90 euro cents per share (2016: 38.19 euro cents per share). The final ordinary dividend, together
with the interim ordinary dividend of 19.10 euro cents per share, paid on 19 September 2017, amount to a total ordinary dividend
for the year of 62.0 euro cents per share, an increase of 9% on the 2016 total ordinary dividend of 57.0 euro cents per share.
The Boards regularly review the Group's capital allocation priorities to optimise value accretive growth and long-term returns for
shareholders. Our strong cash generation has allowed us to reinvest to grow the business and sustain a cost advantaged position,
while supporting growth in the ordinary dividend and deleveraging the balance sheet. As a result, our balance sheet leverage is
well within our stated policy of maintaining investment grade credit metrics. Given the confidence in the Group's ongoing cash
generating capacity, the Boards have decided to recommend a special dividend of 100.0 euro cents per share in addition to the
recommended final ordinary dividend. In coming to this view, the Boards have taken full account of the Group's access to funding
and development plans, including ongoing expansionary capital expenditure programmes and the possibility of further small to
mid-sized acquisitions over the coming years.
The final ordinary dividend and the special dividend are subject to the approval of the shareholders of Mondi Limited and
Mondi plc at the respective Annual General Meetings scheduled for 16 May 2018 and if approved are payable on 25 May 2018 to
shareholders on the register on 4 May 2018.
Outlook
Supported by ongoing good demand, we have seen strong upward momentum in pricing across our key product segments in
Packaging Paper and Fibre Packaging over the course of 2017 and into early 2018. We expect continued, but manageable
pressure on the cost base across the Group, a consequence of the turn in the commodity price cycle and the general economic
recovery we are seeing in many of the regions in which we operate. The recent US dollar weakness coupled with stronger
emerging market currencies, most notably the South African rand, are current headwinds.
Our outlook for the business is positive and we remain confident that our consistent and focused strategy, robust business
model centred around our cost advantaged assets, and firm focus on driving performance will sustain our track record of delivering
value accretive growth. The special dividend of 100.0 euro cents per share recommended by our Boards in addition to the full
year ordinary dividend of 62.0 euro cents per share reflects the strength of our financial position and our continued confidence in
the Group's cash generating capacity.
Principal risks and uncertainties
The Boards are responsible for the effectiveness of the Group's risk management activities and internal control processes. They
have put procedures in place for identifying, evaluating, and managing the significant risks that the Group faces. In combination
with the audit committee, the Boards have conducted a robust assessment of the principal risks to which Mondi is exposed and
they are satisfied that the Group has effective systems and controls in place to manage its key risks within the risk tolerance levels
established.
Risk management is by nature a dynamic and ongoing process. Our approach is flexible to ensure that it remains relevant at all
levels of the business, and dynamic to ensure we can be responsive to changing business conditions. This is particularly important
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. In
considering the ever increasing competition for talent in a number of the markets in which the Group operates, the Boards have
included attraction and retention of key skills and talent as a significant risk, as the only change from the prior year.
Strategic risks
The industries and geographies in which we operate expose us to specific long-term risks which are accepted by the Boards as a
consequence of the Group's chosen strategy and operating footprint.
While there have been no significant changes in our strategic risk exposure during the year, we continue to monitor recent capacity
announcements and the developments in the process as the UK seeks to exit the European Union.
The executive committee and Boards monitor our exposure to these risks and evaluate investment decisions against our overall
exposures so that our strategic capital investments and acquisitions take advantage of the opportunities arising from our deliberate
exposure to such risks.
Industry productive capacity
Plant utilisation levels are the main driver of profitability in paper mills. New capacity additions are usually in large increments
which, through their impact on the supply/demand balance, influence market prices. Unless market growth exceeds capacity
additions, excess capacity may lead to lower selling prices. In our converting operations investments in newer technology may
lower operating costs and provide increased product functionality increasing competition and impacting margins.
We monitor industry developments in terms of changes in capacity and utilisation levels, as well as trends and developments in our
own product markets. We routinely review our asset portfolio and capacity utilisation levels to drive performance and safeguard our
assets. Our strategic focus on production at low cost and innovation activities to achieve cost advantages and produce higher
value added responsibly produced and sustainable products, combined with our focus on growing markets and consistent
investment in our operating capacity, ensures that we can remain competitive.
Product substitution
Changing global socio-economic and demographic trends and consumption patterns and increased public awareness of
sustainability challenges affect the demand for Mondi's products. Customers' needs and purchasing power are changing in
emerging markets. Substitution may be to different products not produced by Mondi or to different solutions meeting the same
customer requirement.
Factors that may positively or negatively impact the demand for our products include reduced weight of packaging materials,
increased use of recycled materials, electronic substitution of paper products, substitution of plastic packaging, increased
demand for high-quality printed material, certified and responsibly produced goods, and specific material qualities.
Our ability to meet changes in consumer demand depends on our capacity to correctly anticipate change and develop new
products on a sustainable, competitive and cost-effective basis. Opportunities also exist for us to take market share from
substitutes produced by our competitors. Our focus is on products enjoying positive substitution dynamics and growing regional
markets as we work with our customers to develop new markets and new products. Our broad range of converting products
provides some protection from the effects of substitution between paper and plastic-based packaging products.
Fluctuations and variability in selling prices or gross margins
Our selling prices are determined by changes in capacity and demand for our products, which are, in turn, influenced by
macroeconomic conditions, consumer spending preferences, and inventory levels maintained by our customers.
Changes in prices differ between products and geographic regions and the timing and magnitude of such changes have varied
significantly over time. Gross margins in our downstream converting operations are impacted by fluctuations in key input costs
which cannot be passed on to customers in all cases.
Our strategic focus is on higher growth markets and products where we enjoy a competitive advantage through innovation,
proximity or production cost. We continue to invest in our high-quality, cost advantaged asset base to ensure we maintain our
competitive cost position and continue to further develop businesses with better long term fundamentals. We are committed to
meeting service levels and product quality requirements. Our high levels of vertical integration reduce our exposure to price
volatility of our key input costs. In our downstream operations the focus is on passing through our main material costs to sales
prices. Our financial policies and structures take the inherent price volatility of the markets in which we operate into consideration.
Country risk
We have production operations across more than 30 countries; some in jurisdictions where the political, economic and legal
systems are less predictable than in countries with more developed institutional structures. Political or economic upheaval,
inflation, changes in laws, nationalisation, or expropriation of assets may have a material effect on our operations in those
countries. Uncertainties remain over the outcomes of the UK's decision to exit from the European Union.
We actively monitor all countries and environments in which we operate. Regular formal and informal interaction with government
officials, local communities and business partners assist us to remain abreast of changes and new developments. The Boards
have approved specific country risk premiums to be added to the required returns on investment projects in those countries where
risks are deemed to be higher and new investments are subject to rigorous strategic and commercial evaluation.
Where we have large operations in higher risk locations, we maintain a permanent internal audit presence and operate asset
protection units. We are in the process of reviewing how we assess, monitor and manage risks in our supply chain, including the
use of country-based risk assessment tools and databases. Our geographic diversity and decentralised management structure,
utilising local resources in countries in which we operate, reduces our exposure to any specific jurisdiction.
Financial risks
We aim to maintain an appropriate capital structure and to conservatively manage our financial risk exposures in compliance
with all laws and regulations.
Despite ongoing short-term currency volatility and increased scrutiny of the tax affairs of multinational companies, our overall
residual risk exposure remains similar to previous years, reflecting our conservative approach to financial risk management.
Capital structure
A strong and stable financial position increases our flexibility and provides us with the ability to take advantage of strategic
opportunities as they arise. Our ability to raise debt and/or equity financing is significantly influenced by general economic
conditions, developments in credit markets, equity market volatility, and our credit rating. Failure to obtain financing at reasonable
rates could prevent us from realising our strategy and have a negative impact on our competitive position.
We operate a central treasury function under a board-approved treasury policy. We provide regular reporting to the Boards on our
treasury management policies. Compliance with treasury policies at operating level is monitored by our central treasury function
and we engage external advisors to review our central treasury function. We aim to maintain an investment grade credit rating and
we have access to a variety of sources of funding with varying maturities.
Currency risk
We operate in more than 30 countries and are thus exposed to the effect of changes in foreign currency rates. The impact of
currency fluctuations affects us because of mismatches between the currencies in which our operating costs are incurred and
those in which revenues are received.
Key operating cost currencies that are not fully offset by local currency denominated revenues include the South African rand,
Polish zloty, Swedish krona, and Czech koruna; while the revenues generated in US dollar, Russian rouble and UK pound
sterling are greater than operating costs incurred in those currencies. In addition, appreciation of the euro compared with the
currencies of the other key paper producing regions or paper pricing currencies, notably the US dollar, would reduce the
competitiveness of the products Mondi produces in Europe compared with imports from such key paper-producing regions which
could potentially lead to lower revenues and earnings.
We fund our entities in their local currencies to minimise translation risk. This exposes us to interest rate risk from these
currencies which we aim to manage through interest rate swaps and fixed rate borrowings. Balance sheet exposure and material
forecast future capital expenditure transactions are hedged. We do not permit speculative currency positions. We do not hedge
our exposure to projected future sales or purchases and our businesses respond to currency fluctuations through changes in
selling prices or increasing the level of exports where competitiveness improves as currencies weaken. Our strategic focus on
sustainable value and driving performance along the value chain provides inherent cost advantages, protecting us from adverse
currency fluctuations.
Tax risk
We operate in a number of countries - all with different tax systems. We make significant intragroup charges, the basis for which is
subject to review during tax audits. In addition, the international tax environment is becoming more onerous, requiring increasing
transparency and reporting and in-depth scrutiny of the tax affairs of multinational companies.
The Boards have approved the Group's Tax Policy. We aim to manage our affairs conservatively and our operations are structured
tax efficiently to take advantage of available incentives and exemptions. We have dedicated tax resources throughout the Group
supported by a centralised Group tax team. We obtain external advisory opinions for all major tax projects, such as acquisitions
and restructuring activities, and make use of external benchmarks where possible. Arm's length principles are applied in the pricing
of all intragroup transactions in accordance with Organisation for Economic Cooperation and Development guidelines.
Operational risks
A low residual risk tolerance is demonstrated through our focus on operational excellence, investment in our people and
commitment to the responsible use of resources.
Our investments to improve our energy efficiency, engineer out our most significant safety risks, improve operating efficiencies,
and renew our equipment continue to reduce the likelihood of operational risk events. However, the potential impact of any such
event remains unchanged.
Cost and availability of raw materials
Access to sustainable sources of raw materials is essential to our operations. We have access to our own sources of wood in
Russia and South Africa and we purchase wood, paper for recycling, pulp, and polymers for film production to meet our needs in
the balance of our operations. Wood prices and availability may be adversely affected by reduced quantities of available wood
supply that meet our standards for chain-of-custody certified or controlled wood, and initiatives to promote the use of wood as a
renewable energy source.
We are committed to acquiring our raw materials from sustainable, responsible sources and avoiding the use of any controversial
or illegal supply. We are involved in multi-stakeholder processes to address challenges in meeting the global demand for
sustainable, responsible fibre and we encourage legislation supporting the local collection of recycled materials. The sustainable
management of our forestry operations is key in managing our overall environmental impact, helping to protect ecosystems, and
developing resilient landscapes. We have built strong forestry management resources in Russia and South Africa to actively
monitor and manage our wood resources in those countries. We continue to certify our forests with credible external certifications.
We have multiple suppliers for each of our operations and our centralised procurement teams work closely with our operations in
actively pursuing longer term agreements with strategic suppliers. We have developed an internal monitoring and risk assessment
system to understand and manage the performance of our suppliers and their adherence to our Suppliers' Code of Conduct. We
are working to improve our understanding and management of sustainability risks within our supply chain. We support the
introduction of legislation to address human rights issues, such as the UK Modern Slavery Act 2015, and are committed to
achieving more transparency in the supply chain to address the risks.
Energy security and related input costs
Mondi is a significant consumer of electricity which is generated internally and purchased from external suppliers. Where we do not
generate electricity from biomass and by-products of our production processes, we are dependent on external suppliers for raw
materials such as gas, oil and coal. Increasing energy costs contribute significantly to increasing chemical, fuel, and transportation
costs which are often difficult to pass on to customers. As an energy-intensive business, we face potential physical and regulatory
risks related to climate change.
We monitor our electricity usage, carbon emission levels and use of renewable energy. Most of our larger operations have high
levels of electricity self-sufficiency. We focus on improving the energy efficiency of our operations by investing in improvements to
our energy profile and increased electricity self-sufficiency, while reducing ongoing operating costs and carbon emission levels.
Where we generate electricity surplus to our own requirements, we may sell such surplus externally. We also generate income
from the sale of green energy credits in certain of our operations at prices determined in the open market. We focus on optimising
the use of biomass-based fuels in order to reduce our use of fossil-based energy sources.
Technical integrity of our operating assets
We have five major mills which account for approximately 75% of our total pulp and paper production capacity, and a significant
consumer packaging manufacturing facility in Germany. If operations at any of these key facilities are interrupted for any significant
length of time, it could have a material adverse effect on our financial position or performance. Accidents or incidents such as fires,
explosions, or large machinery breakdowns or the inability of our assets to perform the required function effectively and efficiently
whilst protecting people, business, the environment and stakeholders could result in property damage, loss of production,
reputational damage, and/or safety incidents.
Our capital investment programme supports the replacement of older equipment to improve both reliability and integrity, and our
proactive repair and maintenance strategy is designed to improve production reliability and minimise breakdown risks. We conduct
detailed risk assessments of our high-priority equipment and have specific processes and procedures in place for the ongoing
management and maintenance of such equipment. We actively monitor all incidents and have a formal process which allows us to
share lessons learnt across our operations, identify emerging issues, conduct benchmarking, and evaluate the effectiveness of our
risk reduction activities. Our Fire Protection programme is supported by independent loss prevention audits and we take out
property insurance cover for key risks.
Environmental impact
We operate in an environmentally high-impact sector and need to manage the associated risks and responsibilities. Our operations
are water, carbon and energy intensive; consume materials such as fibre, polymers, metals and chemicals; and generate
emissions to air, water and land. We are the custodian of more than two million hectares of forested land. We consider potential
impacts on constrained resources, loss of biodiversity and ecosystems negatively impacted by our forestry and manufacturing
operations. We are subject to a wide range of international, national and local environmental laws and regulations, as well as the
requirements of our customers and expectations of our broader stakeholders. Costs of continuing compliance, potential restoration
and clean-up activities, and increasing costs from the effects of emissions have an adverse impact on our profitability. The impacts
of climate change such as rising frequency and intensity of water shortages, floods and storms worldwide and pests and diseases
also have the potential to impact on our operations and forests.
We ensure that we are complying with all applicable environmental, health and safety requirements where we operate. Our own
policies and procedures, at or above local policy requirements, are embedded in all our operations and are supported through the
use of externally accredited environmental management systems. We focus on a clean production philosophy to address the
impact from emissions, discharge, and waste. We emphasise the responsible management of forests and associated ecosystems
and protect high conservation value areas. We ensure that we manage our forests responsibly and implement measures to protect
biodiversity. We collaborate with stakeholders to contribute to addressing sustainability challenges such as creating a circular
economy for plastics. We undertake compliance assessments in relation to regulatory requirements such as the EU Industry
Emissions and Energy Efficiency Directives to determine future investment requirements.
Employee and contractor safety
We operate large facilities, often in remote locations. Accidents/incidents cause injury to our employees or contractors, property
damage, lost production time, and/or harm to our reputation. Risks include: fatalities, serious injuries, illness, disease, and
substance abuse.
We have a goal of zero harm and aim to continuously advance our 24-hour safety mindset and safety culture. We continually
monitor incidents and close calls and actively transfer learnings across our operations. We apply an externally accredited safety
management system and conduct regular audits of our operations to ensure our facilities remain fit-for-purpose. We have
implemented a project to engineer out the most significant risks in our operations supported by robust controls and procedures for
operating those assets. We provide extensive training to ensure that performance standards and practice notes are communicated
and understood and our incentives are impacted by the non-achievement of safety milestones.
Attraction and retention of key skills and talent
Our success is driven by our people. Key to our long-term success is attracting, retaining, recruiting and developing a skilled and
committed workforce. Access to the right skills, particularly management and technical skills is critical to support the performance
and growth of our business. Operations in remote locations make attracting and retaining skilled employees challenging. Losing
skills or failing to attract new talent to our business has the potential to undermine our ability to drive performance and deliver on
our strategic objectives.
Our culture and values play a key role in empowering and inspiring our people. These are highlighted by various Inspire
Programmes and collaboration initiatives throughout our operations. We have a zero tolerance policy towards discrimination and
we provide equal opportunities for all employees. To attract skills and talent we are investing in employer branding. We have
implemented measures to monitor and manage succession planning, staff turnover, internal placements and training. We are
engaged in fair and transparent recruitment practices, and have reviewed and updated our diversity as well as our labour and
human rights policies. We ensure competitive compensation levels through benchmarking and continue to support and invest in
Group-wide as well as local training programmes. We regularly conduct performance and development reviews at a local level
and carry out a Group-wide employee survey approximately every two years. Through a confidential reporting hotline Speakout,
employees can raise concerns about conduct that may be contrary to our values.
Compliance risks
We have a zero tolerance approach to compliance risks. Our strong culture and values, emphasised in every part of our business,
with a focus on integrity, honesty and transparency, underpins our approach.
Reputational risk
Non-compliance with the legal and governance requirements and globally established responsible business conduct in any of the
jurisdictions in which we operate and within our supply chain could expose us to significant risk if not actively managed. Failure to
successfully manage relationships with our stakeholders could disrupt our operations and adversely impact the Group's reputation.
These requirements include laws relating to the environment, exports, price controls, taxation, competition compliance, human
rights, and labour. Fines imposed by authorities for non-compliance are severe and, in some cases, legislation can result in
criminal sanction for entities and individuals found guilty. Areas of weaker governance also present the challenge of addressing
potential human rights issues in our operations and supply chain. The introduction of human rights legislation, such as of the UK
Modern Slavery Act 2015 has further highlighted the need to identify and address potential risks of child labour, forced or bonded
labour and human trafficking in our supply chain.
We operate a comprehensive training and compliance programme, supported by self-certification and reporting, with personal
sanction for failure to comply with Group policies. Our legal and governance compliance is supported by a centralised legal
compliance team and is subject to regular internal audit review. We engage with our stakeholders through formal and informal
processes such as our Socio-economic Assessment Toolbox (SEAT) and Community Engagement Plans. We have a confidential
reporting hotline, Speakout, enabling employees, customers, suppliers, managers and other stakeholders to raise concerns about
conduct that may be contrary to our values. We increasingly work with our suppliers to identify and assess risks and promote
responsible business conduct in the value chain.
Information technology risk
Many of our operations are dependent on the availability of IT services and an extended interruption of such services may result in
plant shutdown and an inability to meet customer requirements. Cyber crime continues to increase and attempts are increasingly
sophisticated, with the consequences of successful attacks including compromised data, financial fraud, and system shutdowns.
We have a comprehensive IT Security Policy approved by our Boards. We conduct regular threat assessments and utilise external
providers to evaluate and review our security policies and procedures. Where possible, we have redundancies in place, our system
landscape is based on well-proven products, and we have cyber crime insurance. We operate an extensive training and
awareness programme for all our users.
Going concern
The directors have reviewed the Group's budget, considered the assumptions contained in the budget, and reviewed the significant
risks which may impact the Group's performance in the near term. These include an evaluation of the current macroeconomic
environment and reasonably possible changes in the Group's trading performance.
The Group's financial position, cash flows, liquidity position, and borrowing facilities are described in the annual financial
statements. At 31 December 2017, Mondi had EUR791 million of undrawn, committed debt facilities. The Group's debt facilities have
maturity dates of between 1 and 8 years, with a weighted average maturity of 3.8 years.
Based on our evaluation the Boards considered it appropriate to prepare the financial statements on the going concern basis.
Accordingly, the Group continues to adopt the going concern basis in preparing the financial statements.
Contact details
Mondi Group
Peter Oswald +43 1 79013 4000
Andrew King +44 193 282 6321
Sara Sizer +43 664 244 9994
Clara Valera +44 193 282 6357
FTI Consulting
Richard Mountain +44 7909 684 466
Webcast and conference call dial-in details
Presentation of our results will be at 09.00 (UK) and 11.00 (SA).
The presentation will be available to download from www.mondigroup.com/investors an hour before the presentation commences.
An online webcast will be available via www.mondigroup.com/FYResults17.
Should you have any issues with accessing the webcast, please e-mail mondi@kraftwerk.co.at.
The conference call dial-in numbers are:
South Africa 0800 998 654 (toll free)
UK 0800 358 6377 (toll free)
Europe 0800 005 408 (toll free)
Other +44 330 336 9105
Conference code: 6595078
Should you have any issues on the day with accessing the dial-in conference call, please call +44 330 336 9105.
Questions can be submitted via the webcast or via the dial-in conference call.
A video recording of the presentation will be available on Mondi's website during the afternoon of 2 March 2018.
Directors' responsibility statement
These financial statements have been prepared under the supervision of the Group Chief Financial Officer, Andrew King CA (SA),
and have been audited in accordance with the applicable requirements of the Companies Act of South Africa 2008 and the UK
Companies Act 2006.
The responsibility statement has been prepared in connection with the Group's Integrated report and financial statements 2017,
extracts of which are included within this announcement.
The directors confirm that to the best of their knowledge:
- the condensed combined and 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
combined and consolidated financial statements of the Group, prepared in accordance with IFRS. (They do not contain
sufficient information to comply with IFRS.)
- the Group's combined and 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 they face;
- the Integrated report and financial statements 2017, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group's 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-yearly
results for the six months ended 30 June 2017.
The Group's condensed combined and consolidated financial statements, and related notes, including this responsibility statement,
were approved by the Boards and authorised for issue on 1 March 2018 and were signed on their behalf by:
Peter Oswald Andrew King
Director Director
Audited financial information
The condensed combined and consolidated financial statements and notes 1 to 19 for the year ended 31 December 2017 are
derived from the Group annual financial statements which have been audited by the Group's auditors, PricewaterhouseCoopers
LLP and PricewaterhouseCoopers Inc. Their unmodified audit reports are available for inspection at the Group's registered offices.
Condensed combined and consolidated income statement
for the year ended 31 December 2017
2017 2016
Special Special
items items
EUR million Notes Underlying (Note 4) Total Underlying (Note 4) Total
Group revenue 3 7,096 - 7,096 6,662 - 6,662
Materials, energy and consumables used (3,456) - (3,456) (3,249) - (3,249)
Variable selling expenses (525) - (525) (499) - (499)
Gross margin 3,115 - 3,115 2,914 - 2,914
Maintenance and other indirect expenses (319) - (319) (301) - (301)
Personnel costs (1,053) (9) (1,062) (996) (13) (1,009)
Other net operating expenses (299) (14) (313) (251) (5) (256)
Depreciation, amortisation and impairments (426) (38) (464) (385) (20) (405)
Operating profit 1,018 (61) 957 981 (38) 943
Net profit from equity accounted investees 1 - 1 1 - 1
Total profit from operations and equity accounted
investees 1,019 (61) 958 982 (38) 944
Net finance costs 6 (71) - (71) (101) - (101)
Profit before tax 948 (61) 887 881 (38) 843
Tax (charge)/credit 7 (181) 8 (173) (166) 9 (157)
Profit for the year 767 (53) 714 715 (29) 686
Attributable to:
Non-controlling interests 43 43 48 48
Shareholders 724 671 667 638
Earnings per share (EPS) attributable to
shareholders
(euro cents)
Basic EPS 8 138.6 131.8
Diluted EPS 8 138.5 131.7
Basic underlying EPS 8 149.5 137.8
Diluted underlying EPS 8 149.4 137.7
Basic headline EPS 8 146.0 135.9
Diluted headline EPS 8 145.9 135.8
Condensed combined and consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
Before tax Tax Net of tax Before tax Tax Net of tax
EUR million amount charge amount amount benefit amount
Profit for the year 714 686
Items that have been or may subsequently be
reclassified to the condensed combined and consolidated
income statement
Gains on available-for-sale investments - - - 1 - 1
Exchange differences on translation of foreign operations (73) - (73) 150 - 150
Share of other comprehensive expense of equity accounted
investees (2) - (2) - - -
Items that will not subsequently be reclassified to the
condensed combined and consolidated income statement
Remeasurements of retirement benefits plans 9 (1) 8 (19) 4 (15)
Other comprehensive (expense)/income for the year (66) (1) (67) 132 4 136
Other comprehensive (expense)/income attributable to:
Non-controlling interests (2) - (2) (4) - (4)
Shareholders (64) (1) (65) 136 4 140
Total comprehensive income attributable to:
Non-controlling interests 41 44
Shareholders 606 778
Total comprehensive income for the year 647 822
Condensed combined and consolidated statement of financial position
as at 31 December 2017
EUR million Notes 2017 2016
Property, plant and equipment 3,962 3,788
Goodwill 698 681
Intangible assets 111 120
Forestry assets 10 325 316
Other non-current assets 58 61
Total non-current assets 5,154 4,966
Inventories 867 850
Trade and other receivables 1,106 1,049
Cash and cash equivalents 14b 38 404
Other current assets 44 41
Total current assets 2,055 2,344
Total assets 7,209 7,310
Short-term borrowings 11 (267) (651)
Trade and other payables (1,074) (1,100)
Other current liabilities (184) (167)
Total current liabilities (1,525) (1,918)
Medium and long-term borrowings 11 (1,098) (1,119)
Net retirement benefits liability 12 (232) (240)
Deferred tax liabilities (255) (267)
Other non-current liabilities (60) (70)
Total non-current liabilities (1,645) (1,696)
Total liabilities (3,170) (3,614)
Net assets 4,039 3,696
Equity
Combined share capital and stated capital 542 542
Retained earnings and other reserves 3,172 2,850
Total attributable to shareholders 3,714 3,392
Non-controlling interests in equity 325 304
Total equity 4,039 3,696
The Group's condensed combined and consolidated financial statements, and related notes 1 to 19, were approved by the Boards
and authorised for issue on 1 March 2018 and were signed on their behalf by:
Peter Oswald Andrew King
Director Director
Mondi Limited company registration number: 1967/013038/06
Mondi plc company registered number: 6209386
Condensed combined and consolidated statement of changes in equity
for the year ended 31 December 2017
Equity
attributable to Non-controlling Total
EUR million shareholders interests equity
At 1 January 2016 2,905 282 3,187
Total comprehensive income for the year 778 44 822
Dividends (274) (32) (306)
Purchases of treasury shares (20) - (20)
Other 3 10 13
At 31 December 2016 3,392 304 3,696
Total comprehensive income for the year 606 41 647
Dividends (273) (22) (295)
Purchases of treasury shares (24) - (24)
Other 13 2 15
At 31 December 2017 3,714 325 4,039
Equity attributable to shareholders
EUR million 2017 2016
Combined share capital and stated capital 542 542
Treasury shares (27) (24)
Retained earnings 3,601 3,217
Cumulative translation adjustment reserve (606) (536)
Post-retirement benefits reserve (71) (75)
Share-based payment reserve 23 22
Cash flow hedge reserve (1) (2)
Merger reserve 259 259
Put option liability reserve (4) (9)
Other sundry reserves (2) (2)
Total 3,714 3,392
Condensed combined and consolidated statement of cash flows
for the year ended 31 December 2017
EUR million Notes 2017 2016
Cash flows from operating activities
Cash generated from operations 14a 1,325 1,401
Dividends received from equity accounted investees - 1
Dividends received from other investments 1 -
Income tax paid (151) (173)
Net cash generated from operating activities 1,175 1,229
Cash flows from investing activities
Investment in property, plant and equipment (611) (465)
Investment in intangible assets (16) (13)
Investment in forestry assets (49) (45)
Acquisition of subsidiaries, net of cash and cash equivalents 13 (37) (162)
Other investing activities 19 20
Net cash used in investing activities (694) (665)
Cash flows from financing activities
Proceeds from medium and long-term borrowings 25 1
Repayment of medium and long-term borrowings (11) (166)
(Repayment of)/proceeds from Eurobonds 14c (500) 500
Net proceeds from/(repayment of) short-term borrowings 14c 20 (152)
Interest paid (83) (82)
Dividends paid to shareholders 9 (273) (274)
Dividends paid to non-controlling interests (22) (33)
Purchases of treasury shares (24) (20)
Net cash (outflow)/inflow from held-for-trading derivatives (47) 4
Other financing activities (5) 3
Net cash used in financing activities (920) (219)
Net (decrease)/increase in cash and cash equivalents (439) 345
Cash and cash equivalents at beginning of year 377 36
Cash movement in the year 14c (439) 345
Effects of changes in foreign exchange rates 14c (4) (4)
Cash and cash equivalents at end of year 14b (66) 377
Notes to the condensed combined and consolidated financial statements
for the year ended 31 December 2017
1 Basis of preparation
The Group has two separate legal parent entities, Mondi Limited and Mondi plc, which operate under a dual listed company (DLC)
structure. The substance of the DLC structure is such that Mondi Limited and its subsidiaries, and Mondi plc and its subsidiaries,
operate together as a single economic entity through a sharing agreement, with neither parent entity assuming a dominant role.
Accordingly, Mondi Limited and Mondi plc are reported on a combined and consolidated basis as a single reporting entity.
The Group's condensed combined and 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
combined and consolidated financial statements of the Group, prepared in accordance with IFRS; the South African Institute of
Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee; the requirements of the
Companies Act of South Africa 2008; Financial Pronouncements as issued by the Financial Reporting Standards Council; and
Article 4 of the EU IAS Regulation. They do not contain sufficient information to comply with IFRS.
The condensed combined and consolidated financial statements have been prepared on a going concern basis as discussed in the
commentary under the heading 'Going concern'.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December
2017 or 2016 but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies,
and those for 2017 will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2) or (3) of the UK Companies Act 2006. Copies of their unqualified
auditors' reports on the Integrated report and financial statements 2017 as well as the condensed combined and consolidated
financial statements are available for inspection at the Mondi Limited and Mondi plc registered offices.
These condensed combined and consolidated financial statements have been prepared on the historical cost basis, except for the
fair valuing of financial instruments and forestry assets.
2 Accounting policies
The same accounting policies, methods of computation and presentation have been followed in the preparation of the condensed
combined and consolidated financial statements as were applied in the preparation of the Group's annual financial statements for
the year ended 31 December 2016, except as follows:
- A number of amendments to IFRS became effective for the financial period beginning on 1 January 2017, but the Group
did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these
new standards.
3 Operating segments
Identification of the Group's externally reportable operating segments
The Group's operating segments are reported in a manner consistent with the internal reporting provided to the DLC executive
committee, the chief operating decision-making body. The operating segments are managed based on the nature of the underlying
products produced by those businesses and comprise four distinct segments.
Each of the reportable segments derives its income from the sale of manufactured products.
Effective from 1 October 2017, the Group reorganised its business units to reflect the nature of the underlying products produced.
The changes to the Group's business units, and consequently to the Group's segmental reporting, are as follows:
- Uncoated Fine Paper and South Africa, excluding the containerboard operations, were merged into a single business unit;
- the containerboard operations of South Africa were merged into Packaging Paper; and
- there were no changes to the Fibre Packaging or Consumer Packaging business units.
Prior year figures have been restated to reflect the new organisational structure. The reorganisation had no impact on the overall
Group result.
Year ended 31 December 2017
Packaging Fibre Consumer Uncoated Intersegment
EUR million, unless otherwise stated Paper Packaging Packaging Fine Paper Corporate elimination Total
Segment revenue 2,292 2,055 1,646 1,832 - (729) 7,096
Internal revenue (642) (34) (5) (48) - 729 -
External revenue 1,650 2,021 1,641 1,784 - - 7,096
Underlying EBITDA 629 189 215 449 (38) - 1,444
Depreciation and impairments (143) (72) (62) (116) - - (393)
Amortisation (4) (6) (21) (2) - - (33)
Underlying operating profit/(loss) 482 111 132 331 (38) - 1,018
Special items 3 - (49) (15) - - (61)
Operating segment assets 2,469 1,363 1,539 1,757 15 (187) 6,956
Operating segment net assets 2,101 1,063 1,313 1,446 6 - 5,929
Additions to non-current
non-financial assets 316 122 143 180 - - 761
Capital expenditure cash payments 283 115 91 122 - - 611
Underlying operating profit margin (%) 21.0 5.4 8.0 18.1 - - 14.3
Return on capital employed (%) 26.3 11.3 10.4 27.8 - - 19.7
Average number of employees
(thousands) 1 5.3 8.1 6.0 6.8 0.1 - 26.3
Year ended 31 December 2016 (restated)
Packaging Fibre Consumer Uncoated Intersegment
EUR million, unless otherwise stated Paper Packaging Packaging Fine Paper Corporate elimination Total
Segment revenue 2,103 1,929 1,562 1,720 - (652) 6,662
Internal revenue (579) (32) (4) (37) - 652 -
External revenue 1,524 1,897 1,558 1,683 - - 6,662
Underlying EBITDA 527 194 198 481 (34) - 1,366
Depreciation and impairments (126) (66) (59) (104) (1) - (356)
Amortisation (4) (5) (18) (2) - - (29)
Underlying operating profit/(loss) 397 123 121 375 (35) - 981
Special items - (13) (19) (6) - - (38)
Operating segment assets 2,215 1,315 1,502 1,781 4 (161) 6,656
Operating segment net assets 1,876 1,006 1,270 1,466 - - 5,618
Additions to non-current
non-financial assets 168 161 217 134 - - 680
Capital expenditure cash payments 175 107 91 92 - - 465
Underlying operating profit margin (%) 18.9 6.4 7.7 21.8 - - 14.7
Return on capital employed (%) 23.1 13.5 10.5 32.3 - - 20.3
Average number of employees
(thousands) 1 5.3 7.7 5.3 7.0 0.1 - 25.4
Note:
1 Presented on a full time employee equivalent basis
Reconciliation of underlying EBITDA and underlying operating profit to profit before tax
EUR million 2017 2016
Underlying EBITDA 1,444 1,366
Depreciation and impairments (393) (356)
Amortisation (33) (29)
Underlying operating profit 1,018 981
Special items (see note 4) (61) (38)
Net profit from equity accounted investees 1 1
Net finance costs (71) (101)
Profit before tax 887 843
Reconciliation of operating segment assets
2017 2016
Segment Segment Segment Segment
EUR million assets net assets assets net assets
Group total 6,956 5,929 6,656 5,618
Unallocated
Investment in equity accounted investees 3 3 9 9
Deferred tax assets/(liabilities) 25 (230) 26 (241)
Other non-operating assets/(liabilities) 178 (337) 209 (307)
Group capital employed 7,162 5,365 6,900 5,079
Financial instruments/(net debt) 47 (1,326) 410 (1,383)
Total assets/equity 7,209 4,039 7,310 3,696
External revenue External revenue
by location of production by location of customer
EUR million 2017 2016 2017 2016
Revenue
Africa
South Africa 617 594 426 407
Rest of Africa 19 13 206 200
Africa total 636 607 632 607
Western Europe
Austria 1,043 1,018 146 143
Germany 891 897 952 929
United Kingdom 75 33 241 224
Rest of western Europe 532 529 1,340 1,278
Western Europe total 2,541 2,477 2,679 2,574
Emerging Europe
Poland 992 900 592 546
Rest of emerging Europe 1,348 1,246 954 883
Emerging Europe total 2,340 2,146 1,546 1,429
Russia 907 760 720 602
North America 583 588 747 729
South America - - 71 70
Asia and Australia 89 84 701 651
Group total 7,096 6,662 7,096 6,662
4 Special items
EUR million 2017 2016
Operating special items
Impairment of assets (52) (22)
Reversal of impairment of assets 14 2
Restructuring and closure costs:
Personnel costs (9) (13)
Other restructuring and closure costs (14) (5)
Total special items before tax and non-controlling interests (61) (38)
Tax credit (see note 7) 8 9
Total special items attributable to shareholders (53) (29)
Operating special items
Restructuring and closure costs and related impairments during the year comprise:
Packaging Paper
- Partial impairment of kraft paper assets in the US. Impairment of assets of EUR16 million was recognised.
- Release of restructuring and closure provisions of EUR5 million on finalisation of the sale of a kraft paper mill
in Finland. Restructuring and closure costs and related impairment of assets of EUR14 million were previously recognised in
special items in 2015.
- Partial reversal of impairment of a kraft paper mill in Bulgaria. Reversal of impairment of assets of EUR14 million was
recognised.
Consumer Packaging
- Restructuring of consumer packaging operations, including the closure of a plant in Poland, streamlining the UK operations
and reducing the fixed cost base across the business. Restructuring costs of EUR22 million and impairment of assets of EUR28
million were recognised.
- Release of restructuring and closure provision of EUR1 million related to release liner operations in the US. Restructuring and
closure costs and related impairment of assets of EUR19 million were previously recognised in special items in 2016.
Uncoated Fine Paper
- Closure of production of newsprint at Merebank mill in South Africa. Restructuring costs of EUR7 million and impairment of
assets of EUR8 million were recognised.
5 Write-down of inventories to net realisable value
EUR million 2017 2016
Write-down of inventories to net realisable value (22) (29)
Aggregate reversal of previous write-downs of inventories 19 18
6 Net finance costs
Net finance costs are presented below:
EUR million 2017 2016
Investment income
Investment income 4 5
Net foreign currency losses
Net foreign currency losses (2) (4)
Finance costs
Interest expense
Interest on bank overdrafts and loans (65) (97)
Net interest expense on net retirement benefits liability (9) (10)
Total interest expense (74) (107)
Less: Interest capitalised 1 5
Total finance costs (73) (102)
Net finance costs (71) (101)
The weighted average interest rate applicable to capitalised interest on general borrowings for the year ended 31 December 2017
was 4.05% (2016: 7.15%) and was related to investments in Poland, the Czech Republic and South Africa (2016: Poland, Russia,
the Czech Republic and South Africa).
7 Tax charge
The Group's effective rate of tax before special items for the year ended 31 December 2017, calculated on profit before tax before
special items and including net profit from equity accounted investees, was 19% (2016: 19%).
EUR million 2017 2016
UK corporation tax at 19.25% (2016: 20%) 1 1
SA corporation tax at 28% (2016: 28%) 28 22
Overseas tax 153 134
Current tax in respect of prior years 5 5
Current tax 187 162
Deferred tax in respect of the current year 16 28
Deferred tax in respect of prior years (23) (22)
Deferred tax attributable to a change in the rate of domestic income tax 1 (2)
Total tax charge before special items 181 166
Current tax on special items (2) (1)
Deferred tax on special items (6) (8)
Total tax credit on special items (see note 4) (8) (9)
Total tax charge 173 157
8 Earnings per share (EPS)
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
EUR million 2017 2016
Profit for the year attributable to shareholders 671 638
Special items (see note 4) 61 38
Related tax (see note 4) (8) (9)
Underlying earnings for the year 724 667
Special items not excluded from headline earnings (23) (18)
Loss on disposal of property, plant and equipment 1 -
Impairments not included in special items 4 5
Related tax 1 4
Headline earnings for the year 707 658
Weighted average number of
shares
million 2017 2016
Basic number of ordinary shares outstanding 484.3 484.2
Effect of dilutive potential ordinary shares 0.3 0.3
Diluted number of ordinary shares outstanding 484.6 484.5
9 Dividends
An interim ordinary dividend for the year ended 31 December 2017 of 299.94850 rand cents/19.10 euro cents per share was paid
on 19 September 2017 to all Mondi Limited and Mondi plc ordinary shareholders on the relevant registers on 25 August 2017.
A proposed final ordinary dividend for the year ended 31 December 2017 of 42.90 euro cents per ordinary share will be paid on
25 May 2018 to those shareholders on the register of Mondi plc on 4 May 2018. An equivalent South African rand final ordinary
dividend will be paid on 25 May 2018 to shareholders on the register of Mondi Limited on 4 May 2018.
In addition, a proposed special dividend of 100.00 euro cents per ordinary share will be paid on 25 May 2018 to those
shareholders on the register of Mondi plc on 4 May 2018. An equivalent South African rand special dividend will be paid on 25 May
2018 to shareholders on the register of Mondi Limited on 4 May 2018. The proposed special dividend has been approved by the
Financial Surveillance Department of the South African Reserve Bank.
The final ordinary and special dividends are subject to the approval of the shareholders of Mondi Limited and Mondi plc at
the respective annual general meetings scheduled for 16 May 2018.
Dividends paid to the shareholders of Mondi Limited and Mondi plc are presented on a combined basis.
euro cents per share 2017 2016
Final ordinary dividend paid (in respect of prior year) 38.19 37.62
Interim ordinary dividend paid 19.10 18.81
Final ordinary dividend proposed for the year ended 31 December 42.90 38.19
Special dividend proposed for the year ended 31 December 100.00 -
Total final ordinary and special dividends proposed for the year ended 31 December 142.90 38.19
EUR million 2017 2016
Final ordinary dividend paid (in respect of prior year) 180 183
Interim ordinary dividend paid 93 91
Total ordinary dividends paid 273 274
Final ordinary dividend proposed for the year ended 31 December 208 185
Special dividend proposed for the year ended 31 December 485 -
Total final ordinary and special dividends proposed for the year ended 31 December 693 185
Declared by Group companies to non-controlling interests 22 32
Dividend timetable
The proposed final ordinary and special dividends for the year ended 31 December 2017 of 42.90 euro cents per share and
100.00 euro cents per share respectively will be paid in accordance with the following timetable:
Mondi Limited Mondi plc
Last date to trade shares cum-dividend
JSE Limited 30 April 2018 30 April 2018
London Stock Exchange Not applicable 2 May 2018
Shares commence trading ex-dividend
JSE Limited 2 May 2018 2 May 2018
London Stock Exchange Not applicable 3 May 2018
Record date
JSE Limited 4 May 2018 4 May 2018
London Stock Exchange Not applicable 4 May 2018
Last date for receipt of Dividend Reinvestment Plan (DRIP) elections by Central
Securities Depository Participants 10 May 2018 10 May 2018
Last date for DRIP elections to UK Registrar and South African Transfer
Secretaries by shareholders of Mondi Limited and Mondi plc 11 May 2018 4 May 2018*
Payment Date
South African Register 25 May 2018 25 May 2018
UK Register Not applicable 25 May 2018
DRIP purchase settlement dates (subject to the purchase of shares in the open
market) 31 May 2018 29 May 2018**
Currency conversion date
ZAR/euro 2 March 2018 2 March 2018
Euro/sterling Not applicable 8 May 2018
*11 May 2018 for Mondi plc South African branch register shareholders
**31 May 2018 for Mondi plc South African branch register shareholders
Share certificates on the South African registers of Mondi Limited and Mondi plc may not be dematerialised or rematerialised
between 2 May 2018 and 6 May 2018, both dates inclusive, nor may transfers between the UK and South African registers of
Mondi plc take place between 25 April 2018 and 7 May 2018, both dates inclusive.
Information relating to the dividend tax to be withheld from Mondi Limited shareholders and 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 2
March 2018.
10 Forestry assets
EUR million 2017 2016
At 1 January 316 219
Capitalised expenditure 46 39
Acquisition of assets 3 6
Fair value gains 43 64
Impairment losses recognised (3) -
Disposal of assets - (1)
Felling costs (73) (57)
Currency movements (7) 46
At 31 December 325 316
Comprising
Mature 190 193
Immature 135 123
Total forestry assets 325 316
The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy (see note 17), consistent
with prior years. The fair value of forestry assets is determined using a market approach.
11 Borrowings
Financing facilities
Group liquidity is provided through a range of committed debt facilities. The principal loan arrangements in place include the
following:
EUR million Maturity Interest rate % 2017 2016
Financing facilities
Syndicated Revolving Credit Facility July 2021 EURIBOR/LIBOR + margin 750 750
EUR500 million Eurobond April 2017 5.75 % - 500
EUR500 million Eurobond September 2020 3.375 % 500 500
EUR500 million Eurobond April 2024 1.50 % 500 500
European Investment Bank Facility June 2025 EURIBOR + margin 71 81
Export Credit Agency Facility June 2020 EURIBOR + margin 34 53
Other Various Various 132 113
Total committed facilities 1,987 2,497
Drawn (1,196) (1,685)
Total committed facilities available 791 812
In April 2017 Mondi redeemed a 5.75% EUR500 million Eurobond on maturity from available cash and committed undrawn debt
facilities.
The EUR500 million Eurobond maturing in 2020 contains a coupon step-up clause whereby the coupon will be increased by 1.25%
per annum if the Group fails to maintain at least one investment grade credit rating from either Moody's Investors Service or
Standard & Poor's. Mondi currently has investment grade credit ratings from both Moody's Investors Service (Baa1, outlook stable)
and Standard & Poor's (BBB, outlook positive).
2017 2016
EUR million Current Non-current Total Current Non-current Total
Secured 1 1 2 1 2 3
Unsecured
Bonds - 995 995 500 995 1,495
Bank loans and overdrafts 255 94 349 150 110 260
Other loans 11 8 19 - 12 12
Total unsecured 266 1,097 1,363 650 1,117 1,767
Total borrowings 267 1,098 1,365 651 1,119 1,770
The Group's borrowings as at 31 December are analysed by nature and underlying currency as follows:
Floating rate Fixed rate Total carrying
2017/EUR million borrowings borrowings value Fair value
Euro 129 999 1,128 1,184
South African rand 103 - 103 103
Turkish lira 56 - 56 56
US dollar 10 5 15 15
Russian rouble 4 1 5 5
Other currencies 53 5 58 58
Carrying value 355 1,010 1,365
Fair value 355 1,066 1,421
Floating rate Fixed rate Total carrying
2016/EUR million borrowings borrowings value Fair value
Euro 129 1,498 1,627 1,701
South African rand 60 - 60 60
Turkish lira 47 - 47 47
US dollar 6 9 15 15
Russian rouble 9 - 9 9
Other currencies 10 2 12 12
Carrying value 261 1,509 1,770
Fair value 261 1,583 1,844
The fair values of the EUR500 million Eurobonds are estimated with reference to the last price quoted in the secondary market. All
other financial liabilities are estimated by discounting the future contractual cash flows at the current market interest rate that is
available to the Group for similar financial instruments.
The Group swaps euro and sterling debt into other currencies through the foreign exchange market using foreign exchange
contracts which has the effect of exposing the Group to interest rates of these currencies. The currencies swapped into/(out of) and
the amounts as at 31 December were as follows:
EUR million 2017 2016
Short-dated contracts with tenures of less than 12 months
Pounds sterling 7 12
Czech koruna 251 188
Polish zloty 297 317
Russian rouble (164) 27
Swedish krona 31 39
US dollar 96 119
Other 89 96
Total swapped 607 798
12 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 2017. The net retirement benefit liability decreased by EUR14 million mainly due to
changes in assumptions. The assets backing the defined benefit scheme liabilities reflect their market values as at 31 December
2017. Net remeasurement gains arising from changes in assumptions amounting to EUR4 million have been recognised in the
condensed combined and consolidated statement of comprehensive income.
13 Business combinations
To 31 December 2017
Acquisition of Excelsior Technologies Limited
Mondi acquired 100% of the outstanding share capital of Excelsior Technologies Limited (Excelsior) on 3 February 2017 from
funds managed by Endless LLP and certain other minority shareholders, for a total consideration of GBP34 million (EUR40 million) on
a debt and cash-free basis. Excelsior is a vertically-integrated producer of innovative flexible packaging solutions, mainly for food
applications, with a unique packaging technology for microwave steam cooking. The acquisition of Excelsior supports the
development of Mondi's Consumer Packaging business in high growth product applications.
Excelsior's revenue for the year ended 31 December 2017 was EUR49 million with a loss after tax of EUR3 million. Excelsior's revenue of
EUR45 million and loss after tax of EUR3 million since the date of acquisition have been included in the condensed combined and
consolidated income statement.
Acquisition of Smurfit Kappa Recycling CE, s.r.o.
Mondi acquired 100% (51% effective share) of the outstanding share capital of Smurfit Kappa Recycling CE, s.r.o. (SK Recycling)
on 8 March 2017 for a consideration of EUR1 million on a debt and cash-free basis. SK Recycling operates eight paper recycling sites
in Slovakia. The acquisition increases the availability of high quality paper for recycling that is procured by the Group's central and
eastern European mills.
SK Recycling's revenue for the year ended 31 December 2017 was EUR4 million with a nil profit after tax. SK Recycling's revenue of
EUR2 million and nil profit after tax since the date of acquisition have been included in the condensed combined and consolidated
income statement.
Acquisition of Mondi TSP Co., Ltd.
Mondi acquired the remaining shares of Mondi TSP Co., Ltd. (TSP) that it did not already own (representing an interest of 50%) on
26 July 2017 for a consideration of THB143 million (EUR4 million) on a debt and cash-free basis. TSP operates a plant near Bangkok,
Thailand, and produces consumer goods packaging products with a focus on retort stand-up pouches for the food and pet food
industry. The acquisition supports the growth of Mondi's Consumer Packaging business.
TSP's revenue for the year ended 31 December 2017 was EUR14 million with a nil profit after tax. TSP's revenue of EUR5 million and nil
loss after tax since the date of acquisition have been included in the condensed combined and consolidated income statement.
Details of the net assets acquired, as adjusted from book to fair value, are as follows:
EUR million Book value Revaluation Fair value
Net assets acquired
Property, plant and equipment 7 2 9
Intangible assets - 12 12
Share of joint venture 1 - 1
Inventories 5 2 7
Trade and other receivables 14 (3) 11
Cash and cash equivalents 2 - 2
Total assets 29 13 42
Trade and other payables (13) 1 (12)
Deferred tax liabilities - (3) (3)
Total liabilities (excluding debt) (13) (2) (15)
Short-term borrowings (2) - (2)
Medium and long-term borrowings (8) - (8)
Debt assumed (10) - (10)
Net assets acquired 6 11 17
Goodwill arising on acquisitions 24
Goodwill arising on purchase price adjustment (Uralplastic) 2
Fair value of joint venture interest previously held (4)
Cash acquired net of overdrafts (2)
Net cash paid per condensed combined and consolidated statement of cash
flows 37
EUR million Goodwill Net assets Net cash paid
Excelsior 21 12 31
SK Recycling - 1 1
TSP 3 4 3
Acquisitions total 24 17 35
Purchase price adjustment (Uralplastic) 2 - 2
Acquisitions total including adjustments 26 17 37
Transaction costs of EUR1 million were charged to the condensed combined and consolidated income statement.
The fair value accounting of these acquisitions is provisional in nature. The nature of these businesses is such that further
adjustments to the carrying values of acquired assets and/or liabilities, and adjustments to the purchase price, are possible as the
detail of the acquired businesses is evaluated post acquisition. If necessary, any adjustments to the fair values recognised will be
made within 12 months of the acquisition dates.
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 and the revaluation amounts respectively
as presented.
Goodwill arising on the above business combinations is not tax deductible.
Proposed acquisition of Powerflute Group Holdings Oy
In December 2017 Mondi signed an agreement to acquire 100% of the outstanding shares in Powerflute Group Holdings Oy
(Powerflute) for a total consideration of EUR365 million on a debt and cash free-basis.
Powerflute operates an integrated pulp and paper mill in Kuopio (Finland) with an annual production capacity of 285,000 tonnes of
high-performance semi-chemical fluting. Powerflute's premium semi-chemical fluting is sold to a diverse range of customers,
primarily for packaging fresh fruit and vegetables, but also other end-uses such as electronics, chemicals and pharmaceuticals.
The proposed acquisition of Powerflute supports the strategy of investing in high-quality packaging and paper assets and to
expand the product range and geographic reach of Mondi's containerboard business.
The transaction remains subject to competition clearance and customary closing conditions and is expected to complete in the first
half of 2018.
Proposed acquisition of Suez Bags Company SAE
In December 2017 Mondi signed an agreement to acquire an additional 57.84% of the outstanding share capital of industrial bags
producer Suez Bags Company SAE (Suez Bags) for a total consideration of EGP165 million (EUR8 million). Mondi currently owns
29.89% of the outstanding share capital of Suez Bags.
Suez Bags operates an industrial bags plant near Cairo in Egypt, serving mostly regional customers. The proposed acquisition
complements the existing network of plants in the growing Middle East region, and provides Mondi with a leading position in Egypt.
The transaction is expected to complete in the first half of 2018.
To 31 December 2016
Mondi acquired 100% of the outstanding share capital of SIMET S.A. (SIMET) on 27 April 2016 for a consideration of EUR13 million
on a debt and cash-free basis. SIMET is a corrugated plant that produces a wide range of flexo printed packaging.
On 12 July, Mondi acquired a 90% interest in Kale Nobel Ambalaj Sanayi ve Ticaret Anonim Sirketi (Kalenobel) for a consideration
of EUR90 million on a debt and cash-free basis. Kalenobel is a consumer packaging company focused on the manufacture of flexible
consumer packaging for ice cream and other applications as well as aseptic cartons.
On 15 July, Mondi acquired a 100% interest in ZAO Uralplastic-N (Uralplastic) for a consideration of RUB2,949 million (EUR41 million)
on a debt and cash-free basis. Uralplastic manufactures a range of consumer flexible packaging products for food, hygiene,
homecare and other applications.
On 20 October, Mondi acquired 100% of the outstanding share capital of LLC Beepack (Lebedyan) for a consideration of
RUB2,825 million (EUR41 million) on a debt and cash-free basis. Lebedyan produces a range of corrugated packaging trays and
boxes for food and agricultural products including beverages, fruit and vegetables, poultry and dairy.
Details of the net assets acquired are as follows:
EUR million Book value Revaluation Fair value
Net assets acquired
Property, plant and equipment 39 16 55
Intangible assets 5 22 27
Inventories 16 1 17
Trade and other receivables 44 (3) 41
Cash and cash equivalents 2 - 2
Total assets 106 36 142
Trade and other payables (23) (2) (25)
Provisions - (1) (1)
Net retirement benefits liability - (2) (2)
Deferred tax liabilities - (7) (7)
Total liabilities (excluding debt) (23) (12) (35)
Short-term borrowings (17) - (17)
Medium and long-term borrowings (19) - (19)
Debt assumed (36) - (36)
Net assets acquired 47 24 71
Goodwill arising on acquisitions 81
Goodwill arising on purchase price adjustment (KSP) 13
Deferred acquisition consideration (Ascania) 2
Non-controlling interests in equity (3)
Cash acquired net of overdrafts (2)
Net cash paid per condensed combined and consolidated statement of cash
flows 162
EUR million Goodwill Net assets Net cash paid
SIMET 4 6 10
Kalenobel 42 31 68
Uralplastic 22 6 28
Lebedyan 13 28 41
Acquisitions total 81 71 147
Purchase price adjustment (KSP) 13 - 13
Deferred acquisition consideration (Ascania) 2
Acquisitions total including adjustments 94 71 162
Transaction costs of EUR5 million were charged to the condensed combined and consolidated income statement. No adjustments
were made in 2016 to the fair values of prior year acquisitions.
14 Consolidated cash flow analysis
(a) Reconciliation of profit before tax to cash generated from operations
EUR million 2017 2016
Profit before tax 887 843
Depreciation and amortisation 422 380
Impairment of property, plant and equipment and intangible assets (not included in special items) 4 5
Share-based payments 15 13
Net cash flow effect of current and prior year special items 40 17
Net finance costs 71 101
Net profit from equity accounted investees (1) (1)
Decrease in provisions and net retirement benefits (16) (14)
(Increase)/decrease in inventories (19) 24
Increase in operating receivables (87) (1)
(Decrease)/increase in operating payables (16) 45
Fair value gains on forestry assets (43) (64)
Felling costs 73 57
Loss on disposal of property, plant and equipment 1 -
Other adjustments (6) (4)
Cash generated from operations 1,325 1,401
(b) Cash and cash equivalents
EUR million 2017 2016
Cash and cash equivalents per condensed combined and consolidated statement of financial
position 38 404
Bank overdrafts included in short-term borrowings (104) (27)
Cash and cash equivalents per condensed combined and consolidated statement of cash
flows (66) 377
The fair value of cash and cash equivalents approximate their carrying values presented.
The Group operates in certain countries (principally South Africa) where the existence of exchange controls may restrict the use of
certain cash balances. 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:
Current Debt-related
Cash and financial Debt due Debt due derivative
cash asset within one after one financial Total Total net
EUR million equivalents investments Total assets year year instruments debt debt
At 1 January 2016 36 2 38 (222) (1,319) 5 (1,536) (1,498)
Cash flow 345 - 345 152 (335) - (183) 162
Acquired through business
combinations - - - (17) (19) - (36) (36)
Movement in unamortised loan costs - - - - (2) - (2) (2)
Net movement in derivative financial
instruments - - - - - (23) (23) (23)
Reclassification 1 - - - (541) 547 - 6 6
Currency movements (4) - (4) 4 9 (1) 12 8
At 31 December 2016 377 2 379 (624) (1,119) (19) (1,762) (1,383)
Cash flow (439) (1) (440) 480 (14) - 466 26
Acquired through business
combinations - (1) (1) (2) (8) - (10) (11)
Movement in unamortised loan costs - - - - (2) - (2) (2)
Net movement in derivative financial
instruments - - - - - 20 20 20
Reclassification - 1 1 (32) 32 - - 1
Currency movements (4) - (4) 15 13 (1) 27 23
At 31 December 2017 (66) 1 (65) (163) (1,098) - (1,261) (1,326)
Note:
1 Following the acquisition of the outstanding minority interest in a subsidiary, the shareholder loan previously provided by the minority
shareholder was reclassified as an intercompany loan and has been eliminated on consolidation
15 Capital commitments
EUR million 2017 2016
Contracted for but not provided 393 222
Approved, not yet contracted for 1,545 1,516
Total capital commitments 1,938 1,738
These capital commitments relate to the following categories of non-current non-financial assets:
EUR million 2017 2016
Intangible assets 47 35
Property, plant and equipment 1,891 1,703
Total capital commitments 1,938 1,738
The expected maturity of these capital commitments is:
EUR million 2017 2016
Within one year 740 538
One to two years 672 593
Two to five years 526 607
Total capital commitments 1,938 1,738
Capital commitments are based on capital projects approved by the end of the financial year and the budget approved by the
Boards. Major capital projects still require further approval before they commence and are not included in the above analysis. The
Group's capital commitments are expected to be financed from existing cash resources and borrowing facilities.
16 Contingent liabilities
Contingent liabilities comprise aggregate amounts as at 31 December 2017 of EUR6 million (2016: EUR11 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
combined and 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 insured fully, or at all, 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.
17 Fair value measurement
Financial instruments that are measured in the condensed combined and consolidated statement of financial position at fair value,
or where the fair value of financial instruments has been disclosed in the notes to the condensed combined and 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 only 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.
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 where available 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 directors consider that the carrying values of financial assets and financial liabilities recorded at
amortised cost in the condensed combined and consolidated financial statements are approximately equal to their fair values.
Carrying amount Fair value
EUR million 2017 2016 2017 2016
Financial liabilities
Borrowings 1,365 1,770 1,421 1,844
The non-controlling interest holder in Kalenobel holds an option to put its shares to Mondi until June 2021, but not before
March 2018, at a price determined based on future earnings. The present value of the option is EUR4 million (2016: EUR9 million) based
on the current expected business plan, and is capped at EUR25 million. Further analysis is not provided as the option is not
considered material.
18 Related party transactions
The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service transactions with
equity accounted investees and others 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 Limited, Mondi plc and their respective subsidiaries, which are related parties, have been eliminated
on consolidation.
There have been no significant changes to the related parties as disclosed in note 31 of the Group's annual financial statements
for the year ended 31 December 2016.
19 Events occurring after 31 December 2017
In addition to the final ordinary and special dividends proposed for 2017 (see note 9) there has been the following material
reportable event since 31 December 2017:
- A new EUR600 million one year multicurrency revolving credit facility was signed on 22 February 2018 on normal commercial terms
for such a facility. The facility will be used for general corporate purposes.
Production statistics
(Restated)
2017 2016
Packaging Paper
Containerboard '000 tonnes 2,297 2,253
Kraft paper '000 tonnes 1,206 1,204
Softwood pulp '000 tonnes 2,010 1,976
Internal consumption '000 tonnes 1,874 1,804
Market pulp '000 tonnes 136 172
Hardwood pulp '000 tonnes 547 500
Internal consumption '000 tonnes 543 500
Market pulp '000 tonnes 4 -
Fibre Packaging
Corrugated board and boxes million m2 1,650 1,448
Industrial bags million units 4,952 4,881
Extrusion coatings million m2 1,281 1,249
Consumer Packaging
Consumer packaging million m2 7,437 7,156
Uncoated Fine Paper
Uncoated fine paper '000 tonnes 1,644 1,666
Softwood pulp '000 tonnes 375 375
Internal consumption '000 tonnes 358 356
Market pulp '000 tonnes 17 19
Hardwood pulp '000 tonnes 1,345 1,319
Internal consumption '000 tonnes 950 963
Market pulp '000 tonnes 395 356
Newsprint '000 tonnes 277 313
Exchange rates
Average Closing
versus euro 2017 2016 2017 2016
South African rand 15.04 16.27 14.81 14.46
Czech koruna 26.33 27.03 25.54 27.02
Polish zloty 4.26 4.36 4.18 4.41
Pounds sterling 0.88 0.82 0.89 0.86
Russian rouble 65.88 74.16 69.39 64.30
Turkish lira 4.12 3.34 4.55 3.71
US dollar 1.13 1.11 1.20 1.05
Glossary of terms
This announcement contains a number of terms which are explained below:
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 and
current financial asset investments.
Return on capital employed (ROCE) Trailing 12-month underlying operating profit, including share of equity accounted
investees' net profit/(loss), divided by trailing 12-month average capital employed
and for segments has been extracted from management reports. Capital employed
is adjusted for spend on those strategic projects which are not yet in production.
Special items Those financial items which the Group considers should be separately disclosed on
the face of the condensed combined and consolidated income statement to assist in
understanding the underlying financial performance achieved by the Group. Such
items are generally material by nature and exceed EUR10 million and the Group,
therefore, excludes these items when reporting underlying earnings and related
measures in order to provide a measure of the underlying performance of the Group
on a basis that is comparable from year to year.
TRCR Total recordable case rate (TRCR) is calculated as the number of total recordable
cases (the sum of fatalities, lost-time injuries, restricted work cases, medical
treatment cases and compensated occupational illnesses) divided by the number of
hours worked per 200,000 man hours.
Underlying EBITDA Operating profit before special items, depreciation, amortisation and impairments
not recorded as special items.
Underlying operating profit Operating profit before special items.
Underlying profit before tax Profit before tax and special items.
Underlying earnings Net profit after tax attributable to shareholders, before special items.
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, employing around 26,300 people in over 30 countries. We are fully integrated across
the packaging and paper value chain - from managing forests and producing pulp, paper and plastic films, to developing and
manufacturing effective industrial and consumer packaging solutions. Sustainability is embedded in everything we do, with clearly
defined commitments across 10 action areas. We delight our customers with our innovative and sustainable packaging and paper
solutions. Our major operations are in central Europe, Russia, North America and South Africa. In 2017, Mondi had revenues of
EUR7.1 billion and a return on capital employed of 19.7%.
Mondi has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker MND
and a premium listing on the London Stock Exchange for Mondi plc, under the ticker MNDI. We are a FTSE 100 constituent, and have
been included in the FTSE4Good Index Series since 2008 and the JSE's Socially Responsible Investment (SRI) Index since 2007.
Sponsor in South Africa: UBS South Africa Proprietary Limited.
Date: 02/03/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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