In Our material issues within a global context we referred to the social challenges and anticipated trends regarding economic development and populations’ demographics that our communities are facing today and how some of these can be addressed through providing employment and promoting labour productivity. In this section we demonstrate how we create and share sustainable value throughout our supply chain, through payments to our employees, provision of equity and loan capitals, payments to our suppliers, taxes paid, and reinvestments in the Group.

Our strategy to deliver value

We are confident that our strategy is sound and that we have the ability to adapt and execute it successfully across the business cycle as we:

  • build on our leading market positions in our core packaging and uncoated fine paper markets;
  • continue to invest in our high-quality asset base, focusing on those assets which enjoy inherent cost advantages;
  • help our customers succeed by seeking to develop smarter, more cost effective processes and work with them to find inventive, innovative, advanced solutions; and
  • continue to improve productivity and find new ways to keep our costs down.

One of our focus areas over the last year has been on integrating and optimising the significant acquisitions made towards the end of 2012 and executing major capital projects initiated over the past three years. Our strong culture of continuous productivity improvement, our relentless focus on cost management and the benefits of restructuring activities completed during the year ensured that fixed cost increases were contained to well below inflationary levels.

Mondi remains strongly cash generative with net debt reducing to €1,621 million, compared to €1,872 million at 31 December 2012, notwithstanding the €405 million (2012: €294 million) invested in capital expenditure projects during the year. Cash generated from operating activities exceeded €1 billion for the first time.

Creating sustainable value

As a business with a significant global footprint, we are committed to creating sustainable value in the following ways:

  • investing in the long-term growth and development of our business;
  • finding inventive, innovative, advanced solutions that meet our customers’ needs;
  • following our customers into high-growth emerging markets, where together we can offer cutting edge products that deliver exceptional value;
  • focusing on achieving best practice and complying with regulatory standards;
  • creating and sustaining valuable and meaningful employment, recognising diversity and creating a working environment where opportunities unfold for our people;
  • working diligently to ensure the safety and well-being of our employees and contractors;
  • minimising our contribution to climate change;
  • active stewardship of our land and fresh water ecosystems to maintain biodiversity;
  • sustainable forest management through credible certification and Chain-of-Custody along the supply chain;
  • enhancing the eco-efficiency of Mondi products through resource efficiency and responsible use of materials throughout their life-cycles; and
  • contributing to the development of people and communities at and around our operations.
Value added statement 2013: € million %
Turnover 6,476
Purchased materials and services (4,478)
Value added 1,998
Distributed to    
Employees 957 48
Providers of equity capital 198 10
Providers of loan capital 115   6
Direct taxes paid 126   6
Reinvested in the group 602 30
1,998 100
Corporate social investment spend (€’000) 2010 2011 2012 2013
Community health and welfare 691 205 219 211
Education and youth 679 797 835 574
Environment 29 81 102 456
Community development 6,427 5,828 4,895 4,302
Arts, culture and heritage 146 903 235 313
Housing 837 333 288 235
Other 3,802 9,150 7,716 3,907
Total 12,611 17,300 14,300 9,997

Capital expenditure

Capital expenditure of €405 million was €111 million higher than the prior year as expenditure on a number of our previously announced energy and debottlenecking investments ramped up.

Investing in green energy is considered key to our on-going success, with €431 million committed to such projects at various of our large, integrated pulp and paper mills between 2011 and 2016.

Our major strategic investments initiated over the past two years and completed during 2013 include the rebuild of the bark boiler at our Syktyvkar uncoated fine paper and containerboard mill in Russia, a new recovery boiler at our Frantschach kraft paper mill in Austria, a recovery boiler economiser and turbine at our Stambolijski kraft paper mill in Bulgaria and a new steam turbine at our Richards Bay pulp and containerboard mill in South Africa. With the exception of the bark boiler completed in the first half of 2013, these projects were completed in the second half of the year, with the benefits of reduced energy costs, improved efficiencies and improved electricity self-sufficiency expected to be realised from 2014 onwards. In total approximately €140 million has been invested in these and other smaller energy-related projects.

Operating and financial highlights

Our Integrated report and financial statements 2013 provide a comprehensive review of the operational and financial performance of our Group. Key financial measures for the year include:

Key financial measure 2012 2013
Group revenue €5.8 billion €6.5 billion
Underlying operating profit €574 million €699 million
Basic underlying earnings per share 69.2 euro cents per share 95.0 euro cents per share
Capital expenditure €294 million €405 million
Net debt €1,872 million €1,621 million
Return on capital employed 13.6% 15.3%