Full directors report - Mondi

exacerbated by the robust performance
of the South African rand in the second
half (up around 9.4% versus the euro
and 17.0% versus the US dollar
compared to the first half), placed
particular pressure on margins.
Especially pleasing has been the
substantial cash flow generation from
operations, and the ability of the
Group to continue to invest significant
amounts of capital in our two major
projects, S ´ wiecie in Poland and
Syktyvkar in Russia. These projects
will reinforce our position as a cost
leader in our chosen markets.
Importantly, the Group has continued to
reduce its level of debt – a commendable
achievement in the current market – and
has been successful in maintaining the
quantum of committed debt facilities
available to it despite the unfavourable
banking environment.
Chief executive David Hathorn reports
on the Group’s operating and financial
performance and on its strategy in his
review of the year on pages 16 to 21
of this report.
Sustainability
Mondi is highly cognisant of the
broader role the Group plays as an
employer and responsible corporate
citizen. With so much of our business
in emerging markets, our role is clearly
even more important as we strive to
achieve a balance in terms of the
economic, social and environmental
impacts of our business. We report
good progress on our sustainability
commitments in the Sustainable
Development Report (at
www.mondigroup.com/sustainability)
and a summary review can be found
on pages 34 to 43 of this report.
Safety continues to be a significant
item on the agenda at every DLC Board
meeting and an intrinsic part of our
culture and our sustainable
development philosophy. Although our
focus on safety resulted in an improved
workplace safety record for the year,
with no reportable fatal accidents within
the Group (2008: two fatalities), in 2010
we have regrettably already experienced
a fatality in our forestry operations in
South Africa. The Boards believe that
this accident, as with all other accidents,
could and should have been prevented
and we take responsibility for ensuring
that we learn from each and every
safety incident and that we implement
the necessary measures to further
entrench safe behaviour.
A number of achievements in 2009 are
worthy of special mention:
• Our Lost Time Injury Frequency Rate
(LTIFR) reduced once more. This
follows a continued focus on safety
by management and our employees
and was achieved notwithstanding
the large-scale projects being
undertaken in Poland and Russia.
• The second set of land claims
involving seven communities in
KwaZulu-Natal in South Africa was
successfully concluded. We have
developed a unique model, in close
Resilient performance
in challenging
circumstances
• consultation with the South African
Ministry of Land Affairs, which
provides a long-term, mutually
beneficial and sustainable solution to
communities, to government and to
the Group.
• All of our forests have now been
assessed for Forest Stewardship
Council (FSC) certification, with
certification of the last outstanding
area in Russia expected in the first
half of 2010.
• We have reported significant progress
in reducing and optimising our
resource usage, in particular water
and energy. More than half of our
energy usage comes from biomass
(renewable energy sources).
Operating as we do in emerging
markets where the effects of climate
change are likely to be exaggerated,
we have given critical consideration
both to our role in respect of climate
change and to the impact of climate
change on our Group and our
communities. During 2009 we
reported a further reduction in CO2
emissions and participated in the
Carbon Disclosure Project’s 2009
greenhouse gas emission and climate
change survey. The positive role
played by sustainably managed
forests has been recognised in the
international climate change debate,
underlining the point that these
forests mitigate climate change by
sequestering carbon from the
atmosphere and storing it as biomass.
In the midst of these achievements we
must reflect on the fact that the
restructuring of operations resulted in
Directors’ report
Annual report and accounts 2009 Mondi Group 13