Mondi Limited

Notes to the financial statements and
consolidated financial statements
for the year ended 31 December 2010
1 Accounting policies
Basis of preparation
The consolidated financial statements and financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The Group has also complied with
South African Statements and Interpretations of Statements of Generally Accepted Accounting Practice. There are no differences
for the Group and Company in applying IFRS as issued by the IASB. The financial statements have been prepared on a going
concern basis. These financial statements should be read in conjunction with the Mondi Group’s dual listed company (DLC)
combined and consolidated financial statements.
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain properties and
financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The
principal accounting policies adopted are set out below.
Basis of consolidation
Dual listed structure
The Mondi Group has two separate legal parent entities, Mondi Limited and Mondi plc, which operate under a 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. The effects
of this sharing agreement and the DLC have been ignored for the purpose of preparing these South African silo financial
statements which have been prepared to comply with the South African Companies Act of 1973.
Subsidiary undertakings
The consolidated financial statements incorporate the assets, liabilities, equity, revenues, expenses and cash flows of Mondi
Limited, and of its respective subsidiary undertakings drawn up to 31 December each year. All intra-group balances, transactions,
income and expenses are eliminated. Subsidiary undertakings are those entities over which the Group has the power, directly or
indirectly, to govern operating and financial policy in order to obtain economic benefits.
The results of subsidiaries acquired or disposed of during the years presented are included in the consolidated income statement
from the effective date of acquiring control or up to the effective date of disposal, as appropriate. Where necessary, adjustments
are made to the results of subsidiaries to bring their accounting policies into alignment with those used by the Group.
The interest of non-controlling interests is measured, at initial recognition, as the non-controlling proportion of the fair values of the
assets and liabilities recognised at acquisition, except for those instances where the Group elects to measure the non-controlling
interests at fair value in accordance with the allowance provided in IFRS 3, ‘Business Combinations’ (revised).
After initial recognition non-controlling interests are measured as the aggregate of the value at initial recognition and their
subsequent proportionate share of profits and losses.
The Company’s investments in subsidiaries and joint ventures are reflected at cost less amounts written off and provisions for
any impairments.
Associates
Associates are investments over which the Group is in a position to exercise significant influence, but not control or joint control,
through participation in the financial and operating policy decisions of the investee. Typically, the Group owns between 20% and
50% of the voting equity of its associates. Investments in associates are accounted for using the equity method of accounting
except when classified as held for sale.
The Group’s share of associates’ net income, presented net of tax, is based on financial statements drawn up to reporting dates
that are either coterminous with that of the Group or no more than three months prior to that date. Where reporting dates are not
coterminous, adjustments are made to the associate’s net income for the effects of significant transactions or events that occur
after the associate’s reporting date up to the reporting date of the Group.
The total carrying values of investments in associates represent the cost of each investment including the carrying value of goodwill,
the share of post-acquisition retained earnings, any other movements in reserves and any long-term debt interests which in substance
form part of the Group’s net investment in that entity. The carrying values of associates are reviewed on a regular basis and if an
impairment has occurred, it is written off in the year in which those circumstances arose. The Group’s share of an associate’s losses in
excess of its interest in that associate is not recognised unless the Group has an obligation to fund such losses.
20 Annual report and accounts 2010