Anora Group Oyj

Annual Report (ESEF) • Mar 20, 2024

52990007AXNSS4PNX3522023-01-012023-12-3152990007AXNSS4PNX3522022-01-012022-12-3152990007AXNSS4PNX3522023-12-3152990007AXNSS4PNX3522022-12-3152990007AXNSS4PNX3522021-12-3152990007AXNSS4PNX3522021-12-31ifrs-full:IssuedCapitalMember52990007AXNSS4PNX3522021-12-31ifrs-full:CapitalReserveMember52990007AXNSS4PNX3522021-12-31ifrs-full:StatutoryReserveMember52990007AXNSS4PNX3522021-12-31ifrs-full:ReserveOfCashFlowHedgesMemberiso4217:EURiso4217:EURxbrli:shares52990007AXNSS4PNX3522021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember52990007AXNSS4PNX3522021-12-31ifrs-full:RetainedEarningsMember52990007AXNSS4PNX3522021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember52990007AXNSS4PNX3522021-12-31ifrs-full:NoncontrollingInterestsMember52990007AXNSS4PNX3522022-01-012022-12-31ifrs-full:RetainedEarningsMember52990007AXNSS4PNX3522022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember52990007AXNSS4PNX3522022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember52990007AXNSS4PNX3522022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember52990007AXNSS4PNX3522022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember52990007AXNSS4PNX3522022-12-31ifrs-full:IssuedCapitalMember52990007AXNSS4PNX3522022-12-31ifrs-full:CapitalReserveMember52990007AXNSS4PNX3522022-12-31ifrs-full:StatutoryReserveMember52990007AXNSS4PNX3522022-12-31ifrs-full:ReserveOfCashFlowHedgesMember52990007AXNSS4PNX3522022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember52990007AXNSS4PNX3522022-12-31ifrs-full:RetainedEarningsMember52990007AXNSS4PNX3522022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember52990007AXNSS4PNX3522022-12-31ifrs-full:NoncontrollingInterestsMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:RetainedEarningsMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember52990007AXNSS4PNX3522023-01-012023-12-31ifrs-full:StatutoryReserveMember52990007AXNSS4PNX3522023-12-31ifrs-full:IssuedCapitalMember52990007AXNSS4PNX3522023-12-31ifrs-full:CapitalReserveMember52990007AXNSS4PNX3522023-12-31ifrs-full:StatutoryReserveMember52990007AXNSS4PNX3522023-12-31ifrs-full:ReserveOfCashFlowHedgesMember52990007AXNSS4PNX3522023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember52990007AXNSS4PNX3522023-12-31ifrs-full:RetainedEarningsMember52990007AXNSS4PNX3522023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember52990007AXNSS4PNX3522023-12-31ifrs-full:NoncontrollingInterestsMember Report by the Board of Directors GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 25 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Report by the Board of Directors 2023 KEY RATIOS 2023 2022 Net sales, EUR million 726.5 702.7 Comparable EBITDA, EUR million 68.2 76.1 % of net sales 9.4 10.8 EBITDA, EUR million 67.5 67.9 Comparable operating result, EUR million 34.8 42.9 % of net sales 4.8 6.1 Operating result, EUR million -31.3 34.7 Result for the period, EUR million -39.9 18.1 Earnings per share, EUR -0.59 0.26 Net cash flow from operating activities, EUR million 135.3 -0.4 Net debt / comparable EBITDA 2.0 4.0 Personnel at end of period 1,219 1,251 Anora is a leading wine and spirits brand house in the Nordic region and a global industry forerunner in sustainability. Anora Group also includes Anora Industrial and logistics company Vectura. Anora’s shares are listed on Nasdaq Helsinki. Overall, the year 2023 was a challenging one for Anora,  performance. During the year, several actions were executed to renew the operational model and improve margin trajectory, such as reorganisation related change negotiations and cost savings. The company is well on track with the targets set out in these initiatives. The year ended in a more positive territory and results were seen from these cost cuts and the most recent price increases, supported by lower raw material prices and more stabilised currencies. For the full year, net sales were EUR 726.5 million, showing a growth of 3.4%. Globus Wine, Denmark’s leading wine company acquired in July 2022, has been reported as part of Anora’s Wine segment as of 1 July 2022. For the full year, Anora still experienced a negative impact on net sales  currencies. Due to the challenges described above Anora revised its  2023 on 28 February 2023, at which time it was estimated that Anora’s comparable EBITDA was expected to be between EUR 80 and 90 million in 2023. Anora revised the above guidance range down to EUR 70-78 million on 15   the weakening of Swedish Krona and Norwegian Krone had   According to the latest guidance issued on 18 December 2023, it was estimated that Anora’s comparable EBITDA was expected to be between EUR 66-69 million in 2023. The main reasons for lowering the guidance then were weaker  as well as lower monopoly sales in the fourth quarter. For the full year 2023, comparable EBITDA decreased from EUR 76.1 million to EUR 68.2 million or 9.4 percent of net sales. In 2022, the comparable EBITDA was negatively  Globus Wine inventory values due to an accounting error, without impact on inventory volumes. In 2023, Anora successfully completed the divestment of its Larsen cognac business to International Beverage Holdings Limited. Anora reported one time capital gain of EUR 11.6 million of sales of Larsen Cognac business under other operating income. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 26 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS At the end of the year the cash balance was very high. Cash and cash equivalents reached EUR 212.7 million, supported by lower working capital due to inventory reduction. This resulted in lower net debt of EUR 137.5 million, while the net interest-bearing debt / comparable  target of 2.5x. Anora’s business model  portfolio of its own brands and a wide range of prominent international partner wines and spirits to its customers  Anora also provides services to its partners utilising the company’s production, packaging and logistics capacity. Anora’s industrial products – grain spirits, barley starch, technical ethanols and feed components – are produced as by-products from the distillation process and are provided to b-2-b customers in various industries. The logistics company Vectura AS provides logistics services in the Norwegian wine and spirits market.  economies of scale in sourcing, production and distribution, and allows the company to take advantage of its shared operations – such as consumer research, innovation, product development and overall knowhow – and use its  Market environment in 2023 During 2023, overall sales volumes in the Nordic markets declined by 2.1% overall, with spirits decreasing by 3.7% and wine by 1.8% compared to the previous year. All countries faced challenges compared to the previous year and the volumes declined in both wine and spirits. After Covid-19 the consumption has shifted back from monopolies to on-trade, travel retail and border trade. Compared to pre- pandemic levels in 2019, monopolies in Norway and Sweden grew by 15.1% and 4.6% in 2023, respectively, while Finland declined by 5.7%. The availability and cost of raw materials, labour, energy and fuel have already partly impacted the operating  During the year, price increases were seen during the monopoly pricing windows due to higher input costs. There were also some signs that overall sales has slowed  in consumers partly trading down. In the Industrial segment, there was uncertainty in the market development of both industrial products and services. The barley and feed prices declined from the previous year’s record-high levels. The demand for starch decreased, driven by lower demand from pulp and paper industry. Technical ethanol prices started to show decline during the fourth quarter. Volumes in industrial services decreased compared to the previous year. Key events Divestment of Larsen Anora sold its Larsen cognac business to International Beverage Holdings limited on 29 September 2023. The disposal included Anora’s brands Larsen, Renault, Monopol and ibis as well as the company’s subsidiary Larsen S.A.S with its production site in Cognac, France and Anora’s eaux-de vie maturation stock. Reorganisation savings programme As part of Anora’s strategy implementation and to improve  negotiations in all of its business segments, Wine, Spirits and Industrial, in order to develop its operational model and structure. Altogether, approximately 650 employees were  and an increased focus on strategy, Anora estimated that the planned changes would generate approximately EUR 3–4 million in savings and result in redundancies of approximately 40 employees. The goal was to strengthen the commercial focus on  synergies in line with Anora’s 2030 strategy. The plans included commercial operations in Anora’s Wine and Spirits segments in the Nordic countries and Anora Industrial’s operations in Finland. The changes were additional to  the Centre of Excellence strategy. Anora is well on track with the targets set out in these initiatives. The change negotiations  The Nordic market sales volumes include overall monopoly sales in Finland, Sweden and Norway, and sales in Denmark. On-trade is excluded. Sales volume change in percent calculated from the change in sales volumes in millions of litres. Sources: Alko, Systembolaget, Vinmonopolet, Nielsen IQ. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 27 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Successful launches and awards Innovations are a key growth driver for Anora. The examples below present the success that Anora’s brands have reaped during 2023: • Important new launches were Kron Vodka Rhubarb in Sweden as well as Koskenkorva Climate Action and Dirty Opland Aquavit in Norway. In Finland, there were several new launches, such as Leijona Capri Lemonello, Leijona Namu and Koskenkorva Winterapple as well as new non and low-alcoholic products in groceries. • Anora had significant growth from new own wines launched in 2023, such as Il Capolavoro BiB and Sköna Hönan in Sweden, YOKO Rosé BiB and 3 Generation PET Bottle Pinot Noir in Norway and Il Capolavoro bottle in Finland. Globus Wine expanded its Italian brands Ragnatela and Veronia in several sizes. • In September Anora launched Blossa 23, a limited edition annual glögg that celebrates its 20th anniversary, as well as relaunched Blossa Winter Apple from 2004. For the first time ever, the Blossa annual glögg was also launched as an alcohol-free variant available in Sweden and Finland. The Blossa 23 annual glögg sold very well. • In Global Travel, Koskenkorva Climate Action was awarded as the “Best Spirits Product (under €40)” at the prestigious TR Business Awards 2023 in Cannes during the TFWA Global Travel Retail exhibition, while Skagerrak and Valhalla Herb Liqueur Shot received “Highly Recommended” honours in the same category. • Gilde Juleaquavit 2023 won a prestigious silver award in the Global Spirits Design & Packaging Masters in December. • Xanté was awarded three medals in The Liqueur Masters 2023 (The Spirits Business Awards) in November - one of the most respected spirits competitions in the industry. The prestigious Master Medal was awarded to the original Xanté Cognac & Pear and two gold medals went to the intriguing Xanté Rum & Pear (Fruit liqueurs) and Xanté Passion Fruit & Pear (NoLo). News in partner wines Anora’s wine portfolio includes a wide range of premium wine from around the world. The partner portfolio develops all the time with new launches or partners to meet consumer trends and demand. In 2023, Anora actively participated in monopoly tenders and began collaboration with Penfolds and Anselmo Mendes in Sweden. Anora’s partner Terre Cevico and Wennerco launched  More” in a PET bottle in the Finnish market. This wine was launched in the monopoly sales to order assortment and has created interest with press and consumers alike. Other successful launches were Codorniu Ars Collecta Rosé – a new cava from Codorniu launched in Alko in December, which sold over half of its yearly estimate in only three weeks, as well as the seasonal Halloween packages of 19 Crimes Glow. These striking bag-in-box seasonal packages launched by Treasury Wine Estate boosted the sales of these 19 Crimes wines in Alko by 46% in October compared to the previous year. Events in Industrial In November 2023, the Koskenkorva Distillery was once again granted The Year Award in the Starch Europe’s Safety Programme. This was the third consecutive year when Koskenkorva Distillery has won the said award. The Year Award is awarded to plants plants with a full calendar year without lost time incidents (LTI), and it is an important  safety. The new heat recovery system at the Koskenkorva Distillery was taken into use in 2023. The new system will increase heat circulation within the distillery and reduces steam power generation by 10% in the long term. Anora’s cooperation with Fortum at the Kalax wind farm in Närpiö is in place and will be continued until 2025. The investment in the heat recovery system and the wind power initiative support Anora’s target to reduce CO 2 emissions at the Koskenkorva Distillery. In 2023, the Koskenkorva  of 44 (44) %. The Distillery’s CO 2 emissions still followed the strong trend of reduction in CO 2 emissions since 2014. To mitigate the impact of the high cost of barley, the Koskenkorva Distillery’s running speed was lowered during the year. In total, 174,0 (184.3) million kilos of grain were used at the plant. In 2023, the average barley market price was 277.1 €/tn (347.8€/tn), a decrease of 20%. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 28 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Strategy and financial targets  and sustainability roadmap for 2022–2030 were introduced at the Capital Markets Day on 29 November 2022. Anora’s vision is to be the leading Nordic wine and spirits group delivering growth through sustainability. Financial targets  the progress in them. Long-term financial targets for 2030 Actual 2023 Actual 2022 Annual net sales growth including M&A, majority being organic 3–5% 3.4% 5.7% Comparable EBITDA margin through focus on margin accretive business and scale benefits on indirect costs 16% 9.4% 10.8% Net IB debt / comparable EBITDA (LTM) debt levels may occasionally exceed in connection with M&As <2.5x 2.0x 4.0x Dividend pay-out ratio % of result for the period 50–70% -37.2 83.1% Dividend policy: Anora aims to maintain a stable or increasing dividend with a dividend payout ratio of 50–70% of the result for the period. Strategic pillars Anora’s growth strategy is founded on core strategic pillars and has sustainability at its centre: • Lead category growth across consumer occasions and channels to cement the position as the wine and spirits powerhouse in Sweden, Norway and Finland • Scale position in Denmark and the Baltics, and beyond the Nordics, build the world’s leading sustainable brands from Nordic heroes to international challengers. Long-term sustainability targets Anora’s long-term sustainability targets are: • Waiting for science-based targets to be approved: 42% near-term reduction and 90% long-term reduction in total emissions (Scopes 1-2, and Scope 3 emissions from purchased goods and services, upstream transportation and distribution and downstream transportation and distribution) and 30.3% reduction in FLAG greenhouse gas emissions by 2030 • A carbon-neutral Koskenkorva Distillery during 2026 and all production by 2030 without carbon compensations • Increasing the amount of own grain spirit products made from regeneratively farmed barley to 30% • By 2030 all packages are lightweight, 100% recyclable and of materials from certified sources or from recycled origins. Identified efficiency potential  in the supply chain during its strategic period through the implementation of a centre of excellence strategy for its bottling sites in Finland, Norway and Denmark. According to the plan, the production of vodka-based spirits would be centralised at the Rajamäki plant in Finland, whereas the Gjelleråsen plant in Norway would focus on the distillation, blending and bottling of aquavits and bitters. Operational excellence of wine production would be concentrated at the Globus Wine plant in Denmark. The planned changes would reduce production footprint complexity, improve the utilisation of current production lines and reduce costs. The specialisation is expected to be completed during 2025 and would entail a gradual downsizing of around 40 full-time equivalents over a period of three years in Norway. Research and development activities The Group’s direct research and development expenditure amounted to EUR 2.3 million in 2023 (EUR 2.2 and 3.5 million in 2022 and 2021, respectively) million and was related to the product development of alcoholic beverages. The R&D expenditure represented 0.3% of net sales in 2023 (0.3% and 0.7% in 2022 and 2021, respectively). Financial review Net sales, profitability and result for the period In 2023, Anora Group’s net sales were EUR 726.5 million, an increase of 3.4% from the previous year. The increase in net sales compared to the previous year is due to Globus Wine being reported as part of Anora’s Wine segment as of 1 July 2022. Net sales were also positively impacted by price increases and the international sales in Spirits, while the weaker currencies had a negative impact, especially the weakening of the NOK and SEK. The consolidated income statement includes the income statement of the divested business of Larsen until 29 September 2023. In 2023, Anora Group’s comparable EBITDA was EUR 68.2 (76.1) million, or 9.4% (10.8%) of net sales. The decline  segment, high input costs and weaker currencies. The  was approximately EUR 13.9 million. Since the beginning of November, both SEK and NOK have again started to strengthen. The barley and fuel prices were also below  presented on page 58. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 29 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Reorganisation related change negotiations were launched in Q4 and a cost savings initiative in Q2. Anora is well on track with the targets set out in these initiatives.  EUR 103.8 (93.8) million, including EUR 83.0 (74.0) million in wages and salaries. The growth was mostly due to the acquisition of Globus Wine. Other operating expenses amounted to EUR 134.1 (137.6) million. Result for the period amounted to EUR -39.9 (18.1) million, and earnings per share were EUR -0.59 (0.26). The below tables illustrate net sales and comparable EBITDA by reporting segments. Wine segment The Wine segment develops, markets and sells partner wines and Anora’s own wine brands to customers in the Nordic monopoly markets and in Denmark. Globus Wine is reported as part of Anora’s Wine segment as of 1 July 2022. In 2023, the net sales for the Wine segment increased by 5.6% to EUR 334.3 (316.6) million. The increase in net sales compared to the previous year is due to Globus Wine being reported as part of Anora’s Wine segment as of 1 July 2022. Net sales were negatively impacted by unfavourable currency exchange rates and previously lost partners in Sweden. The negative impact of the exchange rates on net sales was approximately EUR 20.7 million. In 2023, comparable EBITDA was EUR 12.4 (23.5) million, or 3.7% (7.4%) of net sales. The decline in EBITDA was mainly driven by higher input costs due to weaker currencies, but also as a result of previously lost partners  local currencies in all markets. In 2022, the comparable  million correction of Globus Wine inventory values due to an accounting error, without impact on inventory volumes. Spirits segment The Spirits segment consists of the business areas Spirits and International. The Spirits business area develops, markets and sells both Anora’s own spirits brands and partner brands to customers in the Nordic monopoly markets. The International business area consists of Anora’s own operations in Estonia, Latvia, Denmark and Germany, as well as global duty free and travel retail, and exports. In 2023, the net sales for Spirits increased by 1.4% to EUR 237.0 (233.8) million. The growth was due to price increases and international sales growth. The negative impact of the exchange rates on net sales was approximately EUR 11.3 million. In 2023, comparable EBITDA increased to EUR 40.3 (37.8) million, or 17.0% (16.2%) of net sales, due to savings in operating expenses. Industrial segment The Industrial segment comprises Anora’s industrial business – industrial products and services, the logistics company Vectura in Norway, and supply chain operations. In 2023, the total net sales for Industrial segment decreased by 5.6% to EUR 269.5 (285.5) million, driven by lower starch and feed sales. External net sales decreased by 3.0% and amounted to EUR 155.1 (160.0) million. Internal sales decreased mostly due to divestment of Larsen. In 2023, comparable EBITDA was EUR 17.5 (17.7) million, or 6.5% (5.9%) of net sales. Comparable EBITDA  lower barley price. Financial items For the full year 2023, other operating income amounted to EUR 20.3 (10.9) million, with the majority coming from  Larsen, sales of steam, energy and water of EUR 4.0 (4.2) million, income from insurance compensation EUR 0.0 (1.1) million and rental income of EUR 1.4 (1.4) million.  million for the full year 2023, due to increase in interest rates. An insurance claim relating to the acquisition of Globus Wine Anora made a claim during Q2 under the warranties and indemnity insurance policy taken in connection with the acquisition of Globus Wine. Anora thus has a contingent asset in the form a potential insurance compensation. NET SALES BY SEGMENT, TOTAL EUR million 2023 2022 Change % Wine 334.3 316.6 5.6 Spirits 237.0 233.8 1.4 Industrial 269.5 285.5 -5.6 Anora Group net sales, external 726.5 702.7 3.4 * Total net sales by segment includes external and internal sales. COMPARABLE EBITDA BY SEGMENT EUR million 2023 2022 Change % Wine 12.4 23.5 -47.7 Spirits 40.3 37.8 6.6 Industrial 17.5 17.7 -1.3 Group allocations -1.9 -2.8 Anora Group 68.2 76.1 -10.4 % of net sales 9.4 10.8 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 30 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Impacts of impairment testing As a result of annual impairment testing, impairments  owned and right-of-use assets at the Gjelleråsen plant of the Industrial segment in Norway due to its loss of volume to other factories following the Centre of Excellence program, as well as at Vectura, which shares the same right-of-use  As a result, the Group operating result weakened to EUR -31.3 (34.7) million. The values of shares of the parent company’s subsidiaries in Denmark were also impaired mainly due to weak   reduce Anora Group Plc’s distributable funds by EUR 58.7 million to EUR 100.2 million. For shares owned by other Group companies, impairments totalling EUR 23.6 million were made to the values of shares of certain companies held by Vingruppen in Sweden and Norway due to recent partner losses, reducing the distributable funds of their respective parent companies. The impairments made do not impact the loans, cash  Cash flow and balance sheet   from operations was mainly due to lower net working capital than in the previous year. In 2023, the change in working capital contributed to EUR 109.2 (-44.8) million, due to lower inventory levels and increase in the sale of receivables. The Group’s net working capital improved to EUR -79.2 (63.7) million at the end of December. The receivables sold amounted to EUR 173.6 (59.4) million at the end of the reporting period. The Larsen divestment also  In 2023, gross capital expenditure totalled EUR 12.6 (10.7) million. During the period, the capital expenditure was allocated mainly to replacement investments and to  At the end of the reporting period, the Group’s net debt amounted to EUR 137.5 (300.9) million. The decrease in net debt was due primarily to the sale of Larsen business. The reported net debt to comparable EBITDA was 2.0 (4.0) times. Anora Group’s liquidity position was strong throughout the period. Cash and cash equivalents amounted to EUR 212.7 (91.4) million, while the interest-bearing debt including lease liabilities amounted to EUR 350,2 (392.3) million. The Group has a revolving credit facility of EUR 150.0 (150.0) million of which EUR 0.0 (0.0) million was in use at the end of the reporting period. In December 2023  credit facilities agreement, thus extending the term loan and revolving credit facilities maturity by one year to December 2026. The gearing ratio at the end of the reporting period was 33.7% (62.5%), while the equity ratio was 35.9% (37.0%). At the end of the period, the total in the consolidated balance sheet was EUR 1,135.7 (1,301.3) million. Personnel Anora Group employed 1,219 (1,251) persons at the end of the period and on average 1,273 (1,159) persons in 2023. PERSONNEL BY COUNTRY AT THE END OF THE PERIOD 2023 2022 Finland 416 414 Norway 360 370 Sweden 171 165 Denmark 171 174 Estonia 61 68 Latvia 31 33 France 0 22 Germany 9 5 Total 1,219 1,251 Anora’s values serve as a foundation for building skills and competences of the employees and priorities in their development plans. The revised performance review incorporates elements of well-being and competence  planning, assessing competence building based on the values. Anora wants to ensure an inclusive and safe work environment for all its employees. Anora’s work on Diversity, Equity, and Inclusion continued, and Anora’s  Conduct and recruitment policy. The Code of Conduct was updated and disclosed during the year. The code articulates the company’s dedication to conducting business reliably, GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 31 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS include personnel related restructuring costs of EUR 4.9 (0.1) million. Share-based incentive scheme The Board of Directors of Anora has decided on a new plan period within the share-based long-term incentive scheme for the Company’s management and selected key employees. The scheme comprises a Performance Share Plan (also “PSP”) for the top management and other key employees and a Restricted Share Plan (also “RSP”) as a complementary  situations. Performance Share Plan (PSP) 2023–2025 The PSP 2023–2025, commenced as of the beginning of 2023 and the potential share rewards thereunder will be paid during H1 2026. The payment of the rewards is conditional on the achievement of the performance targets set by the Board of Directors for the plan. The performance measures based on which the potential share reward under PSP 2023–2025 will be paid are revenue growth, earnings per share (EPS), the relative total shareholder return of the Company’s share and a measure based on the Sustainalytics ESG rating. Eligible for participation in PSP 2023–2025 are approximately 54 individuals, including the members of Anora Group’s Executive Management Team. If the performance targets set for PSP 2023–2025 are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 667,000 shares. Restricted Share Plan (RSP) 2023–2025 The RSP 2023–2025 commenced as of the beginning of 2023 and the potential share rewards thereunder will be paid during H1 2026 at the latest. The aggregate maximum number of shares to be paid based on RSP 2023–2025 is approximately 67,000 shares. Other terms The value of the reward payable to participants based on the plans is limited by a share price development- based cutter. Anora Group applies a share ownership recommendation to the members of the company’s Executive Management Team. According to this recommendation, each member of Anora Group’s Executive Management Team is expected to retain in his/her ownership at least half of the shares received under the share-based incentive plans of the company until the value of his/her share ownership in the company corresponds to at least his/her annual gross base salary. Anora Group originally announced the establishment of the long-term incentive scheme by a stock exchange release issued on 9 June 2022. The stock exchange release on the 2023-2025 incentive schemes decided by Board of Directors was issued on 21 December 2022. See also “Events after period” for more information on the a new plan period 2024-2026 within the share-based long-term incentive scheme for the management and selected key employees, published in a stock exchange release on 14 February 2024. fairly, and following the respective laws and regulations.  individuals employed by any Anora Group company. The annual Anora Tasting employee survey provides valuable information on employees’ engagement, leadership, team performance and overall well-being. The survey was conducted in November, followed by reviews of the results, training sessions and action planning that were consistently implemented throughout the organization. Anora is committed to enhancing the well-being of its employees, continuing an external service, Auntie, to support employees’ psychological safety and well-being. Anora’s change negotiations that were initiated in November 2023, were concluded in January 2024 in all operating countries. Changes were made in organisational structures to support a stronger commercial focus, reduce complexity, and create synergies in line with Anora’s strategy. With the introduction of these new structures, the duties of 37 employees at Anora will end. The new organizations are in place as of February 2024. EMPLOYEE BENEFIT EXPENSES EUR million 2023 2022 Wages and salaries 83.0 74.0 Pension expenses Defined contribution plans 10.5 9.1 Defined benefit plans 0.1 0.0 Share-based payments 0.0 0.6 Other social expenses 10.2 10.1 Total 103.8 93.8 In Anora, the total wages and salaries of personnel consists   GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 32 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Non-Financial Information 2023 Sustainability governance At Anora, the administrative and governing bodies are the Annual General Meeting, the Board of Directors and the CEO. Anora’s highest decision-making power is exercised by the shareholders at the Annual General Meeting. The Board and CEO, with the support of the Audit Committee and the Remuneration and Nomination Committee, are charged with the company’s management. The Management Team supports the CEO in steering the company. Anora’s Board of Directors oversees the appropriate governance of sustainability and ESG (Environmental, Social and Governance) criteria within the Anora Group, as well as sustainability management and ESG-related risks. The Board’s responsibility is to approve Anora’s sustainability  Anora’s Audit Committee regularly discusses sustainability and climate-related matters, for example, as well as climate-related risks and opportunities as part of Anora’s TCFD (Task Force on Climate-Related Financial Disclosures) report. The Audit Committee also assists the Board in overseeing the appropriate governance of sustainability and ESG criteria within Anora, as well as sustainability management and ESG-related risks. Anora’s Executive Management Team (EMT) is responsible for the implementation and monitoring of the 2030 Sustainability Roadmap and acts as a steering group. The EMT also discusses targets and  targets within the roadmap, and prepares sustainability investments. In terms of Anora-wide decision-making forums in place, the Business Area Leadership Teams are responsible for implementing roadmap targets, taking responsibility for investment planning and cascading the roadmap to Anora’s operational plans. Sustainability topics are regularly discussed in both EMT as well as Audit Committee meetings. Anora’s Sustainability Director acts as the coordinator to drive the sustainability agenda at Anora and has the responsibility to provide an overview of the roadmap’s implementation, and leads, reports and communicates on ESG topics. Sustainability work is coordinated in the Sustainability Working Group, consisting of the leaders  Business sustainability roles include a focus on Anora’s  other criteria. The internal audit for Anora’s Sustainability Governance was performed by Anora’s internal auditor, Deloitte Oy, in 2023. During 2023, Anora undertook preparations with regard to the upcoming EU Corporate Sustainability Reporting Directive (CSRD). As one part of this preparation, Anora conducted a new and updated materiality analysis in line with the upcoming directive and double-materiality principle. Based on this analysis, Anora can identify the material sustainability topics it is required to report on based on the new European Sustainability Reporting Standards (ESRS) and can further its preparations for the new reporting requirements that are mandated in 2024. Other preparative actions included human rights due diligence development as well as working with ESG- related data, calculating science-based targets for Scopes 1-3 and submitting the targets for validation to the SBTi,  sustainability report. In 2024, Anora will focus especially on building the new sustainability report and undertaking a biodiversity assessment as well as conducting climate change-related scenario analyses. Sustainability management Anora’s sustainability strategy, detailed by the Board, CEO, and management team, is owned by every employee. Our critical policies include the Code of Conduct and Supplier Code of Conduct which align with the OECD Guidelines for Multinational Enterprises and the UN Business and Human Rights principles. Anora’s new Human Rights commitment was approved by Anora’s Executive Management Team  ISO9001:2015, ISO14001:2015 and ISO45001:2018, encompass quality, occupational health, safety, and environmental management. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 33 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Materiality & SDGs Materiality analysis During 2023, Anora conducted a new and updated materiality analysis in line with the upcoming Corporate Sustainability Reporting Directive (CSRD) and double- materiality principle, considering both the impacts (the inside-out view) and the risks and opportunities (the outside-in view). Based on this analysis, Anora can identify the material sustainability topics it is required to report on based on the European Sustainability Reporting Standards  2024. This work involved many parts of the organisation and included the input of experts on human resources,  strategy, sustainability and public relations. The new materiality analysis also created a further  opportunities in Anora’s global business and value chain from a short-, medium- and long-term perspective. Risks, impacts and opportunities that exceeded a certain threshold based on their ratings constituted Anora’s material  analysis, the most material topics for Anora were climate change, water, biodiversity, circular economy, own workers and workers in the value chain, end-users, and business conduct. The new materiality analysis builds on the analysis undertaken in 2022 as a base to Anora’s 2030 Sustainability Roadmap. As part of the 2022 materiality analysis, we conducted 20 in-depth interviews with our external stakeholders, with  as well as an open survey with over 200 answers from employees and external stakeholders including authorities, banks, analysts, investors, consumers, customer companies, industry associations, media, NGOs, owners, political decision-makers and suppliers. The 2023 materiality analysis was supported with additional interviews with a focus on biodiversity and human rights in the value chain. Based on the materiality analysis, Anora is viewed as having a strong and proactive approach to sustainability, as well as the ability to act as a Nordic frontrunner of the industry in thought leadership and sustainability themes. As part of the new assessment, a number of topics were determined as material from an ESRS-perspective. These topics will be described and detailed in our 2024 sustainability report, when ESRS and CSRD will be applicable  the material topics with relevant targets valid during 2023. Sustainable development goals In addition to conducting an updated materiality analysis, we have divided the matrix into material topics to show how they strongly link to and align with the United Nations Sustainable Development Goals (UN SDGs). Anora currently  Material topics • Inclusivity diversity, equality • Responsible drinking culture promotion • Consumer education on responsible and sustainable choices • Healthy ingredients • No- and low-alcoholic products • Responsible marketing • High product quality and food safety SDG 3 material topic links to our work around promoting a responsible drinking culture, including responsible marketing, increasing non and low-alcoholic (NoLo) products that support the responsible drinking trend and sober curiosity movement, as well as mitigating the adverse effects that our products have. In addition, high product quality and food safety are also viewed as important topics. Material topics • Product’s water footprint • Environmentally sound wastewater handling SDG 6: ‘Clean water and sanitation’. Our production plants operate in areas that do not suffer from water scarcity. However, we are a  cultivation countries suffer of water scarcity, so this is an important material topic for us. We are  Finland, Rajamäki with groundwater springs we use in our products. We are also working to reduce our own water consumption by implementing advanced wastewater management processes. Material topics • Waste reduction • Climate-smart packaging • Socially responsible sourcing • Transparency and responsibility in supply chains • Safe workplace • Employee development • Leadership and people management •  • Organic products SDG 12; ‘Responsible consumption and production’. Our focus area here relates to our climate- smart packaging, our circular economy-based production, particularly at our Koskenkorva  products, including Fair Trade and Fair for Life. Material topics • GHG emissions from own production • GHG emissions in supply chains • New circular production models • Environmentally responsible sourcing •  SDG 13; ‘Climate action’. Our focus here is on our emissions reduction efforts in our own production at our Koskenkorva Distillery, as well as in our value chain, and the fact that we have committed to set science-based targets, and have submitted our targets for validation in 2023. Material topics • Regenerative agriculture • Biodiversity conservation SDG 15; ‘Life on land’. Our material topics related to this SDG are particularly focused on our actions to enhance regenerative farming and biodiversity conservation. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 34 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Policies Anora’s vision is to be the leading Nordic wine and spirits group, delivering growth through sustainability. Sustainability is integral to Anora’s business strategy. Anora has committed to an ambitious sustainability roadmap to 2030 covering its entire value chain and new areas of its operations. The roadmap is founded on the decade-long focus on sustainability, particularly circular economy- based production, and an extensive materiality assessment, conducted in 2022 and revised and updated in 2023. Anora’s sustainability work is built on the main themes of Planet, People and Product.  in accordance with the Finnish Accounting Act, Anora’s approach to the management of environmental, social, employee and human rights matters, as well as topics related to anti-corruption and bribery, product quality, safety, and sustainability. For more information about Anora’s comprehensive sustainability work, see Anora’s Sustainability Report 2023. Our Code of Conduct and our values help us make the right choices and guide our work in a constantly evolving business environment. This delivers the foundations for our long-term success. Anora’s compliance system is embedded in our governance model and is designed to strengthen our company performance and a Group-wide culture of integrity at all levels. We follow how this culture is developing with the help of our annual employee survey, Anora Tasting. Policies, procedures and guidelines form the basis of our compliance programme. We review and update our policies and procedures through an annual policy management process. In addition, with the regulatory environment in constant change, we want to ensure that our Group policies stay relevant and up to date. With the support of risk management function, each business area, function and unit are responsible for identifying and managing compliance risks related to its own operations. To enhance this process, we utilise the results of annual risk assessments to guide our compliance activities and mitigation actions in businesses and functions. Together, the risk management function and the businesses update the risk assessments and mitigation actions throughout the year to respond to changes in the risk environment. The progress of these actions is reported to the Audit Committee of the Board of Directors and our businesses on a quarterly, half-year or annual basis. Environment One of the main themes in Anora’s 2030 sustainability roadmap is Planet. Under this theme, Anora advances it work related to the circular economy model of Koskenkorva Distillery, regenerative farming, environmentally responsible sourcing, emissions from its own operations and value chain, water resources, and biodiversity. a) Policies and ways of working Anora manages its approach to environmental matters through various standards, policies and principles. Anora has a Quality, Safety and Environment policy. This policy is based on Anora’s 2030 Sustainability Roadmap, which sets out responsibility targets and is based on UN Sustainable Development Goals. The management and implementation of quality, safety and environmental values is part of our sustainability work and thus are the most paramount for Anora. We are committed to the continuous improvement of our operations. As part of the policy: • We comply with the laws, regulations and industry codes of the countries in which we operate. • The Executive Management Team, the management of each function, as well as each employee within their sphere of influence is responsible for implementing these principles. • We promote these principles in our global supply chain. Environmental impacts are managed through ISO 14001. The ISO 14001 policy is an international standard, and its requirements provide a framework and guidelines for creating an Environmental Management System (EMS). ISO 14001  headquarters. The ISO 14001 standard contains the following key elements: • Environmental policy • Planning • Implementation and operation • Checking and corrective action • Management review The standards, policies, and principles relevant to Anora’s environmental work include: • Anora Code of Conduct • Anora Code of Conduct for Suppliers and Subcontractors • Quality, Safety and Environment policy • Anora Procurement policy and Principles of responsible sourcing • ISO 14001:2015 Environmental Management System, covering Anora’s operations in Finland The most senior level in Anora that is accountable for the implementation of the Quality, Safety and Environment policy is the Executive Management Team.  stakeholders, and stakeholders who need to help implement it. The policy can be found from anora.com/en/sustainability/policies GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 35 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS b) Environmental risks and their management Environmental risks are assessed regularly as part of the Anora Group’s risk management process and as part of Anora’s ISO 14001 EMS. In addition to the updated evaluation in the Group’s risk management process, Anora has also conducted a separate and revised climate change- related risk and opportunity assessment. More detailed reporting on this can be found in the Disclosure on climate- related risks and opportunities (TCFD) section. In addition to climate-related risks, other principal environmental risks include natural disasters, possible pollution leaks into the soil or waterways (including groundwater areas), overruns of the waste-water quality limits in Anora’s environmental permits, and the costs related to maintaining compliance with increasingly strict  and sanctions resulting from any non-compliance with the said regulations. The risks are managed through various measures, including the management of Anora’s operations through the ISO 14001 EMS, regular monitoring of wastewater quality, ownership of land in groundwater areas and the careful monitoring of legislative developments. c) Outcome and KPIs During 2023, Anora updated the calculation of the baseline 2021 emissions in its entire value chain (Scopes 1–3), including the addition of acquired Globus Wine on the baseline and calculating the emissions and targets for forest, land, and agriculture (FLAG) sector as well. In December 2023, Anora submitted its targets for validation to the SBTi. Our commitment on following targets was submitted to the SBTi: • Near-Term targets: Anora commits to reduce absolute Scope 1–2 and Scope 3 emissions from purchased goods and services, upstream transportation and distribution and downstream transportation and distribution 42% by 2030 from 2021 base year. • Long-Term Targets: Anora commits to reduce absolute Scope 1–2 and Scope 3 emissions from purchased goods and services, upstream transportation and distribution and downstream transportation and distribution 90% by 2050 from 2021 base year. • FLAG targets: Anora commits to reduce absolute scope 3 FLAG (land and forest use) greenhouse gas emissions 30,3% by 2030 from a 2021 base year. Related to the target of reducing emissions, one of Anora’s core ambitions is to have its entire production carbon neutral by 2030 and the Koskenkorva Distillery carbon neutral during 2026 – both without carbon compensations. Social, employee and human rights The second main theme in Anora’s 2030 sustainability roadmap is People. Anora aspires to be an inclusive and safe workplace that represents the diversity, equity and progressiveness of Nordic culture. Anora aims for zero accidents and a strong safety culture. Continuous work is undertaken to ensure that Anora’s value chain is fair and transparent, to source sustainably and protect human rights. KPI 2023 2022 2021 Total fossil emissions & reduction compared to previous year (Scope 1 and 2) 21,434 tCO 2 e -21.0% 27,144 tCO 2 e +5.5% 25,737 tCO 2 e -3.2% Amount of regeneratively farmed barley agreed to be purchased: Target to increase the share of regeneratively farmed barley to 30% of own grain spirit products by 2030. 2.3 million kg 0.056 million kg 0.050 million kg Wastewater volume (1,000 m³): Target to reduce wastewater volume with 20% by 2030, compared to 2021 246.6 238 293 Waste recycling and recovery rate (%) Koskenkorva, Gjelleråsen, Globus Wine 100%, Rajamäki 99.9% Koskenkorva, Rajamäki, Gjelleråsen and Globus Wine 100% Koskenkorva, Cognac, Rajamäki and Tabasalu: 99.5% Gjelleråsen: Approx 100% Landfill waste (t): Target to reach zero by 2030 11.13 11.57 28.18 All figures displayed are for annual periods of January-December. Figures include former Altia and former Arcus **Globus Wine included in 2023 wastewater figure, excluded in 2022 and 2021 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 36 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS a) Policies and ways of working Anora is committed to respecting and promoting human rights and international labour standards in accordance with the United Nation’s (UN) Universal Declaration of Human Rights and the key conventions of the International Labour Organization (ILO) and expects the same from its suppliers, partners, and subcontractors. Anora wants to ensure safe and healthy working conditions for all its employees and  by the company. Anora’s work on the area of Diversity, Equity and Inclusion (DEI) is also an important focus area. Anora’s human rights work in its supply chain is governed by the amfori BSCI’s Code of Conduct which Anora has adopted throughout its operations. The values and principles of the amfori Code of Conduct have a strong focus on working conditions and human rights. Anora is a direct member of the amfori BSCI to develop responsible sourcing.  operations in Finland (Rajamäki, Koskenkorva, Ruoholahti: Anora HQ). ISO 45001 EMS provides an internationally recognised framework for managing occupational health and safety risks. It enables us to systematically assess hazards and implement risk control measures, leading to reduced workplace injuries, illnesses, and incidents. Adopting the standard shows our employees and external stakeholders that we are committed to worker health, safety, and well-being. Anora’s new human rights commitment, published in 2023, describes our approach to human rights in our value chain and our human rights due diligence process. Anora’s report on the Norwegian Transparency Act, published in 2023, describes our human rights due diligence. It includes information on our human rights assessment and human rights commitment. The report is published in English and Norwegian. The standards, policies and principles relevant to social, employee and human rights matters include: • Anora Code of Conduct • Anora Supplier Code of Conduct • Quality, Safety and Environment Policy • Anora Human Rights Commitment • Anora’s Procurement Policy describes our procurement principles, including the responsibility on human rights and environment in the value chain. • Principles of responsible sourcing • Non-Harassment Policy • Anora Policy of Alcohol Consumption for employees • amfori BSCI Code of Conduct • ISO 45001:2018 Occupational Health and Safety Management System; covering Anora’s operations in Finland. The most senior level in Anora that is accountable for the implementation of the Quality, Safety and Environment Policy, the Procurement Policy and the Non-Harassment Policy is the Executive Management Team. Anora has made the policies available to potentially  implement them. The policies can be found from anora.com/en/sustainability/policies b) Employee and human rights risks and their management The risks are assessed as part of Anora Group’s risk management process and as part of Anora’s ISO 45001 EMS. The principal employee risks relate to Anora’s ability to recruit, develop, motivate, and retain the right know how and succeed in daily leadership, the maintenance of good collaboration practices with employees and their unions, as well as the occurrence of accidents, to manage the risks, Anora develops its employer value proposition, recruitment, and retention, conducts the employee satisfaction survey on an annual basis, and maintains frequent collaboration with unions. Anora’s new Human Rights Policy was approved by Anora’s Executive Management Team in June 2023. The Policy will be regularly updated to allow us to also communicate our evolving approach on human rights. Our salient human rights issues arise from our supply chain. Agricultural value chains and some of the geographies we source from are prone to human rights risks and we recognise the need to actively identify possible changes in our own and our suppliers’ operating environment which might increase the likelihood of these risks. We are committed to taking regular steps to ensure that we have  or mitigate the risks. We conducted a human rights impact assessment with the help of external human rights expertise in 2023 and  rights risks in our supply chain: • Right to health & safety • Right to freedom of discrimination in employment • Right to decent work • Right to freedom of association and collective bargaining • Forced labour Where there is potential for adverse impacts on vulnerable people or groups, Anora is committed to taking measures, based on due diligence processes, to avoid causing or contributing to adverse human rights impacts through our own activities (including through our own operations and our supply chain), and to addressing and remediating such impacts when they occur. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 37 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS At Anora, we are committed to systematically improving our sustainable procurement procedures. We already have in  • Anora Code of Conduct & Code of Conduct for Suppliers and Sub-contractors • Third-party audits & certificates • Internal audits & supplier visits • Risk country profiles to give us a holistic understanding of the human rights situation in our supply chain countries • Supplier self-assessment tools to both communicate about Anora’s commitments and gain a wider understanding of our suppliers’ sustainability (incl. human rights) approach • Human rights training for all employees to share the findings from our impact assessment process and strengthen internal competence. Our human rights management processes are constantly developing, and we recognise that this is an area which requires active attention. c) Outcome and KPIs In 2023, Anora continued to build the organisation and company culture after the merger in 2021. In 2022, Anora unveiled its new company values: Courage to explore; Energy to inspire; and Empowering to win. In 2023, a leadership program pilot group, focusing on the value ‘Courage to explore’ was successfully launched. The year remained challenging from the People perspective due to    In 2023, Anora conducted its second post-merger Employee Engagement Survey entitled ‘Anora Tasting’ with a response rate of 83%. The 2023 survey, for example, found that 78% of Anora’s employees are very happy with their direct manager. With regards to occupational health and safety, Anora’s goal is to increase the number of safety observations and to reduce the number of absences caused by accidents. During the reporting year, Anora focused on the continual improvement of processes and the unifying of safety measurements across the organisation, as well as training employees on safety topics. Of note, safety data from Globus Wine, acquired in 2022, has been reported internally from the fourth quarter of 2023, but not yet included in Anora   were more positive in 2023 compared to the previous year and, for example, Anora’s Lost Time Incident Frequency (LTIF) rate was 4.6 in 2023 compared to 7.0 in 2022. There were no fatal work-related accidents during the year. Anti-bribery and corruption Anora has a zero-tolerance policy towards bribery and corruption. The company is committed to operating  Anora also expects its representatives, consultants, agents, subcontractors, and other business partners to unconditionally refrain from corruptive behaviour when performing services for Anora or on its behalf. Anora does not support, either directly or indirectly, political parties or organisations. In addition, Anora does not participate in  a) Policies and ways of working Anora’s Code of Conduct describes the company’s commitment to ethical business conduct. Anora updated its Anti-Bribery and Anti-Corruption policies in 2023. Every employee is familiarised with the company’s Code of Conduct, including the anti-bribery and corruption activities. Anora has a whistleblowing channel maintained by an independent third party, open to all employees and external stakeholders. All concerns raised, whether through the channel or through other means, are investigated in accordance with an established process to ensure accuracy, anonymity, and fairness. The standards, policies, and principles relevant to anticorruption and -bribery matters include: • Anora Code of Conduct • Anti-Bribery and Corruption Policy • Whistleblowing channel KPI 2023 2022 2021 Number of amfori BSCI audited suppliers 2 0 0 Increase in the number of safety observations per person Target: three observations per person by 2025 3.6 2.9 2.6 Lost Time Incident Frequency (LTIF)* Target: 0 by 2030 4.6 7.0 5* 10.5 In former Altia Industrial In former Altia In former Arcus Does not include Globus Wine, Germany or Vingruppen Sweden GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 38 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS The most senior level in Anora that is accountable for the implementation of the Anti-Bribery and Corruption Policy is the Executive Management Team. Anora has made the policy available to potentially  implement it. The policy can be found from anora.com/en/sustainability/policies. b) Anti-corruption and -bribery risks and their management The risks are assessed as part of Anora Group’s risk management process. The principal risks associated with anti-corruption and bribery matters include, in addition to  any act of corruption or bribery, especially related to Anora’s key persons and business partners. Given that alcohol is a highly regulated business, obtaining and maintaining the necessary licenses and permits are associated with a risk of corruption or bribery, especially in countries high on the corruption index. Potential non-compliance to the regulation for the marketing of alcoholic beverages also poses risks to Anora’s operations. These risks are managed through contractual obligations, third-party due diligence inspections concerning suppliers and distributors where necessary, as well as internal training on Anora’s Anti- Bribery and Corruption Policy. c) Outcome and KPIs Anora’s Code of Conduct was revised and updated during the reporting period. Anora updated its Anti-Bribery and Anti-Corruption -policies in 2023 and launched an anti- bribery and anti-corruption e-learning for all employees working in relevant positions. During 2023, we received  of which only one required further investigation measures.  the whistleblowing channel was detected. Product quality, safety and sustainability The third main theme in Anora’s 2030 sustainability roadmap is Product. Anora’s work focuses on advancing climate-smart packaging and increasing the share of sustainable and no- and low-alcohol (NoLo) products in Anora’s portfolio. Product quality and safety, as well as a responsible drinking culture and responsible marketing are also Anora’s top priorities. a) Policies and ways of working Sustainability is incorporated in the strategies of Anora’s own brands and product development. Anora actively develops climate-smart packaging, such as Bag-in-Boxes, pouches, tetras, cans, and PET and rPET bottles, as alternative to glass bottles. Related to product quality and  instructions are maintained as part of Anora’s management system. Quality indicators, such as customer claims and the proportion of deviations in production, are monitored monthly. Anora has the ISO 9001 quality management system  recognised standard for quality management. It helps organisations to improve their performance, meet customer expectations and demonstrate their commitment to quality.  maintain, and continually improve a quality management system. Implementing ISO 9001 means that Anora has put  quality products and services. The FSSC 22000 v.5.1 Food Safety Management System  internationally recognised standard ISO 22000 and complemented by technical standards, such as ISO TS 22002-1 for food manufacturing and ISO TS 22002-4 for packaging manufacturing. The standards, policies and principles relevant to product quality, safety and sustainability, as well as the marketing and consumption of Anora’s products include: • Code of Conduct • Quality, Safety and Environment Policy • Marketing, internal guidelines for responsible marketing • Responsible Marketing Policy KPI 2023 2022 2021 Communication and training on anti-corruption policies 32.5% employees for whom the training was relevant completed the course Internal communications on anti-corruption policies done New employees have completed an on-line course. Internal communications have been done. Number of cases of misconduct reported through the whistleblowing channel 4 0 0 Information includes former Altia. At former Arcus, anti-corruption issues were included in the onboarding process for new employees. Figure includes former Altia. The method for reporting grievances differed for former Arcus and the data for 2021 are thus non-conforming. No grievances related to anti-corruption or bribery incidents were reported via former Arcus’ internal whistleblowing process in 2021. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 39 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS • ISO 9001:2015 Quality Management System; covering Anora’s operations in Finland, the Tabasalu plant in Estonia, and the Gjelleråsen plant in Norway • FSSC22000 v.5.1 Food Safety Management standard; covering Anora’s Rajamäki plant in Finland • ISO /IEC 17025 Testing and calibration laboratories; covering the laboratory at Gjelleråsen • Fairtrade certification for Anora Finland and Anora Sweden. Fair for Life certification for Anora Finland and Anora Sweden • The Koskenkorva Distillery, the Rajamäki alcoholic beverage plant, trading products at the Tabasalu Beverage plant (deliveries and storage) and the distillery in Sundsvall, production plant Gjelleråsen and Globus Wine plant in Køge are certified for organic production.  stakeholders, and stakeholders who need to help implement it. The policy can be found at anora.com/en/sustainability/policies b) Product quality, safety and sustainability related risks and their management The principal risks related to the quality and safety of Anora’s products relate to the failure in ensuring the quality  the supply chain. These can include a failure to comply with hygiene requirements, a lack of consistency in the quality of products, any contamination of products, as well as defects in raw materials or packaging. Such incidents can lead to product recalls or make the company subject to legal claims. As the alcohol business is highly regulated, stricter regulations regarding the marketing and advertising of alcoholic beverages or their taxation, for example, could have an impact on the company’s operations. To manage risks of this type, Anora maintains quality and food safety in accordance with international standards and legal requirements. Anora employs modern methods to ensure the safety of production processes and to eliminate various microbiological, chemical, and physical hazards. Quality is monitored continuously during production by means of line inspections and testing, as well as the analysis of end products. Instructions and processes are maintained in view of possible recalls and situations are practiced regularly by way of phantom testing. Applicable legislation and any developments therein are reviewed regularly. c) Outcome and KPIs KPI 2023 2022 2021 Share of recycled materials in Anora’s packaging Target: recyclable materials and materials from certified sources or recycled origin used in Anora’s packaging: 100% by 2030 Glass bottles 50% Plastic bottles 22% Bag-in-Boxes 18% Glass bottles 34% Plastic bottles 21% Bag-in-Boxes 29% Glass bottles 36% Plastic bottles 16% Bag-in-Boxes 29% Share of net sales from no- and low-alcohol products Target: 5% by 2030 4% 4% No data Figures are for Anora’s own production and own brands and exclude labels and closures. Former Altia and former Arcus consolidated in 2021, Globus Wine included in 2023 figures. Scope: own products, includes wines under 10% abv, spirits under 30% abv, RTDs and non-alcoholic products. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 40 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Disclosure on climate-related risks and opportunities (TCFD) Climate change-related risks and opportunities are considered as part of Anora Group’s risk management process, but in 2022, the topic was given more focus and analysed following the recommendations and guidance of the Task Force on Climate-related Financial Disclosures  opportunities in a workshop in 2022. The same risks and opportunities remained valid for 2023. During 2023, Anora developed its processes regarding the integration of climate risk management and reporting. Anora will continue the developing process and plans to conduct TCFD-aligned scenario analyses during 2024. This disclosure follows TCFD’s four thematic areas: governance, strategy, risk management, and metrics and targets. Governance Anora’s Board of Directors approves Anora’s sustainability strategy, the 2030 Sustainability Roadmap, and  the appropriate sustainability governance within the Group, such as the ESG risk assessment, including climate- related issues. The Board is informed about and discusses sustainability and climate-related issues regularly. The Audit Committee assists the Board in overseeing the appropriate sustainability governance within the Group, including the management of sustainability work and risks. The Audit Committee and the Board consider sustainability and climate-related issues also when setting performance objectives. Anora’s long-term incentive plan includes objectives related to Anora’s ESG-ratings and Scope 1-2  the key sustainability results and ESG-ratings quarterly in business reviews. Anora has assigned sustainability and climate- related responsibilities to management-level positions. The Executive Management Team and Senior Vice Presidents (SVP) are responsible for the implementation of the sustainability roadmap; discuss targets and ensure commitment in units; approve actions and targets within the roadmap and prepare sustainability investments. The Executive Management Team also monitors climate-related issues through the risk management process. Business area leadership teams and SVPs are responsible for implementing roadmap targets, planning for investments and bringing the roadmap to the operational plans of their own business areas. The sustainability working group is a team formed during the sustainability roadmap creation process in 2022 and it includes all business areas. The group discusses areas of improvement, synergies and better collaboration and is responsible for the sub-area targets and actions. Anora’s Sustainability Director has operational oversight of the 2030 Sustainability Roadmap implementation, leads and coordinates reporting and communicating on sustainability topics and according to relevant regulation. The Sustainability Director is part of the extended Executive Management Team and reports to the CEO. The Sustainability Director introduces and presents climate- related issues to the Executive Management Team, the Audit Committee and the Board. Strategy  categories, transition risks and physical risks as per the TCFD guidance. According to the TCFD guidance, transition risks are risks related to the transition towards carbon-neutral economy. Physical risks arise from the physical impacts of climate change and can be divided into acute or chronic risks. In its risk assessment, Anora’s focus is on the climate-  for Anora’s operations and which Anora can actively mitigate (see the tables 1 & 2 for risks and opportunities). GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 41 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS TABLE 1: CLIMATE-RELATED RISKS RISK TYPE Sustainability standards Legislation and retailer / monopoly requirements on product validation are increasing with a risk of quick shifts in procurement demands. Anora needs to ensure that its production, partners and suppliers in wine and farming are managing climate issues, in line with the climate standards or certifications relevant to the markets Anora operates in. Changing weather conditions Sudden changes and unpredictable weather (frost, hailstorms, drought, forest fires etc.) are already causing risks for the harvest of Anora’s raw materials every year, especially for the wine crops. Anora has operations in different geographical locations where weather conditions also differ. Rising average temperatures In the long term, continuously rising average temperature and, for example, the consequent droughts during peak growth season can affect both the quality and yield of barley and potato in the Nordics. CATEGORY Transition risk – market & reputation Physical risk – acute Physical risk – chronic TIME HORIZON Short / medium / long Short / medium Short / medium / long IMPACT LEVEL Moderate Moderate Moderate RESPONSE EXAMPLES Encouraging partners and suppliers to manage climate-related risks, validating performance, and adopting harmonised climate / environmental certification relevant to Anora´s markets. Supporting partners to prepare for the requirements of CSRD and CSDDD in the EU. Preparing for changes affecting the material supply and working proactively to predict changes in global wine and grain supply chains. Securing new origins and grape varieties to ultimately ensure great wines and spirits in the long run. Optimising barley varieties for better weather robustness. TABLE 2: CLIMATE-RELATED OPPORTUNITIES OPPORTUNITY TYPE Near market filling A global shift to a low-carbon economy may impact competitiveness and prices as the demand for fossil-free energy sources increases. Near market filling enables both optimising logistics emissions and using locally preferred sustainable packaging options. Logistics / transportations depends on fossil-fuels but offers many fossil-free alternatives. Ethanol production in Koskenkorva Transitioning towards CO 2 -free production in Koskenkorva is an opportunity as it allows more control and access to a full sustainable value chain, including the distillation operations and local grain sourcing in ethanol production. Regenerative farming A big part of Anora’s production and emissions come from the raw material purchases of barley and wine. Regenerative farming provides opportunities in mitigating emissions, conserving biodiversity, and securing a better supply. CATEGORY Transition – resource efficiency / market Transition – resource efficiency Transition – products & services TIME HORIZON Short / medium Medium Medium / long IMPACT LEVEL Moderate Moderate Moderate RESPONSE EXAMPLES Not shipping wine in glass bottles from the country of origin, but shipping bulk liquids to be filled close to the end markets and using tailored sustainable packaging options to meet customer requirements. Using low-emission transport forms for the bulk-wine, such as biodiesel trains. Investing in energy saving and circulation technologies, using fossil-free energy sources for electricity and steam, securing traceability of the grain, and innovating new sustainable distillates, e.g., from regenerative barley. Providing training and offering contract incentives for farmers. Cooperating with the BSAG (Baltic Sea Action Group) and local farming consultants and authorities. In addition to the risks described in the tables, Anora has   as a failure to leverage opportunities related to the green transition, a failure to anticipate regulatory changes regarding packaging, energy or sustainability reporting, unsuccessful investments related to the decarbonisation of operations, increased cost of raw materials due to their decreased supply and lower quality, and reputational damage due to unsustainable or unethical practices in the supply chain.  the insecurity and volatility of the supply of green energy,  the supply chain and harvest of raw materials, and changes  physical risks related to climate change is the risk related to the water management and water availability especially in the industries and communities in Anora’s wine supply chain. Water related risks in our own operations are discussed in general risk management process and climate change does not have acute material risk to the water availability and quality in Nordic countries. See more on Anora’s water management.  climate-friendly logistics options in e.g., biofuel and electric trucks, solar panels, extensions of growing areas, Koskenkorva Climate Action vodka, climate-smart packaging, and competitive advantage from sustainability. Anora’s vision is to be the forerunner in sustainability which is why climate-related actions are one of the key areas in its strategy. Anora is, for example, pursuing opportunities through acquisitions, such as that of Globus Wine in the area  consumer preferences can have a strategic meaning and GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 42 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS  farming to produce more sustainable products is one key focus areas in Anora’s strategy. Risk management Climate-related risk assessment is one part of Anora’s overall risk management process. Anora started to evaluate climate- related risks and opportunities more thoroughly in 2022 by conducting an interactive TCFD workshop to introduce the topic to key personnel and identify climate-related risks and opportunities. Anora additionally considers climate- related issues in its carbon neutrality investment plan for the Koskenkorva distillery. Better integration of the climate- related risk assessment to Anora’s overall risk management continued in 2023. The climate-related risks will be assessed regularly, ownership will be updated, prioritizations will be made, and mitigation actions discussed. As part of the climate risk and opportunity assessment,    risks as follows: short time horizon 1–2 years, medium time horizon 3–5 years and long-term time horizon over 5 years. The time horizons are aligned with Anora’s overall  related risks are potentially arising in several time horizons. The size and scope of the risks is assessed also in overall risk management process.  TCFD’s recommendations, and divides climate-related risks into two main categories: transition – and physical risks.   and terminology are further guided by the TCFD recommendations. The terminology related to the impact and time horizon is aligned with the overall terminology used in Anora’s risk management process. With climate- related risks, the impact is described verbally, not yet on e.g., monetary terms.  assessment processes further and to integrate climate- related risks into general risk management system. During  the separately conducted climate risk assessment in 2022 were integrated into overall risk management system and updated and assessed with the same criteria regarding scope and likelihood. Metrics and targets Anora’s climate-related metrics and targets are based on Anora’s sustainability roadmap for 2030. Anora measures for example its water, energy, and waste management, as well as its greenhouse gas emissions. During 2023, Anora updated the calculation of the baseline 2021 emissions in its entire value chain (Scopes 1–3), including the addition of acquired Globus Wine on the baseline and calculating the emissions and targets for forest, land, and agriculture (FLAG) sector as well, and submitted its targets for validation to the SBTi. Anora has incorporated sustainability in its long-term incentive plans (Performance Share Plan, PSP) and a bridge plan, measured by Anora’s fossil Scope 1-2 emissions and the Sustainalytics ESG-rating. Anora’s key forward-looking climate-related targets are that its own production will be carbon neutral by 2030 and the Koskenkorva distillery already during 2026, without compensation. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 43 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Disclosure according to the EU Taxonomy Regulation In order to reach EU’s ambitious climate and environmental targets, the European Parliament and Council introduced a framework, the EU Taxonomy, which became the Taxonomy Regulation (EU) 2020/852 in 2020.  environmentally sustainable economic activities and thus, direct capital into the green transition. In addition to the two previous climate-related objectives, the Taxonomy was expanded to four remaining environmental objectives in 2023 with the Environmental Delegated Act and with amendments to the Climate Delegated Act. In 2022, Anora chose to voluntarily report its Taxonomy- eligibility against these four remaining environmental objectives based on reports containing the proposed activities and screening criteria to give a fuller picture of  Environmental Delegated Act did not, however, include the economic activities that would have corresponded to Anora’s industry and activities. Therefore, Anora will continue to report according to the published Delegated Acts and has omitted any voluntary reporting for 2023. For the reporting year 2023, Anora undertook an assessment of the Taxonomy-eligibility and alignment of its entire business, and the results are presented as part of this disclosure. Accounting principles  in accordance with IFRS as adopted by the European Union and all required key performance indicators under   statements 2023. The taxonomy-eligible parts (numerators) of the key performance indicators are based on group  Act. Assessment of compliance with the Taxonomy Regulation (EU) 2020/852 Anora is a leading Nordic player in the production, import, sale and distribution of wine and spirits. Anora’s business operations also include industrial operations in distillation, bottling and logistics services as well as the production of technical ethanol products, neutral potable ethanol, feed components and barley starch. As part of its Taxonomy- assessment, Anora evaluated all its business segments and activities against the activity descriptions and technical criteria of relevant economic activities listed in the EU Taxonomy Climate Delegated Act, its amendment, as well as the EU Environmental Delegated Act. Based on this assessment, the following taxonomy-eligible  • 5.4 Renewal of waste water collection and treatment - Anora operates waste water treatment systems in its plants. The upgrades and renewals to these systems improve waste water quality and help minimize the environmental impact. Currently, the energy efficiency improvements of these improvements cannot be quantified, resulting in non-alignment with the Taxonomy. • 4.24 Production of heating and cooling from bioenergy - Approximately 40 % of the sold heat in Koskenkorva is generated using agricultural biomass (mainly barley and oats husks) as its input. Currently there is lacking information of the agricultural biodiversity conditions of the biomass origins as required by the technical criteria of the taxonomy. The lack of information leads to non-alignment with the taxonomy. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 44 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS • 6.6. Freight transport services by road - Anora has evaluated the percentage share of its outbound logistics services carried out with a vehicle fleet that meets the EURO VI emissions standard (approximately 89% of total utilised fleet) on a cost- basis. The vehicles do not yet fulfil the criteria for ‘zero-emission heavy-duty vehicles’ or ‘low-emission heavy-duty vehicles’ as required by the criteria for taxonomy-alignment. • 7.3. Installation, maintenance and repair of energy efficiency equipment - Many individual installations of HVAC equipment, energy efficient lighting systems and additions to insulation to existing envelope components of buildings are recognized as taxonomy-eligible expenditure. Information regarding the individual components in accordance with Regulation (EU) 2017/1369, a formal climate risk assessments and assessment of use of chemicals in the installed equipment as required in the Climate Delegated Act is currently missing thus leading to non-alignment with the taxonomy. • 7.4. Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) - Expenditure targeted to Electric car power supply construction at Tabasalu plant is considered Taxonomy-eligible. As a formal climate risk assessment for the equipment is missing, the expenditure is not yet considered Taxonomy-aligned. Companies are required to describe how double counting  allocated to the activities assessed to be Taxonomy-eligible. The activities listed above correspond well with income and   allocated based on the assumptions above. In terms of Taxonomy-eligible capital expenditure,    and air-conditioning equipment. These investments were deemed Taxonomy-eligible on the basis of purchased output from other companies’ Taxonomy-eligible activities, notably the activities 7.3 Installation, maintenance and  maintenance, and repair of charging stations for electric vehicles in buildings. During the reporting year, Anora   since these investments are connected to a manufacturing activity that is not considered Taxonomy-eligible itself, Anora has applied the precautionary principle and excluded them from its Taxonomy reporting. Compliance with Minimum Safeguards The Taxonomy Regulation refers to Minimum Safeguards as the procedures implemented by an undertaking to ensure the alignment with a) the OECD Guidelines for Multinational Enterprises, b) the UN Guiding Principles on Business and Human Rights c) the principles and rights  the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and d) the International Bill of Human Rights. The Platform on Sustainable Finance, which is the working group responsible for preparing the technical details and criteria under the Taxonomy Regulation, published in October 2022 the Final Report on Minimum Safeguards, which stipulates the suggested current compliance criteria. In practice, the undertaking needs to demonstrate that its own operations, the operations  covered by adequate procedures to avoid adverse impacts and mitigate risks connected to a) human rights and working conditions (as stipulated by the UN General Principles and OECD, b) corruption and bribery, c) ensuring fair competition and d) taxation matters. Anora had no court convictions or serious infringements regarding the topics above during 2023. Anora’s existing governance practices and policies are designed to avoid  kinds of risks, included social matters. Anora is, for example, a member of the amfori BSCI which conducts supply chain oversight in a number of countries regarding social adverse impacts. During 2023, human rights were one of Anora’s key sustainability priorities, and Anora conducted an extensive human rights assessment on its operations. Based on the assessment, Anora also started unifying its sustainable procurement practices and building a shared human rights due diligence approach and thus, working towards compliance to the Minimum Safeguards. Nevertheless, the few Taxonomy-eligible activities that Anora has  do not meet the substantial contribution criteria for those activities. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 45 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS PROPORTION OF TURNOVER FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY-ALIGNED ECONOMIC ACTIVITIES – DISCLOSURE COVERING YEAR 2023 Financial year 2023 Year Substantial contribution criteria DNSH criteria Economic Activities (1) Code (2) Turnover (3) Proportion of turnover, year 2023 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) turnover, year 2022 (18) Category enabling activity (19) Category transitional activity (20) EUR million % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T TAXONOMY-ELIGIBLE ACTIVIES Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% 0% N/A Of which enabling Of which transitional Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Production of heating and cooling from bionenergy CCM 4.24 0.8 0.1% 0.1% Freight transport services by road CCM 6.6 12.6 1.7% 1.2% Turnover of Taxonomy-non-aligned activities 13.4 1.8% 1.3% Turnover of Taxonomy-eligible activities (A.1+A.2) 13.4 1.8% 1.3% N/A TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 713.1 98.2% 98.7% TOTAL 726.5 100 % 100 % GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 46 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS PROPORTION OF CAPEX FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY-ALIGNED ECONOMIC ACTIVITIES – DISCLOSURE COVERING YEAR 2023 Financial year 2023 Year Substantial contribution criteria DNSH criteria Economic Activities (1) Code (2) CapEx (3) Proportion of CapEx, year 2023 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) CapEx, year 2022 (18) Category enabling activity (19) Category transitional activity (20) EUR million % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T TAXONOMY-ELIGIBLE ACTIVIES Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% Of which enabling Of which transitional Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Renewal of waste water collection and treatment CCM 5.4 0.03 0.1% 0.0% Installation, maintenance and repair of energy efficiency equipment CCM 7.3 0.22 1.0% 0.6% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 0.0 0.0% 0.0% CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.25 1.1% 0.6% CapEx of Taxonomy-eligible activities (A.1+A.2) 0.25 1.1% 0.6% TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 21.75 98.9% 99.4% TOTAL 22.0 100% 100.0% GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 47 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS PROPORTION OF OPEX FROM PRODUCTS OR SERVICES ASSOCIATED WITH TAXONOMY-ALIGNED ECONOMIC ACTIVITIES – DISCLOSURE COVERING YEAR 2023 Financial year 2023 Year Substantial contribution criteria DNSH criteria Economic Activities (1) Code (2) OpEx (3) Proportion of OpEx, year 2023 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Proportion of Taxonomy- aligned (A.1.) or -eligible (A.2.) OpEx, year 2022 (18) Category enabling activity (19) Category transitional activity (20) EUR million % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T TAXONOMY-ELIGIBLE ACTIVIES Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% Of which enabling Of which transitional Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 0% 0% OpEx of Taxonomy-eligible activities (A.1+A.2) 0.0 0% 0% TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 17.6 100% 100% TOTAL 17.6 100% 100% GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 48 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Contextual information about turnover KPI  Delegated Act, based on the same accounting that applies for revenue under the IFRS covering amounts derived from the sale of products and services as agreed in customer contracts. Anora’s Taxonomy-eligible turnover (the numerator of the turnover KPI) was determined by estimating the share of turnover from activities assessed to be Taxonomy-eligible as described above. The share of Anora’s Taxonomy-eligible turnover is very low, because the majority of Anora’s business does not match the economic activities with substantial contribution potential to climate change targets under the Taxonomy regulation. For more information on Anora’s principles for  Contextual information about CapEx KPI  the Disclosures Delegated Act, additions to tangible and intangible assets before depreciation, impairment, amortisation and excluding fair value changes during   of the turnover KPI), see section Financial Statements note 2.1 and 2.2. The Taxonomy-eligibility of investments was determined by assessing if the investment was targeted towards a taxonomy-eligible activity or based on the purchase of output from other companies’ Taxonomy-eligible activities, as described above. The Taxonomy-eligible CapEx investments correspond to additions to tangible assets in  installation of charging stations for electric vehicles. Contextual information about OpEx KPI No operating expenditure corresponding to eligible activities under the Climate Delegated Act was recognized. Governance Anora complies with the Finnish Corporate Governance Code. The detailed information about Anora’s Corporate Governance Principles, as approved by Anora’s Board of Directors, is available on Anora’s website: anora.com/ en/investors/governance. Corporate Governance and Remuneration Statements for 2023 will be published during week 12 in 2024.. Corporate Governance and Remuneration Statements for 2023 will be published during week 12 in 2024. Annual General Meeting 2023 Anora Group Plc’s Annual General Meeting (AGM) was held  statements and discharged the members of the Board of  2022. The AGM adopted the Remuneration Report of the governing bodies. Auditor The AGM re-elected PricewaterhouseCoopers Oy as the company’s auditor for a term that ends at the close of the next AGM. PricewaterhouseCoopers Oy had informed the company that Authorized Public Accountant Markku Katajisto will be the auditor in charge. Dividend distribution The AGM approved the proposal by the Board of Directors to   instalment of EUR 0.11 per share was paid on 28 April 2023 and the second instalment of EUR 0.11 per share was paid on 25 October 2023. Board of Directors In accordance with the proposal by the Shareholders’ Nomination Board, the AGM elected seven members to the Board of Directors for a term expiring at the end of the next Annual General Meeting. In addition to the Board members elected by the AGM, Anora’s employees have, in accordance with the agreement on employee participation between Anora and the special negotiating body of the employees, elected two members and their deputies to the Board of Directors for a term expiring at the end of the 2024 AGM. As at the end of 2023, the members of the Board of Directors were Kirsten Ægidius, Michael Holm Johansen, (Chairperson), Christer Kjos, Annareetta Lumme-Timonen, Jyrki Mäki-Kala (Vice Chairperson), Florence Rollet, Torsten Steenholt, Arne Larsen (elected employee member), and Jussi Mikkola (elected employee member). GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 49 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Board Committees as at the end of 2023 In the Board’s organisational meeting after the AGM, the following members were appointed to the Board’s committees: • Audit Committee: Jyrki Mäki-Kala (Chairperson), Christer Kjos, Annareetta Lumme-Timonen and Torsten Steenholt. • Human Resources Committee: Michael Holm Johansen (Chairperson), Kirsten Ægidius and Florence Rollet. Board remuneration The remuneration of the Board members elected by the AGM consists of annual fees as follows: • EUR 65,000, Chairperson • EUR 46,500, Vice Chairperson • EUR 31,000, member In addition to these fees, the following annual fees are paid to Board members elected by the AGM who are appointed by the Board as members of the Board’s permanent and temporary Committees: Audit Committee: • EUR 10,000, Chairperson • EUR 5,000, member Human Resources Committee: • EUR 8,000, Chairperson • EUR 4,000, member In addition to these fees, the Board members elected by the AGM receive a meeting fee for the Board of Directors and Board Committee meetings of EUR 600 per meeting and EUR 1,200 per meeting for members travelling to a meeting outside her/his country of residence. Travel expenses are reimbursed in accordance with the company’s travel policy. The AGM decided that the Board members elected by the AGM may choose to receive his/her annual fees in cash or shares in the company, or a combination thereof. The Shareholders’ Nomination Board has recommended that the Board members elected by the AGM accumulate a shareholding in Anora that exceeds his/her one-time annual remuneration. Authorisation of the Board of Directors to resolve on the repurchase of the company’s own shares The AGM authorised the Board of Directors to resolve on the repurchase of up to 6,755,362 shares in the company in aggregate, which corresponds to approximately 10.0 percent of all the company’s shares. The shares may be repurchased for the purpose of improving the company’s capital  or other arrangements, for incentive arrangements and remuneration schemes or to be retained by the company as treasury shares, transferred, cancelled or for other purposes resolved by the Board of Directors. The authorisation is valid until the close of the next AGM, however, no longer than until 30 June 2024. Further information on this authorisation can be found in the stock exchange release published on 19 April 2023. Authorisation of the Board of Directors to resolve on the issuance of shares for the purposes of financing or carrying out corporate acquisitions or other arrangements The AGM also authorised the Board of Directors to resolve on the issuance of shares in one or several tranches, against or without consideration. The Board of Directors may resolve to issue either new shares or issue treasury shares held by the company. The issuance of shares may be carried out in deviation from the shareholders’ pre-emptive rights (directed issue). The number of shares to be issued based on this authorisation shall not exceed 6,755,362 shares in aggregate, which corresponds to approximately 10.0 percent of all of the company’s shares at the time of the proposal. The authorisation may be used to improve the company’s  acquisitions or other arrangements or for other purposes resolved by the Board of Directors. The authorisation is valid until the close of the next AGM, however, no longer than until 30 June 2024. Further information on this authorisation can be found in the stock exchange release published on 19 April 2023. Authorisation of the Board of Directors to resolve on the issuance of shares for remuneration purposes The AGM authorised the Board of Directors to resolve on the issuance of shares in one or several tranches, against or without consideration to be used for incentive arrangements and remuneration schemes purposes. The Board of Directors may resolve to issue either new shares or issue treasury shares held by the company. The issuance of shares may be carried out in deviation from the shareholders’ pre-emptive rights (directed issue). The number of shares to be issued based on this authorisation shall not exceed 1,351,072 shares in aggregate, which corresponds to approximately 2.0 percent of all of the company’s shares. The authorisation is valid until the close of the next AGM, however, no longer than until 30 June 2024. Further information on this authorisation can be found in the stock exchange release published on 19 April 2023. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 50 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Shareholders’ Nomination Board at the end of 2023 The members of the Shareholders Nomination Board represent Anora’s three largest shareholders. The shareholders have appointed the following members: • Stein Erik Hagen, Canica AS, Chairman of the Shareholders’ Nomination Board • Petter Söderström, Solidium Oy • Anne Lise E. Gryte, Geveran Trading Co. Limited In addition, Michael Holm Johansen and Jyrki Mäki- Kala, Chairperson and Vice Chairperson of Anora’s Board of Directors, respectively, act as expert members in the Nomination Board. The proposals of Anora’s Shareholders’ Nomination Board to the Annual General Meeting to be held on 17 April 2024, including the the remuneration to be paid to the Board members, have been submitted in a stock exchange release dated 7 December 2023. More information can be found in the said stock exchange release. Chief Executive Officer and Group Management Mr Pekka Tennilä served as the CEO of Anora Group Plc until 25 October 2023. The Board of Directors appointed Mr Jacek Pastuszka CEO of Anora Group Plc as of 25 October 2023. Members of Anora’s Executive Management Team as at 31 December 2023 were: • Jacek Pastuszka, CEO • Sigmund Toth, CFO • Janne Halttunen, SVP, Wine • Kirsi Puntila, SVP, Spirits • Hannu Tuominen, SVP, Anora Industrial • Mikkel Pilemand, SVP, Chief Growth Officer (CGO) • Kirsi Lehtola, SVP, Chief HR Officer (CHRO). Ms Johana Sundén, CHRO, and Mr Risto Gaggl, SVP Industrial, were appointed to their respective positions and members of the Executive Management Team as of 1 January 2024. Shares and shareholders Anora’s shares are listed on the Nasdaq Helsinki with the trading code “ANORA” and the ISIN code FI4000292438. All shares carry one vote and have equal voting rights. At the end of the reporting period, Anora Group Plc’s share capital amounted to EUR 61,500,000 and the number of issued shares was 67,553,624. Flagging notifications  SHARE INFORMATION 2023 2022 Number of shares issued 67,553,624 67,553,624 Share capital, EUR 61,500,000 61,500,000 Earnings per share, EUR -0.59 0.26 Dividend per share, EUR 0.22 0.22 Share performance, Nasdaq Helsinki Closing price on the last day of trading, EUR 4.36 7.36 Highest price, EUR 7.69 11.04 Lowest price, EUR 3.98 6.62 Volume 19,221,711 13,082,762 Market capitalisation, EUR million 294.5 497.2 Proposal by the Board of Directors Illustration of Anora's ownership structure 31 Dec 2023 0.3% 29.9% 23.5% 4.6% 19.4% 22.4% Canica AS Solidium Oy Geveran Trading Co. Limited Households Other institutions Rest of the world Canica AS  Solidium Oy  Geveran Trading Co. Limited  Households  Other institutions  Rest of the world  The chart provides an illustration of Anora’s ownership structure including the largest shareholders based on information provided to the company. In the Euroclear Finland data, the shareholdings of Canica AS and Geveran Trading Co. Limited are included in the nominee-registered shares. Rest of the world comprises shareholdings by directly registered foreign shareholders. 1 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 51 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Shareholder structure At the end of the period, Anora had 28,168 (28,074) registered shareholders in Euroclear Finland. The share of nominee-registered shares was 40.9% (45.6%). LARGEST SHAREHOLDERS REGISTERED IN EUROCLEAR FINLAND 31 DEC 2023 Shareholder Number of shares % of shares 1 Solidium Oy 13,097,481 19.4 2 Varma Mutual Pension Insurance Company 2,031,240 3.0 3 Ilmarinen Mutual Pension Insurance Company 1,290,000 1.9 4 WestStar Oy 1,199,705 1.8 5 Elo Mutual Pension Insurance Company 641,000 0.9 6 Veritas Pension Insurance Company Ltd. 456,170 0.7 7 Savolainen Heikki Antero 359,571 0.5 8 OP Life Assurance Company Ltd 276,376 0.4 9 Eriksson Trygve 200,000 0.3 10 Rantalainen-Yhtiöt Oy 190,000 0.3 10 biggest owners in total 19,741,543 29.2 Source for shareholder data: Euroclear Finland Management’s ownership On 31 December 2023, the members of the Board of Directors, the CEO and the members of the Executive Management Team, including their controlled corporations, owned a total of 173,743 shares corresponding to 0.26% of the total number of shares. Authorisations, option and share-based incentive programmes During 2023, Anora had no share option programmes. The Board of Directors is authorised to resolve on the repurchase of the company’s own shares and on the issuance of shares  acquisitions or other arrangements, or for remuneration purposes. The Board of Directors has not used any of these authorisations during 2023. The authorisations are described in detail under the Governance chapter. Information about the share-based incentive programme is given under the Personnel chapter. OWNERSHIP STRUCTURE BY SECTOR 31 DEC 2023 Sector Number of shares % of shares Public sector 17,569,501 26.0 Financial and insurance corporations 12,397,619 18.4 Households 15,841,587 23.5 Non-financial corporations 4,420,785 6.5 Non-profit institutions 696,624 1.0 Rest of the world 16,627,508 24.6 Total 67,553,624 100.0 Nominee-registered shares 27,629,079 40.9 DISTRIBUTION BY SIZE OF HOLDING 31 DEC 2023 Number of shares Number of shareholders % of shareholders Number of shares % of shares 1–100 9,538 33.86 540,101 0.80 101–500 11,834 42.01 3,120,582 4.62 501–1,000 3,486 12.38 2,666,944 3.95 1,001–5,000 2,810 9.98 5,888,222 8.72 5,001–10,000 293 1.04 2,102,251 3.11 10,001–50,000 163 0.58 3,227,277 4.78 50,001–100,000 18 0.06 1,444,667 2.14 100,001–500,000 17 0.06 3,487,630 5.16 500,001– 9 0.03 45,075,950 66.73 Total 28,168 100.0 67,553,624 100.0 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 52 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Risks and risk management Risk management At Anora, the purpose and objetives of risk management are to: • support the implementation of the Anora Group’s strategy, • identify risks, and methods for mitigating the probability and impacts, of physical injury, property damage, hazards and business interruption, • ensure profitability development and contribute to shareholder value; • ensure business continuity. Anora’s Risk Management Policy, which has been approved by the Board of Directors, describes the goals, principles and responsibilities for risk management at Anora Group and the related reporting principles as well as operating methods. Furthermore, the policy ensures that risk management has a collective operating model throughout Anora, and that the enterprise risk management process is closely intrgrated with other management processes (such as the strategy and planning processes). Anora’s risk management policy is based on the COSO ERM framework, the SFS-ISO 31000 standard “Risk management. Principles and instructions” and on the corporate governance code of Finnish listed companies (Corporate Governance Code). Climate-related risk  the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Strategic risks • Business environment • Technology • Regulation • Climate change • Reputation • M&A • Human rights Hazard risks • Health and safety • Property • Environment • Fires, accidents and natural catastrophes Financial risks • Liquidity •  • Interest rate, currency and credit risks • Taxation risks • Accounting and reporting • Capital structure Operational risks • Organisation, management and personnel • IT and security • Production and processes • Business disruption • Quality • Contractual and liability risks • Compliance Risk management Risk management at Anora is a systematic process, the purpose of which is to guarantee comprehensive and  monitoring, and reporting on risks for the entire group. It is an integral part of Anora Group’s planning and management process, decision-making, day-to-day management, and operations, as well as of the control and reporting procedures. The risk management policy describes the goals, principles and responsibilities of Anora’s risk management and the related reporting principles. In line with this, risks are reported in accordance with the Group’s reporting responsibilities. The management principles of the Group’s  in the Notes to the Consolidated Financial Statements, under section 4.1; Financial risk management. The risk management function is also responsible for the global insurance programs of the Group. The business areas and functions report on risks and changes in risks on a quarterly basis. The Executive Management Team supports and coordinates risk management and reports key risks and material changes therein to the Audit Committee of the Board of Directors in connection with the interim  supported by the Audit Committee, reviews the most    uncertainties, and changes therein, in the interim reports  GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 53 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Most significant risks and uncertainties For reporting and risk assessment purposes, risks are categorised into four categories: strategic risks, operational  Strategic and business risks relate to decision-making, resource allocation, business model, management systems and the capacity to respond to changes in the operating environment (long-term, 3–5 years). Strategic risk assesment comprises also the regulatory framework and ethically sustainable business practices that apply to the company’s operations and industry. Corporate Responsibility risks related to business operations are  connection with the Report by the Board of Directors. Operational risks concern the implementation of strategy and day- to-day business operations. Such risks include deviations in processes, systems and conduct (short- term, 1–2 years). Hazard risks are errors, malfunctions and accidents occurring within Anora or its operating environment, resulting in damage or loss. Financial risks pertain to changes in market prices, the short- and   following table contains a summary of key uncertainties with  Risk Description Risk management Raw material price risk The availability of domestic barley and its market price has a significant impact on the profitability of Anora’s business. Anora ensures the availability and price of barley with contract farming in co-operation with farmers and grain companies. Risks related to customers and consumer demand The customers in Anora’s market areas include Nordic retail monopolies, wholesalers who sell alcohol, restaurants, retail stores, travel retail, international wine and spirits companies and importers operating in the export markets. The wide customer base provides Anora with diverse opportunities for the long-term development of customer cooperation. Changes in consumer behaviour may, in the long term, shift the emphasis in the demand for Anora’s products between different product categories. A strong market position, efficient industrial processes, good quality and well-known brands improve Anora’s chances to manage the risk. Changes in consumption patterns and the need to adjust operations are prepared for by investing in consumer-driven product development. Product safety risks As a wine and spirits company, one major risk is ensuring the quality and safety of the raw materials and finished goods through the supply chain. Anora employs modern methods to ensure the safety of production processes and to eliminate various microbiological, chemical, and physical hazards. In ensuring product safety, Anora complies with the operating methods required by food safety management and quality certificates. Damage risks Anora has production facilities in Finland, Denmark, Norway, and Estonia. A fire or other unforeseen event may interrupt the operations of a production facility. All Anora’s production facilities have insurance policies for material damage and the interruption of operations in the Group’s insurance programme. Key production facilities are subject to a risk survey every 1–2 years. Continuity plans serve to limit possible damage due to interruptions in operations. Financial risks The key risks related to finance in Anora’s operations are currency transaction and translation risks, interest rate risks and refinancing and liquidity risks. Financial risk management aims to mitigate any impact that price fluctuations and other uncertainties in the financial markets have on operating results, the balance sheet, and cash flow and to ensure sufficient liquidity. The management principles of the Group’s most significant financial risks are described in more detail in the Notes to the Consolidated Financial Statements, under section 4.1. Financial risk management. Compliance Key compliance risks in Anora’s operations relate to the breach of laws and regulations and decisions by authorities concerning reporting, permits and licenses, marketing of alcoholic beverages, competition law and processing of personal data. Anora aims to manage compliance risks and ensure ethically sustainable business practices with guidance and regular training. Compliance risk management aims to avoid sanctions, consequences and official investigations and decisions that may damage the company’s profitability, business continuity and reputation. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 54 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Price risk associated with commodities Barley In 2023, Anora consumed approximately 174.0 (184.3) million kilos of grain to produce ethanol and starch. The availability of high-quality domestic barley was ensured until the end of 2023 through contract farming and cooperation with farmers and grain stores. The market price of barley     been hedged against with derivative instruments. Electricity A strong increase in the market price of electricity is  by following Anora’s principles for electricity procurement and by a third-party specialist. These principles determine the hedging limits within which the electricity price risk is hedged against. The hedges are executed with the OTC- derivatives of Nasdaq OMX Oslo ASA. At the end of 2023, the hedging ratio for deliveries for the next 12 months was 83.6% (78.0%), in line with the set targets. In 2023, the average hedging ratio was 86.8% (76.2%).  applied to the hedges against electricity price risk, and hedge  in 2023 as in 2022. Anora purchases its electricity straight from the Nord Pool Spot markets as a delivery tied to the spot price of the Finnish price area. As part of its electricity purchases, Anora also purchases physical electricity through bilateral  Sensitivity to market risks The table below describes the sensitivity of the Group’s  prices, foreign exchange rates and interest rates. When Anora applies hedge accounting, the sensitivity is directed at equity. When hedge accounting is not applied, the sensitivity  2023 2023 2022 2022 EUR million Income statement Equity Income statement Equity +/-10% electricity - +/-0.2 - +/-0.8 +/-10% change in EUR/NOK exchange rate +/-1.2 +/-1.3 -/+0.1 +/-0.3 +/-10% change in EUR/SEK exchange rate +/-2.9 +/-3.9 +/-6.4 +/-1.9 +/-10% change in EUR/USD exchange rate -/+1.1 -/+1.3 -/+0.2 -/+0.6 +/-10% change in EUR/AUD exchange rate -/+0.1 -/+0.1 -/+0.0 -/+0.1 +/-1%-points change in interest rates -2.1 - -1.6 -0.0 SENSITIVITY OF FINANCIAL INSTRUMENTS TO MARKET RISKS (BEFORE TAXES) IN ACCORDANCE WITH IFRS 7 The sensitivity to foreign exchange rate changes is calculated from the net currency position resulting from    An increase of one percentage point in interest rates    Short-term risks and uncertainties  to the overall economic development, impact of regulatory changes, the geopolitical environment, disruptions in supply chains, price and availability of raw materials and cyber threats. In addition, the short-term risks relate also to the integration of acquired businesses, as well as related   development and its impacts on consumption, to  regulatory changes in areas such as alcohol taxation, excise taxation and legislation on consumer behaviour.  pose several risks and may lead to a recession within the operating area and also more widely as a result of the weakening economic sentiment and consumer spending.  funding, foreign exchange rates and interest rates may be  capital markets. Unexpected and unforeseen disruptions in the supply   GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 55 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS changes in the prices of raw materials. Risks can be caused by internal or external events. The increasingly unstable geopolitical environment could   relate to an escalation of the already existing global supply chain disruptions with also potential threats to shipping routes, to the supply of grain, and to further price increases across all input costs. The risk of rising energy and fuel prices and volatility in production volumes continue. Possible problems with the availability and cost of raw materials, labour, energy and fuel may impact the operating  in the near future. Certain risks have already partly materialised. Cyber risk threat levels have also increased lately and government authorities have warned of an increasing threat and number of cyber-attacks. There have been reported cases of cyber-attacks on business enterprises and government authorities with severe impacts. Anora continuously improves its cyber security operations and technologies. It cannot be excluded that also Anora or its business partners could face cyber-attacks with potentially  operations. Events after the period Anora announced on 8 January 2024 that Anora Group’s CFO Sigmund Toth has resigned from his position. He will continue in his current position until 1 August 2024, at the latest. Sigmund remains highly committed to contribute to the company’s success during his notice period, including ensuring a smooth handover to his successor. The Board of Directors of Anora Group Plc announced on 14 February 2024 that it has approved the commencement of a new plan period within the share-based long-term incentive scheme for the management and selected key employees. Eligible for participation in PSP 2024-2026 are approximately 50 individuals, including the members of Anora Group’s Executive Management Team. If the performance targets set for PSP 2024–2026 are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 1,294,000 shares (referring to gross earning before the withholding of the applicable payroll tax). The aggregate maximum  RSP 2024–2026 is approximately 129,000 shares (referring to gross earning before the withholding of the applicable payroll tax). Anora announced on 8 March 2024 that Stein Eriksen (49), M.Sc. (Econ.), has been appointed as CFO and a member of the Executive Management Team of Anora Group from the beginning of August 2024. He will report to Jacek Pastuszka, CEO. Stein Eriksen’s latest position has been CFO of the Norwegian stock-listed company XXL ASA, the largest sports retailer in the Nordic countries. He has also acted in a combined role as the Interim CEO and CFO of XXL ASA. Prior to that, he has had a long career at the Norwegian stock-listed blue-chip company Orkla, a leading industrial investment company focused on brands and consumer-oriented companies. At Orkla, Stein’s most recent positions were CFO at Orkla Care and SVP Finance at Orkla ASA. Dividend proposal  the parent company’s distributable funds amount to EUR    The Board of Directors proposes to the Annual General Meeting to be held on 17 April 2024 that a dividend of EUR 0.22  Anora aims to maintain a stable or increasing dividend with a dividend payout ratio of 50–70% of the result for the period, as  Annual General Meeting 2024 Anora Group Plc’s Annual General Meeting 2024 is planned to be held on 17 April 2024. The notice to and instructions for the AGM are published by a stock exchange release, and on Anora’s website. Outlook for 2024 Market outlook In 2024, the volumes in our key markets are expected to be slightly lower than in 2023 due to challenging economic conditions. Guidance In 2024, Anora’s comparable EBITDA is expected to be EUR 75–85 million (2023: EUR 68.2 million). Helsinki, 19 March 2024 Anora Group Plc Board of Directors GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 56 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Key ratios of the Group 2023 2022 2021 2020 2019 Income statement Net sales EUR million 726.5 702.7 478.2 342.4 359.6 Comparable EBITDA EUR million 68.2 76.1 71.7 52.4 44.8 (% of net sales) % 9.4 10.8 15.0 15.3 12.4 EBITDA EUR million 67.5 67.9 62.9 40.3 43.1 Comparable operating result (EBIT) EUR million 34.8 42.9 51.2 35.0 26.8 (% of net sales) % 4.8 6.1 10.7 10.2 7.5 Operating result EUR million -31.3 34.7 42.4 22.9 25.1 Result before taxes EUR million -53.9 23.4 38.6 21.3 24.6 Result for the period EUR million -39.9 18.1 31.2 17.8 18.4 Items affecting comparability (EBITDA) EUR million -0.7 -8.2 -8.8 -12.1 -1.7 Items affecting comparability (EBIT) -66.1 -8.2 -8.8 -12.1 -1.7 Balance sheet Cash and cash equivalents EUR million 212.7 91.4 168.9 130.7 64.2 Total equity EUR million 408.7 481.4 507.9 156.3 151.2 Non-controlling interest EUR million 0.5 0.9 0.9 - - Borrowings EUR million 216.3 247.5 162.6 116.1 82.6 Invested capital EUR million 624.1 728.9 670.5 272.4 233.8 Profitability Return on equity (ROE) % -9.0 3.6 9.3 11.6 12.2 Return on invested capital (ROI) % -1.7 4.2 7.4 7.7 8.5 2023 2022 2021 2020 2019 Financing and financial position Net debt EUR million 137.5 300.9 126.0 -3.9 28.9 Gearing % 33.7 62.5 24.8 -2.5 19.1 Equity ratio % 35.9 37.0 41.2 34.3 37.8 Net cash flow from operating activities EUR million 135.3 -0.4 50.8 56.1 52.6 Net debt/comparable EBITDA 2.0 4.0 1.8 -0.1 0.6 Share-based key ratios Earnings / share (Basic) EUR -0.59 0.26 0.67 0.49 0.51 Earnings / share (Diluted) EUR -0.58 0.26 0.67 0.49 0.51 Equity / share EUR 6.04 7.13 7.52 4.33 4.18 Dividend per share EUR 0.22 0.22 0.45 0.75 0.42 Dividend/earnings % -37.2 83.1 67.6 152.2 82.6 Effective dividend yield % 5.0 3.0 4.1 7.5 5.1 Price/Earnings -7.4 27.8 16.3 20.3 16.1 Closing share price on the last day of trading EUR 4.36 7.36 10.86 9.98 8.18 Highest EUR 7.69 11.04 12.00 10.40 8.22 Lowest EUR 3.98 6.62 9.62 7.01 7.08 Market value of shares at the end of period EUR million 294.5 497.2 733.6 360.7 295.6 Number of shares outstanding at the end of period 67,553,624 67,553,624 67,553,624 36,140,485 36,140,485 Personnel Personnel end of period 1,219 1,251 1,055 637 632 Average number of personnel 1,273 1,159 799 650 682 Board’s dividend proposal for the financial year 2022 EUR 0.22 per share. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 57 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES (APM) TO IFRS FIGURES AND ITEMS AFFECTING COMPARABILITY (IAC) EUR million 2023 2022 Items affecting comparability Net gains or losses from business and assets disposals 12.3 0.8 Cost for closure of business operations and restructurings -7.1 -0.1 Costs related to the closed voluntary pension scheme - 0.3 Costs related to the merger of Altia and Arcus -1.3 -4.6 Inventory fair valuation -0.3 -2.0 Other major corporate projects -4.3 -2.6 Total items affecting comparability -0.7 -8.2 Comparable EBITDA Operating result -31.3 34.7 Less: Depreciation, amortisation and impairment 98.8 33.2 Total items affecting comparability 0.7 8.2 Comparable EBITDA 68.2 76.1 % of net sales 9.4 10.8 Comparable EBIT Operating result -31.3 34.7 Less: Total items affecting comparability 66.1 8.2 Comparable EBIT 34.8 42.9 % of net sales 4.8 6.1 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 58 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS THE DEFINITIONS AND REASONS FOR THE USE OF FINANCIAL KEY INDICATORS Key figure Definition Reason for the use Gross profit Total net sales + total operating income – material and services Gross profit is the indicator to measure the performance Gross margin, % Gross profit / Total net sales Operating margin, % Operating result / Net sales Operating result shows result generated by the operating activities. EBITDA EBITDA margin, % Operating result before depreciation and amortization EBITDA / Net sales EBITDA is the indicator to measure the performance of the Group. Comparable operating result Comparable operating margin, % Comparable EBITDA Comparable EBITDA margin, % Items affecting comparability Operating result excluding items affecting comparability Comparable operating result / Net sales EBITDA excluding items affecting comparability Comparable EBITDA / Net sales Material items outside normal business, such as net gains or losses from business and assets disposals, impairment losses, cost for closure of business operations and restructurings, major corporate projects including direct transaction costs related to business acquisitions and the merger, merger related integration costs, expenses arising from the fair valuation of inventories in connection with merger, voluntary pension plan change, and costs related to other corporate development. Comparable EBITDA, comparable EBITDA margin, comparable operating result and comparable operating margin are presented in addition to EBITDA and operating result to reflect the underlying business performance and to enhance comparability from period to period. Anora believes that these comparable performance measures provide meaningful supplemental information by excluding items outside normal business, which reduce comparability between the periods. Comparable EBITDA is an internal measure to assess performance of Anora and key performance measure at segment level together with net sales. Comparable EBITDA is commonly used as a base for valuation purposes outside the Company and therefore important measure to report regularly. Invested capital Total equity + Borrowings Base for ROI measure. Return on equity (ROE), % Result for the period / Total equity (average of reporting period and comparison period) This measure can be used to evaluate how efficiently Anora has been able to generate results in relation to the equity of the Company. Return on invested capital (ROI), % (Result for the period + Interest expenses) / (Total equity + Non- current and current borrowings) (average of reporting period and comparison period) This measure is used to evaluate how efficiently Anora has been able to generate net results in relation to the total investments made to the Company. Key figure Definition Reason for the use Borrowings Net debt Non-current borrowings + Current borrowings Borrowings + Non-current and current lease liabilities - Cash and cash equivalents Net debt is an indicator to measure the total external debt financing of the Group. Gearing, % Net debt / Total equity Gearing ratio helps to show financial risk level and it is a useful measure for management to monitor the level of Group’s indebtedness. Important measure for the loan portfolio. Equity ratio, % Total equity / (Total assets -Advances received) Equity/assets ratio helps to show financial risk level and it is a useful measure for management to monitor the level of Group’s capital used in the operations. Net debt / Comparable EBITDA Net debt / Comparable EBITDA Earnings / share Result for the period attributable to shareholders of the parent company/Share-issue adjusted number of shares during the period Equity/share Equity attributable to shareholders of the parent company /Share- issue adjusted number of shares at the end of period Dividend/share Dividend distribution for period/ Number of shares (basic) at the end of period Dividend / earnings % Dividend/share / Earnings/ share Effective dividend yield % Dividend/share / Price of share at the end of the accounting period Price / earnings Price of share at the end of accounting period / Earnings/share Market value of outstanding shares The number of shares at the end of accounting period x the price of the share at the end of accounting period. GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW SUSTAINABILITY Annual Report 2023 59 REPORT BY THE BOARD OF DIRECTORS GOVERNANCE FINANCIAL STATEMENTS Financial Statements GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Contents to the financial statements SYMBOLS Accounting policies Critical estimates and management judgements CONSOLIDATED FINANCIAL STATEMENTS 128 Consolidated income statement 128 Consolidated statement of comprehensive income 128 Consolidated balance sheet 129 Consolidated statement of cash flows 130 Consolidated statement of changes in equity 131 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 132 General information 132 1 Operating result 134 1.1 Segment information 135 1.2 Revenues from operations 137 1.3 Other operating income 139 1.4 Materials and services 139 1.5 Employee benefit expenses 140 1.6 Other operating expenses 140 1.7 Research and development expenditures 140 2 Operative assets and liabilities 141 2.1 Goodwill and other intangible assets 142 2.2 Property, plant and equipment 145 2.3 Right of use assets 148 2.4 Inventories 149 2.5 Trade and other receivables 150 2.6 Employee benefit obligations 150 2.7 Trade and other payables 151 2.8 Provisions 151 3 Financial items and capital structure 152 3.1 Finance income and expenses 153 3.2 Financial assets and liabilities 153 3.2.1 Financial assets 153 3.2.2 Financial liabilities 154 3.2.3 Classification and fair values of financial assets and liabilities 157 3.3 Derivative instruments and hedge accounting 159 3.4 Equity 161 4 Financial and capital risk 163 4.1 Financial risk management 164 4.2 Capital risk management 169 5 Consolidation 170 5.1 General consolidation principles 171 5.2 Changes in group structure 172 5.3 Subsidiaries 174 5.4 Associated companies and joint arrangements 176 6 Other notes 179 6.1 Income tax expense 180 6.2 Collaterals, commitments and contingent assets and liabilities 184 6.3 Related party transactions 184 6.4 Share-based payments 186 6.5 Events after the reporting period 188 PARENT COMPANY FINANCIAL STATEMENTS 189 Anora group plc income statement (FAS) 189 Anora group plc balance sheet (FAS) 190 Anora group plc statement of cash flows (FAS) 192 Notes to Anora Group Plc financial statements 193 BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFITS 202 THE AUDITORS’ NOTE 202 AUDITOR’S REPORT 203 INDEPENDENT AUDITOR’S REASONABLE ASSURANCE REPORT ON ANORA GROUP OYJ’S ESEF FINANCIAL STATEMENTS 209 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 127 GOVERNANCE FINANCIAL STATEMENTSBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY CONSOLIDATED INCOME STATEMENT EUR million Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022 NET SALES 1.2 726.5 702.7 Other operating income 1.3 20.3 10.9 Materials and services 1.4 -441.4 -414.3 Employee benefit expenses 1.5 -103.8 -93.8 Other operating expenses 1.6 -134.1 -137.6 Depreciation, amortisation and impairment 2.1–2.3 -98.8 -33.2 OPERATING RESULT -31.3 34.7 Finance income 3.1 24.6 5.6 Finance expenses 3.1 -47.4 -17.5 Share of profit in associates and joint ventures and income from interests in joint operations 5.4 0.2 0.6 RESULT BEFORE TAXES -53.9 23.4 Income tax expense 6.1 13.9 -5.3 RESULT FOR THE PERIOD -39.9 18.1 Result for the period attributable to: Owners of the parent -39.9 17.9 Non-controlling interests 0.0 0.2 Earnings per share for the result attributable to owners of the parent, EUR Basic -0.59 0.26 Diluted -0.58 0.26 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME EUR million Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022 Result for the period -39.9 18.1 OTHER COMPREHENSIVE INCOME/(LOSS) Items that will not be reclassified to profit or loss Remeasurements of post-employment benefit obligations -0.1 0.1 Related income tax 6.1 0.0 -0.0 Total -0.1 0.1 Items that may be reclassified to profit or loss Cash flow hedges -6.7 3.1 Translation differences 3.4 -12.8 -16.9 Income tax related to these items 6.1 1.0 -0.7 Total -18.5 -14.5 Other comprehensive income for the period, net of tax -18.6 -14.4 TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD -58.5 3.7 Total comprehensive income attributable to: Owners of the parent -58.4 3.5 Non-controlling interests -0.1 0.2 The notes are an integral part of the consolidated financial statements. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 128Annual Report 2023 FINANCIAL STATEMENTS Consolidated financial statements CONSOLIDATED BALANCE SHEET EUR million Note 31 Dec 2023 31 Dec 2022 ASSETS Non-current assets Goodwill 2.1 304.3 310.5 Other intangible assets 2.1 206.3 226.1 Property, plant and equipment 2.2 62.7 76.7 Right-of-use assets 2.3 67.9 136.8 Investments in associates and joint ventures and interests in joint operations 5.4 12.3 20.7 Financial assets at fair value through other comprehensive income 3.2.1 0.7 0.7 Other receivables 3.2.1 0.0 0.0 Deferred tax assets 6.1 0.0 0.6 Total non-current assets 654.1 772.1 Current assets Inventories 2.4 144.2 186.2 Trade and other receivables 2.5 110.1 241.9 Derivatives receivables 0.8 5.8 Current tax assets 6.1 3.9 Cash and cash equivalents 212.7 91.4 Assets held for sale 5.4 7.6 - Total current assets 481.6 529.2 TOTAL ASSETS 1,135.7 1,301.3 EUR million Note 31 Dec 2023 31 Dec 2022 EQUITY AND LIABILITIES Equity attributable to owners of the parent 3.4 Share capital 61.5 61.5 Invested unrestricted equity fund 336.8 336.8 Legal reserve 0.0 0.5 Hedge reserve -1.5 4.2 Translation differences -44.0 -33.0 Retained earnings 54.5 110.7 Equity attributable to owners of the parent 407.3 480.5 Non-controlling interests 0.5 0.9 Total equity 407.8 481.4 Non-current liabilities Deferred tax liabilities 6.1 36.5 57.3 Borrowings 3.2.2 214.8 216.0 Non-current liabilities at fair value through profit or loss 3.2.2 0.1 0.6 Lease liabilities 3.2.2 120.7 132.4 Other liabilities 0.0 0.0 Employee benefit obligations 2.6 2.4 2.7 Total non-current liabilities 374.5 409.1 Current liabilities Borrowings 3.2.2 1.5 31.5 Current liabilities at fair value through profit or loss 3.2.2 0.6 - Lease liabilities 3.2.2 13.3 12.4 Provisions 2.8. 3.9 - Trade and other payables 2.7 329.6 364.4 Derivatives liabilities 2.2 0.2 Current tax liabilities 2.2 2.3 Total current liabilities 353.4 410.9 Total liabilities 727.9 820.0 TOTAL EQUITY AND LIABILITIES 1,135.7 1,301.3 The notes are an integral part of the consolidated financial statements. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 129Annual Report 2023 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS EUR million Note 1 Jan-31 Dec 2023 1 Jan-31 Dec 2022 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes -53.9 23.4 Adjustments Depreciation, amortisation and impairment 2.1-2.3 98.8 33.2 Share of profit in associates and joint ventures and income from investments in joint operations 5.4 -0.2 -0.6 Net gain on sale of non-current assets 1.3, 1.6 -12.2 -0.9 Finance income and costs 3.1 22.8 11.9 Other adjustments 0.2 -0.1 Adjustments total 109.3 43.5 Change in working capital Change in inventories, increase (-) / decrease (+) 8.3 -29.2 Change in trade and other receivables, increase (-) / decrease (+) 119.8 0.0 Change in trade and other payables, increase (+) / decrease (-) -18.9 -15.6 Change in working capital 109.2 -44.8 Interest paid 3.1 -28.2 -11.8 Interest received 3.1 12.0 2.7 Other finance income and expenses paid 3.1 -8.0 -2.6 Income taxes paid -5.2 -10.7 Financial items and taxes -29.4 -22.4 NET CASH FLOW FROM OPERATING ACTIVITIES 135.3 -0.4 EUR million Note 1 Jan-31 Dec 2023 1 Jan-31 Dec 2022 CASH FLOW FROM INVESTING ACTIVITIES Payments for property, plant and equipment and intangible assets 2.1-2.2 -12.6 -10.7 Proceeds from sale of property, plant and equipment and intangible assets 1.3 0.9 1.2 Proceeds from financial assets at fair value through other comprehensive income 0.0 - Proceeds received from disposals of subsidiaries and business operations (net of cash) 52.3 - Acquisitions of subsidiaries and business operations -0.1 -85.9 Interest received from investments in joint operations 5.4 0.9 0.9 Dividends received 3.1 0.2 0.1 NET CASH FLOW FROM INVESTING ACTIVITIES 41.6 -94.3 CASH FLOW FROM FINANCING ACTIVITIES Changes in commercial paper program -30.0 10.0 Proceeds from borrowings - 293.5 Repayment of borrowings 3.2.2 -1.5 -234.9 Repayment of lease liabilities 3.2.2 -11.1 -12.0 Dividends paid and other distributions of profits 3.4 -15.1 -30.4 NET CASH FLOW FROM FINANCING ACTIVITIES -57.7 26.2 CHANGE IN CASH AND CASH EQUIVALENTS 119.2 -68.5 Cash and cash equivalents at the beginning of the period 91.4 168.9 Translation differences on cash and cash equivalents 2.1 -9.0 Change in cash and cash equivalents 119.2 -68.5 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 3.2.3 212.7 91.4 The notes are an integral part of the consolidated financial statements. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 130Annual Report 2023 FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Invested Equity attributable unrestricted Translation Retained to owners of the Non-controlling EUR million Note Share capital equity fund Legal reserve Hedge reserve differences earnings parent company interests Total equity Equity at 1 January 2022 61.5 336.8 0.4 1.7 -15.0 121.6 507.0 0.9 507.9 Total comprehensive income Result for the period - - - - - 17.9 17.9 0.2 18.1 Other comprehensive income (net of tax) Cash flow hedges - - - 2.4 - - 2.4 - 2.4 Translation differences 3.4 - - - - -18.0 1.1 -17.0 0.0 -16.9 Remeasurements of post-employment benefit obligations - - - - - 0.1 0.1 - 0.1 Total comprehensive income for the period - - - 2.4 -18.0 19.0 3.5 0.2 3.7 Transactions with owners Dividend distribution - - - - - -30.5 -30.5 -0.2 -30.7 Share based payment - - - - - 0.6 0.6 - 0.6 Total transactions with owners - - - - - -29.9 -29.9 -0.2 -30.2 EQUITY AT 31 DECEMBER 2022 61.5 336.8 0.5 4.2 -33.0 110.7 480.5 0.9 481.4 Equity at 1 January 2023 61.5 336.8 0.5 4.2 -33.0 110.7 480.5 0.9 481.4 Total comprehensive income Result for the period - - - - - -39.9 -39.9 0.0 -39.9 Other comprehensive income (net of tax) Cash flow hedges - - - -5.7 - - -5.7 -0.0 -5.7 Translation differences 3.4. - - - - -11.0 -1.7 -12.7 -0.1 -12.8 Remeasurements of post-employment benefit obligations - - - - - -0.1 -0.1 - -0.1 Total comprehensive income for the period - - - -5.7 -11.0 -41.8 -58.4 -0.1 -58.5 Transactions with owners Dividend distribution - - - - - -14.9 -14.9 -0.2 -15.1 Share-based payments - - - - - 0.0 0.0 - 0.0 Total transactions with owners - - - - - -14.8 -14.8 -0.2 -15.1 Transfer to reserve - - -0.5 - - 0.5 0.0 - 0.0 EQUITY AT 31 DECEMBER 2023 61.5 336.8 0.0 -1.5 -44.0 54.4 407.3 0.5 407.8 The notes are an integral part of the consolidated financial statements. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 131Annual Report 2023 FINANCIAL STATEMENTS Notes to the consolidated financial statements GENERAL INFORMATION Information on Anora Anora Group Plc (‘company’, ‘parent company’), a public limited liability company, and its subsidiaries (together ‘Anora Group’, ‘Anora’ or ‘Group’) is a leading wine and spirits brand house in the Nordic region . Anora has a broad portfolio of iconic brands, including Koskenkorva, Linie, Skagerrak, Chill Out, Ruby Zin, Wongraven, O.P. Anderson and Falling Feather. Key brands are exported to over 30 markets globally. Together with partners Anora brings the world of drinks to the Nordics. Anora has a strong partner portfolio which include several well-known wine producers from all over the world, as well as spirits producers with well-known spirits brands, like Jack Daniels, Fireball, Fernet Branca, Jose Cuervo, Larsen and Underberg. Anora’s business operations also include world-class industrial operations in distillation, bottling and logistics services as well as the production of technical ethanol products, neutral potable ethanol, feed components and barley starch. Anora’s customers include alcohol retail monopolies, alcoholic beverage wholesale outlets, restaurants, grocery stores, travel trade, importers in the export markets and industrial customers. Anora Group Plc, the parent company of Anora Group, is domiciled in Helsinki, Finland. Anora Group Plc is a Finnish publicly listed company. Anora’s shares are listed in Nasdaq Helsinki. The registered address of the Company is Kaapeliaukio 1, FI-00180 Helsinki, Finland. Copies of the consolidated financial statements are available online at www.anora.com or at the Group’s headquarters at Kaapeliaukio 1, FI-00180 Helsinki, Finland. Anora Group Plc’s Board of Directors has approved these financial statements for publication in its meeting on 19 March 2024. According to the Finnish Limited Liability Companies Act, shareholders have the right to approve or reject the financial statements in the Annual General Meeting held after the publication of the financial statements. The Annual General Meeting also has the right to make a decision to amend the financial statements. Basis of preparation The consolidated financial statements for the year ended 31 December 2023 are prepared in accordance with IFRS Accounting Standards complying with the SIC and IFRIC interpretations in force and approved by EU on 31 December 2023. Notes to the consolidated financial statements also comply with the requirements of the Finnish Accounting Act and Limited Liability Companies Act. The consolidated financial statements for the year ended 31 December 2023 has been prepared on a historical cost basis, except for equity investments and derivatives. The consolidated financial statements are presented in millions of euros. The figures are rounded to the nearest million with one decimal, and therefore the sum of individual figures may deviate from the total presented. If the figure is EUR 0, it is shown as a hyphen. From 1 January 2023, IASB’s amendment on IAS 12 regarding deferred taxes related to Assets and Liabilities arising from a Single Transaction became effective. This amendment regulates the way that entities account for deferred tax on transactions that lead to initial recognition of both an asset and a liability and narrow the scope of the initial recognition exception so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. Amendment is applied to transactions that occur on or after the beginning of the earliest comparative period presented. For Anora Group, this applies to all temporary differences related to right of use assets and lease liabilities at the beginning of the earliest comparative period, January 1, 2022. This amendment has had no effect on the income statement or balance sheet figures of the Group, as deferred taxes on temporary differences related to right of used assets and lease liabilities have been historically recognized. However resulting deferred tax assets and liabilities were previously disclosed on a net basis on balance sheet and in notes. Therefore the only effect for the Group from applying this amendment is the gross presentation of deferred tax assets and liabilities arising from leases in note 6.1. There were no other changes in accounting standards or other accounting requirements which entered into force from 1 January 2023 that have had material impact for Anora Group. There are no new IFRS standards, amendments to standards and IFRIC interpretations effective on or after January 1, 2024, that are expected to have any material impact on the Group . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 132Annual Report 2023 FINANCIAL STATEMENTS Accounting policies requiring management judgement and key sources of estimation uncertainty The preparation of financial statements requires management to make accounting estimates which may include use of judgement in the application of the accounting standards. Estimates and related assumptions made in the preparation of the financial statements, are based on the management’s best knowledge at the reporting date. The realised results can differ from the estimates, and any changes in estimates and assumptions are recognised when estimates and assumptions are corrected. Material accounting policies and critical accounting estimates and judgements made are described to each note as follows; • Revenue recognition - Note 1.2 • Intangible assets - Note 2.1 • Property, plant and equipment – Note 2.2 • Right of use assets – Note 2.3 • Financial assets and liabilities – Note 3.2 • Inventories – Note 2.4 • Trade and other receivables – Note 2.5 • Employee benefit obligations – Note 2.6 and 6.4 • Changes in Group structure – Note 5.2 • Income taxes – Note 6.1 Accounting note reclassifications Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts. There have been no such reclassifications in relation to consolidated income statement or consolidated balance sheet. Reclassifications in individual notes are further described if material. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 133Annual Report 2023 FINANCIAL STATEMENTS 1 Operating result Comparable EBITDA EUR million 68.2 Net sales EUR million 726.5 OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 134 BUSINESS OVERVIEW 1.1 SEGMENT INFORMATION Description of segments and principal activities The reportable segments of Anora in these consolidated financial statements consist of Wine, Spirits, and Industrial. The Board of Directors of Anora is determined as the Group’s Chief Operative Decision Maker (CODM) being responsible for allocating resources, deciding on strategy and assessing performance of the operating segments. The reportable segments are based on Anora’s operating structure and internal reporting to the CODM and used to assess the performance of the segments. For internal reporting purposes, reporting on the segment profit is based on internal measures of gross profit and comparable EBITDA derived as follows: • Net sales and direct segment expenses including costs of goods sold reported within the Gross Profit and Comparable EBITDA segment profit measures are measured and reported under the same accounting principles as in the consolidated accounts. • Expenses allocated to the segments related to shared function costs or business support services, comprise costs such as centralised marketing costs, IT infrastructure related costs, shared support services, headquarter costs including finance and treasury, communication, legal and human resource related costs as well as certain warehousing and service fees. For internal reporting purposes these cost allocations are based on budgeted amounts and variances from budgeted amounts are presented under column “Group and allocations”, and this can result in either incurred overruns or savings compared to budgeted amounts. These variances are not allocated to the segments for internal reporting purposes. • The Group and allocations column represents, in addition to the budget variances, certain unallocated headquarter costs. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 135Annual Report 2023 FINANCIAL STATEMENTS The reportable segments comprise the following: Wine The Wine segment develops, markets and sells Anora’s own wine brands as well as partner wines to customers in the Nordic monopoly markets and Denmark. Wine segment in Denmark also include contract manufacturing and logistics services on behalf of other group companies. During 2023 the Group has initiated a Center of Excellence program in order to improve production efficiency, which mean that contract manufacturing for wine will be concentrated in Globus Wine in Denmark during the years to come. The change in operations did not have a material impact on net sales or profitability of individual segments in 2023. Spirits The Spirits segment develops, markets and sells Anora’s own spirits brands and partner brands to customers in the Nordic monopoly markets, in addition to international markets as Estonia, Latvia, Denmark and Germany, in addition to global duty free and travel retail and other exports. Industrial The Industrial segment comprises Anora’s industrial business – industrial products and contract manufacturing (mainly for the Spirits business but also to some extent for the Wine business), the logistics company Vectura and supply chain operations. 1 Jan–31 Dec 2022 EUR million Wine Spirits Industrial Group and allocations Eliminations Group Net sales external 309.7 233.0 160.0 0.0 0.0 702.7 Net sales internal 6.9 0.8 125.5 0.0 -133.2 0.0 Total Net sales 316.6 233.8 285.5 0.0 -133.2 702.7 Other operating revenues external 0.7 0.0 10.0 0.2 0.0 10.9 Other operating revenues internal 2.1 0.4 6.2 37.2 -45.9 -0.0 Total other operating revenues 2.8 0.4 16.2 37.4 -45.9 10.9 Materials and services -225.9 -131.8 -178.2 -0.3 121.9 -414.3 Gross Profit 93.5 102.4 123.5 37.1 -57.2 299.3 Employee benefits and other operating expenses -70.5 -66.6 -105.6 -45.9 57.1 -231.4 EBITDA 23.0 35.8 17.9 -8.8 -0.0 67.9 Items affecting comparability 1) 0.6 2.0 -0.2 5.9 0.0 8.3 Comparable EBITDA 23.5 37.8 17.7 -2.8 -0.0 76.1 EBITDA 67.9 Depreciation, amortisation and impairment -33.2 Operating profit 34.7 Industrial segment include production and/or logistics facilities in 5 main locations (Koskenkorva and Rajamäki in Finland, Gjelleråsen in Norway, Sundsvall in Sweden and Tabasalu in Estonia). In addition there are two small aquavit distilleries in Atlungstad in Norway and Skåne in Sweden. Segment net sales and results All intragroup business transactions are made based on arm’s length principles. The following tables set out the segment net sales and Comparable EBITDA as well as the reconciliation of the Comparable EBITDA to the Group’s operating result: 1 Jan–31 Dec 2023 EUR million Wine Spirits Industrial Group and allocations Eliminations Group Net sales external 334.3 237.0 155.1 0.0 0.0 726.5 Net sales internal 0.0 0.0 114.3 0.0 -114.3 0.0 Total Net sales 334.3 237.0 269.5 0.0 -114.3 726.5 Other operating revenues external 0.0 0.0 8.0 12.3 0.0 20.3 Other operating revenues internal 0.0 0.0 15.6 26.1 -41.8 0.0 Total other operating revenues 0.0 0.0 23.6 38.4 -41.8 20.3 Materials and services -244.4 -137.3 -174.0 0.0 114.3 -441.4 Gross Profit 89.9 99.7 119.0 38.4 -41.8 305.4 Employee benefits and other operating expenses -82.6 -60.3 -104.0 -32.8 41.8 -237.9 EBITDA 7.3 39.5 15.1 5.6 0.0 67.5 Items affecting comparability 1) 5.0 0.8 2.4 -7.5 0.0 0.7 Comparable EBITDA 12.4 40.3 17.5 -1.9 0.0 68.2 EBITDA 67.5 Depreciation, amortisation and impairment -98.8 Operating profit -31.3 1) Items affecting comparability comprise of material items outside normal business, such as net gains or losses from business and assets disposals, impairment losses, cost for closure of business operations and restructurings, major corporate projects including direct transaction costs related to business acquisitions and the merger, merger related integration costs, expenses arising from the fair valuation of inventories in connection with merger, voluntary pension plan change, and costs related to other corporate development. Gains on sale of business operations, property, plant and equipment and intangible assets are presented in Note 1.3 and employee costs related to restructuring in Note 1.5 . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 136Annual Report 2023 FINANCIAL STATEMENTS Other entity-wide disclosures Net sales by geography Net sales broken down by the segment and country for the years ended 31 December 2023 and 2022 were as follows: EUR million 2023 2022 Wine Finland 48.6 47.1 Sweden 115.9 134.7 Norway 78.4 83.7 Denmark 86.8 44.2 Other countries 4.6 0.0 Wine Total 334.3 309.7 Spirits Finland 62.4 56.3 Sweden 52.6 51.3 Norway 56.3 48.5 Denmark 20.0 18.5 Other countries 45.7 58.4 Spirits Total 237.0 233.0 Industrial Finland 120.7 127.1 Norway 27.0 27.3 Other countries 7.4 5.6 Industrial Total 155.1 160.0 TOTAL 726.5 702.7 Significant customer relationships The Group has significant customer relationships with Alko in Finland, with Vinmonopolet in Norway and Systembolaget in Sweden, related to sales from the Wine and Spirits segments. The total net sales from Alko were approximately EUR 91.6 million (2022: EUR 89.6 million). The total net sales from Vinmonopolet were EUR 107.4 million (2022: EUR 90.9 million). The total net sales from Systembolaget were around EUR 140.8 million (2022: EUR 151.5 million). In Industrial segment net sales of EUR 43.9 million (2022: EUR 45.7 million) were derived from a single external customer. No other single external customer represented 10 per cent or more of Anora’s total net sales for the years ended 31 December 2023 or 2022. Non-current assets by geography The total of non-current assets other than financial instruments and deferred tax assets broken down by the location of the assets as at 31 December 2023 and 2022 were as follows: EUR million 2023 2022 Restated Finland 103.4 100.1 Sweden 43.1 40.9 Norway 339.9 438.6 Estonia 2.0 2.0 Latvia 0.6 0.4 Denmark 151.1 157.4 Other countries 1.0 10.7 TOTAL 641.1 750.1 Comparison figures from 2022 has been changed as the presented specification in the 2022 report included a computational calculation error (Norway EUR 53.9 million, Denmark EUR -41.7 million, Sweden EUR -8.1 million, Finland EUR -3.3 million and other countries EUR 2.8 million). The error has had no impact on reported balance sheet figures. 1.2 REVENUES FROM OPERATIONS Revenue recognition The revenue is recognised at an amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price may include variable considerations such as volume discounts, bonuses, marketing support, product returns etc. The variable considerations are estimated using the most likely value method if not yet realised in the end of reporting period. The revenue is further adjusted with indirect sales taxes, excise taxes, deposit and recycling fees. The wine and spirits businesses generally only sell physical products in the form of wine and spirits products. Sale of these products are accounted for in the Group’s income statement at the point in time when they are delivered to the Group’s customers according to the delivery terms. In contract services the contracts essentially include a single performance obligation, being a series of distinct services such as contract manufacturing, customer services and logistics. The revenue recognition occurs at a point in time, when the control of the goods is transferred to the customer according to the delivery terms. Revenue from the sale of services is recognised at the time of delivery of services, which in most cases correspond with delivery of the goods manufactured or goods distributed being delivered to the customers according to the delivery terms. This include the Logistics business, as this business is acting as an agent on behalf of its business partners, and therefore the logistics services are considered completed at the time of the goods being delivered to the customers according to delivery terms. The revenue from activity-based services at logistics business, such as rent for storage of pallets, reconstruction of pallets from larger EUR pallets to smaller quarter pallets, destruction services, etc, is recognised over time. Input for these services is based on actual pallet places of storage being used during the period, actual number of pallets being reconstructed during a period or actual volume being destructed during a period. Primarily accounts receivable fall due 0–60 days after invoicing date. Transaction prices do not include any significant financing components . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 137Annual Report 2023 FINANCIAL STATEMENTS The most significant revenue flows are generated by the sale of own products and partner brands to Scandinavian wine and spirit monopolies, Horeca customers, wholesalers and travel retail customers. In addition, revenues are generated by contract manufacturing, sale of logistic services and the sale of industrial products, such as starch, feed and technical ethanol. In partner supplier agreements, which entitle Group to distribute partners’ products, Anora acts as a principal towards the end customer having control over the product, discretion in establishing prices and owning the inventory. Accordingly, revenue recognised is the gross amount to which Anora is entitled to in these product sales. The other activity based operating revenues from warehousing services at logistics business, is recognised over time. Critical estimates and management judgement - Revenue recognition Anora provides volume-based rebates, bonuses and other discounts to their customers in open markets and on-trade customers in the monopoly markets. These classify as variable considerations within contracts with customers. The group estimates such variable consideration to which it will be entitled in exchange for transferring goods to the customers. The variable consideration is estimated at a contract inception based on expected sales volumes using historical and year- to-date sales data and other information about trading with individual customers or groups of customers. The Group estimates discounts, rebates and bonuses using the most likely amount method. Contracts assets and liabilities Contract assets represent the amount which Anora has right to receive goods expected to be returned to inventory with respect to return clauses in the contracts. Contract assets are measured at the former carrying amount of the inventory less any expected costs to recover the goods and less any impairment losses. Contract liabilities represent the amount received or receivable that is expected to be returned as a refund liability. These contracts assets or liabilities are very limited in the Group and are included in other receivables or other payables in the Group’s balance sheet. Excise taxes related to sales The amount of excise tax deducted from sales revenue is significant. The amounts of sales including tax and excise taxes are presented below: EUR million 2023 2022 Restated Sales revenues deducted with revenue adjustments 1,403.2 1,372.4 Excise tax -676.8 -669.7 Net sales 726.5 702.7 Tax share of sales revenues, % 48.2% 48.8 % Excise tax amount in 2022 financial statements was included in an incorrect amount due to a computational calculation error (Previously disclosed Sales revenues deducted with revenue adjustments and Excise taxes were both higher by EUR 334.5 million, while net sales are unchanged). The error has been corrected in the comparable figures for 2022 in this report and did not have any impact on net sales or taxes paid, neither in presented figures in income statement, balance sheet or cash flows. Net Sales by revenue types EUR million 2023 2022 Wines 334,3 309,7 Spirits 237,0 233,0 Industrial Products 71,3 75,3 Total sale of products 642,6 618,0 Contract manufacturing services 60,2 61,0 Logistics services 23,7 23,8 Total sale of services 83,9 84,8 Net sales 726,5 702,7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 138Annual Report 2023 FINANCIAL STATEMENTS 1.3 OTHER OPERATING INCOME Other operating income mainly includes gains on the disposal of non-current assets, income from sale of energy, water, steam and carbon dioxide, gains on sale of emission allowances, rental income and related non-core business service income and contract termination fees. Gains on sale of subsidiaries and business operations relates to sale of Larsen cognac business and is in its full part of Group and Allocations figures. EUR million 2023 2022 Gains on sale of subsidiaries and business operations 11.6 - Gains on sale of property, plant and equipment and intangible assets 0.8 0.9 Gains on sale of emission allowances 0.1 1.2 Rental income 1.4 1.4 Income from sale of energy, water, steam and carbon dioxide 4.0 4.2 Insurance compensations - 1.1 Other income 2.3 2.2 TOTAL 20.3 10.9 1.4 MATERIALS AND SERVICES Materials and services consist of cost of material, such as barley, wine, different spirit, liquids, ground water as well as other ingredients needed for a variety of different drinks, packaging materials, production costs, changes in inventories, scrapping and obsolescence costs and external services such as logistics and warehousing. EUR million 2023 2022 Raw materials, consumables and goods Cost of goods sold -428.1 -407.5 Scrapping and obsolescence and revaluation -3.8 -4.0 External services -9.5 -2.9 TOTAL -441.4 -414.3 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 139Annual Report 2023 FINANCIAL STATEMENTS 1.5 EMPLOYEE BENEFIT EXPENSES In Anora, the total wages and salaries of personnel consists of fixed and variable pay, allowances, short and long-term incentives and fringe benefits. EUR million 2023 2022 Wages and salaries -83.0 -74.0 Pension expenses Defined contributions plans -10.5 -9.0 Defined benefit plans -0.1 0.0 Share-based payments -0.0 -0.6 Other social expenses -10.2 -10.1 TOTAL -103.8 -93.8 Employee benefit expenses include personnel related restructuring costs of EUR 4.9 million (2022: EUR 0.1 million). The EUR 4.9 million restructuring costs is split EUR 0.7 million to Wines, EUR 0.9 million to Spirits, EUR 2.4 million to Industrial and EUR 0.9 million in Group and Allocations. Average number of personnel during the period 2023 2022 Workers 542 538 Clerical employees 731 621 TOTAL 1,273 1,159 More information on the Group’s pension plans is presented in Note 2.6. Information of management remuneration is presented in Note 6.3 related party transactions . 1.6 OTHER OPERATING EXPENSES EUR million 2023 2022 Losses on sales and disposals of property, plant and equipment and intangible assets -0.2 -0.2 Short term, low value and other lease related payments -6.6 -4.7 Marketing expenses -28.0 -29.9 Travel and representation expenses -3.9 -5.2 Outsourcing services -27.3 -35.5 Repair and maintenance expenses -14.0 -14.8 Cars and transport services -7.9 -0.5 Energy expenses -11.8 -9.8 IT expenses -10.1 -12.0 Variable sales expenses -14.8 -16.0 Other expenses -9.4 -9.1 Total -134.1 -137.6 Auditor’s fees included in other operating expenses, EUR million 2023 2022 Audit fees -1.2 -1.2 Tax consulatation 0.0 0.0 Other fees -0.1 -0.3 Total -1.4 -1.4 The table above presents fees to Group auditor PricewaterhouseCoopers as well as other auditors of Group subsidiaries during the year. 1.7 RESEARCH AND DEVELOPMENT EXPENDITURES Operating result includes research and development expenditures amounting to EUR 2.3 million (2022: EUR 2.2 million). The R&D expenditures represents 0.3 % of net sales in 2023 (2022: 0.3%) . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 140Annual Report 2023 FINANCIAL STATEMENTS 2 Operative assets and liabilities OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 141 BUSINESS OVERVIEW 2.1 GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets comprise of goodwill, marketing related intangible assets (trademarks and company brands), customer related intangible assets, software, other intangible assets and prepayments for intangible assets. Intangible assets are capitalised at cost price or fair value with deduction for accumulated depreciation and accumulated write downs in the event of non-transitory impairment. Goodwill Goodwill arising on the business acquisition is recognised as a residual value in the excess of the aggregate of the consideration transferred, the amount of non-controlling interests and any previously held equity interest in the acquiree, over the fair value of the net assets acquired. Goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but is tested annually for impairment. For the purpose of impairment testing, goodwill is allocated to the groups of cash generating units (CGU) that are expected to benefit from the business combinations in which the goodwill was generated . Marketing related intangible assets (Trademarks and company brands) Marketing related intangible assets are either arising from business acquisitions or purchased separately. Marketing related intangible assets that have been acquired in connection with business acquisitions are capitalised at fair value at the time of the business acquisition, while separately purchased marketing related intangible assets are capitalised at cost price. Critical estimates and management judgements – Useful lives of trademarks On initial recognition of marketing related intangible assets, an assessment is made on whether the asset is expected to have definite useful lives or not. In this assessment, the Group gives particular weight to Group’s expected use of the asset, the customary life cycles for the assets of this type, the stability of the sector and the business, and the probability that the Group will succeed in maintaining the asset’s financial lifetime, given the Group’s ability to maintain value. The Group also devotes resources to legal control of these assets in large and important markets. Marketing related intangible assets with definite useful lives are amortised by the straight-line method over the expected useful life. The capitalised value of marketing related intangible assets with indefinite lifetime is tested for impairment at least once a year, or more often if there are indications that the value of the asset has decreased. The estimated useful lives of marketing related intangible assets are as follows: Trademarks with indefinite useful life: not amortized Trademarks with definite useful life: 0–50 years Company Brands with definite useful life: 5 years Customer related intangible assets (Customer relations) Customer related intangible assets are arising from business acquisitions and are capitalised at fair value at the time of the business acquisition. Customer related intangible assets are amortised by the straight-line method over the expected useful life. The estimated useful lives of customer related intangible assets are as follows: Customer relations Wine: 7–15 years Other intangible assets Other intangible assets include software in addition to prepayments for intangible assets. These other intangible assets are recognised in the balance sheet at the original cost and depreciated over their estimated useful lives. The costs related to other intangible assets are capitalised if it can be demonstrated that the asset will generate the future economic benefits, the entity controls the asset, and the purchase price can be measured reliably. All other expenditure is recognised as an expense when incurred. The estimated useful lives of intangible assets are as follows: IT-development and software: 3–10 years Expenditure on research activities is recognised in profit or loss in the period in which it is incurred. The Group has no projects related to the development activities of new products or processes qualifying for the identifiability and other criteria regarding capitalisation under IFRS. Accounting for emission allowances is described in Note 6.2 . There are no material contractual commitments for acquisitions of intangible assets . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 142Annual Report 2023 FINANCIAL STATEMENTS GOODWILL AND OTHER INTANGIBLE ASSETS EUR thousand Goodwill Trademarks and customer relations Software and other intangible assets Prepayments Other intangible assets total Acquisition cost at 1 January 2023 353.3 330.9 41.5 2.1 374.4 Additions - 0.1 0.3 2.6 2.9 Disposals -2.8 -16.1 -2.4 - -18.4 Effect of movement in exchange rates -10.7 -9.4 -0.9 - -10.3 Transfers between items - -0.1 3.4 -3.3 0.0 Acquisition cost at 31 December 2023 339.8 305.4 41.9 1.3 348.7 Accumulated amortisation and impairment losses at 1 January 2023 -42.8 -111.3 -37.0 - -148.3 Amortisation - -8.9 -2.3 - -11.2 Impairment losses - - -0.8 - -0.8 Accumulated amortisation on disposals and transfers 0.0 13.9 2.2 - 16.1 Effect of movement in exchange rates 7.3 1.1 0.8 - 1.8 Accumulated amortisation and impairment losses at 31 December 2023 -35.5 -105.3 -37.0 - -142.3 Carrying amount at 1 January 2023 310.5 219.5 4.6 2.1 226.1 CARRYING AMOUNT AT 31 DECEMBER 2023 304.3 200.1 4.9 1.3 206.3 Acquisition cost at 1 January 2022 327.3 300.0 40.6 0.8 341.4 Acquisition of subsidiaries 41.4 43.9 0.7 - 44.6 Additions - 0.1 0.3 1.7 2.1 Disposals - -0.4 -0.0 - -0.4 Effect of movement in exchange rates -15.4 -12.8 -0.5 - -13.3 Transfers between items - - 0.4 -0.4 0.0 Acquisition cost at 31 December 2022 353.3 330.9 41.5 2.1 374.4 Accumulated amortisation and impairment losses at 1 January 2022 -49.5 -109.5 -35.2 - -144.7 Amortisation - -8.1 -2.4 - -10.6 Accumulated amortisation on disposals and transfers - 0.4 0.0 - 0.4 Effect of movement in exchange rates 6.7 5.9 0.7 - 6.5 Accumulated amortisation and impairment losses at 31 December 2022 -42.8 -111.3 -37.0 - -148.3 Carrying amount at 1 January 2022 277.8 190.6 5.4 0.8 196.7 CARRYING AMOUNT AT 31 DECEMBER 2022 310.5 219.5 4.6 2.1 226.1 The most significant trademarks include for example, Gammel Opland, Aalborg, Gammel Dansk, Braastad, Lysholm Linie, Løiten, Hot’n’ Sweet, Renault, Xanté, Blossa, Chill Out, Explorer, 1-Enkelt and Arsenitch. Software and other intangible assets are mainly computer software. Impairment testing Book value of assets are assessed to determine whether there is any impairment at least at the end of each financial year. If any evidence of impairment emerges (a triggering event), the assets’ recoverable amount is estimated. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and value in use. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. The impairment loss is immediately recognised in profit or loss and the estimated useful life of the asset in question is reassessed when an impairment loss is recognised. The impairment loss is reversed if there has been such a positive change in the estimates used to determine the recoverable amount of the asset or cash-generating unit, that recoverable amount of the asset will increase the book value of asset. Impairment losses are only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. An impairment loss on goodwill is never reversed. Critical estimates and management judgements – Impairment testing: The preparation of calculations for the impairment testing of goodwill requires estimates regarding the future. The management’s estimates and related critical uncertainties are related to the components of the recoverable amount calculation, including the discount rate, budgets, the terminal growth rate and development of the net sales and operating result, including estimated cost levels of main raw materials and energy. The discount rates reflect current assessments of the time value of money and relevant market risk premiums reflecting risks and uncertainties for which the future cash flow estimates have not been adjusted . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 143Annual Report 2023 FINANCIAL STATEMENTS The cash generating unit for impairment testing of marketing related intangible assets is the trademark itself. To determine the recoverable amount for these assets, future cash flows are calculated based on “relief from royalty” method after tax. Impairment testing of goodwill and intangible assets with indefinite useful life Allocation of goodwill Goodwill is allocated to groups of cash-generating units (CGU) that represent the level on which the management monitors the goodwill. The Group’s three segments are considered to form the group of cash generating units (CGU) and represent the lowest level at which goodwill is monitored for internal management purposes. During 2023 there were no changes in the CGU structure. The allocation of goodwill to CGUs is as follows: EUR million 2023 % 2022 % Wine 105.4 34.6% 106.3 34.2% Spirits 198.9 65.4% 204.2 65.8% Total 304.3 100.0% 310.5 100.0% Impairment testing - Goodwill The key assumptions in goodwill impairment testing are operating result and discount rate. The goodwill allocated to the Group’s cash-generating units is tested for impairment annually or when there is reason to assume that the carrying amount has exceeded the recoverable amount, with the carrying amount compared to the recoverable amount in the testing. The annual impairment tests have been carried out on 31 December 2023 and 31 October 2022. The cash flow estimates used are based on CGU-specific financial plans for the following year approved by the Group’s Board of Directors. The forecast period applied for the calculations covers five years, beyond which the cash flow projections are extrapolated using a constant CGU specific long-term growth rate estimate. The forecasted cash flows for a longer term than this have been estimated by using an annual growth rate estimate of 2.0% which is based on an assumption of inflation growth. The terminal growth rate used is unchanged from 2022 impairment testing calculations. Pre-tax discount rates reflect specific risks relating to the relevant CGUs and the countries in which they operate. Management makes judgements regarding the development of assumptions other than WACC based on internal and external views of the industry’s history and future. The weighted average costs of capital used as discount rates for the cash flow estimates are presented in the enclosed table: Used pre-tax discount rate % 2023 2022 Wine 8.2% 8.0% Spirits 8.6% 8.4% The estimated average operating margins used in the calculations are presented in the enclosed table: Projected average pre-tax operating result % 2023 2022 Wine 5.6% 9.5% Spirits 16.6% 13.2% Based on the analyses prepared by the Group, no reasonably possible change in any of the key assumptions would cause any of the tested unit’s recoverable amount to decrease to be equal to its carrying amount. Impairment testing - Trademarks Equivalent impairment tests are made for trademarks with indefinite useful life and useful life of 50 years. The recoverable amount for trademarks is calculated on the basis of relief from royalty method after taxes whereby the brand’s annual royalty rate is considered to be the expected long-term profit that the individual trademarks are expected to have. The forecast period applied for the calculations covers five years. The terminal value is based on an assumption of inflation growth of 2 percent. The terminal growth rate used is unchanged from 2022 impairment testing calculations. Cash flow estimates used are discounted using a post-tax discount rate specific for the country where each brand is predominantly sold. Used post-tax discount rate % 2023 2022 Norwegian Brands 7.3% 7.1% Danish Brands 6.5% 7.1% GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 144Annual Report 2023 FINANCIAL STATEMENTS A significant proportion of the Group’s trademarks are assessed not to have definite useful lives. These are not amortised on an ongoing basis but are solely subject to annual impairment testing. On initial recognition of trademarks, it is assessed whether the trademark is expected to have definite useful lives or not. In this assessment, the Group gives particular weight to Group’s expected use of the trademark, the customary life cycles for trademarks of this type, the stability of the sector and the business, and the profitability that shall maintain the trademark’s financial lifetime given the Group’s ability to maintain value. The Group also devotes resources to legal control of trademarks in large and important markets. At the end of 2023, all of the Group’s trademarks with indefinite useful lives were related to Spirits segment. The carrying amount of these assets amounted to EUR 128.3 million (2022: EUR 134.3 million). Most of the trademarks within Spirits business are trademarks that have existed for several decades, and some have existed for several hundred years. If impairment tests show declining curves over time, the trademark may be written down to higher of estimated value in use and fair value less costs to sell and a new assessment of the trademark’s estimated useful live is performed. If it is estimated after a new assessment that the useful life is no longer indefinite, the trademark is redefined to have a definite useful life, whereby a straight line amortisation method is applied for the remaining book value over the remaining useful life. 2.2 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment Property, plant and equipment mainly consist of manufacturing and warehouse buildings, land, and machinery and equipment used in alcoholic beverage industry. Property, plant and equipment are measured at historical cost less accumulated depreciation and possible impairment losses. If parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items. The subsequent costs related to the items of property, plant and equipment are capitalised only if the future economic benefits exceed the originally assessed standard of performance. All other expenditure, for example ordinary maintenance and repair costs, is recognised as an expense as incurred. Depreciation is recognised on a straight-line basis over the estimated useful lives of items of property, plant and equipment. Land is not depreciated. Government grants, for example grants received from the State, are recognised in profit or loss in the same period in which the related expenses are recognised. Grants that compensate the Group for the acquisition of property, plant and equipment are deducted from the carrying amount adjusted with the grant received. The estimated useful lives of property, plant and equipment are as follows: Buildings and structures 10–40 years Machinery and equipment 3–20 years Other tangible assets 3–10 years The estimated useful lives and residual values are reviewed at each financial year-end, and if they differ substantially from the previous estimates, the depreciation periods are adjusted accordingly. Impairment loss is recognised in profit or loss to the extent the assets carrying value exceeds its recoverable amount. Gains and losses on the disposals of property, plant and equipment are included in other operating income or expenses. Rajamäki real estate is pledged as security for mortgages, see note 6.2. There are no material contractual commitments for acquisitions of property, plant and equipment. Critical estimates and management judgements – Property, plant and equipment: Estimation of useful life is most critical estimate related to property, plant and equipment . Impairment – Industrial Production Business During 2023, the Group initiated a centre of excellence program which resulted in production volume being moved from the production facility in Norway to other production facilities in Finland and Denmark. This move was a triggering event for impairment testing of the Group’s production facility at Gjelleråsen in Norway, which is a part of the Group’s Industrial segment. The Industrial segment does not have any allocated goodwill or intangible assets with indefinite useful life. The largest asset of this production business is the Right-Of-Use (ROU) asset related to the building premises at Gjelleråsen. This ROU facility at Gjelleråsen is used by all business units in Norway. The asset is allocated to the business units based on actual use of the premises forming separate lease components. The main part GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 145Annual Report 2023 FINANCIAL STATEMENTS of the premises is used by the Industrial Production business and the Industrial Logistics business at Gjelleråsen. Less significant lease components are used by Wine and Spirits businesses at Gjelleråsen. In addition to this there are other assets used in production, such as ROU process and bottling machinery and equipment, owned process and bottling machinery and equipment as well as some owned software assets related to the production business. The Gjelleråsen Production business is as a separate cash generating unit as it has well-defined cash flows, with revenues stemming mainly from internal customers and an independent cost base corresponding to the bottling and process units at Gjelleråsen. A recoverable amount using value in use calculation was determined as at 31 December 2023 for the Gjelleråsen Production CGU. The calculated recoverable amount was negative due to loss making nature of the business. In addition, separate impairment assessments have been made for the individual assets within the CGU. Based on management judgement, the property lease component can be subleased, and therefore capable of independent cashflows. The fair value less cost of disposal (FVLCOD) was determined of the related ROU asset using income approach. The fair value measurement is classified as Level 3 of the fair value hierarchy due to some unobservable inputs used in the valuation. Main assumptions are estimated rent per square meter of NOK 1,200 with 2% annual inflation, start of sublease from 2025 for the remaining part of the lease agreement period until end of 2036, all operating expenses related to the premises covered by the new tenant, using an asset specific discount rate of 11.8% before tax. The resulting recoverable amount is EUR 11.1 million. All other machinery and equipment, both ROU and owned, have also been evaluated individually. The process and bottling equipment has in general been considered not to have any second hand market and therefore their FVLCOD was assessed as zero, while casks, vehicles and laboratory assets have been considered to have a fair value less cost of disposal at least corresponding to their book value. As a result of the above assessment, impairments related to the Gjelleråsen Production CGU was recorded at EUR 39.0 million, where EUR 28.0 million is related to ROU building, EUR 5.2 million related to ROU machinery & equipment, EUR 5.5 million related to owned machinery & equipment and EUR 0.3 million related to software. Impairment was allocated to the assets which do not generate independent cash flows in a way that their carrying amount was reduced to the highest of their FVLCOD (if measurable), their value in use (if determinable) and zero. Impairment – Industrial Logistics Business Vectura is the Group’s Logistics business in Norway, which is also part of the Industrial Segment. This Logistics business has suffered from poor profitability during recent years. In addition, as noted above there was an impairment recorded for the production component of the Gjelleråsen property lease. This constitute indicators of impairment for the logistic lease component of the Gjelleråsen property as an individual asset and the Logistics business as a whole. The Right-Of-Use (ROU) asset related to the building premises at Gjelleråsen used by the Logistics business is the largest asset for the business. In addition to this there are other assets used in logistics operations, such as ROU logistics machinery and equipment, owned logistics machinery and equipment as well as some owned software assets related to the logistics business. The Gjelleråsen Logistics business is a separate cash generating unit as it is a separate legal company with well-defined cash flows, with revenues stemming mainly from internal customers and an independent cost base corresponding to the logistics from Gjelleråsen. A recoverable amount using value in use calculation was determined as at 31 December 2023 for the Gjelleråsen Logistics CGU. The calculated recoverable amount was EUR 15.3 million. The FVLCOD for the ROU asset related to the property lease component used by the logistics business was determined using the same valuation approach and the same key assumptions as the valuation of ROU asset related to the property lease component used by the Production business described above. The resulting recoverable amount is EUR 15.5 million. No other assets within the CGU are capable of generating independent cash flows. Impairment was allocated to these assets in a way that their carrying amount was reduced to the highest of their FVLCOD (if measurable), their value in use (if determinable) and zero. Total impairment related to the Gjelleråsen Logistics CGU was recorded at EUR 25.7 million, where EUR 21.7 million is related to ROU building, EUR 1.2 million related to ROU machinery & equipment, EUR 2.3 million related to owned machinery & equipment and EUR 0.5 million related to software. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 146Annual Report 2023 FINANCIAL STATEMENTS PROPERTY, PLANT AND EQUIPMENT EUR million Land and water areas Buildings and structures Machinery and equipment Prepayments and assets under construction Total Acquisition cost at 1 January 2023 3.0 114.4 185.5 8.8 311.7 Additions - 0.1 1.9 7.5 9.5 Disposals -0.5 -5.2 -25.7 -0.0 -31.4 Effect of movement in exchange rates - -0.0 -2.4 -0.3 -2.8 Transfers between items 0.0 2.1 7.2 -9.3 0.0 Acquisition cost at 31 December 2023 2.5 111.4 166.5 6.6 287.1 Accumulated depreciation and impairment losses at 1 January 2023 0.0 -93.9 -141.1 - -235.0 Depreciation - -2.3 -7.3 - -9.6 Impairment losses - - -8.3 -0.3 -8.6 Accumulated depreciation on disposals and transfers - 3.1 24.2 - 27.2 Effect of movement in exchange rates - 0.0 1.5 0.0 1.5 Accumulated depreciation and impairment losses at 31 December 2023 0.0 -93.2 -131.0 -0.3 -224.4 Carrying amount at 1 January 2022 3.0 20.5 44.4 8.8 76.7 CARRYING AMOUNT AT 31 DECEMBER 2023 2.5 18.3 35.5 6.4 62.7 Acquisition cost at 1 January 2022 3.0 113.4 177.5 5.3 299.3 Acquisition of subsidiaries - - 7.6 0.0 7.7 Additions 0.0 0.1 1.6 6.8 8.6 Disposals -0.0 -0.1 -0.8 -0.0 -0.9 Effect of movement in exchange rates - -0.0 -2.6 -0.2 -2.9 Transfers between items 0.0 1.0 2.1 -3.2 0.0 Acquisition cost at 31 December 2022 3.0 114.4 185.5 8.8 311.7 Accumulated depreciation and impairment losses at 1 January 2022 0.0 -91.4 -136.6 - -228.0 Depreciation - -2.6 -6.9 - -9.5 Accumulated depreciation on disposals and transfers - 0.0 0.6 - 0.6 Effect of movement in exchange rates - 0.0 1.8 - 1.8 Accumulated depreciation and impairment losses at 31 December 2022 0.0 -93.9 -141.1 - -235.0 Carrying amount at 1 January 2022 3.0 22.0 41.0 5.3 71.3 CARRYING AMOUNT AT 31 DECEMBER 2022 3.0 20.5 44.4 8.8 76.7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 147Annual Report 2023 FINANCIAL STATEMENTS 2.3 RIGHT OF USE ASSETS Leases Lease is a contract, or a part of a contract that conveys the right to use an asset for a period of time in exchange for consideration. A contract contains a lease if there is an identified asset and the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A right-of-use asset and a lease liability is recognized at lease commencement date to reflect Anora’s right to use the underlying asset and the unpaid future lease payments respectively. Anora mainly acts as the lessee. The Group’s leases are related to normal business operations, such as leases on production, distribution and administration buildings, machine & equipment for production, vehicles, forklifts and office technology. The lease liability is measured by discounting the expected lease payments to the present value. Lease payments include fixed lease payments, expected payments related to residual value guarantees and the possible exercise price of the purchase option if the use of the option is reasonably certain. The lease period is the non-cancellable period of the lease. Any extension options are added to the lease period if it is reasonably certain that the Group will exercise such options. Lease payments are discounted at the internal rate of return of the lease if that rate can be readily determined. If an internal rate of return cannot be readily determined, the incremental borrowing rate is used as the discount rate. The criteria used to determine the discount rate includes the class of the underlying asset, geographical location, currency and the lessee’s credit risk premium. The lease liability is remeasured and adjusted against the right of used asset if the cash flow in accordance with the original terms and conditions of lease changes; for example, if the lease period changes or if the lease payments change based on a variable index or interest rate. The lease liability is divided into current and non-current liability and is presented on a separate line on the balance sheet. Right-of-use assets are measured at acquisition cost based on the amount of the initial measurement of the lease liability less payments made at or before commencement date and lease incentives received, adding initial direct costs and adjusting by estimated dismantling or site restoration costs. Right-of-use assets are depreciated over the lease period or their useful lives, depending on which is shorter. Right-of-use assets related to land, buildings and other real estate are depreciated in 2–32 years and right-of-use assets related to machinery and equipment are depreciated in 2–15 years. Right-of-use assets related to tangible assets are presented on a separate line on the balance sheet. The IFRS 16 standard includes exemptions concerning leases of less than 12 months and low-value assets. Lease liabilities are not recognised for leases of less than 12 months and low-value assets . Anora considers assets with an acquisition cost of less than EUR 5,000 to be low-value. Lease expenses related to leases included in the exemptions are recognised in equal instalments over the lease period. Lease agreements include the agreement concluded with Destilleriveien 11 AS on the lease of production, distribution, and administration buildings at Gjelleråsen for an irrevocable period of 25 years as from 1 January 2012. The annual rent under this agreement is about 8,8 million euros as from 2024. The lease agreement of the premises at Gjelleråsen also include an option to extend the lease by 10 years after the initial 25 years. This option is currently considered not to be exercised and, therefore, it is not included in the calculation of Right-Of-Use asset and Lease liability at end of 2023 and 2022. Lease agreements also include the agreement concluded with Destilleri ApS on the lease of areas for a micro-distillery on the premises in Aalborg, Denmark where the Aalborg aquavit and Gammel Dansk Brands was historically produced. The agreement is irrevocable until October 2031, whereafter the agreement can be cancelled by Anora with 12 months’ notice. The agreement is on the other hand non-cancellable by the landlord for another 18 years after October 2031. This date of cancellation by the landlord is estimated to be the end date of the lease which was used in calculating the Right-Of-Use asset and Lease liability at end of 2023 and 2022. On the relocation to Gjelleråsen in 2012, agreements were entered by former Arcus into for the lease of new machines and equipment for the production and distribution activities at Gjelleråsen. The contract partner for these agreements is Nordea Finans and agreements are subject to variable interest rates. These agreements run until 2027. Other lease agreements include lease agreements for office premises, other machinery and equipment, company cars, trucks, lorries in the logistics business and lease of various office machines. Critical estimates and management judgements – Right of use assets: The most critical management judgements are related to determination of discount rates and use of any possible extension options related to the lease contracts. Impairment of Right-of-use assets For details of impairment of right-of-use assets, see Note 2.2 regarding impairment of property, plant and equipment. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 148Annual Report 2023 FINANCIAL STATEMENTS RIGHT-OF-USE ASSETS EUR million Buildings Machinery and equipment Total Acquisition cost at 1 January 2023 158.1 35.9 194.0 Additions 6.9 2.4 9.3 Disposals -21.0 -3.5 -24.5 Effect of movement in exchange rates -6.9 -1.9 -8.8 Acquisition cost at 31 December 2023 137.0 32.9 170.0 Accumulated depreciation at 1 January 2023 -35.2 -22.1 -57.2 Depreciation -9.7 -2.9 -12.6 Impairment losses -49.7 -6.4 -56.1 Accumulated depreciation on disposals 19.8 3.3 23.1 Effect of movement in exchange rates -0.3 1.0 0.7 Accumulated depreciation at 31 December 2023 -75.0 -27.1 -102.1 Carrying amount at 1 January 2023 122.9 13.9 136.8 CARRYING AMOUNT AT 31 DECEMBER 2023 62.1 5.8 67.9 EUR million Buildings Machinery and equipment Total Acquisition cost at 1 January 2022 136.5 37.0 173.4 Acquisitions of subsidiaries 18.1 0.6 18.7 Additions 10.8 0.8 11.5 Disposals -0.5 -0.7 -1.2 Effect of movement in exchange rates -6.7 -1.7 -8.4 Acquisition cost at 31 December 2022 158.1 35.9 194.0 Accumulated depreciation at 1 January 2022 -27.6 -20.2 -47.8 Depreciation -9.9 -3.3 -13.2 Accumulated depreciation on disposals 0.5 0.4 0.9 Effect of movement in exchange rates 1.8 1.0 2.8 Accumulated depreciation at 31 December 2022 -35.2 -22.1 -57.2 Carrying amount at 1 January 2022 108.9 16.8 125.7 CARRYING AMOUNT AT 31 DECEMBER 2022 122.9 13.9 136.8 2.4 INVENTORIES Inventories Inventories are measured at the lower of cost and net realisable value. Self-manufactured products are measured at standard cost, where both fixed and variable production costs are allocated to the standard cost of the products produced based on different allocation keys. Raw materials, supplies and trading goods are measured at weighted average cost. Semi-finished products are measured at weighted average cost. Repacked trading goods are measured at standard cost in repacking plant. The standard cost used for self-manufactured products and repacked trading goods represents approximation of actual cost under weighted average cost formula. The cost of finished products and work in progress includes raw materials, direct labour costs, other direct costs as well as an allocable proportion of variable procurement and production costs and fixed overheads in case of finished products, determined based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. INVENTORIES EUR million 2023 2022 Restated Materials and supplies 39.6 68.4 Work in progress 14.5 20.1 Finished goods 43.5 72.9 Trading goods 49.9 27.4 Other inventories 0.2 0.6 Total before obsolescence 147.7 189.3 Provision for obsolescence -3.5 -3.1 TOTAL 144.2 186.2 Inventory categories presented in 2022 Group’s financial statements included a classification error related to initially incorrect classification of inventory of recently acquired Globus Wine AS. In addition, provision for obsolescence has been presented on a separate line compared to the note in the 2022 annual report. This error was corrected in 2023 financial statements, including comparatives (Materials and supplies EUR -13.8 million, Finished goods EUR 20.5 million, trading goods EUR -3.6 million, provision for obsolescence EUR -3.1 million). The error had no impact on presented figures in income statement, balance sheet or cash flows. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 149Annual Report 2023 FINANCIAL STATEMENTS Trade receivables from associated companies and joint arrangements are included in receivables from related parties, presented in Note 6.3. AGEING ANALYSIS OF TRADE RECEIVABLES EUR million 2023 2022 Trade receivables not past due 85.6 213.8 Trade receivables past due 1–90 days 10.9 12.4 Trade receivables past due over 90 days 1.5 1.8 Impairment losses -1.7 -0.8 TOTAL 96.3 227.3 CHANGES OF IMPAIRMENT LOSSES EUR million 2023 2022 Expected credit losses at beginning of period -0.8 -0.9 Accruals for expected credit losses during period -1.0 0.0 Reversal of accruals for expected credit losses during period 0.1 0.4 Realized credit losses during period 0.0 -0.3 Translation differences 0.0 0.0 EXPECTED CREDIT LOSSES AT END OF PERIOD -1.7 -0.8 A significant share of the Group’s revenue is associated with the state monopolies in the Nordic region, where there is not considered to be material credit risk. The Group’s credit risk is otherwise spread over a large number of small customers within the Horeca market, industrial customers as well as a small number of distributors outside the home markets. On this basis, the Group applies a simplified approach to calculation of expected credit losses. The loss allowance for trade receivables is based on the ageing of the accounts receivables, regional portfolio and experienced historic credit losses. Forward looking macro-economic information has been included in analysis. 2.6 EMPLOYEE BENEFIT OBLIGATIONS Group’s pension arrangements The Group operates various pension plans in accordance with local conditions and practices in different countries. In the Finnish, Norwegian, Swedish, Danish and German companies, statutory pension obligations are arranged through pension insurance companies, when the plans are defined contribution plans and they are managed in accordance with local legislation and established practice. Gift pension and unfunded pension arrangements In addition to the defined contribution plans, the Group has a few gift pensions and other unfunded defined benefit plans for some of the employees in Norway. On the transition to the defined contribution plan in Norway, there were individuals who would be disadvantaged in the event of early retirement at 65–67 years of age. To compensate for this, it was agreed to that a gift pension would be paid to all employees who were affected. As at 31.12.2023, this pension is linked to 70 active employees and 15 retired former employees. In the actuarial calculated defined benefit pension plans, the amount of the pension benefit at retirement is calculated based on salary, years of service and life expectancy. The Norwegian pension plans cover only few employees, thus the related pension liabilities are not material for the Group. At the end of the reporting period 2023 the total actuarial calculated defined benefit plan obligations amounted to EUR 2.4 million (2022: EUR 2.7 million). 2.5 TRADE AND OTHER RECEIVABLES Trade and other receivables Trade receivables are carried at original invoiced amount less any allowance for expected credit losses. An allowance for expected credit losses recognised immediately in profit and loss. Allowance for expected credit losses are recognised based on lifetime expected credit losses from trade receivables in accordance with IFRS 9. The expected credit loss model is forward looking and expected default rates are based on historical realised credit losses. The lifetime expected credit loss provision is calculated using aging of the accounts receivable and regional portfolios. Trade receivables are written off when there is no reasonable expectation of recovery for example the failure of a debtor to engage in a repayment plan with the Group. Sold trade receivables are derecognised from the balance sheet as soon as the receivable is sold and the payment has been received. At the time of sale, the Group derecognises the trade receivable as the contractual right to these cash flows expire and all the related substantial risks and rewards have been transferred outside the Group. The costs related to the sold receivables are recognised in Other finance expenses. TRADE AND OTHER RECEIVABLES EUR million 2023 2022 Trade receivables 96.3 227.3 Prepayments to customers/suppliers 3.4 6.3 Accrued income 6.2 4.0 Other receivables 4.2 4.3 TOTAL 110.1 241.9 At the end of the reporting period 2023 the sold trade receivables amounted to EUR 173.6 million (2022: EUR 59.4 million) .  GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 150Annual Report 2023 FINANCIAL STATEMENTS 2.7 TRADE AND OTHER PAYABLES EUR million 2023 2022 Restated Trade payables 96.6 103.5 Accruals for wages and salaries and social security contributions 13.2 13.3 Interest liabilities 0.2 0.2 Procurement expenses 10.6 12.5 Other accrued expenses 28.1 41.1 Excise tax 114.5 126.0 VAT liability 59.6 62.1 Other liabilities 6.8 5.7 TOTAL 329.6 364.4 The comparable figures for 2022 have been changed from the note in official annual report from 2022, to reflect updated categorisation of payables (Accruals for wages and salaries and social security contributions EUR 13.2 million, Procurement expenses EUR -3.5 million, Other accrued expenses EUR -0.8 million, Other liabilities -8.0 million). The change have had no impact on presented figures in income statement, balance sheet or cash flows . 2.8 PROVISIONS Provisions A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably estimated. The amount recognised as provision is the management’s best estimate of the costs required to settle the existing obligation at the end of the reporting period. If part of the obligation may potentially be compensated by a third party, the compensation is recognised as a separate asset when it is virtually certain that the compensation will be received. A provision for restructuring costs is recognized only when general recognition criteria for provision are met and after management has prepared and approved a formal plan to which it is committed, and it has raised a valid expectation in those affected by the measures that it will carry out the restructuring by starting to implement that plan or announcing its main features. The costs included in a provision for restructuring are those costs that are either incremental or incurred as a direct result of the plan or are the result of a continuing contractual obligation with no continuing economic benefit to Anora or a penalty incurred to cancel the contractual obligation. At the end of 2023, the group has EUR 3.9 million of provision related to restructuring plans. The Group had no provisions at 31 December 2022. EUR million Opening Balance provisions Provisions made during 2023 Provisions reversed during 2023 Translation differences Amount in balance sheet 31.12.2023 Restructuring provisions 0.0 4.9 -1.1 0.1 3.9 TOTAL 0.0 4.9 -1.1 0.1 3.9 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 151Annual Report 2023 FINANCIAL STATEMENTS 3 Financial items and capital structure Dividend per share EUR 0.22 Earnings per share EUR -0.59 OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 152 BUSINESS OVERVIEW 3.1 FINANCE INCOME AND EXPENSES FINANCE INCOME EUR million 2023 2022 Interest income Loans, receivables and cash and cash equivalents 12.0 2.7 Total interest income 12.0 2.7 Foreign exchange gains Foreign exchange gains on FX-derivatives 4.8 0.0 Foreign exchange gains on I/C loans and cash pool accounts 8.0 2.3 Total foreign exchange gains 12.9 2.3 Dividend income Fair value through other comprehensive income 0.0 0.0 Total dividend income 0.0 0.0 Other financial income Other financial income -0.2 0.7 Total other financial income -0.2 0.7 TOTAL FINANCE INCOME 24.6 5.6 FINANCE EXPENSES EUR million 2023 2022 Interest expenses Financial liabilities at amortised cost -22.8 -6.4 Derivatives under hedge accounting (Interest rate risk) - -0.3 Interest expenses on lease liabilities -5.5 -5.0 Other interest expenses, pension liability 0.0 0.0 Total interest expenses -28.3 -11.7 Foreign exchange losses Foreign exchange losses on FX-derivatives -5.8 -0.5 Foreign exchange losses on I/C loans and cash pool accounts -8.6 -3.3 Total foreign exchange losses -14.4 -3.9 Other finance expenses Other financial expenses -4.7 -1.9 Total other finance expenses -4.7 -1.9 TOTAL FINANCE EXPENSES -47.4 -17.5 Foreign exchange difference arising from trade receivables and trade payables amounting to EUR 0.1 million (2022: EUR -0.7 million) and from currency derivatives amounting to EUR -0.8 million (2022: EUR 1.4 million) are included in operating result. 3.2 FINANCIAL ASSETS AND LIABILITIES 3.2.1 FINANCIAL ASSETS According to IFRS 9 the classification is business model driven and there are three classes: fair value through profit and loss, amortised cost and fair value through other comprehensive income. Classification is made upon initial recognition based on the purpose of use of the asset. The basis of classification is reassessed at each reporting date. All purchases and sales of financial instruments are recognised on the trade date, which is the date when the Group commits to purchase or sell a financial instrument. Financial assets are recognised in the balance sheet at original cost which equals their fair value at the acquisition date. If the asset in question is not measured at fair value through profit or loss, transaction costs are included in the original cost of the financial asset. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or the Group transfers all the substantial risks and rewards related to the financial asset outside the Group. Financial assets are included in non-current items of the balance sheet when their maturity is over 12 months. Impairment of financial assets The impairment model requires the recognition of impairment provision based on expected credit losses. The allowance for credit losses is recognised based on lifetime expected credit losses from trade receivables and contract assets. More information on the allowance for credit losses on trade receivables can be found in Note 2.5. Trade and other receivables. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 153Annual Report 2023 FINANCIAL STATEMENTS The impairment model does not apply to financial assets measured at fair value since those are measured at fair value which already takes into account expected credit losses. Financial assets recognised at fair value through profit or loss This category includes financial assets held for trading purposes or otherwise designated as financial assets recognised at fair value through profit or loss by Anora Group. Sold receivables are classified in this category. Derivative instruments held for hedging purposes, but not qualifying for the criteria of hedge accounting, are classified in this category. Items in this category are initially recognised at fair value and subsequently measured at the fair value of each reporting date, which is the market bid price at the end of the reporting period determined based on public price quotations in active markets. Realised and unrealised gains and losses arising from changes in fair values are recognised in profit or loss in financial items in the period in which they are incurred if they relate to hedging of financial items. Amortised cost Loans and receivables arise when money, goods or services are delivered to a debtor, and they are included in current or non-current financial assets in accordance with their maturity. The assets in this category are held according to a business model of which objective is to collect contractual cash flows. In Anora, non-current receivables include loan receivables and other receivables with the maturity of over one year. Current receivables include trade receivables as well as cash and cash equivalents presented under current financial assets. Receivables are measured at amortised cost when the related payments are fixed or determinable and the instruments are not quoted in financial markets. The exchange rate differences of intra-group foreign currency denominated loan receivables are presented within financial items as foreign exchange differences related to loans. Fair value through other comprehensive income The assets measured at fair value through other comprehensive income consist of unquoted shares, that are not held for trading purposes and at initial recognition, the Group has made a final choice that they belong to this category. The changes in fair values are presented in other comprehensive income . 3.2.2 FINANCIAL LIABILITIES Financial liabilities are classified as financial liabilities at fair value through profit or loss and financial liabilities at amortised cost. Financial liabilities are initially measured at fair value and recognised net of transaction costs, with the exception of items measured at fair value through profit or loss. A financial liability (or a part of it) is not derecognised until the obligation specified in the contract is discharged or cancelled or expires. A financial liability is classified as current, unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the end of the reporting period. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include derivatives held for hedging purposes but not qualifying for hedge accounting and put options for the purchase of non- controlling interests. Derivatives held for hedging purposes but not qualifying for hedge accounting are measured at fair value, which is determined based on price quotations in active markets at the reporting date. Realised and unrealised gains or losses arising from the changes in fair values are recognised through profit or loss in the financial items as incurred. The liabilities related to options for the purchase of non-controlling interests are estimated on the basis of pricing mechanisms applied in the shareholder agreements . Financial liabilities at amortised cost This category includes the Group’s external loans from financial institutions, loans from pension institutions, commercial paper loans as well as trade payables. These financial liabilities are measured at amortised cost using the effective interest method. When loans are paid off or refinanced, the related unamortised costs are recognised in finance expenses. Group overdrafts in use are included in current borrowings. In addition, Anora has a revolving credit facility and the related fee is amortised on a straight-line basis in other finance expenses during the term of the facility. The exchange rate differences arising from foreign currency denominated loans from financial institutions are disclosed under financial items. The exchange rate differences of intra- group foreign currency denominated loans are presented within financial items in the foreign exchange differences of the category financial liabilities at amortised cost. The fair values of loans from financial institutions and commercial paper loans are determined based on future cash flows discounted with market interest rate at the reporting date adjusted with Anora’s credit risk premium. At the reporting date, the carrying amounts of the loans are not materially different from their book values . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 154Annual Report 2023 FINANCIAL STATEMENTS LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS EUR million 2023 2022 Book value at the beginning of the period 0.6 1.3 Acquisition of subsidiares 0.0 0.0 Changes in value during period 0.1 -0.6 Interest during period 0.0 0.0 Translation differences 0.0 -0.1 Book value at the end of the period 0.8 0.6 Non-current liability 0.1 0.6 Current liability 0.6 0.0 Options for the purchase of non-controlling interests Within the Group’s wines business, the general managers of several subsidiaries have non-controlling interests. Most of the general managers have put options linked to their interests and these options can be exercised on a future date. The Group does not have control of these shares at the end of period, nor does it have control of the possible exercising of the put options. The value of put options is therefore recognised as liabilities at fair value at the end of the year. The liabilities related to options for the purchase of non- controlling interests are estimated on the basis of pricing mechanisms applied in the shareholder agreements discounted for the close of the financial year. The most important parameters in the pricing mechanisms were the development in the share values, measured as EBIT (operating profit) up to the estimated due date, multiplied by a fixed market based multiple. As the basis for EBIT, the underlying companies’ budgets and long-term plans up until the expected due date are used. The discount rate is NIBOR or STIBOR with duration matched to the expected due date . BORROWINGS AND LEASE LIABILITIES EUR million 2023 2022 Non-current Loans from financial institutions 209.5 209.3 Loans from pension institutions 5.3 6.8 Lease liabilities 120.7 132.4 TOTAL 335.4 348.4 Current Loans from financial institutions 0.0 0.0 Loans from pension institutions 1.5 1.5 Commercial papers 0.0 30.0 Lease liabilities 13.3 12.4 TOTAL 14.8 43.9 Interest-bearing non-current loans from financial and pension institutions are measured at amortised cost using the effective interest method. All of the Group’s non-current and current loans from financial and pension institutions were nominated in euro’s as at 31 December 2023 and 31 December 2022. The weighted average effective interest rate (p.a.) of the Group’s loans from financial and pension institutions as at 31 December 2023 was 5.7% (2022: 3.5%). The weighted average interest rate (p.a.) of the Group’s lease liabilities as at 31 December 2023 was 3.7% (2022: 3.1%). In December 2022 Anora refinanced its loan portfolio and all existing loans from financial institutions were early repaid. Group’s external bank loans were combined under the parent company and terms were unified. Company entered into an EUR 410 million term and revolving facilities agreement. It consists of EUR 260 million term loan and EUR 150 million revolving credit facilities. In December 2023 Anora exercised its first extension option in relation to its credit facilities agreement, thus extending the term loan and revolving credit facilities maturity by one year to December 2026 . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 155Annual Report 2023 FINANCIAL STATEMENTS THE NET DEBT Movements in net debt the year ended 31 December 2023 and 2022 are presented in the following table: EUR million Cash and cash equivalents Loans from financial and pension institutions (non-current) Loans from financial and pension institutions (current) Lease liabilities (non-current) Lease liabilities (current) Total Net debt as at 1 January 2023 91.4 216.0 31.5 132.4 12.4 300.9 Cash flows 119.2 - -31.5 - -11.2 -161.9 Translation differences 2.2 - - -6.9 -0.5 -9.5 Other non-cash movement - -1.3 1.5 -4.8 12.5 7.9 NET DEBT AS AT 31 DECEMBER 2023 212.7 214.8 1.5 120.7 13.3 137.5 Net debt as at 1 January 2022 168.9 136.1 26.5 120.8 11.6 126.0 Cash flows -68.5 63.6 5.0 - -12.0 125.1 Translation differences -9.0 - - - - 9.0 Acquisitions of subsidiaries - 18.0 - 17.3 1.4 36.6 Other non-cash movement - -1.6 - -5.7 11.4 4.2 NET DEBT AS AT 31 DECEMBER 2022 91.4 216.0 31.5 132.4 12.4 300.9 Derivative instruments Derivatives are included in financial assets and liabilities at fair value through profit or loss when they do not meet the criteria of hedge accounting pursuant to IFRS 9. These derivatives are recognised at fair value on the trade date and they are subsequently measured at fair value at the reporting date. Derivative instruments and hedge accounting are described in Note 3.3. The fair values of derivatives equal the amount that the Group would have to pay, or it would receive from the termination of the derivative contract at the reporting date. The fair values of forward exchange contracts are determined by using the market prices at the reporting date. The fair values of interest rate derivatives are determined by discounting the related future cash flows. The valuation of commodity derivatives is determined based on the fair values received from the financial markets . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 156Annual Report 2023 FINANCIAL STATEMENTS 3.2.3 CLASSIFICATION AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES FAIR VALUES AND THE CARRYING AMOUNTS IN THE CONSOLIDATED BALANCE SHEET FOR EACH FINANCIAL INSTRUMENT BY CLASSES: 2023 EUR million Note Derivatives, hedge accounting Fair value through profit or loss Amortised cost Fair value through other comprehensive income Carrying amounts of items in the balance sheet Fair value Level Financial assets Non-current financial assets Unquoted shares 3.2.1. - - - 0.7 0.7 0.7 3 Other non-current receivables - - 0.0 - 0.0 0.0 Current financial assets Trade and other receivables 2.5. - - 96.3 - 96.3 96.3 Derivative instruments/Forward exchange contracts 0.0 -0.0 - - 0.0 0.0 2 Derivative instruments/Commodity derivatives 0.8 - - - 0.8 0.8 2 Cash and cash equivalents 4.1. - - 212.7 - 212.7 212.7 Assets held for sale - - 7.6 - 7.6 7.6 TOTAL 0.8 0.0 316.6 0.7 318.1 318.1 Financial liabilities Non-current financial liabilities Borrowings 3.2.2. - - 214.8 - 214.8 214.8 2 Lease liabilities 3.2.2. - - 120.7 - 120.7 120.7 2 Non-current liabilities at fair value through profit or loss - 0.1 - - 0.1 0.1 3 Other non-current liabilities - - 0.0 - 0.0 0.0 Current financial liabilities Borrowings 3.2.2. - - 1.5 - 1.5 1.5 2 Lease liabilities 3.2.2. - - 13.3 - 13.3 13.3 2 Current liabilities at fair value through profit or loss 3.2.2. - 0.6 - - 0.6 0.6 3 Trade and other payables 2.7. - - 96.6 - 96.6 96.6 Derivative instruments/Forward exchange contracts 2.7. 1.7 0.5 - - 2.2 2.2 2 TOTAL 1.7 1.3 446.8 0.0 449.8 449.8 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 157Annual Report 2023 FINANCIAL STATEMENTS 2022 EUR million Note Derivatives, hedge accounting Fair value through profit or loss Amortised cost Fair value through other comprehensive income Carrying amounts of items in the balance sheet Fair value Level Financial assets Non-current financial assets Receivables from interests in joint operations - - 7.6 - 7.6 7.6 Unquoted shares 3.2.1. - - - 0.7 0.7 0.7 3 Other non-current receivables - - 0.0 - 0.0 0.0 Current financial assets Trade and other receivables 2.5. - - 229.7 - 229.7 229.7 Derivative instruments/Interest rate derivatives 0.0 - - - 0.0 0.0 2 Derivative instruments/Forward exchange contracts 0.8 0.1 - - 0.9 0.9 2 Derivative instruments/Commodity derivatives 5.4 - - - 5.4 5.4 Cash and cash equivalents 4.1. - - 91.4 - 91.4 91.4 TOTAL 6.2 0.1 328.7 0.7 335.7 335.7 Financial liabilities Non-current financial liabilities Borrowings 3.2.2. - - 216.0 - 216.0 216.0 2 Lease liabilities 3.2.2. - - 132.4 - 132.4 132.4 2 Non-current liabilities at fair value through profit or loss - 0.6 - - 0.6 0.6 3 Other non-current liabilities - - 0.0 - 0.0 0.0 Current financial liabilities Borrowings 3.2.2. - - 31.5 - 31.5 31.5 2 Lease liabilities 3.2.2. - - 12.4 - 12.4 12.4 2 Trade and other payables 2.7. - - 104.5 - 104.5 104.5 Derivative instruments/Interest rate derivatives 0.0 - - - 0.0 0.0 2 Derivative instruments/Forward exchange contracts 0.1 0.1 - - 0.2 0.2 2 TOTAL 0.1 0.7 496.9 - 497.7 497.7 on public quotations of identical financial instruments. In level two, the inputs used in determining the fair values are based on quoted market rates and prices observable for the asset or liability in question directly (i.e. price) or indirectly on discounted future cash flows. Fair values of other financial assets and liabilities in level two reflect their carrying value. In level three, the fair values of assets and liabilities are based on inputs that are not based on observable market data for all significant variables, and instead are, to a significant extent, based on management estimates and their use in generally accepted valuation techniques. The reported fair value level is based on the lowest level of input information that is significant in determining the fair value. At the reporting date due to short maturity fair value of trade receivables and other short-term receivables and liabilities equal to their value in the balance sheet. The table above presents the classification of financial instruments. The levels 1–3 of fair value hierarchy reflect the significance of inputs used in determining the fair values. In level one, fair values are based GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 158Annual Report 2023 FINANCIAL STATEMENTS 3.3 DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING When the Group applies IFRS 9 hedge accounting to foreign currency, interest rate and electricity derivatives, the effective portion of the fair value change is recognised in other comprehensive income and presented within equity in the hedge reserve. When hedge accounting is applied In Anora, cash flow hedging is applied to part of the interest rate, foreign currency and electricity derivatives based on case- by-case assessment. In cash flow hedging, the Group is hedging against changes in cash flows related to a specific asset or liability recognised in the balance sheet or to a highly probable future business transaction. Hedge accounting is a method of accounting with the purpose to allocate one or several hedging instruments so that their fair value changes offset in full or partly the changes in fair value or cash flow arising from the hedged risk in profit or loss during the period, for which the hedge is designated. In the beginning of the hedging arrangement, Anora documents the relationship between each hedging instrument and hedged item, as well as the objectives of risk management and the strategy in engaging in hedging. IFRS 9 requires that the effectiveness of hedging instruments is tested prospectively. Effectiveness means the ability of a hedging instrument to offset the changes in the fair value of the hedged item or changes in the cash flows of the hedged transaction attributable to the hedged risk. Under IFRS 9 the hedging relationship is regarded to be highly effective when there is an economic relationship between the hedged item and the hedging instrument. Hedging ratio is defined as a relationship between the quantity of the hedging instrument and the quantity of the hedged item. Hedge accounting is discontinued when the criteria for hedge accounting is no longer met. The gains and losses arising from fair value changes of derivative contracts, to which hedge accounting is applied, are presented in hedge reserve. Forward points are included to hedging relationship. The effective portion of the unrealised changes in the fair value of derivatives designated and qualifying as cash flow hedges are recognised in other comprehensive income and presented in the hedge reserve in equity. The ineffective portion is immediately recognised in finance income or expenses in profit or loss. The cumulative gain or loss in equity on derivative instruments related to commercial items is recognised in profit or loss as an adjustment to purchases or sales simultaneously with the hedged item in the period in which the hedged item affects profit or loss. Realised gain or loss on electricity derivatives is included in operating result in electricity procurement expenses. When a hedging instrument designated as a cash flow hedge no longer meets the criteria of hedge accounting, the gain or loss accumulated in equity is recognised through finance income or expenses. When hedge accounting is not applied The accounting for gains and losses arising from fair value measurement is dependent on the purpose of use of the derivative. In Anora, the changes in the fair values of derivative instruments are immediately recognised in profit or loss in finance income or expense if the derivative in question is related to hedging of commercial cash flows (purchases and sales) and hedge accounting is not applied. The fair value changes of other derivative instruments are immediately recognised in profit or loss in finance income or expense items if hedge accounting is not applied. Derivatives, to which hedge accounting is not applied, are acquired to minimise the profit and/or cash flow effects related to business operations or financing. NOMINAL VALUES OF DERIVATIVE INSTRUMENTS EUR million 2023 2022 Derivative instruments designated for cash flow hedging Interest rate derivatives - 20.0 Forward exchange contracts 64.1 24.1 Commodity derivatives, electricity 1.2 2.4 0.0TWh 0.1TWh Derivative instruments, non-hedge accounting Forward exchange contracts 39.3 5.6 The nominal values of derivative instruments are based on amounts and market prices at the reporting date . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 159Annual Report 2023 FINANCIAL STATEMENTS EFFECTS OF HEDGE ACCOUNTING ON THE FINANCIAL POSITION AND PERFORMANCE EUR million EURAUD EURGBP EURUSD EURNOK EURSEK USDDKK USDSEK Foreign currency forwards 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Carrying amount (asset) 0.0 - - - - - - 0.0 - 0.3 - 0.5 - - Carrying amount (liability) - 0.0 0.0 - 0.0 0.1 0.5 0.0 1.0 - 0.1 - 0.1 - Notional amount 1.0 1.1 1.2 - 2.1 1.0 12.0 3.3 36.5 12.9 10.0 5.0 1.3 - Maturity date Feb–Dec 2024 Feb–Dec 2023 Feb–Dec 2024 - Feb–Dec 2024 Feb–Dec 2023 Feb–Dec 2024 Feb–Dec 2023 Feb–Dec 2024 Feb–Dec 2023 Feb–Dec 2024 Feb–Dec 2023 Feb–Aug 2024 - Hedge ratio 1:1 1:1 1:1 - 1:1 1:1 1:1 1:1 1:1 1:1 1:1 1:1 1:1 - Change in discounted value of outstanding hedging instruments since 1 January 0.0 -0.1 0.0 - 0.1 -0.1 -0.5 -0.1 -1.3 0.0 -0.7 0.5 -0.1 - Change in value of hedged item used to determine hedge effectiveness 0.0 0.1 0.0 - -0.1 0.1 0.5 0.1 1.3 0.0 0.7 -0.5 0.1 - Positive and negative fair values of unrealised derivatives and their net amount are presented below. Currency derivatives are under netting agreements. The master netting agreements in respect of derivatives do not meet the criteria for offsetting in the balance sheet owing to legally enforceable right not existing currently . OFFSETTING FINANCIAL ASSETS AND LIABILITIES EUR million 2023 2022 Derivative assets: Fair value, gross 0.8 6.4 Fair value, under netting agreements 0.0 -0.1 Fair value, net 0.8 6.3 Derivative liabilities: Fair value, gross 2.2 0.2 Fair value, under netting agreements 0.0 -0.1 Fair value, net 2.2 0.0 EUR million Interest rate swap 2023 2022 Carrying amount (asset) - 0.0 Carrying amount (liability) - - Notional amount - 20.0 Maturity date - 04/2023 Hedge ratio - 1:1 Change in discounted value of outstanding hedging instruments since 1 January - 0.6 Change in value of hedged item used to determine hedge effectiveness - -0.6 Weighted average hedged rate for the year - 0.0 EUR million Commodities - Electricity 2023 2022 Carrying amount (asset) 0.8 5.4 Notional amount 1.2 2.4 TWh 0.04 0.1 Maturity date 2024–2025 2023–2025 Hedge ratio 1:1 1:1 Change in discounted value of outstanding hedging instruments since 1 January -4.6 3.1 Change in value of hedged item used to determine hedge effectiveness 4.6 -3.1 Weighted average hedged price EUR/MWh 30.5 32.3 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 160Annual Report 2023 FINANCIAL STATEMENTS 3.4 EQUITY Share capital At the end of the reporting period, Anora Group Plc’s share capital amounted to EUR 61,500,000 and the number of issued shares was 67,553,624. All shares issued have been paid in full. The shares have no nominal value. Each share has one vote at the Annual General meeting and equal rights to dividend and other distribution of assets. The company does not hold its own shares. NUMBER OF SHARES 2023 2022 Number of outstanding shares in the beginning of the financial year (Basic) 67,553,624 67,553,624 Total number of outstanding shares at the end of the financial year (Basic) 67,553,624 67,553,624 Number of outstanding shareoptions in the beginning of the financial year 632,200 0 Options granted during period 472,200 656,400 Options forfeited during period -133,950 -24,200 Options exercised during period 0 0 Total number of outstanding shareoptions at the end of the financial year 970,450 632,200 Total number of oustanding shares at the end of the financial year (Diluted) 68,524,074 68,185,824 Invested unrestricted equity fund The invested unrestricted equity reserve includes the subscription price of shares to the extent that it has not been recorded in share capital according to specific resolution. Fair value reserve The fair value reserve represents the change in the fair value of financial assets measured at fair value through other comprehensive income. Legal reserve Legal reserve represents a statutory part of the foreign subsidiary’s result. Hedge reserve The hedge reserve includes the fair value changes of derivative instruments used for cash flow hedging for effective hedges. CASH FLOW HEDGE RESERVE EUR million Currency forwards Interest rate swaps Commodities Total hedge reserves Opening balance 1 January 2022 0.3 -0.4 1.8 1.7 change in fair value of hedging instruments recognized in OCI -1.9 0.8 8.4 7.3 Reclassified from OCI to profit or loss - included in purchases/sales adjustments 1.4 - - 1.4 Reclassified from OCI to financial income and expenses - -0.4 - -0.4 Reclassified from OCI to electricity purchases - - -4.8 -4.8 Deferred tax 0.0 0.0 -1.1 -1.0 Closing balance 31 December 2022 -0.2 0.0 4.4 4.2 change in fair value of hedging instruments recognized in OCI -3.1 0.0 -4.4 -7.5 Reclassified from OCI to profit or loss - included in purchases/sales adjustments 0.8 0.0 - 0.8 Reclassified from OCI to financial income and expenses - - - 0.0 Reclassified from OCI to electricity purchases - - 0.8 0.8 Deferred tax 0.3 - -0.2 0.2 Closing balance 31 December 2023 -2.2 0.0 0.7 -1.5 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 161Annual Report 2023 FINANCIAL STATEMENTS Translation differences Translation differences comprise all foreign exchange differences arising from the translation of the foreign subsidiaries’ financial statements. The Group’s accumulated translation differences amounted to negative EUR 44.0 million at 31 December 2023 (31.12.2022: negative EUR 33.0 million). Earnings per share Basic earnings per share is calculated by dividing the result for the period attributable to owners of the parent company by the weighted average number of shares outstanding during the reporting period. Diluted earnings per share has been calculated on the same basis as basic earnings per share except that it reflects the impact of any potential commitments the Group has to issue shares in the future. The table at the start of this note show all outstanding ordinary and diluted shares as of 31.12.2023. EARNINGS PER SHARE 2023 2022 Result for the period attributable to the shareholders of the parent company, EUR million -39.9 17.9 Weighted average number of shares outstanding basic 67,553,624 67,553,624 Weighted average number of shares outstanding diluted 68,664,920 67,929,466 Earnings per share (EUR) basic -0.59 0.26 Earnings per share (EUR) diluted -0.58 0.26 Dividend The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.22 (EUR 0.22 for 2022) per share be paid for the financial year 2023. ANORA GROUP PLC DISTRIBUTABLE FUNDS EUR million 2023 2022 Invested unrestriced equity 52.2 52.2 Retained earnings 74.4 65.9 Distribution of dividends -14.9 -30.4 Profit for the period -11.5 38.9 TOTAL DISTRIBUTABLE FUNDS 100.2 126.6 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 162Annual Report 2023 FINANCIAL STATEMENTS 4 Financial and capital risk Gearing 33.7% OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 163 BUSINESS OVERVIEW 4.1 FINANCIAL RISK MANAGEMENT Financial risk management principles The aim of Anora’s financial risk management is to ensure the Group’s financial stability and availability of sufficient financing options in different market situations. In addition, the aim is to support the business operations to identify business-related financial risks and their management, and to limit and for some extent to hedge against without speculating material financial risk that the core business creates. The guiding principles of Anora’s financial risk management are documented and described in the Group Treasury Policy. The Group is exposed to various market risks. Changes in these risks affect the company’s assets, liabilities and anticipated transactions. The risks are caused by changes in interest rates, currencies and commodity market prices. Selected derivative instruments can be used to manage the risks resulting from these market risks. Anora mainly hedges against risks that impact the Group’s cash flow, and, if deemed appropriate, also certain foreign currency denominated items in the balance sheet. Derivatives are solely used to hedging against the above-mentioned risks. The principles of IFRS 9 hedge accounting are applied to certain interest rate, foreign exchange as well as electricity derivatives. Financial risk management is executed as part of the Group’s risk management, according to the Risk Management Principles approved by the Board of Directors. Anora’s principles aiming towards financial, credit and operational continuity form the basis for financial risk management. Risk management process Special process features related to financing are described below in connection with the descriptions of market, liquidity and credit risks. The financial risk exposure is regularly reported to the Audit Committee and Anora’s Board of Directors. The most significant principle decisions concerning risk management are made by the company’s Board of Directors. Financial risk management Financial matters are reported regularly to the Group management. The Board of Directors processes all substantial financial matters, such as the Group’s external funding arrangements. Tasks and responsibilities regarding Anora’s financial operations and financial risk management are described in the financial risk management principles. The Group Treasury is responsible for securing financing, identifying risks and hedging of those risks according to Group Treasury Policy. The business units and subsidiaries are responsible for managing the risks associated with their own operations and forecasting cash flows. Risk concentrations Anora carefully analyses the financial risks and risk concentrations related to its operations. Risk concentrations identified as a result of this assessment are described in connection with the descriptions of market and credit risks. Market risk Anora defines market risk as a risk where the fair values of financial instruments or future cash flows fluctuate as a result of changes in market prices. The most significant market risks for the Group are currency risk, interest rate risk and price risks for barley and electricity. 1. Currency risk Anora is exposed to currency risks as it has operations in several different countries. The objective of the Group’s currency risk management is to limit the effect of exchange rate fluctuations on the Group’s cash flow in EUR. The most significant currencies are NOK, SEK, USD, AUD and DKK. Transaction risk Transaction risk is caused by foreign currency denominated items in the balance sheet and future cash flows related to sales, purchases and return of capital. Foreign exchange exposures are monitored at the Business level and future foreign currency cash flow risks of either sales or purchase contracts are hedged. The estimated future commercial exposures are evaluated by the Businesses, and the level of hedging is per Group Treasury Policy’s mandate. Hedge accounting in accordance with IFRS 9 is applied to most of the hedges. Hedging transactions are executed with forward exchange contracts or options for the following 24 months at the most, predominantly following the pricing towards state monopolies in the Nordic region. In Finland this takes place every six months, in Norway every four months and in Sweden every six months. The two tables below present the Group’s net currency position, first on the basis of financial instruments recorded on the balance sheet and secondly including on a net basis also the estimated future foreign currency net cash flows. The currency position resulting from the financial instruments in accordance with IFRS 7 consists of trade receivables, trade payables, cash and cash equivalents, the Group’s internal and external loans and derivative instruments. The net currency risk has been taken into account in the table if the transaction currency is other than the Company’s functional currency . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 164Annual Report 2023 FINANCIAL STATEMENTS TABLE 1: THE GROUP’S NET CURRENCY POSITION AT 31 DECEMBER The net currency position resulting from the financial instruments in accordance with IFRS 7 EUR million 2023 2022 EUR-SEK -29.5 62.0 EUR-NOK -11.8 -0.8 EUR-USD 10.8 8.3 EUR-AUD 1.1 1.1 The Group’s net currency position at 31 December including also the hedged commercial cash flows EUR million 2023 2022 EUR-SEK 7.0 124.2 EUR-NOK 31.2 58.2 EUR-USD -2.5 -18.0 EUR-AUD 0.1 -1.7 Translation risk Translation risk is mainly caused by the parent company’s foreign currency denominated net investments in foreign subsidiaries, which cause a translation difference in equity in the Group’s balance sheet upon consolidation. The Group Treasury regularly analyses the translation risk and reports any material issues to the management. The most significant net investments are denominated in SEK and NOK. The translation risk has not been hedged . 2. Interest rate risk The objective of interest rate risk management is to minimise the impact of fluctuations arising from interest rate changes on the Group’s profit. In December, Anora extended the maturity of its bullet loan and RCF by one year. At 31 December 2023 the total nominal amount of loans was amounting to EUR 216.8 million (2022: 218.3) and was divided as follows: • The EUR 210.0 million bullet loan matures in December 2026. • The EUR 6.8 million pension loan matures in January 2028. The interest rate is fixed for the whole loan period. The maximum amount under Anora’s domestic commercial paper program is EUR 100 million. The amount of issued commercial papers at 31 December 2023 was EUR 0.0 (2022: 30.0) million. The sold trade receivables are derecognised at the time of trade with no obligation to repurchase. The related costs are recognised in other financial expenses. The trade receivables are current receivables and the related interest rate risk is not hedged. The amount of the sold trade receivables was EUR 173.6 million at 31 December 2023 (2022: 59.4 million). 3. Price risk associated with commodities Barley In 2023, Anora consumed approximately 174.0 (184.3) million kilos of grain to produce ethanol and starch. The availability of high- quality domestic barley was ensured until the end of 2023 through contract farming and cooperation with farmers and grain stores. The market price of barley significantly fluctuates year by year as a result of several factors that affect Finnish barley supply and demand. The price of barley is therefore considered to be a significant risk for Anora during the financial year. The price risk has not been hedged against with derivative instruments. Electricity A strong increase in the market price of electricity is a significant risk for Anora. In Finland, the risk is managed by following Anora’s principles for electricity procurement and by a third-party specialist. These principles determine the hedging limits within which the electricity price risk is hedged against. The hedges are executed with the OTC-derivatives of Nasdaq OMX Oslo. At the end of 2023, the hedging ratio for deliveries for the next 12 months was 83.6% (78.0%), in line with the set targets. In 2023, the average hedging ratio was 86.8% (76.2%). Cash flow hedge accounting in accordance with IFRS 9 is applied to the hedges against electricity price risk, and hedge effectiveness is tested quarterly. All hedging was effective in 2023 as in 2022. Anora purchases its electricity straight from the Nord Pool Spot markets as a delivery tied to the spot price of the Finnish price area. As part of its electricity purchases, Anora also purchases physical electricity through bilateral fixed-price contracts. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 165Annual Report 2023 FINANCIAL STATEMENTS 4. Sensitivity to market risks The following table describes the sensitivity of the Group’s profit and equity (before taxes) to changes in electricity prices, interest and foreign exchange rates. When Anora applies hedge accounting, the sensitivity is directed at equity. When hedge accounting is not applied, the sensitivity is recognised as a potential impact on profit or loss. The sensitivity to foreign exchange rate changes is calculated from the net currency position resulting from financial instruments.  TABLE 2: SENSITIVITY ANALYSES Sensitivity of financial instruments to market risks (before taxes) in accordance with IFRS 7 2023 2022 EUR million Income statement Equity Income statement Equity +/-10% electricity - +/-0,2 - +/-0,8 +/-10% change in EUR/NOK exchange rate +/-1,2 +/-1,3 -/+0,1 +/-0,3 +/-10% change in EUR/SEK exchange rate +/-2,9 +/-3,9 +/-6,4 +/-1,9 +/-10% change in EUR/USD exchange rate -/+1,1 -/+1,3 -/+0,2 -/+0,6 +/-10% change in EUR/AUD exchange rate -/+0,1 -/+0,1 -/+0,0 -/+0,1 +1%-points parallel shift in interest rates -2.1 - -1.6 -0,0 At the end of 2023 the total Group floating rate liability position consists of floating rate liabilities EUR 210.0 million (2022: EUR 210.0 million). 5. Liquidity risk The Group’s activities are subject to seasonal fluctuations and alcohol sales increase in periods with national celebrations and public holidays, especially at Easter and Christmas. The fourth quarter is normally the best quarter for the Group which is also reflected in cash flows. In order to manage the liquidity risk, Anora continuously maintains sufficient liquidity reserves, which at the end of 2023 comprised Group’s both EUR 10 million and NOK 100 million overdraft facilities and a EUR 150 million revolving credit facility. At the end of December 2023, no revolving credit facility was in use (2022: EUR 0.0 million). The facilities mature in December 2026. More detailed information on the Group’s external loans is provided in the interest rate risk section. TABLE 3: LIQUIDITY RESERVES Cash and cash equivalents and unused committed credit limits EUR million 2023 2022 Cash and cash equivalents 212.7 91.4 Overdraft facilities 18.9 19.5 Revolving credit line 150.0 150.0 TOTAL 381.6 260.9 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 166Annual Report 2023 FINANCIAL STATEMENTS TABLE 4: MATURITIES OF FINANCIAL LIABILITIES Contractual payments on financial liabilities 2023 Cash flows 2024 Cash flows 2025 Cash flows 2026– EUR million Total contractual cash flows Fixed rate Variable rate Repayment Fixed rate Variable rate Repayment Fixed rate Variable rate Repayment Non-derivative: Loans from financial institutions 1 -247.2 0.0 -12.4 0.0 0.0 -12.5 0.0 0.0 -12.3 -210.0 Loans from pension institutions 2 -7.0 -0.1 0.0 -1.5 -0.1 0.0 -1.5 -0.1 0.0 -3.8 Lease liabilities -170.0 0.0 -5.4 -13.1 0.0 -4.9 -17.6 0.0 -25.7 -103.3 Trade payables -96.6 -96.6 Derivative: Currency derivatives, hedge accounting Inflow 63.7 0.0 0.0 63.7 0.0 0.0 0.0 0.0 0.0 0.0 Outflow -65.3 0.0 0.0 -65.3 0.0 0.0 0.0 0.0 0.0 0.0 Currency derivatives, non-hedge accounting Inflow 39.0 0.0 0.0 39.0 0.0 0.0 0.0 0.0 0.0 0.0 Outflow -40.0 0.0 0.0 -40.0 0.0 0.0 0.0 0.0 0.0 0.0 Interest rate derivatives, hedge accounting 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Commodity derivatives, hedge accounting -1.2 0.0 0.0 -0.7 0.0 0.0 -0.5 0.0 0.0 0.0 TOTAL -524.5 -0.1 -17.8 -114.6 -0.1 -17.3 -19.6 -0.1 -38.0 -317.0 1 Loans from financial institutions mature 2026 2 Loans from pension institutions mature 2028 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 167Annual Report 2023 FINANCIAL STATEMENTS TABLE 4: MATURITIES OF FINANCIAL LIABILITIES Contractual payments on financial liabilities 2022 Cash flows 2023 Cash flows 2024 Cash flows 2025– EUR million Total contractual cash flows Fixed rate Variable rate Repayment Fixed rate Variable rate Repayment Fixed rate Variable rate Repayment Non-derivative: Loans from financial institutions 1 -233.8 0.0 -7.9 0.0 0.0 -8.0 0.0 0.0 -7.9 -210.0 Loans from pension institutions 2 -8.5 -0.1 0.0 -1.5 -0.1 0.0 -1.5 -0.1 0.0 -5.3 Lease liabilities -187.4 0.0 -5.3 -12.4 0.0 -4.9 -14.2 0.0 -32.4 -118.3 Trade payables -103.5 0.0 0.0 -103.5 0.0 0.0 0.0 0.0 0.0 0.0 Derivative: Currency derivatives, hedge accounting Inflow 24.0 0.0 0.0 24.0 0.0 0.0 0.0 0.0 0.0 0.0 Outflow -23.5 0.0 0.0 -23.5 0.0 0.0 0.0 0.0 0.0 0.0 Currency derivatives, non-hedge accounting Inflow 5.7 0 0 5.7 0 0 0 0 0 0 Outflow -5.6 0 0 -5.6 0 0 0 0 0 0 Interest rate derivatives, hedge accounting 0.0 0.0 0 0 0.0 0 0 0.0 0 0 Commodity derivatives, hedge accounting -2.4 0 0 -1.2 0 0 -0.7 0 0 -0.5 TOTAL -535.2 -0.1 -13.2 -118.1 -0.1 -12.9 -16.4 -0.1 -40.3 -334.1 1 Loans from financial institutions mature 2026 2 Loans from pension institutions mature 2028 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 168Annual Report 2023 FINANCIAL STATEMENTS 6. Credit risk The objective of Anora’s credit risk management is to minimise the losses if one of the Group’s counterparties fails to meet its obligations. The principles of credit risk management are described in the Group’s credit policy. Credit risks are caused by a counterparty not fulfilling its contractual payment obligations or the counterparty’s credit rating changing in a manner that affects the market value of the financial instruments it has issued. The aim is to minimise credit risks by active credit management and by taking into account customers’ credit rating when determining the payment term of invoices. A significant share of the Group’s revenue is associated with the state monopolies in the Nordic region where there is not considered to be any credit risk. The Group’s credit risk is otherwise spread over industrial customers, a large number of small customers within the Horeca market as well as a small number of distributors outside the home markets. 4.2 CAPITAL RISK MANAGEMENT The target of Anora’s capital management is to secure an effective capital structure that supports the profitable growth of the operations. The Board of Directors monitors the Group’s capital structure regularly. Anora monitors its capital based on total Net Debt to Comparable EBITDA. The ratio is calculated by dividing net debt with the last 12 month’s comparable EBITDA of the Group. Net debt /comparable EBITDA ratio at the end of 2023 is not comparable with prior period. 2022 Comparable EBITDA includes Globus result only from 1st of July 2022 onwards. During the business cycle, Group’s Net debt to comparable EBITDA is likely to fluctuate, and the objective is to retain a sufficiently strong capital structure to secure the Group’s financing needs. Net debt / comparable EBITDA is a covenant used in Group’s funding arrangements. During the financial period, the covenants were not in breach. At 31 December 2023 and 31 December 2022 the Net debt comparable/ EBITDA was as follows: TABLE 5: NET DEBT/COMPARABLE EBITDA Net Debit / Comparable EBITDA as of 31 December, EUR million 2023 2022 Comparable EBITDA 68.2 76.1 Borrowings 216.3 247.5 Lease liabilities 134.0 144.8 Cash and cash equivalents 212.7 91.4 Net debt 137.5 300.9 Net Debt /Comparable EBITDA AT 31 DECEMBER 2.0 4.0 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 169Annual Report 2023 FINANCIAL STATEMENTS 5 Consolidation OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 170 BUSINESS OVERVIEW 5.1 GENERAL CONSOLIDATION PRINCIPLES Consolidation Consolidation, consolidation method and classification of ownership interests depends on whether the Group has power to control or jointly control the entity or have significant influence or other interests in the entity. When the Group has power to control the entity, it is consolidated as a subsidiary according to principles described in Note 5.3. Power to control an entity is normally achieved when shareholding is above 50% When the Group has joint control or significant influence over an entity but does not have power to control, entity is accounted for by using the principles set in Note 5.4. Significant influence is normally achieved when the Group has between 20%–50% shareholding. If the Group does not have power to control nor significant influence in the entity, its ownership interests are classified as financial assets at fair value through other comprehensive income and accounted for according to principles described in Note 3.2.1. This normally happens when the Group’s ownership is below 20%. Non-controlling interests Non-controlling interests’ share of profit after tax is shown on a separate line after Group’s result for the period. Non- controlling interests’ share of equity is shown on a separate line as part of the Group’s total equity. In some subsidiaries with non-controlling interests, the non-controlling shareholder have a put option related to the non-controlling interest, where the Group does not have control of the non-controlling interests before the options are exercised, nor does it have control of whether the options will be exercised, or when this exercise may take place. The value of such options is recognised as liability at fair value through profit and loss in the balance sheet and reduces the non- controlling share of equity. This means that the non-controlling interests presented in the income statement and in the equity show only values where the minority does not have put options related to the minority shares. Foreign currency items All transactions in foreign currency are converted to functional currency at the time of the transaction. Monetary items in foreign currency are converted on the balance sheet date into functional currency by using the exchange rate on the balance sheet date. The consolidated financial statements are presented in euro, which is the functional currency of the parent company. The functional currency in the subsidiaries is the currency in which the subsidiary reports its legal statutory accounts, and the Group has subsidiaries with functional currencies EUR, SEK, NOK and DKK. When consolidating subsidiaries that have a functional currency other than euro, profit and loss items are converted to the group’s presentation currency at year-to-date average exchange rates published by the European Central Bank. For balance sheet items reported in other currencies than euro, including PPA values and goodwill, the conversion to euro is based on closing rate on the reporting date. Exchange rates used for translation of reported figures in foreign functional currencies during 2023 are: EXCHANGE RATES DURING 2023 Functional currencies reported Average rate 2023 Closing rate 31.12.2023 Average rate 2022 Closing rate 31.12.2022 Swedish krona SEK 11.4842 11.0960 10.6571 11.1218 Norwegian krone NOK 11.4684 11.2405 10.1122 10.5138 Danish krone DKK 7.4513 7.4529 7.4396 7.4365 Translation differences arising from elimination of the cost of foreign subsidiaries and from translation of the foreign subsidiaries’ post-acquisition profits and losses are recognised in other comprehensive income and presented as a separate item within equity. Goodwill and the fair value adjustments to the carrying amounts of assets and liabilities of foreign subsidiaries are accounted for as assets and liabilities of the respective foreign subsidiary, which are translated to euro using the closing rate at the reporting date. If these foreign units are entirely or partly disposed, related exchange rate differences are recognised in profit or loss as part of the gain or loss on disposal. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 171Annual Report 2023 FINANCIAL STATEMENTS 5.2 CHANGES IN GROUP STRUCTURE Sale of Larsen business Anora Group sold its Larsen cognac business to International Beverage Holdings limited as at 29th of September 2023. The disposal includes Anora’s brands Larsen, Renault, Monopol and ibis as well as the company’s subsidiary Larsen S.A.S with its production site in Cognac, France and Anora’s eaux-de vie maturation stock. Critical accounting estimate and management judgement regarding sale of Larsen Cognac business was related to the amount of goodwill derecognised. The derecognised goodwill was determined as the part of the goodwill recorded from the historic purchase of Larsen that was allocated to Spirits business in 2022 (EUR 2.8 million). Management consider that the described method better reflects goodwill associated with the operations disposed compared to the method on the basis of relative values of the operation disposed of and the portion of the cash-generating unit retained. DISPOSED AMOUNTS OF ASSETS AND LIABILITIES EUR million 2023 The carrying amounts of assets and liabilities sold as at the date of sale Goodwill 2.8 Other intangible assets 2.2 Property plant and equipment 4.2 Inventory 31.4 Trade and other receivables 1.7 Cash and cash equivalents 4.2 Total assets 46.4 Deferred tax liabilities 0.1 Employee benefit obligation 0.1 Trade and other payables 1.3 Total liabilities 1.5 Net assets sold 44.9 Total disposal consideration in cash 58.5 Transaction costs -2.0 Total capital gain 11.6 Completion of the Globus Wine acquisition in 2022 On July 1, 2022 Anora completed the acquisition of Globus Wine A/S, the leading wine company in Denmark. The acquired business is reported as part of Anora’s Wine segment as of July 1, 2022. The provisional amounts recognized on the date of the purchase have been adjusted within 12 months after the date of acquisition, to reflect new information obtained about facts and circumstances that existed at the date of acquisition, there were no adjustment made in 2023 to the amounts recored as of 31 December 2022. The final amounts are presented in the table below. RECOGNISED AMOUNTS OF IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED EUR million 2022 Intangible assets 44.3 Property, plant and equipment 7.7 Right of use assets 18.7 Inventory 20.9 Trade and other receivables 15.6 Cash and cash equivalents 0.1 Total Assets 107.3 Interest bearing liabilities 36.6 Deferred tax liabilities 10.9 Trade and other payables 20.2 Total liabilities 67.7 Net assets total 39.6 Goodwill 40.6 Total consideration 80.2 ANALYSIS OF CASH FLOWS OF ACQUISITION EUR million 2022 Purchase consideration, cash payment -80.2 Cash and Cash equivalents, in acquired companies 0.1 Transaction costs of the acquisitions -1.0 Net cash flow from acquisitions -81.1 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 172Annual Report 2023 FINANCIAL STATEMENTS Completion of the Von Elk acquisition in 2022 On September 1, 2022 Anora completed the acquisition of Von Elk Company Oy, mostly known for the brand Glöet, which is one of the most popular sparkling glögg in the Nordics. The acquired business is reported as part of Anora’s Wine segment as of September 1, 2022. The provisional amounts recognized on the date of the purchase have not been adjusted after the date of acquisition. The final amounts are presented in the are presented in the table below. EUR million 2022 Intangible assets 0.3 Property, plant and equipment 0.0 Trade and other receivables 0.0 Cash and cash equivalents 0.2 Total Assets 0.5 Deferred tax liabilities 0.1 Trade and other payables 0.0 Total liabilities 0.1 Net assets total 0.5 Goodwill 0.8 Remeasurement 0.3 Total consideration 1.0 ANALYSIS OF CASH FLOWS OF ACQUISITION EUR million 2022 Purchase consideration, cash payment -1.0 Cash and Cash equivalents, in acquired companies 0.2 Transaction costs of the acquisitions -0.0 Net cash flow from acquisitions -0.8 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 173Annual Report 2023 FINANCIAL STATEMENTS 5.3 SUBSIDIARIES Subsidiaries consolidation principles Consolidated financial statements of Anora include the parent company, Anora Group Plc, and all subsidiaries. Subsidiaries are all those in which the parent company exercises control. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the investee, and could affect those returns through its power over the investee. The financial statements of acquired subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All business combinations are accounted for by using the acquisition method. The consideration transferred and the identifiable assets acquired and liabilities assumed in the acquired company are measured at fair value at the acquisition date. The aggregate amount of the consideration transferred, the amount of non-controlling interests and any previously held equity interest in the acquiree, exceeding the fair value of the net assets acquired is recorded as goodwill.  All acquisition-related costs, with the exception of costs to issue debt or equity securities, are expensed. The consideration transferred does not include any transactions accounted for separately from the acquisition. Any contingent consideration is recognised at fair value at the acquisition date, and it is classified as either liability or equity. Contingent consideration classified as a liability is measured at fair value at each reporting date and any resulting gain or loss is recognised in profit or loss. Intra-group transactions, receivables, liabilities and unrealised gains, as well as the distribution of profits within the Group are eliminated in preparing the consolidated financial statements. Unrealised losses are not eliminated if the loss in question results from impairment. Non-controlling interests’ share of profit after tax is shown on a separate line after the Group’s profit for the year. Non- controlling interests’ share of equity is shown on a separate line as part of the Group’s equity. In some subsidiaries with non-controlling interests, there are put options related to the non-controlling interests. These put options are accounted for separately, see chapter 5.1 Non-controlling interests on how this affects presented non-controlling interests in the income statement and equity. Anora Group Plc had 70 subsidiaries at the end of the reporting period (72 subsidiaries at 31 December 2022) . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 174Annual Report 2023 FINANCIAL STATEMENTS Country of incorporation Parent company’s share of ownership (%) 2023 Group’s share of ownership (%) 2023 Parent company’s share of ownership (%) 2022 Group’s share of ownership (%) 2022 Altia Denmark A/S Denmark 100.0 100.0 100.0 100.0 Altia Norway AS Norway 100.0 100.0 100.0 100.0 Anora Estonia AS Estonia 100.0 100.0 100.0 100.0 Anora Germany GmbH Germany - 100.0 - 100.0 Anora Latvia SIA Latvia 100.0 100.0 100.0 100.0 Anora Prime Brands AS Norway - 100.0 - 100.0 Anora Sweden AB Sweden 100.0 100.0 100.0 100.0 Arcus Brand Lab AS Norway - 100.0 - 100.0 Arcus Co Brands AS Norway - 100.0 - 100.0 Arcus Denmark A/S Denmark - 100.0 - 100.0 Arcus Finland Oy Finland - 100.0 - 100.0 Arcus-Gruppen AS Norway - 100.0 - 100.0 Arcus Holding AS Norway 100.0 100.0 100.0 100.0 Arcus Norway AS Norway - 100.0 - 100.0 Arcus Sweden AB Sweden - 100.0 - 100.0 Arcus Wine Brands AS Norway - 100.0 - 100.0 Atlungstad Håndverksdestilleri AS Norway - 100.0 - 100.0 Best Buys International AS Norway 100.0 100.0 100.0 100.0 BevCo AS Norway - 100.0 - 100.0 Bibendum AB Sweden - 100.0 - 100.0 Bibendum AS Norway 100.0 100.0 100.0 100.0 Brews4U Finland Oy Finland - 91.0 - 91.0 Champagne Sigurd Wongraven AS Norway - 100.0 - 100.0 Classic Wines AS Norway - 100.0 - 100.0 Creative Wines AS Norway - 100.0 - 100.0 Det Danske Spiritus Kompagni A/S Denmark - 100.0 - 100.0 Excellars AS Norway - 100.0 - 100.0 Globus Wine A/S Denmark - 100.0 - 100.0 Globus Wine GmbH Germany - 100.0 - 100.0 Globus Wine Germany GmbH Germany - 100.0 - 100.0 Globus Wine Poland Poland - 0.0 - 100.0 Hedoni Wines AS Norway - 100.0 - 100.0 Heritage Wines Sweden AB Sweden - 93.3 - 93.3 Heyday Wines AS Norway - 90.1 - 90.1 Interbev AS Norway 100.0 100.0 100.0 100.0 Larsen SAS France 0.0 0.0 100.0 100.0 Løiten Brænderis Destillation ANS Norway - 100.0 - 100.0 Country of incorporation Parent company’s share of ownership (%) 2023 Group’s share of ownership (%) 2023 Parent company’s share of ownership (%) 2022 Group’s share of ownership (%) 2022 De Lysholmske Brenneri og Destillasjonsfabrikker ANS Norway - 100.0 - 100.0 Merlot HoldCo ApS Denmark 100.0 100.0 100.0 100.0 Merlot BidCo ApS Denmark - 100.0 - 100.0 New Frontier Wines AB Sweden - 79.6 - 79.6 Oplandske Spritfabrik ANS Norway - 100.0 - 100.0 Philipson & Söderberg AB Sweden - 100.0 - 100.0 Premium Wines AS Norway 100.0 100.0 100.0 100.0 Quaffable Wines Sweden AB Sweden - 79.6 - 79.6 Siemers & Cos Destillasjon ANS Norway - 100.0 - 100.0 Social Wines Oy Finland - 100.0 - 100.0 South Swedish Craft Spirits AB Sweden - 100.0 - 100.0 Sublime Wines AS Norway - 100.0 - 100.0 Summit Wines AS Norway - 100.0 - 100.0 Symposium Wines AS Norway - 100.0 - 100.0 Strøm AS Norway 100.0 100.0 100.0 100.0 Swedish Wine Mafia AB Sweden - 99.5 - 99.5 Valid Wines Sweden AB Sweden - 94.5 - 94.5 Vectura AS Norway - 100.0 - 100.0 Vingaraget AB Sweden - 100.0 - 100.0 Vingruppen AS Norway - 100.0 - 100.0 Vingruppen Oy Finland - 100.0 - 100.0 Vingruppen Holding Sweden AB Sweden - 100.0 - 100.0 Vingruppen i Norden AB Sweden - 100.0 - 100.0 Vinordia AS Norway - 100.0 - 100.0 Vinordia Sweden AB Sweden - 100.0 - 100.0 Vinum Import Oy Finland - 98.1 - 98.1 Vinunic AB Sweden - 94.5 - 94.5 Vinuniq AS Norway - 100.0 - 100.0 Vinunic Oy Finland - 100.0 - 100.0 Von Elk Company Oy Finland 100.0 100.0 100.0 100.0 Oy Wennerco Ab Finland 100.0 100.0 100.0 100.0 The WineAgency Sweden AB Sweden - 99.5 - 99.5 Wineworld Finland Oy Finland - 90.0 - 90.0 Wineworld Sweden AB Sweden - 99.5 - 99.5 Wongraven Wines AS Norway - 90.0 - 90.0 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 175Annual Report 2023 FINANCIAL STATEMENTS 5.4 ASSOCIATED COMPANIES AND JOINT ARRANGEMENTS Associated companies Associated companies are all entities where the Group has joint control or significant influence over an entity but does not have power to control the entity. Normally this is when the Group accompanies a shareholding of over 20% of voting rights or otherwise has significant influence, but not control. Anora has investments in associated companies Palpa Lasi Oy, Tiffon SA, ISH ApS and Beverage Link AS. Associated companies are consolidated by using the equity method. Under the equity method, the investment is initially recognised at cost and subsequently adjusted with the change in the net assets of the investee after the acquisition date, consistent with the ownership interest of the Group. After the acquisition the Group’s share in the associated company’s profit and loss for the period is separately disclosed in the Group’s income statement, presented after operating result. If the Group’s share in the associated company’s loss exceeds the carrying amount of the investment, the investment is recognised at zero value in the consolidated balance sheet and the loss exceeding the carrying amount is not consolidated, unless the Group has committed to fulfil the company’s obligations. An investment in an associated company includes goodwill arisen on acquisition. The Group’s share in changes in the associated company’s other comprehensive income is recognised in consolidated other comprehensive income (OCI). Results from the transactions between the Group and its associates are recognised only to the extent of unrelated investor’s interests in the associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. In case of such indications, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its’ carrying value. The impairment is recognised in share of results in associated companies. Financial statements of associated companies have been changed when necessary to correspond with the accounting policies adopted by the Group. If financial statements for the period are not available, the share of the profit is included in the consolidated financial statements based on the preliminary financial statements or latest available information. Joint arrangements A joint arrangement is an arrangement of which two or more parties have contractually agreed joint control which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. A joint arrangement is either a joint operation or a joint venture .  SHAREHOLDINGS IN ASSOCIATED COMPANIES AND JOINT ARRANGEMENTS Company Nature of relationship Measurement method 2023 Share of ownership % 2022 Share of ownership % Roal Oy, Finland Joint operation Cost 50.0 50.0 Palpa Lasi Oy, Finland Associate Equity 25.5 25.5 Tiffon SA, France Associate Equity 34.8 34.8 Beverage Link AS, Norway Associate Equity 45.0 45.0 ISH ApS, Denmark Associate Equity 26.0 26.0 Roal Oy engages in enzyme business in Finland. Anora has joint control over Roal together with ABF Overseas Limited (“ABF”), but the option right held by the other shareholder represents in substance a receivable with a fixed rate of return and Anora does not have a right to 50% of the net assets until the option lapses. Accordingly, the interest is classified as a joint operation with Anora accounting for its share of assets as a receivable with the annual minimum dividend accounted for as interest income. The receivable amounted to EUR 7.6 million as at 31 December 2023 and 31 December 2022. Palpa Lasi Oy engages in the recycling and re-use of glass beverage packages. Tiffon SA is a cognac producer and the Group buys Cognac from Tiffon SA (Braastad Cognac). Tiffon SA has official accounting year that end 30 June every year. Beverage Link As is a jointly owned logistics company between Vectura AS, Skandinavisk Logistik AS and Cuveco AS. ISH ApS is Danish scale-up company in non-alcoholic spirits, wines and ready-to-drink beverages. ISH currently exports to over 15 countries with a special focus on Scandinavia, Western Europe and North America. Assets held for sale – Roal Oy ABF has notified Anora in December 2023 that they will exercise their call option to acquire Anora Group Plc’s shares in Roal Oy at a fixed purchase price of MEUR 7.6 in Q1 2024. Therefore, as of 31 December 2023 the investment in Roal Oy was classified as available for sale according to criteria’s met in reference to IFRS 5 Non-current assets held for sale and discontinued operations. The call option was formally exercised on 13 February 2024. The transaction is expected to close during Q1 2024.  GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 176Annual Report 2023 FINANCIAL STATEMENTS INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT ARRANGEMENTS 2023 EUR million Roal Oy Tiffon SA ISH ApS Other Total Book value at beginning of the period 7.6 7.2 4.7 1.2 20.7 Acquisition of companies 0.0 0.0 0.0 0.0 0.0 Additions 0.0 0.0 0.1 0.0 0.1 Share of profit during period 0.9 0.3 -0.4 -0.6 0.2 Transfer to subsidiary shares 0.0 0.0 0.0 0.0 0.0 Dividend received -0.9 -0.2 0.0 0.0 -1.1 Translation differences 0.0 0.0 0.0 0.0 0.0 Total 7.6 7.3 4.4 0.6 19.9 Reclassified to assets held for sale -7.6 0.0 0.0 0.0 -7.6 Total book value at end of the period 0.0 7.3 4.4 0.6 12.3 RECONCILIATION TO CARRYING AMOUNT 2023: 2023 EUR million Roal Oy Tiffon SA ISH ApS Other Total Group's share of Net assets N/A 7,3 0,1 0,6 8,0 Goodwill 0.0 0.0 4.3 0.0 4.3 Cost price 7.6 0.0 0.0 0.0 7.6 Carrying amount 7.6 7.3 4.4 0.6 19.9 Reclassified to assets held for sale -7.6 0.0 0.0 0.0 -7.6 Total book value at end of the period 0.0 7.3 4.4 0.6 12.3 INVESTMENTS IN ASSOCIATED COMPANIES AND JOINT ARRANGEMENTS 2022 EUR million Roal Oy Tiffon SA ISH ApS Other Total Book value at beginning of the period 7.6 7.1 0.0 1.6 16.3 Acquisition of companies 0.0 0.0 0.0 0.0 0.0 Additions 0.0 0.0 5.0 0.0 5.0 Share of profit during period 0.9 0.1 -0.3 -0.2 0.4 Transfer to subsidiary shares 0.0 0.0 0.0 -0.3 -0.3 Dividend received -0.9 -0.1 0.0 0.0 -1.0 Translation differences 0.0 0.1 0.0 0.0 0.1 Total 7.6 7.2 4.7 1.2 20.7 RECONCILIATION TO CARRYING AMOUNT 2022: 2022 EUR million Roal Oy Tiffon SA ISH ApS Other Total Group's share of Net assets N/A 7,2 0,3 1,2 8,8 Goodwill 0.0 0.0 4.3 0.0 4.3 Cost price 7.6 0.0 0.0 0.0 7.6 Carrying amount 7.6 7.2 4.7 1.2 20.7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 177Annual Report 2023 FINANCIAL STATEMENTS FINANCIAL SUMMARY OF ASSOCIATED COMPANIES 2023 Balance sheet figures 2023 EUR million Tiffon SA ISH ApS Other Total Current assets Cash and cash equivalents 1.2 0.4 0.4 2.0 Other current assets 33.0 1.3 5.1 39.4 Total current assets 34.2 1.7 5.5 41.4 Non-current assets 2.3 0.1 0.0 2.4 Current liabilities Financial liabilities excluding trade payables 0.0 0.0 0.0 0.0 Other current liabilities 2.6 1.5 3.3 7.4 Total current liabilities 2.6 1.5 3.3 7.4 Non-current liabilities Financial liabilities excluding trade payables 0.0 0.0 0.0 0.0 Other non-current liabilities 12.9 0.0 0.0 12.9 Total non-current liabilities 12.9 0.0 0.0 12.9 Net assets 21.0 0.3 2.2 23.5 Income statement figures 2023 EUR million Tiffon SA ISH ApS Other Total Total revenues 11.3 3.5 13.9 28.7 Depreciation and amortisation -0.4 0.0 0.0 -0.4 Interest income 0.0 0.0 0.0 0.0 Interest expense 0.0 0.0 0.0 0.0 Profit for the period Profit for the period from continuing operations 0.9 -1.5 -2.3 -3.0 Profit for the period from discontinuing operations 0.0 0.0 0.0 0.0 Total profit for the period 0.9 -1.5 -2.3 -3.0 Other comprehensive income 0.0 0.0 0.0 0.0 Total comprehensive income 0.9 -1.5 -2.3 -3.0 FINANCIAL SUMMARY OF ASSOCIATED COMPANIES 2022 Balance sheet figures 2022 EUR million Tiffon SA ISH ApS Other Total Current assets Cash and cash equivalents 1.4 1.9 3.0 6.4 Other current assets 30.4 1.0 5.4 36.9 Total current assets 31.9 3.0 8.5 43.3 Non-current assets 2.0 0.0 0.0 2.1 Current liabilities Financial liabilities excluding trade payables 0.0 0.0 0.0 0.0 Other current liabilities 2.7 1.6 3.9 8.3 Total current liabilities 2.7 1.6 3.9 8.3 Non-current liabilities Financial liabilities excluding trade payables 0.0 0.0 0.0 0.0 Other non-current liabilities 10.4 0.0 0.0 10.4 Total non-current liabilities 10.4 0.0 0.0 10.4 Net assets 20.8 1.3 4.6 26.7 Income statement figures 2022 EUR million Tiffon SA ISH ApS Other Total Total revenues 9.9 1.4 14.8 26.2 Depreciation and amortisation -0.4 0.0 0.0 -0.4 Interest income 0.0 0.0 0.0 0.0 Interest expense 0.0 0.0 0.0 0.0 Profit for the period Profit for the period from continuing operations 0.4 -1.2 -0.9 -1.7 Profit for the period from discontinuing operations 0.0 0.0 0.0 0.0 Total profit for the period 0.4 -1.2 -0.9 -1.7 Other comprehensive income 0.0 0.0 0.0 0.0 Total comprehensive income 0.4 -1.2 -0.9 -1.7 Related party transactions with associated companies and joint arrangements are presented in Note 6.3. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 178Annual Report 2023 FINANCIAL STATEMENTS 6 Other notes OPERATING RESULT OPERATIVE ASSETS AND LIABILITIES FINANCIAL ITEMS AND CAPITAL STRUCTURE FINANCIAL AND CAPITAL RISK CONSOLIDATION OTHER NOTES GOVERNANCE FINANCIAL STATEMENTSREPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY Annual Report 2023 179 BUSINESS OVERVIEW 6.1 INCOME TAX EXPENSE Income tax expense The Group’s income tax expense recognised through profit or loss comprises current tax based on taxable income for the period, any adjustments to tax payable in respect of previous periods, and changes in deferred taxes. Current income tax based on taxable income is calculated according to the local tax regulations of each Group company. Tax effects related to transactions or other events recognised in profit or loss are recognised in profit or loss. If the taxes relate to items of other comprehensive income or transactions or other events recognised directly in equity, income tax expense is recognised within the respective items. The Group’s share of profit or loss in associated companies and joint ventures is reported as calculated from the net profit and thus including the income tax effect. Deferred tax assets and liabilities are principally recognised for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The most significant temporary differences arise from Intangible assets, Property, plant and equipment, Right-of-Use assets and corresponding lease liabilities, carry forward of unused tax losses and fair value allocations on business combinations. Deferred tax on assets and liabilities arising from single transactions are presented in a net basis in the income statement and in the balance sheet, but are shown with gross values in the deferred tax notes. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax liabilities are recognised in full. Deferred taxes are calculated using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax is recognised for foreign subsidiaries undistributed earnings only when related tax effects are probable. Deferred tax assets and liabilities are set off when they are levied by same taxing authority and Anora has legally enforceable right to set off the balances. The legislation implementing the OECD Pillar Two model rules was enacted in Finland in 2023 and will come into effect from January 1, 2024, onwards. Anora applies the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Since the Pillar Two legislation was not effective at the reporting date, no current tax exposure related to Pillar Two taxes exists at December 31, 2023. Anora is in the process of assessing its exposure to the Pillar Two legislation for when it comes into effect. This assessment indicates that Pillar Two legislation is not expected to have a material impact on Anora’s income taxes. Critical estimates and management judgements – Deferred tax assets Judgment is required in assessing whether deferred tax assets are recognised on the balance sheet. Deferred tax assets are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These future cash flow estimates depend on estimates of future sales volumes, price levels of main raw materials, capital expenditure and other components affecting profitability of the operations. These estimates and assumptions are subject to risk and uncertainty hence it is possible that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised on the balance sheet and the amount of any other tax losses and temporary differences not yet recognised. Anora’s ability to generate taxable profit is also subject to general economic, financial, competitive, legislative and regulatory factors that are beyond its control. If Anora generates lower future taxable profits than what management has assumed in determining the amounts of the recognised deferred tax assets, the assets would be impaired, either partly or in full. Accordingly, amounts recognised in balance sheet could potentially be reversed through profit and loss. Changes in circumstances may also result in recognition of deferred tax assets for tax losses that previously have not been recognised as an asset . GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 180Annual Report 2023 FINANCIAL STATEMENTS INCOME TAX EXPENSE EUR million 2023 2022 Current tax expense -4.4 -5.4 Adjustments to taxes for prior periods 0.8 -0.2 Change in deferred taxes 17.4 0.3 Total 13.9 -5.3 The reconciliation of the tax expense recognised in profit and loss and the tax expense calculated using Anora Group’s domestic corporate tax rate (20.0%): RECONCILIATION OF TAX EXPENSE EUR million 2023 2022 Result before taxes -53.9 23.4 Income tax using the parent company tax rate 10.8 -4.7 Effect of tax rates of subsidiaries in foreign jurisdictions 1.8 0.0 Non-taxable income 1.3 0.3 Non-deductable expenses -0.4 -0.7 Utilisation of previously unrecognized tax losses 0.0 0.0 Adjustments to taxes for prior periods 0.8 0.3 Share of profit in assocated companies, net of tax -0.1 -0.1 Tax arising on dividends 0.0 0.0 Tax on undistributed earnings -0.3 -0.1 Other items 0.0 -0.3 Total 13.9 -5.3 INCOME TAX RECOGNISED IN OTHER COMPREHENSIVE INCOME 2023 EUR million Before tax Tax Net of tax Cash flow hedges -6.7 1.0 -5.7 Translation differences -12.8 0.0 -12.8 Remeasurements of post-employment benefit obligations -0.1 0.0 -0.1 Total -19.7 1.0 -18.6 2022 EUR million Before tax Tax Net of tax Cash flow hedges 3.1 -0.7 2.4 Translation differences -16.9 0.0 -16.9 Remeasurements of post-employment benefit obligations 0.1 0.0 0.1 Total -13.7 -0.7 -14.4 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 181Annual Report 2023 FINANCIAL STATEMENTS DEFERRED TAX ASSETS AND LIABILITIES Change in deferred tax assets and liabilities EUR million 1 Jan 2023 Recognised in profit or loss Recognised in OCI Acquired /disposed business Exhange rate differences 31 Dec 2023 Deferred tax assets: Tax losses 3.7 0.2 0.0 0.0 -0.2 3.7 Fixed assets 0.0 2.1 0.0 0.0 0.1 2.2 Lease Liabilities 31.4 -0.6 0.0 0.0 -1.6 29.1 Pension benefits 0.6 0.0 0.0 0.0 0.0 0.5 Other temporary differences 0.5 0.3 0.0 0.0 0.0 0.8 Total deferred tax assets 36.2 2.1 0.0 0.0 -1.8 36.4 Offset against deferred tax liabilities -35.6 -2.9 0.2 0.0 1.9 -36.5 Net deferred tax assets 0.6 -0.8 0.2 0.0 0.0 0.0 Deferred tax liabilities: Fixed assets 4.6 -0.1 0.0 0.3 0.0 4.8 Right-of-use assets 29.7 -13.3 0.0 0.0 -1.8 14.6 Recognised in hedge reserve 1.1 -0.2 -1.0 0.0 0.0 -0.1 Fair value allocation on acquisitions 45.2 -1.9 0.0 0.0 -2.1 41.2 Deductable goodwill depreciation 9.3 -0.2 0.0 0.0 0.0 9.1 Undistributed profits of foreign subsidiaries 1.3 0.3 0.0 0.0 0.0 1.6 Other temporary differences 1.7 0.0 0.0 0.0 0.0 1.7 Total deferred tax liabilities 92.9 -15.3 -1.0 0.3 -3.8 73.0 Offset against deferred tax assets -35.6 -2.9 0.2 0.0 1.9 -36.5 Net deferred tax liabilities 57.3 -18.2 -0.9 0.3 -1.9 36.5 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 182Annual Report 2023 FINANCIAL STATEMENTS DEFERRED TAX ASSETS AND LIABILITIES Change in deferred tax assets and liabilities EUR million 1 Jan 2022 Recognised in profit or loss Recognised in OCI Acquired /disposed business Exhange rate differences 31 Dec 2022 Deferred tax assets: Tax losses 5.8 -2.0 0.0 0.2 -0.2 3.7 Lease Liabilities 29.0 3.9 0.0 0.0 -1.4 31.4 Pension benefits 0.7 0.0 0.0 0.0 0.0 0.6 Other temporary differences 0.6 0.0 0.0 0.0 0.0 0.5 Total deferred tax assets 36.0 1.8 0.0 0.2 -1.7 36.2 Offset against deferred tax liabilities -36.4 -0.2 -35.6 Net deferred tax assets -0.4 0.0 0.6 Deferred tax liabilities: Fixed assets 4.0 -0.1 0.0 0.9 -0.1 4.6 Right-of-Use assets 27.5 3.5 0.0 0.0 -1.3 29.7 Recognised in hedge reserve 0.4 0.0 0.7 0.0 0.0 1.1 Fair value allocation on acquisitions 38.7 -2.0 0.0 9.8 -1.4 45.2 Deductable goodwill depreciation 9.8 0.0 0.0 0.0 -0.5 9.3 Undistributed profits of foreign subsidiaries 1.2 0.1 0.0 0.0 0.0 1.3 Other temporary differences 1.1 0.3 0.0 0.4 -0.2 1.7 Total deferred tax liabilities 82.6 1.9 0.7 11.1 -3.5 92.9 Offset against deferred tax assets -36.4 -35.6 Net deferred tax liabilities 46.2 11.1 -3.5 57.3 At 31 December 2023, the Group had EUR 0.8 million (2022: EUR 0.8 million) of tax loss carry forwards for which no deferred tax was recognised. Anora management estimates these losses arise in subsidiaries which have neither indication of future taxable income nor other convincing evidence that tax losses can be utilised and deferred tax asset be recognised in balance sheet. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 183Annual Report 2023 FINANCIAL STATEMENTS 6.2 COLLATERALS, COMMITMENTS AND CONTINGENT ASSETS AND LIABILITIES EUR million 2023 2022 Collaterals and commitments Collaterals given on behalf of Group companies Mortgages 18.5 18.5 Guarantees 13.0 9.3 TOTAL COLLATERALS 31.5 27.8 Commitments Short-term and low value lease obligations; Less than one year 0.3 0.2 Between one and five years 0.3 0.3 Total short-term and low value lease obligations 0.6 0.5 Other commitments 2.3 18.1 TOTAL COMMITMENTS 2.9 18.6 Collaterals given on behalf of Group companies all relate to commitments to authorities. Short-term and low value obligations consist mainly of laptops. Other commitments include mainly purchase obligations of wine. There are no material contractual commitments for acquisitions of intangible assets. Emission allowances The Group participates in the European Union emission trading scheme, where it has been granted a certain number of carbon dioxide emission allowances for a certain period of time, free of charge. Anora Group Plc discloses its carbon dioxide emission allowances granted free of charge on net basis. The emission allowances granted free are recognised on zero-value. If the Group has sufficient amount of allowances to cover the obligation to deliver allowances corresponding to the amount of emissions made, the obligation is recognised as corresponding value of emissions (zero value). The Group does not recognise income or expenses arising from emission allowances through profit or loss when the emission allowances granted are sufficient to cover the obligation to deliver allowances corresponding to the amount of emissions made. If the realised emissions exceed the granted emission allowances, the obligation arising from the excess emissions is recognised at fair value as a liability in the balance sheet at the reporting date. If the realised emissions fall below the granted emission allowances, the difference is not recognised in the balance sheet but it is disclosed in the notes to the financial statements, measured at fair value. Anora’s actual emissions are below the emission allowances granted. The following table presents changes in allowances for financial years 2023 and 2022, as well as their fair values: Emission allowances, kilotons 2023 2022 Emissions allowances received 22.6 22.6 Excess emission allowances from the previous period 2.0 13.5 Sold emission allowances -2.0 -13.0 Realised emissions -21.6 -21.1 Emission allowances at 31 December 1.0 2.0 Fair value of emission allowances at 31 December, EUR million 0.1 0.2 Anora continues to operate within the emission trading system for the trading period 2021–2030. 6.3 RELATED PARTY TRANSACTIONS The Company’s related parties include the subsidiaries, associated companies and joint arrangements. The subsidiaries are presented in Note 5.3 and the associated companies and joint arrangements in Note 5.4. Related party transactions associated companies and joint arrangements are not eliminated in the Group’s consolidated financial statements. Related parties also include the Board of Directors, the CEO, the members of the Executive Management Team and their family members as well as entities controlled or jointly controlled by these persons. Also, entities that are controlled or jointly controlled by, or are associates of the State of Finland, are related parties of Anora based on the fact that the State of Finland has significant influence over Anora. Anora has applied the exemption to report only material transactions with the government related entities. Transactions with related parties are entered into on market terms. Anora has related party transactions on a continuous basis with its major customer Alko. Transactions with Alko have been presented below under Other companies considered related parties. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 184Annual Report 2023 FINANCIAL STATEMENTS The following transactions have taken place with related parties: EUR million 2023 2022 Sales of goods and services Company Relation Alko Finnish government related entity 91.6 89.6 Tiffon SA Associated company 0.2 0.2 Roal Oy Associated company 0.8 0.4 TOTAL 92.7 90.2 Purchases of goods and services Company Relation Alko Finnish government related entity 1.3 1.6 Hoff SA Shareholder 2.2 2.4 Tiffon SA Associated company 4.0 4.8 Palpa Lasi Oy Associated company 1.7 1.5 Beverage Link AS Associated company 0.1 0.1 TOTAL 9.3 10.5 MANAGEMENT REMUNERATION EUR million 2023 2022 CEO Salaries and other short-term employee benefits 0.6 0.5 Performance bonus and the bonuses from long-term incentive plan 0.0 0.7 Pension benefits 0.1 0.1 TOTAL 0.7 1.3 Members of the Executive Management Team (CEO not included) Salaries and other short-term employee benefits 1.5 1.8 Performance bonus and the bonuses from long-term incentive plan 0.0 0.6 Pension benefits 0.2 0.3 TOTAL 1.7 2.7 Members and deputy members of the Board of Directors 0.5 0.6 No monetary loans have been granted to the CEO or the members of the Board of Directors, nor any collaterals or commitments granted on their behalf. The company and the CEO have not agreed on a retirement age  EUR million 2023 2022 Outstanding balances from sales and purchases of goods and services Receivables Company Relation Alko Finnish government related entity 3.0 5.2 Tiffon SA Associated company 0.0 0.1 Roal Oy Associated company 0.1 0.1 TOTAL 3.1 5.4 Payables Company Relation Alko Finnish government related entity 0.1 0.2 Hoff SA Shareholder 0.3 0.3 Tiffon SA Associated company 0.0 0.9 Palpa Lasi Oy Associated company 0.2 0.2 Beverage Link AS Associated company 0.0 0.0 TOTAL 0.6 1.7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 185Annual Report 2023 FINANCIAL STATEMENTS MANAGEMENT'S SHAREHOLDINGS Executive Management Position Number of shares at 31 Dec 2023 Number of shares at 31 Dec 2022 Jacek Pastuszka CEO 0 0 Sigmund Toth CFO 14,057 14,057 Janne Halttunen SVP, Wine 9,300 9,300 Kirsi Puntila SVP, Spirits 6,666 6,666 Risto Gaggl SVP, Industrial 0 0 Johanna Sundén Chief Human Resource Officser (CHRO) 0 0 Mikkel Pilemand Chief Growth Officer (CGO) 0 0 Hannu Tuominen Resigning SVP, Industrial 9,600 9,600 Kirsi Lehtola Resigning Chief Human Resource Officer (CHRO) 5,100 5,100 Pekka Tennilä Former CEO 0 32,604 Henrik Bodekær Thomsen Former SVP, Spirits 0 258 TOTAL 44,723 77,585 % of total shares 0.07% 0.11% BOARD OF DIRECTOR'S SHAREHOLDINGS Board of Director’s Position Number of shares at 31 Dec 2023 Number of shares at 31 Dec 2022 Michael Holm Johansen Chairperson of the Board 80,000 80,000 Jyrki Mäki-Kala Vice Chairperson of the Board 13,600 1,232 Kirsten Ægidius Board member 6,100 2,440 Christer Kjos Board member 0 0 Annareetta Lumme-Timonen Board member 4,600 0 Torsten Steenholt Board member 20,000 20,000 Florence Rollet Board member 4,620 0 Arne Larsen Board member 0 0 Jussi Mikkola Board member 100 100 Sanna Suvanto-Harsaae Former Board member 0 3,908 Ingeborg Flønes Former Board member 0 1,900 TOTAL 129,020 109,580 % of total shares 0.19% 0.16% 6.4 SHARE-BASED PAYMENTS Anora Group has a share-based long-term incentive scheme for the company’s management and selected key employees, which are settled in shares. The incentive scheme comprises a performance share plan as well as a bridge plan to cover the transition period into the integrated business operations of Anora Group. The granted shares are measured at fair value at the grant date and are recognised as personnel expenses over the vesting period with corresponding increase in equity. Non-market conditions are not included in fair value of share-based instruments but in the number of instruments that are expected to vest. At each reporting period closing date, the estimates about number of instruments are revised and the impact is recognised in income statement. The objectives of the share-based long-term incentive scheme are to align the interests of Anora Group’s management and key employees with those of the company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit management and key employees to achieving Anora Group’s strategic targets and the retention of Anora Group’s key resources. Performance Share Plan The Performance Share Plan consists of annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share rewards. The potential share rewards are paid in listed shares of Anora Group. The commencement of each new plan is subject to a separate decision of Anora Group’s Board of Directors  GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 186Annual Report 2023 FINANCIAL STATEMENTS Performance share plan 2022–2024 The performance share plan 2022–2024 (PSP 2022–2024) commences effective as of the beginning of 2022 and the share rewards payable thereunder will be paid during H1 2025. The payment of the rewards is conditional on the achievement of the performance targets which the Board of Directors has set for the plan. The performance measures based on which the potential share reward under PSP 2022–2024 will be paid, are revenue growth, earnings per share (EPS), the relative total shareholder return of the Company’s share and a measure linked to the reduction of CO 2 emissions. Eligible for participation in PSP 2022–2024 are 33 individuals, including the members of Anora Group’s Executive Management Team. If all the performance targets set for this plan are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 304,517 shares (referring to gross earnings before the withholding of the applicable payroll tax). The estimated aggregate gross value of this plan, based on the current value of Anora Group’s share, is approximately EUR 1.3 million. The materialised value of the plan may deviate from this estimate as a result of share price development and the degree to which the performance targets set for the plan are achieved. Performance share plan 2023–2025 The performance share plan 2023–2025 (PSP 2023–2025) commences effective as of the beginning of 2023 and the share rewards payable thereunder will be paid during H1 2026. The payment of the rewards is conditional on the achievement of the performance targets which the Board of Directors has set for the plan. The performance measures based on which the potential share reward under PSP 2023–2025 will be paid, are revenue growth, earnings per share (EPS), the relative total shareholder return of the Company’s share and a measure linked to ESG – Sustainalytics ESG Risk Rating Score. SHARE-BASED PAYMENTS Plan Performance Share Plan Performance Share Plan 2022-2024 Performance Share Plan 2023-2025 Type Share Share Share Instrument Performance Period 2022–2023 Performance Period 2022–2024 Performance Period 2023–2025 Grant date 17.06.2022 17.06.2022 06.03.2023 Beginning of earning period 01.01.2022 01.01.2022 01.01.2023 End of earning period 31.03.2023 31.03.2024 31.03.2025 Vesting date 31.03.2024 31.03.2025 31.03.2026 Vesting conditions Revenue, EPS, Relative TSR & ESG Revenue, EPS, Relative TSR & ESG Revenue, EPS, Relative TSR & ESG Maximum contractual life, years 2.25 3.25 3.25 Remaining contractual life, years 0.25 1.25 2.25 Number of persons at the end of reporting year 33 33 40 Payment method Equity & Cash Equity & Cash Equity & Cash Changes during period Outstanding in the beginning of the period 251,800 380,400 0 Granted during period 1,500 2,667 468,033 Forfeited during period -30,300 -78,550 -25,100 Extercised during period 0 0 0 Outstanding at the end of the period 223,000 304,517 442,933 Valuation parameters for instruments granted during period Shareprice at grant, EUR 6.07 Shareprice at reporting period end, EUR 4.36 Expected dividends, EUR 0.82 Risk free rate, % 3.1 % Volatility, % 23.8 % Valuation model Monte Carlo Fair value 31.12, EUR 563,120 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 187Annual Report 2023 FINANCIAL STATEMENTS EFFECT OF SHARE-BASED INCENTIVES ON THE RESULT: EUR million 2023 2022 Expenses for the financial year, sharebased payments paid in equity 0.0 0.6 Expenses for the financial year, sharebased payments paid in cash 0.0 0.0 Total 0.0 0.6 EUR million 2023 2022 Liabilities arising from share-based payments 31.12. 0.0 0.0 Total 0.0 0.0 6.5 EVENTS AFTER THE REPORTING PERIOD Anora announced on 8 January 2024 that Anora Group’s CFO Sigmund Toth has resigned from his position. He will continue in his current position until 1 August 2024, at the latest. Sigmund remains highly committed to contribute to the company’s success during his notice period, including ensuring a smooth handover to his successor. The Board of Directors of Anora Group Plc announced on 14 February 2024 that it has approved the commencement of a new plan period within the share-based long-term incentive scheme for the management and selected key employees. Eligible for participation in PSP 2024-2026 are approximately 50 individuals, including the members of Anora Group’s Executive Management Team. If the performance targets set for PSP 2024–2026 are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 1,294,000 shares (referring to gross earning before the withholding of the applicable payroll tax). The aggregate maximum number of shares to be paid in specifi c situations based on RSP 2024–2026 is approximately 129,000 shares (referring to gross earning before the withholding of the applicable payroll tax). Eligible for participation in PSP 2023–2025 are 33 individuals, including the members of Anora Group’s Executive Management Team. If all the performance targets set for this plan are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 442,933 shares (referring to gross earnings before the withholding of the applicable payroll tax). The estimated aggregate gross value of the PSP 2023–2025, based on the current value of Anora Group’s share, is approximately EUR 1.9 million. The materialised value of the plan may deviate from this estimate as a result of share price development and the degree to which the performance targets set for the plan are achieved. Bridge Plan for the years 2022–2023 The Bridge Plan was established to cover specific incentive and retention needs during the transaction related transition period during which the joint businesses of Altia Plc and Arcus ASA were integrated in connection with the formation of Anora Group. The Bridge Plan was a one-off plan commencing effective as of the beginning of 2022 and its performance period covered the years 2022–2023. The potential share rewards payable based on the Bridge Plan would have been paid in listed shares of Anora Group during H1 2024. The payment of the share rewards was conditional on the achievement of the performance targets which the Board of Directors has set for the plan. These performance targets were not met, and there will therefore not be any rewards based on this bridge plan in 2024. Other terms The value of the reward payable to participants based on the plans is limited by a share price development-based cutter. If the individual’s employment with Anora Group terminates before the payment of the reward, the individual is, as a main rule, not entitled to any reward based on the respective plan. Anora announced on 8 March 2024 that Stein Eriksen (49), M.Sc. (Econ.), has been appointed as CFO and a member of the Executive Management Team of Anora Group from the beginning of August 2024. He will report to Jacek Pastuszka, CEO. Stein Eriksen’s latest position has been CFO of the Norwegian stock-listed company XXL ASA, the largest sports retailer in the Nordic countries. He has also acted in a combined role as the Interim CEO and CFO of XXL ASA. Prior to that, he has had a long career at the Norwegian stock-listed blue-chip company Orkla, a leading industrial investment company focused on brands and consumer-oriented companies. At Orkla, Stein’s most recent positions were CFO at Orkla Care and SVP Finance at Orkla ASA GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 188Annual Report 2023 FINANCIAL STATEMENTS Parent company financial statements ANORA GROUP PLC INCOME STATEMENT (FAS) EUR million Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022 NET SALES 1. 250.4 246.1 Increase (+) / decrease (-) in inventories of finished goods and work in progress -5.1 4.6 Other operating income 2. 25.9 20.2 Materials and services Raw materials, consumables and goods Purchases during the period -137.4 -175.3 Change in inventories -13.1 13.0 External services -0.6 -0.2 Total materials and services -151.1 -162.5 Personnel expenses 3. Wages and salaries -25.8 -23.8 Indirect employee expenses Pension expenses -4.3 -3.8 Other indirect employee expenses -0.9 -0.8 Total personnel expenses -31.1 -28.4 Depreciation, amortisation and impairment losses Depreciation and amortisation according to plan 8. -9.0 -9.8 Total depreciation, amortisation and impairment losses -9.0 -9.8 Other operating expenses 4. -61.0 -59.1 OPERATING RESULT 19.1 11.1 EUR million Note 1 Jan-31 Dec 2023 1 Jan–31 Dec 2022 Finance income and expenses 5. Income from Group companies 33.1 32.0 Income from participating interests 0.9 0.9 Other interest and finance income From Group companies 4.3 0.2 From others than Group companies 18.3 0.7 Impairment losses on investments in non-current assets -58.7 -1.1 Interest and other finance expenses To Group companies -2.5 -0.6 To others than Group companies -25.2 -4.0 Total finance income and expenses -29.6 28.2 RESULT BEFORE APPROPRIATIONS AND TAXES -10.6 39.3 Appropriations 6. Depreciation difference increase (-) / decrease (+) 1.0 1.4 Income tax expense 7. Current period taxes -2.4 -1.8 Deferred taxes 0.4 0.0 Other direct taxes 0.0 0.0 Total income taxes -2.0 -1.8 RESULT FOR THE PERIOD -11.5 38.9 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 189Annual Report 2023 FINANCIAL STATEMENTS ANORA GROUP PLC BALANCE SHEET (FAS) EUR million Note 31 Dec 2023 31 Dec 2022 ASSETS NON-CURRENT ASSETS 8. Intangible assets Intangible rights 0.4 3.1 Other capitalized long-term expenditure 4.0 3.4 Prepayments 1.3 2.1 Intangible assets total 5.8 8.5 Tangible assets Land and water areas 2.5 2.5 Buildings and structures 17.5 17.3 Machinery and equipment 21.5 22.1 Other tangible assets 0.5 0.5 Prepayments and assets under construction 5.3 4.0 Tangible assets total 47.3 46.4 Investments Holdings in Group companies 232.3 325.2 Participating interests 13.2 13.0 Other shares and investments 0.6 0.6 Investments total 246.1 338.9 TOTAL NON-CURRENT ASSETS 299.1 393.8 EUR million Note 31 Dec 2023 31 Dec 2022 CURRENT ASSETS Inventories 9. Materials and supplies 22.3 35.4 Work in progress 4.0 8.6 Finished goods 16.5 17.0 Advance payments 0.0 - Inventories total 42.8 61.0 Non-current receivables 10. Receivables from Group companies 56.4 14.8 Deferred tax assets 0.7 0.3 Non-current receivables total 57.1 15.1 Current receivables 11. Trade receivables 29.9 36.4 Receivables from Group companies 21.4 93.6 Receivables from participating interest undertakings 0.1 0.1 Accrued income and prepaid expenses 3.2 9.4 Current receivables total 54.6 139.5 Cash at hand and in banks 131.9 44.3 TOTAL CURRENT ASSETS 286.4 259.9 TOTAL ASSETS 585.6 653.7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 190Annual Report 2023 FINANCIAL STATEMENTS ANORA GROUP PLC BALANCE SHEET (FAS) EUR million Note 31 Dec 2023 31 Dec 2022 EQUITY AND LIABILITIES Equity 13. Share capital 61.5 61.5 Invested unrestricted equity fund 52.2 52.2 Hedge reserve 0.4 4.4 Retained earnings 59.5 35.5 Profit for the period -11.5 38.9 TOTAL EQUITY 162.0 192.5 Appropriations 14. Depreciation difference 16.1 17.1 Liabilities Non-current 15. Loans from financial institutions 210.0 210.0 Loans from pension institutions 5.3 6.8 Deferred tax liabilities 0.1 1.1 Other liabilities - 4.9 Non-current liabilities total 215.3 222.8 Current Loans from financial institutions - 30.0 Loans from pension institutions 1.5 1.5 Trade payables 15.5 17.4 Liabilities to Group companies 16. 91.7 90.2 Other liabilities 63.6 62.2 Accrued expenses and deferred income 17. 19.8 20.0 Current liabilities total 192.1 221.3 TOTAL LIABILITIES 407.5 444.1 TOTAL EQUITY AND LIABILITIES 585.6 653.7 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 191Annual Report 2023 FINANCIAL STATEMENTS ANORA GROUP PLC STATEMENT OF CASH FLOWS (FAS) EUR million Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022 CASH FLOW FROM OPERATING ACTIVITIES Result before taxes -9.5 40.7 Adjustments Depreciation, amortisation and impairment 9.0 9.8 Gain/loss from disposal of property, plant and equipment and intangible assets -5.7 -0.8 Finance income and costs 29.6 -28.2 Change in depreciation difference -1.0 -1.4 Other adjustments 2.0 0.2 Adjustments total 33.9 -20.5 Change in working capital Change in inventories, increase (-) / decrease (+) 8.5 -17.6 Change in trade and other receivables, increase (-) / decrease (+) 9.1 -23.2 Change in trade and other payables, increase (+) / decrease (-) -6.9 -5.3 Change in working capital 10.7 -46.2 Interest paid -16.2 -3.2 Interest received 6.8 0.8 Other finance income and expenses paid -2.9 -1.4 Income taxes paid -2.3 -0.5 Financial items and taxes -14.5 -4.3 NET CASH FLOW FROM OPERATING ACTIVITIES 20.6 -30.3 EUR million Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022 CASH FLOW FROM INVESTING ACTIVITIES Payments for property, plant and equipment and intangible assets -9.0 -7.1 Proceeds from sale of property, plant and equipment and intangible assets 2. 0.5 0.9 Investments in subsidiaries - -81.9 Investments in participating interests -0.1 -5.0 Proceeds from disposals of subsidiaries (net of cash) 56.5 - Loans granted to subsidiaries -6.7 -82.5 Repayments of loans to subsidiaries 35.9 - Dividends received 5. 34.0 33.0 NET CASH FLOW FROM INVESTING ACTIVITIES 111.1 -142.7 CASH FLOW FROM FINANCING ACTIVITIES Changes in commercial paper program -30.0 10.0 Proceeds from current borrowings 16. 2.3 -38.2 Proceeds from non-current borrowings - 293.5 Repayment of non-current borrowings 15. -1.5 -145.0 Dividends paid and other distributions of profits 13. -14.9 -30.4 NET CASH FLOW FROM FINANCING ACTIVITIES -44.0 89.9 CHANGE IN CASH AND CASH EQUIVALENTS 87.6 -83.1 Cash and cash equivalents at the beginning of the period 44.3 127.4 Change in cash and cash equivalents 87.6 -83.1 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 131.9 44.3 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 192Annual Report 2023 FINANCIAL STATEMENTS NOTES TO ANORA GROUP PLC FINANCIAL STATEMENTS Accounting policies for financial statements   Non-current assets and depreciations                  Inventories                Pension plans     Cash Pool    Leases  Financial Derivatives             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development expenditure   Financial securities   Receivables  Sale of trade receivables    Non-current financial liabilities  Income taxes    Foreign currency denominated items    GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 194Annual Report 2023 FINANCIAL STATEMENTS 1. NET SALES EUR million 2023 2022 Net sales by business areas Alcohol beverages 130.0 119.2 Industrial services 120.4 127.0 TOTAL 250.4 246.1 Net sales by geographic areas Finland 191.1 186.2 Europe 57.9 57.8 Rest of the world 1.4 2.1 TOTAL 250.4 246.1 2. OTHER OPERATING INCOME EUR million 2023 2022 Rental income 1.2 1.2 Income from energy sales 4.0 4.2 Proceeds from disposal of non-current assets 5.7 0.8 Service income 12.6 10.5 Other income 2.3 3.4 TOTAL 25.9 20.2 * includes sales gain of trademarks related to sale of Larsen SAS (EUR 5.3 million) ** includes sales gain of inventory related to sale of Larsen SAS (EUR 0.8 million). See also Group Note 5.2. for more information. 4. OTHER OPERATING EXPENSES EUR million 2023 2022 Rental expenses -1.6 -1.6 Marketing expenses -6.9 -7.3 Energy expenses -9.5 -9.1 Travel and representation expenses -1.2 -1.2 Repair and maintenance expenses -7.1 -7.1 IT expenses -9.2 -8.1 Outsourcing services -11.2 -11.6 Variable sales expenses -5.8 -5.9 Other expenses -8.5 -7.2 TOTAL -61.0 -59.1 Auditor's fees Audit fees -0.5 -0.3 Other fees -0.1 -0.1 TOTAL -0.6 -0.4 Environmental expenses   3. NOTES RELATED TO PERSONNEL EUR million 2023 2022 Wages and salaries -25.8 -23.8 Pension expenses -4.3 -3.8 Other social expenses -0.9 -0.8 TOTAL -31.1 -28.4 EUR million 2023 2022 Fringe benefits (taxable value) -0.7 -0.6 The average number of personnel during the reporting period 2023 2022 Workers 196 195 Clerical employees 227 211 TOTAL 423 406 EUR million 2023 2022 CEO -0.6 -0.5 Board members -0.5 -0.6 Pension commitments of the Board and CEO  GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 195Annual Report 2023 FINANCIAL STATEMENTS 5. FINANCE INCOME AND EXPENSES EUR million 2023 2022 Dividend income From Group companies 33.1 32.0 From participating interest undertakings 0.9 0.9 Total dividend income 34.0 33.0 Interest income From Group companies 4.3 0.2 From others 2.5 0.6 Total interest income 6.9 0.8 Other finance income From others 15.8 0.2 Total other finance income 15.8 0.2 TOTAL FINANCE INCOME 56.7 33.9 Interest expenses To Group companies -2.5 -0.6 To others -13.6 -2.5 Total interest expenses -16.1 -3.1 Other finance expenses To others Impairment losses on investments in non-current assets -58.7 -1.1 Other finance expenses -11.6 -1.5 Total other finance expenses -70.3 -2.6 TOTAL FINANCE EXPENSE -86.4 -5.7 TOTAL FINANCE INCOME AND EXPENSES -29.6 28.2 The following items are included in finance items of the income statement from fair value hedges: Other finance income Fair value changes of derivatives -0.2 0.0  Group Note 5.2. for more information. ** Impairment losses on investments in non-current assets includes write-downs of shares in subsidiaries. 6. APPROPRIATIONS EUR million 2023 2022 Difference between depreciations according to plan and depreciations made in taxation: Intangible rights 0.7 0.3 Other intangible assets -0.4 0.0 Buildings and structures 0.3 0.5 Machinery and equipment 0.4 0.5 Other tangible assets 0.0 0.0 TOTAL 1.0 1.4 7. INCOME TAX EXPENSE EUR million 2023 2022 Income taxes from current period -2.4 -1.8 Income taxes from previous periods 0.0 0.0 Change in deferred tax assets 0.4 0.0 TOTAL -2.0 -1.8 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 196Annual Report 2023 FINANCIAL STATEMENTS 8. SPECIFICATION OF NON-CURRENT ASSETS EUR million 2023 2022 Intangible assets Intangible rights Acquisition cost at 1 January 33.2 33.1 Additions 0.1 0.1 Disposals -15.6 0.0 Transfers between items 0.1 - Acquisition cost at 31 December 17.7 33.2 Accumulated amortisation at 1 January -30.1 -28.5 Accumulated amortisation on disposals and transfers 13.8 0.0 Amortisation for the period -1.0 -1.7 Accumulated amortisation at 31 December -17.3 -30.1 CARRYING AMOUNT AT 31 DECEMBER 0.4 3.1 Goodwill Acquisition cost at 1 January 18.7 18.7 Acquisition cost at 31 December 18.7 18.7 Accumulated amortisation at 1 January -18.7 -18.5 Amortisation for the period - -0.2 Accumulated amortisation at 31 December -18.7 -18.7 CARRYING AMOUNT AT 31 DECEMBER - - Other intangible assets Acquisition cost at 1 January 27.7 27.3 Additions 1.2 0.2 Transfers between items 2.0 0.3 Acquisition cost at 31 December 30.9 27.7 Accumulated amortisation at 1 January -24.4 -22.1 Amortisation for the period -2.5 -2.3 Accumulated amortisation at 31 December -26.9 -24.4 CARRYING AMOUNT AT 31 DECEMBER 4.0 3.4 Prepayments in intangible assets Acquisition cost at 1 January 2.1 0.8 Additions 1.3 1.6 Transfers between items -2.1 -0.3 CARRYING AMOUNT AT 31 DECEMBER 1.3 2.1 EUR million 2023 2022 Tangible assets Land and water areas Acquisition cost at 1 January 2.5 2.5 Additions - 0.0 Transfers between items 0.0 - Disposals 0.0 0.0 CARRYING AMOUNT AT 31 DECEMBER 2.5 2.5 Buildings and structures Acquisition cost at 1 January 100.6 99.7 Additions 1.2 0.7 Transfers between items 0.9 0.3 Disposals -0.1 -0.1 Acquisition cost at 31 December 102.7 100.6 Accumulated depreciation at 1 January -83.3 -81.3 Accumulated depreciation on disposals and transfers 0.1 0.0 Depreciation for the period -1.9 -2.1 Accumulated depreciation at 31 December -85.2 -83.3 CARRYING AMOUNT AT 31 DECEMBER 17.5 17.3 Machinery and equipment Acquisition cost at 1 January 125.1 124.3 Additions 1.8 1.0 Transfers between items 1.1 0.2 Disposals -16.9 -0.3 Acquisition cost at 31 December 111.1 125.1 Accumulated depreciation at 1 January -103.0 -99.6 Accumulated depreciation on disposals and transfers 16.9 0.1 Depreciation for the period -3.5 -3.6 Accumulated depreciation at 31 December -89.6 -103.0 CARRYING AMOUNT AT 31 DECEMBER 21.5 22.1 Other tangible assets Acquisition cost at 1 January 0.5 0.5 Acquisition cost at 31 December 0.5 0.5 CARRYING AMOUNT AT 31 DECEMBER 0.5 0.5 Prepayments and assets under construction Acquisition cost at 1 January 4.0 0.9 Additions 3.4 3.6 Transfers between items -2.1 -0.5 CARRYING AMOUNT AT 31 DECEMBER 5.3 4.0 CARRYING AMOUNT OF MACHINERY AND EQUIPMENT USED IN PRODUCTION AT 31 DECEMBER 21.2 21.8 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 197Annual Report 2023 FINANCIAL STATEMENTS EUR million 2023 2022 Investments Holdings in Group companies Acquisition cost at 1 January 485.1 402.9 Additions - 81.9 Disposals -34.3 - Transfer from partisipating interests - 0.2 Acquisition cost at 31 December 450.8 485.1 Accumulated impairment at 1 January -159.9 -158.8 Impairment -58.7 -1.1 Accumulated impairment at 31 December -218.6 -159.9 CARRYING AMOUNT AT 31 DECEMBER 232.3 325.2 Participating interests Acquisition cost at 1 January 13.0 8.2 Additions 0.1 5.0 Transfer to holdings in group companies - -0.2 CARRYING AMOUNT AT 31 DECEMBER 13.2 13.0 Other shares and investments Acquisition cost at 1 January 0.6 0.6 CARRYING AMOUNT AT 31 DECEMBER 0.6 0.6 During year 2023 Anora Group Plc sold its Larsen cognac business, including shares of Larsen, inventory and trademarks. Sales gain from shares EUR 6.6 million is included in Finance income (Note 5). Sales gain from trademarks and inventory totaling EUR 6.1 million is included in Other operating income (Note 2). Selling expenses EUR 2.0 million were posted in Other operating expenses and have been reducing the total sales gain. See more information also in Group note 5.2. 9. INVENTORY   10. NON-CURRENT RECEIVABLES EUR million 2023 2022 Receivables from Group companies Loan receivables 56.4 14.8 Deferred tax assets Non-deductible interest expenses 0.4 - Fixed assets deferred depreciations 0.3 0.3 Deferred tax assets total 0.7 0.3 TOTAL NON-CURRENT RECEIVABLES 57.1 15.1 11. CURRENT RECEIVABLES EUR million 2023 2022 Receivables from Group companies Trade receivables 8.1 9.7 Loan receivables 0.3 71.1 Cash Pool receivables 1.9 3.3 Other receivables 3.5 4.5 Derivatives 1.5 0.0 Accrued income and prepaid expenses 6.2 5.0 Total 21.4 93.6 Receivables from participating interest undertakings Trade receivables 0.1 0.1 Total 0.1 0.1 Receivables from others Trade receivables* 29.9 36.4 Accrued income and prepaid expenses 3.2 9.4 Total 33.1 45.8 TOTAL CURRENT RECEIVABLES 54.6 139.5 Accrued income and prepaid expenses Significant items in accrued income and prepaid expenses: Derivatives 0.8 5.8 Others 2.3 3.6 Total 3.2 9.4 * Does not include the sold trade receivables GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 198Annual Report 2023 FINANCIAL STATEMENTS 12. DISCLOSURES ON FAIR VALUES (DERIVATIVES) 2023 2022 EUR million Fair value 31 Dec Changes in the fair value recognised in the income statement Changes in the fair value recognised in fair value reserve Fair value 31 Dec Changes in the fair value recognised in the income statement Changes in the fair value recognised in fair value reserve Derivative instruments Interest rate derivatives (level 2) - - - 0.0 - 0.0 Foreign exchange derivatives ( level 2) -0.6 -0.2 -0.4 0.0 0.0 0.0 Commodity derivatives (level 2) 0.8 - 0.8 5.4 - 5.4 TOTAL 0.2 -0.2 0.4 5.5 0.0 5.5 13. EQUITY EUR million 2023 2022 Restricted equity Share capital at 1 January 61.5 61.5 Share capital at 31 December 61.5 61.5 Hedge reserve at 1 January 4.4 1.5 Additions and disposals -4.1 2.9 Hedge reserve at 31 December 0.4 4.4 Total restricted equity 61.9 65.9 Unrestricted equity Invested unrestricted equity fund at 1 January 52.2 52.2 Invested unrestricted equity fund at 31 December 52.2 52.2 Retained earnings at 1 January 74.4 65.9 Distribution of dividends -14.9 -30.4 Profit for the period -11.5 38.9 Retained earnings at 31 December 48.0 74.4 Total unrestricted equity 100.2 126.6 TOTAL EQUITY 162.0 192.5 Distributable unrestricted equity Calculation of distributable equity: Invested unrestricted equity fund 52.2 52.2 Retained earnings at 1 January 74.4 65.9 Distribution of dividends -14.9 -30.4 Profit for the period -11.5 38.9 TOTAL DISTRIBUTABLE UNRESTRICTED EQUITY 100.2 126.6 Company’s share capital: Number of shares outstanding at the end of the period 67,553,624 67,553,624 GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 199Annual Report 2023 FINANCIAL STATEMENTS 14. APPROPRIATIONS EUR million 2023 2022 Depreciation difference Intangible rights 0.1 0.9 Other intangible assets 0.7 0.3 Buildings and structures 0.7 1.0 Machinery and equipment 14.6 14.9 Other tangible assets 0.0 0.0 TOTAL 16.1 17.1 15. LIABILITIES EUR million 2023 2022 Non-current Loans from financial institutions 210.0 210.0 Loans from pension institutions 5.3 6.8 Deferred tax liabilities 0.1 1.1 Other liabilities - 4.9 TOTAL 215.3 222.8 16. LIABILITIES TO GROUP COMPANIES EUR million 2023 2022 Trade payables 0.7 0.9 Cash Pool liabilities 88.9 88.0 Derivative instruments - 0.2 Other accrued expenses 2.2 1.0 TOTAL 91.7 90.2 17. ACCRUED EXPENSES AND DEFERRED INCOME EUR million 2023 2022 Significant items under accrued expenses: Holiday pay and other wages and salaries 5.7 5.1 Contract discount 0.9 0.5 Procurement expenses and other accrued expenses 10.6 13.8 Taxes 0.6 0.5 Derivative instruments 2.1 0.1 TOTAL 19.8 20.0 18. COLLATERALS AND COMMITMENTS EUR million 2023 2022 Collaterals given on behalf of the Group companies Mortgages 18.5 18.5 Guarantees 7.1 4.1 TOTAL COLLATERALS 25.6 22.6 Commitments and other contingencies Operating and finance lease obligations Not later than one year 0.7 0.6 Later than one year 0.8 0.8 Total 1.5 1.4 Lease obligations Not later than one year 0.7 0.7 Later than one year 2.9 0.9 Total 3.7 1.6 Other obligations Not later than one year 2.3 2.6 Total 2.3 2.6 TOTAL COMMITMENTS 7.5 5.6 VAT liability for real estate investments     GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 200Annual Report 2023 FINANCIAL STATEMENTS DERIVATIVE CONTRACTS EUR million 2023 2022 Electricity derivatives Fair value 0.8 5.4 Nominal value 1.2 2.4 Amount (TWh) 0.0 0.1 Parent company's external forward exchange contracts Fair value -2.1 0.2 Nominal value 101.5 22.1 Parent company's internal forward exchange contracts Fair value -1.5 -0.2 Nominal value 49.9 7.8 Interest rate derivatives Fair value - 0.0 Nominal value - 20.0 Emission allowances (kilotons) 2023 2022 Emission allowances received 22.6 22.6 Excess emission allowances from the previous year 2.0 13.5 Sold emission allowances -2.0 -13.0 Realised emissions -21.6 -21.1 EMISSION ALLOWANCES AT 31 DECEMBER 1.0 2.0 Fair value of the remaining emission allowances, EUR thousand 53 161     19. RELATED PARTY TRANSACTIONS     GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 201Annual Report 2023 FINANCIAL STATEMENTS Board of Directors’ proposal for the distribution of profits                     The Auditors’ Note       GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 202Annual Report 2023 FINANCIAL STATEMENTS Auditor’s Report  Report on the Audit of the Financial Statements Opinion  •    •     What we have audited   •    •  Basis for Opinion      Independence         Our Audit Approach Overview Materiality Audit Scope Key Audit Matters •   •    •  •  •   GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 203Annual Report 2023 FINANCIAL STATEMENTS     Materiality           Overall group materiality  How we determined it  Rationale for the materiality benchmark applied        How we tailored our group audit scope        Key Audit Matters        GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 204Annual Report 2023 FINANCIAL STATEMENTS Key audit matter in the audit of the group How our audit addressed the key audit matter Revenue recognition Refer to note 1.2 in the consolidated financial statements. Anora’s revenue is generated from the sale of own wine and spirits products and partner brands, contract manufacturing, sale of logistic services and sale of industrial products. The transaction price may include variable considerations such as volume discounts, bonuses, marketing support and product returns. Due to a variety of contractual terms, the calculation of the period’s variable consideration is an accounting area that requires management judgement. We have also considered the risk that revenue is not recorded in the correct period to be a key audit matter. Our audit procedures included e.g. the following: • We gained an understanding of the nature of the revenue streams and different contractual terms used. • We assessed the group’s accounting policies over revenue recognition. • We tested, on a sample basis, accounting treatment of variable considerations to the terms of underlying agreements. • We performed reconciliation of the whole product revenue of the significant entities in Finland to underlying invoices and delivery documents. We gained an understanding of unreconciled transactions and tested these, on a sample basis, to relevant supporting documents. • For other significant entities outside of Finland and other revenue streams, we tested, on a sample basis, sales transactions to incoming cash. • We examined a sample of credit notes during 2023 and subsequent year end to relevant supporting documents. • We tested a sample of sales invoices recorded in December 2023 and January 2024 to evaluate that revenue had been recognised in the right period. • We obtained customers confirmations for selected revenue and accounts receivable. Valuation of inventory Refer to note 2.4 in the consolidated financial statements. Inventory forms a significant part of the Group’s assets, amounting to € 144 million as of 31 December 2023. Inventories are measured at the lower of cost and net realizable value. Self-manufactured products are measured at standard cost which approximate weighted average cost formula. Fixed and variable production costs are allocated to the cost of manufactured products. Management exercises judgement and applies assumptions when estimating the need for an obsolescence provision. This includes identification of slow moving and seasonal products, changes in product portfolio and consideration of sales forecasts. Given the factors described above, we have considered valuation of inventory to be a key audit matter. Our audit procedures included e.g. the following: • We gained an understanding of the controls established in relation to inventory valuation. • We tested the key reconciliations between general ledger and inventory ledger. • We assessed the adequacy of the obsolescence provision and checked adherence to the Group’s accounting policy. • We tested, on a sample basis, the accuracy of cost for self-manufactured products by comparing the actual production costs to market and other price data. • We tested a sample of inventory items to confirm whether they are held at the lower of cost and net realisable value, through comparison to vendor invoices and sales prices. • For a sample of warehouses, we attended the physical stock-take counting or reconciled third party confirmations with the accounting records. This included observation and / or inquiries in relation to overall inventory condition. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 205Annual Report 2023 FINANCIAL STATEMENTS Key audit matter in the audit of the group How our audit addressed the key audit matter Valuation of tangible and intangible assets Refer to note 2.1, 2.2 and 2.3 in the consolidated financial statements. Valuation of tangible and intangible assets, including goodwill allocated to Wine and Spirits cash generating units and production and logistics assets in Norway. The group reports goodwill totalling to € 304 million, property plant and equipment of € 63 million and right of use assets of € 68 million as of 31 December 2023. Goodwill is allocated to Wine and Spirits cash generating units. Management tests goodwill for potential impairment annually and whenever there is an indication that the carrying value may be impaired through comparing the recoverable amount against the carrying value of each cash generating unit. Impairment tests are performed at operating segment level. The recoverable amounts are determined using the value in use method. Property, plant and equipment and right of use assets are tested for impairment only when indicators of impairment exist. Management identified indicators of impairment for the group’s production and logistics operations in Gjelleråsen, Norway. Therefore, management performed impairment testing for these Production and Logistics cash generating units and certain individual assets within. As a result, the total amount of impairment recognised in the period was approximately € 65 million in relation to production and logistics operations in Gjelleråsen. Valuation of goodwill and other assets is a key audit matter due to its financial significance as well as due to the high level of management judgement involved in relation to the number of underlying assumptions used to determine the recoverable amount, including the revenue growth, EBITDA, capital expenditures, working capital, market rentals and discount rates applied to free cash-flows. In addition, methodology of determining and allocating impairment, when identified, is complex. Our audit of goodwill and production and logistics assets valuation focussed on critical estimates and management’s judgement. We have assessed the appropriateness of these through the following procedures: • We obtained an understanding and evaluated the methodology applied in calculations of recoverable amount for relevant cash generating units by comparing it to the requirements of IAS 36, “Impairment of Assets”. • We obtained an understanding and evaluated the methodology applied in determining appropriate level of impairment testing and allocation of identified impairment for production and logistics operations in Norway. • We evaluated and challenged management’s future cash flow forecasts and the process by which they were drawn up, including comparing them to the latest Board approved budgets, and assessing reasonableness of future sales and profitability projections post the budget period. • We compared the current year actual results to the figures for the financial year ended 31 December 2022 included in the prior year impairment models to assess accuracy of management’s historic forecasts. • We involved our valuation experts to assess the reasonableness of the discount rates and long- term growth rates used in goodwill impairment testing. • Our property valuation experts evaluated and challenged market rentals and discount rates used in the calculation of recoverable amount of the production and logistics leased facilities in Norway. • We considered the appropriateness of assumptions used in the sensitivity analysis performed by management. • We considered the adequacy of the related disclosures provided in note 2.1 and 2.2 of the group’s financial statements. We have no key audit matters to report with respect to our audit of the parent company financial statements. There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the parent company financial statements. GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 206Annual Report 2023 FINANCIAL STATEMENTS Responsibilities of the Board of Directors and the Managing Director for the Financial Statements              Auditor’s Responsibilities for the Audit of the Financial Statements     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  GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 207Annual Report 2023 FINANCIAL STATEMENTS Other Reporting Requirements Appointment   Other Information      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   PricewaterhouseCoopers Oy    GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 208Annual Report 2023 FINANCIAL STATEMENTS Independent Auditor’s Reasonable Assurance Report on Anora Group Oyj’s ESEF Financial Statements (Translation of the Finnish Original)      Management’s Responsibility for the ESEF Financial Statements      Our Independence and Quality Management          Our Responsibility                Opinion       PricewaterhouseCoopers O    GOVERNANCEBUSINESS OVERVIEW REPORT BY THE BOARD OF DIRECTORS SUSTAINABILITY 209Annual Report 2023 FINANCIAL STATEMENTS Anora Group Plc P.O. 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