Elopak ASA

Annual Report (ESEF) • Apr 10, 2024

Elopak ASA Combined annual and sustainability report 2023 Advancing our sustainable growth We are in the business of combating climate change and driving a more circular economy, and it is our obligation to leave behind a better earth for the next generation. Being sustainable is core to our organization and we ensure economic growth without exploiting the resources or the people of this planet. Advancing our sustainable growt h Combined annual and sustainability report 2023 CEO letter to shareholders 4 This is Elopak 6 Elopak at a glance 7 Sustainable value creation 11 Our peformance 14 Executing on our sustainability driven growth strategy 15 People 19 Planet 26 Profit 34 Governance 41 Corporate governance 42 Sustainability governance 57 Financials 61 Consolidated financial statements 62 Elopak ASA financial statements 117 Responsibility statement 137 Auditor’s report 138 PwC limited assurance report on GHG statement 143 Alternative Performance Measures (APMs) 145 ESG metrics 148 Appendices 155 Risk factors and responses 156 Double materiality assessment 162 Stakeholder engagement 166 Description of all material topics 168 Sustainability methodology 194 Contents How to read the report This document constitutes the Statutory annual report in accordance with Norwegian requirements for Elopak Group for the year ended December 31, 2023. The report is filed with the Norwegian Register of company accounts. This report presents the Board of Director’s report on pages 14 –53 . Combined annual and sustainability report 2023   CEO letter to shareholders Advancing our sustainable growth 2023 has been an important year in advancing our sustainable growth. We have expanded our market pres- ence, announced a new production plant in the US, and continued our path to become a net zero company by 2050. This year, we celebrated 15 years of structured sustainability work. In recognition of our dedication, we received an A+ score for our ESG reporting from Position Green, placing Elopak in the top 5% of companies best prepared for the introduction of the European Sustainability Reporting Standards. In addition, we achieved an EcoVadis Gold rating for our performance with a score that places us in the top 2% of all rated companies worldwide. We are pleased to report 33% decrease in scope 1 and 2 greenhouse gas emissions from 2020. These developments reflect our continued commitment to environmental, social, and ethical excellence in our journey towards becoming a net zero company by 2050. From a market point of view, inflationary pressures and market fluctuations persisted. Consequently, consumers experienced lower purchasing power, affecting consumption somewhat in our core segments. In addition, the global economy was char- acterized by supply chain disruptions and tight labor markets. Despite challenges, Elopak grew its business and profitability through right prioritization, continued market interest in our Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 4 4 CEO letter to shareholders offering, and a conscious pricing policy. This paved the way for a significant investment decision in the company’s history, namely to build a new production plant in Little Rock, Arkansas. As our US market share has increased rapidly over the last years, this is an important step to enable continued growth. Production is expected to begin in the first half of 2025, adding over 100 new skilled professionals to our global workforce. Financially, we look back on a strong year and I am pleased to confirm that the Elopak team has delivered on all the 3-5-year midterm targets set in the IPO in 2021. Revenues grew by 9.4% organically, adjusted EBITDA margin was 15.1%, and the leverage ratio at year end was 1.9x. This strengthened balance sheet represents a solid foundation for further growth – the leverage ratio of 1.9 is below our midterm target and also below the level prior to the Naturepak acquisition in 2021, the establishment of GLS Elopak and the exit out of Russia. This demonstrates the resilience of the company and is a testament to the hard work and dedication of our employees. During the year, we have improved our capabilities by welcoming a record of 166 new colleagues across the world. Together with the rest of our colleagues, we will continue to strengthen our partnerships with customers and suppliers. Looking back, I would like to say a big thank you to all our colleagues, customers, suppliers and partners for fantastic collaborations and results achieved throughout the year. Thomas Körmendi, CEO “Financially, we look back on a strong year and I am pleased to confirm that the Elopak team has delivered on all the 3-5-year midterm targets set in the IPO in 2021.“ Thomas Körmendi, CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 5 5 CEO letter to shareholders This is Elopak Combined annual and sustainability report 2023 6 This is Elopak 1915 Patent for Pure-Pak ® granted 1957 Elopak was founded 2021 Listed on Oslo Børs 2022 Net zero target 2014 Sustainability report 2016 100% renewable electricity 2018 Science based targets 1987 Elopak becomes owner of Pure-Pak ® license world wide Our history Elopak at a glance Elopak is a leading, global provider of carton packaging, filling equipment and technical services. Founded in Norway in 1957, we employ approximately 2 700 people and operate 11 manufacturing units globally. Each year, we sell approximately 14 billion cartons across more than 70 markets. The company is listed on the Oslo Stock Exchange (Oslo Børs). Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 7 7 This is Elopak | Elopak at a glance This is Elopak | Elopak at a glance We develop and supply fiber based packaging under the following product brands: Pure-Pak ® cartons for fresh and aseptic liquid food Roll Fed packaging for aseptic liquid food D-PAK™ cartons for non food products for personal and home care All our product brands are made using renewable, recyclable and sustainably sourced materials, providing natural and convenient alternatives to plastic bottles that fit within a low carbon, circular economy. Decades of investment in innovation have greatly expanded our product portfolio, allowing us to pioneer solutions that help customers lower their carbon footprint and empower consumers to make responsible choices. Our product portfolio represents globally trusted, sustainable packaging solutions for liquid content, used daily around the world. Filling machines State of the art offerings Packaging solutions Sustainable cartons and closure options Technical services Value added support Our offering Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 8 8 This is Elopak | Elopak at a glance This is Elopak | Elopak at a glance Key figures 1,132 €‌ Revenue‌ 1 170.9 €‌ Adjusted EBITDA‌ 1 33% Scope 1 and 2 emissions reduction from 2020 baseline 30% Of all milk cartons in Europe fully renewable +10.5% Revenue growth 15.1% Adjusted EBITDA margin 100% Scope 2 – % of renewable electricity used 94% Of employees completed Code of Conduct training 3.8 Total Recordable Incident rate 1.9x Leverage ratio 2% Scope 3 total emissions reduction from 2020 baseline 1 Numbers in EUR million Combined annual and sustainability report 2023 9 This is Elopak | Elopak at a glance Machine production Coating plants Converting plants Roll Fed production Market unit offices HQ, Corporate office, Technology center Joint ventures Licensee partners Main footprints Elopak has a sophisticated production network, with market units and associates in over 40 countries, helping to serve customers all over the world. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 10 10 This is Elopak | Elopak at a glance This is Elopak | Elopak at a glance Sustainable value creation With the overall vision ‘Chosen by people, packaged by nature’, we set out to offer natural and responsible alternatives to plastic packaging. Integrating the perspectives of people, planet and profit is a key principle when executing our sustainability driven growth strategy. It is our firm belief that this commitment is our strongest asset for profitable growth. We do this through expanding our fresh and aseptic market share, while also marketing our products to brands traditionally filled in plastic packaging. Additionally, we are working to grow our presence in new geographical markets, whilst continuously improving the way we operate across the world. In the following sections, we cover our material sustainability topics, risks and responses, before information on the Elopak share. Information on our strategy execu- tion progress can be found in the section “Executing on our sustainability driven growth strategy” within the “Our performance” chapter. Combined annual and sustainability report 2023 11 11 This is Elopak | Sustainable value creation This is Elopak | Sustainable value creation Material topics Double materiality is a concept that enables companies to identify their impacts on society and the environment, as well as the impact various external factors may have on the Company (risks and opportunities). The process helps companies determine relevant and significant focus areas (material topics). Elopak conducted a double materiality assess- ment in 2023, building on established baseline from previous years, and adding to our climate risk and opportunity assessment conducted in 2022. Using the UN Sustainable Development Goals (UN SDGs), the Global Reporting Initiative (GRI) and the EU’s new European Sustainability Reporting Standards (ESRS) frameworks as guiding principles, Elopak’s approach focuses on key social, environmental and governance issues relevant to our company. Our GRI index can be found here: https://www.elopak.com/annual-reports/ documenta tion People Our workforce Business conduct Responsible supply chains Elopak’s material topics are listed below, and further presented throughout the report. Planet Climate Nature Circularity Profit Financial stability Growth Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 12 12 This is Elopak | Sustainable value creation This is Elopak | Sustainable value creation Risk factors and responses Elopak’s Board and Management is committed to proactive and effective risk management to ensure an adequate level of risk exposure. It is the Board and management’s opinion that Elopak has taken appropriate measures to ensure an acceptable and appropriate level of risk exposure through its business model, procedures, and actions. Risk management procedures are described in the risk section in the Governance chapter. To the right is a consolidated overview of what Elopak considers its main risk factors. Market risk, credit risk and liquidity risk are discussed further in Note 25 of the Group Consolidated Financial Statements, while the extended risk description and risk responses are described in the section Risk factors and responses in the Appendix. Risk type Risk factor Short description People risks Corruption and business partner risk Operating in countries associated with high corruption risk and working with high risk business partners, including agents, exposes Elopak to corruption and integrity risks Human and labor rights risk Risks relating to human rights in high risk countries throughout the value chain; from sourcing and production to markets and recycling. Risk exposure to human rights breaches is driven by complex regulatory requirements Capability risk Knowledge and resource constraints may challenge support scaling and delivery of long term value creation Planet risks Physical impacts Risks related to physical climate change (e.g. flooding, draught, wildfires etc.) Transition impacts Risks and opportunities related to the societal and economic shift toward a more climate-friendly future (e.g. regulatory or technological development) Profits risks Raw material and energy – availability and price Dependency on raw materials such as board, plastic resin, aluminium foil and energy. Cost and availability fluctuations Market dynamics – consumption Macro changes over the past years may trigger downward pressure in dairy and juice consumption in some markets Cyber security risk Security breaches, including unauthorized access to systems and other cyber threats Geopolitical and market presence risk Operating in 40 countries, and supplying in over 70, may expose Elopak to instability that may impact performance Investment and integration Investment in new businesses, for example through acquisitions may expose Elopak to integration risk and failure to achieve anticipated results Inflation rates and capital cost The past years’ inflation increases, and subsequently increases to interest rate, have triggered lower cash generation and higher cost of capital Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 13 13 This is Elopak | Sustainable value creation This is Elopak | Sustainable value creation Our performance Combined annual and sustainability report 2023 14 Our peformance Executing on our sustainability driven growth strategy Our commitment to sustainable fiber based packaging paves the way for future growth. 2023 was a year of significant milestones for Elopak. Despite global economic and geopolit- ical headwinds, the company grew its business, increased profitability, and made the largest investment decision for a new plant in the Company's history. Inflationary pressures remained high throughout the year and created challenging economic conditions for consumers, which impacted consumption in most geographies where Elopak operates. In addition, supply chain disruptions continued, which affected Elopak’s commissioning of filling machines. To deliver now and in the future competence is key for our industry, Elopak worked diligently with recruitment, culture development and promotion to attract and retain talent. At the IPO in 2021, Elopak defined its 3-5 year midterm targets. In 2023, the company delivered on all these targets. Elopak achieved an organic growth of 9.4%, an EBITDA margin of 15.1%, a leverage ratio of 1.9x, and the Board proposes a dividend of NOK 1.46 per share, corresponding to 50% of adjusted net profit to shareholders. The below section provides an overview of how Elopak has deployed its five profitable growth drivers in 2023. Combined annual and sustainability report 2023 15 15 Our peformance | Executing on our sustainability driven growth strategy Our peformance | Executing on our sustainability driven growth strategy Expand our fresh market share in North America Elopak’s North American operations grew significantly in 2023. This was driven by a strong momentum driving market share in both dairy and juice segments. Elopak continues to deliver increased profitability in the region, mainly driven by market share growth, margin accretive product mix effects and efficient operations. Furthermore, CO 2 emissions have been significantly reduced through improve- ments such as reusing warmth from exhaust sealers and compressor rooms to heat the building, in combination with heat pumps. In December, Elopak announced the site of our new U.S. production plant in Little Rock Arkansas. With Elopak’s market share in North America expanding rapidly for several years, this is a pivotal step in responding to customer demand. Production is expected to begin in the first half of 2025. Since the initial announcement in June 2023, we have signed new contracts with some of our existing customers in the region, further strengthening the investment case. Drive market share in aseptic markets Over the past years, Elopak has developed a strong aseptic platform, with both filling equipment and carton solutions. The Pure- Fill machine platform optimizes energy and water consumption, saves space for our customers, and ensures easy integration in production processes to reduce waste. The first machines have already been installed and are in full production. The Pure-Pak ® eSense is an aluminium free aseptic carton with up to 50% lower carbon footprint than a standard Pure-Pak ® aseptic carton, while also simpli- fying full recyclability. Broaden and strengthen our geographic footprint Elopak continues to strengthen its presence in MENA and India, bringing packaging solutions to new and attractive markets. In 2023, Elopak upgraded the plant in Casablanca to introduce more size options, allowing the company to offer a broader product portfolio. Despite the market in MENA being impacted by drought, economic downturn and competition, the region delivered increased revenue for Elopak as well as profitability in 2023 and is expected to deliver further growth. In India, our partly owned subsidiary GLS Elopak is offering Roll Fed aseptic cartons under the brand “ALPAK” in various sizes to meet the growing demand for sustainable packaging solutions. GLS Elopak has been established to manufacture and process high- quality fresh and aseptic packaging solutions, which are designed to ensure that liquid food is safe and accessible to consumers. The company will cater to both the fresh and aseptic segments with applications such as dairy, plant-based drinks, juice, water and liquor. Elopak’s ambition is to be a top 3 player in the market and become a full solution provider, introducing Pure-Pak ® fresh cartons, Pure-Pak ® aseptic cartons and complemen- tary solutions. Although still in its early stages, the operation has shown real potential, deliv- ering ahead of plan in 2023 and is on track to deliver revenue of EUR 80-100 million in 2027. “This is our first converting plant in the U.S. and a landmark investment for our company. North America is a key building block for our future growth, and we are very excited about expanding our presence in the region. I would like to thank all parties involved for enabling the next step in our North American growth journey” Thomas Körmendi, CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 16 16 Our peformance | Executing on our sustainability driven growth strategy Our peformance | Executing on our sustainability driven growth strategy Accelerate growth by replacing plastics with cartons Elopak’ s cartons are established as a natural alternative to plastic bottles with several end use applications, from milk and juice to non-food household products. Over the past years, we see that brands are converting from plastic bottles to fiber based packaging. Many do this as they consider cartons a more environmentally friendly choice compared to plastics. Our D-PAK™ carton portfolio for liquid non-food household products has attracted interest from both high profile global customers and strong local brands. The D-PAK™ range showcases Elopak's develop- ment and innovation capabilities, incorporating market leading technology and packaging solutions. The hand soap and detergent refill carton segment represents a significant potential market for personal care product brands. World’s largest franchise brand of yogurt chooses Elopak cartons Yoplait yogurt is now offered in 750 ml Pure-Pak ® Sense cartons in France One carton replaces 6 plastic pots of yogurt and reduces packaging material with 50% 85% of consumers asked preferred cartons over plastic pots for their spoonable Yoplait yogurts Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 17 17 Our peformance | Executing on our sustainability driven growth strategy Our peformance | Executing on our sustainability driven growth strategy Drive commercial excellence through margin optimization, value engineering and operational improvement Elopak has demonstrated its ability to adapt and meet market challenges head on through pricing initiatives as well as cost control. As part of Elopak’s sustainability driven growth strategy, the company implemented a pricing governance, which has been successfully used to battle the significant cost inflation of the last two years and protect the company’s margins. Additionally, in terms of plant effi- ciency, waste was kept at historically low levels in 2023. Elopak has a long history of contin- uous improvements, and the efficiency and quality of the plants are generally high. Elopak was also able to cut its scope 1 and 2 emissions according to plan, amounting to a cut of 1.115 tons (13%) versus 2022 and 2.829 tons (33%) versus 2020. “We’re always looking for new and exciting ways to innovate our products to be better for the planet and more convenient for our customers, and Elopak’s D-PAK™ carton is an instrumental next step for smol to further cut our use of plastic bottles; taking the refill revolution one step forward, starting off with our washing up liquid and fabric conditioner.“ Nick Green, Co-founder of smol Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 18 18 Our peformance | Executing on our sustainability driven growth strategy Our peformance | Executing on our sustainability driven growth strategy People Our workforce At Elopak we aim to provide a safe, engaging, and inclusive workplace. Our vision, “Chosen by people, packaged by nature” puts people at its core and our culture is founded on our promises to ‘Empower, Unite, and Accelerate’. We strive to ensure that our employees have a sense of belonging and that these promises guide our behavior and help us act as one Elopak. This is hardwired in all our policies and procedures and reflected in our Employer Value Proposition (EVP). Safety As part of the llong term safety plan we can conclude 2023 was a good year for safety. The number of recorded injuries ended at a historically low level. This is thanks to continued development in technical safety boosted by safety culture activities. Elopak makes no compromises on safety and aims for zero work related injuries. As part of that journey Elopak had Total Recordable Injury (TRI) frequency rate target at 5.0 for 2023 and reached 3.8. Total recordable injury rate 7.5 5.6 3.8 2021 0 2 4 8 6 2022 2023 Combined annual and sustainability report 2023 19 19 Our peformance | People Our peformance | People Health, wellbeing, culture and engagement Securing a sustainable, healthy, fair, and motivating workplace is achieved through a systematic approach to the various stages in the employee life cycle – from attraction to off-boarding. All managers and team leaders are responsible for creating and maintaining a healthy working environment. Absence due to sickness (long and short term) was reduced somewhat from 4.3% in 2022 to 4.2% in 2023, still above our global target of 3%. The main reason for this development is increased virus and flu variants in Europe during 2023, coupled with our encouragement to stay at home when sick. Workplaces worldwide must adapt to challenges with increased sick-leave rates. Elopak is continuously improving our work environment by evaluating existing and relevant activities related to both physical and psychological issues. In addition to setting goals as part of our performance management process, we focus on personal development plans, wellbeing, and our three promises. Our goal is for a minimum of 85% of staff to have documented perfor- mance and development dialogue meetings. In 2023 we reached 86%. We encourage our employees to learn and take charge of their own development and we offer a single platform for all global learning programs, including a wide range of courses. We also provide several regional and local training activities with a broad focus, from leadership to safety. The learning platform allows us to track training and thus ensure compliance with our Code of Conduct, Anti-Corruption Policy, GDPR (General Data Protection Regulation), safety requirements and other relevant courses. We measure employee satisfaction through a company wide survey. In 2023, 73% took the opportunity to give their valuable feedback about working at Elopak. The overall scores show that Elopak is considered to be a good and fair employer. Data showed that we offer our employees a physically and psychologically safe workplace where they can use their skills and contribute based on who they are. In regular follow-up talks with management, more than 300 action plans have been created, ranging from safety to culture related goals and ambitions. We depend on motivated and qualified managers and team leaders to meet chal- lenges and changes in an increasingly complex world. In 2023, we continued our leadership development programs and we gathered our top 100 leaders to align on strategy, leadership and culture. To further strengthen our culture, we organized a structured culture program of surveys, digital conversations and leader- ship workshops. We also appointed culture champions to help and support leaders in Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 20 20 Our peformance | People Our peformance | People driving culture changes and acting as culture ambassadors. We have significantly reduced our attri- tion rate in 2023 and we have invested in strengthening our employer brand. In 2023 we measured engagement through our employer Net Promoter Score (eNPS), which improved by 72% in 2023 compared to 2022. We launched our first graduate program in 2023. It focuses on our technical value chain and business, with individual development plans, coaching and dedicated mentors to nurture our graduates. The global graduate program aims to strengthen our employer brand amongst the younger generations. Labor rights Respecting universal human and labor rights standards in line with human rights as defined by the United Nations, we work systematically to identify and address risks and potential breaches throughout our operations, supply chain and business partners. Decent labor and working conditions are safeguarded by various policies, procedures, guidelines, and training available to all employees. 61% of our workforce is covered by local work councils and/or national collective bargaining agreements. Through frequent formal and informal dialogues, we maintain a strong working relationship with both local work councils and unions as well as with our European Workers Council. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 21 21 Our peformance | People Our peformance | People Diversity and inclusion Elopak’s workforce are represented in 40 countries – all representing different cultures. Hence, the company pays respect to multiple diversity aspects, including genders. The packaging industry has traditionally been dominated by men, which is still visible in our distribution/numbers. We aim for a balanced distribution of genders across all levels as reflected in our policies, covering recruitment, diversity, equity and inclusion. Female 21% Male 79% 2023 Female 22% Male 78% 2022 Female 22% Male 78% 2021 Board of Directors Female Male 43% 57% 43% 57% 43% 57% 2023 2022 2021 Senior managers (2 nd level) Female Male 33% 67% 32% 68% 37% 63% 2023 2022 2021 Line managers Female Male 20% 80% 18% 82% 2023 2022 2021 20% 80% Management team incl. CEO Female Male 10% 90% 11% 89% 2023 2022 2021 10% 90% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 22 22 Our peformance | People Our peformance | People Business conduct Compliance risk management An ethics and compliance risk assessment is conducted for all Elopak operations. In 2023, key risks included business partner risk (specifically joint venture integrity), corruption risk and human rights risk. Ethics and compliance training In 2023, 94% of Elopak’s employees conducted the annual mandatory Code of Conduct training, either through an e-learning course or in person training. The training covers key topics in the Code of Conduct, including anti-corruption, business partner integrity and human rights. In the training, our employees confirmed to have read and under- stood Elopak’s Code of Conduct. Reported concerns of misconduct Elopak is committed to building a culture of trust where employees feel comfortable to ask questions and report any suspected breaches of our Code of Conduct, internal policies and procedures, and/or laws and regulations. In 2023, we conducted a campaign on group level, where the objective was to strengthen our speak up culture by creating more aware- ness on what to speak up about and how to speak up. During the campaign, 82% of our employees conducted the training on speaking up, and 75% of our managers completed specific training on handling concerns. There were five concerns reported through the Elopak whistleblower helpline and through other channels in 2023. Of these reported concerns, three cases were related to human resource issues. In 2022, there were six cases reported through the whistleblower helpline. Based on the training efforts on speaking up in 2023, we would expect to see more reports of misconduct. In Elopak, we had 0.19 reports per 100 employees‌.‌ 1 This is low in comparison to companies of similar size. Hence, we will conduct a survey in 2024 to get further insights into the character- istics of Elopak’s speak up culture. 1 Footnote: Based on Elopak having 2 700 people working for the group, including Joint Ventures Year Accounting, auditing and financial reporting Business integrity (corruption, bribery, conflict of interest, etc.) Human resources, diversity and workplace respect Environment, health and safety Misuse and misappropriation of corporate assets Other 2023 - 1 3 - - 1 2022 - 2 3 - - 1 2021 - 2 1 - - - Table 1: Number of reported concerns by area – 2021-2023 Combined annual and sustainability report 2023 23 23 Our peformance | People Our peformance | People Business partner integrity Joint ventures compliance reviews Throughout 2023, we held meetings with key personnel in our joint ventures to review how they work with compliance. In 2023, we established a compliance network for our Indian joint venture. There are dedi- cated compliance champions representing the business areas and support functions of GLS Elopak, and management meets regularly with the compliance champions to discuss and strengthen compliance in the organization. During the on-site visit to our joint venture partner in India in 2023, we conducted compliance training of all compliance champions in key policies and procedures, including the code of conduct. Additionally, focus for the on-site visit was to strengthen cooperation and discuss and align on main compliance risks. Training In 2023, employees in exposed positions received training on how Elopak works with business partners, focusing on our integrity due diligence process. 98% of the target group (total of 309 employees) conducted the e-learning on awareness of business partner risk and 67% of the same target group completed the e-learning for our internal procedures. Data privacy and protection In 2023, we conducted a GDPR audit to ensure continuous learning and compliance with privacy legislation. Elopak has not received any complaints from data subjects, nor any notifications of complaints related to Elopak’s processing of personal data from local super- visory authorities. All registered personal data breaches are related to employees’ personal data, not customers’ personal data. We have in total received 5 inquiries in 2023 through our Global Data Protection Officer. Human rights Human and labor rights is a dedicated section of the annual and mandatory Code of Conduct training provided to all employees. In 2023, we introduced a new human rights e-learning course which was made available to all employees. Further e-learning courses covering topics on responsible business practices, speaking up and reporting concerns were also made accessible to employees. In December, we celebrated the UN’s Human Rights Day by sharing news and insights on our intranet and providing human rights training for employees. 24 24 Our peformance | People Our peformance | People Responsible supply chain In 2023, 95 suppliers, accounting for approxi- mately 75% of total spend, had been assessed by Ecovadis and/or via our internal supplier integrity due diligence questionnaire and process covering social and environmental criteria. This mainly included direct suppliers that provide raw materials for our cartons, packaging and filling machines to customers and indirect suppliers mainly related to logistics and transport, plants investments, IT, cleaning services and other significant and/or critical indirect suppliers. We continued implementing our Global Supplier Code of Conduct (updated in 2022) in all operations and sites including Morocco, Saudi Arabia and joint venture in India. For active and potential high risk suppliers, supplying from high risk countries, in depth integ- rity due diligence assessments were conducted with support from an external partner. We continued to observe responsible business conduct requirements in supplier contracts through our standard Terms and Conditions for different Business Areas. All new or renegotiated contracts will take heed of our standard Responsible Business Conduct requirements. We have further improved our supplier due diligence framework by better integrating human rights considerations into the existing audit framework. This includes an updated SAQ (supplier assessment questionnaire) including more specific questions on human rights and labor. In addition, specific supplier human rights capacity building and maturity assessments were conducted for selected key suppliers. We continued implementing our supplier qualification and due diligence framework across our operations and sites in Morocco, Saudi Arabia and our joint venture in India. Corporate Procurement has strengthened the governance and giving the global procurement network training. The relevant training related to use suppliers that are fulfilling our require- ments to responsible suppliers. The % of all suppliers that have signed, accepted or demonstrated conformance to the Elopak Global Supplier Code of Conduct decreased by 2% compared to 2022. A broader scope including operations in Morocco and Saudi Arabia and re-engagement with suppliers on our updated SCoC which has taken more time are the main factors behind this reduction. Elopak is subject to annual corporate social responsibility reporting requirements pursuant to section 3-3c of the Norwegian Accounting Act. The reporting is covered within this report. Elopak will publish a statement of due dili- gence assessments in accordance with the Transparency Act on https://www.elopak. com/other-reports-presentations / before June 30, 2024. Performance Targets Ensure all key suppliers accept our Supplier Code of Conduct and are assessed for social responsibility and environmental criteria by 2025. KPIs KPI reference Status 2023 a) % of raw material suppliers (by spend) signed, accepted or demontrated confomrance to Elopak Global Supplier Code of Conduct Self-defined a) 97% b) % of all suppliers (by spend) signed, accepted or demontrated conformance to Elopak Global Supplier Code of Conduct Self-defined b) 80% c) % of suppliers (by spend) assessed for environmental and social impact GRI 308-2a c) 77% GRI 414-2a Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 25 25 Our peformance | People Our peformance | People Planet Climate Performance Targets 42% reduction of Elopak’s direct emissions (scope 1 and residual scope 2) by 2030 25% reduction of value chain emission (scope 3) by 2030 KPIs KPI reference Status 2023 Change in scope 1 and 2 emissions (% from 2020 baseline) GRI 305-5 –33% Change in scope 3 emissions (% from 2020 baseline) GRI 305-5 +0.6% Elopak’s science based targets Scope 1 Natural gas, propane, heating, oil, waste incineration, wood 42% reduction by 2030 42% Scope 2 Electricity, district heating Continue to purchase 100% renewable electricity 100% 25% Scope 3 Business travel, transport, raw materials and filling machines 25% reduction across the value chain by 2030 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 26 26 Our peformance | Planet Our peformance | Planet Scope 1 Late in 2022 Elopak completed renovation on our plant in Montreal, reusing heat from exhaust sealers and compressor rooms to heat the building, in combination with heat pumps for other heating. The plant has cut as much as 60% in the natural gas use from 2022 to 2023. This contributed to a 30% reduction for the Group in the same period. The learnings from the Montreal project can be transferred to other plants in Elopak and is shown to be a cost effective way of driving down our emissions and reusing waste heat. In some cases, we will still rely on gas or resist- ance heaters, due to heat pump efficiency dropping too low past -15 degrees Celsius. With the significant achieved reduction in 2023, we aim to reach our science based targets before 2030. Even so, we will of course continue our program to further reduce our emission footprint beyond the target. Scope 2 Elopak sources 100% renewable electricity for all our sites, sourced from the countries where we have our main operations. Elopak sources certificates close to our sites. We used the following sources for the supply of renewable electricity at our sites. -33% 1 In 2023, the emissions from our own production (scope 1 and residual scope 2) were 5.718 tons of CO 2 e 1 Compared to a 2020 baseline Region System Origin Europe Guarantees of Origin (GO) Hydropower plants, Norway Ukraine Polish Guarantees of Origin (GO) Photovoltaic Array installations, Poland North America Renewable Energy Certificates (RECs) Texas Wind Power plant, USA Morocco International Renewable Electricity Certificates (I-RECs) Wind plant, Morocco Saudi Arabia International Renewable Electricity Certificates (I-RECs) Solar plant, UAE India International Renewable Electricity Certificates (I-RECs) Hydropower plant, India Israel International Renewable Electricity Certificates (I-RECs) SHNEUR TZE'ELIM Solar powerplant, Israel We used the following sources for the supply of renewable electricity at our sites: 100% 100% renewable electricity 2023 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 27 27 Our peformance | Planet Our peformance | Planet Scope 3 In 2023, our scope 3 emissions for the categories included in the scope of our Science-based Targets increased by 0.6% compared to the 2020 baseline. This is fully related to the high volume of sold filling machines in 2023. For the other categories we see a total reduction of 6%. Our total scope 3 emissions were reduced by 2% compared to 2020. The different categories for scope 3 emissions are presented and described the sustainability methodology section in the appendix. All cate- gories are estimated and reported in the data tables. In addition, we highlight the categories included in the scope of our Science-based Targets. They are the most important catego- ries within which Elopak can make an impact through both internal measures and value chain collaboration. The categories included in our Science-based Targets are: raw mate- rials (part of purchased goods and services), business travel, transport and distribution, and filling machines in operation. +0.6% In 2023, Elpak's scope 3 emissions included in SBT were 545 085 tons of CO 2 e 1 Compared to a 2020 baseline Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 28 28 Our peformance | Planet Our peformance | Planet Average footprint per carton More environmentally friendly cartons include brown board as well as the use of bio circular polyethylene. In 2023, the volume of brown board cartons in Europe was stable from 2022. Comparing the carbon footprint of brown board vs. bleached board, the 2023 volume of brown board has contributed to an emission reduction of more than 2 100 tons. Accumulated reduction from introduction of brown board is more than 9 000 tons. 32.1 gCO 2 e/carton 2014 27.1 gCO 2 e/carton 2017 25.0 gCO 2 e/carton 2019 24.8 gCO 2 e/carton 2021 23.3 gCO 2 e/carton 2023 28.0 gCO 2 e/carton 2015 27.3 gCO 2 e/carton 2016 24.9 gCO 2 e/carton 2018 25.4 gCO 2 e/carton 2020 23.9 gCO 2 e/carton 2022 Carbon footprint of average Elopak PE carton with closure. Based in internal cradle-to-gate calculations in Elopak's DEEP tool, version 14. The numbers represent an average 1 liter PE coated carton with closure sold in Europe, for fresh dairy products. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 29 29 Our peformance | Planet Our peformance | Planet The below figure shows the main raw materials purchased by Elopak in comparison to the mate- rials’ climate impact. Paperboard, being by far the main raw material, represents less than half of our materials’ climate impact. While aluminium by weight only represents 2% of our raw material purchase, it represents 17% of the emissions from our raw materials. Paperboard Polymers Aluminium Material consumption overview – paperboard, polymers, aluminium 17% 81% 41% 42% 17% 2% Different materials purchased by the Elopak Group Carbon footprint of different raw materials Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 30 30 Our peformance | Planet Our peformance | Planet Purchased goods and services The main contributor to our scope 3 emissions is the raw materials used in our products. Changes in emissions from year to year in this category are strongly correlated to volume development in our sold products. Still, they are also over time impacted by measures taken by our suppliers and the efficiency of our products and processes. Demand is a key driver for change in our industry, and we see increased demand for our low emission products. This will help drive scope 3 emissions down, in conjunction with measures taken by our producers. The emissions from purchased goods and services included in our Science-based Targets decreased by 8% in 2023 compared to our 2020 baseline. The increased share of cartons with features like renewable PE and brown board is the main factor behind this reduction. From 2022 to 2023 the reduction is 3%. Business travel Even though business travel only accounts for 0.6% of our total scope 3 emissions, it is a tangible and manageable factor we can aim to reduce directly. Hence, we want to highlight how these emissions develop and the meas- ures we take to reduce them. Our travel activity was drastically reduced in 2020, 2021 and partly 2022 due to the Covid 19 pandemic 2023 has represented a return to the need for collaboration as well as an increased activity level, in particular related to service. Still, valuable lessons have been learned, and our goal is to reduce business travel as much as possible and transition to increased use of digital meeting points and digital tools. We encourage employees to choose online meetings and make use of digital communications whenever possible. Our emissions related to travel were up 48% compared to last year, and up 159% compared to our 2020 baseline. Compared to 2019, the year before the pandemic, our emissions are reduced by 1%. Transport and distribution In recent years, we’ve launched initiatives to enhance the fill rate of our transportation system. This fill rate is determined by assessing how much of the floor space within our trans- port equipment is utilized. Additionally, we’re actively working to optimize our transport routes, aiming to minimize the total distance traveled. Furthermore, alongside our focus on the fill rate, we’ve introduced measures to achieve a higher pallet load. This involves adding extra layers of cartons per pallet, contributing to more efficient transport and storage. Going forwards we will initiate new projects and explore new opportunities for electric vehi- cles, biofuel and logistic optimizations. Emissions from transport decreased by 6% from 2022 to 2023, mainly due to the mix of weight and distances and updated emission factors. Compared to 2020, the emissions are reduced by 3%. Filling machines in operation Elopak develops and offers a wide range of state-of-the-art filling machines to efficiently fill fresh, extended shelf life (ESL) and aseptic liquid food products. Our filling machines are suitable for many different food products, and the machines can run a variety of package sizes for all our Pure-Pak ® brands. Our machines come with different production capacities and can fill a wide range of pack sizes and shapes. In addition, our machines are adapted and certified to meet various geographical standards. In 2023, emissions from filling machines in operation increased by 82% compared to 2022 and 38% compared to our 2020 baseline. The emissions are strongly correlated with the number of filling machines sold yearly. The volume in 2023 represents a relative high volume compared previous years. 2022 was a year with a low volume. In 2023, Elopak's emissions from purchased goods and services were 367 335 tonnes of CO 2 e In 2023, Elopak's emissions from third party transport were 43 404 tonnes of CO 2 e +159% In 2023, Elopak's emissions from business and travel were 4 126 tonnes of CO 2 e In 2023, Elopak's emissions from filling machines in operation were 130 219 tonnes of CO 2 e +38% -8% -3% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 31 31 Our peformance | Planet Our peformance | Planet Nature Biodiversity Since Elopak became certified by the Forest Stewardship Council (FSC™) in 2010, the annual sales of labeled cartons have steadily increased. Since 2015, 100% of Elopak’s purchased paperboard has come from verified and controlled sources, in line with the standards from FSC™. Not all customers require cartons with the label. In 2023, we sold in total 55% labeled cartons, while 80% of the sales volume in Europe was with label. While the number in Europe is increasing, global numbers decreased slightly as the new markets historically have less demand for FSC-labeled cartons. However, we see an increased demand and expect volume growth for FSC™ also for the new markets. All our FSC-labeled cartons are certified throughout every stage of the value chain, from forest yield to paperboard production to final product manufacturing. In 2023 our Saudi Arabia plant was FSC™ certified. 100% of the renewable polymers Elopak supplies are certified according to ISCC PLUS. In 2022, Elopak received our Aluminum Stewardship Initiative (ASI) performance certificate. Through a third party, we seek to certify all our own products for recyclability. This is done on all our four main categories of cartons. Biodiversity emerged as a new material topic for Elopak from the 2023 double materiality assessment. We recognize the importance of addressing biodiversity and have taken steps to establish a framework around the topic. During 2024 we will establish policies, make action plans and establish KPIs. FSC-certified cartons 2% 2010 24% 2012 37% 2014 46% 2016 55% 2016 63% 2020 60% 2022 16% 2011 34% 2013 43% 2015 49% 2017 58% 2019 55% 2023 64% 2021 Performance Targets Ensure sustainable value chain behind all raw materials through product certification according to the most stringent and credible standars available by 2030. KPIs KPI reference Status 2023 a) % certified purchased materials Self defined a) 43% b)% certtified sold products FCS certified Self defined b) 55% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 32 32 Our peformance | Planet Our peformance | Planet Pollution Elopak reports on waste by category. We report and track waste in our internal reporting tool, ‘Footprinter’. One of the cate- gories reported is the handling of hazardous waste. The reported amount of hazardous waste has been relatively stable the last two years. Total amount per 2023 was 229.5 tons, an increase from 218.4 tons in 2022. The reported waste per category can be found in the ESG metrics chapter. Water Total water consumption for Elopak was 60 704 m 3 in 2023. Compared to reported consumption in 2020 this is an increase of 17 648 m 3 . This increase is entirely related to the new plant in India. Compared to 2022, the reported consumption represents an increase of 16 055 m 3 . We are restating the water consumption from 2021 and 2022 due to an error in the reporting metric in one of the plants. For 2022, this has resulted in a reduc- tion of water consumption of 13 975 m 3 . Renewability Elopak target: 100% renewable or recycled content materials in all beverage cartons on the European market, and available in other markets, by 2030. 50% of all fresh milk cartons in Europe fully renewable by 2025. In 2023 the share of renewable content of cartons sold in the European market was 82%. The corresponding figure for 2022 was 84%. The small reduction is related to a higher relative share of aseptic cartons sold in 2023. The share of fully renewable fresh milk cartons in Europe was 30% in 2023. This percentage is unchanged from 2022. Fully renewable cartons for fresh milk in Europe 8% 2018 13% 2019 18% 2020 22% 2021 30% 2022 30% 2023 50% 2025 target Performance Targets 100% renewable or recycled content materials in all beverage cartons on the European market, and available in other markets, by 2030 50% of all fresh milk cartons in Europe fully renewable by 2025 KPIs KPI reference Status 2023 a) % Renewable or recycled content materials in cartons sold, European market Self defined a) 82% b)% of fresh milk cartons in Europe fully renewable Self defined b) 30% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 33 33 Our peformance | Planet Our peformance | Planet Profit Performance versus midterm targets Elopak has committed to the following midterm targets: Revenue growth EBITA margin Capex Dividend policy Capital structure The numbers presented exclude Russia, both for 2022 and 2021. Key financials The following table summarizes key financial metrics as they have been reported through the year in the quarterly reports. The main developments in 2023 are described in the following sections of the report. Year to date ended December 31 EUR 1 000 2023 2022 2021 Revenue 1 132.0 1 023.7 855.3 EBITDA‌ 1 164.1 109.9 103.3 Adjusted EBITDA‌ 1 170.9 119.4 113.7 Adjusted EBITDA margin‌ 1 15.1% 11.7% 13.3% Profit from continuing operations 69.4 34.2 30.3 Adjusted profit attributable to Elopak shareholders‌ 1 68.3 44.0 35.5 Leverage ratio‌ 1 1.9 3.3 2.1 Adjusted basic and diluted earnings per share (in EUR) 0.25 0.16 0.14 1 Definition of Alternative Performance Measures, including specification of adjustments, at the end of this report The numbers presented exclude Russia, both for 2022 and 2021. Targets Mid term 3–5 years 2023 2022 2021 Revenue growth 2–3% organic growth p.a. and selectivity pursue M&A opportunities 9.4% 11.9% 3.5% EBITA margin 14–15% adjusted EBITDA margin 15.1% 11.7% 13.3% Capex EUR ~50m p.a. EUR 41m EUR 44m EUR 37m Dividend policy ~50–60% pay-out ratio % of adjusted net profit 50% 50% 52% Capital structure ~2.0x net debt/adjusted EBITDA mid-term 1.9x 3.3x 2.1x Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 34 34 Our peformance | Profit Our peformance | Profit Revenues Group Full year 2023, Group revenues increased by 10.6%, or EUR 108.3 million. Adjusting for currency fluc- tuation and acquisition effects, revenue growth is 9.4%, or EUR 96.4 million. Revenues by geography and product EUR million 2023 2022 Change EMEA 870 459 785 976 11% Americas 290 601 260 535 12% Corporate and Eliminations (29 016) (22 815) 27% Total Revenues 1 132 043 1 023 696 11% EUR million 2023 2022 Change Cartons and closures 1 028 177 923 750 11% Equipment 50 272 28 583 76% Service 51 142 45 367 13% Other 2 451 25 996 (91%) Total revenue 1 132 043 1 023 696 11% Revenues EMEA by product EUR million 2023 2022 Change Cartons and closures 755 682 671 025 13% Equipment 52 385 36 307 44% Service 52 113 46 036 13% Other 10 278 32 608 (68%) Total revenue 870 459 785 976 11% In EMEA, full year revenues increased EUR 84.5 million (10.8%) compared to last year with an organic revenue growth of EUR 64.7 million, adjusted for currency translation and acquisition effects. The main drivers behind the organic revenue growth were improved pricing, higher Roll Fed volumes, and equipment sales. The Roll Fed carton growth was mainly through our joint venture in India as well as market share gains in Europe. Revenue from equipment increased as the company delivered more Fresh and Aseptic filling machines than in 2022. In Pure-Pak ® , our volumes decreased mainly due to consumption decline. This was most prominent during the first three quarters and stabilized in the fourth quarter. Revenues Americas by product EUR million 2023 2022 Change Cartons and closures 276 739 256 522 8% Equipment 12 114 2 183 455% Service - - - Other 1 748 1 830 (4%) Total revenue 290 601 260 535 12% In Americas, full year revenues increased by EUR 30.1 million (11.5%) compared to last year. The organic revenue growth was EUR 37.9 million (14.6%), adjusted for currency translation effects. Pure-Pak ® revenues increased mainly from growth in the Fresh Dairy and Juice segment from onboarding of new customers and growth with existing. Additional revenue growth also from favorable product mix and price increases from pass-through of raw material cost increases. Revenue from the sale of equipment increased due to placement of more Fresh filling machines compared to 2022. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 35 35 Our peformance | Profit Our peformance | Profit Adjusted EBITDA Annual Adjusted EBITDA EUR million 2023 2022 Change EMEA 135 482 94 283 44% Americas 67 433 51 466 31% Corporate and Eliminations (32 048) (26 336) 22% Total Adjusted EBITDA 170 867 119 413 43% On a full year basis, adjusted EBITDA for the Group increased by EUR 51.5 million (43.1%) to EUR 170.9 million. Adjusted EBITDA margin was 15.1% (11.7%). EMEA In EMEA, full year revenues increased EUR 84.5 million (10.8%) compared to last year with an organic revenue growth of EUR 64.7 million, adjusted for currency translation and acquisition effects. The main drivers behind the organic revenue growth were improved pricing, higher Roll Fed volumes, and equipment sales. The Roll Fed carton growth was mainly through our joint venture in India as well as market share gains in Europe. Revenue from equipment increased as the company delivered more Fresh and Aseptic filling machines than in 2022. In Pure-Pak ® , our volumes decreased mainly due to consumption decline. This was most prominent during the first three quarters and stabilized in the fourth quarter. 119 86 13 25 6 2 171 FY 2022 Net revenue mix Raw materials‌ 1 Operations Other Currency effect‌ 2 FY 2023 1 Raw materials are only related to carton production in Europe and MENA 2 FX impact related to EURUSD, EURINR, EURMAD Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 36 36 Our peformance | Profit Our peformance | Profit Americas In Americas adjusted EBITDA increased by EUR 16.0 million, from EUR 51.5 million in 2022 to EUR 67.4 million in 2023. Adjusted EBITDA margin was 23.2% (19.8%). Adjusting for currency translation effects adjusted EBITDA increased by EUR 17.6 million. Pure-Pak ® carton volume growth was a key driver of the improved performance, achieved through gaining market share through both new and existing customers within the fresh dairy and juice segments. Additionally, 2023 was a year with solid filling machine placements, a leading indicator of future growth. Based on 2023 performance, the region has a solid foundation prior to building a new plant in the US. The two joint ventures in Americas performed very well in 2023, supported by volume growth in the school milk segment. The share of result was EUR 6.9 million, which was an increase of EUR 2.5 million. The following table provides a reconciliation from reported operating profit to EBITDA and adjusted EBITDA. For further details and definitions, we refer to the Alternative Performance Measures section in the back of this report. Reconciliation of EBITDA and adjusted EBITDA EUR 1 000 December 31 2023 December 31 2022 Operating profit 102 778 41 774 Depreciation, amortisation and impairment adjusted 61 332 63 938 Impairment fixed and long term assets Ukraine - 4 189 EBITDA 164 111 109 901 Total adjusted items with EBITDA impact (100) 5 133 Share of net income from joint ventures (continued operations)‌ 1, ‌ 2 6 855 4 378 Adjusted EBITDA 170 867 119 413 1 Share of net income and impairment on investment from joint ventures included in adjusted figures 2 See reconciliation of net income from joint ventures Profit Full year operating profit increased by EUR 61.0 million to EUR 102.8 million. The comparable period was affected negatively from impairment in Ukraine and transactions costs related to acquisition of Naturepak and GLS. Additionally, EUR 2.6 million is due to decreased depreciation and amortization of noncurrent assets, predominantly related to acquired business in MENA. The remaining margin development is a result of the factors explained above in adjusted EBITDA section. For the full year, net financial expenses were EUR 24.3 million, an increase of EUR 21.5 million, with around EUR 5.5 million coming from unrealized fair value losses on interest rate swaps. In comparison, in 2022 we reported an unrealized fair value gain of EUR 8.9 million on interest rate swaps. Interest on external funding increased by EUR 8.8 million in 2023 compared to 2022, driven by increased benchmark rates. This was partially offset by interest rate swaps, which had a net interest settlement of EUR 3.2 million in Elopak’s favor during the period. The compa- rable period also had a favorable foreign exchange gain of 3.0 million, not repeated in 2023. Income tax expenses for 2023 were EUR 15.5 million, corresponding to an effective tax rate of 18%. (2022 EUR 12.2m, or 26%). The tax expense in 2023 was impacted favorably by currency translation effects. The expected tax at current statutory tax rates for the Group is approximately 24% before permanent differences, depending on the relative mix of profits and losses taxed at varying rates in the jurisdictions in which Elopak operates. Profit from continuing operations in 2023 increased by EUR 35.2 million from EUR 34.2 million to EUR 69.4 million. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 37 37 Our peformance | Profit Our peformance | Profit Cash flow and capital structure Cash flow For the full-year 2023, cash flow from oper- ations was EUR 157.2 million, mainly driven by strong earnings and improved cash from working capital. The working capital position increased at the beginning of the year mainly from delayed commissioning of filling machines and high inventories of packaging material. This was mitigated by targeted initiatives during the second half of the year, resulting in a positive impact for the full year. Net cash flow used in investing activities was EUR -32.0 million, reflecting a slightly lower than average level of leased filling machines and a normal level of manufacturing plant pro- jects in Europe and Americas. Furthermore, Elopak received installments from the sale of its Russian subsidiary amounting to EUR 4.9 million, as well as dividends from Joint Ventures of EUR 2.0 million. In the comparable period the main investment was the acquisi- tion of Naturepak and GLS India. Net cash flow from financing activities was EUR -137.5 million, reflecting net debt reduction of EUR 69.8 million, dividends paid to our shareholders of EUR 19.6 million, interest expenses of EUR 11.3 million and lease payments of EUR 18.4 million. Capital structure Net interest-bearing bank debt has decreased from EUR 300.8 million at year end 2022 to EUR 231.0 million as of end of December. The main reason for the decrease is strong cash from operations year to date. In 2023, lease liability according to IFRS 16 increased by EUR 10.8 million to EUR 101.5 million due to new tethered caps contracts. Consequently, the Leverage Ratio as of December 31, 2023 was 1.9x which is a significant improvement from 3.3x reported as of December 31, 2022. For a specification of the net debt, please refer to section ‘Alternative Performance Measures (APMs)’. Elopak ASA Elopak ASA is the parent company in the Elopak Group with financial activities and corporate functions. Elopak ASA had a profit of EUR 35.5 million in 2023, compared to EUR 23.5 million in 2022. Total assets were EUR 461.7 million as of 31 st of December 2023, compared to EUR 472.6 million in 2022. Cash flow from operations improved by EUR 69.9 million to EUR 52.0 million while cash flow from investing activities were EUR 27.0 million in 2023 compared to -63.0 million in 2022. Cash flow from financing activities of -93.8 million brings cash and cash equivalents to EUR 0.2 million as of 31 st of December 2023, down from EUR 15.0 million in 2022. Equity increased by EUR 47.3 million, from EUR 268.0 million as of December 31, 2022, to EUR 315.3 million as of December 31, 2023. Total comprehensive income was EUR 66.4 million. . The Board confirms that the accounts are presented under a going concern assumption. Outlook Elopak continues to pay close attention to how inflationary pressure and increased interest rates impact consumption and consumer behavior. There are signs of improvement on the supply chain disruptions, and the situation is expected to gradually improve. Elopak is in a structurally good position with diversified markets, and a solid financial position. The company expects its strategic initiatives to continue to grow the top line and strengthen the results further. Skøyen, April 10, 2024 Board of Directors in Elopak ASA This document is signed electronically Dag Mejdell Chairperson Trond Solberg Board Member Anna Belfrage Board Member Sid Johari Board Member Sanna Suvanto-Harsaae Board Member Håvard Grande Urhamar Board Member (employee representative) Anette Bauer Ellingsen Board Member (employee representative) Thomas Körmendi CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 38 38 Our peformance | Profit Our peformance | Profit The Elopak share Elopak aims to deliver long term value creation for its shareholders, exceeding comparable investment alternatives. For our shareholders, this will be reflected in the combination of the long-term price performance of the Elopak share and dividend payout. Market capitalization and turnover The Elopak share is listed on Oslo Børs under the ticker code ELO. All shares have equal rights and are freely transferable. The market capitalization of Elopak as of December 31, 2023 was NOK 8.2 billion, up from 6.7 billion at the end of 2022. The average daily volume of ELO shares traded on Oslo Børs was 104 thou- sand, down from 181 thousand in 2022. Elopak will endeavor to increase trading volume and liquidity during 2024. Dividend Elopak has a dividend policy and guidance to distribute 50-60% of adjusted net profit as an annual dividend. Please see page 44 for complete dividend policy.The Board proposes to pay a dividend of NOK 1.46 per share for the 2023 financial year. The dividend payout proposal is in the lower end of the range due to the expected investment level related to the construction of the US plant. The dividend will be paid out on or about May 28, 2024 to shareholders of record on the date of the Annual General Meeting. 2024 Annual general meeting The Annual General Meeting will take place on May 13, 2024. Information about how to register for the Annual General Meeting will be published on www.elopak.com no later than 21 days prior to the event, including information on how to register to attend or vote. Figure 1. Elopak share price development in 2023 Share price Jan 20 25 30 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Combined annual and sustainability report 2023 39 39 Our peformance | Profit Our peformance | Profit Analyst coverage Elopak has several analysts covering the Elopak share. Six financial analysts provide market updates and estimates for our financial results. Firm Analyst E-mail ABG Sundal Collier Martin Melbye martin.melbye@abgsc.no Arctic Securities Jeppe Baardseth jeppe.baardseth@arctic.com Carnegie Robin Santavirta robin.santavirta@carnegie.fi DNB Niclas Gehin niclas.gehin@dnb.no BNP Paribas Exane Charlie Muir Sands charlie.muir-sands@exanebnpparibas.com SEB Håkon Fuglu hakon.fuglu@seb.no Financial calendar Date Event May 8, 2024 Quarterly report – Q1 2024 May 13, 2024 Annual general meeting May 14, 2024 Ex-dividend date On or about May 28, 2024 Annual dividend payment August 15, 2024 Quarterly report – Q2 2024 October 30, 2024 Quarterly report – Q3 2024 Top 20 shareholders as of December 31, 2023 Shareholder # Shares Dec 2023 % Ownership Dec 2023 #1 Ferd AS 161 465 870 60.0 #2 Nippon Paper Industries Co., Ltd. 13 460 950 5.0 #3 Pareto Asset Management AS 11 391 103 4.2 #4 Morgan Stanley & Co. International Plc 9 308 944 3.5 #5 Folketrygdfondet 8 841 209 3.3 #6 Fidelity International 7 576 102 2.8 #7 Artemis Investment Management LLP 5 882 252 2.2 #8 Pictet Asset Management Ltd. 3 058 590 1.1 #9 Oddo BHF Asset Management S.A.S. 2 896 868 1.1 #10 Arctic Fund Management AS 2 492 236 0.9 #11 DNB Asset Management AS 2 459 685 0.9 #12 Allspring Global Investments LLC 2 195 672 0.8 #13 Skagen AS 2 126 041 0.8 #14 Indépendance et Expansion AM S.A 1 766 059 0.7 #15 GW&K Investment Management, LLC 1 689 222 0.6 #16 UBS Asset Management (Switzerland) 1 570 315 0.6 #17 T D Veen AS 1 169 193 0.4 #18 Clearstream Banking SA 1 100 221 0.4 #19 MFS Investment Management 1 088 366 0.4 #20 Wenaasgruppen AS 1 017 391 0.4 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 40 40 Our peformance | Profit Our peformance | Profit Governance Combined annual and sustainability report 2023 41 Governance Corporate governance We believe that effective corporate governance is the foundation of our business. Through our governance, we set clear responsibilities for our managers, employees, and partners. We do so because we believe that this is ultimately the best way of creating long term competitive returns for our shareholders and ensuring that our business is sustainable. Our objectives and principles Our objective is to ensure long term value crea- tion for our shareholders, employees and society through our vision, mission, and promises. We believe that the best way to achieve this goal is through a value-based performance culture, stringent ethical requirements, and a code of conduct that promotes personal integrity and respect for the environment. Therefore, our corporate governance is based on our corporate values and ethical guidelines such as the Elopak Code of Conduct. Good corporate governance is a fundamental element in the practical work of the compa- ny’s governing bodies, and it defines the criteria on which the trust of the company’s shareholders is based. Implementing and reporting on corporate governance Elopak is subject to annual corporate governance reporting requirements pursuant to section 3-3b of the Norwegian Accounting Act, the Norwegian Code of Practice for Corporate Governance (the “Code of Practice”), and Oslo Børs Rule Book II – Issuers Rules, Section 4; Continuing obli- gations for issuers of shares. This report was approved by the Board on April 10, 2024. The report follows the system used in the Code of Practice and describes how Elopak has implemented the Code of Practice in its business. The report covers each section of the Code of Practice, and any deviations are specified and explained under the relevant section. Elopak has established, and the Board has approved, a set of Principles for Corporate Governance (available on the Elopak website) describing the company’s main principles for corporate governance. In addition, the company has established a Rules of Procedure for the Board to ensure a clear and productive division of roles and responsibilities between the Board, the Management and the share- holders, as well as satisfactory control over the company’s activities. These principles and guidelines ensure good and effective corpo- rate governance and are based on the Code of Practice. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 42 42 Governance | Corporate governance Governance | Corporate governance The Board has the ultimate responsibility for the management of the company, adherence to good corporate governance standards, and will at all times ensure that Elopak complies with the Code of Practice. Business Elopak’s business purpose is expressed in the company’s Articles of Association, section 2: “The objective of the company is production and sale of packaging, production and sale of machinery and equipment for packaging, agency and services relating to packaging products and anything connected with this as well as participation in other companies”. The Articles of Association are published on the company’s website. Within the frame- work of the Articles of Association, Elopak has established goals and strategies for the business. Elopak’s objectives and strategies are presented in the section “Executing our sustainability-driven growth strategy”. The evaluation of Elopak’s objectives and strategies as well as risk profiles and risk management are described in the chapter Risk management and internal control. When defining objectives, strategies, and risk profiles to create value for shareholders in a sustainable manner, the Board takes into account financial, social and environmental considerations. The Board has guidelines for how it integrates considerations related to its stakeholders into its value creation. The Board evaluates the objectives, strategies and risk profile at least on an annual basis. Equity and dividends Equity As of December 31, 2023, Elopak had a consolidated equity of EUR 315.3 million, corresponding to an equity ratio of 32.8%. The Board considers that Elopak has a capital structure that is appropriate for its objectives, strategy and risk profile. Dividends Elopak targets a dividend payout ratio of approximately 50-60% of the Elopak Group’s adjusted net profit attributable to Elopak’s shareholders. In deciding whether to propose a dividend and in determining the dividend amount, the CEO General Meeting Board of Directors Board Succession and Compensation Committee Board Audit and Sustainability Committee External auditor Nomination Committee Election Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 43 43 Governance | Corporate governance Governance | Corporate governance Board will comply with the legal restrictions set out in the Norwegian Public Limited Liabilities Companies Act and take into account the company’s capital requirements, including capital expenditure requirements, the compa- ny’s financial condition, general business conditions, borrowing arrangements and any other restrictions that its contractual arrange- ments in place at the time of the dividend may place on its ability to pay dividends and the maintenance of appropriate financial flexibility. Board mandates to increase the share capital At the annual general meeting of the company on May 11, 2023 the Board was authorized to increase the share capital of Elopak by up to NOK 37 690 662 in one or more share capital increase through issuance of new shares. The authorization was only to be used to: issue shares as consideration in connection with acquisitions; issue shares in connection with the employee incentive or share ownership schemes; and raise new equity in order to strengthen the company’s financing. The authorization is valid until the annual general meeting in 2024, but in no event later than June 30, 2024. The Board has not issued any shares pursuant to this authorization. Board mandates to acquire own shares At the annual general meeting of the company on May 11, 2023 the Board was authorized to acquire the company’s own shares on behalf of the company with an aggregate nominal value of up to NOK 37 690 662. Consideration may not be less than NOK 1 and may not exceed NOK 250 and the Board determines the methods by which own shares can be acquired or disposed of. The authorization is valid until the annual general meeting in 2024, but in no event later than June 30, 2024. Pursuant to this authorization, the Board purchased 410 540 shares since the annual general meeting on May 11, 2023 and up to December 31, 2023. The shares were purchased to fulfill the company’s obligations under its long-term incentive plan (as further described in the Remuneration Report 2023). Equal treatment of shareholders and transactions with close associates The company’s share capital is NOK 376 906 619.60 divided into 269 219 014 shares, each with a nominal value of NOK 1.40. The Board and the Management are committed to ensuring equal treatment of all the compa- ny’s shareholders and that transactions with related parties take place on an arm’s length basis. ( Note 29 ) to the consolidated financial statements provides details about transactions with related parties. Financial relationships related to the directors and executive personnel are described in note 29 . In 2023, the company purchased 410 540 of its own shares on Oslo Børs. The share buyback program was completed as follows: 260 540 shares purchased between September 11, 2023 and October 6, 2023 at an average price of NOK 22.65 as publicly disclosed in a stock exchange announce- ment on October 6, 2023. 150 000 shares purchased between December 11, 2023 and December 22, 2023 at an average price of NOK 28.09 as publicly disclosed in a stock exchange announce- ment on December 22, 2023. Shares and negotiability The Articles of Association place no restric- tions on owning, trading or voting for shares in the company. There are no general restrictions on the purchase or sale of shares by the Board or members of the Company’s Management as long as they comply with the regulations on insider trading and the Market Abuse Regulation. The extraordinary general meeting on November 23, 2022 approved a performance share unit program (the Long-Term Incentive Plan), and the annual general meeting of the company on May 11, 2023 granted the Board an authorization to acquire own shares. For the 2023 performance, Management and senior directors were granted an annual award of shares from the company. Further details of the Long Term Incentive Plan are described in the Remuneration Report for 2023. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 44 44 Governance | Corporate governance Governance | Corporate governance General meetings All shareholders have the right and are encouraged to participate in the general meetings of the company, which exercises the highest authority of Elopak. The Board ensures that its shareholders can attend and participate in the general meetings. This year’s annual general meeting will take place on May 13, 2024. The Elopak Group’s financial calendar is published via Oslo Børs and in the investor relations section at the Elopak’s website. Notice, registration, and participation The full notice for general meetings shall be sent to the shareholders no later than 21 calendar days prior to the meeting. The notices for such meetings shall include documents providing the shareholders with sufficient detail for the shareholders to make an assessment of all the cases to be considered as well as all relevant information regarding procedures of attendance, proxy and voting. The notice and the documents may be sent to or made available for the shareholders by electronic communication, to the extent allowed in the Articles of Association. A share- holder may still request physical copies of the relevant documents to be sent to him or her. The Chair of the Board and the CEO are present at the annual general meeting (save in case of legal absence), along with the leader of the Nomination Committee and the company’s external auditor, to the extent the agenda items make such attendance relevant. Representatives of the Board will normally be present at general meetings. However, Elopak does not require the entire Board to attend the general meeting. This is a deviation from the Code of Practice which states that it’s appropriate that all board members attend general meetings. Shareholders who intend to attend a general meeting of the company shall give the company written notice of their intention within a time limit given in the notice of the general meeting, which pursuant to the Articles of Association cannot expire earlier than two working days before the general meeting. The deadline for registering attendance is set as close to the meeting as possible. Shareholders who have failed to give such notice within the time limit can be denied admission. Voting and proxy Shareholders unable to attend a general meeting may use electronic voting to vote directly on individual agenda items during the premeeting registration period. Shareholders unable to attend a meeting may also vote by proxy. The procedures for electronic voting and the proxy voting instructions are described in the meeting notification and published on the company’s website. The company has chosen to deviate from the Code of Practice’s recommendation that shareholders should be able to vote separately on each candidate nominated for election to the Board and Nomination Committee. This choice is based on the Nomination Committee’s selection of candidates being focused on the combined qualifications and experience of the proposed Board members and the Nomination Committee, and therefore that voting should not be separated. Chairing meetings General meetings will normally be chaired by the Chair of the Board. This is a deviation from the Code of Practice which states that the general meeting should be able to elect an independent chairperson for the general meeting. The Board has not deemed it neces- sary to always give the general meeting the option to elect an independent chairperson, as in the company's experience the general meetings have been chaired in a satisfactory manner. The Board will however from time to time evaluate whether it is desirable to engage an external chairperson to chair the general meeting. Minutes from general meetings are published as soon as practicable via the Oslo Børs’ reporting system ( www.newsweb.no , ticker code: ELO) and in the investor relations section at the Elopak website. Nomination committee Elopak has a Nomination Committee as laid down in the company’s Articles of Association. The Nomination Committee shall consist of between two to four members, elected by the general meeting. The members of the Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 45 45 Governance | Corporate governance Governance | Corporate governance Nomination Committee should be selected to consider the interests of shareholders in general, and the Nomination Committee should be independent of the Board and the Management of the company. No Board member or member of the Management should serve on the Nomination Committee. Members of the Nomination Committee are elected for a term of two years unless other- wise decided by the general meeting. The current members of the Nomination Committee are Tom Erik Myrland (chair), Terje Valebjørg (member) and Kari Olrud Moen (member). The primary responsibilities of the Nomination Committee are to present proposals to the general meeting regarding election of share- holder elected Board members, the Board members’ fees, the election of members to the Nomination Committee, the Nomination Committee members’ fees, as well as to propose amendments to the Nomination Committee Charter. The Nomination Committee shall justify why it is proposing each Board member candidate separately. In preparation for possible searches for new members of the Board the Nomination Committee shall have contact with share- holders, members of the Board and the company’s executive personnel. The Nomination Committee’s expenses are covered by the company. The Nomination Committee Charter is approved by the general meeting. Proposal for Board member candidates can be submitted to the Nomination Committee up to the end of November each year. Shareholders who wish to contact the Nomination Committee can do so by sending an e-mail to: investors@elopak. com . Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 46 46 Governance | Corporate governance Governance | Corporate governance Board of Directors Composition and independence Pursuant to the Company’s Articles of Association, the Board shall consist of between 3 and 12 board members, as decided by the general meeting. The Board currently has five shareholder elected directors, all elected by the general meeting for a two year term and all independent of the Management team. All board members are defined as independent of the company's main shareholders. The Board members are encouraged to own shares in the company. The composition of the Board is intended to secure the interests of the shareholders in general, while the directors also collectively possess a broad business and management background as well as in-depth sector understanding and exper- tise in investment, financing and capital markets. Weight is also given to the Board’s ability to make independent judgements of the business in general and of the individual matters presented by the executive management. Consideration has also been given to gender representation and independence of directors from the company and its management. Dag Mejdell Chairperson Sid Johari Board member Trond Solberg Board member Håvard Grande Urhamar Employee elected board member Anette Bauer Ellingsen Employee elected board member Anna Belfrage Board member Sanna Suvanto-Harsaae Board member Combined annual and sustainability report 2023 47 47 Governance | Corporate governance Governance | Corporate governance Dag Mejdell Chairperson Dag Mejdell has been Chair of the Board since May 11, 2023. He is a fulltime external board professional. Mejdell has a degree in Economics and Business Administration from the Norwegian School of Economics (Handelshøyskolen). Current directorships and senior management positions: Norsk Hydro ASA (chairperson of the board, chairperson compensation and people committee), Sparebank 1 SR-Bank (chair- person of the board, chairperson compensation and people committee, member of the risk committee), and Mestergruppen AS (chairperson of the board, member of the audit committee). Sid Johari Board member Sid Johari has been a Board member since 2017. Johari has three decades of executive management and board membership experience within the fields of R&D, product industrialization, and sales in large global companies. From running small teams of highly specialized technology development in theoretical fluid dynamic at ABB to developing unique liquid packaging solutions for emerging markets at Tetra Pak and finally leading sales operations in Asia and America and establishing a global industrial operation for Sidel, he has gathered vast knowledge and expertise within the field of R&D and product industrialization. Johari is currently engaged in supporting young technology companies with disruptive technologies to enter the market by acting as a board member or advisory board member when needed. Johari holds a Master of Science in Mechanical Engineering from Lund University. Current directorships and senior manage- ment positions: Tech2M (founder) and Airgo Design (advisory board member). Trond Solberg Board member Trond Solberg has been a Board member since 2008. Solberg has more than 20 years of experience from public and private investments. First for 20 years at Ferd AS, including his position as Co-Head of Ferd Capital from 2012 to 2022 and now in the current position as Investment Director at Farvatn. In addition, Solberg has extensive board experience as chair and board member for multiple companies, including Brav and Fürst. Prior to joining Ferd AS, Solberg was employed within consulting at Accenture. Solberg holds a Master’s degree in Economics (Norwegian: Siviløkonom) from BI Norwegian Business School. Current directorships and senior management posi- tions: Farvatn Private Equity AS (lnvestment Director), Skolo AS (chairperson), RemovAid (chairperson), Oilcomp AS (chairperson), Ocomp Holding AS (chair- person), and Elywhere Group AS (board member). Anna Belfrage Board member Anna Belfrage has been a Board member and the chair of the Audit Committee since April 15, 2021. Belfrage has over 30 years of experience within finance, first as an auditor with PricewaterhouseCoopers, then as CFO in various industrial companies in Sweden. She has also been acting CEO of the listed company Beijer Electronics Group AB. Most recently, Belfrage was the CFO and Senior VP IT and Purchasing in the forestry group Södra Skogsägarna Ekonomisk Förening. Belfrage is currently working as a professional board member. Belfrage holds a Master’s degree in Economics (Norwegian: Siviløkonom) and additional courses in Business Administration and Corporate Law from Lund University. Current directorships and senior management positions: Mycronic AB (publ.) (board member, chair of the audit committee), Note AB (publ.) (chairperson, member of the audit committee), CINT AB (publ.) (board member, chair of the audit committee), Ellevio AB (board member, chair of the audit committee), Sveaskog AB (board member, chair of the audit committee) and Deep Ocean Group AS (board member, chairperson of the audit committee). Year of appointment: 2023 Born: 1957 Shares owned at year-end 2023‌ 1 : 56 000 Record of Attendance: 6 Year of appointment: 2017 Born: 1959 Shares owned at year-end 2023: 17 857 Record of Attendance: 8 Year of appointment: 2008 Born: 1979 Shares owned at year-end 2023: 0 Record of Attendance: 8 Year of appointment: 2021 Born: 1962 Shares owned at year-end 2023: 0 Record of Attendance: 8 1 Number includes board member and its close associates. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 48 48 Governance | Corporate governance Governance | Corporate governance Sanna Suvanto-Harsaae Board member Sanna Suvanto-Harsaae has been a Board member since April 15, 2021. Suvanto-Harsaae has extensive experience as a board member and director from several international companies. Suvanto-Harsaae holds a Bachelor’s degree in Economics from Lund University. Current directorships and senior manage- ment positions: Posti Oyj (chair of the board, chair of the remuneration committee, member of the audit committee), BoConcept AS (chair, member of the audit committee), TCM AS (chair of the board, chair of the remuneration committee, member of the audit committee), Orthex Oyj (chair), Babysam AS (chair), Altia Oyj (chair of the board, chair of the remuneration committee, member of the audit committee), Nordic Pet Care Group AS (chair), Harvia Oyj (vice-chair of the board, chair of the audit committee), CEPOS (Center for Political Studies)(board member) and Broman Group Oy (board member). Previous directorships and senior management positions last five years: SAS AS (board member), Isadora AS (chair), and Paulig Oy (chair). Håvard Grande Urhamar Employee-elected board member Håvard Grande Urhamar has been an employ- ee-elected Board member since August 1, 2023. Urhamar has been employed in Elopak since 2006, and currently holds the position as Senior Manager Board Development and Manager Packaging Procurement. Urhamar holds a MA of Science and Technology from NTNU, Trondheim. Anette Bauer Ellingsen Employee-elected board member Anette Bauer Ellingsen has been an employee-elected Board member since May 6, 2021. Dr. Ellingsen has been employed in the company since May 2014 and currently holds the position of Senior Food Microbiologist. Prior to her current position, Dr. Ellingsen held the position as marketing responsible for veterinary medicines in Interfarm AS (2011- 2014). Anette Bauer Ellingsen holds a PhD in Food Microbiology from the Norwegian School of Veterinary Science and a BSc. Biotech (Hons) degree from Griffith University (Australia). Year of appointment: 2021 Born: 1966 Shares owned at year-end 2023: 14 285 Record of Attendance: 8 Year of appointment: 2023 Born: 1976 Shares owned at year-end 2023: 0 Record of Attendance: 4 Year of appointment: 2021 Born: 1977 Shares owned at year-end 2023: 1 071 Record of Attendance: 8 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 49 49 Governance | Corporate governance Governance | Corporate governance The work of the Board The Board has established and adopted a written instruction “Rules of Procedure for the Board” that regulates areas of responsibility, tasks and the division of roles between the Board and the CEO. The Board has established an annual cycle which sets out all planned meeting dates, regular Board agenda items, and procedures for Board document preparations. The CEO reports regularly to the Board on operational and financial developments, results, and other material company and industry developments, such as sustainability and compliance topics. The Nomination Committee has held individual discussions with each Board member (both shareholder and employee elected), with the CEO to evaluate the Board’s effectiveness and the manner in which its members function, both individually and as a group. Pursuant to Elopak’s Rules of Procedure for the Board and Elopak’s Code of Conduct, all Board members and Management are committed to making the company aware of any material interest they may have in items to be considered by the Board. Neither a Board member nor the company CEO may partici- pate in Board discussions or decisions of such particular significance that the member must be deemed to have a special or prominent personal or financial interest in the matter. It is the opinion of the Board that there were no transactions that were material between the group and its shareholders, Management or related parties in 2023, except those described in note 29 to the consolidated financial figures. 8 board meetings were held in 2023. Board committees The company has, in addition to the Nomination Committee, appointed a Board Audit and Sustainability Committee (BASC) and a Board Succession and Compensation Committee (BSCC). Both committees are appointed to assist the Board in discharging its oversight responsibilities, work as preparatory bodies for the Board and according to specific mandates approved by the Board. The Board Audit and Sustainability Committee The Board nominates the BASC members and the chairperson of the BASC. The BASC consist of at least two members, all of whom are members of the Board and independent non-executive directors of the Company. Members are appointed for a period of two years. The current BASC members are Anna Belfrage (chairperson) and Trond Solberg (committee member). The BASC oversees the reporting process to ensure the balance, transparency, and integrity of external financial and sustainability reporting. The BASC shall also consider the following: The effectiveness of the company’s internal control and risk management system The independent audit process, including recommending the appointment and assessing the performance of the external auditor The company’s process for monitoring compliance with laws, regulations, internal standards, policies, and expectations of key stakeholders, including customers, employees, and society as a whole Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 50 50 Governance | Corporate governance Governance | Corporate governance The Board has prepared and approved a sepa- rate Board Audit and Sustainability Charter. The Board Succession and Compensation Committee The Board nominates the members and the chairperson of the BSCC. The BSCC consists of at least two members, all of whom are members of the Board and independent nonexecutive directors of the company. Members are appointed for a period of two years. The current members of the BSCC are Dag Mejdell (chairperson), Trond Solberg (committee member), and Sanna Suvanto- Harsaa (committee member). The BSCC shall annually oversee and review the overall compensation policies, contracts and agreements approved by the Board of Directors and General Meeting. The BSCC shall also provide recommendations to the Board of Directors for setting the targets for any performance related incentive compensation and equity-based plans and programs for management to ensure that the compensation matches the long-term interests of the share- holders and the goals set for the company by the Board of Directors. In addition, the BSCC shall oversee the executive succession planning practices and results. The overall purpose is to ensure that the Company can attract, motivate, and retain board members and employees with the experience, skills and behavior needed to achieve our objectives, carry out our strategy and maximize our shareholder value. The BSCC activities during 2023 included: Preparing the Remuneration Report for 2023 in line with the reporting standards in section 6-16a and 6-16b of the Norwegian Public Limited Liability Companies Act and Elopak’ guideline for remuneration of leading persons. Incentive program principles, target setting and results considering the business context in general. Remuneration of the CEO, including performance review, short-term incentive achievement and equity grants. Review of contractual terms and conditions for Management. Expansion of the long-term incentive program to senior management. Succession planning (included in the BSCC’s mandate in 2023), including thor- ough review of the system for succession planning and candidates. The Board has prepared and approved a separate BSCC charter. Board self-assessment The Board yearly conducts a self-assessment of its work, competence and interaction with Management. Risk management and internal control Risk management As set out in the company’s Principles for Corporate Governance, the Board shall ensure that Elopak has a good internal control framework and appropriate systems for risk management given the scope and nature of the company’s business activities. These systems are to be continuously developed in light of the company’s growth and situation. Executing our sustainability driven growth strategy depends on managing overall risk exposure and standalone risk factors to which the group is exposed. Elopak’s Board and Management are committed to proactive risk management to ensure effective strategy execution with an adequate level of risk exposure. Together with the Management, the Board has evaluated the key risks of operations and strategic projects. The BASC assists the Board in discharging oversight responsibilities, including ensuring the effectiveness of our internal control and risk management system. Management is respon- sible for operationalizing the risk management responses, including ensuring the group’s primary strategic initiatives, as well as iden- tifying, assessing, managing, and mitigating the top risks we face in our operations. The respective business areas, with their expertise and knowledge of their fields of operations, are the risk owners and support Management’s overall risk responsibilities by understanding, mitigating, and managing risks as part of their operations as well as assessing, analyzing, and addressing how the risks influence the group’s performance. As an integrated part of Elopak’s business planning process, the group, as well as the respective business areas and key functions, Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 51 51 Governance | Corporate governance Governance | Corporate governance map, evaluate, and classify risks based on likelihood, mitigating actions, and estimated impact. The framework of the process includes a defined process to execute risk management throughout the organization, from identification to managing and mitigating risks. Each risk factor identified is evaluated based on the potential materiality of the risk, financially or otherwise affecting the Elopak Group, and the probability of the risk materializing. The cost of control and benefits of adjusting the risk levels are considered to ensure the prioritization of beneficial risk management. The same risk assessment processes are used in strategically important or financially significant projects. It also directs the compliance work and is the starting point for developing new processes and procedures in the Elopak Management System. This ensures that responses and controls are aligned to an acceptable risk level. A key part of the risk assessment is also to evaluate which risks are at an acceptable level – our risk appetite. For certain risk categories like safety, the risk appetite is very low, but for some commercial risks, there will be a risk/reward evaluation. In our business performance review process, risks are monitored, managed, and mitigated throughout the year to manage the appro- priate level of risk exposure and monitor the progress of risk response actions. Impacts, risks and opportunities related to sustainability matters are considered during the double materiality assessment as required by the Corporate Sustainability Reporting Directive (CSRD). The assessment was performed during 2023 and the framework and methodology will be implemented as a part of Elopak’s risk management procedures. Elopak will establish a process where the double materiality assessment is updated every 2 years, with regular reporting to the Board. Transferring the double materiality assessment into company strategy, targets and monitoring, is also a process where the Board has oversight. Elopak Management System Throughout 2023, we have focused on developing our management system - Elopak Management System (EMS). EMS outlines our global policies and procedures to ensure we can fulfill the tasks required to achieve our objectives and strategic goals, including internal controls. EMS will be made available to all employees in 2024. With commitment from the Management team, the management system will be updated with key documenta- tion in a prioritized, step-by-step approach. Internal control The Board oversees the internal control routines in the company through the BASC. Processes evaluated include, but are not limited, to procurement, production and inventory, sales, payroll, period end closing and IT general control. Each year, the external auditor performs tests of the company’s internal control routines and presents the findings to the Board. On this basis, the Board reviews management’s plan for further devel- opment of the company’s internal control system. Remuneration of the Board The general meeting determines the Board’s remuneration annually, based on recommendations from the Nomination Committee. Remuneration of the Board members shall be reasonable and based on the Board’s responsibilities, work, time invested and the complexity of the enterprise. Work in committees may be compensated in addition to the remuneration received for Board membership. This is further described in Elopak’s remuneration guidelines and Remuneration report. Remuneration of Management The BSCC assists the Board in discharging the Board’s responsibilities relating to the compensation of the Management team. Remuneration of the Management team is described in Elopak’s remuneration guidelines and in the Remuneration report. Information and communications Elopak’s reporting of financial, sustainability and other information is based on transpar- ency and equal treatment of shareholders. Elopak shall provide the public with accurate, comprehensive, and timely information, to form a good basis for making decisions related to valuation and trade of the Elopak share. All information considered relevant and signifi- cant for valuing the company’s shares will be distributed and published in English via Oslo Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 52 52 Governance | Corporate governance Governance | Corporate governance Børs’ disclosure system, www.newsweb.no , and via Elopak’s investor website simultaneously. Elopak emphasizes an open and ongoing dialogue with the investor community, through frequent meetings with investors, fund managers, analysts and journalists. The company is also present at relevant investor conferences and seminars. The CEO, CFO and Head of Investor Relations are responsible for the main dialogue with the investor commu- nity and the company’s shareholders. The company has established an Investor Relations Policy, including guidelines for the company’s communication with shareholders outside the general meetings. Elopak holds public presentations in connec- tion with the announcement of quarterly and annual financial results as well as strategic updates. The presentations are available via Oslo Børs’ news site www.newsweb.no and Elopak’s investor website. Takeovers The Board has established guidelines for takeover bids. If a take-over process should occur, the Board and the Management team each have an individual responsibility to ensure that the company’s shareholders are treated equally and that there are no unnecessary interrup- tions to the company’s business activities. The Board has a particular responsibility in ensuring, to the extent possible, that the shareholders have sufficient information and time to assess the offer. In the event of a takeover bid, the Board will, in addition to complying with relevant legislation and regulations, seek to comply with the recommendations in the Code of Practice. This includes obtaining a valuation from an independent expert. Diversity, equity and inclusion The company has not established separate guidelines for equity and diversity for the composition of the Board, Management and control bodies. However, the company has adopted a diversity, equity and inclusion policy which applies to the group as whole, including appointment of Management. Further, the Nomination Committee considers the Board’s composition with regards to age, gender, education and professional background when proposing new Board members. Auditor The Board has delegated to the BASC to monitor the external auditor, and the BASC reports the outcome of this work to the Board. The external auditor, PWC, annually presents its overall plan for the audit of Elopak for the BASC’s consideration. The external auditor’s involvement with BASC during 2023 related to the following: Presented the main features of the audit work. Attended BASC meetings approving the financial statements, reviewing possible significant changes in accounting principles, assessing significant accounting estimates, and considering all possible disagree- ments between the external auditor and Management. Reviewed Elopak’s internal control procedures and systems, including the identification of weaknesses and proposals for improvements. Held a meeting with the Board without the presence of the Management. Confirmed its independence and provided an overview of non-audit services provided to Elopak. During 2023, the external auditor attended 7 meetings with BASC in addition to one meeting with the Board. Pursuant to the Code of Practice, the Board has established guidelines for Elopak’s management use of the external auditor for non-audit services. The Board reports to the annual general meeting on the external auditor’s total fees, split between audit and non-audit services. The annual general meeting approves the auditor’s fees for Elopak ASA. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 53 53 Governance | Corporate governance Governance | Corporate governance Elopak Management 2023 This is Elopak Management as of December 31, 2023. The updated Management of 2024 can be viewed here: https://www.elopak.com/about/manage ment Thomas Körmendi Chief Executive Officer Thomas Körmendi is the CEO and President of the Elopak Group. He joined Elopak in 2018. Körmendi has more than 30 years of extensive management and business development experience from several international companies. Prior to joining Elopak, Körmendi held the position as the CEO of Kezzler AS. Körmendi has also served as a member of the board of directors of One Nordic AB. He is currently member of the board of directors at Nordic Paper and Norican. In addition, he has held the position as CEO of the Relacom Group, Interim CEO of Cardo Flow Solutions, Managing Director of Tetra Pak Bulgaria, Turkey, Caucasus, and Hungary, and as the Vice President of Tetra Pak with responsibility for the North Europe region. Körmendi holds a Master of Science in Economics from Copenhagen Business School. Previous directorships and senior management positions last five years: One Nordic (board member), Kezzler A/S (CEO), and Körmendi & Co (Senior Business Advisor). Bent K. Axelsen Chief Financial Officer Bent K. Axelsen is CFO for the Elopak Group since 2019. Axelsen is an experienced executive with broad international experience across a range of profes- sions ranging from finance to business development, marketing, product management, and business operations. In addition to working from Norway in global positions, Axelsen has local business experience from Asia, after living two years in Singapore and 4 years in Thailand. Prior to joining the Elopak, Axelsen spent more than 15 years in Yara International ASA, where he held several managing positions, including the position as CFO & SVP Global Business Excellence, SVP Marketing & Business Development, CFO Crop Nutrition, and Vice President and Country Manager Thailand. In addition, Axelsen has held several posi- tions in Norsk Hydro ASA. Axelsen holds a Master’s degree in Economics from BI Norwegian Business School. Patrick Verhelst Chief Marketing Officer Patrick Verhelst is Chief Marketing Officer for the Elopak Group. He joined Elopak in 2019. Verhelst has more than 30 years of experience within marketing, sales, and leadership from holding management positions in several international companies. Prior to joining Elopak, Verhelst held the position of Director of Sales, Marketing, and Innovation for the Wipak Group. He has also been the Vice President of Sales for Coveris Group, the Business Group Strategy Director, Program Director of Sales & Marketing Transformation, and Marketing Director Europe for SCA Packaging. In addition, Verhelst has held several managing positions for General Electric Plastic, including Global Business Manager, Product Manager Europe, and Sales & Marketing Manager Europe. Verhelst is a Civil Engineer in Chemistry and Agricultural Sciences and holds a Master’s in Business Management from the Vrije Universiteit in Brussel. In addition, Verhelst has a degree in Business-to-Business Marketing from the Economic School of Management in Brussels. Previous directorships and senior management positions last five years: Wipak Group (Director of Sales, Marketing & Innovation). Year of appointment: 2018 Körmendi holds 396 105 shares and 409 286 rights to shares in Elopak. Year of appointment: 2019 Axelsen holds 203 833 shares and 145 046 rights to shares in Elopak. Year of appointment: 2019 Verhelst holds 61 562 shares and 119 642 rights to shares in Elopak. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 54 54 Governance | Corporate governance Governance | Corporate governance Nete Bechmann Chief Human Resources Officer Nete Bechmann is Chief Human Resources Officer for the Elopak Group. She joined Elopak in 2020. Bechmann has more than 30 years’ experience within human resources, leadership, and finance. Prior to joining Elopak, Bechmann held the position of exec- utive HR business partner in Vestas Wind Systems AS and has also held several HR positions within Arla Foods. Nete Bechmann has a Graduate Diploma in Accounting. Current directorships and senior manage- ment positions: Aarhus Katedral Gymnasium (board member). Previous directorships and senior manage- ment positions last five years: Business Aarhus/ International Community (member of the executive committee), Vestas Wind Systems A/S (executive HR business partner). Ivar Jevne EVP Packaging and Procurement Ivar Jevne is Executive Vice President MPS (Material and Product Supply) and Procurement for the Elopak Group. He first joined Elopak in 2005 and was promoted to his current position in 2013. As such, Jevne has more than 15 years of experience from within the Elopak system, starting out as the Group Purchasing Director/Chief Purchasing Officer. Prior to joining Elopak, Jevne held the position of Principal at A.T. Kearney. Jevne holds a Master of Science from the Norwegian University of Science and Technology. Stephen D. Naumann EVP Region Europe North and India Stephen Naumann is the Group’s Executive Vice President for Region Europe North and India. He has been a member of the Elopak Group Leadership Team since 2007. Naumann has nearly 30 years of experi- ence within Elopak, starting as Sales and Marketing Manager in 1992. He made several advancements in the years that followed, with the first milestone as General Manager of Elopak GmbH Germany in 1997. He was then entrusted with additional responsibility for the NL and UK markets. In 2005, he became VP Northern Europe and Global Accounts. In 2007, Naumann joined the GLT as an EVP Europe North and West. In 2015, he became Executive VP Region Europe and Mediterranean and Roll Fed and has been the EVP for Europe North and CIS since 2019. Naumann holds a degree of Wirtschaftsassistent Industrie, comparable to a Bachelor’s degree in Economics. Current direc- torships and senior management positions: FKN e.V. (board member delegated by Elopak GmbH). Wolfgang Buchkremer Chief Technical Officer Wolfgang Buchkremer is Chief Technical Officer for the Elopak Group. He first joined Elopak in 2011 and was promoted to his current position as CTO in 2018. As such, Buchkremer has 13 years of experience from within the Elopak system, starting out as a Senior Manager within Research and Engineering. Prior to joining Elopak, Buchkremer held the position of Manager for Advanced Development for KHS. In addition, Buchkremer has been the Deputy Head of Technology Pool Machine for SIG Combibloc. Buchkremer holds an Engineer degree in Automation Technology from Fachhochschule Aachen University of Applied Sciences. Current directorships and senior management positions: Elopak GmbH (general manager), Elopak Inc. (board member). Year of appointment: 2013 Jevne holds 239 432 shares and 142 251 rights to shares in Elopak. Year of appointment: 2020 Bechmann holds 35 447 shares and 134 630 rights to shares in Elopak. Year of appointment: 2007 Naumann holds 190 055 shares and 252 177 rights to shares in Elopak. Year of appointment: 2018 Buchkremer holds 78 638 shares and 131 537 rights to shares in Elopak. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 55 55 Governance | Corporate governance Governance | Corporate governance Dag Grönevik EVP Equipment and Service Dag Grönevik is Executive Vice President for Equipment and Service for the Elopak Group. Grönevik has held the position since March 2022. Grönevik has an educational background as Mechanical Engineer and has more than 30 years of experience from several senior leadership roles within Service and Operations, based in different parts of the world such as Russia, China, Southeast Asia, Oceania and Europe. Prior to joining Elopak, Grönevik was Managing Director for Service Leaders Matters, a global recruiting firm for senior service leaders. In addition, Grönevik has experience in leading the global service business at Sidel International AG and from various roles at Tetra Pak, recently as Head of Services in Region South and Southeast Asia, Global Director of Operations in Sweden, and Region EMEA head of Services in Switzerland. Previous directorships and senior management positions last five years: Service Leaders Matters (managing director) Lionel Ettedgui EVP Region Americas Lionel Ettedgui is Executive Vice President for the North America region in Elopak. Ettedgui has been appointed EVP Region America since September 2019. Prior to joining Elopak, Ettedgui was the President and CEO of Colabor Group. In addition, Ettedgui served more than 6 years as President and Chief operating officer of the Saputo Bakery division. In addition, Ettedgui has held various executive positions in Europe and Africa within trade, operations manage- ment, and business development. Ettedgui has also served on the board of directors of several compa- nies. Ettedgui holds a degree in Business from the Institut Supérieur de Gestion. Current directorships and senior management positions: Elopak Canada (board member), Elopak Inc. (board member), Envases (board member), and Impresora del Yaque (board member). Previous directorships and senior manage- ment positions last five years: Mito Sushi (member of the advisory board), 123KLAN (member of the advisory board), Fondation Hopital Sacre Coeur (board member), and Groupe Colabor (president and CEO). Finn M. Tørjesen EVP Region Europe South and MENA Finn M. Tørjesen is Executive Vice President for Region Europe South and MENA. Tørjesen has held the position of EVP since May 2019 and has been with Elopak since 1991. Tørjesen has been an inter- national marketing and sales executive for more than 25 years. Tørjesen holds a Master of Business from the University of Strathclyde and a Bachelor (Hons) from Oslo Business School. Current directorships and senior management positions: Elopak Spa Italy (chair), Elopak Nampak JV (board member), and The Norwegian Spanish Chamber of Commerce in Madrid (board member). Previous directorships and senior management positions last five years: Elopak Obeikan JV (board member). Year of appointment: 2019 Ettedgui holds 95 553 shares and 209 922 rights to shares in Elopak. Year of appointment: 2022 Grönevik holds 9 660 shares and 114 304 rights to shares in Elopak. Year of appointment: 2019 Tørjesen holds 79 816 shares and 133 476 rights to shares in Elopak. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 56 56 Governance | Corporate governance Governance | Corporate governance Sustainability governance Governing bodies Accountability for sustainability lies with the Board. The Board has appointed the BASC to oversee sustainability governance, frameworks, and reporting. The Board has also appointed the Board Succession and Compensation Committee to oversee the compensation of management, including sustainability KPIs embedded in the compensation mix. During 2023, sustainability topics were presented to both the Board and to BASC quarterly. Figure 1: Sustainability governance model. There are also other networks (e.g., safety, procurement) which are not included in the illustration. Board of Directors Board Audit and Sustainability Committee (BASC) Board Succession and Compensation Committee (BSCC) CEO Compliance Network Implementation of compliance in operations Ethics & Compliance Council Sustainability Network Implementation of sustainability approach in operations Sustainability Council People and Organization Owner of Employee Life Cycle and Diversity, Equity and Inclusion Procurement Owner of Responsible Supply chains Product Management and Sustainability Owner of Overall approach, Environmental Impact, Certification of Raw Materials, Recycling Finance Owner of Ethics & Compliance and Human Rights Operations Owner of Safety Group leadership Team (GLT) Business planning/business review and overall strategy execution Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 57 57 Governance | Sustainability governance Governance | Sustainability governance Administrative bodies Sustainability execution is the responsibility of the Management, the Group Leadership Team (GLT). The tasks of adherence to sustainability regulations and reporting have been delegated by the GLT to a Sustainability Council. Chaired by the Director of Sustainability, the council consists of the CMO, the CFO, the CHRO and the CPO/ EVP Packaging and Procurement. This council oversees sustainability processes, priorities and responsibilities which are covered by the represented business areas. A cross-functional Sustainability Network manages and implements relevant sustaina- bility topics in Elopak. The network consists of representatives from functions in the business areas which are represented in the Sustainability council. The Ethics and Compliance Council is respon- sible for managing and coordinating ethics and compliance risks, including human rights, and facilitating an efficient implementation across Elopak. The Ethics and Compliance council, chaired by the Chief legal and compliance officer, consists of senior management and personnel representing the different regions, business areas and support functions of the organization. The council meets at least twice a year. Ethics and compliance matters are regularly discussed with the Group Leadership Team and are reported to the BASC. Further, a Compliance Network consisting of compliance champions across the organization supports the implementation of compliance in the business through awareness-raising, training and guidance. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 58 58 Governance | Sustainability governance Governance | Sustainability governance External engagement Memberships Elopak is member of trade associations and work with non-governmental and interna- tional organizations, certification bodies, and multi-stakeholder initiatives to promote sustainable practices and continuously improve our products and transparency prac- tices. Elopak holds the memberships listed in the table to the right. Our certificates can be found here: https://www.elopak.com/annual-reports/ documenta tion Name Description UN Global Compact The largest corporate sustainability initiative in the world. It acts as a universal call to companies to align their operations and strategies focusing on ten universally accepted principles in the areas of human rights, labor, environment, and anti- corruption, whilst encouraging member parties to take action in support of UN goals and issues embodied in the SDGs. FSC™ – Forest Stewardship Council™ Working to ensure sustainable forest management practices globally. ISCC – International Sustainability and Carbon Certification Working to ensure sustainable practices behind renewable feedstocks for plastics. ASI – Aluminium Stewardship Initiative A global non-profit standard setting and certification organization. The organiza- tion aims to maximize the contribution of aluminium to a sustainable society. Members include producers, users, and stakeholders in the aluminium value chain. RE100 A global initiative of companies committing to sourcing 100% renewable electricity. EcoVadis The world’s largest and most trusted provider of business sustainability ratings. Name Description Sedex One of the world’s leading ethical trade service providers. ACE – The Alliance for Beverage Cartons and the Environment A European industry association working to benchmark and profile cartons as renewable, recyclable, and low carbon packaging solutions. EXTR:ACT The European platform to increase the recycling of beverage cartons and similar fiber based multi-material packaging. Carton Council An industry association working to drive carton recycling in North America. 4Evergreen A cross-industry alliance of over 100 members representing the entire lifecycle of fibre-based packaging – from forests to producers, designers, brand owners and recyclers. HolyGrail 2.0 A cross value chain initiative working to improve packaging recycling through the use of pioneering digital watermarks. Europen European trade association representing the packaging industry value chain. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 59 59 Governance | Sustainability governance Governance | Sustainability governance In addition to the memberships mentioned above, Elopak also holds membership in several national beverage carton associations. Certifications Elopak holds the certifications listed in the table to the right. Certifications Description Forest Stewardship Council (FSC™) Every Elopak’s factory is certified. This enables us to offer FSC™ labeled cartons and to ensure that all the forestry behind our cartons are managed responsibly. ISCC PLUS (International Sustainability and Carbon Certification) Elopak's largest factories are certified. This enables us to offer cartons featuring certified renewable polyethylene (polymers). ISO 9001 (Quality management) All but one of Elopak’s factories are certified. The remaining is expected to be certified in 2024. ISO 14001 (Environmental management) Some of Elopak’s factories are certified. This ensures good management practices and a strong environmental focus, and best practice is spread to other noncertified sites. ISO 45001/ OHSAS 18001 (Occupational health and safety management) Two of Elopak’s factories are certified. This verifies good health and safety practices and is an addition to our internal safety policies and practices which are based on the ISO framework. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 60 60 Governance | Sustainability governance Governance | Sustainability governance Financial statements Consolidated financial statements 62 Elopak ASA financial statements 117 Responsibility statement 137 Auditor’s report 138 PwC limited assurance report on GHG statement 143 Alternative Performance Measures (APMs) 145 Combined annual and sustainability report 2023 61 Financials Consolidated financial statements Elopak Group Consolidated statement of income 63 Consolidated statement of comprehensive income 64 Consolidated statement of financial position 65 Consolidated statement of cash flows 67 Consolidated statement of changes in equity 68 Notes to the consolidated financial statements 69 Note 01 Company information and basis of preparation 69 Note 02 Critical accounting judgments and key sources of estimation uncertainty 71 Note 03 Revenues 72 Note 04 Operating segments 74 Note 05 Payroll expenses, numbers of employees, benefits etc. 75 Note 06 Share-based payments 75 Note 07 Other operating expenses 77 Note 08 Financial income and expense 77 Note 09 Income tax 78 Note 10 Discontinued operations 80 Note 11 Development cost and other intangible assets 81 Note 12 Goodwill 83 Note 13 Property, plant and equipment 85 Note 14 Leases 87 Note 15 Investment in joint ventures 90 Note 16 Other non-current assets 92 Note 17 Impairment Ukraine 92 Note 18 Inventory 93 Note 19 Trade receivables and other current assets 94 Note 20 Equity and shareholders information 96 Note 21 Employee retirement benefit plans 98 Note 22 Interest-bearing loans and borrowings 98 Note 23 Other current liabilities 100 Note 24 Capital management 100 Note 25 Financial risk management 101 Note 26 Change in obligations from financial activities 108 Note 27 Business combination 109 Note 28 Shares in subsidiaries and joint ventures 112 Note 29 Related parties 113 Note 30 Fees to external auditors 114 Note 31 Subsequent events 114 Note 32 Financial climate impact 115 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 62 62 Financials | Consolidated financial statements Consolidated statement of income EUR 1 000, except for share information Note 2023 2022 Revenues 3 1,132,043 1,023,696 Other operating income 145 157 Total income 4 1,132,187 1,023,853 Cost of materials (719,796) (681,474) Payroll expenses 5 , 6 (189,623) (176,721) Depreciation and amortization expenses 11-14 , 17 (60,147) (61,528) Impairment of non-current assets 11-14 , 17 (1,186) (6,599) Other operating expenses 7 , 30 (58,658) (55,757) Total operating expenses (1,029,409) (982,079) Operating profit 4 102,778 41,774 Financial income and expense Share of net income from joint ventures 6,855 4,378 Financial income 15 7,807 10,305 Financial expense 8 (32,064) (13,033) Foreign exchange gain/(loss) 8 (498) 2,983 Profit before tax from continuing operations 84,880 46,407 Income tax 9 (15,513) (12,188) Profit from continuing operations 69,366 34,220 Discontinued operations Russia 10 (1,339) (23,622) Profit/(loss) from discontinued operations (1,339) (23,622) Profit/(loss) 68,027 10,598 EUR 1 000, except for share information Note 2023 2022 Profit attributable to: Elopak shareholders 67,061 10,856 Non-controlling interest 966 (259) Basic and diluted earnings per share from continuing operations 20 0.25 0.13 Basic and diluted earnings per share from discontinued operations 0.00 (0.09) Basic and diluted earnings per share attributable to Elopak shareholders 0.25 0.04 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 63 63 Financials | Consolidated financial statements Consolidated statement of comprehensive income EUR 1 000 2023 2022 Items that will not be reclassified subsequently to profit or loss Actuarial gain/(loss) on defined benefit pension plans, net of tax (81) 20 Items reclassified subsequently to net income upon derecognition Exchange differences on translation foreign operations Elopak shareholders 375 6,406 Exchange differences on translation foreign operations non-controlling interest (383) (467) Net value gain/(loss) on cash flow hedges, net of tax (1,517) (6,972) Other comprehensive income, net of tax (1,606) (1,013) Total comprehensive income 66,421 9,585 Total comprehensive income attributable to: Elopak shareholders 65,838 10,310 Non-controlling interest 583 (726) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 64 64 Financials | Consolidated financial statements Consolidated statement of financial position EUR 1 000 Note December 31 2023 December 31 2022 ASSETS Non-current assets Development cost and other intangible assets 11 62,300 71,331 Deferred tax assets 9 22,883 22,414 Goodwill 12 , 27 106,061 104,958 Property, plant and equipment 10 , 13 , 17 , 27 202,934 201,975 Right-of-use assets 10 , 14 , 17 , 27 86,370 76,784 Investment in joint ventures 15 , 28 37,709 34,673 Other non-current assets 16 14,892 19,841 Total non-current assets 533,149 531,976 Current assets Inventory 18 192,189 187,207 Trade receivables 19 110,243 102,197 Other current assets 9 , 19 113,720 109,214 Cash and cash equivalents 13,308 25,883 Total current assets 429,460 424,502 Total assets 4 962,610 956,479 EUR 1 000 Note December 31 2023 December 31 2022 EQUITY AND LIABILITIES EQUITY Share capital 20 50,104 50,155 Other paid-in capital 70,548 69,987 Currency translation reserve (27,103) (27,477) Cash flow hedge reserve (4,275) (2,758) Retained earnings 216,977 169,584 Attributable to Elopak shareholders 306,253 259,491 Non-controlling interest 9,043 8,477 Total equity 315,296 267,967 LIABILITIES Non-current liabilities Pension liabilities 21 2,502 2,668 Deferred taxes 9 14,041 17,240 Non-current liabilities to financial institutions 22 224,433 304,033 Non-current lease liabilities 14 78,424 73,536 Other non-current liabilities 5,033 1,867 Total non-current liabilities 324,434 399,344 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 65 65 Financials | Consolidated financial statements Consolidated statement of financial position cont. EUR 1 000 Note December 31 2023 December 31 2022 Current liabilities Current liabilities to financial institutions 22 19,333 21,682 Trade payables 127,847 124,038 Taxes payable 9 6,997 2,198 Public duties payable 25,066 22,682 Current lease liabilities 14 23,096 17,139 Other current liabilities 23 120,540 101,429 Total current liabilities 322,880 289,167 Total liabilities 647,314 688,512 Total equity and liabilities 962,610 956,479 Skøyen, April 10, 2024 Board of Directors in Elopak ASA This document is signed electronically Dag Mejdell Chairperson Trond Solberg Board Member Anna Belfrage Board Member Sid Johari Board Member Sanna Suvanto-Harsaae Board Member Håvard Grande Urhamar Board Member (employee representative) Anette Bauer Ellingsen Board Member (employee representative) Thomas Körmendi CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 66 66 Financials | Consolidated financial statements Consolidated statement of cash flows EUR 1 000 Note 2023 2022 Profit before tax from: Continuing operations 84,880 46,407 Discontinued operations 10 (1,339) (22,825) Profit before tax (including discontinued operations) 83,540 23,583 Interest to financial institutions 8 11,303 5,658 Lease liability interest 8 , 14 6,566 4,575 Profit before tax and interest paid 101,410 33,815 Depreciation, amortization and impairment losses 11-14 , 17 61,332 76,118 Net (gains), losses from disposals, impairments and change in fair value of financial assets and liabilities (399) 500 Net unrealised currency (gain)/loss (174) 2,297 Income from joint ventures 15 (6,855) (4,378) Net (gain)/loss on sale of non-current assets (13) 137 Income taxes paid 9 (14,270) (13,683) Change in trade receivables (9,275) (10,615) Change in other current assets (5,265) (16,391) Change in inventories (6,982) (39,175) Change in trade payables 3,897 4,893 Change in other current liabilities 34,011 (8,117) Change in net pension liabilities (228) (307) Net cash flow from operating activities 157,189 25,094 EUR 1 000 Note 2023 2022 Purchase of non-current assets 16 (40,774) (43,714) Acquisition of subsidiaries and joint ventures 27 - (88,262) Proceeds from sale of non-current assets 122 1,232 Proceeds from sale of financial assets and businesses 4,883 - Dividend from joint ventures 15 2,018 - Change in other non-current assets 1,772 4,735 Net cash flow from investing activities (31,978) (126,009) Proceeds of loans from financial institutions 22 1,087,304 1,178,067 Repayment of loans from financial institutions 22 (1,174,598) (1,030,217) Interest to financial institutions 8 (11,303) (5,658) Lease payments 14 (18,359) (19,770) Dividend paid to equity holders of Elopak ASA (19,634) (19,623) Purchase of treasury shares 20 (885) (241) Net cash flow from financing activities (137,475) 102,558 Effects of exchange rate changes on cash and cash equivalents (310) (22) Net change in cash and cash equivalents (12,575) 1,621 Cash and cash equivalents at the beginning of the year 25,883 24,262 Cash and cash equivalents at the end of the period 13,308 25,883 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 67 67 Financials | Consolidated financial statements Consolidated statement of changes in equity December 31, 2023 EUR 1 000 Note Share capital Other paid-in capital Currency translation reserve Cash flow hedge reserve Retained earnings Non-controlling interest Total equity Total equity 01.01 50,155 69,987 (27,477) (2,758) 169,584 8,477 267,967 Profit for the period - - - - 67,061 966 68,027 Other comprehensive income for the period net of tax - - 375 (1,517) (81) (383) (1,606) Total comprehensive income for the period - - 375 (1,517) 66,980 583 66,421 Dividend paid - - - - (19,634) (16) (19,650) Share based payments 6 - 1,100 - - 47 - 1,146 Treasury shares (50) (539) - - - - (589) Total capital transactions in the period 20 (50) 561 - - (19,587) (16) (19,093) Total equity 31.12 50,104 70,548 (27,103) (4,275) 216,977 9,043 315,296 December 31, 2022 EUR 1 000 Note Share capital Other paid-in capital Currency translation reserve Cash flow hedge reserve Retained earnings Non-controlling interest Total equity Total equity 01.01 50,155 70,236 (33,883) 4,215 178,330 - 269,054 Profit for the period - - - - 10,856 (259) 10,598 Other comprehensive income for the period net of tax - - 6,406 (6,972) 20 (467) (1,013) Total comprehensive income for the period - - 6,406 (6,972) 10,877 (726) 9,585 Dividend paid - - - - (19,623) - (19,623) Share based payments - (241) - - - - (241) Acquisition of GLS Elopak 27 - - - - - 9,202 9,202 Treasury shares (1) (9) - - - - (10) Total capital transactions in the period 20 (1) (250) - - (19,623) 9,202 (10,672) Total equity 31.12 50,155 69,987 (27,477) (2,758) 169,584 8,477 267,967 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 68 68 Financials | Consolidated financial statements Notes to the consolidated financial statements Note 01 Company information and basis of preparation Elopak ASA is a public limited company incorporated in Norway. Elopak is a global supplier of liquid carton packaging and filling equipment, catering to both the fresh and aseptic segments. The principal activities of the company and its subsidiaries are described in Note 3Note 3. The address of the registered office and principal place of business is Industriveien 30, 3430 Spikkestad, Norway. Elopak ASA is listed on the Oslo Stock Exchange (Oslo Bors). The Board of Directors and the CEO authorized these consolidated financial statements of Elopak ASA and its subsidiaries for the year ended December 31, 2023, for issue on April 10, 2024.. The address of the registered office and principal place of business is Industriveien 30, 3430 Spikkestad, Norway. Elopak ASA is listed on the Oslo Stock Exchange (Oslo Bors). The Board of Directors and the CEO authorized these consolidated financial statements of Elopak ASA and its subsidiaries for the year ended December 31, 2023, for issue on April 10, 2024. Elopak's material accounting policies are included in the explanatory notes to the consolidated financial statements. Basis of preparation The consolidated financial statements of Elopak ASA and its subsidiaries have been prepared in accordance with IFRS®Accounting Standards as adopted by the European Union (EU). The accounting policies adopted have been applied consistently to all of the years presented. Elopak also provides disclosures in accordance with requirements in the Norwegian Accounting Act (Regnskapsloven). New and amended standards adopted by Elopak do not have a material impact on the consolidated financial statements. The Elopak Group consists of Elopak ASA and its subsidiaries as set out in Note28. The consolidated financial statements incorporate the financial state-ments of the companies controlled by Elopak ASA. The functional currency of Elopak ASA is the Euro (EUR). All numbers are presented in Euro 1 000 unless otherwise is clearly stated. Material accounting policies Material accounting policies and information about management judg-ments, estimates, and assumptions are provided in the respective notes throughout the consolidated financial statements. Accounting policies that relate to the financial statements as a whole or are relevant for several notes are included in this “Material accounting policies” section. Foreign currencies The individual financial statements of each group entity are prepared in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Euro, which is the functional currency of the parent company and the presentation currency for the consolidated financial statements. For the purpose of presenting the consolidated financial statements, the assets and liabilities of Elopak’s foreign operations are expressed in Euro using exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the rele-vant periods. Impairment of non-financial assets excluding goodwill At each reporting date, Elopak reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, Elopak estimates the recoverable amount of the cash-generating unit to which the asset belongs. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 69 69 Financials | Consolidated financial statements Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is esti-mated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount. The increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. Financial instruments at amortized cost Subsequent to initial recognition, non-derivative financial instruments are measured at amortized cost using the effective interest method, less any impairment losses. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or liability or, where appropriate, a shorter period. Financial instruments at fair value The fair value of investments that are actively traded in organized financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market value of another instrument which is substantially the same, discounted cash flow analysis or other valuation models. Trade and other payables Trade and other payables that contain significant financing components are measured at amortized cost, otherwise, they are measured at nominal value. Adoption of new and revised International Financial Reporting Standards A number of new standards are effective for annual periods beginning after January 1, 2023, and earlier application is permitted. However, Elopak has not early adopted the following new or amended accounting standards. Amendments to IFRS that are mandatorily effective for an accounting period that begins on or after January 1, 2023 have been adopted. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. •Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) •IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts The following new and amended standards issued but not yet effective are not expected to have a material impact on Elopak’s consolidated financial statement: •Classification of Liabilities as Current or Non-current (Amendments to IAS 1) •Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) •Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) •Lack of Exchangeability (Amendments to IAS 21) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 70 70 Financials | Consolidated financial statements Note 02 Critical accounting judgments and key sources of estimation uncertainty In the application of Elopak’s accounting policies, which are described in Note 1, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Business combinations In a business combination, the assets acquired and liabilities assumed are valued at fair value at the time of acquisition. The various assets and liabilities are valued on the basis of different models, requiring estimates and assumptions to be made. Goodwill is the residual value in this allo-cation. Errors in estimates and assumptions can lead to an error in the split of the value between the various assets and liabilities incl. goodwill, but the sum of the total excess values will always be consistent with the purchase price paid. The useful lives of the intangible assets acquired in a business combi-nation are assessed as either finite or indefinite and may in some cases involve considerable judgements. Intangible assets acquired with finite useful lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. According to IFRS 3, goodwill is to be allocated at the acquisition date, to each of the acquirer's CGUs, or groups of CGUs, which are expected to benefit from the business combination. This can include existing CGUs of the acquirer irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The identification of CGUs may require significant judgement by management. In 2022 Elopak acquired 100% of the voting shares of Naturepak Beverage Packaging Co Ltd and consolidates the company as a subsidiary in Elopak’s consolidated financial statements. In 2022 Elopak acquired 50% of the shares in GLS Elopak and consolidates the company as a subsidiary in Elopak’s consolidated financial statements. The shareholder agreement provides Elopak with exposure to variable returns and power to affect the returns from GLS Elopak, which means that Elopak has control of GLS Elopak in accordance with IFRS 10. Details are presented in Note27. War in Ukraine In March 2022, Elopak suspended all activities in Russia and restarted operations in Ukraine after a temporary close-down. Impairment in Ukraine is presented in Note 17and discontinued operations in Russia is presented in Note10. Deferred tax assets Management has exercised judgment in assessing the recognition of tax loss carryforward for Elopak’s various entities and the resulting deferred tax asset. The judgment is based upon the entities’ assessed ability to generate future cash flows that will enable the entities to do so. The assessments imply a degree of uncertainty relating to such future events. Tax expenses and deferred tax assets are presented in Note 9. Tax disputes In tax disputes, Elopak accounts for tax costs according to decisions made by local tax authorities or according to subsequent tax rulings in the actual case or similar cases. Where transfer pricing adjustments have been made, mutual agreement procedures (MAP) between the affected countries are normally available. A successful MAP procedure, as intended in the double tax treaties between countries, would result in a corresponding tax adjustment in a Group company, thus removing the tax cost for Elopak. Where a MAP process is available, Elopak recognizes tax costs according to the probability of the outcome of the MAP process. If tax authorities within the EU do not agree, taxpayers have the right to demand arbitration. Details regarding ongoing tax disputes are described in Note 9. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 71 71 Financials | Consolidated financial statements Note 03 Revenues Accounting policy The Group is a global supplier of paper-based packaging system solutions for liquid products. Revenue from contracts with customers is derived from sale of filling equipment, Pure-Pak®carton and Roll Fed packaging material (hereby denominated as cartons), closures and related services. Revenue is recognised when control of the goods or services are transferred to the customer and is presented net of returns, trade discounts, volume rebates and other customer incentives. The Group also presents lease income from lease of filling equipment. Generally, the Group recognises revenue on a point in time basis when the customer takes title to the goods and rewards for the goods. For goods without alternative use where the Group has a legally enforceable right to payment for the goods, the Group recognises revenue over time, which generally is, as the goods are produced. Sale of cartons and closures Cartons are printed based on customer specifications and are therefore without alternative use. Cancellation provisions in the customer contracts, combined with background law in the legal jurisdictions give the company an enforceable right to payment for work performed to date as described in IFRS 15. Most of the customer contracts include cancellation clauses that give the company sufficient protection to conclude that there is an enforceable right to payment. Closures are not customised and therefore with alternative use and recognised at point in time. Sale of filling equipment Revenue from sale of filling equipment is recognised at the point in time when control of the asset is transferred to the customer, generally when the machine is tested and accepted by the customer. Filling equipment could result in no alternative use if it would incur significant costs to rework the design and func-tion of the machine to adapt it to another customer. However, in most cases filling equipment is standard equipment and considered to have alternative use, hence they are recognised at point in time. Sale of service The Group offers research and development support, after sales services and technical training and main-tenance support. Revenue from support, service and training is recognised over time, as the customer simultaneously receives and consumes the benefit provided to them. The Group uses an input method in measuring progress of the services because there is a direct relationship between the Group’s effort/labour hours occurred and the transfer of service to the customer. Trade discounts, volume rebates and other incentives If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Cartons are often sold with retrospective volume discounts based on aggregate sales over several months. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. A refund liability is recognised for the expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No significant element of financing is deemed present, and the Group had no right of return in the reporting period. Contract liabilities Payments for filling equipment are generally made in instalments and a contract liability is recognised when a payment is received or due from a customer before the Group transfers the filling equipment. Contract liabilities are recognised as revenue when control of the filling equipment is transferred to the customer. Contract assets Contract assets consist of prepaid support (rebate) to customers which will be offset against contracted future purchases of cartons and features. The prepaid support is allocated to the different performance obligations, hereunder filling equipment and cartons/closures. Contract assets include over time revenue for cartons before the right to payment becomes unconditional. See Note 19for disclosure of contract assets. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 72 72 Financials | Consolidated financial statements Remaining performance obligations Delivery obligations for cartons are completed within one year or less, so we have therefore elected to use exception IFRS 15.121. The Group's revenues consist of revenue from contracts with customers (99%) and rental income from lease of filling equipment (1%). Revenues are primarily derived from the sale of cartons and closures, sales and rental income related to filling equipment and service. Revenues specified by geographical area EUR 1 000 2023 2022 USA 219 203 193 839 Germany 159 778 161 629 Canada 77 705 68 778 Netherlands 58 201 56 215 Norway 27 120 25 645 Other 590 036 517 589 Total revenue 1 132 043 1 023 696 The revenues are specified by location (country) of the customer. Revenues by product and operating segment 2023 EUR 1 000 EMEA Americas Other and eliminations Total Cartons and closures 755 682 276 739 (4 245) 1 028 177 Equipment 52 385 12 114 (14 227) 50 272 Service 52 113 - (971) 51 142 Other 10 278 1 748 (9 575) 2 451 Total revenue 870 459 290 601 (29 016) 1 132 043 2022 EUR 1 000 EMEA Americas Other and eliminations Total Cartons and closures 671 025 256 522 (3 797) 923 750 Equipment 36 307 2 183 (9 907) 28 583 Service 46 036 - (669) 45 367 Other 32 608 1 830 (8 442) 25 996 Total revenue 785 976 260 535 (22 815) 1 023 696 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 73 73 Financials | Consolidated financial statements Note 04 Operating segments Information reported to the Group's chief operating decision makers, the Group Leadership Team, for the purpose of resource allocation and assessment of segment performance is focused on two key geographical regions – EMEA and Americas. GLS Elopak is included in EMEA. Key figures representing the financial performance of these segments are presented in the following note. Refer to Note 13for disclosure of fixed assets specified by geographical area. The tables include investments in continuing operations only. 2023 EUR 1 000 EMEA Americas Other and eliminations Total Revenue from contracts with customers 842 304 288 882 857 1 132 043 Other income 61 83 - 145 Total income from external customers 842 365 288 965 857 1 132 187 Revenue from other group segments 28 153 1 718 (29 872) - Total income 870 519 290 684 (29 015) 1 132 187 Operating expenses‌1 (734 923) (230 120) (3 034) (968 076) Depreciation and amortization (50 589) (7 159) (2 398) (60 147) Impairment (1 186) - - (1 186) Operating profit 83 821 53 405 (34 446) 102 778 EBITDA‌2 135 595 60 564 (32 048) 164 111 Adjusted EBITDA‌2 135 482 67 433 (32 048) 170 867 Total assets 967 566 186 563 (191 519) 962 610 Purchase of non-current assets during the year 38 353 1 756 665 40 774 2022 EUR 1 000 EMEA Americas Other and eliminations Total Revenue from contracts with customers 764 434 258 748 514 1 023 695 Other income 157 - - 157 Total income from external customers 764 591 258 748 514 1 023 853 Revenue from other group segments 21 542 1 787 (23 329) - Total income 786 133 260 535 (22 815) 1 023 853 Operating expenses‌1 (693 984) (213 558) (6 410) (913 952) Depreciation and amortization (51 564) (7 164) (2 800) (61 528) Impairment (6 338) (261) - (6 599) Operating profit 34 247 39 551 (32 024) 41 774 EBITDA‌2 92 149 46 976 (29 224) 109 901 Adjusted EBITDA‌2 94 283 51 466 (26 336) 119 413 Total assets 945 626 157 111 (146 258) 956 479 Purchase of non-current assets during the year 45 006 5 657 (6 949) 43 714 1Operating expenses include cost of materials, payroll expenses, and other operating expenses. 2See the APM disclosure for the reconciliation of EBITDA and adjusted EBITDA. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 74 74 Financials | Consolidated financial statements Note 05 Payroll expenses, numbers of employees, benefits etc. The table includes investments in continuing operations only. EUR 1 000 2023 2022 Salary (151 449) (140 957) Social security (23 585) (22 173) Pension defined benefit plans (Note21) (99) (84) Pension defined contribution plans (Note21) (9 996) (9 597) Other benefits (4 495) (3 911) Total (189 623) (176 721) Man-year Elopak employees (excl. equity investees) 2 018 2 100 Executive management compensation for the year ended December 31, 2023 is disclosed in the Remuneration Report which is presented on the Elopak website. Note 06 Share-based payments In November 2023 the Group expanded the long-term incentive program to include senior management. Under the expanded program PSUs (Performance Share Units) of the parent are granted to members of the Group Leadership Team (GLT) and senior management. One PSU (instrument) equals one share. The eligible employees will be granted an annual award of shares from the company if certain performance criteria are met. The key terms and conditions related to the grants are as follows: KPI Categories Weighted Metric Financial targets 50% Adjusted EBITDA less normalized capex People and Planet targets 20% Environmental target (Co2emission) Shareholder value targets 30% Total shareholders return (TSR) The granted PSUs will be gradually vested during a 3-year period. Allocation of PSUs will be based on % of base pay, maximum allocation of 80% for CEO, 50% for Group Leadership Team members, and between 10 to 15% for senior management. The fair value of the PSUs related to TSR is estimated at the grant date through a Monte Carlo simulation. The fair value of the PSU's related to the remaining KPIs are equal to the share price at grant date. However, the above performance condition is only considered in determining the number of PSUs that will ultimately vest. The PSUs will under normal circumstances be exercised as soon as possible after each vesting date. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for these PSUs. The Group accounts for the PSUs as an equity-settled plan. There is no exercise price to any of the PSUs, and therefore the weighted average exercise price for all instruments are zero. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 75 75 Financials | Consolidated financial statements Reconciliation of outstanding Performance share units Number of instruments in thousands (PSU) 2023 Number of options 2022 Number of options Outstanding at 1.1‌ 699 - Granted during the year 1 616 744 Performance adjusted 45 (45) Forfeited during the year - - Exercised during the year‌ (149) - Expired during the year - - Outstanding at 31.12 2 211 699 Exercisable at 31.12 (vested) - - Weighted average remaining contractual life outstanding at end of period 1.87 years 2.52 years The weighted average share price at the date of exercise was EUR 2.27 in 2023. The weighted average fair value of PSU granted was EUR 1.40 during 2023 and EUR 2.32 in 2022. The following tables list the inputs to the models used for the years ended 31 December: Assumptions and inputs for options granted during the year 2023 2022 FV per instrument‌1 € 1.40 € 2.32 Dividend yield‌1 - - Expected volatility‌1 21.06% 7.95% Risk-free interest rate‌1 1.81% 3.09% Contractual life‌1 2.55 2.63 Expected lifetime‌‌1 0.32 0.03 Weighted average share price (€) € 2.02 € 2.32 1Weighted average parameters at grant of instrument Expected volatility is assessed based on historical volatility of the Company’s share price, with more weight to the expected term period. The expected term of the instruments has been based on historical experience and general option holder behavior. Components of share-based payments employee benefit expense 2023 2022 Share based payment (1 445) (89) Social security contribution (196) (9) Total expenses related to share-based payments (1 640) (98) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 76 76 Financials | Consolidated financial statements Note 07 Other operating expenses EUR 1 000 2023 2022 Sales and administration expenses (7 733) (6 908) Occupancy and maintenance expenses (5 201) (4 907) Travel expenses (11 313) (8 660) Losses and changes in allowance for bad debt (571) (920) Consultants, auditors, lawyers, etc (16 423) (17 759) IT expenses (10 901) (10 332) Other expenses (6 516) (6 271) Total (58 658) (55 757) Note 08 Financial income and expense Financial income EUR 1 000 2023 2022 Interest income from bank deposits 3 346 782 Other interest income‌1 285 8 459 Finance lease interest income 555 637 Other financial income 3 621 428 Total 7 807 10 305 1Other interest income in 2022 includes gains from interest rate derivatives of EUR 8 399 thousand. Financial expense EUR 1 000 2023 2022 Interest expense to financial institutions (14 402) (5 658) Other interest expense‌1 (4 657) (347) Lease liability interest (6 566) (4 575) Other financial expenses (6 428) (2 453) Total (32 064) (13 033) 1Other interest expense in 2023 includes loss from interest rate derivatives of EUR 5 518 thousand. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 77 77 Financials | Consolidated financial statements Note 09 Income tax Income tax expense EUR 1 000 2023 2022 Current income tax Current income tax charge 20 405 13 214 Adjustments in respect of current income tax of previous year (2 934) (2 583) Withholding tax 1 107 2 337 Total current income tax 18 578 12 968 Deferred tax Deferred tax cost (2 519) (1 243) Effect of changed tax rate and corrections previous years (545) 463 Total deferred tax (3 064) (780) Income tax expense reported in the statement of comprehensive income 15 514 12 188 Payable tax EUR 1 000 2023 2022 Payable tax opening balance (3 185) (2 616) Current income tax 18 578 12 968 Translation (278) 102 Net tax paid (14 356) (13 638) Payable tax closing balance 759 (3 184) Reconciliation of tax expense EUR 1 000 2023 2022 Profit before income tax 84 879 46 407 Expected tax at statutory tax rate‌1 20 371 11 138 Adjustments in respect of different local tax rates 2 151 1 300 Non-taxable income/expense - - Share of results of joint ventures (1 645) (1 051) Adjustments in respect of income tax of previous years (2 626) (2 336) Withholding tax, non-refundable 1 107 2 337 Adjustments in respect of changes to tax rates and regulations (853) 564 Currency translation effects (4 630) (2 233) Other differences 1 640 2 468 Income tax expense 15 514 12 188 Effective income tax rate 18.3% 26.3% 1The expected tax at statutory tax rate of 24% (24% in 2022) is based on an estimate of where the Group taxes its profits and the corresponding applicable tax rates Change in deferred tax on items in Other Comprehensive Income/Equity EUR 1 000 2023 2022 Remeasurement gain/loss on actuarial gains and losses 211 266 Cash flow hedges (406) (1 957) Equity transactions (409) (330) Change in deferred tax on items in Other Comprehensive Income/Equity (603) (2 020) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 78 78 Financials | Consolidated financial statements Deferred tax EUR 1 000 2023 2022 Revaluation of inventories 16 795 13 564 Payables/receivables 23 538 13 977 Non-current assets (14 729) (10 131) Fixed assets depreciations (7 927) (8 592) Liquid assets (17 971) (14 302) Losses available for offsetting against future taxable income 9 427 9 101 Other differences (292) 1 557 Total deferred tax 8 842 5 174 Deferred tax assets 22 883 22 414 Deferred tax liabilities 14 041 17 240 Net deferred assets/liabilities 8 842 5 174 Deferred tax assets are evaluated at each balance sheet date and recognized to the extent that it is probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the liability shall be settled or the asset to be realized, based on tax rates and laws that have been enacted or substan-tively enacted at the balance sheet date. Specification of tax losses carried forward – country and year of expire EUR 1 000 After 2025 Indefinite Total Canada - 805 805 Germany‌1 - 2 206 2 206 United Kingdom - 11 596 11 596 Norway - 25 794 25 794 Other - 598 598 - 41 000 41 000 1Amount relate to interest limitation rules in Germany Tax losses carried forward of EUR 14 181 thousand are not recognized as a basis for calculating unused tax losses carried forward in net deferred assets/liabilities. The amount not recognized is mainly related to the United Kingdom. Where transfer pricing adjustments have been made, mutual agreement procedure (MAP) between the affected countries are normally available. See Note 2for further details. In tax disputes, the Group accounts for tax costs according to decisions made by local tax authorities, or according to subsequent tax rulings in the actual case, or similar cases. A dividend distribution from Elopak Systems AG to Elopak ASA, formerly Elopak AS, in 2011 and 2014 was deemed to be taxable income for Elopak ASA in a decision by Norwegian tax office in 2017. The full tax cost of NOK 69 600 thousand was recognized and paid in accordance with the ruling at that time. Elopak lost in the Oslo district court in 2022 and Bortgarting court of appeal in March 2024. Elopak will appeal the ruling to the Supreme Court. The Group operates in Norway, which has enacted new legislation to implement the global minimum tax rules (OECD - Pillar Two). The Group expects to be subject to these rules in relation to its operation in multiple jurisdic-tions, with the newly enacted tax legislation in Norway effective from 1 January 2024. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 79 79 Financials | Consolidated financial statements Note 10 Discontinued operations On July 15, 2022 Elopak ASA and Packaging Management and Investing LLC, a company beneficially owned by management of JSC Elopak, reached an agreement for the sale and purchase of all of Elopak’s shares in JSC Elopak. This represented a full divestment by Elopak from its existing Russian operations. Transfer of the shares in JSC Elopak was carried out in February 2023 after officially approval from the Russian Government. However, the terms of the SPA implied that Elopak lost control of JSC Elopak on the date it was signed, hence the entity was deconsolidated from Q3 2022. As Elopak’s operations in Russia represented a single major geographical area of operations and previously have been presented as a separate reporting segment, Elopak is presenting the profit and loss from Russia as discon-tinued. The purchase price is payable in five annual instalments. The receivable was measured and recognized at the share’s fair value on the transaction date. After initial recognition the receivable is being measured at amortized cost. Elopak ASA received the first instalment in June 2023 and part of the second installment in July 2023. One of Elopak’s former customers in Russia has won a legal claim against JSC Elopak which then has been put forward to Elopak ASA as a reimbursable claim. The legal claim has been appealed. The claim represents a contingent liability which has been recognized in the statement of comprehensive income as part of discontinued operations in 2023. Discontinued operations Year to date ended December 31 EUR 1 000 2023 2022 Revenues - 18 184 Total income - 18 184 Cost of materials - (15 197) Payroll expenses - (2 311) Depreciation, amortization and impairment - (9 921) Other operating expenses (1 339) (1 034) Total operating expenses (1 339) (28 463) Operating profit (1 339) (10 278) Net financial income - (2 452) Profit before tax (1 339) (12 730) Income tax - (797) Results from discontinued operations, net of tax (1 339) (13 527) Loss on sale of discontinued operations - (10 095) Income tax on gain on sale - - Profit/loss from discontinued operations (1 339) (23 622) Net cash flow from operating activities - 1 834 Net cash flow from investing activities - - Net cash flow from financing activities - (186) Foreign currency translations - 635 Net change in cash and cash equivalents - 2 283 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 80 80 Financials | Consolidated financial statements Note 11 Development cost and other intangible assets Accounting policy Expenditure on research activities is recognized as an expense in the period in which it is incurred. An internally generated intangible asset arising from development is recognized in the statement of financial position if the recognition criteria in IAS 38 are met. After initial recognition the assets are carried at cost less any accumu-lated amortization and impairment losses. See Note 1for impairment of non-financial assets accounting policy. Development cost and other intangible assets 2023 EUR 1 000 Customer relations Development costs IT-software Total Cost at 1.1 26 183 47 814 79 502 153 499 Additions - 5 215 1 415 6 630 Disposals - (146) (126) (272) Reclassification - - - - Currency translation 286 6 (121) 171 Cost at 31.12 26 469 52 889 80 671 160 029 Acc. amortization and impairment losses at 1.1 5 698 25 748 50 722 82 168 Current year amortization charge 2 812 4 084 8 744 15 640 Current year impairment charge - - 17 17 Amortization disposals - - (29) (29) Impairment disposals - - - - Reclassification - - - - Currency translation amortization 50 - (109) (59) Currency translation impairment - - (9) (9) Accumulated amortization at 31.12 8 560 29 832 58 761 97 152 Net accumulated impairment at 31.12 - - 576 576 Carrying amount 31.12 17 910 23 057 21 334 62 300 Economic life 0-8 years 5-10 years 3-7 years Amortization method Linear Linear Linear Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 81 81 Financials | Consolidated financial statements 2022 EUR 1 000 Customer relations Development costs IT-software Total Cost at 1.1 - 44 183 76 579 120 762 Business combinations 26 824 - - 26 824 Additions - 3 643 3 211 6 853 Disposals - - (430) (430) Reclassification - - - - Currency translation (641) (12) 142 (510) Cost at 31.12 26 183 47 814 79 502 153 499 Acc. amortization and impairment losses at 1.1 - 21 740 42 160 63 900 Current year amortization charge 6 035 4 007 8 510 18 552 Current year impairment charge - - 287 287 Amortization disposals - - (362) (362) Impairment disposals - - - - Reclassification - - - - Currency translation amortization (337) - 130 (207) Currency translation impairment - - (3) (3) Accumulated amortization at 31.12 5 698 25 748 50 155 81 600 Net accumulated impairment at 31.12 - - 568 568 Carrying amount 31.12 20 485 22 066 28 780 71 331 Economic life 0-8 years 5-10 years 3-7 years Amortization method Linear Linear Linear Customer relations include fair value of customer and supply contracts from the acquisition of GLS Elopak and Naturepak Beverage Packaging Ltd in 2022. Customer relations have an estimated economic life of 8 years. See note 27for further details. The additions under development costs relate to the development of new filling and production machine technology. Most of the IT-software are additions related to investments in IT system for management of materials flow and finances. The system roll-out started in 2017 and continued throughout 2023. Research and development The cost of research and development not eligible for capitalization which have been expensed in 2023 amounts to EUR 12 823 thousand. Comparable amount in 2022 was EUR 12 501 thousand. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 82 82 Financials | Consolidated financial statements Note 12 Goodwill Accounting policy Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impair-ment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. The table below shows the cost value, additions, disposals, impairment charges and carrying value for the various goodwill items in the Group. Goodwill EUR 1 000 2023 2022 Cost at 1.1 111 181 58 089 Business combinations (note27) - 57 089 Currency translation 1 093 (3 997) Cost at 31.12 112 274 111 181 Accumulated impairment 1.1. 6 223 6 223 Current year impairment charge - - Currency translation impairment (9) - Accumulated impairment at 31.12 6 213 6 223 Carrying amount 31.12 106 061 104 958 Impairment test for goodwill Goodwill is allocated to the Group's cash generating units and is tested for impairment annually or more frequently if there are indications of impairment. Testing for impairment involves the determination of the recoverable amount of the cash generating unit. The recoverable amount is determined by discounting future expected cash flows, based on the business plans for the cash generating units. The discount rate applied to the future cash flow is based on the Group's weighted average cost of capital (WACC), adapted to the market's apprehension of the risk factors for each cash generating unit. Growth rates are used to project cash flows beyond the periods covered by the business plans. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 83 83 Financials | Consolidated financial statements Cash generating units The goodwill items specified above are related to the Elopak Group. Goodwill related to acquisition of Elopak Denmark A/S, Elopak AB, Elofin OY, Variopak and Naturepak Beverage Packing Co.Ltd. are allocated to the cash generating unit Europe. This CGU, renamed to Elopak EMEA following the acquisition of Naturepak Beverage Packing Co.Ltd. in March 2022, consists of Elopak’s European markets, including the internal production and supply organization and Naturepak Beverage, a leading provider of fresh liquid carton and packaging systems in the MENA region with local production facilities in Morocco and Saudi Arabia. These goodwill items have a carrying value of EUR 103 204 thousand as of December 31, 2023 (EUR 102 018 thousand as of December 31, 2022). Goodwill related to the acquisition of GLS Elopak in April 2022 is allocated to a separate cash generating unit as operations are mainly in India (GLS Elopak buys raw materials, produces cartons and sells goods to the customers). This goodwill item has a carrying value of EUR 2 817 thousand as of December 31, 2023 (EUR 2 940 thousand as of December 31, 2022). The basis to consider Elopak EMEA as one cash generating unit is the inherent structure of the market. Customers are merging across borders and are increasingly treating EMEA as one market. The historical requirement from customers to source from specific plants is no longer present. Elopak is adapting to this trend by allocating produc-tion flexibly to the plants in EMEA in order to optimize logistics and production cost. According to this development, the margins along Elopak’s value chain will be subject to change from one year to another, and therefore the appropriate way to assess indicators for impairment for the EMEA business is as one unit. Impairment test and assumptions Recoverable amount for the cash generating units Elopak EMEA and GLS Elopak are calculated based on values in use. The cash flows that are basis for the impairment tests are based on assumptions about future sales volumes, selling prices and direct costs. These are uncertain factors. These assumptions are based on historical experience from the relevant markets, adopted budgets and the Group’s expectations of market changes and other financial impacts from climate risks. Upon completion of the impairment tests in 2023 and 2022 the Group does not expect significant changes in current trade in EMEA and expected future cash flows there are mainly a continuation of observed trends. GLS Elopak is continuing its expansion, relying on a huge and one of the fastest growing carton market in the world. Calculated recoverable amounts in the impairment tests are higher than carrying amounts, and based on the tests, it is concluded that there is no impairment in 2023 or 2022. Determined cash flows are discounted with discount rates presented in the table below. Detailed description of the assumptions used Discount rate after tax Discount rate before tax Growth rate 2-5 years Long-term growth rate EUR 1 000 2023 2022 2023 2022 2023 2022 2023 2022 Elopak EMEA 6.9% 7.7% 7.4% 11.0% - - - - GLS Elopak 13.1% 12.5% 14.1% 17.9% - - - - The discount rates reflect the current markets assessment of the risk specific to the cash generating unit. The rates are estimated based on the weighted average cost of capital for similar assets in the market. The economic outlook remains uncertain in terms of continued high inflation, still increasing interest rates and heightened geopolitical risk, which all increases threat of recession. This will determine the corporate loan market and debt capital market going forward, which all saw increases in credit spreads in mid-2022 and has since then been volatile. The cost of debt in our discount rates are based on our current long-term financing, and sensitivities related to changes in this is reflected in the analysis discussed below. Average growth rate for the future 2 to 5 years period is based on Elopak Group's expectations for the market development that the business operates in. When estimating future cash flows committed operating efficiency improvement measures are taken into account. Changes in the outcomes for these initiatives may influence future estimated cash flows. Investment costs necessary to meet expected future growth are taken into account. Based on management's assessment, the estimated investment costs do not include investments that improve the assets performance. The related cash flows are treated correspondingly. Management believes that there is no reasonably possible change in any of the key assumptions that would cause the carrying value of the unit to materially exceed its recoverable amount. Sensitivity analysis have been performed based on a 0.5% increase and decrease of the discount rate and perpetual growth. The value in the low end of the range is higher than the carrying amount, hence the sensitivity analysis shows no indication of impairment. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 84 84 Financials | Consolidated financial statements Note 13 Property, plant and equipment Accounting policy Capitalized property, plant and equipment are reflected at cost less accumulated depreciation and accumu-lated impairment losses. Property, plant and equipment, other than land and properties under construction, are depreciated over their estimated useful lives, using the straight-line method and taking into consideration any residual values. See Note 1for impairment of non-financial assets accounting policy. Property, plant and equipment 2023 EUR 1 000 Landand buildings Machineryand plant Officeand transport Total Cost at 1.1 52 701 556 880 20 390 629 971 Additions 256 34 198 381 34 835 Disposals (434) (1 602) (370) (2 406) Transfer to/from inventory / reclassification 2 475 (4 535) 634 (1 426) Currency translation (305) (2 694) (124) (3 123) Cost at 31.12 54 692 582 248 20 911 657 851 Acc. depreciation and impairment losses at 1.1 29 375 381 609 17 012 427 997 Current year depreciation charge 1 610 27 981 1 453 31 043 Current year impairment charge‌ 164 979 25 1 168 Depreciation disposals (301) (1 072) (361) (1 734) Impairment disposals (132) (36) (4) (172) Depreciation transferred to inventory / reclassification - (1 625) - (1 625) Impairment transferred to inventory / reclassification - - - - Currency translation (80) (1 587) (93) (1 760) Acc. depreciation and impairment losses at 31.12 30 636 406 249 18 032 454 917 Carrying amount 31.12 24 056 175 999 2 879 202 934 Economic life 0-40 years 3-15 years 3-12 years Amortization method Linear Linear Linear Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 85 85 Financials | Consolidated financial statements 2022 EUR 1 000 Landand buildings Machineryand plant Officeand transport Total Cost at 1.1 41 524 532 615 20 724 594 863 Business combinations 10 184 11 305 135 21 623 Additions 227 37 940 304 38 471 Disposals (176) (6 153) (476) (6 805) Discontinued operations (note10) (296) (24 273) (2 082) (26 651) Transfer to/from inventory / reclassification 1 581 (6 367) 868 (3 918) Currency translation (344) 11 813 918 12 387 Cost at 31.12 52 701 556 880 20 390 629 971 Acc. depreciation and impairment losses at 1.1 27 314 364 715 16 410 408 438 Current year depreciation charge 1 530 25 831 1 697 29 057 Current year impairment charge 868 5 272 173 6 312 Depreciation disposals (169) (4 514) (427) (5 110) Discontinued operations (note10) (271) (19 493) (1 737) (21 501) Impairment disposals - (319) (3) (322) Depreciation transferred to inventory / reclassification - (1 138) - (1 138) Impairment transferred to inventory / reclassification - (346) - (346) Currency translation 104 11 602 900 12 606 Acc. depreciation and impairment losses at 31.12 29 375 381 609 17 012 427 997 Carrying amount 31.12 23 326 175 271 3 378 201 975 Economic life 0-40 years 3-15 years 3-12 years Amortization method Linear Linear Linear The lease revenues and commitments for Carton filling machines rented to customers as well as the lease expenses and commitments for equipment leased and used in our production are disclosed in Note14. The company has not pledged property, plant and equipment as security for liabilities. Property, plant and equipment specified by geographical area‌1 EUR 1 000 2023 2022 Canada 23 778 28 485 Denmark 24 708 25 940 Germany 71 065 69 025 India 10 593 9 944 Morocco 7 492 6 508 Netherlands 46 349 44 547 Norway 3 779 3 097 Saudi Arabia 2 982 3 555 Ukraine 3 271 3 281 United Kingdom 8 671 7 325 Other 245 267 Total 202 934 201 975 1The split by geographical area is based on the jurisdiction of legal owner. Other off-balance sheet commitments and contingencies EUR 1 000 2023 2022 Commitments for the acquisition of property, plant and equipment 7 012 1 269 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 86 86 Financials | Consolidated financial statements Note 14 Leases Accounting policy The Group as a lessee The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases and leases of low value assets. For short-term leases and leases of low value assets, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components and instead account for any lease and associated non-lease components as a single arrangement. The Group has applied this practical expedient to all classes of right-of-use assets, except for rent of buildings. The Group as a lessor The group enters into lease agreements as a lessor with respect to filling machines placed with customers. These leases are classified as finance or operating leases. Whenever the terms of the lease transfer substan-tially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. See Note 1for impairment of non-financial assets accounting policy. 1. The Group as lessor - operating leases The Group leases out filling machines under operating leases. Rental income was EUR 10 019 thousand in 2023, compared to EUR 9 326 thousand in 2022. Lease terms are between 1 year to 10 years. Options to extend the lease term or purchase the leased asset reflects market conditions at the time of exercising the option. At the reporting date the Group has future minimum lease receivables as follows (undiscounted) EUR 1 000 2023 2022 Due within year 1 9 578 11 242 Due within year 2 8 083 9 159 Due within year 3 6 329 7 863 Due within year 4 5 128 6 519 Due within year 5 4 195 4 509 Due after year 5 7 652 8 330 Total 40 965 47 621 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 87 87 Financials | Consolidated financial statements 2. The Group as lessor - finance lease The group leases out filling machines under finance leases. Generally, lease terms are between 5 years to 10 years. Options to extend or purchase the leased asset will normally reflect market pricing. Amounts receivable under finance leases (undiscounted) EUR 1 000 2023 2022 Due within year 1 2 150 2 648 Due within year 2 1 581 1 870 Due within year 3 1 493 1 302 Due within year 4 1 083 1 213 Due within year 5 769 804 Due after year 5 1 684 2 345 Total receivables under finance leases, undiscounted 8 760 10 181 Unearned finance income 1 676 2 162 Total receivables under finance leases, discounted 7 084 8 020 There is no impairment loss allowance related to the finance lease receivables in 2023 and 2022. Credit risk related to the filling machine lease agreements is considered very low. Credit risk is considered insignificant due to right to require return of the machine in case of default. The average effective interest rate contracted is approximately 6.67% per annum. The Group as lessee The Group leases several assets including buildings, plants, cars and filling machines. Right-of-use assets December 31, 2023 EUR 1 000 Property and buildings Machinery Office and transport Total Carrying amount 1.1 52 148 13 968 10 668 76 784 Additions and adjustments 3 896 16 043 3 261 23 200 Disposals (6) (33) (111) (151) Current year depreciation charge (4 442) (5 177) (3 844) (13 463) Carrying amount at 31.12 51 596 24 800 9 974 86 370 December 31, 2022 EUR 1 000 Property and buildings Machinery Office and transport Total Carrying amount 1.1 38 652 12 986 11 314 62 952 Additions and adjustments 22 258 6 307 3 278 31 842 Disposals (3 956) (28) (100) (4 084) Current year depreciation charge (4 806) (5 288) (3 823) (13 918) Impairment losses - (8) - (8) Carrying amount at 31.12 52 148 13 968 10 668 76 784 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 88 88 Financials | Consolidated financial statements The Group has no significant purchase options except from one purchase option related to the High Bay ware-house lease agreement commenced in November, 2022. This purchase option can be exercised in 2042 and purchase price is market value at exercise date. An exercise of the purchase option is not considered to be reason-ably certain, hence it is not recognised. In 2023, expenses related to short-term leases were EUR 20 thousand, expenses related to low value assets were EUR 610 thousand and expenses related to variable payments not included in the measurement of lease liabilities were EUR 222 thousand. The Group has signed contracts for Tethered Cap and other closure lines with a lease term of 5 years and a nominal value of EUR 20 839 thousand, which will commence at different stages during 2024. Lease liabilities EUR 1 000 Note 2023 2022 Current lease liabilities 26 23 096 17 139 Non-current lease liabilities 26 78 424 73 536 Total 101 520 90 674 At the reporting date the Group has lease liabilities as follows (undiscounted) EUR 1 000 2023 2022 Due within year 1 25 505 20 751 Due within year 2 18 597 20 449 Due within year 3 17 262 14 208 Due within year 4 14 637 12 282 Due within year 5 11 258 10 381 Due after year 5 70 132 75 623 Total 157 390 153 694 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 89 89 Financials | Consolidated financial statements Note 15 Investment in joint ventures Accounting policy A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control. The results and assets and liabilities of a joint venture company are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the equity investee. The statement of comprehensive income reflects the share of the results of operations of the associate (net after tax). Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture company recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. After application of the equity method the Group determines whether it is necessary to recognise an additional impairment on the individual investments. The Group determines if there are indications of impairment, and if this is the case, the Group calculates the impairment loss as the difference between the recoverable amount of the joint venture and its carrying value. The investment in the joint ventures specified below have been accounted for in accordance with the equity method of accounting. Lala Elopak S.A. de C.V. is a carton production plant in Mexico selling cartons to Americas. Impresora Del Yaque is a carton production facility in the Dominican Republic also selling cartons to Americas. Elopak Nampak Africa Limited is a sales centre in Kenya, established in 2020, selling cartons to Africa. The investments are joint ventures because the investment partners have the same rights and control in the companies. Investments in joint ventures 2023 EUR 1 000 Lala ElopakS.A. de C.V. ImpresoraDel Yaque Elopak NampakAfrica Ltd Total Ownership - and voting share 49% 51% 50% Carrying amount 1.1 24 210 10 707 (244) 34 673 Income from joint venture companies 4 730 2 139 (14) 6 855 Dividend received (4 004) (1 907) - (5 911) Recognized to equity (6) - - (6) Currency translation 2 874 (777) - 2 097 Carrying amount 31.12 27 805 10 163 (258) 37 709 2022 EUR 1 000 Lala ElopakS.A. de C.V. ImpresoraDel Yaque Elopak NampakAfrica Ltd Total Ownership - and voting share 49% 51% 50% Carrying amount 1.1 19 390 8 270 (133) 27 527 Income from joint venture companies 2 665 1 824 (112) 4 378 Recognized to equity (14) - - (14) Currency translation 2 169 613 - 2 783 Carrying amount 31.12 24 210 10 707 (244) 34 673 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 90 90 Financials | Consolidated financial statements Summarized financial information 2023 EUR 1 000 Lala ElopakS.A. de C.V. ImpresoraDel Yaque Elopak Nampak Africa Ltd Total Revenue 95 362 24 703 21 120 086 Operating profit 13 281 4 267 (29) 17 519 Profit after tax (loss) 9 653 4 195 (28) 13 820 Other comprehensive income that may be reclassified to net income 5 866 (1 523) - 4 342 Total comprehensive income 15 518 2 672 (28) 18 163 Current assets 52 932 18 786 125 71 842 Non-current assets 16 255 3 053 1 19 309 Current liabilities 16 234 1 911 75 18 221 Non-current liabilities 2 969 - 567 3 536 Equity 49 984 19 928 (517) 69 395 Group's share of profit after tax (loss) 4 730 2 139 (14) 6 855 2022 EUR 1 000 Lala ElopakS.A. de C.V. ImpresoraDel Yaque Elopak Nampak Africa Ltd Total Revenue 78 865 25 471 63 104 400 Operating profit 7 431 4 361 (208) 11 584 Profit after tax (loss) 5 440 3 577 (224) 8 794 Other comprehensive income that may be reclassified to net income 4 427 1 202 - 5 630 Total comprehensive income 9 867 4 780 (224) 14 423 Current assets 40 181 21 572 188 61 940 Non-current assets 15 476 3 459 1 18 936 Current liabilities 10 495 3 208 171 13 874 Non-current liabilities 2 499 - 507 3 006 Equity 42 663 21 823 (489) 63 997 Group's share of profit after tax (loss) 2 665 1 824 (112) 4 378 Voting share Ownership/voting share 2023 2022 Lala Elopak S.A. de C.V. 49% 49% Impresora Del Yaque 51% 51% Elopak Nampak Africa Limited 50% 50% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 91 91 Financials | Consolidated financial statements Note 16 Other non-current assets EUR 1 000 2023 2022 Contract assets 3 311 3 775 Non-current finance lease receivables (Note14) 5 113 5 865 Financial instruments (Note25) 3 521 6 811 Other non-current assets 2 948 3 390 Carrying amount 31.12 14 892 19 841 Note 17 Impairment Ukraine Due to the war in Ukraine, Elopak suspended all activities in Russia, and restarted operations in Ukraine after a temporary close-down, in March 2022. Consequently, the Group has tested assets in Ukraine for impairment and recognized an impairment loss through the statement of comprehensive income. Ukraine is included in the oper-ating segment EMEA. The impairment loss is calculated using a weighted average of possible scenarios including continuing operations and closing operations. The Russian operation is classified as discontinued operations and all assets and liabilities related to the Russian operation were deconsolidated from the Elopak consolidated financial statements due to loss of control on July 15, 2022. See note 10Discontinued operations. Due to the circumstances in Ukraine the impairment assessment has been updated at the end of each quarter. No deferred tax asset is recognized related to the operations in Ukraine. After impairment, the recoverable amount of property, plant and equipment is EUR 2 984 thousand, while all other non-current assets are written down to recoverable amount of zero. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 92 92 Financials | Consolidated financial statements Balance sheet effect of impairment EUR 1 000 December 31 2023 December 31 2022 ASSETS Non-current assets Development cost and other intangible assets (17) (26) Deferred tax assets - (1 555) Property, plant and equipment (266) (4 155) Right-of-use assets - (8) Other non-current assets - - Total non-current assets (284) (5 744) Current assets Inventory 451 (1 883) Trade receivables 8 (32) Other current assets 4 (230) Total current assets 464 (2 145) Total assets 180 (7 889) EUR 1 000 2023 2022 COMPREHENSIVE INCOME Cost of materials 451 (2 079) Depreciation, amortization and impairment (284) (4 189) Other operating expenses 12 (67) Operating profit 180 (6 335) Financial items - - Income tax - (1 554) Profit/loss 180 (7 889) Note 18 Inventory Accounting policy Cost is calculated using the FIFO cost formula for cartons, filling machines and spare parts. Inventory 2023 EUR 1 000 Raw materials Work in progress Finished goods Total Cost 31.12 27 621 93 456 82 424 203 502 Write down 01.01 3 755 19 7 100 10 874 Realised (291) - (424) (715) Write down 93 - 1 060 1 153 Write down per 31.12. 3 558 19 7 736 11 313 Carrying amount 31.12 24 063 93 437 74 688 192 188 2022 EUR 1 000 Raw materials Work in progress Finished goods Total Cost 31.12 34 579 84 954 78 549 198 082 Write down 01.01 (307) - 5 142 4 835 Realised 308 - (615) (308) Write down 3 754 19 2 573 6 347 Write down per 31.12. 3 755 19 7 100 10 874 Carrying amount 31.12 30 824 84 934 71 449 187 208 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 93 93 Financials | Consolidated financial statements Note 19 Trade receivables and other current assets Accounting policy Trade and other receivables that are held to collect contractual cash flows only and the contractual cash flows are solely principal and interest are measured at amortised cost using the effective interest method, less any impairment. Short-term receivables are measured at nominal values reduced by appropriate allow-ances for expected credit losses. Accounts receivables which are subject to non-recourse factoring are classified as instruments held to collect contractual cash flows and for sale and are measured at fair value through other comprehensive income until they are derecognised. See Note 1for non-derivative financial instruments accounting policy. Impairment of financial assets The loss allowance for expected credit losses is mostly related to individual assessments and is recognised for financial asset measured at amortised cost or fair value through OCI, contract assets under IFRS 15, lease receivables under IFRS 16 and certain written loan commitments and financial guarantee contracts. Loss allowance is assessed at each reporting day. Loss allowances for trade receivables, contract assets and lease receivables that do not contain a significant financing component are measured at an amount equal to lifetime expected credit losses. Loss allowances for trade receivables, contract assets and lease receivables that do contain a significant financing component are measured at an amount equal to the lifetime expected credit losses including interest revenues. When there is no objective evidence of impairment, interest reve-nues are calculated based on gross carrying amount, otherwise interests are calculated based on the net carrying amount. The amount of the loss is recognised in profit or loss. In case of changes to expected credit losses in a subsequent period, the previously recognised impairment loss is reversed to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in profit or loss. Trade receivables EUR 1 000 2023 2022 Accounts receivable, gross 115 000 106 243 Allowances (4 758) (4 045) Carrying amount 31.12 110 243 102 197 Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. 2023 EUR 1 000 Gross carrying amount Loss rate Expectedcredit loss Current 96 131 3.3% 3 218 Up to 7 days 7 863 - - Up to 30 days 4 292 0.3% 13 30-60 days 2 228 0.3% 6 60-90 days 1 102 0.1% 1 Over 90 days 3 383 44.9% 1 519 Total 115 000 4.1% 4 758 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 94 94 Financials | Consolidated financial statements 2022 EUR 1 000 Gross carrying amount Loss rate Expectedcredit loss Current 84 354 2.9% 2 443 Up to 7 days 8 422 - - Up to 30 days 3 677 0.3% 11 30-60 days 2 558 6.6% 169 60-90 days 1 416 2.0% 29 Over 90 days 5 815 24.0% 1 395 Total 106 243 3.8% 4 045 Movement in the allowance for expected credit losses of trade receivables EUR 1 000 2023 2022 As at 1.1 4 045 4 231 Business combinations (note27) - 802 Change in provision for expected credit losses 473 (721) Change in write-off (98) (16) Foreign exchange movement 337 (251) Carrying amount 31.12 4 757 4 045 Other current assets EUR 1 000 2023 2022 Project income earned, not invoiced 44 643 39 195 Prepaid support 1 832 2 129 Contract assets 46 475 41 324 Prepayments and accrued expenses 20 519 14 476 V.A.T. receivable 20 820 24 639 Accrued income tax receivables 6 238 5 382 Financial instruments 1 064 999 Finance leasing receivable short term 1 971 2 362 Current investments of shares - 4 829 Other current receivables 16 632 15 202 Carrying amount 31.12‌1 113 720 109 214 1Contract assets consist of prepaid rebates to customers which will be offset against contracted future sales of cartons and closures. Total of prepaid support was EUR 5 143 thousand in 2023 and EUR 5 904 thousand in 2022. Based on customer knowledge and experience of very few losses, the credit risk related to prepaid support is considered insignificant. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 95 95 Financials | Consolidated financial statements Note 20 Equity and shareholders information Elopak ASA was established with share capital of NOK 376 906 620 (EUR 50 155 321) and the total number of shares outstanding for Elopak ASA is 269 219 014, each with a face value of NOK 1.4 (EUR 0.19). At December 31, 2023, the company has a share capital of NOK 376 532 338 (EUR 50 104 463) and the total number of shares outstanding for Elopak ASA is 268 951 670, each with a face value of NOK 1.4 (EUR 0.19). Treasury shares / Share-based bonus Elopak ASA’s ordinary general meeting on May 11, 2023 approved a share buy-back program for the repurchase of up to NOK 37 690 662, meaning up to 26.9 million shares at nominal value of NOK 1.40/share. The shares acquired under the share buy-back program will be used to meet the Company’s obligations towards employees who participate in the Company’s long-term incentive plan. As of December 31, 2023, the balance of treasury shares is 267 344. The treasury share capital is EUR 51 thousand and the treasury share premium is EUR 545 thousand. Dividend The Board approved a dividend of NOK 0.86 per share for the financial year 2022 on May 12, 2023. The dividend payment was EUR 19 634 thousand based on 269 219 014 outstanding shares, of which EUR 11 747 thousand was paid to Ferd AS. The Board of Directors will propose to the Annual General Meeting a dividend of NOK 1.46 per share for 2023. Share capital 2023 Number of shares Ordinaryshares issued Treasuryshares Ordinary shares outstanding Shares at 1.1 269 219 014 (5 519) 269 213 495 Treasury shares purchased - (410 540) (410 540) Treasury shares re-issued - 148 715 148 715 Shares at 31.12 269 219 014 (267 344) 268 951 670 2022 Number of shares Ordinaryshares issued Treasuryshares Ordinary shares outstanding Shares at 1.1 269 219 014 - 269 219 014 Treasury shares purchased - (170 000) (170 000) Treasury shares re-issued - 164 481 164 481 Shares at 31.12 269 219 014 (5 519) 269 213 495 Basic and diluted earnings per share (EUR 1 000, except number of shares) 2023 2022 Profit attributable to Elopak shareholders 67 061 10 856 Issued ordinary shares at beginning of period, adjusted for share split in the period 269 213 495 269 219 014 Effect of shares issued (62 416) (3 024) Weighted-average number of ordinary shares in the period 269 151 079 269 215 990 Basic and diluted earnings per share attributable to Elopak shareholders (in EUR) 0.25 0.04 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 96 96 Financials | Consolidated financial statements The Group's top 20 shareholders Shareholder's name Total shareholding Ferd AS‌1 60.04% Nippon Paper Industries Co., Ltd. 5.00% Pareto Asset Management AS 4.24% Boldhaven 3.46% Folketrygdfondet 3.29% Fidelity International 2.82% Artemis Investment Management LLP 2.19% Pictet Asset Management Ltd. 1.14% Oddo BHF Asset Management S.A.S. 1.08% Arctic Fund Management AS 0.93% DNB Asset Management AS 0.91% Allspring Global Investments LLC 0.82% Skagen AS 0.79% Indépendance et Expansion AM S.A 0.66% GW&K Investment Management, LLC 0.63% UBS Asset Management (Switzerland) 0.58% T D Veen AS 0.43% Clearstream Banking SA 0.41% MFS Investment Management 0.40% Wenaasgruppen AS 0.38% 1Elopak ASA is a subsidiary of Ferd AS and is consolidated within their consolidated financial statements which can be found on their website. The Executive team own directly, or indirectly the following number of shares in the Group Executive team Total number of shares Thomas Körmendi, CEO 396 105 Bent Axelsen, CFO 203 833 Patrick Verhelst, Chief Marketing Officer 61 562 Wolfgang Buckhremer, Chief Technology Officer 78 638 Ivar Jevne, EVP Packaging and Procurement 239 432 Stephen Naumann, EVP Region Europe North, India and CIS 190 055 Finn Tørjesen, EVP Region Europe South and MENA 79 816 Lionel Ettedgui, EVP Region Americas 95 553 Nete Bechmann, Chief Human Resource Officer 35 447 Dag Grönevik, EVP Equipment and Service 9 660 Total 1 390 101 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 97 97 Financials | Consolidated financial statements Note 21 Employee retirement benefit plans Defined contribution plans The Group operates defined contribution pension plans where the plans are held separately from those of the Group in funds under control of trustees. The only obligation of the Group is to make the specified contributions. Defined benefit plans The Group also runs pension plans that grant the employees a right to defined future benefits. The benefits are mainly dependent on years of service, the level of salary at age of retirement and size of contributions from the national insurance. The obligations are partly covered through insurance companies. Elopak has unfunded retiree medical insurance plans for certain of its employees located in the United States. Pension liability EUR 1 000 2023 2022 Defined benefit obligations (2 502) (2 668) Net pension liability (2 502) (2 668) Pension expense EUR 1 000 2023 2022 Defined benefit plans net (99) (84) Defined contribution plans (9 996) (9 597) Total pension expense (10 095) (9 681) Defined benefit plans are subject to actuarial calculations. The estimated pension cost for pension benefit plans in 2023 is EUR 99 thousand and in 2022 is EUR 84 thousand. Note 22 Interest-bearing loans and borrowings Accounting policy See Note 1for non-derivative financial instruments accounting policy. Interest-bearing loans and borrowings 2023 2022 EUR 1 000 Available Utilised Available Utilised Current liabilities to financial institutions 56 857 19 333 57 073 21 682 Non-current liabilities to financial institutions 400 000 224 433 400 000 304 033 Total 243 767 325 715 Repayment profile EUR 1 000 2023 2022 2023 - 21 682 2024 19 333 - 2025 225 000 305 000 2026 - - Total 244 333 326 682 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 98 98 Financials | Consolidated financial statements Weighted average interest rates on long-term loans 2023 2022 EUR 1 000 Rate In Ccy In EUR In Ccy In EUR EUR 4.11% 225 000 225 000 305 000 305 000 Total 225 000 305 000 The values above are gross amounts excluding amortised borrowing costs. The long-term loans are drawn under a EUR 400 000 thousand multi currency revolving credit facility. The facility is available until May 2025. Elopak has started a process to refinancing the long-term loan financing and will aim to have concluded the refinancing in the first half of 2024. Amounts are shown net of prepaid transaction costs. Changes to the Groups debt profile reflect changes in the functional currency of entities within the Group. Elopak has a Supply Chain Financing programme towards the largest suppliers to take advantage of supplier cash discounts and optimize working capital. Accounts receivables factoring facilities EUR 1 000 Available 2023 Available 2022 Non-recourse 180 141 45 010 179 275 41 823 Total 45 010 41 823 Elopak factors its receivables in the ordinary course of business. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 99 99 Financials | Consolidated financial statements Note 23 Other current liabilities EUR 1 000 2023 2022 Provisions 3 343 681 Accrued expenses 70 330 70 547 Derivatives (Note25) 8 231 4 268 Prepaid from customers 38 636 25 932 Total 120 540 101 429 Note 24 Capital management Elopak’s level of capital and how this is managed relates closely to the company’s risk profile and the company’s ability to withstand turbulent times. The main objectives when Elopak assess their capital management is to mini-mize financing costs, while maintaining adequate liquidity and flexibility for short-term liquidity needs and M&A activities. The policy is to maintain unutilised and available liquidity of 40% of utilised debt. Elopak’s financial guiding is to pay out dividends equal to 50% - 60% of adjusted net profits. All financing activities are managed by the central Treasury at the parent company level. The capital needs of Elopak subsidiaries are mainly covered by granting internal loans or by equity injection where applicable. The short-term liquidity needs of Elopak group companies are managed at group level through the Elopak internal bank and cash-pooling. The financial guiding also targets constantly that the company reduces its gearing ratio and to be ~2.0x EBITDA on a mid-term basis. The financial covenants under Elopak’s Revolving Credit Facility are limited to a maximum gearing ratio (Net Interest Bearing Debit/EBITDA) of 4.75 and to hold a minimum equity of EUR 100 million at all times. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 100 100 Financials | Consolidated financial statements Note 25 Financial risk management Accounting policy The Group enters into derivative financial instruments to manage its exposure to interest rate, foreign exchange rate and raw material risk arising from operational, financing and investment activities. In accord-ance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedging relationship. The Group designates certain derivatives as either hedge of the fair value of recognised assets or liabilities or firm commitments (fair value hedges), or hedge of highly probable forecast transactions or hedge of foreign currency risk of firm commitments (cash flow hedges). At inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item. Balance sheet management The Group manages the balance sheet to ensure a healthy financial position and liquidity. This is done through an annual budgeting process followed by performance management and forecasting updates to ensure adequate financial flexibility and liquidity for the company. The Group’s main bank covenants, especially the net interest bearing debt/ EBITDA, are monitored closely on a continuous basis to ensure compliance at all times. Financial risk policy The Group is exposed to market risk, credit risk and liquidity risk. Risk management activities are governed by appropriate policies and procedures. Risks are identified, measured and managed in accordance with the Group's policies and risk objectives. It is the Group's policy that no trading in derivatives for speculative purposes shall be undertaken. There have been no significant changes in the management of risks related to financials during the period. Categories of financial risk to operational business 1. Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency risk, commodity price risk and interest rate risk. Elopak buys derivatives to manage market risks and seeks to apply hedge accounting to manage volatility in profit or loss. Hedge accounting is applied to all currency and commodity derivatives, while interest rate derivatives are not subject to hedge accounting. Derivatives December 31, 2023 December 31, 2022 EUR 1 000 Assets Liabilities Total Assets Liabilities Total Currency derivatives 904 7 398 (6 494) 747 1 280 (534) Commodity derivatives 31 2 408 (2 377) - 3 318 (3 318) Interest derivatives 3 650 2 105 1 545 7 063 - 7 063 Total 4 585 11 911 (7 326) 7 810 4 598 3 212 The full fair value of a derivative is classified as "Other non-current assets or "Other non-current liabilities" if the remaining maturity of the derivative is more than 12 months and as "Other current assets" or "Other current liabilities", if the maturity of the derivative is less than 12 months. The fair value estimation of derivative financial instruments has been arrived at by applying a level 2 valuation methodology which uses inputs other than unad-justed quoted prices for identical assets and liabilities, with changes in fair value are therefore recognized in the income statement. No other material financial assets or liabilities are measured at fair value through profit or loss. Where eligible, derivatives used for hedging are designated in cash flow hedge accounting relationships. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 101 101 Financials | Consolidated financial statements Currency risk Elopak's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activi-ties, financing of foreign operations and the Group's net investments in foreign subsidiaries. The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows: Assets Liabilities Currency 2023 2022 2023 2022 BGN 241 222 246 238 CAD 96 376 22 928 64 044 95 182 CHF 4 800 4 337 4 771 4 252 CZK 62 929 57 588 62 821 68 479 DKK 2 809 965 2 494 348 2 889 442 2 403 598 DZD - - - 4 577 EUR 86 393 4 910 750 783 3 910 GBP 32 760 26 313 32 821 27 076 HUF 863 797 638 998 449 243 603 176 NIS - 8 9 - JPY 2 814 818 4 091 538 6 493 463 2 077 533 MXN 66 521 65 240 62 304 65 645 NOK 2 537 714 2 093 232 2 548 400 2 089 246 PLN 79 545 47 729 78 552 51 036 RUR 1 889 323 1 344 703 1 888 924 1 344 978 SAR - - - 3 274 SEK 260 590 193 612 274 466 194 541 TND - - - 57 UAH - - - - USD 63 043 86 368 83 515 51 649 Foreign exchange risk from operating activities such as salaries and personnel tax are managed by hedging trans-actions that are highly probable to occur within periods out 18 months by entering foreign currency contracts. The Group employs a layering policy in which the nearest calendar quarter is hedged up to 90% with coverage decreasing in steps to 15% at 18 months out. Currency exposures related to purchase of filling machines are hedged at a one-to-one basis (100% coverage at the specified date of payment). Hedge accounting is applied to all currency derivatives, except for cross-currency interest rate swaps which are recognised as financial income or financial expense in profit or loss. Hedge accounting is designated at the date of recognition of the hedged item, however the derivatives are due at the date of expected payment. At designation, the fair value of the hedging derivatives is recycled from Hedge reserve in equity to the hedged item (i.e. filling machine recognised in inventory) and to profit or loss to the same accounting line and at the same time as the hedged item is recognised to profit or loss. Outstanding derivatives Nominal amount EUR 1 000 December 31, 2023 December 31, 2022 Currency Ccy EUR Ccy EUR CAD 7 749 5 292 - - EUR (89 952) (89 952) (72 633) (72 633) JPY 10 358 989 66 264 9 461 714 67 267 NOK 388 197 34 536 255 426 24 294 USD (27 740) (25 104) (24 231) (22 718) Total nominal value (8 965) (3 790) Total fair value (6 494) (534) Positive numbers represent purchases. Interest risk Elopak's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. To manage this risk, the Group maintains a portion of its borrowings at fixed rates of interest by entering interest rate swaps. These swaps are designated to hedge underlying debt obligations; however, they are not subject to hedge accounting. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 102 102 Financials | Consolidated financial statements Outstanding derivatives Notional amounts and fair values December 31, 2023 December 31, 2022 EUR 1 000 Currency Notional EUR Fair value Notional EUR Fair value Interest EUR 150 000 1 545 120 000 7 063 Total 1 545 7 063 Positive numbers represent purchases. Commodity price risk Elopak's operating activities require a continuous supply of aluminium and polyethylene. Based on a 12-month forecast of requirements the Group manages the commodity price risk by hedging the purchase price of the commodity with the use of commodity price swaps. Hedge accounting is applied for all commodity derivatives. As per December 31, 2023 the hedged amount of Polyethylene derivatives is 42% of expected purchase for the next 12 months. Outstanding derivatives Notional amounts and fair values December 31, 2023 December 31, 2022 EUR 1 000 Metric Tonnes Fair value Metric Tonnes Fair value Polyethylene 15 000 (2 408) 13 000 (2 576) Aluminum 3 960 31 8 400 (743) Total (2 377) (3 318) Positive numbers represent derivative assets. Sensitivity The following table demonstrates the sensitivity to a reasonably possible change in exchange rates (for foreign exchange contracts), commodity prices (for commodity swaps) and interest rates (for interest rate swaps) with all other variables being held constant. The impact on the Group's equity is due to changes in the fair value of deriva-tives designated as cash flow hedges. Numbers are before tax December 31, 2023 December 31, 2022 EUR 1 000 Movement Effect on profit Effect on equity Effect on profit Effect on equity Foreign exchange derivatives +5% (5 022) (10 872) (1 414) (8 222) (5%) (2 597) (427) 213 1 638 Commodity swaps +5% - 1 604 - 1 461 (5%) - (1 604) - (1 461) Interest rate swaps +1% 4 417 - 2 010 - (1%) (4 642) - (2 093) - Positive numbers represent derivative assets Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 103 103 Financials | Consolidated financial statements 2. Liquidity risk Elopak's objective is to maintain a balance between continuity of funding, and flexibility through the use of bank loans and overdraft facilities. The maturity profile of the Group's financial assets and liabilities based on contractual undiscounted payments is summarised below. The tables only show balance sheet items classified as financial instruments and do not include other balance sheet items affecting liquidity, such as inventories. Also, off-balance sheet items such as unused credit facilities are not included. The derivative instruments may be settled gross or net with the relevant protocol being reflected in the tables. Contractual maturities of financial liabilities, including estimated interest payments Non-derivatives financial liabilities 2023 EUR 1 000 Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings(Note22) 243 767 19 333 224 433 - - 243 767 Accounts payable 127 847 127 847 - - - 127 847 Other liabilities 162 765 113 111 16 851 12 969 19 834 162 765 Total 534 379 260 291 241 285 12 969 19 834 534 379 Derivatives financial instruments 2023 EUR 1 000 Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Foreign exchange 7 398 5 823 1 575 - - 7 398 Interest rate swaps 2 105 - - 1 318 787 2 105 Commodities 2 408 2 408 - - - 2 408 Total 11 911 8 231 1 575 1 318 787 11 911 Non-derivatives financial liabilities 2022 EUR 1 000 Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings(Note22) 325 715 32 760 319 451 - - 325 715 Accounts payable 124 038 124 038 - - - 124 038 Other liabilities 165 105 78 108 28 708 18 847 39 442 165 105 Total 614 859 234 906 348 159 18 847 39 442 614 859 Derivatives financial instruments 2022 EUR 1 000 Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Foreign exchange 1 280 951 330 - - 1 280 Commodities 3 318 3 318 - - - 3 318 Total 4 598 4 269 330 - - 4 598 The fair value of all financial assets and liabilities approximates their carrying value. The fair value estimation of derivative financial instruments has been arrived at by applying a level 2 valuation methodology which uses inputs other than unadjusted quoted prices for identical assets and liabilities Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 104 104 Financials | Consolidated financial statements 3. Credit risk Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Elopak has adopted a policy of only being exposed to credit-worthy counterparties, based upon inde-pendent credit analysis for all counterparties, where available. In the cases where this is not available, Elopak uses other publicly available financial information and its own trading records to assess creditworthiness. Outstanding receivables are monitored regularly. 4. Hedge accounting Cash flow hedge accounting is applied to hedges of foreign currency risk and commodity price risk. The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair values of cash flow hedging instruments related to hedged transactions that have not yet occurred. Movements in the cash flow hedge reserve are detailed in the table below: Contracts 2023 2022 EUR 1 000 Opening position Movement Closing position Opening position Movement Closing position Commodity price hedges (3 318) 942 (2 377) 5 303 (8 621) (3 318) Currency hedges (176) (2 872) (3 048) 142 (318) (176) Tax effect 737 413 1 150 (1 230) 1 967 737 Total (2 758) (1 517) (4 275) 4 215 (6 972) (2 758) The movement in the hedge reserve includes gains/(losses) transferred from the cash flow hedge reserve into the income statement during the period. Foreign exchange forwards and commodities hedge maturities are disclosed in note 25.2. Liquidity Risk, which is representative of when the hedge reserve in equity will be recycled to the state-ment of comprehensive income. These are included in the following line items in the income statement. Movement in hedge reserve EUR 1 000 2023 2022 Cost of goods sold (1 673) (7 790) Other operating expenses (1 829) (569) Net financial items (5 518) - Total (9 020) (8 359) Movement in hedge reserve due to changes in fair values (10 537) 1 387 Total (1 517) (6 972) Due to Elopak hedging policy, hedges are entered into based on highly probable future transactions, either per transaction or by applying base layers. All hedges have a hedge ratio 1:1 and hedge in-effectiveness related to differences in timing of settlement in 2023 and 2022 was insignificant and is not recognised directly to profit and loss. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 105 105 Financials | Consolidated financial statements Carrying amount of financial asset and liabilities December 31, 2023 Categories Fair value measurement using EUR 1 000 Notes Fair value through profit and loss (FVPL) Fair value through other comprehensive income (FVOCI) Financial instruments at amortized cost Total Quoted prices in active markets (Level 1) Significant observable inputs (Level2) Significant unobservable inputs(Level 3) Total instruments measured at fair value Assets Derivatives 25 3 660 925 - 4 585 - 4 585 - 4 585 Finance lease receivable 16, 19 - - 7 084 7 084 - - - - Trade receivables 19 - - 110 243 110 243 - - - - Other current assets 19 - - 116 944 116 944 - - - - Cash and cash equivalents - - 13 308 13 308 - - - - Total 3 660 925 247 579 252 164 - 4 585 - 4 585 Liabilities Liablities to financial institutions 25 - - 243 767 243 767 - - - - Derivatives 25 5 451 6 460 - 11 911 - 11 911 - 11 911 Trade payables, and other payables - - 266 576 266 576 - - - - Total 5 451 6 460 510 343 522 253 - 11 911 - 11 911 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 106 106 Financials | Consolidated financial statements Carrying amount of financial asset and liabilities December 31, 2022 Categories Fair value measurement using EUR 1 000 Notes Fair value through profit and loss (FVPL) Fair value through other comprehensive income (FVOCI) Financial instruments at amortized cost Total Quoted prices in active markets (Level 1) Significant observable inputs (Level2) Significant unobservable inputs(Level 3) Total instruments measured at fair value Assets Derivatives 25 7 121 689 - 7 810 - 7 810 - 7 810 Finance lease receivable 16, 19 - - 8 227 8 227 - - - - Trade receivables 19 - - 102 197 102 197 - - - - Other current assets 19 - - 113 018 113 018 - - - - Cash and cash equivalents - - 25 883 25 883 - - - - Total 7 121 689 249 325 257 135 - 7 810 - 7 810 Liabilities Liablities to financial institutions 25 - - 325 715 325 715 - - - - Derivatives 25 550 4 048 - 4 598 - 4 598 - 4 598 Trade payables, and other payables - - 245 417 245 417 - - - - Total 550 4 048 571 132 575 731 - 4 598 - 4 598 Fair value of financial assets and financial liabilities are measured using different levels of input. •Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. •Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. •Level 3 inputs are unobservable inputs for the asset or liability. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 107 107 Financials | Consolidated financial statements Note 26 Change in obligations from financial activities 2023 EUR 1 000 Interest-bearing loans and borrowings (Note22) Lease liabilities (Note14) Total 1.1 325 715 90 674 416 390 Cash Flows Proceeds of loans from financial institutions 1 087 304 - 1 087 304 Repayment of loans from financial institutions (1 174 598) - (1 174 598) Interest expense to financial institutions (11 303) - (11 303) Lease payments - (18 359) (18 359) Non-cash effects Interest expense 11 605 6 566 18 171 Net additions lease liabilities - 22 639 22 639 Other non-cash items 5 033 - 5 033 31.12 243 756 101 520 345 276 Current 19 333 23 096 Non-current 224 433 78 424 2022 EUR 1 000 Interest-bearing loans and borrowings (Note22) Lease liabilities (Note14) Total 1.1 183 853 80 604 264 457 Cash Flows Proceeds of loans from financial institutions 1 178 067 - 1 178 067 Repayment of loans from financial institutions (1 030 217) - (1 030 217) Interest expense to financial institutions (5 658) - (5 658) Lease payments - (19 770) (19 770) Non-cash effects Interest expense 5 258 4 575 9 833 Net additions lease liabilities - 25 266 25 266 Other non-cash items (5 588) - (5 588) 31.12 325 715 90 674 416 390 Current 21 682 17 139 Non-current 304 033 73 536 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 108 108 Financials | Consolidated financial statements Note 27 Business combination Accounting policies A business combination is a transaction or other event in which an acquirer obtains control of one or more busi-nesses. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Determining whether a particular set of assets and activities is a business should be based on whether the inte-grated set is capable of being conducted and managed as a business by a market participant. Business combinations are accounted for according to IFRS 3 using the acquisition method, also called purchase price allocation (PPA). The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at fair value at acquisition date according to IFRS 13, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-con-trolling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in other operating expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the statement of profit or loss. Goodwill arises in a business combination when the fair value of consideration transferred exceeds the fair value of identifiable assets acquired less the fair value of identifiable liabilities assumed. Goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units that are expected to benefit from the combination irrespective of whether other assets or liabilities of the acquiree are assigned to those units and tested subsequently for impairment. Acquisitions of GLS Elopak Company Principal activity Date of business combination Percentage owned Acquiring entity GLS Elopak Trading and manufacturing May 13, 2022 50% Elopak BV (49.5%)Elopak UK Limited (0.5%) Elopak and GLS signed on April 28, 2022 an agreement in which the two companies will have 50% ownership of a newly formed company, GLS Elopak. The completion date (closing) took place May 13, 2022. The agreement provides Elopak with exposure to variable returns and power to affect the returns from GLS Elopak, which means that Elopak will have control of GLS Elopak in accordance with IFRS 10 and will consolidate the company as a subsidiary in Elopak’s financial statements. GLS Elopak will leverage the respective expertise, assets and networks of Elopak and GLS to capitalize on the significant consumer demand in India. The company is being established to manufacture and process high-quality fresh and aseptic packaging solutions, which are designed to ensure that liquid food is safe and accessible to consumers across the globe. The company will cater to both fresh and aseptic segments with applications such as dairy, plant-based drinks, juice, water and liquor. The transaction is recognized as a business combination in accordance with IFRS 3 and the acquisition date is May 13, 2022. The acquisition-date fair value of the total consideration transferred was EUR 12 793 thousand in cash. Transaction costs of EUR 340 thousand were expensed and are included in other operating costs. If the transactions had occurred January 1, 2022, GLS Elopak would have contributed EUR 73 thousand revenue and a loss of EUR 292 thousand before tax. From acquisition date to reporting date GLS Elopak has contributed EUR 5 217 thousand revenue and a loss of EUR 713 thousand before tax. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 109 109 Financials | Consolidated financial statements Fair values of the identifiable assets in GLS Elopak at acquisition date EUR 1 000 2022 ASSETS Non-current assets Development cost and other intangible assets 29 Deferred tax assets 1 Property, plant and equipment 10 462 Total non-current assets 10 492 Current assets Inventory 550 Other current assets 797 Cash and cash equivalents 8 419 Total current assets 9 766 Total assets 20 258 Non-current liabilities Deferred tax liability 624 Total non-current liabilities 624 Current liabilities Current liabilities to financial institutions Trade and other payables 1 106 Other current liablities 124 Total current liabilities 1 230 Total liabilities 1 854 Total identifiable net assets at fair value 18 404 Non-controlling interest (at share of identifiable net assets) 9 202 Purchase consideration 12 793 Goodwill arising from acquisition 3 591 Purchase consideration Cash consideration paid 12 793 Total consideration 12 793 Provision for deferred tax is made for the difference between acquisition cost and acquired tax base in accordance with IAS 12. Offsetting entry of this non-cash deferred tax is goodwill. The remaining goodwill comprises the value of expected synergies arising from the acquisition and assembled workforce, which is not separately recognized. None of the goodwill recognized is deductible for income tax purposes. Analysis of cash flows on acquisition EUR 1 000 2022 Net cash acquired with the subsidiary 8 419 Cash paid 12 793 Net cash flow from acquisition (included in investing activites) (4 374) Acquisitions of Naturepak Company Principal activity Date of business combination Percentage owned Acquiring entity Naturepak Beverage Packaging Co Ltd Trading and manufacturing March 29, 2022 100% Elopak BV (99%)Elopak UK Limited (1%) Elopak Arabia Holding Company acquired 100% of the voting shares of Naturepak Beverage Packaging Co Ltd on March 29, 2022. Naturepak Beverage is the leading provider of fresh liquid carton and packaging systems in the MENA region with local production facilities in Morocco and Saudi Arabia, which will be integrated into Elopak’s global production network. Present in 16 countries, Naturepak Beverage has an annual production capacity of 2.7 billion cartons across various product sizes and its customers are global blue chip FMCG players and strong regional champions. The acquisition will reinforce Elopak’s position in the region and is an important milestone in management’s ambitions to target 2-3% organic revenue growth, deliver inorganic opportunities and grow its global footprint by entering new geographies. The transaction is recognized as a business combination in accordance with IFRS 3 and the acquisition date is March 29, 2022. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 110 110 Financials | Consolidated financial statements The acquisition-date fair value of the total consideration transferred was EUR 85 383 thousand in cash. Transaction costs of EUR 2 110 thousand were expensed and are included in other operating costs. If the transactions had occurred January 1, 2022, Naturepak would have contributed EUR 7 765 revenue and EUR 917 profit before tax. From acquisition date to reporting date Naturepak has contributed EUR 33 422 thousand revenue and a loss of EUR 2 527 thousand before tax. Fair values of the identifiable assets in Naturepak Beverage Packaging Co Ltd at acquisition date EUR 1 000 2022 ASSETS Non-current assets Development cost and other intangible assets 26 794 Property, plant and equipment 11 162 Right-of-use assets 50 Deferred tax asset 1 459 Other non-current assets 446 Total non-current assets 39 910 Current assets Inventory 1 480 Trade receivables 4 881 Other current assets 2 644 Cash and cash equivalents 1 495 Total current assets 10 500 Total assets 50 410 Non-current liabilities Deferred tax liability 7 789 Non-current lease liabilities 32 Other non-current liabilities 2 371 Total non-current liabilities 10 192 Current liabilities Current liabilities to financial institutions 713 Trade and other payables 3 921 Current lease liabilities 47 Other current liablities 3 652 EUR 1 000 2022 Total current liabilities 8 333 Total liabilities 18 525 Total identifiable net assets at fair value 31 885 Purchase consideration 85 383 Goodwill arising from acquisition 53 498 Purchase consideration Cash consideration paid 85 383 Total consideration 85 383 Provision for deferred tax is made for the difference between acquisition cost and acquired tax base in accordance with IAS 12. Offsetting entry of this non-cash deferred tax is goodwill. The remaining goodwill comprises the value of expected synergies arising from the acquisition and assembled workforce, which is not separately recognized. None of the goodwill recognized is deductible for income tax purposes. Analysis of cash flows on acquisition EUR 1 000 2022 Net cash acquired with the subsidiary 1 495 Cash paid 85 383 Net cash flow from acquisition (included in investing activites) (83 888) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 111 111 Financials | Consolidated financial statements Note 28 Shares in subsidiaries and joint ventures The following companies are consolidated as subsidiaries in Elopak Group Company Percentage owned Year of acquisition Country Principal activity Elopak AB 100% 1961 Sweden Trading Elopak B.V. 100% 1968 Netherlands Manufacturing Elopak GmbH 100% 1968 Germany Trading and manufacturing Elopak SpA 100% 1981 Italy Trading Elopak Oy 100% 1982 Finland Trading Elopak Systems AG 100% 1984 Switzerland Trading Elopak Denmark A/S 100% 1988 Denmark Trading and manufacturing Elopak GesmbH 100% 1989 Austria Trading PrJSC Elopak Fastiv 100% 1994 Ukraine Trading and manufacturing Elopak S.A. 100% 1994 Poland Trading and service Elopak Israel AS 100% 1998 Norway Holding Elopak Canada Inc. 100% 2000 Canada Trading and manufacturing Elofill GmbH 100% 2000 Germany Holding Elopak s.r.o. 100% 2001 Czech Republic Trading Elopak UK Ltd 100% 2004 United Kingdom Trading Elopak BS d.o.o 100% 2017 Serbia Service Elopak Kft. 100% 2006 Hungary Trading Elopak EOOD 100% 2009 Bulgaria Trading Elopak Tunisie SARL 100% 2017 Tunisia Trading Elopak Egypt LLC 100% 2017 Egypt Trading Elopak Algerie SARL 49% 2018 Algeria Trading Elopak Arabia Holding Company LLC 100% 2022 Saudi Arabia Holding Elopak Packaging Company LLC 100% 2022 Saudi Arabia Trading and manufacturing Elopak Morocco SAS 100% 2022 Morocco Trading and manufacturing GLS Elopak 50% 2022 India Trading and manufacturing The percentage owned represents the voting stake. The following joint ventures are accounted for in accordance with the equity method Company Percentage owned Year of acquisition Country Principal activity Lala Elopak S.A. de C.V. 49% 1998 Mexico Trading and manufacturing Impresora Del Yaque 51% 2007 Dominican Republic Trading and manufacturing Elopak Nampak Africa Ltd 50% 2020 Kenya Trading The percentage owned represents the voting stake. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 112 112 Financials | Consolidated financial statements Note 29 Related parties Transactions with key management Related party transactions and balances Transaction values for the year ended Balance outstanding as of EUR 1 000 December 31 2023 December 31 2022 December 31 2023 December 31 2022 Joint Ventures Sales of goods and services 7 606 4 877 5 033 1 200 Purchase of goods and services 36 865 35 781 3 075 2 394 Dividends received 2 018 - - - Associates Sales of goods and services 82 69 - - Purchase of goods and services 1 777 1 198 23 26 Loan and related interest - - 818 836 All amounts are excl. VAT Board of Directors: annual compensation and number of shares owned Related party transactions and balances Compensation earned Number of shares EUR 1 000, except number of shares December 31 2023 December 31 2022 December 31 2023 December 31 2022 Dag Mejdell, Chairperson 45 - 56 000 - Trond Solberg 50 - - - Sanna Suvanto-Harsaae 43 43 14 285 14 285 Sid Johari 40 40 17 857 17 857 Anna Belfrage 48 48 - - Anette Bauer Ellingsen 13 15 1 071 1 071 Håvard Grande Urhamar 5 - - - Marianne Groven - 1 - - Cornelia Ann O Neill Kormeseth - - - - Erland Fretheim - - 370 370 Magne Johan Hamarstrøm - - - - Jo Olav Lunder‌1 21 65 - 107 142 Erlend Sveva‌2 8 15 1 071 1 071 1Left his position as Chairperson May 11, 2023 2Left his position as Board member August 30, 2023 Other related party transactions Loans to employees were EUR 19 thousand in 2023 and EUR 24 thousand in 2022. No guarantees have been provided. None of the Board Members or the CEO have executive loans or guarantees in the company. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 113 113 Financials | Consolidated financial statements Note 30 Fees to external auditors PWC was elected as the principal auditor since 2019, while some Group companies are audited by other audit firms. Expensed fees Year to date ended December 31, 2023 EUR 1 000 Audit fee Other assurance services Tax services Other non-audit services Total PWC (878) (34) (2) (96) (1 010) Others (230) (3) (113) (89) (435) Total (1 108) (37) (115) (185) (1 445) Year to date ended December 31, 2022 EUR 1 000 Audit fee Other assurance services Tax services Other non-audit services Total PWC (840) (33) (7) (42) (922) Others (117) (3) (118) - (238) Total (957) (36) (125) (42) (1 159) All amounts are excl. VAT Note 31 Subsequent events The Board will propose to the Annual General Meeting a dividend of NOK 1.46 per share for 2023. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 114 114 Financials | Consolidated financial statements Note 32 Financial climate impact Sustainability Framework Elopak manages the risks related to sustainability. Climate risks, such as the rapidly changing regulatory environ-ment and physical risks are integrated parts of the sustainability framework. We focus our efforts on monitoring global developments concerning sustainability and/or packaging, such as the EU Taxonomy framework, the Corporate Sustainability due diligence directive, and the EU Packaging & Packaging Waste Directive. See Recycling and recyclability, Appendix: EU Taxonomy, and Appendix: Double materiality assess-ment for more details. The EU Directive 2019/904, also known as Single Use Plastic Directive requires that all single use plastic closures that encompass the carton closures must remain attached during its use, which will come into effect as of July 3, 2024. At present, Elopak is subject to Plastic Product Tax in the UK from 2022 and Spain from 2023. The implementation in Italy is delayed and will not take effect until mid-2024. We will assess developments of Plastic Product Tax in other countries as relevant. As EU Member States have competence on tax, they may change scope, define payer, or decide if the levy will be paid from national budget, meaning no imposition of plastic tax. It has been assessed that the Plastic Product Tax will have no impact on the outcome of impairment testing. On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force in the EU. Elopak has a reporting requirement for the year commencing on January 1, 2024 and is developing internal polices and proce-dures to meet the CSRD requirements. There is no current impact on the financial statements. Since the first draft of the EU Packaging and Packaging Waste Regulation (PPWR) was issued by the EU Commission in November 2022, Elopak has been closely following its developments. Though both the EU Parliament and EU Council issued negotiating positions in 2023, the contents of the regulation remain under discussion until its text is published. While Elopak is continuing to follow the PPWR and its impacts to packaging value chains, there is no impact for the financial statements. Elopak sustainability program Elopak’s Group strategy is managed through an annual business planning process where the company defines some key priorities. Each business unit defines its Must-Win-Battles, which are granulated down to individual targets for employees. This structure entails the entire organization and strategic approach, including the sustainability program. Read more about Elopak’s Group strategy in our annual report. The sustainability program is an embedded part of the overall group strategy, and responsibilities for various sections are placed throughout all business units. The Group Leadership Team (GLT) is the overall steering committee of the program and reviews the performance on a quarterly basis. The Board of Directors is overall responsible for strategy approval and implementation. Our sustainability program consists of targets divided into our material topics. The targets are linked to specific strategic initiatives owned by relevant business areas. Specific KPIs are defined to measure and report progress and continuously adapted to reflect our ambitions, some of which refer to the GRI framework or CSRD; others are more specific to our industry and hence self-defined. See Our performance for more details. Climate Risk A full climate risk assessment of material adverse physical impacts to the business from climate change was completed in 2022 in accordance with TCFD (Task Force on Climate-related Financial Disclosures), a framework organization to publicly disclose climate-related risks and opportunities. The climate risk is categorized into Physical impacts such as extreme weather, floods or droughts and sea level rise and Transition impacts from potential changes in climate policy and market outlooks. In order to comprehensively map and analyze risks and opportunities associated with climate change, information and insights are obtained on the following three parameters: Impact, likelihood and time horizon. A combination of these parameters provides an overall assessment of which risk and opportunities are especially relevant for Elopak. Financial climate impacts Based on the sustainability framework, the defined sustainability program targets and the result of the climate risk assessment, Elopak has considered the impacts of climate change in preparing the 2023 consolidated annual financial statements. The table below summarizes the climate risk financial impact assessments. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 115 115 Financials | Consolidated financial statements Climate risk Annual Impact(EUR million) Time horizon Category Regulatory risk: Competition from other low-carbon packaging alternatives More than 80 short revenue Regulatory risk: Changing landscape for packaging regulations More than 80 short revenue Opportunity: Offering low-carbon and circular alternatives More than 80 short revenue Opportunity: Rising costs related to CO2 Less than 20 short revenue Regulatory risk: Constrained access and price fluctuations for low-emission materials Between 5 and 20 short cost Physical risk: Extreme storm events disrupting direct operations for up to one week Less than 5 medium cost Regulatory risk: Technological developments for carton recycling require investment and/or product development More than 20 medium cost Physical risk: Chronic droughts or water shortages in areas of direct operations or upstream value chain Between 5 and 20 long cost Physical risk: Wildfires impacting raw material volumes in the upstream value chain Between 5 and 20 long cost Four risks/opportunities are considered to have a potential of increased revenues at a short time horizon while five risks are considered to have a risk of costs at short, medium or long time horizons. Long time horizon varies from up to 2030 for regulatory risks and until 2100 for physical risks. Impact on capital expenditure commitments: •Targets related to reduced emissions are mainly met by replacing old production line components with new, more energy-effective components. Most of the replaced parts are already fully depreciated. •Due to the Single Use Plastic Directive the existing Caps lease contracts were reassessed in 2022 with a reduced useful life in preparation for the changing legislation. Elopak has signed a contract for Tethered Cap lines and is expecting to expand the offering of tethered cap solutions to customers during 2023 and 2024. Additionally, Elopak has assessed that the existing lease contracts for separable cap lines should be fully depreciated before the tethering requirement will be in place and has therefore reassessed the respective leases, see Note 14for further information. Recognition and measurement of impairments: Impairments are mainly identified and recognized by determining the recoverable amount based on value in use, which means that the item is measured as a present value of discounted future cash-flows. These cash flows are based on expected revenues, result and capital expenditures in the CGU of which the item is operating within. The climate risk financial impact assessment concludes that the potential of revenues is by far higher than the risk of costs and that the revenues is likely to occur earlier than the costs. In the case that Elopak is faced with increased cost related to the climate risks, this will over time be passed on to the customers, similar to what other packaging companies are expected to do when faced with the same climate challenges. Based on this, we consider the risk of impairment related to climate risk to be low. Recognition and measurement of provisions and disclosures surrounding contingent liabilities: Elopak has not identified future costs or losses that meets the definition of provision or contingent liabilities under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Inventory is measured at cost and written down to the extent that expected sales price less cost of sales is lower than cost. Inventory items related to sale of cartons and closures have a high turnover, hence it is not expected to be negatively impacted by future climate risk costs. Filling machines and spare parts for filling machines have a lower turnover in inventory, however climate risk assessments have not concluded a specific risk related to these machines. Besides the specific assessments mentioned above, no financial climate impacts have been identified as material to the 2023 consolidated Annual Financial Statements or the alternative performance measures (APMs). Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 116 116 Financials | Consolidated financial statements Elopak ASA financial statements Elopak ASA Statement of profit and loss 118 Statement of financial position 119 Statement of financial position 120 Statement of cash flows 121 Notes to the parent company financial statements 122 Note 01 Significant accounting policies 122 Note 02 Operating revenues 123 Note 03 Payroll expenses, number of employees, remuneration, loans to employees etc. 124 Note 04 Pension costs, pension assets and pension liabilities 125 Note 05 Intangible assets 126 Note 06 Fixed assets 126 Note 07 Transactions with related parties 127 Note 08 Shares and participations in other companies, etc. 127 Note 09 Net other financial items 128 Note 10 Income tax 129 Note 11 Equity 130 Note 12 Balances with companies in the same group, etc. 131 Note 13 Inventory 132 Note 14 Share capital and shareholder information 133 Note 15 Other non-current liabilities 134 Note 16 Guarantee obligations 134 Note 17 Commitments and contingencies 134 Note 18 Financial risk management 135 Note 19 Subsequent events 136 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 117 117 Financials | Elopak ASA financial statements Statement of profit and loss EUR 1 000 Note 2023 2022 Total revenues 2 622 983 574 580 Raw material expenses (527 074) (508 825) Payroll expenses 3 , 4 (43 235) (38 190) Depreciation, amortization and impairment 5 , 6 (11 691) (11 206) Other operating expenses (35 430) (33 856) Total operating expenses (617 430) (592 077) Operating profit 5 554 (17 497) Financial income and expenses Share of net income from subsidiaries and joint ventures 7 , 8 31 731 40 728 Reversal / write-down of financial fixed assets 8 (2 183) (13 017) Financial income 9 19 243 15 100 Financial expenses 9 (20 429) (980) Net financial items 28 361 41 832 Profit before tax 33 915 24 335 Income tax 10 1 616 (818) Profit 35 530 23 517 Allocation of net profit Transfer from / to other equity 597 1 496 Proposed dividend 34 933 22 021 Total allocation 11 35 530 23 517 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 118 118 Financials | Elopak ASA financial statements Statement of financial position EUR 1 000 Note December 31 2023 December 31 2022 Assets Non-current assets Intangible assets 5 38 200 42 383 Deferred tax assets 10 13 849 12 468 Total intangible assets 52 049 54 851 Land, buildings and other property 6 478 485 Plant and machinery 6 3 237 2 561 Equipment, tools, office machines etc 6 66 50 Total fixed assets 3 781 3 097 Investments in subsidiaries 8 305 182 309 225 Loans to companies in the same group 12 72 616 78 532 Investment in joint ventures 8 24 251 24 251 Other non-current assets 3 844 2 665 Total financial fixed assets 405 893 414 674 Total non-current assets 461 723 472 622 EUR 1 000 Note December 31 2023 December 31 2022 CURRENT ASSETS Inventory 13 78 310 90 777 Trade receivables 12 10 559 14 430 Other current assets 12 105 449 101 847 Total receivables 116 009 116 278 Cash and cash equivalents 216 14 982 Total current assets 194 534 222 036 Total assets 656 257 694 658 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 119 119 Financials | Elopak ASA financial statements Statement of financial position EUR 1 000 Note December 31 2023 December 31 2022 Equity and liabilities Equity Share capital (268 951 670 shares at NOK 1.4) 14 , 11 50 105 50 155 Other paid-in capital 11 70 550 69 952 Total paid-in equity 120 655 120 106 Retained earnings 11 44 958 43 704 Total equity 165 613 163 811 Liabilities Non-current liabilities Pension liabilities 4 2 071 2 206 Non-current liabilities to financial institutions 15 224 433 304 033 Other non-current liabilities 3 680 330 Total non-current liabilities 230 184 306 568 EUR 1 000 Note December 31 2023 December 31 2022 Current liabilities Current liabilities to financial institutions 17 045 19 977 Trade payables 12 86 078 81 157 Public duties payable 14 378 13 694 Taxes payable 10 - - Provision dividend 11 34 933 22 021 Other current liabilities 12 108 026 87 430 Total current liabilities 260 461 224 280 Total liabilities 490 645 530 848 Total equity and liabilities 656 257 694 658 Skøyen, April 10, 2024 Board of Directors in Elopak ASA This document is signed electronically Dag Mejdell Chairperson Trond Solberg Board Member Anna Belfrage Board Member Sid Johari Board Member Sanna Suvanto-Harsaae Board Member Håvard Grande Urhamar Board Member (employee representative) Anette Bauer Ellingsen Board Member (employee representative) Thomas Körmendi CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 120 120 Financials | Elopak ASA financial statements Statement of cash flows EUR 1 000 Note 2023 2022 Profit before taxes 33 915 24 335 Depreciation, amortization and impairment fixed assets 5 , 6 11 691 11 206 Depreciation, amortization and impairment financial assets 5 , 6 2 183 13 017 Net unrealized currency gain / loss to equity (1 733) (6 967) Dividend received 8 (31 731) (40 728) Cash flow from profit before tax 14 325 862 Taxes paid 10 (710) (2 251) Change in trade receivables 3 871 (191) Change in other receivables (3 602) (11 876) Change in inventories 12 467 (15 275) Change in trade payables 4 921 (2 522) Change in other liabilities 20 884 13 536 Change in net pension liabilities (178) (182) Net cash flow from operations 51 977 (17 900) EUR 1 000 Note 2023 2022 Purchase and disposal of non-current assets 5 , 6 (8 191) (6 199) Sale of non-current fixed assets 5 , 6 23 - Dividend received 8 31 731 40 728 Capital changes subsidiaries 8 4 658 (95 607) Change in other non-current investments (1 179) (1 967) Net cash flow from investing activities 27 042 (63 045) Dividend paid 11 (19 634) (19 623) Change in current liabilities to credit institutions (2 932) 6 301 Change in non-current loans and liabilities (70 333) 91 238 Purchase of treasury shares (885) - Net cash flow from financing activities (93 784) 77 916 Net cash flow (14 766) (3 028) Liquidity pr 1.1 14 982 18 000 Liquidity pr 31.12 216 14 982 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 121 121 Financials | Elopak ASA financial statements Notes to the parent company financial statements Significant accounting policies General information The financial statement has been prepared in accordance with the Norwegian Accounting Act, in accordance with Norwegian accounting standards and generally accepted accounting principles in Norway. All numbers are presented in EUR 1 000 unless otherwise stated. Elopak ASA, including subsidaries and shares in joint ventures as listed in note 8 , are consoliated in the group financial statement for Elopak ASA. The accounting and presentation currency is EUR, as the majority of underlying transactions are in Euro. Significant accounting policies Valuation and classification of assets and liabilities Assets intended for permanent ownership or use in the business are classified as non-current assets. Other assets are classified as current assets. Receivables due within one year are classified as current assets. The classification of current and non-current liabilities is based on the same criteria. Current assets are valued at the lower of historical cost and fair value. Fixed assets are carried at historical cost, but are written down to their recoverable amount if this is lower than the carrying amount and the decline is expected to be permanent. Fixed assets with a limited economic life are depreciated on a systematic basis in accordance with a reasonable depreciation schedule. Other non-current liabilities, as well as current liabilities, are valued at nominal value. Foreign currency All monetary balance sheet items denominated in foreign currencies are translated into EUR at the exchange rate prevailing at the balance sheet date. Currency derivatives are valued in the balance sheet at fair value on the balance sheet date. Revenue Sale of goods Revenue is recognized when it is earned, i.e. when both the risk and control have been mainly transferred to the customer. This will normally be the case when the goods are delivered to the customer. The revenue is recognized with the value of the remuneration at the time of transaction. Sale of services Revenue is recognized when it is earned, i.e. when the claim to remuner- ation arises. This occurs when the service is performed, as the work is being done. The revenue is recognized with the value of the remuneration at the time of transaction. Cost of sales and other expenses In principle, cost of sales and other expenses are recognized in the same period as the revenue to which they relate. In instances where there is no clear connection between the expense and revenue, the apportionment is estimated. Other exceptions to the matching criteria are disclosed where appropriate. Inventories Inventory is stated at the lower of cost and net realizable value. Cost comprises direct materials and, where applicable, direct labour costs. Finished goods and work in progress also include a proportion of manu- facturing overheads based on normal operating capacity that have been incurred in bringing the inventory to its present location and condition. Cost is calculated using the FIFO cost formula for cartons, filling machines and spare parts. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Receivables Trade receivables and other receivables are recognized at nominal value, less the accrual for expected losses of receivables. The accrual for losses is based on an individual assessment of each receivable. Intangible fixed assets Expenses relating to the development of intangible assets, including research and development expenses, are capitalized when it becomes Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 122 122 Financials | Elopak ASA financial statements probable that the future economic benefits arising from the assets will accrue to the company, and the cost of the assets can be reliably measured. Intangible assets with a limited economic life are amortised on a system- atic basis. Intangible assets are written down to the recoverable amount if the expected economic benefits are not covering the carrying amount and any remaining development costs. Shares in subsidiaries and joint ventures Subsidiaries and joint ventures are carried at cost. A write-down to fair value will be performed if the impairment is not considered to be temporary, and an impairment charge is deemed necessary according to generally accepted accounting principles. Received dividends are recog- nized as financial income. Pensions Payments to defined contribution retirement benefit plans are charged as an expense when employees have rendered service entitling them to the contributions. Payments made to public retirement benefit schemes are accounted for as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. For defined benefit plans, the cost of providing benefits is determined using actuarial valuations at each reporting date. Actuarial gains and losses are recognized in full in the period in which they occur in other comprehensive income. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The plan asset or pension liability recognized in the statement of financial position consist of the net present value of the defined benefit obligation, unrecognized past service cost, and fair value of plan assets. Income taxes Tax expenses are matched with operating income before tax. Tax related to equity transactions, e.g. group contribution, is recognized directly in equity. Tax expense consists of current income tax expense and change in net deferred tax. Deferred tax liabilities and deferred tax assets are presented net in the balance sheet. Cash and cash equivalents Cash and cash equivalents include cash, bank deposits and other mone- tary instruments with a maturity of less than three months at the date of purchase. The statement of cash flow The statement of cash flow has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term, liquid investments. Operating revenues EUR 1 000 2023 2022 Sales revenue 600 678 556 571 Management and group services 22 305 18 009 Total 622 983 574 580 In 2023, intra-group sales transactions amounts to EUR 604 million (2022: EUR 538 million). Geographical distribution of operating revenues 2023 2022 Europe 579 692 512 558 Asia, Middle East 2 937 6 722 Africa 14 880 34 077 America 25 473 21 224 Total 622 983 574 580 Operating revenues are specified according to the customer's location. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 123 123 Financials | Elopak ASA financial statements Payroll expenses, number of employees, remuneration, loans to employees etc. Payroll expenses, number of employees, remuneration, loans to employees etc. Payroll expenses 2023 2022 Salary (20 651) (18 678) Social security costs (3 369) (2 822) Hired personnel from group companies (17 119) (14 839) Pension cost (see not e 4 ) (1 529) (1 495) Other benefits (566) (355) Total (43 235) (38 190) Average number of FTE employees 170 159 Salaries and remunerations to the Group management CEO BoD Salary (incl bonus) (978) Other benefits (47) (285) CEO is included in an annual bonus scheme. Targets are reviewed annually. The performance criteria are divided into shared and individual. Shared targets, accounting for 50%, reflects Elopak Group’s strategic priorities, profita- bility, cash flow, foundational as well as ESG value drivers. Individual targets, accounting for 50%, is primarily based on financial, strategic and operational value drivers. In addition to the annual bonus scheme, CEO is also included in a long-term incentive scheme based on the value adjusted equity of Elopak Group. Guidelines for remuneration of Group Leadership Team and Board Members are disclosed in the Remuneration Report which is presented on the Elopak website. Fees to external auditors 2023 2022 Audit fee (490) (449) Other assurance services (34) (33) Tax advisory services (2) (7) Other non-audit services (96) (23) Total (622) (512) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 124 124 Financials | Elopak ASA financial statements Pension costs, pension assets and pension liabilities The company is required to have an occupational pension plan in accordance with Norwegian legislation on occu- pational pensions (“lov om obligatorisk tjenestepensjon”). The company’s pension plan meets the requirements of this legislation. All employees are part of a defined contribution plan. In addition, the company has agreed on a defined benefit plan, individually, with some former employees. The defined contribution plan for 2023 includes 174 employees (2022:167) with a cost of EUR 1 174 million compared to EUR 1 226 million in 2022. Pension cost related to the defined benefit plan includes change of the present value of pension obligations and pension assets. Net pension liabilities are recorded as long-term debt. Pension costs recognized in profit an loss 2023 2022 Interest cost on projected benefit obligations (43) (32) Return on plan assets - - Accrued social security tax (7) (5) Total pension costs recognized in profit an loss (49) (37) Net pension obligations Funded and unfunded obligations 2023 2022 Present value pension obligations (incl. payroll tax) (2 071) (2 206) Fair value of plan assets - - Net pension obligations (2 071) (2 206) Changes in estimates recognized directly in equity (44) (68) Financial preconditions 2023 2022 Discount rate 2.60% 2.40% Expected salary increase 3.50% 3.50% Social security escalation rate 3.25% 3.25% Expected pension increase 2.80% 2.60% Expected return on plan assets‌ 1 - 4.70% 1 The pension scheme is unsecured; the secured pension fund expired from the actuarial valuation in 2022. The actuarial assumptions for demographic factors and departure are based on the commonly used assumptions in insurance. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 125 125 Financials | Elopak ASA financial statements Intangible assets Patents and sales rights IT software Total Intangible assets Acquisition cost 01.01.2023 25 108 69 216 94 325 Additions 5 200 1 254 6 454 Disposals (121) (121) Acquisition cost 31.12.2023 30 308 70 350 100 658 Accumulated amortization 31.12.2023 12 735 49 292 62 027 Accumulated impairment 31.12.2023 431 431 Carrying amount 31.12.2023 17 573 20 627 38 200 Current year amortization charge 2 272 8 416 10 689 Current year depreciation/write-down charge 2 272 8 416 10 689 Economic life 3-10 years 3-7 years Amortization % 10-33% 14-33% Amortization method Linear Linear The additions under patents relate to the development of a new filling machine platform. IT software additions are mainly related to an ongoing project for the implementation of a ERP system. Expected profit from capitalized research and development cost exceed book values. The company have also expensed EUR 5 million as research and development costs in 2023 (2022: EUR 4 million). Fixed assets Land and buildings Machinery and plant Furniture, tools, office machines Total fixed assets Acquisition cost 1.1.2023 5 248 12 926 1 407 19 582 Additions 106 2 015 40 2 162 Disposals (23) (549) (350) (923) Acquisition cost 31.12.2023 5 331 14 392 1 097 20 820 Accumulated depreciation 31.12.2023 4 853 11 155 1 030 17 038 Carrying amount 31.12.2023 478 3 237 67 3 782 Current year depreciation charge 114 865 23 1 002 Current year depreciation/write-down charge 114 865 23 1 002 Useful life 7 - 10 years 3 - 10 years 3 - 7 years Depreciation % 10-14% 10-33% 14-33% Depreciation method Linear Linear Linear Operational leases: Duration Over 10 years 3-6 years 1-2 years Annual rental amount off-balance sheet 2 836 2 419 103 Total future lease obligation 51 128 8 036 167 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 126 126 Financials | Elopak ASA financial statements Transactions with related parties In 2023, dividends of EUR 31.7 million were recognized from subsidiaries and associated companies. In 2022 the same number was EUR 40.7 million. See also notes 2 , 8 , 9 , and 12 for more information regarding transactions and items with related parties. Shares and participations in other companies, etc. Company Percentage owned Acquisition cost Book value 2023 Equity 2023 Results 2023 Elopak Oy, Finland 100% 1 862 31 342 179 Elopak Denmark A/S, Denmark 100% 91 296 66 000 20 169 2 387 Elopak BV, Netherlands 100% 105 456 105 569 123 918 4 019 Elopak Fastiv, Ukraine 100% 2 289 2 285 10 693 365 Elopak SPA, Italy 100% 4 233 880 1 648 58 Elopak Systems AG, Switzerland 100% 13 560 13 560 14 526 (189) Elopak Inc, USA 100% 47 405 47 405 42 086 8 119 Elopak Israel AS, Norway 100% 1 316 1 316 219 (8) Elopak Canada Inc, Canada 100% 6 942 7 122 50 441 27 857 Elopak GsmbH, Austria 100% 6 227 5 273 3 615 728 Elopak S.R.O, Czechia 100% 197 197 135 64 Elopak UK Ltd, UK 100% 47 191 - 10 622 2 471 Elopak BS D.O.O Serbia 100% 160 160 341 97 Elopak AB, Sverige 100% 10 593 6 820 10 732 220 Elopak KFT, Hungary 100% 13 13 198 70 Elopak EOOD, Bulgaria 100% 3 3 128 7 Elopak Poland SA, Poland 100% 20 388 6 000 5 248 162 Elofill Gmbh, Germany 100% 42 215 42 538 49 371 584 Elopak Tunisie SARL, Tunisia‌ 1 100% 3 3 41 (5) Elopak Egypt LLC, Egypt‌ 1 100% 6 6 52 2 Elopak Algerie SARL, Algeria 49% - - 1 1 Total shares, subsidiaries 401 356 305 183 Envases Elopak S.A. de C.V., Mexico 49% 24 247 24 247 24 492 4 730 Elopak Nampak Africa Ltd, Kenya 50% 4 4 (258) (14) Total shares, joint ventures 24 251 24 251 Total shares 329 433 1 Owned 50% directly, and 50% through wholly owned subsidiaries Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 127 127 Financials | Elopak ASA financial statements The percentage owned is equal to the voting share percentage. During 2023, Elopak ASA decreased the share capital in Elopak Oy Finland and distributed the reduction to Elopak ASA. During 2023, Elopak ASA increased the share capital in Elopak Canada Inc, Elopak BV and Elofill Gmbh in order to represent the investment made to the share options schemes. Dividends from subsidiaries and joint ventures of EUR 31.7 million in 2023 (EUR 40.7 million in 2022) have been recognized as financial income. Impairment tests have been performed on those investments where the book value exceeds the equity in the company. No impairment has been made in 2023. Net other financial items 2023 2022 Interest income from companies in the same group 14 738 10 732 Other interest income 1 970 795 Interest costs for companies in the same group (1 936) (1 465) Other interest expenses‌ 1 (16 802) 2 672 Total interest income (+) / expense (-) (2 032) 12 733 Net currency gain/loss‌ 2 (460) 3 469 Other financial income from enterprises in the same group 42 105 Other financial cost (1 499) (2 186) Total other financial income / expense (1 457) (2 081) Total other financial income 19 243 15 100 Total other financial expenses (incl. profit/loss on exchange) (20 429) (980) 1 Gains on interest rate swaps are includes as a reduction of interest expense. 2 Profit/loss on currency are presented net in the statement for profit and loss as part of other financial income. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 128 128 Financials | Elopak ASA financial statements Income tax Income tax expenses 2023 2022 Tax cost payable outside Norway 846 2 251 Tax payable in Norway‌ 1 (1 590) - Change in deferred tax (872) (1 434) Total tax cost (1 616) 818 Profit before tax expenses 33 915 24 335 FX effect on deferred tax asset from 2021 2 251 Permanent differences 4 346 17 359 Change in temporary differences 8 975 (1 976) Non-taxable dividend income (31 730) (41 114) Translation difference (20 767) (8 700) Differences recognized directly in equity‌ 2 (2 209) (9 392) This year's tax base (7 471) (17 237) 1 Related to change in actuarial effects on pensions, change in cash flow hedges in equity, and share issuance cost taken net to equity. 2 Tax payable in 2023 is related to an adjustment of taxes payable for 2020. Overview of temporary differences 2023 2022 Inventory 2 744 3 038 Goodwill 3 938 5 539 Fixed Assets 17 821 16 623 Provisions 2 381 4 866 Pensions 2 071 2 206 Fair value of hedging instruments 7 316 (3 243) Temporary differences 36 271 29 029 Tax receivable on taxes paid outside of Norway‌ - - Tax losses carried forward 26 681 27 646 Total 62 951 56 675 Deferred tax asset 13 849 12 468 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 129 129 Financials | Elopak ASA financial statements Explanation of why this year's tax expense does not amount to 22% of profit before tax 2023 2022 Profit before taxes 33 915 24 335 22% tax on profit before tax 7 461 5 354 Tax effect of: Permanent differences (22%)‌ 1 956 3 819 Correction previous years (353) Taxes paid outside Norway 710 2 251 Non-taxable dividend (6 981) (9 045) Translation difference (4 216) (1 914) Currency effect on deferred tax asset 806 353 Estimated tax expense (- income) (1 616) 818 Effective tax rate as a percentage of profit before tax (4.8%) 3.4% 1 Includes non-deductible expenses as well as taxable income from NOKUS. Equity Company Share capital Other paid-in capital Other equity Total equity Equity 01.01.2023 50 155 69 952 43 704 163 811 This year's change in equity: Profit for the year - - 35 530 35 530 Dividend provision to shareholders - - (34 933) (34 933) Own shares (267.344) (50) (537) - (587) Currency effect dividend previous year - - 2 387 2 387 Provision for share-based bonus - 1 480 - 1 480 Settlement of share-based bonus (345) 47 (298) Change in actuarial gains and losses for pensions - - (44) (44) Change in cash flow hedge reserve - - (1 733) (1 733) Equity 31.12.2023 50 105 70 550 44 958 165 613 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 130 130 Financials | Elopak ASA financial statements Balances with companies in the same group, etc. Non-current loans to group companies 2023 2022 Elopak GmbH 59 000 59 000 Elopak Canada Inc 13 575 14 063 Elopak South Africa 41 469 Elopak Morocco - 5 000 Total 72 616 78 532 Trade receivable Other current assets 2023 2022 2023 2022 Elopak BV - - 22 674 19 323 Elopak BV branch office Spain - - - 185 Elopak Canada - - 80 8 898 Elopak BS d.o.o. 185 138 4 2 Elopak Denmark AS - - 68 11 Elopak GmbH - - 45 271 50 938 Elopak Israel AS branch office 253 28 - - Elopak Poland S.A. - - 6 1 Elopak EOOD, Bulgaria 1 1 - - Elopak UK Ltd - - 4 296 4 088 Elopak Ukraine 2 476 4 224 6 3 Elopak Algeria - - 13 - Elopak India - 2 083 - - Elopak South Africa 925 917 15 15 Elopak Morocco 4 014 2 816 154 81 Elopak Czech - - - 166 Elopak US - - 147 9 Intra-group positions 7 855 10 206 72 736 83 719 External positions 2 705 4 224 32 713 18 128 Total 10 559 14 430 105 449 101 847 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 131 131 Financials | Elopak ASA financial statements Trade payables Other current liabilities 2023 2022 2023 2022 Elofill GmbH - - 1 554 2 542 Elopak AB 390 204 2 443 2 147 Elopak BV - - 3 863 2 867 Elopak BV branch office Spain - - 477 3 Elopak BV branch office France 8 11 679 617 Elopak Canada 249 24 11 976 403 Elopak BS d.o.o. 73 74 83 73 Elopak Denmark AS - - 3 202 1 906 Elopak Fastiv 62 36 - - Elopak Gesmbh 21 - 3 728 5 647 Elopak GmbH - - 14 334 12 280 Elopak Hungary - - 227 576 Elopak Inc. - - 11 405 19 402 Elopak Israel AS - - 194 219 Elopak OY 4 10 403 563 Elopak Poland S.A. (13) (114) 5 110 4 966 Elopak S.p.A - - 2 081 2 925 Elopak s.r.o. - - 125 1 135 Elopak EOOD, Bulgaria - - 126 114 Elopak Systems AG - - 8 504 8 187 Elopak UK Ltd - - 23 - Intra-group positions 794 246 70 535 66 572 External positions 85 284 80 911 37 491 20 857 Total 86 078 81 158 108 026 87 429 Inventory 2023 2022 Raw materials 15 109 22 603 Semi-finished products 24 035 24 853 Filling Machines 10 894 15 087 Finished goods 28 271 28 234 Total 78 310 90 777 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 132 132 Financials | Elopak ASA financial statements Share capital and shareholder information The share capital is NOK 376 906 620, equivalent to EUR 50 155 321 consisting of 269 219 014 shares at face value NOK 1.40 pr share. Elopak ASA owned 267 344 treasury shares at 31.12.2023. Elopak ASA is listed on Oslo Stock Exchange – Euronext. Shareholders holding 1% or more of the total 269.219.014 shares issued as of 31 December 2023 are according to information from Euronext: Name Number of shares Holding (%) Ferd AS 161 465 870 59.98% Nippon Paper Industries Co., Ltd. 13 460 950 5.00% Folketrygdfondet 8 841 209 3.28% Pareto Asset Management AS 6 493 703 2.41% The Bank of New York Mellon SA/NV 6 246 681 2.32% The Northern Trust Comp 5 826 388 2.16% Brown Brothers Harriman (Lux.) SCA 3 840 758 1.43% J.P. Morgan SE 3 000 000 1.11% Bank Pictet & Cie (Europe) AG 2 705 095 1.00% Total 211 880 654 78.70% The Executive team own directly, or indirectly the following number of shares in the Group Executive team Total number of shares Thomas Körmendi, Chief Executive Officer (CEO) 396 105 Bent Axelsen, Chief Financial Officer (CFO) 203 833 Patrick Verhelst, Chief Marketing Officer (CMO) 61 562 Wolfgang Buckhremer, Chief Technology Officer (CTO) 78 638 Ivar Jevne, EVP Packaging and Procurement 239 432 Stephen Naumann, EVP Region Europe North and India 190 055 Finn Tørjesen, EVP Region Europe South and MENA 79 816 Lionel Ettedgui, EVP Region Americas 95 553 Nete Bechmann, Chief Human Resource Officer (CHRO) 35 447 Dag Grönevik, EVP Equipment and Service 9 660 Total 1 390 101 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 133 133 Financials | Elopak ASA financial statements Other non-current liabilities The external long-term loans are drawn under a EUR 400 million multi-currency revolving credit facility. The facility is available until 23.05.2025. Non-current liabilities to financial institutions 2023 2022 EUR 225 000 305 000 Total 225 000 305 000 Amounts are shown net of prepaid transaction costs, which explains the difference against liabilities in the balance sheet. As of 31.12.23, Elopak ASA has met all covenants related to the syndicate loan facility. Guarantee obligations 2023 2022 Guarantees issued for subsidiaries and associated companies 13 124 16 050 Other guarantees 1 785 2 010 Total 14 909 18 060 Commitments and contingencies 2023 2022 Commitments for acquisition of goods 25 702 18 692 Total commitments 25 702 18 692 See also description of lease obligations in not e 6 . Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 134 134 Financials | Elopak ASA financial statements Financial risk management Currency risks Elopak ASA's currency exposure are limited because purchases and sales are made mainly in the same currency (EUR). According to the hedging strategy, Elopak ASA has rolling hedges over 18 months, which secure 90% of the expo- sure in the 1 st quarter and thereafter falls linearly each quarter to 15% in the 6 th quarter. The hedges are based on expectations future cash flows for purchases. Elopak ASA is registered as a borrower for the group's long-term loan facility of Euro 400 million (see note 15 ). Larger purchases of machinery and equipment are also secured in full from the time of ordering. Elopak mainly uses forward contracts by hedging. This kind of instrument is best suited for Elopak based on an assessment of cost and administration. Nominal values 2023 2022 Currency Ccy EUR Ccy EUR CAD 7 749 5 292 EUR (89 952) (89 952) JPY 10 358 989 66 264 9 462 67 NOK 388 197 34 536 255 24 USD (27 740) (25 104) Total nominal value (8 965) 91 Total fair value (6 494) 796 Positive numbers represent purchases Elopak ASA has also entered into forward contracts on behalf of subsidiaries, where an external position is reflected towards subsidiaries. This gives no net exposure, and these contracts are therefore not reflected in the matrix above. At the end of 2023, the fair value of Elopak ASA’s currency derivatives amounts to a liability of EUR 6.5 million (a liability of EUR 0.5 million in 2022). Interest rate risk As mentioned under currency risk, Elopak ASA is registered as a borrower for the group's long-term loan facility of EUR 400 million (see note 15 ). The loan has a floating interest rate. The company's interest rate risk is mainly related to movements in the interest rate on the external loan. To manage this risk, Elopak ASA has entered into interest rate swap agreements. Outstanding derivatives 2023 2022 Currency Nominal value Real value EUR Nominal value Real value EUR EUR 150 000 1 545 120 000 7 063 Total 1 545 7 063 Positive values represent an asset. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 135 135 Financials | Elopak ASA financial statements Credit risk Elopak actively uses available credit risk assessment services. Through its business model, Elopak ASA has limited external credit exposure. There is no history of losses on accounts receivable. There is no significant risk associated with guarantees issued. Commodity price risk Elopak ASA's business needs ongoing supplies of aluminium and polyethylene. Based on 12 months' expected consumption included Elopak ASA commodity price contracts to manage this risk. Outstanding derivatives 2023 2022 Tons Real value EUR Tons Real value EUR Aluminium 3 960 31 8 400 (743) Polyethylene 15 000 (2 408) 13 000 (2 576) Total (2 377) (3 319) Positive values represent an asset ; negative values represent a liability Subsequent events The Board will propose to the Annual General Meeting a dividend of NOK 1.46 per share for 2023. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 136 136 Financials | Elopak ASA financial statements Responsibility statement We confirm to the best of our knowledge that the consolidated financial statements for the period January 1 to December 31, 2023 have been prepared in accordance with IFRS adopted by the EU as well as additional disclosure requirements in the Norwegian Accounting Act, and gives a true and fair view of the Elopak Group’s assets, liabil- ities, financial position and result for the period. We also confirm to the best of our knowledge that the Board of Directors’ Report includes a fair review of significant events that have occurred during the financial year and their impact on the financial statements, any significant related parties transactions and a description of the principal risks and uncertainties for the financial year. Elopak Group Consolidated Financial Statements Skøyen, April 10, 2024 Board of Directors in Elopak ASA This document is signed electronically Dag Mejdell Chairperson Trond Solberg Board Member Anna Belfrage Board Member Sid Johari Board Member Sanna Suvanto-Harsaae Board Member Håvard Grande Urhamar Board Member (employee representative) Anette Bauer Ellingsen Board Member (employee representative) Thomas Körmendi CEO Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 137 137 Financials | Responsibility statement Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 138 138 Financials | Auditor’s report Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 139 139 Financials | Auditor’s report Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 140 140 Financials | Auditor’s report Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 141 141 Financials | Auditor’s report Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 142 142 Financials | Auditor’s report Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 143 143 Financials | PwC limited assurance report on GHG statement Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 144 144 Financials | PwC limited assurance report on GHG statement Alternative Performance Measures (APMs) The Group prepares and reports its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the IASB and as endorsed by the EU (IFRS). In addition, the Group presents several Alternative Performance Measures (APMs). In accordance with European Securities and Market Authority (ESMA) guide- lines dated May 10, 2015, an APM is understood as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework (IFRS). It should be noted that these measures do not have any standardized meaning prescribed by IFRS and therefore are not necessarily comparable to the calculation of similar measures used by other companies. The APMs are regularly reviewed by the Group’s management. The APMs are reported in addition to but are not substitutes for the Group’s consolidated financial statements, prepared in accordance with IFRS. The APMs provide supplementary information to measure the Group’s performance and to enhance comparability between financial periods. The APMs also provide measures commonly reported and widely used by investors, lender, and other stakeholders as an indicator of the Group’s performance. These APMs are among other, used in planning for and fore- casting future periods, including assessing our ability to incur and service debt including covenant compliance. APMs are defined consistently over time and are based on the Group’s consolidated financial statements (IFRS). Organic revenue Organic revenue is a measure of revenue adjusted for currency effects and effects of acquisition and disposal of operations. The Group presents this APM because management considers it to provide useful supplemental information for understanding the Group's revenue devel- opment over time for comparability purposes. EBITDA EBITDA is a measure of earnings before interest, taxes, depreciation, amortization, and impairments. The Group presents this APM because management considers it to provide useful supplemental information for understanding the overall picture of profit generation in the Group’s operating activities and for comparing its operating performance with that of other companies. Adjusted EBITDA Adjusted EBITDA is a measure of EBITDA adjusted for certain items affecting comparability (the Adjustment items) and further including the Group’s share of net income from joint ventures (continued operations) presented as part of financial income and expenses. The Group presents this APM because management considers it to be an important supple- mental measure for understanding the underlying profit generation in the Group’s operating activities and comparing its operating performance with that of other companies. Adjusted profit attributable to Elopak shareholders Adjusted profit attributable to Elopak shareholders represents the Group’s profit attributable to Elopak shareholders adjusted for certain items affecting comparability, taking into account the Adjustment items, related estimated calculatory tax effects based on a 24% statutory tax rate and excluding historical share of net income from joint ventures that have been discontinued. The Group presents this APM because management considers it to provide useful supplemental information for understanding the Group’s profit attributable to Elopak shareholders and for comparability purposes with other companies. Adjusted basic and diluted earnings per share (Adjusted EPS) Adjusted EPS represents adjusted profit attributable to Elopak share- holders divided by weighted average number of ordinary shares – basic and diluted. Elopak presents adjusted basic and diluted earnings per share because management considers it to be an important supplemental measure for understanding the Group’s underlying profit for the year (period) on a per share basis and comparing its profit for the year (period) on a per share basis with that of other companies in the industry. Net debt Net debt is a measure of borrowings (including liabilities to financial institutions before amortization costs and including lease liabilities) less cash and cash equivalents for the period. The Group presents this APM because management considers it as a useful indicator of the Group’s indebtedness, financial flexibility and capital structure because it indi- cates the level of borrowings after taking into account cash and cash equivalents within the Group’s business that could be utilized to pay down outstanding borrowings. Net debt is also used for monitoring the Group’s financial covenants compliance by management. Net debt/adjusted EBITDA (Leverage ratio) Leverage ratio is a measure of net debt divided by adjusted EBITDA. The Group presents this APM because management considers it as a useful indicator of the Group’s ability to meet its financial obligations. Net debt/ adjusted EBITDA is also used for monitoring the Group’s financial cove- nants compliance by management. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 145 145 Financials | Alternative Performance Measures (APMs) Organic revenue EUR 1 000 2023 2022 Change YoY Total revenue and other operating income 1 132 187 1 023 853 10.6% Currency effect 10 449 - - Acquisition and disposal effect (22 370) - - Organic revenue 1 120 266 1 023 853 9.4% EUR 1 000 2022 2021 Change YoY Total revenue and other operating income 1 023 853 855 265 19.7% Currency effect (28 569) - - Acquisition and disposal effect (38 640) - - Organic revenue 956 644 855 265 11.9% Adjusted EBITDA Items excluded from adjusted EBITDA Year ended December 31 EUR 1 000 2023 2022 Impairment fixed and long-term assets Ukraine - 4 189 Impairment short term assets Ukraine - 2 146 Onerous contracts (100) 100 Transaction costs - 2 888 Total adjusted items (100) 9 322 Calculatory tax effect‌ 1 24 165 Total adjusted items net of tax (76) 9 487 1 Calculatory tax effect on adjusted items at 24% Reconciliation of EBITDA and adjusted EBITDA Year ended December 31 EUR 1 000 2023 2022 Operating profit 102 778 41 774 Depreciation, amortization and impairment adjusted 61 332 63 938 Impairment fixed and long term assets Ukraine - 4 189 EBITDA 164 111 109 901 Total adjusted items with EBITDA impact (100) 5 133 Share of net income from joint ventures (continued operations)‌ 2, ‌ 3 6 855 4 378 Adjusted EBITDA 170 867 119 412 2 Share of net income and impairment on investment from joint ventures included in adjusted figures 3 See reconciliation of net income from joint ventures Adjusted profit attributable to Elopak shareholders Year ended December 31 EUR 1 000 2023 2022 Profit attributable to Elopak shareholders 67 061 10 856 Discontinued operations 1 339 23 622 Items excluded from adjusted EBITDA net of tax (76) 9 487 Adjusted profit 68 324 43 965 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 146 146 Financials | Alternative Performance Measures (APMs) Net debt and leverage ratio Year ended December 31 EUR 1 000 2023 2022 Bank debt‌ 1 225 000 305 000 Overdraft facilities 19 333 21 682 Cash and equivalents (13 308) (25 883) Net debt 231 025 300 799 Lease liabilities 101 520 90 674 Net debt 332 545 391 473 Leverage ratio‌ 2 1.9 3.3 1 Bank debt is excluding amortised borrowing costs of EUR 967 thousand as of December 31, 2023 and EUR 567 thousand as of December 31, 2022 2 Leverage ratio is calculated based on last twelve months adjusted EBITDA of EUR 170 867 thousand as of December 31, 2023 and EUR 119 413 thousand as of December 31, 2022. Adjusted earnings per share Year ended December 31 EUR 1 000, except number of shares 2023 2022 Weighted-average number of ordinary shares 269 151 079 269 215 990 Profit attributable to Elopak shareholders 67 061 10 856 Adjusted profit 68 324 43 965 Basic and diluted earning per share (in EUR) 0.25 0.04 Adjusted basic and diluted earning per share (in EUR) 0.25 0.16 Reconciliation of net income from joint ventures Year ended December 31 EUR 1 000 2023 2022 Lala Elopak S.A. de C.V. 4 730 2 665 Impresora Del Yaque 2 139 1 824 Elopak Nampak Africa Ltd (14) (112) Total share of net income joint ventures 6 855 4 378 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 147 147 Financials | Alternative Performance Measures (APMs) ESG metrics Planet data GHG Emissions 2020 2021 2022 2023 2023 vs 2020 Science-based targets and 3 rd party verified Scope 1 Total‌ 1 ton CO 2 e 7 472 6 588 5 974 4 731 (37%) Scope 1 GHG Emission Breakdown ton CO 2 7 382 6 568 5 920 4 688 (36%) Scope 1 GHG Emission Breakdown ton CH 4 6 6 5 5 (14%) Scope 1 GHG Emission Breakdown ton N 2 O 6 4 5 4 (40%) Scope 2 Total (market-based approach) ton CO 2 e 1 075 1 054 858 987 (8%) Scope 2 (location-based approach) ton CO 2 e 27 288 24 587 20 440 22 013 (19%) Scope 3 part of Science Based Targets ton CO 2 e 541 857 556 338 498 413 545 085 0.6% Scope 3 -Category 1: Purchased goods and services, raw materials ton CO 2 e 386 952 382 309 364 901 351 790 (9%) Scope 3 -Category 1: Purchased goods and services, waste ton CO 2 e 14 387 13 551 13 153 15 545 8% Scope 3 -Category 1: Total ton CO 2 e 401 339 395 860 378 054 367 335 (8%) Scope 3 -Category 6: Business Travel, Travel air ton CO 2 e 848 598 2022 3485 311% Scope 3 -Category 6: Business Travel, Travel car ton CO 2 e 743 800 768 642 (14%) Scope 3 -Category 6: Total ton CO 2 e 1 591 1 398 2 790 4 126 159% Scope 3 -Category 4: Upstream transportation and distribution ton CO 2 e 21 834 20 104 22 716 19 716 (10%) Scope 3 -Category 9: Downstream transportation and distribution, not under Elopak’s control ton CO 2 e 22 755 21 053 23 412 23 688 4% Scope 3 -Category 4 & 9: Total ton CO 2 e 44 588 41 157 46 128 43 404 (3%) Scope 3 -Category 11: Use of sold products ton CO 2 e 76 801 101 280 54 856 109 042 42% Scope 3 -Category 13: Downstream leased assets ton CO 2 e 17 537 16 643 16 584 21 176 21% Scope 3 -Category 11 & 13: Total ton CO 2 e 94 339 117 923 71 440 130 219 38% Total Emissions (All scopes included in Science based targets) ton CO 2 e 550 404 563 981 505 245 550 802 - 1 Scope 1 total represents CO 2 , CH 4 and N 2 O recalculated to CO 2 equivalents The GHG Statement is reported based on the Greenhouse Gas Protocol. Methodology is provided in Appendix: Sustainability methodology. PwC has provided limited assurance on GHG scope 1-3 for 2023 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 148 148 ESG metrics ESG metrics 2020 2021 2022 2023 2023 vs 2020 Total emissions scope 1, 2 and 3 Scope 1 Total‌ 1 ton CO 2 e 7 472 6 588 5 974 4 731 (37%) Scope 1 GHG Emission Breakdown ton CO 2 7 382 6 568 5 920 4 688 (36%) Scope 1 GHG Emission Breakdown ton CH 4 6 6 5 5 (14%) Scope 1 GHG Emission Breakdown ton N 2 O 6 4 5 4 (40%) Scope 2 Total (market-based approach) ton CO 2 e 1 075 1 054 858 987 (8%) Scope 2 (location-based approach) ton CO 2 e 27 288 24 587 20 440 22 013 (19%) Scope 1 + Scope 2 marked based ton CO 2 e 8 547 7 642 6 832 5 718 (33%) Scope 3 Total ton CO 2 e 734 935 751 111 686 274 719 918 (2%) 1. Purchased goods and services ton CO 2 e 451 020 445 006 438 859 417 921 (7%) 2. Capital goods ton CO 2 e 2 622 4 499 6 774 7 902 201% 3. Fuel and energy related activities ton CO 2 e 2 931 3 045 2 582 2 845 (3%) 4. Upstream transportation & distribution ton CO 2 e 27 202 21 983 27 549 23 929 (12%) 5. Waste generated in operations ton CO 2 e 301 196 301 278 (8%) 6. Business travel ton CO 2 e 1 591 1 398 2 790 4 126 159% 7. Employee commuting ton CO 2 e 1 668 1 707 1 796 1 831 10% 8. Upstream leased assets ton CO 2 e 9. Downstream transportation & distribution ton CO 2 e 25 272 28 771 28 042 28 728 14% 10. Processing of sold products ton CO 2 e 11. Use of sold products ton CO 2 e 76 801 101 280 54 856 109 042 42% 12. End-of-life treatment of sold products ton CO 2 e 124 681 123 636 102 324 99 481 (20%) 13. Downstream leased assets ton CO 2 e 17 537 16 643 16 584 21 176 21% 14. Franchises ton CO 2 e 15. Investments ton CO 2 e 3 307 2 946 3 815 2 658 (20%) Total Emissions (All scopes)‌ 1 ton CO 2 e 743 482 758 754 693 107 725 636 (2%) GHG Emission Intensity g CO 2 e/ produced carton 0.70 0.68 0.60 0.50 (29%) Scope 1 total represents CO 2 , CH 4 and N 2 O recalculated to CO 2 equivalents Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 149 149 ESG metrics ESG metrics 2020 2021 2022 2023 2023 vs 2020 Consumption per energy type Electricity MWh 85 701 90 060 88 047 89 961 (84%) Natural gas MWh 30 628 26 802 22 120 14 134 (77%) Propane MWh 7 188 6 907 6 861 7 024 (100%) Heating oil MWh 601 667% District heating MWh 5 661 7 997 5 053 4 610 (100%) Burning waste MWh 950 - - 136% Wood MWh 2 900 763 3 803 2 239 (100%) Pellets MWh 1 Diesel MWh 48 669 75 Total energy consumption MWh 133 629 132 577 126 554 118 043 (12%) Energy Intensity kWh/1000 cartons produced 11.78 11.07 10.28 Raw materials purchased (liquid packaging board, aluminium and polymers) ton 380 741 340 852 351 526 368 111 (3%) % from renewable sources (by weight) % 87% 85% 84% 82% (5%) % from recycled sources (by weight) % - - - - % renewable or recycled content materials in Elopak cartons in Europe % 83% 83% 83% 81% (3%) % fully renewable fresh milk cartons in Europe % 18% 22% 30% 30% 69% Certified materials % certified or controlled (according to FSC standards) fibers used in production % 100% 100% 100% 100% - % FSC certified cartons sold, excl. JVs % 63% 64% 60% 55% (12%) % FSC certified cartons sold, Europe % 74% 74% 79% 80% 8% % purchased from certified sources (by weight) % 55% 50% 49% 43% (21%) Waste generated ton 31 144 32 660 35 852 Raw and coated board, paper ton 29 509 31 243 34 279 Hazardous ton 289 218 229 Electric and metal ton 72 73 49 Plastic ton 827 654 803 Other ton 447 472 491 Water consumption m 3 43 056 43 136 44 649 60 704 41% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 150 150 ESG metrics ESG metrics People data Our employees Europe Americas MENA Total Total number of employees 1614 319 86 2019 Female 363 51 8 422 Male 1248 268 75 1591 % Female 22% 16% 9% 21% % Male 78% 84% 91% 79% Line management, multiple levels 205 26 15 246 Female 36 9 3 48 Male 168 17 12 197 % Female 18% 35% 20% 20% % Male 82% 65% 80% 80% 2 nd level management 44 7 1 52 Female 13 3 1 17 Male 31 4 - 35 % Female 30% 43% 100% 33% % Male 70% 57% - 67% Top management 9 1 - 10 Female 1 - - 1 Male 8 1 - 9 % Female 11% - - 10% % Male 89% 100% - 90% Management (all levels) 258 34 16 308 Female 50 12 4 66 Male 207 22 12 241 % Female 19% 35% 25% 21% % Male 80% 65% 75% 78% Board of directors 7 Female 3 Male 4 % Female 43% % Male 57% Europe Americas MENA Total Permanent hired 1587 313 86 1982 Female 355 50 8 410 Male 1227 263 75 1565 Temporary hired 18 3 - 21 Female 6 1 - 7 Male 12 2 - 14 Total full time equivalents 1550 315 86 1953 Full time employees 1495 314 86 1895 Female 298 50 8 356 Male 1196 264 78 1538 Part-time employees 81 2 - 83 Female 51 1 - 52 Male 30 1 - 31 Average age all employees 47 49 40 47 Average age female 44 47 48 45 Average age male 46 49 40 46 Age distribution female employees 363 51 8 422 Below 30 40 5 1 46 30-50 202 22 4 228 Over 50 121 24 3 148 Age distribution male employees 1250 268 78 1596 Below 30 133 14 10 157 30-50 563 123 58 744 Over 50 554 130 10 694 Top management 9 1 - 10 Below 30 - - - - 30-50 - - - - Above 50 9 1 - 10 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 151 151 ESG metrics ESG metrics Europe Americas MENA Total 2 nd level management 44 7 1 52 Below 30 - - - - 30-50 17 3 - 20 Above 50 27 4 1 32 Line management, multiple levels 205 26 15 246 Below 30 3 1 - 4 30-50 100 14 13 127 Above 50 102 11 2 115 Number of hires 123 21 22 166 Number of hires - female 35 7 2 45 Number of hires - male 87 14 18 119 % hires - female 28% 33% 9% 27% % hires - male 71% 67% 82% 72% Hires per age Below 30 41 6 6 53 30-50 60 7 16 83 Above 50 22 8 - 30 Number of terminations 172 18 5 195 Number of terminations - female 33 5 2 40 Number of terminations - male 139 13 3 155 % terminations - female 19% 28% 40% 21% % terminations - male 81% 72% 60% 79% Voluntary turnover 5.3% 4.4% 3.8% 5.1% Voluntary Turnover - female 4.5% 10.0% 25.0% 5.5% Voluntary Turnover - male 5.5% 3.4% 1.4% 5.0% Voluntary turnover pr age group Below 30 9.5% 11.2% 11.3% 9.7% 30-50 4.0% 2.6% 3.5% 3.8% Above 50 5.9% 5.5% - 5.7% 2020 2021 2022 2023 Training and development Total number of course completions 5 300 5 700 7 000 6 700 Number of unique employees receiving training 1 700 1 700 1 767 1 944 Number of hours of training Number of hours of training - male 3 797 2 763 3 149 9 631 Number of hours of training - female 2 099 934 1 065 1 515 Total number of hours of training 5 914 3 718 4 218 11 145 Average number of hours (pr all employees in company) 3 1.8 1.9 5.5 Average number of hours - male 2 1.7 1.8 6.1 Average number of hours - female 5 2.0 2.3 3.6 Training Code of Conduct Total number of employees that have completed training 1198 1429 1778 1898 Percentage of employees that have completed training 56% 68% 93% 94% Percentage of top management that have completed training 100% 100% 100% Percentage of level 2 management that have completed training 89% 98% 100% Percentage of line managers that have completed training 88% 98% 99% Reported concerns Number of reported concerns 3 6 5 Development % of employees that have completed performance dialogues 22% 76% 64% 86% Elopak Net Promoter Score 5.0 8.6 Health and safety Fatalities due to work related injuries Number - - - - Rate - - - - Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 152 152 ESG metrics ESG metrics 2020 2021 2022 2023 High-consequence work-related injuries (without fatalities) Number - 1 - - Rate - 0.28 - - Recordable work related injuries Number 25 27 22 15 Rate 6.9 7.5 5.6 3.8 Number of hours worked Hours 3 645 189 3 585 276 3 894 074 3 900 283 Not employees (contractors) Fatalities due to work related injuries High-consequence work-related injuries (without fatalities) Recordable work related injuries 1 4 Sickness rate Absence due to sickness in the Elopak Group 3.9% 4.0% 4.3% 4.2% Labor Rights % of workforce covered by local bargaining agreements 28% 51% 51% 61% Basic salary ratio Ratio basic salary Women to men - Elopak ASA Norway 81% 2020 2021 2022 2023 Responsible supply chains % of all raw material suppliers (by spend) signed, accepted or demonstrated conformance to Elopak Global Supplier Code of Conduct 100% 95% 97% % of all suppliers (by spend) signed, accepted or demonstrated conformance to Elopak Global Supplier Code of Conduct 80% 80% 75% % of all suppliers (by spend) assessed for environ- mental or social impact 73% 75% 77% Proportion of spending on local suppliers‌ 1 28% 29% New significant suppliers that were screened using environmental criteria‌ 1 100% 100% New significant suppliers that were screened using social criteria‌ 1 100% 100% 1 Operation India not included in the assessments Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 153 153 ESG metrics ESG metrics Restatements 2021 published 2021 adjusted Change 2021 2022 published 2022 adjusted Change 2022 Error in 2022 statement. Incorrect calculation of emissions from closures in Americas Scope 3 part of Science Based Targets ton CO 2 e 548 778 556 338 7 561 490 770 498 413 7 642 Scope 3 -Category 1: Purchased goods and services, raw materials ton CO 2 e 374 749 382 309 7 561 357 258 364 901 7 642 Scope 3 -Category 1: Total ton CO 2 e 388 300 395 860 7 561 370 412 378 054 7 642 As the volume of small size Roll Fed cartons has grown significantly, we have updated the volume figure used in the calculations. We are now using volume of 1 liter equivalents for the Roll Fed volume. GHG Emission Intensity g CO 2 e/ produced carton 0.63 0.68 0.05 0.56 0.60 0.04 Energy Intensity kWh/1000 cartons produced 10.30 11.78 1.48 9.81 11.07 1.26 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 154 154 ESG metrics ESG metrics Appendices Combined annual and sustainability report 2023 155 Appendices Risk factors and responses This section provides an overview of what we consider to be Elopak’s main risk factors and sets out the related response and mitigating measures. Elopak ASA has purchased and maintains a Directors and Officers Liability Insurance. The insurance covers directors and officers and any employee acting in a managerial capacity at Elopak ASA, subsidiaries in which Elopak owns a stake greater than 50%, and our joint ventures. The insurance policy is managed by a reputable insurer with an appropriate rating. Combined annual and sustainability report 2023 156 156 Appendices | Risk factors and responses Appendices | Risk factors and responses Risk type Risk factor Description Response People risks Corruption and business partner risk Operations in countries associated with high risk of corruption. Working with business partners operating in these markets, including third party representatives, Elopak is exposed to corruption and integrity risks. Potential consequences include reputation loss; fines; contractual, litigation and reputational risk; loss of licenses; and suspension or closure of operations. Training and implementation of Elopak’s global compliance program, the Code of Conduct and its supplementary policies and procedures. For further information see chapter 'Business conduct'. Human and labor rights risk Exposure to human rights risks with presence in high risk countries throughout the value chain. Potential consequences include reputation loss; fines; contractual, litigation and reputational risk; loss of licenses; and suspension or closure of operations. For further information see chapter 'Corruption and business partner integrity'. Capability risk Internal capability constraints linked to new skillset requirements, infrastructure, and an aging workforce, a heated labor market, post pandemic trends and inflation, all showcase a risk of knowledge and resource drain. Expand our talent pipeline and enhance succession planning. Arrange activities aimed to ensure employee retention and attraction. Foster a strong culture of leadership and focus on continuous improvements of our infrastructure. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 157 157 Appendices | Risk factors and responses Appendices | Risk factors and responses Risk type Risk factor Description Response Planet risks Transition impact: Low carbon packaging alternatives (risk and opportunity) Impact: High Time Horizon: Short Offering low carbon, circular alternatives to packaging is an important measure to keep up with consumer trends and political requirements. Efforts to decarbonize PET bottles, including the use of 100% recycled PET, replacing PET by bio-based alternatives, or designing bottles for reuse to prolong product longevity. These present both transition risks and opportunities which may affect Elopak’s revenue. The company has invested in an innovation program to further improve our packaging solutions. We aim to succeed in scope 3 emission reductions mainly through supplier engagement. Transition impact: Changing landscape for packaging regulations Impact: High Time Horizon: Short Regulation is becoming a key driver to push companies to adopt sustainable values and behaviors in their businesses. The EU may lead, but other countries are likely to follow. This is a transition risk which may affect Elopak’s revenue. Elopak has a long history of developing sustainable packaging solutions and is committed to continue improving the sustainability credentials of our cartons, which are designed for recycling. While new requirements may bring challenges, the company is well fitted to tackle any requirements presented by additional sustainability requirements and developments. Transition impact: Technological developments for carton recycling require investment and/or product development Impact: High Time Horizon: Medium The collection, sorting and recycling infrastructure for cartons is a bottleneck for the whole industry. Implementation of technological developments are needed to ensure cartons are recycled at scale. This is a transition risk which may impact Elopak’s costs. Elopak has a long history of developing sustainable packaging solutions and is committed to continue improving the sustainability credentials of our cartons, which are already designed for recycling. We work to increase consumer and policy makers awareness. Transition impact: Constrained access and price fluctuations for both high and low emission raw materials (risk and opportunity) Impact: High Time Horizon: Short-Medium The rising cost of carbon emissions is intended to induce the transition away from carbon intensive fuels and towards the application of less carbon intensive alternatives. This increasing cost is directly applied to the packaging material value chain, potentially making carton packaging more cost competitive. This is both a transition risk and an opportunity which may affect Elopak’s revenue and costs. The company has invested in an innovation program to further improve our packaging solutions. Furthermore, we utilize supplier qualification and seek to diversify our use of renewable materials, evaluating alternative materials and assessing our pricing strategy on a regular basis. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 158 158 Appendices | Risk factors and responses Appendices | Risk factors and responses Risk type Risk factor Description Response Planet risks (continued) Physical impact: Chronic droughts or water shortages in areas of direct operations or upstream value chain Impact: Medium Time Horizon: Long This is a physical climate risk which may impact Elopak’s costs. It is already an issue today, as plants have experienced days with indoor air temperature being higher than 40°C. The facilities in India, Saudi Arabia and Morocco have the highest exposure. The main impact of this risk factor is in Elopak’s downstream value chain, such as for juice and dairy producers (risk of reduced access to products). Elopak’s plants perform local risk assessments and work to understand customer risk assessments. We diversify our range of carton offerings through access to new markets and an increased geographical footprint. Physical impact: Wildfires impacting raw material volumes in the upstream value chain Impact: Medium Time Horizon: Long Data suggests that climate change will strongly increase the likelihood of forest fires, with the potential to impact access to paperboard. A study in Finland found an increased probability of forest fire danger days by 56-75% for 2010−2029 and 71-91% for 2080−2099. This is a physical climate risk which may impact Elopak’s costs. Elopak aims to understand suppliers’ risk assessments and develop a common understanding of mitigation approaches. Supplier responses include forest monitoring activities and geographical diversification. Physical impact: Extreme storm events disrupting direct operations for up to one week Impact: Medium Time Horizon: Long For the facilities in northern Europe, including those in the Netherlands and Denmark, the frequency of rainfall extremes is projected to increase by 45% in a 2°C temperature rise scenario. For locations such as Ukraine and Eastern Canada, the probability of extreme rainfall also increases by 37% and 55% respectively. This is a physical climate risk which may impact Elopak’s costs or lead to reduced revenues. Elopak’s plants perform local risk assessments and aim to understand supplier’s risk assessments. We are developing a common understanding of mitigation approaches. Supplier responses include alternative transport route planning. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 159 159 Appendices | Risk factors and responses Appendices | Risk factors and responses Risk type Risk factor Description Response Profits risks Raw material and energy – short term availability and price Elopak is mainly exposed to boards, plastic resin, aluminium foil and energy which is sourced from third party suppliers. The cost and availability of these resources fluctuate with economic, weather and industry conditions. Instability of supply chains, variability in demand/supply balance, and geopolitical uncertainties may impact the company and, worst case, its ability to supply customers. For some customer agreements Elopak has mechanisms, adjusting pricing based on the cost fluctuations of certain raw materials and energy. To manage pricing volatility in Europe, Elopak also has a hedging strategy for LDPE, aluminium and energy. Elopak’s global footprint reduces risk of energy price movements and supply, and external expertise is leveraged to manage energy price risks in key locations. Planning of inventory and changing suppliers are part of risk reduction measures, in addition to proactively identifying and qualifying alternative suppliers. Market dynamics – consumption Downward pressure in dairy and juice consumption can be observed. The uncertainty around economic recovery in certain areas, may impact market dynamics and consumption. Consumption trends have shifted from convenience to affordability, while health and wellness remain top priorities. Elopak has strong and long-lasting customer relationships and enough breadth of portfolio and market exposure to mitigate midterm market volatility. Mid- to long term, Elopak’s growth strategy is a mix of conventional product-focused growth (i.e. expand the market for the Pure-Pak ® solution globally), while at the same time pursuing innovation, growth and additional value by expanding the boundaries of our traditional markets. Cyber security risk Elopak is vulnerable to security breaches. Elopak may not be able to prevent cyberattacks, such as phishing and hacking, or prevent breaches caused by employee error. If such events occur, unauthorized persons may access or manipulate confidential information, destroy data or systems, or cause interruptions in operations of Elopak and/or third parties. Elopak has cyber security measures to safeguard its data and operations, which also incorporate its employees as critical factors. Elopak has increased several security measures, constantly monitoring safeguards and has a continuous improvement approach to combat cybercrime. Elopak has an insurance policy covering consequences of cybercrime, but these may not cover unlimited consequences. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 160 160 Appendices | Risk factors and responses Appendices | Risk factors and responses Risk type Risk factor Description Response Profits risks (continued) Geopolitical and market presence risk Some of the countries in which Elopak operates are subject to political, social, and economic instability that may affect business performance. Elopak monitors and assesses material risks in all geographical areas that are relevant to business operations. Corruption risks are managed through compliance and ethics mandatory training and process for integrity due diligence (IDD) of our business partners. For the extraordinary situation in Ukraine, a dedicated risk response team is working on managing and mitigating risks, continuously assessing the impact on Elopak's people, business and assets, in line with the company’s risk management principles. Investment and integration New investments involve various risks, such as compliance with new laws, value chains, employee recruitment and retention as well as failing to achieve anticipated results. Throughout the investment process and integration, Elopak is committed to high quality and adequate risk assessment and does not hesitate to engage experts to provide external support when necessary. Elopak’s Board and Management closely monitor all significant investment assessments and decisions. Elopak typically requires the sellers in acquisitions to indemnify the Elopak Group against certain undisclosed liabilities. Inflation rates and capital cost Higher capital costs lead to a decline in cash flows, which places higher requirements on operating margins. Elopak’s working capital has grown significantly, which impacts cash generation, and may impact the ability to finance growth, pay dividends and achieve investment grade ratings if the company were to issue bonds. Elopak continuously works on ensuring efficient cash generation with a focus on managing operating capital, CAPEX spend and profitability to ensure sufficient funding of operations and delivering solid cash generation to both debt and equity investors. Continued focus on profitability through strategy execution and business performance is key to delivering a solid return on investments, with expectations to return on capital increasing with rising underlying interest rates. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 161 161 Appendices | Risk factors and responses Appendices | Risk factors and responses Double materiality assessment Our double materiality assessment is based on an established baseline which is updated annually. We follow the methodology from the Corporate Sustainability Reporting Directive (CSRD) and include input from internal and external stakeholders. The Board is accountable for the management of material impacts, risks and opportunities (IRO). The day-to-day management of the double materiality assessment, strategy, targets, KPIs and reporting, is handled by the line organization and is embedded into regular business processes, such as the annual busi- ness planning process where all business areas define their main goals and objectives for the upcoming year. In 2022, Elopak conducted a climate risk and opportunity assessment based on the frame- work of the Taskforce on Climate-Related Financial Disclosures (TCFD). In 2023 this was further evaluated in combination with identi- fied impacts in the assessment, following the framework of the CSRD. The identified risks and opportunities are included in the corpo- rate risk assessment presented in the previous chapter (under ‘planet’). Combined annual and sustainability report 2023 162 162 Appendices | Double materiality assessment Appendices | Double materiality assessment 1. Understand Mapping of activities, business models and value chain Review relevant existing documentation Value-chain description Activities and practices, as well as established policies related to the relevant topics 2. Identify Conduct interviews with internal and external stakeholders Identify and classify impacts, risks and opportunities Outcome Possible direct consequences (incl financial) 3. Evaluate Establish scoring methodology and employ on IROs to define inside-out and outisde-in effects Impact Consequential positive or negative impact on environment or society (identified on sub-topic- level where relevant) 4. Decide Determine threshold values and anchor themes throughout the organization Implement into strategy and reporting framework Classification of impact Classifying type of impact (actual or potential), direction of impact (positive or negative) and time horizon As part of phase one we developed impact pathways to identify Elopak’s impact on sustainability matters, which may also effect the company over time. This was undertaken according to the following steps: The process was divided into four phases of various activities to identify significant topics according to the principles of double materiality. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 163 163 Appendices | Double materiality assessment Appendices | Double materiality assessment A similar approach was used to identify finan- cial effect pathways: Environmental, social and governance risk/ opportunity identification Business impact (direct consequences) Financial impact (financial consequences) Classification of risks and opportunities A full register of impacts, risks and oppor- tunities for Elopak was established, which forms a framework for regular updates. The table below summarizes the ESRS topics and sub-topics identified in the double materiality assessment performed in 2023. Material ESRS topics ESRS sub topics E1: Climate change (high impact) E1: Energy E1: Climate change adaptation E1: Climate change mitigation E2: Pollution (medium impact) E2: Pollution of air E2: Pollution of soil E4: Biodiversity and ecosystems (high impact) E4: Impacts on the extent and condition of ecosystems E5: Resource use and circular economy (high impact) E5: Resource outflows related to products and services E5: Waste S1: Own workforce (high impact) S1: Working conditions S1: Equal treatment and opportunities for all S2: Workers in the value chain (high impact) S2: Working conditions S2: Other work-related rights G1: Business conduct (high impact) G1: Corporate culture (linked to corruption and bribery and protection of whistleblowers) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 164 164 Appendices | Double materiality assessment Appendices | Double materiality assessment UN Sustainable Development Goals Elopak works in accordance with the UN Sustainable Development Goals (SDGs). The 17 goals, with a total of 169 targets, cover key areas to ensure people can thrive and prosper on our planet. This fits well with Elopak’s global approach to sustainability and our vision: “Chosen by people, packaged by nature”. Our approach to the SDGs forms the basis of our materiality assessment and includes the below evaluations, carried out in collaboration with key stakeholders: Which of the SDGs can our business and supply chain impact positively? Which of the SDGs can our business and supply chain potentially impact negatively? Which of the SDGs represent a risk to our business and supply chain if not successful? What will our company do differently in order to impact the SDGs positively? What is the potential indirect effect on other SDGs? Based on these evaluations, we identified four key SDGs for Elopak. In this report, we set out progress on the relevant targets for the below goals. Goal 8 Decent work and economic growth We create work for many people in our business and supply chain. Historically, we have had a strong focus on labor and ethical practices in our company. We now further increase this focus throughout our supply chain and build the skills and employability of our employees. Goal 12 Responsible consumption and production We are dependent on renewable natural resources, and the way we source fiber is a great opportunity for Elopak to contribute to sustainable forests. We have targets for sourcing certified raw materials and helping improve recycling in all steps of our value chain. Goal 13 Climate action We take urgent action to combat climate change and its impact. Elopak is fully aware of our responsibility in the global increase of greenhouse gas emissions. We work to reduce our emissions from our operations and supply chain, and with ambitious Science-Based Targets in place, we commit to reducing our impact further. Goal 17 Partnerships for the goals We cannot achieve the SDGs working alone, and we have been working with suppliers and customers to reduce emissions and the use of raw materials. Strong international coopera- tion is needed now more than ever to ensure that countries have the means to recover from the pandemic, come back stronger and achieve the SDGs. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 165 165 Appendices | Double materiality assessment Appendices | Double materiality assessment Stakeholder engagement Stakeholder engagement is a key part of the double materiality assessment. Our engagement includes frequent contact with key stakeholders, and Elopak focuses on qualitative interviews rather than quantitative data. The input from various stakeholders helps us prioritize topics of key strategic importance. Various external partners and associations provide valuable input and increase our level of knowledge in several areas. The table below shows Elopak’s stakeholder engagement. Key stakeholder groups How we interact Key topics and concerns How we respond Customers/retailers Frequent meetings and desk-studies of websites Structured interviews Raw material sourcing and potential negative impacts Circularity Climate Product development Ensure use of renewable raw materials to reduce the stress on scarce and finite natural resources, as well as working to certify raw materials and verify all suppliers Ensure recyclable products and initiatives to increase consumer awareness and foster recy- cling of products after use Reduce GHG emissions Innovate packaging to ensure offering of the most sustainable package Ensure sourcing of materials through sustainable supply chains Suppliers Frequent meetings and desk-studies of websites Structured interviews Climate and decarbonization Forestry and biodiversity Circularity Joint initiatives with suppliers to understand key risks and drivers, and projects to reduce GHG emissions across the value chain Joint initiatives to understand risks and drivers, and ensure certification of raw materials Ensure recyclable products and initiatives to increase recycling of products after use Shareholders/ investors Frequent meetings Systematic approach to ESG issues Setting ambitious targets and reporting on progress Ensure a systematic approach through consistent work across all business units and bench- marking and reporting in line with relevant market standards Setting scientific targets with third party approval and continuously improving our sustainability reporting Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 166 166 Appendices | Stakeholder engagement Appendices | Stakeholder engagement Key stakeholder groups How we interact Key topics and concerns How we respond Financial institutions Frequent meetings Systematic approach to ESG issues Setting ambitious targets and reporting on progress Ensure a systematic approach through consistent work across all business units and bench- marking and reporting in line with relevant market standards Setting scientific targets with third-party approval, and continuously improving our sustaina- bility reporting Employees Frequent meeting with different departments Surveys Frequent engagement through initiatives Townhall meetings, information sharing Safety Health and well-being Environmental performance of products Systematically work to improve safety and reduce injuries Systematically work to maintain and improve employees’ competence, development, and motivation Reduce GHG emissions internally and across the value chain Innovate packaging to ensure offering of the most sustainable package Government/regulators Engagement through associations Desk studies Packaging related laws and regulations Circularity Climate and decarbonization Nature Ensure recyclable products, advocacy and initiatives to increase consumer awareness and foster recycling of products after use Reduce GHG emissions Maintain good collaboration with industry peers in various associations NGOs and associations Frequent meetings Memberships with various organizations Structured interviews Transparency Nature Circularity Climate Labor- and human rights Responsible sourcing, raw material sources Ensure a systematic approach through consistent work across all business units as well as benchmarking and reporting in line with relevant market standards Ensure certification of raw materials Ensure recyclable products and initiatives to increase consumer awareness and foster recy- cling of products after use Reduce GHG emissions across the value chain Ensure sourcing of materials through sustainable supply chains Local communities around our main sites Various local engagement depending on site Sponsoring of various local activities Safety Good place to work Systematically work to improve safety and reduce injuries Systematically work to maintain and improve employees’ competence, development and motivation Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 167 167 Appendices | Stakeholder engagement Appendices | Stakeholder engagement Description of all material topics Issues considered material, must be correctly addressed, and governed through policies, targets, action plans and metrics. The following section describes our approach, policies and action plans for each of our material topics. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 168 168 Appendices | Description of all material topics Appendices | Description of all material topics People Our workforce Securing a safe and attractive workplace is maintained through a systematic approach in various stages of the employee lifecycle. Our focus is to ensure fair working conditions and terms of employment for our workforce, fair and equal remuneration, and to secure a safe and healthy workplace where we can be at our best. Our policies, processes and promises are based on our vision and mission, as well as our employer value proposition. We continuously work on improving our work- place through effective HR processes from attracting talent to offboarding, and initiatives such as surveys, workshops and other conver- sations with employees. Safety Safety is a core value at Elopak and is consid- ered in every process and every activity undertaken. We are committed to ensuring a safe working environment for our workforce that protects people and property. Compliance with regulations, local requirements, and company and industry standards supports our journey towards our zero-incident vision. Approach At any workplace, incidents are a risk. Our responsibility to our employees is to make their environment as safe as possible by being in control of hazards through clever technical solutions and a safety focused culture. We aim to identify hazards early and mitigate the related risks as much as possible. Several corporate level governance initiatives have been designed and implemented to address hazards, such as our ‘Corporate Safety Policy’ and ‘Safety Standard’. We strive to reach our workplace safety goals through a culture of safety that encompasses rigorous on procedures for our equipment, our facil- ities and our program. Our Key Performance Indicators (KPIs) are implemented across the company with detailed information in case of an incident. Through our ‘Safety Network’, we seek to analyze all incidents and gather information about how to reduce the triggering risk. We are all responsible for safety at Elopak, from managers to individuals, meaning it is essential that information regarding safety is accessible to all employees. For this reason, we extensively discuss safety issues and inci- dents with our local ‘Safety Network’ and are developing standardized information from our Combined annual and sustainability report 2023 169 169 Appendices | Description of all material topics Appendices | Description of all material topics communications department that is available in all relevant languages. Understanding risk is equally important when building a safety culture. We host an annual ‘Safety Week’ to raise awareness and reflect on how everyone can contribute to the safe operation of our organization. This reinforces employee under- standing of individual risk and of our common responsibilities towards one another. Elopak has developed a ‘Safe by choice’ program, designed to focus on individual choices for safety at the workplace. Together with our ‘Golden safety rules’, which address the most common hazards for our employees in operations, we have almost eliminated several common sources of risk. The success of these programs has prompted us to explore ways to expand our guidelines to also encom- pass several secondary risks. The ‘Safe by choice’ program also features regular surveys on our sites, the results of which deliver valuable insights as to our strengths, weaknesses, and development needs. We use these insights to help us with local workshops and address specific risks locally, which our corporate guidelines might otherwise fail to address fully. Together our ‘Golden safety rules’, ‘Safe by choice’ program, and local reporting provide comprehensive and mutually supporting guid- ance, while enabling us to identify and respond to emerging hazards on an ongoing basis. This three pronged approach provides us with valuable insight into other HR related activities, and we combine the benefits of the safety specific programs with other culture building programs across Elopak. Our workforce is our most important resource, which is broadly and deeply reflected in our programs. We expect our managers, at both a corporate and local level, to lead by example. We have four principles that all managers must follow to support a safer working environment: Role modeling, Influencing, Engagement and Felt Leadership. Our guidelines, routines, and best practices are available to all employees through various materials, such as nano learnings in all Elopak languages. Moving forward Our long term strategy focuses extensively on safety, and, in turn, a culture of safety. We will continue work on our ‘Golden safety rules’, ‘Safe by choice’ program, and the improve- ment of locally applicable safety standards through continued surveys and dialogue with employees. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 170 170 Appendices | Description of all material topics Appendices | Description of all material topics Labor rights Approach Elopak respects all applicable laws, rules, regulations, and industry standards concerning working hours, minimum wages, and rules related to the working environment in line with human rights as defined by the United Nations. We respect the freedom of employee association and the right to collective bargaining agreements. Our aim is to follow local mid-market remuneration practices in all the countries where we are represented, including minimum wages and employer’s liability insurance. This main principle is valid for all of Elopak’s fully owned entities. Sustainable labor and working conditions are maintained with various policies, proce- dures, guidelines, and training available to all employees as set out in the relevant chapters of this report. As a guarantee to ensure our workers' rights, a whistleblower channel is accessible to all our employees, enabling them to report anonymously. Moving forward We will continue to maintain close relation- ships with the local work councils, unions and the European Works Council, as well as monitor key operational metrics. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 171 171 Appendices | Description of all material topics Appendices | Description of all material topics Health, wellbeing, culture and engagement Approach A safe and healthy working environment is increasingly important to Elopak. Together, managers, team leaders, human resources and health, safety and environment (HSE) work to continuously deliver improvements. Several programs promoting health are in place. One example is our flexible work policy; other examples include local arrangements for promoting and reimbursing certain health activities. We also host programs for individual coaching, and collective programs for depart- ments. When traveling, employees are under our group-wide travel insurance program ‘Duty of Care’, which includes travel assistance worldwide, 24/7. Learning and development opportunities are critical to building a company that is attractive to work for and do business with. We uphold a holistic approach to developing a wide range of skills, some of which include technical training, machine operation, safety, leadership and more. Dedicated communication activities are an important tool for reaching different internal stakeholders and uniting our people across borders. All above mentioned activities are based on fostering a culture based on our Promises; ‘Empower’, ‘Unite’ and ‘Accelerate’. Performance is measured on a regular basis; through companywide people surveys which results are followed up by action plans, annual performance dialogues between management and employees, as well as follow-up of indi- vidual performance and development goals. With a tighter labor market, we understand that attraction and retention are more impor- tant than ever. This is why our overarching objective remains to strengthen our employer brand, a metric that we measure with our eNPS score. Moving forward Elopak will continue to measure and follow up on a healthy and motivating working envi- ronment, reducing absences and evaluating relevant activities. As we have seen a slight rise in absence during 2023, we will evaluate our benefits practices to implement improvements to both physical and psychological factors. Over the course of 2024, we will continue to follow up on local action plans from our People survey and integrate the valuable tools from the full survey into our leadership platforms. We have invested in increased communica- tion activities with managers, team leaders and employees to strengthen our culture. These will be maintained with the help of our appointed ‘Culture Champions’. To ensure continued learning and develop- ment, leadership training will be extended; we will also continue our global graduate program. Combined annual and sustainability report 2023 172 172 Appendices | Description of all material topics Appendices | Description of all material topics Business conduct Elopak’s vision is to be “chosen by people, packaged by nature.” How we deliver this vision is just as important as what we deliver. This means that we are committed to acting responsibly and with integrity everywhere we operate and to ensure that we comply with applicable laws and regulations. Responsible business conduct is the foundation for our license to operate and the basis for earning the trust of our stakeholders. In 2023, Elopak focused on mitigating risk with joint venture partners and reducing the risk of breaching corruption regulations and human rights viola- tions. Further, in 2023, we conducted a double materiality assessment in preparation for the European Union’s Corporate Sustainability Reporting Directive (CSRD). Approach Elopak has a risk-based approach to compli- ance. An annual ethics and compliance risk assessment is conducted for the Elopak Group, where identified risks are evaluated and mitigated where appropriate. The risks considered are e.g., bribery and corruption, business partner integrity, sanctions, fair competition, and human rights. The ethics and compliance risk assessment is continuously monitored and updated when changes or circumstances require updates to the risk picture. Group Legal and Compliance, together with the Compliance Network, conduct the risk assessment which is reviewed by the Ethics and Compliance Council and the Management team before being presented to, and approved by, the Board of Directors. Elopak’s Code of Conduct outlines our commitments and requirements for applying ethical business practices and compliance. The Code of Conduct is approved by the Board of Directors, and it represents a framework for managing responsible business conduct in Elopak through expected personal and business conduct. The Code of Conduct sets out key principles within various ethics and compliance areas and is supplemented by policies and procedures outlining how these principles are operationalized in the Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 173 173 Appendices | Description of all material topics Appendices | Description of all material topics organization. Supporting documentation includes guidance on anti-corruption and bribery, business partner integrity, human rights, conflict of interest, gifts and hospitality, anti-money laundering, fair competition, insider trading, and sanctions and trade compliance. The Code of Conduct and supporting policies and procedures are implemented in our busi- ness through Elopak’s compliance program. The compliance program is managed by Group Legal and Compliance and led by the Chief Legal and Compliance Officer, who has a direct and independent reporting line to the Board Audit and Sustainability Committee. Compliance risk management Elopak identified the following key ethics and compliance risks which we sought to address in 2023: corruption, human rights violations, and joint venture partner integrity. We continued our work from 2022 on these topics through awareness building, new trainings and with an on-site visit to our joint venture partner in India. Our Code of Conduct training was revamped and included in our onboarding procedures. Figure 1: Country presence for Elopak’s legal entities in 2023 Corruption Risk Picture From Transparency International, Corruption Perception Index 2023 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 174 174 Appendices | Description of all material topics Appendices | Description of all material topics Corruption and business partner integrity Elopak operates legal entities in more than 30 countries, of which many have scores on internationally recognized indexes that indicate high inherent corruption risks. Corruption risks, including bribery, facilitation payments, gifts and hospitality, and conflicts of interest can lead to and/or be perceived as corruption. These risks are managed through mandatory training and awareness building in the Code of Conduct and its supporting documents, such as the process for integrity due diligence (IDD) of our business partners, anti-corruption policy, gifts and hospitality procedure and conflict of interest procedure. Transparency International’s Corruption Perception Index (CPI) measures how corrupt each country’s public sector is perceived to be. The CPI is the most widely used global corruption ranking in the world. The CPI scores for the countries in which Elopak is present are outlined in the figure on the previous page. Findings from the monitoring of corruption risk for Elopak in 2023 identified the need for continued focus of site-specific challenges, relevant partnerships and the facil- itation of risk-based training and awareness. Please see the section 'Human rights' for information on our most significant risks and how we work. Ethics and compliance training, awareness, and communication Training, awareness, and communication are key elements of Elopak’s compliance program to ensure our employees know what to do and how to respond to risk-related situations. In 2023, our efforts included: Code of conduct E-learning course covering key topics, including anti-corruption, business partner integrity, and human rights, as well as employee confirmation of compliance with the principles outlined in the Code of Conduct training. All members of the Management team and Board of Directors successfully completed the training In-person training course covering the same abovementioned topics Course included in the employee onboarding process Speaking up about unethical behavior In May 2023, we initiated a campaign to strengthen our speak up culture by empowering managers and human resources in Elopak to handle concerns related to unethical behavior in a unified manner. In June, we followed up by targeting all employees, with the objective to inform about the duty to speak up, what to report and how to report. The campaign included training and awareness activities through a townhall meeting, news and insights on the intranet, and digital screens at our local sites. Handouts were given to managers and human resource representatives as a guide on their additional responsibility, including a guide to all employees on speaking up about misconduct. A series of videos were shared reflecting real life scenarios related to a hostile working environment and the importance of reporting concerns. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 175 175 Appendices | Description of all material topics Appendices | Description of all material topics E-learning courses: Risk-based training to applicable target groups on topics covering; business partner integrity, speaking up about misconduct (See 'Speaking up about unethical behavior' on the next page), anti-corruption, and human rights In-person training: Interactive sessions covering how to handle reported concerns, as well as dilemma training on pertinent compliance topics with the Management team Guidance and hand-outs: Pamphlets with a specific focus on speaking up about ethical misconduct Intranet: Clear information and guidance on applicable ethics and compliance topics. The intranet was used to share news and insights on ethics and compliance, such as Code of Conduct, business partner integrity and speaking up about miscon- duct. Awareness was dedicated to specific topics, such as celebrating the UN’s international days for anti-corruption and human rights and understanding how this applies to Elopak Training of business partners: Face-to-face interactive sessions with key personnel in our Indian joint venture on important compliance topics. Speaking up and reporting ethical misconduct Elopak is committed to building a culture of trust where employees are comfortable to ask questions and report any suspected breaches of our Code of Conduct, internal policies and procedures, and/or laws and regulations. We have multiple channels where employees can report concerns, normally through their direct manager, but also through members of Human Resources or Group Legal and Compliance, or our externally managed whistleblower helpline. Confidentiality and protection of the individ- uals reporting concerns, incidents, violations, or suspected violations are critical to building and maintaining trust in our reporting chan- nels. Elopak does not tolerate retaliation against anyone who speaks up in good faith. In 2023, we ran a speak up campaign internally, focusing on what to speak up about and how to report, including how to handle reported concerns. Data privacy and protection Elopak takes data protection seriously and has implemented various standards relating to the processing of personal data as well as adopting appropriate security measures to protect personal data against loss, misuse, unauthor- ized access, theft, alteration, disclosure, or destruction. The operational responsibility for data protection has been delegated to the Global Data Protection Officer and Local Data Protection Coordinators in cooperation with General Managers of the legal units to ensure compliance and to avoid unaccept- able risks. Elopak employees are only to use Elopak approved Artificial Intelligence (AI) Chat Assistant/Bots and a chapter has been included in the governing document ‘Acceptable use of IT-tools – end-users’, which all employees need to sign as part of their employment contract. Mandatory training is needed to use the AI Chat Assistant/Bots. Moving forward In 2024, based on our ethics and compliance risk assessment and country risk factors, we plan to continue our work to mitigate inherent high risk for corruption and business partner integrity, as well as to promote fair compe- tition and expand upon our work to ensure good understanding of confidentiality. Our compliance work is closely connected to our work on corporate culture. In Elopak, we believe in the saying “how we behave is who we are.” This implies responsibility for our actions. In 2024, we will continue to promote a culture based on integrity and ethical standards and foster an open culture where everyone feels comfortable voicing their ideas and concerns. To monitor our efforts on this front, we plan to conduct an internal survey on ethics and compliance during 2024. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 176 176 Appendices | Description of all material topics Appendices | Description of all material topics Human rights Elopak respects and supports internationally recognized human rights and labor standards, including those outlined in the International Bill of Human Rights and the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work (Core Labor Standards). Some of Elopak’s own operations, our supply chain, and business relationships are based in countries associated with high inherent political, corruption and human rights risks, and thus, human and labor rights are material topics for us. Freedom House‌ 1 is an independent organiza- tion dedicated to the expansion of freedom and democracy around the world. ‘Freedom in the World’ is their annual global report, rating people’s access to political rights and civil liberties in 210 countries and territories from 0 (not free) to 100 (free). The map below reflects the 2023 global freedom status for the coun- tries in which Elopak had legal units in 2023. Approach Our approach to supporting human rights in our work is based on the UN Guiding Principles on Business and Human Rights and follows the OECD Due Diligence Guidelines for Responsible Business Conduct. Human rights concerns are comprehensive in scope and require a holistic approach across multiple business areas. At Elopak, we strive to integrate human rights considerations into our global business processes; in our own operations, our supply chain and our business relationships. Commitment and governance To meet our commitments, we have embedded human rights considerations in our global compliance program. Ethics and compliance risks, including actual or potential negative human rights impacts, are identified and assessed with the Compliance Network and then reported to our Ethics and Compliance Council, which is made up of senior management members. The Chief Legal and Compliance Officer reports regularly to the Board Audit and Sustainability Committee and the Board of Directors. Further informa- tion on Elopak’s governance model can be found in the Governance section in this report. Policies and procedures Elopak’s key commitments to human rights considerations can be found in our Code of Conduct. The Code of Conduct outlines our commitment to responsible business conduct and is applicable for our employees, those who act on behalf of or represent Elopak, the Management team, and the Board. It is an ethical compass for upholding Elopak’s values and promises in our daily work. The Code of Conduct is available on our website. Our Human Rights Policy is founded on Elopak’s existing commitment to respecting human rights, as described in our Code of Conduct, and aligned with international principles and requirements. The Policy is the starting point for how we manage human rights risks. Key documents supporting the Policy include our Business Partner Procedure (which outlines the integrity due diligence process and country risk assessment), Anti- corruption Policy, Strategic Sourcing Policy (including supplier qualification requirements), Responsible Supply Chain Procedure, Global Supplier Code of Conduct, and General Terms and Conditions of Purchase (GTCs). Regular updates to our governing documents are part of internal processes to maintain our docu- ment management system. Identify, prevent and mitigate negative human rights impact Risk assessment Elopak conducts regular human rights risk assessments. As part of this process, the organization collects information about human rights issues from all legal operating units, across business areas and purchasing catego- ries to identify, classify and prioritize risks. The human rights questionnaire is based on the 1 https://freedomhouse .org Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 177 177 Appendices | Description of all material topics Appendices | Description of all material topics provisions of UN Human Rights Treaties, ILO fundamental conventions and the UN Guiding Principles on business and human rights (UNGPs). For any actual and potential negative human rights risks identified in our own operations, in our supply chain or business relationships, we seek to analyze the risk and further describe the impact through dialogue and workshops with representatives from the specific business area or unit. Furthermore, we seek to identify the rights holders and vulnerable populations impacted. We assess the severity of the impact - by evaluating scale, scope and irremediability - and the likelihood of occur- rence, eventually giving us a risk score. The risk score, together with considerations related to country and purchasing category risks, consti- tutes the foundation for further due diligence and the identification of mitigating measures. Identified, assessed, and prioritized risks Based on specific priorities and experience from earlier due diligence, Elopak considers the most significant risk in the supply chain to be the risk of forced labor. This covers sectors within transport, cleaning and other basic services, where a core driver is the use of Elopak country presence mapped with scores from the 2023 global freedom status by Freedom House. Global Freedom Status From Freedom House, Freedom in the World 2023 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 178 178 Appendices | Description of all material topics Appendices | Description of all material topics vulnerable persons, such as migrant workers. For our own employees, we consider the main risks to be related to health and safety. High temperatures in our manufacturing units, especially during the summer months, and performing manual labor with machinery that can result in workplace accidents. We assess country risk factors which are based on human rights and corruption indexes‌ 1 and purchasing category risk which is based on knowledge of human rights challenges in the different product categories and services in our supply chain. In 2021, we conducted a high-level review and risk assessment of our supply chain to identify key risk topics and our human rights due diligence priorities. We also focus on selected areas and catego- ries to address issues more efficiently with our suppliers. These have been identified consid- ering their business criticality and spend level. They include direct suppliers, providing raw materials to our cartons and secondary pack- aging, and indirect suppliers, mainly related to logistics and transport, and plant investments. In addition to these aspects, further in-depth assessments consider the suppliers’ activity or industry, considering factors such as level of manual work, use of unskilled labor, hazardous work, etc. Prevent and mitigate Responsible supply chain management We work proactively with our suppliers to prevent and mitigate potential human rights violations. In Elopak, we continuously work to ensure our suppliers and sub-suppliers share our values and commitments within health and safety, business integrity, compliance and human rights. Consequently, we expect them to apply the same principles towards their own employees, suppliers, and sub suppliers in the delivery of goods and services to Elopak. This approach ensures the requirements are cascaded through the supply chain. The requirements are included in Elopak’s Supplier Code of Conduct. As part of the supplier qualification and onboarding process, all new suppliers undergo a pre-qualification assess- ment including the Supplier Code of Conduct engagement. Read more about our approach in the chapter 'Responsible supply chain'. Mitigating measures include adequate contractual clauses on responsible business conduct in supplier contracts. Contractual clauses can allow Elopak to require the contractual party to address and rectify viola- tions of human rights or, if deemed necessary, terminate a contract. As part of contractual clauses with suppliers, we include audit rights which give us the possibility to verify their compliance with the commitments outlined in our Supplier Code of Conduct. Human rights training and awareness At Elopak, training, communication, and awareness-raising are a continuous process and a part of our preventive measures to mitigate human rights violations. Elopak key documents are published on our website and in our internal document management system, ensuring they are accessible to all employees and other important stakeholders. Human and labor rights, including diversity, equity and inclusion, are dedicated sections of the Code of Conduct and included in annual e-learning or in-person training, which is mandatory for all employees. In 2023, we introduced a new human rights e-learning course which was made available to all employees. Further e-learning courses covering topics on responsible business practices and speaking up and reporting concerns were also made accessible to employees. In December, we celebrated the UN’s Human Rights Day by sharing news and insights on our intranet and facilitating human rights training for employees. Read about our initiative to strengthen training and awareness of our grievance processes in the section 'Our performance'. Engaging with unions and stake- holder engagement Elopak values its ongoing dialogue with key stakeholders on environment, social and governance topics throughout the year. Our main stakeholders include customers, investors, banks, employees, unions, non-gov- ernmental organizations (NGOs), governments and national authorities. In Europe, we collaborate with unions and union members via the European Works Council (EWC). EWC represents the majority of our sites (regulated by law) and representatives from the Elopak Management hold bi-monthly meetings with the elected EWC Working Party. Additionally, an annual meeting is held where all members of the EWC are represented. Outside of 1 Indexes include: (1) Freedom House: 2023 Global Freedom Status and (2) Transparency International’s Corruption Perception Index 2023) Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 179 179 Appendices | Description of all material topics Appendices | Description of all material topics Europe, we have follow-up and separate dialogues with unions at each local site. 61% of our workforce is covered by local and/or national collective bargaining agreements. Monitor, report and remediate negative human rights impact Inspections, reviews, and audits Third party ethical audits are conducted where deemed necessary. Throughout 2023, we have further improved our supplier qualification and due diligence framework by improving the integration of human rights considerations into our existing audit framework. Reporting of concerns and grievance mechanisms We are committed to building a speak up culture where employees are encouraged to raise concerns and report actual and suspected violations of unethical behavior. Grievances, or complaints, can be of any kind, including social and environmental issues. Through grievances, we can better understand our impact on individuals and groups, ensure that remediation and improvement actions are directed at the persons negatively impacted and will prevent and mitigate the current adverse effects and reduce the risk of causing similar negative effects in the future. Concerns of misconduct or grievances are reported through defined internal channels or through our whistleblower helpline. The whistleblower helpline can be publicly accessed through https://www.elopak.com/ the- elopak -whistleblowing-channel . The helpline is hosted by an independent external service provider and is confidential, anony- mous, and available in multiple languages. Remediation We are committed to providing remediation for identified negative impacts or harm to people caused by our operations or through our supply chain. In instances where Elopak has identified a risk or implemented measures at a supplier which is not effective or does not meet our standards, we aim to define actions in collaboration with the supplier. As part of this collaborative approach, we include follow-up with supplier representatives for a suitable action plan, enhanced due diligence, supplier questionnaire, or we arrange for an audit. External reporting Pursuant to the UK Modern Slavery Act (2015) and the Norwegian Transparency Act (2022), Elopak annually reports on steps undertaken to ensure there is no slavery or human trafficking in the supply chain and reports on conducted human rights due diligence, respectively. These separate reports were combined in 2023 into the “Human and Labor Rights Transparency Statement 202 2” . Moving forward During 2023, we strengthened our human rights framework, which included a more extensive cross functional cooperation across departments and business units. Going forward, we will continue developing our human rights framework and focus on training and awareness building. In 2024, we will work to further improve our supplier qualification and due diligence framework by including specific supplier capacity building within human rights and maturity assessments. We will also focus on strengthening the mapping and assessment of potential human rights violations in our supply chains to mitigate and manage these more effectively. Throughout 2024, we will align human rights with reporting requirements related to e.g., the EU Corporate Sustainability Reporting Directive (CSRD). Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 180 180 Appendices | Description of all material topics Appendices | Description of all material topics Responsible supply chain Annually we spend around EUR 835 million and work with more than 5000 suppliers globally, who deliver goods and services to Elopak required for the production of cartons and filling machines, and for goods both sold to customers and used internally to run our business effectively. Critical raw materials related to our cartons account for approx- imately 60% of our total purchase spend, consisting predominantly of boarlds, polymers, aluminium, inks and solvents. Ensuring that we work with responsible and sustainable suppliers who share our values and commitment to responsible business conduct is crucial to reducing risk and avoiding adverse impacts on people, the environment, and society throughout our supply chain. Monitoring that our suppliers share our goals allows Elopak to better meet the demands and expectations of customers, end consumers, and other stakeholders. Approach Elopak’s Responsible Supply Chain work follows a risk based approach, and combines values enshrined in the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct. We are committed to working with suppliers that meet our require- ments, and we monitor their performance and compliance to mitigate any social and environ- mental risks in our supply chain. Supplier Code of Conduct (SCoC) engagement is an integral part of our supplier onboarding process and is incorporated in our supplier contracts. We expect all our suppliers to respect and comply with the code, and to have an equivalent code and practice for their suppliers and sub suppliers. Elopak conducts risk based integrity due diligence checks on our suppliers to ensure that their reputation, background, and abilities meet our standards as outlined in the SCoC. Significant and/or critical suppliers undergo Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 181 181 Appendices | Description of all material topics Appendices | Description of all material topics a more in depth assessment at least every two years through self assessments, third party assessments such as Ecovadis, follow up meet- ings, and on site audits for high risk suppliers. Significant suppliers are direct suppliers providing raw material to our cartons and secondary packaging, as well as indirect suppliers mainly related to Logistics and trans- port as well as Plant Investments. Where suppliers do not meet our standards, we work with them on corrective actions to better understand potential gaps and improvement areas. If Elopak identifies or becomes aware of non compliance, we actively engage with suppliers to agree on mitigating activities and a clear timeline for following these up. If the supplier does not show willingness or ability to improve or remediate the non compliance, we reserve the right to terminate the business relationship. Through 2023 we have developed several nano-learnings in our online training platform directed at the Procurement Network. Among these topics is our Ecovadis platform and crit- icality assessment. The criticality assessment is outlined in our Strategic Sourcing Management Procedure. Moving forward In 2023 we undertook additional work to train the teams of our new operations and sites located in Morocco and Saudi Arabia, as well as our joint venture in India, and supported their integration into our procurement governing framework, including the supplier qualification and due diligence process. Our focus and priority in 2024 is to continue this work and to better map and assess poten- tial human rights violations in the supply chains of these operations to mitigate and manage these more effectively. There are increasing reporting requirements, and in 2024 we will additionally need to report on the Canadian Forced Labor Act. We will ensure procurement reporting supporting the EU Corporate Sustainability Reporting Directive (CSRD). A priority for improvement in 2024 is our supplier assessments program. Elopak will implement reviews of scope 3 upstream GHG emissions of key suppliers. We will also focus on further implementation of our Responsible Business Conduct requirements company wide through 2024. Implementation of our updated audit frame- work, which includes specific Supplier Human Rights Capacity Building and Maturity assess- ments, will be continued in 2024. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 182 182 Appendices | Description of all material topics Appendices | Description of all material topics Planet Climate While global warming – the emission of green- house gases into the atmosphere – represents the most urgent issue of the decade, there are several other areas where our planet is also under pressure. Six of the nine planetary boundaries are being crossed, and all nine are under stress, some to a greater extent than others. For Elopak, greenhouse gas (GHG) emissions remain the top priority. As part of our commitment to fighting emissions, Elopak was among the first three companies in the world to have our net zero targets approved by the Science-based Targets initiative (SBTi) after the official launch of the net zero standard. This is the first framework for corporate net zero target setting to be directed by climate science. Approach Working systematically to reduce greenhouse gas emissions since 2008, Elopak continues to make tangible progress. We have a science- based approach, following global frameworks such as the Greenhouse Gas Protocol and standards from the Science-based Targets initiative (SBTi). In 2015 Elopak joined the RE100 campaign; since 2016, 100% of our electricity across our sites has been renewably sourced. In 2019, we were among the first companies to set scien- tific targets to reduce greenhouse gas (GHG) emissions in line with keeping global warming below 1.5 °C. In 2021, Elopak took part in the net zero road test for the Science-based Targets initiative (SBTi) with 80 other companies. We updated our near-term targets in line with the new standard, and in 2022, we had our net zero targets approved. In 2023 we conducted a double materiality assessment in preparation for our CSRD reporting. In 2024 we will work extensively on our new goals and KPIs with our stakeholders. Our double materiality assessment confirms the commitment of each of our stakeholders to climate and emission reductions. This strengthens our motivation and drive to deliver on our targets. Combined annual and sustainability report 2023 183 183 Appendices | Description of all material topics Appendices | Description of all material topics Elopak’s science-based targets Scope 1 emissions Scope 1 emissions are direct emissions from Elopak’s operations and can thereby be addressed directly by Elopak. Scope 1 includes emissions from burning of fuels for heat, burning fuels for propulsion and other direct emissions from our operations. Scope 2 emissions Scope 2 encompasses indirect emissions from purchased electricity. Elopak sources renew- able electricity for all its sites. For organizations to participate in the global response to climate change, renewable energy must be a major player in the energy supply mix. The competitiveness of renewable energy is increasing rapidly, and Elopak can play a role in sourcing electricity from renewable sources when practically possible. This increases demand for renewables in the grids we operate in, and thus incentivizes further development. In some markets, it is difficult or impossible to source renewable power directly. The energy certificate system allows us to compensate for this, by purchasing energy certificates to cover 100% of Elopak’s energy consumption; these certificates, in turn, incentivize the develop- ment of more renewable power. Elopak is also exploring the feasibility of purchasing and installing solar panels on our own facilities, reducing the reliance on purchased power. The solar market has improved significantly, and the available solar cell formats are much more adaptable to our needs and the structural limitations of our plants. RE100 In 2015, Elopak became the first packaging company and the first Norwegian company to join the RE100 campaign, committing to sourcing 100% renewable electricity from 2016 onwards for all sites where we have operational control. We were one of a limited number of companies in the RE100 campaign to reach this goal at an early stage. RE100 states that over 400 companies have committed to 100% renewable energy, of which 79 of the RE100 members (up 3 from 2022) have announced reaching 100% renew- able electricity. Scope 3 emissions Scope 3 emissions are not produced by the company itself and are not the results of activities from assets owned or controlled by Elopak, but by those we are indirectly respon- sible for up and down the value chain. Scope 3 emissions include all emission sources that do not fall within the boundaries of scopes 1 and 2. A life cycle approach to the value chain is important in ensuring that all emissions associ- ated with our products are considered. Scope 3 emissions represent the largest group of emissions connected to Elopak, and we are exploring ways to minimize these emissions ourselves. This can be done by being more efficient in our products, thus requiring less raw material for each produced carton, or by changing the material mix. Sales of more environmentally friendly cartons are increasing as markets adapt, and this reduces our overall purchasing of high-CO 2 e-materials. We expect this trend to increase as markets develop further. Elopak is working with suppliers throughout our value chain to reduce emissions. We follow our suppliers closely and use our position as a large purchaser to push for better, greener solutions. Scope 3 Business travel, transport, raw materials and filling machines 25% reduction across the value chain by 2030 25% Scope 2 Electricity, district heating Continue to purchase 100% renewable electricity 100% Scope 1 Natural gas, propane, heating, oil, waste incineration, wood 42% reduction by 2030 42% Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 184 184 Appendices | Description of all material topics Appendices | Description of all material topics Moving forward Our roadmap to 2030 was established in 2019, and we regularly assess Elopak’s progress. With our net zero targets we have raised the bar for our scope 3 emissions, and increased efforts are necessary to ensure this is the case for our entire value chain. Conversations with our stakeholders whilst completing our double materiality assessment have provided valuable insights into our value chain, and prepare us to report on CSRD, local laws, and regulations. All of our existing policies are being examined and refined to comply with CSRD, as are our goals and ambitions. Elopak takes pride in being at the forefront of climate engagement and will continue these efforts with new tools. Our roadmap for 2030 is in constant devel- opment, and substantial changes will be made throughout 2024 as our preparatory analyses for CSRD are integrated into our plans. Scope 1 Our roadmap includes several concrete activ- ities; more are in the works for the coming years. Elements now include: Replacing fossil-fired processes with elec- tric alternatives Transferring energy used for production equipment and processes from gas to electricity Reducing waste through operational excellence Changing petroleum powered forklifts to electric The potential impact of these initiatives exceeds our targets, and the financial and technological feasibility of these initiatives are subject to regular assessments. Our Montreal project shows that there are still fossil fuel savings to be had at our various plants, and identifying new and innovative solutions is key for us to reduce our energy consumption. Scope 2 Within scope 2, our target is to continue purchasing 100% renewable electricity. We also aim to reduce our overall electricity consumption to reduce our residual scope 2 emissions. We have identified some projects, and we encourage colleagues to contribute with ideas, such as through the operational excellence program, to reach these targets. Mapping and increasing energy efficiency at all plants Energy saving projects at all plants Scope 3 Scope 3 emissions, which encompass the entire value chain, constitute the majority of our emissions. While we’ve already identified several key strategic initiatives, further struc- turing is necessary and will be an important project during 2024. These initiatives include: Minimizing transport: By optimizing end-to-end supply chain planning, we aim to reduce emissions associated with transportation. Transport mode evaluation: We’re assessing and optimizing various transport modes wherever feasible. Exploring sustainable alternatives: Investigating market opportunities for replacing fossil fuels with biofuels or electrifying transport, with a long-term consideration of hydrogen. Filling machine efficiency: Optimizing the design and setup of filling machines to minimize emissions per filled carton. Technology adoption: Evaluating new tech- nologies to reduce downtime, waste, and energy consumption in filling machines. Supplier collaboration: Working system- atically with key raw material suppliers to lower material use and emissions related to their production. Low-carbon carton sales: Promoting sales of cartons with the lowest possible carbon footprint. Virtual meetings: Continuing to hold virtual and digital meetings to keep travel-related emissions low. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 185 185 Appendices | Description of all material topics Appendices | Description of all material topics Nature Nature is at the core of our business and, as such, is a core responsibility. Elopak’s vision is “Chosen by people, packaged by nature”. Our responsibility to nature corresponds with our dependence on it. We are a company that uses nature and natural solutions to protect food for our customers, and access to premium and responsibly sourced raw mate- rials is critical to the quality we wish to deliver. If our products are to be selected by some of the world's most stringent customers, our quality and sustainability commitments must be equally stringent. This idea has been enforced worldwide. Especially in the EU, demands are becoming increasingly strict and ambitious – which we applaud. In 2023, we conducted a double materiality assessment to prepare ourselves for EU CSRD and national reporting schemes. 2023 was a year of great global change. After the COVID-19 pandemic, we have seen business travel increase as social interactions have normalized. At the same time, our Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 186 186 Appendices | Description of all material topics Appendices | Description of all material topics focus on environmental issues has increased. We seek to optimize our routines, strive to be more efficient in our production, and intend to be more creative in our research and development. We work to achieve our goals of reducing our scope 3 emissions by 25% by 2030 and to do our part to stay within reach of the Paris climate agreement. This chapter will outline our approach to nature: our environmental, climate, and circu- larity ambitions. Biodiversity Biodiversity is a crucial aspect of our planet’s health and wellbeing. It refers to the variety of life on Earth, including the diversity of species, ecosystems, and genetic diversity. We recognize the importance of addressing biodiversity and have taken steps to establish a framework around the topic. Approach Production of our raw materials requires substantially more land, in particular for sourcing paperboard. The paper and forest products industry is faced with critical questions about its core resource, as climate change and biodiversity concerns affect forest usage. Against this background, Elopak has now identified biodiversity as a material topic in our double materiality assessment. Our approach to biodiversity centers around sourcing raw materials certified to the highest standards. Our FSC™, ISSC plus, and ASI certi- fications remain crucial in this regard. Elopak actively supports initiatives to protect forests and biodiversity. We are committed to combating illegal logging and deforestation, ensuring that all forestry behind our cartons adheres to responsible practices consistent with FSC™ standards. Responsible extraction and utilization of our planet’s raw materials are essential for resource sustainability. As part of a larger value chain, Elopak employs chain of custody certification systems for its primary raw materials, assessing risks and compliance with regulations and best practices within the broader value chain. We have a consistent approach to certifi- cations, which are integral to our policy on Responsible Sourcing of Paperboard, our Global Supplier Code of Conduct, and our Sustainability Program. The certifications are embedded in all relevant areas of the organ- ization, including supply chain, production, design, marketing, and sales. Collaboration is key. We work closely with our suppliers and engage with other stakeholders, including NGOs, alliances, industry associa- tions, and customers, to ensure the credibility of our approach and the selection of certifi- cation schemes. Our goal is to certify products across all our markets. In our expansion into new markets—such as India, North Africa, and the Middle East—we actively work to identify and adopt relevant certification standards. Moving forward In 2024 we will assess the steps needed to establish a broader approach to the topic of biodiversity. This includes the development of policies, action plans and targets. We have over time established dialogues with major paperboard suppliers in order to understand their approach and strategy. This work will continue through 2024. Elopak aims to use certified products in all our cartons, prioritizing paperboard, the main material in our cartons. We ensure all our factories are certified according to the FSC™ standard. Our bio-circular offering remains important in the European market, and we continuously evaluate the need to source certified aluminium. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 187 187 Appendices | Description of all material topics Appendices | Description of all material topics Pollution Pollution is a highlighted topic in our double materiality assessment. The assessment addresses pollution of soil, pollution of air and pollution of water as a result of value chain operations or direct operations. Approach Through our operations, we seek to minimize emissions to air, soil and water. This includes a commitment to reduce and keep hazardous waste at a minimum. Elopak has reported on waste and hazardous waste for many years. The reporting is done by category, and we have started reporting and tracking waste in our internal reporting system, ‘Footprinter’. Pollution is not an extensive material topic in the company's own operations, but we see that the company has an impact through the value chain. Pollution is a new material topic identified in the double materiality assess- ment. Elopak recognizes upstream sources of soil pollution from the sourcing of pigment binders, solvents and additives used for ink in production, as well as the sourcing of steel and bauxite through land-use intensive mining practices. Elopak has a complex value chain, which also includes several transport links. Therefore, Elopak indirectly impacts pollution in both the upstream and the downstream part of the value chain. There are pollution sources from transpor- tation, from raw material suppliers and from processing units to Elopak’s facilities. This is mainly in the form of SO x and NO x emissions. There are also pollution sources from the transportation from Elopak’s facilities to consumers, retailers, and end users. Moving forward While our factories ensure local compliance on direct emissions to air, water and soil, Elopak needs to establish policies and a consistent corporate approach in this area. This includes creating a pollution policy that addresses upstream and downstream value chain, create action plans to implement the policy and establish targets for air and soil pollution. Furthermore, implement routines from our ISO 14001-certified factories to group level. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 188 188 Appendices | Description of all material topics Appendices | Description of all material topics Water Our production is not water intensive, and water was not considered as a material topic in our double materiality assessment. Approach Production of paperboard is said to be water intensive. We have regular meetings with our European board suppliers to understand their approach and strategy for water withdrawal and discharge water. During the meetings, we have been presented with their risk analysis and their mitigation plans. The suppliers are not located in water scarce areas, in fact flooding is considered a higher risk than surface or groundwater scarcity. Because a major portion of the water used is cleaned and discharged back after use, the net water consumption represents a minor portion of total water withdrawal. Moving forward In 2024 we will continue this supplier dialogue and approach our American suppliers in order to gain the same information and understanding. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 189 189 Appendices | Description of all material topics Appendices | Description of all material topics Circularity Circularity has two key aspects – renewability and recyclability. Key principles of circularity include efficient resource use through materials which can be renewed via a natural process or recycled into new products after use. Both of these principles ensure a sustainable and long-term use of resources, keeping materials in the loop as long as possible. Renewability Renewable materials sourced responsibly are crucial to maintaining the scarce resources of our planet. On average, 75% of our Pure-Pak ® cartons are made from naturally renewable paperboard, sourced from northern hemi- sphere forests. The remaining fraction, mainly consisting of polymers, is also available as a renewable material through our bio-circular offering. Renewable raw materials are naturally replenished and have significantly lower greenhouse gas emissions than non-renew- ables. They can also help to ensure resource availability for future generations and reduce the burden of extracting fossil based and finite materials. Using renewable materials and waste/residue products from other processes contributes to a circular economy. Approach Our circularity approach is anchored in our sustainability program and is an important principle for Elopak. Clear KPIs with bonus incentives at the top executive level are in place to increase the sales of low impact cartons in Europe. Low-impact cartons include cartons where the polymer barriers are based on bio-circular feedstocks rather than the traditional fossil sources. Elopak launched its first fully renewable carton in 2014, after which our offering expanded. We now offer bio-circular polymers based on biological waste of vegetable origin, which is considered low risk of indirect land use change (iLUC) impact. We aim to avoid the use of first-generation, crop based feedstocks or any feedstock of animal origin. Instead, we source from nonfood chain related sources, like Crude Tall Oil, a residue from the paper industry. We also ensure responsible practices behind all bio-circular raw materials through certifications. Our 2023 Double Materiality Assessment as well as our engagement with stakeholders confirm the importance of circularity and renewability, and we remain committed to innovation and improvement. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 190 190 Appendices | Description of all material topics Appendices | Description of all material topics Recyclability and recycling The circularity of our cartons can be achieved through product design and efficient and reliable collection, sorting, and recycling systems. Placing any product on the market requires taking responsibility for its whole life cycle – from design and use until end of life cycle. Our cartons are designed to be recyclable and have been recycled for decades. It is key for Elopak that the valuable raw materials applied to manufacture our cartons can be recycled and used to produce new and useful products. Approach Elopak’s approach to recyclability and recy- cling starts with product development through which we strive to secure optimal conditions for material recycling. We know recyclable products depend on recycling infrastruc- ture which includes collection, sorting and recycling, which is why we work closely with various stakeholders across the value chain to improve consumer awareness, local collection, and the efficient recycling of packaging waste. The paper industry is committed to developing and periodically reviewing Design for Recycling (DfR) guidelines, providing producers of paper- based packaging with guidance to identify which materials are compatible with existing recycling processes, and how the recyclability of paper-based packaging can be optimized. We do our best to share relevant data and be a constructive partner for key stakeholders across the value chain, to improve the tracking and measurability of our efforts. Moving forward The company has invested in a future innova- tion program to further improve our packaging solutions and believes that cartons have a natural place in the future low carbon circular economy. As part of our work on circularity, we also engage with stakeholders across the value chain and actively take part of alliances and trade associations, and closely follow legislative developments. Ambitious and forward-looking regulation can boost innovation. Elopak has a long history of developing sustainable pack- aging solutions and is committed to continue improving the sustainability credentials of our cartons, which are already designed for recycling. Europe Elopak is a member of EXTR:ACT, the European association to increase the recycling of beverage cartons and similar fiber based multi material packaging. Elopak currently holds the Presidency of EXTR:ACT, where the company is represented by Inge Eggermont, Specialist Manager Sustainability. This asso- ciation focuses on the technical process of multi material recycling from start to finish and works with the entire value chain to ensure fiber based multi material packaging is designed with the lifecycle in mind in order to be collected, sorted, recycled, and reused in varying markets. Supported by experts in different working groups, EXTR:ACT is driving many general and special projects in all stages of the value chain. North America Elopak plays an active role in the Carton Council of North America and the Carton Council of Canada for advancing access, recy- clability, labelling, and upcycling of gable top materials. Upcycling means reusing materials in such a way as to create a product of higher quality and value than the original. These associations are also critical for keeping us up to date with key legislations. India While still a new market for Elopak, our subsid- iary GLS Elopak started mapping the local recycling situation in India in 2022 with a focus on new governmental guidelines. Read more about recycling on our website https://www.elopak.com/naturally-circular/ easily-recyclab le /. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 191 191 Appendices | Description of all material topics Appendices | Description of all material topics Profit Fair tax allocation The Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises set standards for responsible business conduct across a range of issues and is one of the guidelines Elopak supports and includes in our sustainability approach. The OECD Transfer Pricing Guidelines provide guidance on “the arm’s length principle”, which represents the international consensus on the valuation of cross-border transactions between associated companies. In order to secure a fair allocation of taxable income in the jurisdictions where Elopak has activities, we base our transfer price approach on the OECD guide- lines. Elopak Group operates in Norway, which has enacted new legislation to implement the global minimum tax rules (OECD - Pillar Two). We expect to be subject to these rules in relation to our operation in multiple jurisdictions, with the newly enacted tax legislation in Norway effective from January 1, 2024. A draft tax policy has been prepared and will be presented for the Board for approval during 2024. EU Taxonomy The EU Taxonomy Regulation (Regulation 2020/852) entered into force on July 12, 2020. Since then, the EU has implemented several Delegated Acts to further expand the frame- work. Under the taxonomy regulation, large, public interest undertakings are required to report on the proportion of their economic activities that meet certain technical screening criteria. About the EU Taxonomy The EU taxonomy is a classification system that sets out a list of environmentally sustainable economic activities. It forms part of the EU’s plan to scale up sustainable investment and implement the European Green Deal. The taxonomy was developed in order to provide well-defined, harmonized criteria for when economic activities can be considered sustainable. It sets out robust, science-based technical screening criteria which activities need to comply with to be considered green. By providing this harmonized standard, the taxonomy aims to increase transparency; create security for investors; prevent green- washing; help companies become more climate-friendly; mitigate market fragmenta- tion; and help investors compare investments across Member States. This will help guide investments where they are most needed. By directing investments towards sustainable projects and activities across the EU, the taxonomy aims to help meet the EU’s 2030 and 2050 climate and energy targets. Taxonomy alignment can be broken down into five steps: A company must have an eligible activity as described in one of the delegated acts. The eligible activity should be assessed against technical screening criteria set out in the taxonomy’s delegated acts. The activity must make a substantial contri- bution to one or more of the climate and environmental objectives relevant to that activity. The activity should not do significant harm to the other remaining activities. The company should fulfill the minimum social safeguard standards based on OECD and UN guidelines. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 192 192 Appendices | Description of all material topics Appendices | Description of all material topics EU Taxonomy in Elopak Elopak’s activities are not within the scope of the delegated acts, and therefore, not yet subject to the taxonomy regulations. However, we anticipate that the screening criteria for fiber-based packaging activities may be incorporated into the Delegated act in the future. Still, we find it important to support the implementation of the regulation, creating more transparency and comparability in a field that needs increased awareness and attention. Therefore, we have performed a taxonomy assessment during 2023, where we continued to define the scope and eligibility of our activities. Elopak's activities have been mapped according to the activities defined in the Climate Delegated Act. Production of packaging materials and filling machines are not yet covered and thus categorized as non-eligible following the description stated in the regulation. The screening criterias for activity C2.22 "Manufacture of plastic pack- aging goods" have been assessed. Elopak's cartons care about 85% fiber based and our interpretation of the EU taxonomy is that our activity does not match the definition of the activity. Elopak has previously assessed our activities against the criteria for food and beverage production as these are relevant for our customer’s activities. However, as per the latest addition of sectors in the Environmental Delegated Act, food and beverage production were excluded and manufacturing of plastic packaging goods was added. The new changes are not within scope av Elopak’s activities and we are therefore not yet subject to the taxonomy regulations. Still, we will closely monitor any new developments and strive to support the implementation of the regulation. See Appendix: Sustainability methodology to read more about Elopak's taxonomy assessment. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 193 193 Appendices | Description of all material topics Appendices | Description of all material topics Sustainability methodology People Our workforce In 2023, there were 2 019 employees in the Elopak Group. Employee data presented in the report includes those employees from our wholly owned companies who are directly remunerated by Elopak. We do not include employees in joint ventures, as they are not registered in our global HR systems. The majority of Elopak’s employees are employed in the Netherlands 501 Denmark 309, Canada 281, Germany 235, Norway 177 and Ukraine 144. Employee data presented in the report is grouped into the following regions: Europe, Americas, and MENA (Middle East and North Africa). We terminated the contracts of employees in the divested Russian unit and removed them from our HR systems end of February 2023. There are two types of temporary workers at Elopak; employees hired on a temporary contract and temporary workers hired through external agencies. We only register external workers in our HR systems if needing access to IT. At the end of 2023 there were 56 tempo- rary workers from agencies registered. Elopak does not have any major seasonal variations in its workforce. Elopak has the following levels of management in the organization: Top management – the group leadership team (GLT) Level two management – anyone reporting to a member of the group leadership team Other line management – anyone with responsibility for one or more employees at various levels in the organization Combined annual and sustainability report 2023 194 194 Appendices | Sustainability methodology Appendices | Sustainability methodology Employee life cycle Performance management The annual performance review process runs from December 1 to March 1. In the report, results are presented from the previous reporting year. Our standardized global performance review process run for all employees. However not all production workers use the digital tool for documenting this process yet. Training hours Reported training hours cover training registered in our global HR platform. Our operations around the world conduct local training activities, including mandatory training for production workers which is closely monitored locally. We distribute nano learnings on diverse topics such as IT security to all employees on a regular basis. We do not include local training and nano learning in the reported training hours. The calculations for the Code of Conduct training excludes employees on long term absence. Employee engagement surveys In 2022 we implemented a new tool for employee engagement surveys which include reference to external industry benchmarks. We present the results for employee engage- ment index and the inclusion index with reference to these benchmarks. Employee Net Promotor Score (eNPS) continue to be an important indicator for our employer brand, and we report development with reference to base line from 2022. Voluntary employee turnover rate We calculate the voluntary employee turnover rate as the number of permanent employees who have concluded their contract in the reporting period divided by the average head- count during the same. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 195 195 Appendices | Sustainability methodology Appendices | Sustainability methodology Planet GHG methodology statement Environmental impact and reporting principles Emission-related data are reported according to the Greenhouse Gas (GHG) Protocol, including the updated revisions of the GHG Protocol Scope 2 Guidance (2015). Since 2008, Elopak has published greenhouse gas emission accounts with third party verification of parts of the data. The scope of the verification has increased over the years. The 2023 verification is further described below. Elopak has committed to cut greenhouse gas emissions in line with the strictest criteria set by the Science Based Targets (SBT) initiative. In 2021, Elopak set near-term science-based targets for each emission scope, in line with the new Net zero standard from SBTi. The near-term targets have a timeframe of 10 years (2020-2030). Elopak reports according to the ‘operational control’ consolidation approach, which covers all Elopak’s wholly owned market units and converting, Roll Fed, coating and filling machine plants worldwide. Elopak has two joint ventures – in the Dominican Republic and in Mexico. By reporting in line with the oper- ational control consolidation approach, this means that these are excluded from scope 1 and 2 reporting. GHG emissions related to the joint ventures are reported under scope 3 in the category 15 – investments. The two production plants in the Dominican Republic and Mexico report their data in our online portal, Footprinter. As Elopak is reporting according to the fixed base year approach (base year 2020), emissions sources from the new acquired plants are included with their calculated emissions in our 2020, 2021, 2022 and 2023 data. Emissions for 2023 are calculated for the full year. In cases where the new plants have not yet integrated the Elopak data structure, we specify the data sources and methodology for the emission calculations in the methodology section below. Combined annual and sustainability report 2023 196 196 Appendices | Sustainability methodology Appendices | Sustainability methodology For 2023 we are also including data from our subsidiary GLS Elopak in India (50% owner share, production started in 2022), as Elopak has operational control over the entity. Elopak’s greenhouse gas data is reported in both CO₂ equivalents (CO 2 e) and the separate greenhouse gases. Scope and methodology GHG emission intensity (g CO 2 e/produced carton) is calculated as the sum of our total scope 1 and residual scope 2 emissions divided by the total number of cartons produced in all plants. Energy intensity (kWh/produced carton) is calculated by dividing the energy consumption in all production plants by the total number of cartons produced in all plants. For both intensity targets, we have used liter equivalent for Roll Fed volumes, as these volumes consists of a large portion of small sizes. Emission factors For 2023 reporting, all electricity emission factors (scope 2) were updated according to the latest 2023 International Energy Agency’s (IEA) database. All site fuels (scope 1), district heating (scope 2), and business travel and transportation (scope 3) emission factors were also updated according to the latest 2023 DEFRA (UK Department for Environment, Food & Rural Affairs) emission factors. By updating all emission factors annually, we are more in line with market realities and emission factor developments. The emission factor used for the renewable electricity (market-based approach) is based on a Life Cycle Assessment study of the power plant and is 0.00219 (kg CO₂e/kWh). For other Energy Attribution Certificates (EAC), an emission factor of zero is applied. The carbon footprint of an average Elopak carton with PE (polyethylene) coating and closure is calculated by dividing the total sold volume in Europe on total calculated footprint. Historical numbers represent the actual organization per year and are not recalculated due to later acquisitions or divestments. All data included in scope 1 and 2 emissions and the parts of scope 3 emissions that are included in our Science Based Targets, are third-party verified. One exception is that only Elopak controlled transport is audited. Emissions are split in three scopes, 1, 2 and 3, as described in the figure above. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 197 197 Appendices | Sustainability methodology Appendices | Sustainability methodology Scope 1 Elopak’s scope 1 emissions include all direct emissions in our facilities: Consumption of natural gas Consumption of propane Consumption of diesel Consumption of wood Consumption of pellets Car fleet Elopak has committed to cut scope 1 (and residual scope 2) emissions by 42% by 2030 from a 2020 baseline. This by continuing to purchase renewable electricity for the entire consumption at all Elopak wholly owned sites. Elopak’s scope 1 targets are in line with the 1.5°C pathway. Scope 2 Elopak’s scope 2 emissions include electricity and district heating, and Elopak’s scope 2 targets are in line with the 1.5°C pathway. Renewable electricity Elopak utilizes the market-based allocation method for the scope 2 accounting. In 2023, Elopak utilized Guarantees of Origin (GOs) and International Renewable Energy Certificates (I-RECs) to cover the electricity consumption of the production and administrative facilities in Europe. For North America (Canada and the USA), Elopak utilized a similar system, Green-e certified (RECs). GOs, I-RECs and RECs are systems to trace the source of electricity produced. The purchase is based on actual electricity consumption at Elopak sites in 2023. The European Energy Certificate System (EECS) is the official European system for RECs created to enable cooperation within the renewable energy market across borders. When the GO is used by a consumer, it is canceled in the system to prevent double counting. More renewable energy demand leads to more investment in renewable energy and less greenhouse gas emissions. Every country participating in the energy certificate system has a central organization that over- sees the national markets for GOs. In addition, the whole European system is overseen by the Association of Issuing Bodies. This ensures the credibility of the energy certificate system. Elopak’s science based targets Scope 1 Natural gas, propane, heating, oil, waste incineration, wood 42% reduction by 2030 42% Scope 2 Electricity, district heating Continue to purchase 100% renewable electricity 100% 25% Scope 3 Business travel, transport, raw materials and filling machines 25% reduction across the value chain by 2030 Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 198 198 Appendices | Sustainability methodology Appendices | Sustainability methodology Scope 3 Elopak reports the total scope 3 emissions. Emissions in scope 3 category 1, Purchased goods and services related to materials wasted in production, have been included in Elopak’s scope 3 Science Based Target. Elopak has increased the scope of the external scope 3 verification. For 2023, all scope 3 emissions included in Elopak’s near-term target have been externally verified. Below is a description of the methodology and assumptions made for the different categories. Category 1 – Raw materials To calculate the carbon footprint of our products, we use internal calculations, verified by a third party. We use an internal tool called DEEP (Dynamic Elopak Environmental Performance), which is a cradle-to-gate calcu- lation that considers all emissions connected to the production of all raw materials, as well as Elopak’s own operations, including final conversion and all transportation up to the delivery at Elopak’s customers’ gates. While all these steps are included in the DEEP tool for carbon footprinting of our products, only raw material emissions are included in scope 3 category 1 calculations since the other elements are included in other categories. The scope covers all Elopak’s fully owned opera- tions, plus GLS Elopak in India. The methodology is in line with the ISO standards for Life Cycle Assessments (ISO 14040 and 14044). The Product Category Rules (PCR) for beverage cartons are followed where relevant for the carbon footprint calculation methodology (PCR Beverage Cartons 2011:04 Version 1.0), developed in accordance with ISO 14025:2006. A description of our DEEP tool can be found here: https://www.elopak.com/ annual-reports/documenta tion Data sources Primary data is used for Elopak’s own operations and the production of some raw materials. Internal production data is taken from Elopak’s reporting tool, “Footprinter” (2023 data). Internal transport data is calculated based on reporting from Elopak’s units (2023 data). Suppliers’ primary data is used for key raw materials. Secondary data is sourced from LCA databases where this is relevant, such as EcoInvent, and studies for some of the raw materials, such as PlasticsEurope and the European Aluminium Association, as speci- fied in the beverage carton PCR. The emissions reported for 2023 related to scope 3 category 1, purchased goods and services (raw materials), have been calculated by Anthesis Consulting Group and verified by PWC. Category 1 – Business goods and services These emissions include upstream impacts associated with goods and services procured by Elopak during the reporting year, not included in other purchased goods calcula- tions or other reporting categories. Emissions are estimated using Environmentally Extended Input-Output factors, based on Elopak’s spend across different categories per year (Based on Elopak’s spend cube). These are not included in the scope of our SBTs. For the new plants in Morocco, Saudi Arabia and India, we have allocated their estimated share of spend based on their reported finan- cial numbers in 2023. Category 2 – Purchased capital items, capital goods These are upstream impacts associated with capital items procured by Elopak during the reporting year, not included in other purchased goods calculations or other reporting categories. Emissions are estimated using Environmentally Extended Input-Output factors, based on Elopak’s spend across different categories per year (Based on Elopak’s spend cube). These are not included in the scope of our SBTs. For the new plants in Morocco, Saudi Arabia and India, we have allocated their estimated share of spend based on their reported finan- cial numbers in 2023. Category 3 – Fuel and Energy- Related Activities Extraction, production, and transportation of fuels and energy purchased or acquired by the reporting company in the reporting year, not already accounted for in scope 1 or scope 2. Calculated based on Elopak’s annual Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 199 199 Appendices | Sustainability methodology Appendices | Sustainability methodology energy consumption using Transmission and Distribution and Well-to-Tank factors. These are not included in the scope of our SBTs. Category 4 and 9 – Transportation and distribution Elopak reports on emissions related to third-party transport. This reporting includes transporting all goods from suppliers’ gates via Elopak to customers’ gates. Whether the transportation is purchased and handled by Elopak, our suppliers, or customers, all data is gathered. In Elopak, third-party transport is split into inbound, internal, and outbound. Inbound and internal transportation includes transportation of purchased raw materials and semi-finished products. Outbound transport includes all shipments of manufactured products to customers. We have used a ton-kilometer approach in estimating transport emissions, as it is a straightforward and consistent method. Furthermore, the input required for this approach is more readily available than the input required for the vehicle-kilometer approach. With the former, we do not need to have complete control over the loading of goods. This approach will most likely overestimate transport emissions and thus is a valid conservative approach. For the new plants in Morocco, Saudi Arabia and India, we have used the same calculation methodology as for the other plants. The esti- mated tons transported is based on reported volume data and other logistic information available. The distances are calculated based on reported supplier and customer info. In cases where all information is not available, we have used a conservative estimate. The emissions reported for 2023 related to scope 3 category 4, upstream and down- stream transportation, and distribution (under Elopak’s operational control), have been third- party verified by PWC. Emissions reported in category 9 (upstream and downstream trans- portation and distribution not under Elopak’s operational control) has not been third-party verified. Emissions related to WTW (Well to wheel) and WTT (Well to tank) have been calculated and are included in the scope of the SBT but was not included in the data published. These emissions are now included in both our reported numbers for 2023 and 2022, and our restated numbers for 2021 and 2020. Category 5 – Waste generated in operations This category includes downstream processing of waste coming from Elopak’s factories and offices. The total tonnage of waste is multi- plied by emissions factors for the processing of each waste type. These are not included in the scope of our SBTs. Category 6 – Business travel Elopak reports on emissions from business travel, both from flights and cars, by gathering data from all Elopak units through different portals. Due to the implementation of a new business travel management system, Elopak has improved the emission reporting from business travel flights in the past years. One Elopak unit is still reporting business travel manually in the internal reporting system, Footprinter. All data from the new system and Footprinter is compiled and calcu- lated to get information on the total emissions related to business travel in Elopak. The emissions reported for 2023 related to scope 3 category 6, business travel flights, have been third-party verified by PWC. Category 7 – Employee commuting Includes emissions from Elopak employees traveling to and from work. We also calculate the (optional) emissions associated with Elopak employees working at home. For employee commuting, we use estimated travel distances and modes from the UK National Transport Survey and emissions factors per transport type to estimate the impact per commuter-day. For calculating homeworking emissions, Anthesis’ methodology is used to estimate the incremental emissions associated with each person-day of working from home (link to report). In 2023 and 2022 it is assumed that the employees are working less from home compared to 2020 and 2021, but still more frequently than the years before the pandemic. These emissions are not included in the scope of our SBTs. Category 8 – Upstream leased assets This is found in Elopak’s spend cube. For 2021, 2022 and 2023, there were no upstream leased assets for Elopak. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 200 200 Appendices | Sustainability methodology Appendices | Sustainability methodology Category 10 – Processing of sold products. Not applicable for Elopak. Category 11 and 13 – Filling machines in operation Elopak produces and purchases filling machines and sells and leases these machines to customers. The use of sold and leased filling machines at customer sites is a part of Elopak’s scope 3 emissions and is included in the near-term target. Leased machines are considered in Elopak’s ownership, and hence consumption and emissions are calculated for one year. For machines sold, the emissions are calculated for the estimated lifetime of the machine, which in this approach is set to 20 years. To calculate the emissions related to filling machines, Elopak maps all filling machines sold and leased using an internal CRM tool. Emissions are calculated per machine, considering consumption during operation and cleaning and applying relevant emission factors. Estimated operation time for all the filling machines was assumed. Assumptions and calculations are made in Elopak’s Total Cost of Ownership (TCO) tool. IEA per-country electricity consumption factors are applied according to the customer’s country. Factors for chemicals and transport are taken from Ecoinvent 3.4. Another key presumption is that current-year electricity factors are applied to the lifetime electricity consumption. i.e., no provision is made to estimate a future reduc- tion in grid electricity emissions. The emissions reported for 2023 related to scope 3 category 11 and 13, use of sold products and downstream leased assets (filling machines), have been calculated by Anthesis Consulting Group and verified by PWC. Category 12 – End of life treat- ment of sold products. Emissions associated with the processing of Elopak products at the end of life. Total sales for the reporting year are used, along with carton recycling statistics, to estimate the total tons of different materials (board, caps) going through different treatments every year. These totals are combined with emissions factors for the downstream processing of different materials. These emissions are not included in the scope of our SBTs. For countries where we do not have access to recycling statistics, we are assuming 50/50 share of incineration/landfill. Category 14 – Franchises Not applicable for Elopak Category 15 – Investments Scope 1 and 2 impacts of Joint Ventures where Elopak does not have operational control, calculated using the operational energy consumption of joint ventures reported in Footprinter. These emissions are not included in the scope of our SBTs. Science Based Targets Elopak has committed to cut scope 3 emis- sions by 25% by 2030 from a 2020 baseline. The scope 3 targets are in line with the “Well below 2°C” pathway as defined by SBTi. When setting internal emission targets for scope 3 in line with the SBTi guidance, we have calculated and evaluated the emissions related to each of the scope 3 categories. The criteria in the SBTi guidance for selecting categories in scope 3 to be included in the target are that the chosen categories must cover at least two-thirds of the total scope 3 emissions and that there must be an appropriate level of ambition. Elopak’s criteria to evaluate the significance of the scope 3 categories: They are significant in terms of contribution to emissions. No specific threshold was established, but this was considered in conjunction with the other criteria below. They are Integral to the function of the business. The data quality allowed for developing meaningful reduction initiatives. The potential was identified for developing a target to galvanize internal engagement in decarbonization (Ex: Category 6: Business Travel). These criteria are regularly revised. Categories 3, 7, 8, 10, and 14 are excluded from the scope 3 near term target, as these cate- gories contribute to less than 0.5% of the total scope 3 emissions, hence not fulfilling criteria 1 above. The emissions in scope 3 category 1, purchased goods and services, included in Elopak’s SBT, are related to the raw materials used to produce cartons, closures, and coated boards sold to external customers. Production waste is also included. The remaining emis- sions in category 1 that are excluded from the near-term target are related to business goods and services. These emissions account Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 201 201 Appendices | Sustainability methodology Appendices | Sustainability methodology for 9% of the total scope 3 emissions and are excluded based on evaluations of criteria 2 and 3 above. Emissions in category 2, purchased capital items, account for 1% of the total scope 3 emissions. These emissions are excluded from the near-term target based on evaluations of criteria 2 and 3 above. Emissions in category 12, End-of-life treatment of sold products, account for 15% of the total scope 3 emissions. This category accounts for a signif- icant part of the total scope 3 emissions but based on evaluation of criteria 3 above and the 67% threshold set by the SBTi guidance, it is decided to exclude this category from the near-term target. Emissions in category 15, investments, are related to Elopak’s joint ventures and account for 0.6% of the total scope 3 emissions. This category is excluded from the scope 3 near term target based on evaluation of criteria 1 above. Some categories in scope 3 account for less than 0.5% of the total scope 3 emissions but are still included in the scope 3 near-term target. An example is category 6 business travel. This category is included based on the evaluation of criteria 4 above. Bio-circularity For calculations of % renewability, we consider the paperboard to be 100% renewable, although it may contain other minor non-renewable components. We base this assumption on ISO 14021 (allowing the minimum amounts). Further, we consider renewable PE sourced through a mass balance system to be 100% renewable. The calcula- tions are based on Elopak’s DEEP (Dynamic Elopak Environmental Performance) tool, further described below. EU Taxonomy Elopak’s Taxonomy Assessment Methodology Elopak has performed the taxonomy assess- ment using Celsia Taxonomy software solution. The methodology of taxonomy assessment has included the following steps: Defining scope of assessment: Product – cartons for liquid food Defining eligibility and relevant activities: A taxonomy-eligible activity means an economic activity that is included in the taxonomy regulation. The taxonomy regulation has not yet adopted explicit criteria for the minimum social safeguards beyond the references to the Organization for Economic Cooperation and Development (OECD) guidelines and UN Guiding Principles. Still, our understanding is that defined requirements on minimum social safeguards need to be placed on our company and the activities in question to assess activ- ity-alignment. Elopak has therefore based compliance with minimum social safeguards on an assessment of several requirements derived from the process of due diligence on responsible business conduct as described in OECD’s Guidelines for Multinational Companies and the UN Guiding Principles for Business and Human Rights. Please see below for the actual criteria. Minimum social safe- guards criteria from the EU Taxonomy: Does your company have a policy commitment on social responsibility including human rights, labor rights and anti-corruption – either as a stand-alone policy or integrated into other policies? Elopak has a code of conduct and a human rights policy available on our website. In addition, we have internal policies on anti-corruption, anti-money laundering and sanctions and trade compliance, available for all employees. Does your policy or code of conduct contain social responsibility requirements and/ or expectations towards suppliers and other key business partners? Elopak has a global supplier code of conduct and an internal business partner procedure. Incorporated in the business partner integrity due diligence process are requirements for how we assess country risk, including Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 202 202 Appendices | Sustainability methodology Appendices | Sustainability methodology evaluation of sanctions and trade compliance, corruption, rule of law, and human rights. Does your company have written procedures ensuring that you have an iterative process in line with OECD’s due diligence process including mapping of risks for adverse negative impact on people, implementation of ceasing or preventive measures, tracking and reporting? This process is described in our human rights policy. Have you identified and assessed the salient risks, potential or factual, related to your taxonomy activity/ activities, covering your value chain? Also include an explanation of why these are your prioritized risks. Our climate risk impacts are described in this report. Can you provide information and documentation on the overall measures you have implemented to reduce, cease, or prevent the risks identified? This is described in the climate risk impacts in this report and in the business risks chapter. Do you have a whistleblower mechanism or similar in place, that is known and accessible for internal and external stakeholders? Elopak has externally available information about our third-party hosted whistleblower helpline. It is also described in our code of conduct policy. Internally we have a speak-up policy and a whistleblower and internal investi- gation procedure available for all employees. Do you track whether your policies and identified risks are properly managed through optimal implementation in your day-to-day business? Elopak is in the process of establishing a management system ensuring all business processes are clear and easy to understand for all employees. On an annual basis we do a compliance risk assessment for the Elopak Group. Does your company report on how it addresses adverse impact on human rights, labor rights and anticorruption – where such risks exist – and the results of its actions taken? Elopak’s human rights risk assessment is described in this report. Is the board and top management kept informed about risks, and progress and results reached in the management of these? The BoD receive regular updates on relevant areas related to sustainability, such as human rights and climate risk assessments. This is also part of strategy processes and the annual business plan process. Are the above-mentioned steps of policy commitment, risk assessment, implementation, tracking, and reporting performed on a regular and iterative basis to cover changes in risk exposure that can trigger more in depth assessment and enhanced mitigation? Elopak is in the process of implementing a management system ensuring all business processes are clear and easy to understand for all employees. This system will also ensure key processes (such as risk assessments) are regularly updated. Governing documents are available in an internal document management system with defined responsibilities and frequencies for updates. Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 203 203 Appendices | Sustainability methodology Appendices | Sustainability methodology Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023 2023 Substantial Contribution Criteria Does Not Significantly Harm Criteria Economic Activities (1) € million % Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. Taxonomy Eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) N/A - - - - - - - - - - - - - - - - - - Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) - - - - - - - - - - - - - - - - EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) N/A - - - - - - - - - - Turnover of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - - - - - - - - - - A. Turnover of Taxonomy eligible activities (A.1+A.2) - - - - - - - - - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy non-eligible activies - 1 132.04 100% Total - 1 132.04 100% 1 As stated in Elopak Group financial statement no te 3 Turnover in € million‌ 1 Proportion of Turnover Code Circular economy Biodiversity Minimun safeguards Proportion aligned/ eligible 2023 Proportion aligned/ eligible 2022 Category enabeling activity Category transitional activity Climate change adaption Climate change mitigation Water Climate change adaption Biodiversity Circular economy Water Climate change mitigation Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 204 204 Appendices | Sustainability methodology Appendices | Sustainability methodology Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023 2023 Substantial Contribution Criteria Does Not Significantly Harm Criteria Economic Activities (1) € million % Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. Taxonomy Eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) N/A - - - - - - - - - - - - - - - - - - CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) - - - - - - - - - - - - - - - - EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) N/A - - - - - - - - - - CapEx of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - - - - - - - - - - A. CapEx of Taxonomy eligible activities (A.1+A.2) - - - - - - - - - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-noneligible activities - 34.84 100% 2 As stated in Elopak Group financial statement not e 13 Turnover in € million‌ 1 Proportion of Turnover Code Circular economy Biodiversity Minimun safeguards Proportion aligned/ eligible 2023 Proportion aligned/ eligible 2022 Category enabeling activity Category transitional activity Climate change adaption Climate change mitigation Water Climate change adaption Biodiversity Circular economy Water Climate change mitigation Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 205 205 Appendices | Sustainability methodology Appendices | Sustainability methodology Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023 2023 Substantial Contribution Criteria Does Not Significantly Harm Criteria Economic Activities (1) € million % Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y; N; N/ EL (b) (c) Y/N Y/N Y/N Y/N Y/N Y/N % % E T A. Taxonomy Eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) N/A - - - - - - - - - - - - - - - - - - OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) - - - - - - - - - - - - - - - - EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) EL; N/ EL (f) A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) N/A - - - - - - - - - - OpEx of Taxonomy eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - - - - - - - - - A. OpEx of Taxonomy eligible activities (A.1+A.2) - - - - - - - - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-noneligible activities - 28,39 100% 3 Consists of direct non-capitalized costs related to maintenance of production equipment, maintenance on buildings, expenses related to short-term leasing and research and development cost Turnover in € million‌ 1 Proportion of Turnover Code Circular economy Biodiversity Minimun safeguards Proportion aligned/ eligible 2023 Proportion aligned/ eligible 2022 Category enabeling activity Category transitional activity Climate change adaption Climate change mitigation Water Climate change adaption Biodiversity Circular economy Water Climate change mitigation Combined annual and sustainability report 2023 Combined annual and sustainability report 2023 206 206 Appendices | Sustainability methodology Appendices | Sustainability methodology artbo x.no 529900BIDQN2AOKV6N082023-01-012023-12-31529900BIDQN2AOKV6N082022-01-012022-12-31529900BIDQN2AOKV6N082023-12-31529900BIDQN2AOKV6N082022-12-31529900BIDQN2AOKV6N082021-12-31529900BIDQN2AOKV6N082022-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082023-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082022-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082023-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082022-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082023-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082022-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082023-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082021-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082021-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082021-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares