Annual Report (ESEF) • Mar 30, 2023
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Download Source FileUntitled Resilience in changing climates Annual Report 2022 Contents 04 CEO letter to shareholders 08 This is Elopak 10 At a glance 12 2022 Key gures 16 Responsible choices 18 Oering a natural solution through generations 24 Reecting on our performance 26 Executing our sustainability-driven growth strategy 36 Business performance 48 Business risks 56 The Elopak share 62 From the boardroom 64 A message from The Board 74 Corporate governance report 82 Board: Composition and independence 86 The work of The Board 92 Elopak management 96 Consolidated nancial statements 104 Notes 181 Responsibility statement 182 Financial statements of Elopak ASA (parent company) 213 Auditor's report 219 Alternative performance measures 223 Additional information 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, 2022. The report is filed with the Norwegian Register of company accounts. This report presents the Board of Director’s report on pages 64-73 and 74-85. 4 Elopak Looking back on 2022: Resilience in changing climates Leaving the peak of the pandemic behind, 2022 had businesses and consumers hoping for a return to normal. Instead, companies had to navigate changing climates: geo- political situation, vulnerable environment, raw material and supply chain constraints, as well as invest- ment fluctuations. Through these changing climates, Elopak has shown a high degree of resilience. There have been challenges along the way, but our journey has been supported by market demand, customer loyalty and the commitment of our colleagues. The war in Ukraine has resulted in instability and untold human suffering. At Elopak, our overriding priority remains the safety and wellbeing of our employees at our office in Kyiv and our site in Fastiv. We are proud of our colleagues for their dedication to main- taining vital supply chains in the country and continue to support them in all ways possible. In March 2022, Elopak decided to suspend all business activities in Russia and in February 2023 the divestment was approved and closed. Due to the war, Elopak lost a sizeable part of its business, and the world markets witnessed macro-economic uncertainty, triggering supply chain backlogs, accelerated inflationary pressures and the rise of raw material prices. As a consequence, Elopak was obliged to implement price increases so as to compensate for the increased costs. We delivered higher EBITDA in 2022 than in 2021. In a year with so many cost headwinds, I am happy to see that our strategic focus and dedicated work on commercial excellence have left us in a structurally good position for the future. Our improved EBITDA is also a result of our newly acquired businesses in MENA and India. We remain a resilient company in changing climates. Part of our sustainability-driven growth strategy has been to broaden our geographical foot- print. In 2022, we expanded in the fast-growing MENA market with the acquisition of Naturepak, a leading fresh carton supplier in the region. The integration is now completed and the business is fully focused on realizing its growth 5 Annual Report potential. We also entered the Indian market through our new partly owned subsidiary GLS Elopak, in order to leverage the world’s largest milk market, with the fastest growth in liquid carton packaging. So far, the performance is exceeding all expectations. We are excited for the future potential for both these investments. In Americas, we have experienced an impres- sive year of significant, organic and profitable growth. This has been attributable to our excel- lent product portfolio, as well as the dedication of our highly experienced colleagues serving customer needs across the region. We have worked hard to develop our machine portfolio together with our supplier Shikoku and have signed a significant share of new filling machines sold in 2022. There is a strong demand in this market, and we continue delivering on it. Sustainability is at the core of who we are and everything we do. In 2022, we delivered the Pure-Pak ® eSense; an aluminium-free carton with a 50% lower carbon footprint compared to a conventional aseptic carton. The replacement of aluminium also simplifies recycling. The product was launched in late Q4, together with García Carrión - a S panish-based wine and juice provider with sales in 145 countries. We are investing in innovation to meet the demands of our customers as well as regulatory requirements. This is an important step in our aseptic growth journey – another core tenet of our strategy. As with García Carrión, many Fast-Moving Consumer Goods (FMCG) companies are responding to consumer demands for sustainable packaging. Many are adopting ambitious targets to reduce the use of plas- tics. We expect the use of plastic food and beverage packaging to drop significantly in the long-term, in tandem with increasing interest in cartons. The opportunities are many and we are well-positioned to leverage this future plastic-to-carton conversion. Despite a challenging year, we are proving our resilience in changing climates. This is largely due to our strong commercial position and the commendable efforts of all our colleagues around the world. In addition to our employees, I want to warmly thank our customers, partners and shareholders for the year that has passed and for their continued trust in Elopak. Thomas Körmendi CEO 6 Elopak 7 Annual Report This is Elopak Elopak at a glance Elopak is a leading global supplier of carton packaging and filling equipment. Our iconic Pure-Pak ® cartons are made using renewable, recyclable and sustainably sourced materials, providing a natural and convenient alternative to plastic bottles that fits within a low carbon circular economy. Founded in Norway in 1957 and listed on the Oslo Stock Exchange (Oslo Børs) in 2021, we operate in 40 countries, employ 2,600 people, run 11 manufacturing units and sell in excess of 14 billion cartons annually across more than 70 countries. Through investment in innovation, our product portfolio has greatly expanded, pioneering solutions that help customers lower their carbon footprint and provide consumers with more environmentally friendly packaging solutions. Our carton portfolio represents a globally trusted, sustainable packaging solution for liquid content, used daily by consumers throughout the world. Elopak delivers complete and optimized packaging systems designed to support our ongoing fight against food waste. Each Pure-Pak ® system consists of a filling line with all related services. Through each of the system components, we add value and ensure efficiency and effectiveness throughout the entire value chain. 1915 1957 2021 1987 Patent for Pure-Pak ® granted Elopak was founded Listed on Oslo Børs Elopak becomes owner of Pure-Pak ® license world-wide 10 Elopak As worldwide makers of carton-based packaging, we are committed to remaining our customers´ partner and the consumers´ favorite, through relentlessly devel- oping new solutions for an expanding range of content. Applying market-leading technology, skills and natural materials sourcing, we always aim to provide the highest quality products that leave the world unharmed. Empower - Unite - Accelerate Chosen by people, packaged by nature Our vision Our mission Our promises 11 Annual Report 2022 Key gures 1,024 € * Revenue +19.7% Revenue % Diff. vs PY * Numbers in EUR Million 119.4 € * Adjusted EBITDA 5.6 Total Recordable Incident rate 7% Scope 3 emissions reduction 20% Scope 1 and 2 emissions reduction 11.7% Adjusted EBITDA margin 30% Of all milk cartons in Europe fully renewable 93% Of employees completed Code of Conduct training 3.3x Leverage ratio 100% Scope 2 - % of renewable electricity used Main footprints Machine Production Coating Plants Converting Plants Roll-Fed production Market Unit Offices HQ, Corporate Office, Technology Center Joint Ventures Licensee Partners 13 Annual Report Filling machines State-of-the-art offerings Packaging solutions Sustainable cartons and closure options Technical services Value-added support 14 Elopak Our offering Elopak provides customers with a fully integrated system solution for their liquid food and non-food packaging needs. This includes a whole range of fit-for-purpose filling machines and sustainable carton options, as well as supporting services throughout the planning, filling and packaging value chain. Our filling machines come with a variety of production capacities and will fill a wide range of pack sizes and shapes. Each machine features a unique modular design for exceptional flexibility in installation, operation and maintenance. In addition, machines are adapted and certified to meet different standards around the globe. Beverage cartons outperform plastic-based packaging solutions, with the lowest carbon footprint among liquid food and non-food packaging today. Compared to Polyethylene terephthalate (PET), beverage cartons are 73% more climate friendly. 1) The Pure-Pak ® family of cartons is a sustainable choice. 1) North American Life Cycle Assessment on packaging for Fresh Milk and Juices conducted by Anthesis for Elopak in May 2021 The versatile portfolio has a wide range of applications within liquid food and non-food applications and is fully optimized for brand considerations, consumer preferences, distribution systems, production capacities, as well as filling and printing technologies. Chosen by people for more than 100 years, a Pure-Pak ® carton is the natural alternative to plastic-based packaging solutions. To support customers in planning, product considerations and filling operations, Elopak delivers a full-service portfolio which covers the entire customer journey with frequent touch points. These services include technical planning, machine connectivity, upgrades, retrofits and optimization services, as well as maintenance and customer staff trainings. Through each touchpoint, we deliver value to customers and ultimately consumers – ensuring efficient time to market of important household products. 15 Annual Report The climate change visible in today’s world impact the way consumers think and act. The political and economic instability of 2022, coupled with the increasing effects of climate change, highlight the needs for making responsible choices. Reducing carbon emissions, food waste and opting for sustainable packaging solutions are examples of this trend. Despite reports 1 where consumers say that they find it difficult to make responsible choices due to financial constraints, 62% of shoppers still have good intentions and try to make environmentally friendly purchases. Sustainability has become a core personal value and many customers are actively searching for ways to improve. Packaging can act as a key point of differentiation for everyday purchases at the point of sale and is becoming an increasingly decisive purchase criterion. • 67% of consumers have stopped purchasing a product/service that in their opinion did not meet their sustainbility expectations. • 35% of consumers say that they have put products back on shelves, because they did not deem packaging to be sustainable. The EU Green Deal has accelerated initiatives from retailers and producers to improve recyclability, support easier recyclable packaging and ensure that packaging is reducing its carbon footprint. Consumers want to play an active role in reducing carbon emissions. Sustainable packaging will help brand owners to present an authentic and coherent product offering and have a greater impact on consumer choice in a way that previously only price or brand identity could. Responsible choices Tapping into customers' business ambitions and consumers' desire to act responsibly. 1) Kantar 2022 "Who Cares? Who Does?" 16 Elopak 17 Annual Report to the consumer. Our Elopak Technology Center at Spikkestad in Norway, has the knowledge and expertise to develop the optimal carton solution for our customers. All our cartons are already a sustainable choice and further innovation can improve them both inside and out. We offer boards, barriers, caps, and coat- ings made of recyclable and renewable materials from responsible forestry, as well Elopak’s relentless pursuit of sustainable materials, enhanced product performance and operational excellence makes us the industry innovator and chosen partner for a growing number of customers. A fundamental building block in all our innovational work is our close coopera- tion with clients. We take care of time-sensitive and perishable products, ensuring safe arrival "At Elopak, sustainability is not something we do: it’s who we are" Thomas Körmendi, CEO Our ambition is to leave our customers’ products unchanged and the world unharmed. Since 2008, we have released key data on our environmental impact and published annual environmental reports. Since 2019, we have published Sustainability Reports detailing our broader sustainability targets and progress. While this Annual Report includes many aspects of Elopak’s sustainability journey, we encourage readers to also view our 2022 Sustainability Report (https://sustainabilityreport2022.elopak.com/) for a more detailed account of our recent progress. Oering a natural solution through generations 18 Elopak as CarbonNeutral ® Pure-Pak ® cartons, made from renewable content. Over decades Elopak has invested heavily in market-leading technology to develop high-quality, sustainable Pure-Pak ® pack- aging solutions that deliver convenience for the consumer and ensure product safety. The value that these cartons offer is well recognized. Driven by consumer demand, Elopak has also translated the Pure-Pak ® carton system solution to aseptic beverage applications. Pure-Pak ® has become a very versatile pack- aging format. It is used to package virtually all product types and is considered to suit the ultra-fresh, fresh with Extended Shelf Life (ESL) and aseptic markets. Today, Elopak offers Pure-Pak ® cartons for every conceivable need and has the competence to develop solutions for future needs, with sustainability at the core. We call it Packaging by Nature ® . Packaging by Nature ® Consumers are increasingly demanding more sustainable packaging solutions. Making the transition to more environmentally friendly options such as beverage cartons is not only an important step for brands to take in future-proofing their business; it is also the right thing to do. Brands and retailers are looking for ways to reduce their carbon footprint. Changing their packaging is an obvious step to take that can have a measurable impact on their journey to net-zero, as well as helping them to communicate their sustainability credentials visually on the shelves. Elopak is perfectly positioned to leverage this opportunity, as the Pure-Pak ® carton has stood the test of time. Evolving with market needs, it remains the iconic shape for pack- aging fresh beverages. From the start, the Pure-Pak ® carton was created as a safe and convenient alternative 19 Annual Report to glass bottles, reducing complexity in the supply chain. Today, Pure-Pak ® has established itself as the natural and convenient alternative to plastic bottles. It fits within a low carbon circular economy, and it is made using renewable and sustainably sourced materials. A standout solution When battling for consumers’ attention, the Pure-Pak ® carton excels in meeting relevant trends. The present growth in e-commerce makes it more challenging to ensure a consistent consumer experi- ence. The second moment of truth, which refers to the moment when the consumer uses the product, has become an even more critical decision point. This is the moment when a Pure-Pak ® carton outper- forms other sustainable packaging formats. Pure-Pak ® cartons are considered best- in-use and strongly and positively influence the consumer’s brand perception and future buying decisions. A good user experience will more likely result in the consumer choosing the same brand and speaking favorably of the product in conversation or online reviews. The versatility of the Pure-Pak ® carton format allows Elopak to design a solution for every intended consumer experience. Its quality and flexibility helps to meet trends such as increased demand for longer shelf life, stricter food safety, and shifts towards home consumption or larger formats, as well as “convenient and on-the-go” consumer expectations. The overall conclusion is that we all experience products in increas- ingly different ways. When focusing on the common points across these multitudes of consumer journeys, the right packaging can drive consumer preference and dramatically boost sales. ‘Natural’, ‘healthy’, and ‘locally produced’ remain top drivers behind consumers’ choices when buying food and beverages, impacting the demand for health and plant- based drinks. Sustainable packaging is also having an increasing influence on consumers’ 20 Elopak decisions. In addition, consumers also highly value transparency. Demanding transparency from companies and their products, values, and how they do business is one of the most important and pressing consumer experi- ence trends. It is no secret that the sustainability creden- tials of packaging solutions vary considerably. Choosing the right pack helps reduce the overall carbon footprint of the finished product and ensures the product is kept safe and fresh, helping to minimize waste. In addition, packaging can also help brands to communicate their commitment to the environment. Communicating clearly on sustainable packaging helps build trust and maintain loyalty with consumers. Bärenmarke brand switched to Pure-Pak ® Sense Aseptic as part of a new partnership with Elopak. Hochwald Foods GmbH relaunched its famous Bärenmarke milk in gable top cartons in spring 2022. 21 Annual Report Resilience in changing climates From the start in 1957, Elopak has enabled vital nutrition for generations. As times have changed, products, tastes and demand have evolved, but our Pure-Pak ® cartons continue to be the preferred choice among customers and consumers alike. 22 Elopak 23 Annual Report Reecting on our Performance Annual Report 2021 Reecting on our performance 25 Annual Report Our relentless efforts to provide the best possible consumer experience, while systematically innovating to support our customers in realizing the transition to a net zero, circular economy, makes Elopak uniquely well-positioned to meet the growing demand for sustainable packaging solutions. Therefore, our growth strategy is an optimal mix of conventional Pure-Pak ® carton focused growth strategies and demand innovation, creating new growth and new value by expanding our traditional market’s boundaries. 2022 showed significant progress, Executing our sustainability-driven growth strategy Sharing our commitment to leave the world unharmed for the next generation is our strongest opportunity for protable growth. executing along our five key growth drivers: 1. Set new standards, rolling-out the sustainable, Pure-Pak ® carton solution in North American fresh markets. 2. Introduced disruptive innovation in aseptic markets. 3. Established strongholds in fast-growing MENA and India markets 4. Accelerated plastics to carton conversion 5. Reinforced our commercial excel- lence program: margin optimization, value engineering and operational improvement. 27 Annual Report Our customer in the US, Boxed Water Is Better ® continues to pioneer cartons as the best alternative to plastic water bottles. In September 2022, Boxed Water Is Better ® joined forces with CorePower Yoga – the largest yoga studio brand in the US – to replace all single-use plastic water bottles at its more than 200 studios nationwide. 28 Elopak Pure-Pak ® solution in North American fresh markets Profits for Elopak’s North American operations grew strongly in 2022, mainly driven by a growth in sales in the juice and plant-based segments, as well as school milk volumes. Elopak increased its sales across all key segments – with blanks and caps all performing well. There has also been a very strong momentum and interest in Elopak’s filling machines, with 15 machines signed for in 2022 with a majority to be commis- sioned in 2023. Throughout 2022, Elopak’s focus in North America has been on innovation and sustainability. Having successfully entered the juice segment with our specialized paper- board for juice, we then introduced our cartons made with Natural Brown Board to the American market. Already a huge success in Europe, Natural Brown Board cartons have a lower carbon footprint owing to the use of unbleached wood fibers, which also results in a natural, rustic appearance that helps to communicate the customer’s commitment to sustainability. Furthermore, Elopak invested heavily in sustainable infrastructure, including new printing technologies that will reduce the carbon footprint of our plant in Canada and help maintain the business competitive edge. Nutrinor is the first dairy cooperative in Quebec, Canada to switch to carbon-neutral packaging with the launch of its fresh, organic and lactose free milk in 1 and 2 litre Pure-Pak ® cartons with Natural Brown Board. 29 Annual Report The Pure-Fill™ aseptic filling machine platform and Pure-Pak ® eSense cartons are a winning combi nation, boosting the value of Elopak’s aseptic offering. Introduced disruptive innovation in ambient, aseptic markets For the aseptic market, 2022 has been marked by two milestones: 1. The introduction of the new aseptic Pure-Fill™ filling machine. 2. The launch of the more environmen- tally friendly, aluminium-free aseptic carton: Pure-Pak ® eSense. The Pure-Fill™ aseptic filling machine platform and Pure-Pak ® eSense cartons are a winning combination, boosting the value of Elopak’s aseptic offering. The new aseptic filling line platform: Pure-Fill™ The new Pure-Fill™ platform offers major advantages in marketing more sustainable carton packaging solutions to the aseptic markets. Its revolutionary design ensures compliance with new sustainable packaging formats and features while introducing eco-friendly ways to lower energy and water consumption. The Pure-Fill™ platform offers unique and easy integration in production processes to reduce waste and create the most compact filling line footprint possible. Enhanced 30 Elopak In November 2022, García Carrión was the first to introduce the new Pure-Pak ® eSense aluminium-free aseptic carton. automation further reduces manual intervention. Its proprietary modular design provides wide variety in packaging shapes and sizes and shortens time to market answering today’s volatility in fast-moving consumer markets. Don Simón first to introduce Pure-Pak ® eSense aseptic carton García Carrión was the first to introduce the new Pure-Pak ® eSense. Since November 2022, García Carrión’s famous Don Simón plant-based drinks have been packaged in 1 litre Pure-Pak ® eSense cartons made with Natural Brown Board. Designed using technology from our fresh portfolio, the Pure-Pak ® eSense carton is aluminium-free and instead made with a polyolefin blend barrier. This results in up to 50% lower carbon footprint than a standard Pure-Pak ® aseptic carton while simplifying full recyclability. 31 Annual Report The integration of Naturepak has proceeded quickly and efficiently, adding the local production facilities in Morocco and Saudi Arabia to Elopak’s extensive global network. Established strongholds in fast- growing MENA and India market MENA market In March 2022, Elopak aquired Naturepak Beverage Packaging Co, the leading gable top fresh liquid carton and packaging systems supplier in the MENA region, reinforcing Elopak's position in MENA markets. The integration of Naturepak, has proceeded quickly and efficiently, adding the local production facilities in Morocco and Saudi Arabia to Elopak’s extensive global network. Global paperboard supply constraints created some challenges in the first half of 2022. Elopak has increased efficiencies and supported the company’s ambition to meet the growing demand for sustainable packaging solutions. The Pure-Pak ® carton solution has been effectively implemented, improving pack- appearance and functionality. Technical support and spare-parts services have also been set up. Extended shelf life and aseptic solutions have been introduced to the market through our customer base of global blue chip FMCG players and strong regional champions. Hence, establishing an Elopak stronghold in the fast growing MENA markets. 32 Elopak Shared commitment to sustainability and innovation builds Elopak’s first business in India, the largest fresh milk market. Shared commitment in India On April 28, 2022 Elopak and GLS announced a join venture, in which Elopak has management control. The new partly owned subsidiary GLS Elopak (head quartered at Gurugram in Haryana, India) will leverage the respective expertise, assets and networks of Elopak and GLS to capitalize on the significant consumer demand in India. With its manufacturing hub close to Delhi, India, GLS Elopak will be the only producer of fiber-based packaging for liquid food in the Haryana area. Our partly owned subsidiary in India is already exceeding expectations, offering Roll-Fed aseptic cartons under the brand “ALPAK” in various sizes, along with end-to-end service support to customers. The operation has shown impressive growth rates, positioning GLS Elopak ahead of its five-year plan. 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. Going forward, the company will introduce Pure-Pak ® fresh cartons, Pure-Pak ® aseptic cartons and complementary solutions. 33 Annual Report In May 2022, Ireland’s leading dairy company Glanbia delisted its Avonmore fresh milk in PET bottles, and switched to 1 litre and 500ml Pure-Pak ® Classic cartons only. Accelerated plastics to carton conversion The Pure-Pak ® carton has established itself as a natural and convenient alternative to plastic bottles. Slowly, but surely we see that milk and juice producers are converting their brands from plastic bottles to beverage cartons. One such example is Irish Glanbia with their milk brand Avonmore who switched from PET bottles to cartons. Our D-PAK™ portfolio for liquid non-food household products was heavily promoted in 2022. This portfolio has attracted several high-profile global customers. One such customer is the well-known contract manufacturer McBride, with whom Elopak has entered into an agreement to increase the company's footprint in the household segment and accelerate the conversion from plastic to carton packaging. The D-PAK™ range showcases Elopak's development and innovation capabilities, incorporating market-leading technology and providing sustainable packaging solutions. The hand soap and detergent refill carton segment represents a significant potential market for sustainable personal care product brands. 34 Elopak Elopak has fine-tuned its system offering for these segments and now includes after- market support and technical service. The results so far have been very positive, with feedback from consumers stating that they appreciate the new carton's user-friendly and environmentally friendly features. This feedback has given us confidence that our development is aligned with market expectations. To capture potential customers and prospects, a facility has been established for market testing and smaller scale launches. The freedom to design customer- or brand-specific carton packaging has been proven successful with Elopak's unique label applicator technology. A second generation of technology to make last-minute changes is currently under development, creating a carton pack design that meets all consumer and shopper marketing demands. Elopak has established a quality process that has been proven effective for each new potential application of the D-PAK™, ensuring that the solution meets all technical and regulatory demands. Commercial excellence Margin optimization, value engineering and operational improvements drive resilience. In 2022, Elopak experienced unprecedented times in terms of inflation, supply chain issues and a volatile macro-economic environment. In order to protect its margins Elopak found itself obliged to increase prices for its products to mainly offset the raw material price inflation. In terms of plant efficiency, Elopak has a long history of continuous improvements, and the efficiency and quality of the plants are generally high. In 2022, production was impacted by the close-down in Russia and the war in Ukraine, which has led to a challenging environment for the supply chain planning and increased complexity in the remaining plants. Towards the end of the year production stability and reduced waste levels were achieved. In November, Elopak opened its new High Bay Warehouse in our largest plant in Terneuzen, Netherlands. The high-tech, modern facility offers improved logistics and increased efficiency by replacing storage over multiple sites and automating previously manual processes. 35 Annual Report Raw materials volatility and general inflation As a consequence of the pandemic, and further accelerated by the war in Ukraine, supply/demand imbalance occurred in basi- cally all raw materials worldwide. This was also the case for polymers and aluminium, used as barrier materials in packaging and production of closures. LDPE 1) and aluminium prices were already at a high level at the beginning of 2022. In addition, normally less significant input costs like electricity, filling machine parts, and pallets were volatile and at a high level throughout the year. These are the main features of our raw material exposure In Europe, liquid board contracts are typi- cally multi-year with fixed prices periodically adjusted for cost inflation. In the Americas, board contracts are also multi-year, with spot prices linked to a range of indexes. Purchased boards in Americas are coated with polymer. Customer contracts in the Americas for blanks are linked to similar indexes as the board contracts, and consequently, the raw mate- rial exposure is limited. The same mechanics apply to the Americas’ closure business. 1) Low-density polyethylene Business performance 2022 was characterized by continued ination and supply chain constrains, initiated by the pandemic and further accelerated by geopolitical tensions. Despite being aected by both, Elopak proved its resilience by mitigating this changing environment eectively. 37 Annual Report Polymers (PE) and aluminium for production in the European plants are multi-year contracts with spot prices, and the company enters into commodity hedges to manage the exposure. In European markets, the margin exposure is also managed through raw materials clauses in some customer contracts, primarily for closures. The bottom line is that although Elopak to a large extent mitigates raw material hikes through a combination of commercial and commodity hedging arrangements, the company is still exposed to polymers and aluminium and other cost drivers such as energy utility costs, transportation, and pallets. Adapting to inflation The carton packaging industry is normally relatively stable in terms of prices and raw materials, so the continued inflationary pressures and price volatility are unprecedented. However, the business model of Elopak is robust and has mitigated a large proportion of these challenges. A key focus in 2022 has been to responsibly manage exposure and margins so as to support the financial sustainability of the company as well as that of our customers. During the year we have implemented price increases on products and solutions based on the value we create as well as the increased cost of raw materials. We have actively pushed down manufacturing costs through our operational excellence programs. We will continue to navigate steadily as not all inflationary cost increases have gone through the value chain yet, with paper and board as the most important to consider. Supply chain disruptions Another significant challenge in 2022 was the supply chains disruption leading to a continued challenging sourcing situation for packaging raw materials and filling machine parts. Delays in getting goods also occurred due to transport interruptions. The supply chain situation affected Elopak’s commis- sioning of filling machines, as well as overall inventory levels. Managing the supply chain disruptions Elopak works diligently to ensure a robust and reliable supply chain. Through the pandemic and the war in Ukraine, the organization was put through a live stress test. The company’s 38 Elopak purchasing and supply chain team worked proactively throughout the year to mitigate supply issues impacting Elopak’s customers and production. In addition to a close dialogue with suppliers, some of the measures used to manage supply chain interruptions were plan- ning of inventory, moving inventory internally, switching supplier plants, and change of suppliers. By proactively identifying and qualifying alternative suppliers and sourcing in different regions, Elopak has built resilience in case of supply interruptions. Consumption In 2022, we continued to observe a shift in consumer behaviour towards more environmentally and socially responsible consumption habits. Products such as organic or bio milks and plant-based dairy alternatives continue to grow in popularity as consumers look to reduce their environmental impact and adopt more plant-based or otherwise sustainable diets. Consumer research 1) has shown that shoppers looking to purchase plant-based dairy alternatives also seek out the most sustainable packaging, with brown, unbleached cartons performing better than white ones. Following the peak of the pandemic, overall consumption patterns have largely returned to a 2019 status quo. However, this is some- what disrupted by the continuing trend of working from home, which has lead to more purchases for at home – rather than on-the-go-consumption. The rising cost of living in Europe – caused by the lingering effects of the pandemic and the war in Ukraine – has also impacted consumer behaviour, with an increasing shift towards own-brand (as opposed to branded) products and prod- ucts with longer shelf lives in order to cut costs and avoid waste. Committed to the mid-term targets In 2022, the company delivered a satisfac- tory EBITDA margin, despite unprecedented and significant raw material headwinds during the year. The revenues grew 20% (11% organically), driven by price increases on our products, growth in Americas, and acquisitions in MENA. The company remains committed to the mid-term targets, as margins are expected to normalize over time combined with scale effects from our organic growth. 1) Kantar 2022 "Who Cares? Who Does?" 39 Annual Report Performance vs. mid-term targets Elopak has committed to the following mid-term targets: Targets Mid term 3-5 years 2020 2021 Revenue growth 2-3% organic growth p.a. and selectively pursue M&A opportunities for revenue growth 14-15% adjusted EBITDA margin EUR -50m p.a. 0.3%3.5% 13.5%13.3% Eur 50mEur 37m 22%52% 2.52.1 50-60% pay-out ratio % or adjusted net prot -2.0x net debt/ adjusted EBITDA mid-term EBITDA margin Capex Dividend policy Capital structure 2022 11% 11.7% Eur 44m 50% 3.3 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 2022 are described in the following sections of the report. Year to date ended EUR million 2022 2021 2020 Revenues 1,023.7 855.3 908.8 EBITDA 1) 109.9 103.3 122.9 Adjusted EBITDA 1) 119.4 113.7 122.3 Adjusted EBITDA 1) margin 11.7% 13.3% 13.5% Profit for the period 34.2 33.8 47.8 Adjusted profit for the period 1) 44.0 35.5 45.3 Leverage ratio 1) 3.3 2.1 2.5 Adjusted basic and diluted earnings per share (in EUR) 0.16 0.14 0.18 1) Definition of Alternative Performance Measures, including specification of adjustments, at the end of this report. 2020 figures include Russia. The numbers presented exclude Russia, both for 2022 and 2021 The numbers presented exclude Russia, both for 2022 and 2021 40 Elopak Revenues Group For the full year of 2022, Group revenues increased by 20 %, or EUR 168.4 million. Adjusted for currency translation effects and acquisitions, the revenue growth was 11 %. Revenues by Geography and Product Revenues EUR million 2022 2021 Change EMEA 786.0 674.9 16 % Americas 260.5 192.2 36 % Corporate and eliminations -22.8 -11.8 92% Total revenues 1,023.7 855.3 20 % Revenues EMEA by Product Revenues EUR million 2022 2021 Change Cartons and closures 671.0 570.6 18 % Equipment 36.3 38.5 -6 % Service 46.0 42.8 8% Other 32.6 23.0 41% Total revenues 786.0 674.9 16 % Revenues EUR million 2022 2021 Change Cartons and closures 923.8 752.5 23 % Equipment 28.6 43.5 -34 % Service 45.4 42.3 7 % Other 26.0 16.9 53 % Total revenues 1,023.7 855.3 20 % The numbers presented exclude Russia, both for 2022 and 2021 41 Annual Report Revenues in EMEA increased by EUR 111.1 million, or 16%. The impact from acquired business in MENA and India was EUR 38.5 million. In EMEA, the main driver of the under- lying revenue growth for the full year was price increases on cartons and closures. In terms of volume, the total number of cartons increased, also when adjusting for acquired business. In Pure-Pak ® , fresh volumes decreased mainly due to underlying consumption decline, while aseptic volumes were relatively stable. Our strategic initiative to grow the aseptic dairy business resulted in 8 % volume growth, while the aseptic juice segment decreased, from a very strong 2021 impacted by iced tea sales. The revenue growth in EMEA was also partly driven by higher Roll-Fed volumes. Revenue from equipment decreased as the company delivered less filling machines than in 2021, partly due to delays at customer site but also due to supply chain challenges. Adjusted EBITDA Revenues Americas by Product Revenues EUR million 2022 2021 Change Cartons and closures 256.5 185.2 38 % Equipment 2.2 5.0 -56 % Other 1.8 1.9 -5 % Total renevues 260.5 192.2 36 % Americas In the Americas, revenues increased by EUR 68.3 million compared to last year. Currency translation effects had a EUR 32.8 million favor- able impact due to a stronger USD against EUR, and the underlying growth was 19 %. Pure-Pak ® revenues increased compared to last year. Qualification of new products and customers contributed to a healthier portfolio of customer contracts. During 2022, Region Americas delivered volume growth, mainly in the juice and plant based segments. Raw material indexing contributed to the revenue growth. Revenue from the sale of closures increased due to targeted sales efforts enabled by addi- tional capacity. 42 Elopak Adjusted EBITDA Annual Adjusted EBITDA (EURm) Adjusted EBITDA EUR million 2022 2021 Change EMEA 94.3 97.2 -3 % Americas 51.5 35.4 45 % Corporate and eliminations -26.4 -18.9 40 % Total adjusted EBITDA 119.4 113.7 5 % On a full year basis, adjusted EBITDA for the Elopak Group increased by 5 %, or EUR 5.7 million, from EUR 113.7 million in 2021 to EUR 119.4 million in 2022. Adjusting for currency translation effects (EUR to USD) and acquisitions, the EBITDA decreased by 4%, or EUR 4.8 million. The decrease is mainly a result of the inflationary pressure in Europe. EMEA In EMEA, adjusted EBITDA for the full year decreased by EUR 2.9 million, from EUR 97.2 million in 2021 to EUR 94.3 million in 2022. Adjusted EBITDA margin was 12.0%, down from 14.4 % in the comparable period. Adjusting for acquisitions, the adjusted EBITDA decreased by EUR 8.2m. On a full-year basis, the increase in raw material cost had a negative impact of EUR 50 million. This was largely offset by pricing increases but still had a nega- tive impact of 0.8pp. to the EBITDA margin. Further to this, EBITDA decreased as a result of inflationary pressure on other operational expenses and payroll, and to some extent decline in Pure-Pak ® carton volumes. Operations at the coating and converting plants were good during 2022. Elopak has a long history of continuous improvements, and the efficiency and quality of the plants is generally at a high level. These results have been achieved through a structured operational improvement program, Elovation. In 2022, production KPIs have been impacted by the close-down in Russia and the war in Ukraine, which has led to a challenging environment for the supply chain planning and increased complexity in the remaining plants. Towards the end of the year production stability and reduced waste levels were achieved despite fluctuations in demand, both in volume and type. In November, an important milestone was achieved when the High Bay Warehouse in the The numbers presented exclude Russia, both for 2022 and 2021 43 Annual Report Annual Adjusted EBITDA (EURm) largest plant in the Netherlands was opened, leading to higher storage capacity and realization of manning efficiencies. Americas In Americas, adjusted EBITDA for the full year increased by EUR 16.1 million, from EUR 35.4 million in 2021 to EUR 51.5 million in 2022. Adjusted EBITDA margin was 19.8 %, up from 18.4 % in the same period last year. Adjusting for currency translation effects adjusted EBITDA increased by EUR 10.9 million. Pure-Pak ® carton volume growth was a key driver of the improved performance. Part of the volume growth was on value added board, enabled by successful onboarding of customers in the juice and * Raw materials are only related to carton production in Europa ** FX impact related to EURUSD FY 2021 EBITDA Net revenue mix Raw materials FX Other FY 2022 EBITDA Operations 119 114 72 22 1 50 5 44 Elopak plant-based segments. Plant operations contributed positively through reductions of waste and from increasing volumes while keeping manning stable. Another important milestone was achieved when completing an environmental improvement project, setting the stage to emission reductions in 2023. 2022 has been a very successful year in the market for filling machines. A total of 15 machines are ordered, of which a majority of the machines will be delivered in 2023. The two joint ventures in Americas performed well in 2022, supported by volume growth in the school milk segment. The share of result was EUR 4.4 million, which was an increase of EUR 0.8 million. Profit For the full year operating profit decreased by EUR 7.4 million. EUR 4.2 million is due to impairments of non-current assets in Ukraine. EUR 9.8 million is due to increased depreciation and amortization of non- current assets, predominantly related to acquired business in MENA and India. The remaining margin development is a result of the factors explained above in adjusted EBITDA section. 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 Year to date ended December 31 (EUR million) 2022 2021 Operating profit 41.8 49.2 Depreciation, amortisation and impairment 63.9 54.1 Impairment fixed and long term assets Ukraine 4.2 - EBITDA 109.9 103.3 Total adjusted items 5.1 6.8 Share of net income from joint ventures (continued operations) 1) 2) 4.4 3.6 Adjusted EBITDA 119.4 113.7 The numbers presented exclude Russia, both for 2022 and 2021 45 Annual Report Profit from continuing operations in 2022 increased by EUR 3.9 million from EUR 30.3 million to EUR 34.2 million. The Russian entity was deconsolidated as of July 15, 2022. Until the transaction was closed, the fair value of the shares in the company were presented as other current assets in the Consolidated statement of financial position. The fair value reflected considerations of credit risk, settlement risk and the payment profile over 5 years. Year to date profit from discontinued operations was EUR -23.6 million. The negative result reflects ordinary business until operations were suspended in March and the following impairments of assets as presented in the first and second quarter. On February 22, 2023, Elopak announced that the sale of all Elopak's shares in its former Russian subsid- iary has been completed. For further details please refer to note 19 and 33. Cash flow and capital structure Cash flows For the full year 2022, cash flow from operations was EUR 25.1 million. Cash from operations is impacted by tax payments and For the full year net financial income and expenses were EUR 0.3 million, an improvement of EUR 7.5 million compared to last year. The main driver is revaluation of interest swaps which had a positive impact of EUR 8.4m. The underlying net interest expense increased following a higher net debt and increased interest rates. Income tax expenses for 2022 were EUR 12.2 million, corresponding to an effective tax rate of 26%. (2021 EUR 15.3m, or 34%). The expected effective tax rate for the Elopak Group is approximately 24%, depending on the relative mix of profits and losses taxed at varying rates in the jurisdictions in which Elopak operates. The main reasons for deviation from the anticipated effective tax rate are variations in the distribution of taxable profit within the Elopak Group and impact from the difference in local and functional currency. The year-to- date currency effects for 2022 decreased the tax expense by EUR 2.2 million and increased the 2021 tax expense by EUR 1.7 million. 46 Elopak changes to working capital. Tax payments in 2022 were in line with the previous year, while cash from operations was negatively impacted by increased working capital, as a result of the 20 % top line growth. Inventories increased by EUR 39 million following inflationary pressure and delayed placement of filling machines. Net cash flow used in investing activities was EUR -126.0 million. The main investments were the acquisitions of Naturepak and GLS Elopak. See note 11 for details. In the legacy business, investments were EUR 44 million, consisting of filling machine projects in Europe and manufacturing plant projects in Europe and Americas. This is EUR 6 million higher than in the same period last year but in line with normal levels. The American joint ventures did not distribute dividends during 2022, while a dividend at EUR 5 million was distributed in 2021, this despite improved financial results The key reason for holding back dividends is the inflationary pressure that has caused a higher working capital. Net cash flows from financing activities were EUR 102.6 million, reflecting an increase in bank loans. The increase is predominantly due to the funding of acquisitions. Capital structure As of December 31, 2022, net interest-bearing bank debt has increased to EUR 300.8 million from EUR 160.1 million at year end 2021. The main reason for the increase is funding of the acquisitions, as explained in the cash flow section Lease liabilities increased from EUR 80.6 million to EUR 90.7 million following the addition of the High Bay Warehouse in Terneuzen. Consequently, the Leverage Ratio as of December 31, 2022 was 3.3x. For a specification of the net debt, please refer to Alternative Performance Measures section. Equity decreased by EUR 1.1 million, from EUR 269.1 million as of December 31, 2021 to EUR 268.0 million as of December 31, 2022. Total comprehensive income for the full year 2022 was EUR 9.6 million. A dividend at EUR 19.6 million was paid on May 19, 2022. As part of the acquisition of GLS Elopak, a non- controlling interest in equity was established at EUR 9.2 million, reflecting our partner GLS’ 50 % share of the equity in the consolidated Indian entity. 47 Annual Report Elopak’s Board and Management have a strong focus on risk management to ensure an adequate level of risk exposure. It is of 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. 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 in both Elopak ASA, subsidiaries owned by more than 50% and also our joint ventures. The insurance policy is placed with a reputable insurer with appropriate rating. Risks in the production processes are managed through systematic, detailed work and safety standards. Elopak is covered by insurance that is normal for this type of industry, covering the financial impact of unforeseen events that would cause signifi- cant damage to the equipment or products. In 2022, Elopak conducted a climate risk analysis to establish a framework for iden - tifying and assessing both physical risks and transition risks such as regulations and technological developments. The climate risk analysis will be implemented in both operational and strategic planning processes and will serve as a foundation for mitigating climate risk in Elopak moving forward. Business risks 49 Annual Report See note 34 related to climate risk and impairment testing. As part of Elopak’s compliance with e.g. the Norwegian Transparency Act (2022), the organization conducted a high-level human rights assessment of its operations, supply chain and business relationships. The Elopak Group’s Human Rights Policy was developed and Elopak established a common framework for managing human rights risks. The following is a consolidated overview of what Elopak considers its main strategic risk factors. Market risk, credit risk and liquidity risk are discussed further in Note 25 of the Group Consolidated Financial Statements. The climate risk assessment and the human rights risk assessment is further described in our Sustainability Report. Risk Factor Raw materials – availability and price Inflationary pressure and uneven recoveries of economies Cyber security risk Market Dynamics- consumption Political and regulatory changes Market Presence - country risk Investment and integration Currency exposure Elopak RISK FACTOR MITIGATING ACTION RAW MATERIAL AND ENERGY – AVAILABILITY AND PRICE INFLATIONARY PRESSURE AND UNEVEN RECOVERIES OF ECONOMIES Elopak’s primary raw materials are boards, plastic resin and aluminium foil. In addition, Elopak consumes energy, primarily power in the production process. The cost and availability fluctuate due to economic, weather, and industry conditions. Prices for raw materials have fluctuated significantly since the start of the Covid-19 pandemic, from historically low points in 2020 to record high prices in 2022. The conflict in Ukraine had a significant impact on both raw material and energy prices. Elopak is highly dependent on third-party suppliers for the supply of key raw materials. The price fluctuations of both mate- rial and energy reflects the instability of supply chains, force majeures, variability in demand/supply balance and geopolitical uncertainties. If Elopak’s supply agreements terminate or expire or contracted agreements are not met, Elopak may be forced to obtain deliveries from different suppliers or, in the worst case, to not being able to supply its customers. Elopak has price adjustment mechanisms in place in some customer agreements, adjusting pricing based on the price development of certain raw materials and energy. To manage pricing volatility in Europe, Elopak also has a hedging strategy for LDPE, aluminium and energy. To mitigate the risk of availability of key raw materials, Elopak aims for long-term relationships with multiple suppliers and when possible, having several suppliers prequalified. As an example, boards are purchased under multi-year contracts. Some of the measures for managing supply chain interruptions are planning of inventory, moving inventory internally, and changing supplier, among others. By proactively identifying and qualifying alterna- tive suppliers and sourcing, Elopak has built resilience in case of supply interruptions. The risk of both energy price movements and supply is reduced by operating in multiple geographies. Furthermore, Elopak is utilizing external expertise to manage energy price risk in key locations. From 2021 to 2022, the annual inflation rate was 8.3% in the EU and 6.5% in USA, far above the inflation target of both the ECB and Federal Reserve. After experiencing high raw material price increases in 2021, 2022 started with continued increases following the conflict in Ukraine. This together with higher energy prices has led to higher and a more widespread inflation. Forecasting and predicting continues to be challenging – there is still high uncertainty related to when and how increased interest rates will impact future inflation and the macro economy in different regions. Uneven recoveries across the globe may lead to slower or lower recovery of demand for some products and markets. Continued focus on both innovation and cost discipline are prerequisites when managing inflation. Further, price increases are necessary with the current economic conditions and are largely accepted in line with inflation levels in the overall macro economy. See mitigating actions on Raw Material – Availability and Price, as well as Market Dynamics – Consumption. With legal entities operating in more than 30 countries across the globe, Elopak has a natural spread of operational risk both towards emerging and developed economies. Risk Factor Raw materials – availability and price Inflationary pressure and uneven recoveries of economies Cyber security risk Market Dynamics- consumption Political and regulatory changes Market Presence - country risk Investment and integration Currency exposure 51 RISK FACTOR MITIGATING ACTION CYBER SECURITY RISK Elopak is vulnerable to security breaches, including un- authorized access to systems including operation tech- nology (OT) and other cyber threats that could have a security impact. Elopak may not be able to prevent cyber-attacks, 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, also considering its employees as critical factors. Elopak increased several security measures last year on technology and employee awareness. Elopak is constantly monitoring safeguards and has a continuous improvement approach to consider the increasing sophistication of cyber-crime. Elopak has an insurance policy covering consequences of cybercrime. However, these may not cover unlimited consequences of cyber- crime and/or incidents. MARKET DYNAMICS – CONSUMPTION Following rising energy prices, rising food prices have continued to fuel inflation. Downward pressure in dairy and juice consumption can be observed, following “less spending by buying less” consumer tactics. Consumers have and will adapt their behavior further. After the pandemic, focus has shifted from convenience to affordability and value for money, while health and wellness remain top of mind. Polarization in consumer behavior has accelerated, increasing medium-term volatility in or between market pockets. Elopak has strong and long-lasting customer relationships and enough breadth of portfolio to mitigate medium-term market volatility risk. Medium to long term, Elopak’s growth strategy is a mix of conventional product-focused growth strategies, i.e. expand the market for the Pure-Pak ® solution globally, make acquisitions to gain market share, and create efficiencies. In addition, Elopak pursues demand innovation, creating new growth and new value by expanding the boundaries of our traditional markets. CURRENCY EXPOSURE Elopak's business is exposed to fluctuations in exchange rates. Although Elopak's reporting currency is Euro ("EUR"), several of the Elopak Group’s subsidiaries have other functional and/or underlying currencies. Elopak is mainly exposed to exchange rate fluctuations between EUR and United States Dollar (“USD”), in addition to Norwegian kroner (“NOK”) and Moroccan Dirham (“MAD”). Elopak also has certain investments in foreign operations whose net assets are exposed to currency exchange risk. Elopak aims to minimize the exposure related to currency exchange rate fluctuations by aligning the underlying currency in its commercial agreements, so called natural hedging. Local businesses have access to funding in local currencies as well as EUR through the multi-currency cash pools set up with Elopak’s banking partners. Where unable to achieve natural hedging, Elopak enters derivative agreements to hedge the outstanding exposures to an acceptable level. Nevertheless, exchange rate fluctuations may increase or decrease Elopak's reported revenue and expenses. 52 Elopak RISK FACTOR MITIGATING ACTION GEOPOLITICAL AND MARKET PRESENCE RISK COMPLIANCE AND INTEGRITY RISK ENVIRONMENTAL AND CLIMATE RELATED RISKS In 2022, Elopak had operating legal entities in 40 countries, production in ten locations and sales to customers in more than 70 countries. Some of the countries in which Elopak operates are subject to political, social, and economic instability that may affect business performance. A major incident in 2022, was the conflict in Ukraine that escalated throughout the year. As a result, Elopak’s Russian business was divested to local management while the Ukrainian operations continued despite very challenging circum- stances. See other related risks under risk factors on Compliance and Integrity risk. Due to having an international presence, Elopak moni- tors 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. Incorporated in this process are country risk assessments, including evaluation of sanctions and trade compliance, corruption, rule of law, and human rights. 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. Elopak acts with integrity and in accordance with accept- able ethical standards and complies with international and local laws and regulations. With increased global presence and heightened regulatory and stakeholder requirements related to responsible business conduct, Elopak has a higher risk exposure associated with corruption, anti- competitive practices, sanctions and trade restrictions, human and labor rights violations, and environmental breaches, amongst others. Potential consequences include fines, contractual, litigation and reputational risk, loss of licenses, and suspension or closure of operations. As a global industrial player, Elopak is exposed to various environmental and climate related risks. Both physical risks and governmental mitigation plans like the European Green Deal, political action plans, directives, and taxes on plastic could affect the demand for Elopak’s products positively and negatively. Future legislation with specific requirements for renewable materials and recyclability could also limit the use of different types of packaging. Increasing demand for raw materials with reduced carbon footprint might impact both price and availability. Elopak’s Code of Conduct is approved by the Board and represents a framework for managing ethics and compliance risks. The Code of Conduct sets out require- ments and key principles within various compliance and business integrity areas. Through Elopak’s global compli- ance program, the Code of Conduct and its supplementary policies and procedures outline how the principles are operationalized in the organization. Risks are managed through regular risk assessments and accompanied by mandatory training in compliance and integrity topics, with a focus on bribery and corruption, business partner integrity due diligence, sanctions, fair competition, and human and labor rights. As part of the climate risk analysis performed in 2022, a set of mitigating actions were defined to address the key climate risks. The methodology from the analysis will also serve as a foundation when Elopak implements climate risk assessment as part of the operational and strategic plan- ning process. Elopak has a proactive approach to managing the shifting landscape in the industry, and we welcome new regulations and legislation for circularity and renew- ability, promoting sustainable packaging. Elopak focuses on developing packaging solutions to meet new regulations and requirements and drive new sustainable innovations to the market to improve the competitiveness of our offering. This is further elaborated in our Sustainability Report. 53 RISK FACTOR MITIGATING ACTION CAPABILITY RISK Elopak’s long term aspirations are well defined in our vision, mission and strategy. Despite seeing a decline in some of our traditional core segments, we also see promising “new demand/opportunities” to deliver long term value creation. Ensuring the right capabilities as well as the ability to scale our organization in a sustainable way, are key challenges that must be actively addressed. Internal capability constraints linked to new skillset requirements, infrastructure, and an aging workforce, as well as the external dimensions of a heated labor market, post pandemic trends and inflation, all showcase a risk of knowledge and resource drain. Elopak’s strategic ambitions lead to increased requirements related to skills and capacity. We are working on expanding our talent pipeline, enhancing succession planning as well as activities to ensure retention of existing employees and attraction of new ones. We recently developed our employee value proposition and will launch targeted campaigns going forward. In addition, we continue to anchor strong leadership and culture as well as focus on continuous improvements of our infrastructure. INVESTMENT AND INTEGRATION In 2022, Elopak completed two strategic acquisitions. Consequently, the key focus has been, and continues to be, ensuring a successful integration of the newly acquired businesses. Completing and integrating acquisitions involves various risks, such as complying with new laws and regula- tions, new value chains, unexpected liabilities, incorporating acquired products into Elopak's product line, retaining key employees in the acquired business, and failing to achieve the anticipated results. Political and regulatory factors also pose a significant risk in developing markets. Elopak may consider acquiring other companies, assets, and product lines that may further complement or expand the Group’s existing business. Through its daily business, Elopak has shown the capability and capacity to manage geographical and cultural diversity through our global presence and a diversified product portfolio. Elopak typically requires the sellers in acquisitions to indemnify the Elopak Group against certain undisclosed liabilities. Throughout the investment processes and integration stages, Elopak is committed to high quality and adequate risk assessment and does not hesitate to involve external support from experts when considered necessary. Elopak’s Board and Management closely monitor all significant investment assessments and decisions. 54 Elopak 55 Annual Report 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, 2022 was NOK 6.7 billion, down from 7.2 billion at the end of 2021. The average daily volume of ELO shares traded on Oslo Børs was 0.2 million, down from 0.3 million in 2021. Elopak will endeavor to increase trading volume and liquidity during 2023. Figure 1. Elopak share price development 2022 from IPO date to 31.12.2022 The Elopak share Elopak aims to deliver long-term value creation for its shareholders, exceeding comparable investment alter- natives. For our shareholders, this will be reecte d in the combination of the long-term price performance of the Elopak share and dividend pay-out. -60% Jul Aug Sep Oct Nov DecJan Feb Mar Apr May Jun Share price 10% 0% -10% -20% -30% -40% -50% 56 Elopak Figure 2. Geographic split of Elopak’s shareholder base, as of 31.12.2022 Norway 75% Other 13% United Kingdom 4% United States 3% Japan 5% 57 Annual Report Dividend policy Elopak has a dividend policy and guidance to distribute 50-60% of adjusted net profit as an annual dividend. Shareholders should expect a competitive return on their invest- ment over time through a combination of dividends and an increase in the share price. The Board proposes to pay a dividend of NOK 0.86 per share for the 2022 financial year. The dividend will be paid out on May 24, 2023 to shareholders of record on the date of the Annual General Meeting. 2023 Annual General Meeting The Annual General Meeting will take place at 14:00 (CEST) on Thursday May 11, 2023. 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 attendance or vote. Analyst coverage Elopak has several analysts covering the Elopak share. Five financial analysts provide market updates and estimates for our financial results. Broker Analyst Contact ABG Sundal Collier Martin Melbye [email protected] Carnegie Robin Santavirta [email protected] DNB Niclas Gehin [email protected] Goldman Sachs Moomal Irfan [email protected] SEB Håkon Fuglu [email protected] Financial Calendar Date Event May 4, 2023 Quarterly report – Q1 May 11, 2023 Annual General Meeting May 12, 2023 Ex-dividend day May 24, 2023 Payment of dividend August 17, 2023 Half-yearly report November 2, 2023 Quarterly report – Q3 58 Elopak Top 20 shareholders as of December 31, 2022 Shareholder # Shares Dec 22 % S/O Dec 22 # 1 Ferd As 161,079,280 59.83 % # 2 Nippon Paper Industries Co., Ltd. 13,460,950 5.00 % # 3 Artemis Investment Management Llp 9,076,899 3.37 % # 4 Folketrygdfondet 8,879,709 3.30 % # 5 Morgan Stanley Europe SE 7,356,462 2.73 % # 6 Pareto Asset Management AS 5,029,041 1.87 % # 7 Handelsbanken Fonder AB 3,331,164 1.24 % # 8 DNB Asset Management AS 2,730,062 1.01 % # 9 Pictet Asset Management SA 2,722,642 1.01 % # 10 Skagen AS (Investment Management) 2,126,041 0.79 % # 11 Fidelity Investment Advisors UK Ltd 1,869,244 0.69 % # 12 Oddo BHF Asset Management SAS 1,787,394 0.66 % # 13 Arctic Fund Management As 1,714,930 0.64 % # 14 Fondsfinans Kapitalforvaltning AS 1,550,000 0.58 % # 15 Forsvarets Personellservice 1,524,100 0.57 % # 16 T.D. Veen As 1,469,193 0.55 % # 17 Ubs Asset Management Switzerland AG 1,282,862 0.48 % # 18 Mfs International (Uk) Ltd. 1,248,311 0.46 % # 19 Sp-Fund Management Co. Ltd. 1,185,456 0.44 % # 20 Wenaasgruppen AS 917,391 0.34 % 59 Annual Report Resilience in changing climates From the start in 1957, Elopak has enabled vital nutrition for generations. As times have changed, products, tastes and demand have evolved, but our Pure-Pak ® cartons continue to be the preferred choice among customers and consumers alike. 60 Elopak 61 Annual Report From the Boardroom 62 Elopak 63 Responding to the new environment of inflationary pressures on raw materials as well as most other costs, Elopak implemented extraordinary price increases in 2022. The full effects from these price increases could be seen in the second half of the year, putting Elopak in a structurally good posi- tion for future business scenarios. Also, the company’s Americas business has done very well both in terms of growth and profitability, adding to the strategic deliveries in 2022 and contributing to building a resilient Elopak further. In 2022, the acquisition and integration of Naturepak was completed, and Elopak is Proving resilience and continuing to deliver on strategic initiatives in a demanding year - a message from The Board For Elopak, 2022 was an eventful year that comprised a combination of crisis management and strategy execution. While managing completely new challenges that the compan y has never been exposed to before, Elopak delivered organic growth in Americas, as well as two acquisitions to broaden the company’s footprint in line with the sustainability- driven growth strategy. 64 Elopak now fully focused on delivering on the growth plan in the region. In the spring of 2022, the Board approved a long-term strategic partnership with GLS to deliver sustainable packaging solutions to consumers across India under a new partly owned subsidiary: GLS Elopak. The new company has strong ambitions to grow into one of the biggest players for s ustainable packaging solutions in the South-Asian market. Elopak is happy to welcome both Naturepak and GLS to the Elopak family. During the year, Elopak has observed with great concern and sadness the situ- ation in Ukraine and have wholeheartedly condemned the violence being carried out in this region. Elopak’s over-riding concern has been for the safety and wellbeing of the company’s employees. A group crisis Team was established, which monitored the situation almost daily in close dialogue with the management teams in Ukraine and Russia, in Ukraine to support Elopak employees and to help keep them and their families safe. Elopak also made financial donations to Red Cross, supported local authorities in their work with refugees, and helped Elopak employees financially during 2022. As providers of packaging solutions for liquid food and beverages and part of a vital supply chain, Elopak worked hard to keep supplying the company’s customers across the region so long as it did not compromise the safety of people, and in compliance with all relevant sanctions. In March 2022, Elopak suspended all activities in Russia, a decision that led to the divestment process that was approved in February 2023. In a year where the entire world saw increased geo-political uncertainties, unexpected supply chain challenges and significant inflationary pressures Elopak delivered solid financial results. Revenue grew by 20%, or 11% organically, and a 5% higher EBITDA. The margins were naturally impacted and were lower than the year before, as the Company is still adapting to the new reality. Despite a challenging and extraordinary year, Elopak proved its resilience in changing climates. Looking forward, Elopak expects the volatile environment experienced through 2022 to continue and make it challenging to predict the short-term impacts on results, as both suppliers, customers and consumers are adjusting to new realities. Some parts of the world where Elopak operates are significantly affected by the recession and macro- economic uncertainties affecting consumption. This can affect the company for a period, but Elopak is in a structur- ally good position, diversified markets, and solid financial position. Elopak expects the 65 Annual Report ongoing, strategic initiatives to continue to grow the top-line and strengthen the results. Company overview Elopak is a leading global supplier of carton packaging and filling equipment, using renewable, recyclable, and sustainably sourced materials to provide innovative packaging solutions. Elopak was founded in 1957. The head office is in Oslo, and the Elopak Technology Center is based in Spikkestad, Norway. Elopak has ten produc- tion plants in Europe and the Americas, including two joint ventures, and operates in more than 40 countries through market units and associates. The business activities are reported exter- nally in two segments, EMEA and Americas. Governance Elopak ASA is committed to upholding high standards for corporate governance. We strongly believe that good corporate governance is important for value creation. Elopak’s shares are listed on Oslo Børs, and thus we are bound by the Norwegian Code of Practice for Corporate Governance. We are committed to complying with all recommendations in the Norwegian Code of Practice for Corporate Governance. Elopak has two sub-committees of the Board of Directors: the Board Audit and Sustainability Committee (BASC) and the Compensation Committee, in accordance with the Norwegian Private Limited Companies Act. The Board rolled out an updated Code of Conduct in 2022 to reflect the fact that Elopak is a listed company but also to reflect a higher ambition and expectations from employees, investors, and society at large. A sustainability-driven growth strategy Our vision, “Chosen by people, packaged by nature,” and corresponding mission statement aim to express and emphasize our focus on sustainability and innovation as an integrated part of the company’s purpose and aspiration. The vision and mission guide the direction of the company’s sustainability- driven strategy. Elopak is uniquely positioned to meet the growing demand for sustainable packaging solutions, with its strong track record, growing geographical footprint, and investment in sustainability- focused innovations. Going forward, Elopak will build on these strengths to provide the best carton consumer experience possible while systematically supporting our customers in realizing the transition to a low carbon circular economy. This integrated approach – always taking care of both consumers and the planet – is at the core of Elopak. 66 Elopak Elopak has prioritized five key growth pillars in executing the sustainability-driven growth strategy. 1. Expand our end-to-end, sustainable Pure-Pak ® offer in North American fresh markets 2. Leverage our historical know-how and broaden our sustainable solutions, growing into ambient, aseptic applications 3. Broaden our geographical footprint through selective M&A opportunities, strengthening the company’s position in markets with higher inherent growth 4. Grow accessible potential in our core markets, converting plastics to carton 5. Drive commercial excellence through margin optimization, value engineering, and operational improvement Three principles, in the form of mutual promises, align the organization on how to deliver on the strategy and guide leaders and employees in fulfilling the mission and realizing the vision. These are “Empower,” “Unite,” and “Accelerate” – all key features critical to successful strategy implementation. The Board, Management and Leaders were actively engaged in the process of developing, communicating and implementing the three principles in a structured and engaging way. Through the annual Business Plan, the strategy is broken down to a one-year tactical plan that defines priorities for the coming year; a balanced set of targets focusing on People, Planet, and Profit, all supported by initiatives and action plans. In this way the Board believes that Elopak builds alignment: connecting vision and mission to strategy and ultimately execution; uniting the whole organization; and defining how to deliver together through our promises. People At the end of 2022, Elopak had 2,000 employees (including joint ventures 2,600). Our workforce consists of more than 50 nationalities with various background, expertise, culture, and experience. We embrace diversity in all its forms to ensure competitive and sustainable growth as a strategic asset. We also believe that diversity creates energy for an inspiring and healthy work environment. In 2021 we redefined our vision, mission and the base component of the Elopak culture - our promises. These behaviors capture the essence of the culture we believe supports strategy achievement as well as forming a sustainable and attractive workplace. We launched various initiatives in 2022, including global leadership program to support the implementation, and will 67 Annual Report continue in 2023. We conducted a Pulse Survey late 2022, where employees ranked Elopak as a "good place to work (eNPS = 5)". Our strength is in Empowering people, especially ensuring they have the authority to do what is required. The feedback shows that we have room for improvement in "Unite" and "Accelerate". We sustain and develop Elopak as an attractive employer for current and new employees through several measures. We offer flexible working options, supportive people policies, and annual performance dialogues with individual development plans. We focus on retention and development of future talent, and in 2022 we enhanced efforts on succession planning. EloPeople, our global HR platform, offers a single collection point for all global learning programs and contains a wide range of courses. The platform allows us to track training, ensuring compliance with our Code of Conduct & Anti-Corruption Policy, GDPR, Safety requirements, and other relevant training courses. To further strengthen our attractiveness as an employer, we launched a new Employee Value Proposition “Make it real” in 2022. We asked for input from employees from all over the world on ‘what truly defines Elopak as a workplace’ and our employees answered: We create something that is real and tangible. We respect 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. Elopak will publish a statement of due diligence assessments in accordance with the Transparency Act on https://www.elopak. com/other-reports-presentations/ before June 30, 2023. Our employment model reflects universal human and labor rights standards, and employment conditions are in line with local (national) mid-market conditions. Good working conditions are maintained through policies, procedures, guidelines, and training available to all employees. We believe that our “speak-up” culture and whistleblower helpline are tools for promoting and safeguarding a good working environment and the well-being of our employees. In 2022, we have had high focus on working conditions as part of the integration of the acquisition in MENA. We conducted a survey amongst our new employees with the purpose to understand their experience and needs. The result was very positive. To make Elopak an even safer workplace, we have launched a long-term plan and supportive strategy, providing a framework 68 Elopak for safety plans. Key focus areas and tailored initiatives have been implemented in all local safety plans. A program has been initiated to enable leaders to better interact with the organization, understand underlying factors, and ensure understanding of safety issues. Safety reporting is followed up in the organization regularly, as well as in Executive Management and Board level. Absence due to sickness has increased from 4.0 % in 2021 to 4.3 % in 2022, above our global target of 3 %. The main reason is related to the Covid-19 pandemic, where government regulations and our own recommendations, instructed numbers of days staying at home, as well as the virus and flu variants that Europe has been exposed to, especially during the autumn of 2022. Corrective actions focusing on managing a healthy business environment are carried out in cooperation between the HR and HSE departments, relevant line managers, and local health service providers. We offer our employees programs with individual coaching or collective programs for departments. In Ukraine, we have faced challenges to uphold a safe and healthy working environment during the war, due to the lack of manning in some departments, limited use of electricity, and among others, lack of gas, fuel, and air alarms. Our employees in Ukraine have remained positive and adapted impressively to the situation. Elopak is subject to annual corporate social responsibility reporting requirements pursuant to section 3-3c of the Norwegian Accounting Act. The reporting is covered by the separate Sustainability report published on our website. Planet Elopak’s sustainability program sets clear targets and KPIs for the Planet dimension, as further described in our 2022 Sustainability Report. We have Science Based Targets to keep global warming below 1.5°C and to be Net-Zero by 2040. We also commit to continue sourcing 100% renewable electricity for all global operations through our RE100 membership. We have an ambitious goal of 100% renewable or recycled materials in cartons on the EU market by 2030. Renewability and circularity are key to Elopak, aiming to leave the world unharmed. We call this bio-circularity. Our stakeholders confirm the importance of climate action as well as contributing to a circular economy. In 2022, Elopak was among the first three companies to have our Net-Zero targets approved by the Science Based Targets initiative (SBTi). The Net-Zero standard 69 Annual Report requires near-term and long-term targets focusing on rapid, deep cuts to emissions across the value chain. Our near-term targets aim to reduce absolute scope 1 and 2 GHG emissions by 42% by 2030 (from a 2020 base year) and reduce scope 3 (value chain) GHG emissions by 25% by 2030 from a 2020 base year. We have also set targets to be Net-Zero by 2050 by reducing GHG emissions across all scopes by 90%. Elopak works to ensure responsible sourcing of raw materials through the supply chain through third-party certification schemes. We have identified three main certification systems relevant to our products. Through our Raw Material Sourcing Policy, our Global Supplier Code of Conduct, and our Sustainability Program, we secure a consistent approach aligned with our Procurement Team and our Sustainability Team. The certifications are embedded in all relevant areas of the organization, including supply chain, production, design, marketing, and sales. Our approach to environmental issues is firmly embedded throughout the company through our sustainability program, commitment to our science-based targets, and our RE100 membership. We report in accordance with the GRI framework and the GHG protocol. Please see the Sustainability Report presented on the Elopak website for further details. Profit Elopak delivered 20% top-line growth in 2022 with revenues at EUR 1,024 million, up from 855 million in 2021, (both figures excluding Russia). The growth was mainly in Europe, and the key drivers were price increases on cartons and closures. In terms of volume, the total number of cartons increased, also when adjusting for acquired business. Adjusted EBITDA, as reported in the quarterly reports to investors, was EUR 119.4 million in 2022 compared to EUR 113.7 million in 2021. We are satisfied with the overall performance of Elopak, delivering top-line growth and solid results in a very challenging business environment. Raw material prices continued to increase during the year, and although we saw some softening in Q4, they are still at a very high level. During the year, the pricing of polymers and aluminium reached unprecedented levels. In addition, normally less significant input costs were subject to price increases, like filling machine parts, and pallets, as well as utility costs, which reached unprecedented levels and volatility throughout the year. 70 Elopak Operating profit in 2022 decreased by EUR 7.5 million from EUR 49.2 million to EUR 41.8 million. The main reason for this development is higher cost of materials and impairments on non-current assets. Cash flow from operations was EUR 25 million, compared to EUR 73 million the year before. The working capital level at the end of 2022 was higher mainly due to higher inventories than normal. Net cash flows used in investing activities decreased by EUR 100 million. The main reason was acquisition of subsidiaries in MENA and India. Net cash flows used in financing activities increased by EUR 133 million. The increase is predominantly due to a dividend payment in 2022 and the proceeds of loans from financial institutions. As of December 31, 2022, net interest- bearing bank debt has increased to EUR 301 million from EUR 160 million at year-end 2021. The main reason for the increase is proceeds of loans from financial institutions. Lease liabilities increased from EUR 81 million to EUR 91 million following entry into new lease for the new High Bay Warehouse in Netherlands. Consequently, the Leverage Ratio as of December 31, 2022, was 3.3x. Equity was stable at EUR 268 million as of December 31, 2022, down by EUR 1 million. The total comprehensive income in 2022 was EUR 9,6 million. A dividend of EUR 20 million was paid during the second quarter. The Board confirms that the accounts are presented under a going concern assumption. The net result of the parent company Elopak ASA was EUR 23.5 million, which is an increase from EUR 1.4 million the year before. The main reason for the increase is higher dividends from subsidiaries. The parent company is responsible for sourcing raw materials and production in the European value chain and therefore carries the raw material pricing risk. Outlook 2022 was characterized by the war in Ukraine, which led to continued high raw material prices, general inflationary pressure in all markets, supply chain issues following the pandemic, and an uncertain macro- economic environment. The supply chain challenges are especially impacting Elopak’s filling machine and spare parts business as lead times increase and availability of certain components is constrained. Recently, this challenging environment has affected consumer behavior, leading to a preference towards typically lower-priced private label food and beverage products. 71 Annual Report The fundamentals for sustainable packaging solutions are robust as the world needs to move towards a low-carbon economy. Elopak is well-positioned to address market opportunities and challenges. Sustainability is embedded in the business strategy, and we actively pursue the opportunities arising from sustainability awareness and the continued conversion from plastic to carton. Elopak remains optimistic on the longer- term market fundamentals. Elopak sales are mainly to fresh dairy and aseptic dairy and juice customers, which have proven to be resilient market segments. The volatile environment experienced throughout 2022, continues to make it challenging to predict short-term results as both suppliers, customers and consumers are adjusting to new realities. Increased board cost for Elopak will take effect from end of Q1. Elopak has taken the required mitigating steps to protect margins from increased and volatile raw material and utility prices, including hedging. Elopak has a strong track record of managing margins responsibly over time. However, there are significant inflationary pressures on other input costs, which are expected to continue to impact Elopak’s EBITDA margin in 2023. The Board proposes a dividend to all shareholders of NOK 0.86 per share, in line with dividend policy and the statement in the Q4 report. 72 Elopak Oslo, March 30, 2023 Board of Directors in Elopak ASA Trond Solberg Board Member Sid Johari Board Member Anette Bauer Ellingsen Board Member (employee representative) Sanna Suvanto-Harsaae Board Member Jo Olav Lunder Chairman of the Board Anna Belfrage Board Member Erlend Sveva Board Member (employee representative) Thomas Körmendi CEO 73 Annual Report Our objectives and principles Our objective is to ensure long-term value creation for our shareholders, employees and other stakeholders through our vision, mission and promises. We believe that the best way to achieve this goal is through 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 more than just a technical exercise. It is a fundamental element in the practical work of the company’s governing bodies, and it defines the criteria Corporate governance report We believe that eective corporate governance is the foundation of our business. Through our governance, we set clear responsibilities for our managers, leaders, 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—in every sense of the word. 74 Elopak on which the trust of the Company’s share- holders 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 and the Norwegian Code of Practice for Corporate Governance (the “Code of Practice”), cf. Oslo Børs Rule Book II – Issuers Rules, Section 4; Continuing obligations for issuers of shares. This report was approved by the Board on March 30, 2023. 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 corporate governance principles (available on the Elopak website) describing the Companys main principles for corporate governance. In addition, the Company has prepared a set of guidelines and routines to ensure a clear and productive division of roles and responsibilities between the Board, the executive management and the shareholders, as well as satisfactory control over the Companys activities. These principles and guidelines ensure good and effective corporate governance and are based on the Code of Practice. The Board has the ultimate responsibility for the management of the Company, adher- ence to good corporate governance stan- dards, and will at all times ensure that Elopak complies with the Code of Practice. Regarding business sustainability, Elopak provides information on sustainability in a separate sustainability report in accordance with the Norwegian Accounting Act, where further details regarding sustainability can be found. 75 Annual Report Business Elopak’s business purpose is expressed in the Companys 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 Companys website and within the framework of the Articles of Association, Elopak has established goals and strategies for the business. Elopak’s objectives and strategies are presented in the annual report in section “Executing our sustainability-driven growth strategy”. The evaluation of Elopak’s objectives and strategies as well as risk and risk management is described in “From the Board Room”. 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 on an annual basis, at a minimum. Equity and dividends Equity As of December 31, 2022, Elopak had a consolidated equity of EUR 268 million, corresponding to an equity ratio of 28%. The Board considers that Elopak has a capital structure that is appropriate for its objectives, strategy and risk profile. Dividends Elopak will initially target a dividend pay-out ratio of approximately 50-60% of the Elopak Group’s adjusted net profit. In deciding whether to propose a dividend and in determining the dividend amount, the Board will comply with the legal restrictions 76 Elopak set out in the Norwegian Public Limited Liabilities Companies Act and take into account the Company’s capital requirements, including capital expenditure require- ments, the Company’s financial condition, general business conditions, borrowing arrangements and any other restrictions that its contractual arrangements in place at the time of the dividend may place on its ability to pay dividends and the maintenance of appropriate financial flexibility. Elopak’s next dividend payment is expected to be paid out on May 24, 2023 based on the financial year ended December 31, 2022. The Board has proposed to the Annual General Meeting a dividend of NOK 0.86 per share for the year 2022. Board mandates to increase the share capital At the annual general meeting of the Company on May 12, 2022 the Board was authorized to increase the share capital of Elopak by up to NOK 35,151,662 in one or more share capital increases 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 2023, but in no event later than 30 June 2023. The Board has not issued any shares in rela- tion to this authorization. Board mandates to acquire own shares At the annual general meeting of the Company on May 12, 2022 the Board was authorized to acquire its own shares in the Company on behalf of the Company with an aggregate nominal value of up to NOK 35,151,662. Consideration may not be less than NOK 1 and may not exceed NOK 250 and the Board determines the methods by which own 77 Annual Report shares can be acquired or disposed of. The authorization is valid until the annual general meeting in 2023, but in no event later than 30 June 2023. In relation to this authorization, the Board purchased 105,000 shares since the Annual General Meeting on May 12, 2022 and up to the date of this report. 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 executive management are committed to ensuring equal treatment of all the Company’s shareholders and that transactions with related parties take place on an arm’s length basis. Note 32 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 32. In 2022, the Company purchased 105,000 of its own shares at an average price of NOK 16.77 per share on Oslo Børs. The share buyback program was publicly disclosed in a stock exchange announcement on June 8, 2022. Shares and negotiability The Articles of Association place no restric- tions on owning, trading or voting for shares in Elopak ASA. There are no general restrictions on the purchase or sale of shares by the Board or members of the Company’s executive management as long as they comply with the regulations on insider trading and in the Market Abuse Regulation. The extraordinary general meeting on November 23, 2022 approved a performance share unit program (Long-Term Incentive plan) and authorization to acquire own shares. For the 2022 performance, Executive Management was granted an annual award of shares from the Company. 78 Elopak Performance KPIs in the new LTI program are the following; Financial = Adjusted EBITDA less normalized CAPEX, weight 50% Shareholder Value = Total shareholder return (TSR), weight 30% ESG = CO 2 emission, weight 20% The granted shares will be gradually vested during a 3-year period. Graded vesting gives more activity, increased engagement and perceived value. Allocation of shares will be based on and capped at % of base pay (80% for CEO and 50% for Global Leadership Team members). Other terms and conditions for the new program will be based on market standards. After the expiry of the lock-up period, the Participant shall be free to dispose of the Restricted Shares under certain terms. Futher detials are described in the 2022 Remuneration Report. General meetings All shareholders have the right and are encouraged to participate in the general meetings of Elopak ASA, 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 11, 2023. 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 in order 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 79 Annual Report allowed in the Articles of Association. A shareholder 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 five 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 pre-meeting 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 C ompanys website. Chairing meetings General meetings will normally be chaired by the Chair of the Board. The Board will however evaluate whether it is appropriate to engage an external chairperson to chair the meeting. Minutes from general meetings are published as soon as practicable via the 80 Elopak 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 Nomination Committee should be selected to take into account the interests of shareholders in general, and the majority of the Nomination Committee should be independent of the Board and the executive management of the Company. No Board member or member of the executive management should serve on the Nomination Committee. Members of the Nomination Committee are elected for a term of two years unless otherwise decided by the general meeting. The current members of the Nomination Committee are Tom Erik Myrland, Terje Valebjørg and Kari Olrud Moen. The primary responsibilities of the Nomi- nation Committee are to present proposals to the general meeting regarding election of shareholder 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. 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 Companys executive personnel. The Nomination Committee’s expenses are covered by the Company. The Nomination Committee Charter is approved by the general meeting. Shareholders who wish to contact the Nomination Committee can do so by sending an e-mail to: [email protected] 81 Annual Report Board: Composition and independence Jo Olav Lunder I Chairperson I Year of appointment: 2018 Jo Olav Lunder has been a board member since 2018. Lunder has more than 25 years of board, directorial, and executive experience from multiple private and public companies within telecommunications, IT services, business solutions, and e-commerce. Lunder has held positions such as COO of Telenor Mobile AS, CEO of Ementor ASA, President of Ferd Capital, CEO of Vimpelcom Ltd, and CEO of John Fredriksen Group. Lunder has a Master of Business Administration (MBA) from Henley Business School and a Bachelor’s degree from Oslo Business School. Current directorships and senior management positions: Deep Ocean BV (chairman), Element Logic AS (chairman), BUS AS (chairman), Cigalep AS (chairman), Canica AS (board member), Stenshagen Invest AS (board member), Komplett AS (board member) and IT Verket AS (board member). Shares owned at year-end 2022: 107 142 Record of Attendance: 12 Trond Solberg I Board member I Year of appointment: 2008 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 direc- torships and senior management positions: Farvatn Private Equity AS (lnvestment Director), Blafre AS (chairperson), Skolo AS (chairperson), RemovAid (chairperson), Seco Invest AS (board member), BVN 22 AS (chairperson). Shares owned at year-end 2022: 0 Record of Attendance: 12 82 Elopak Anna Belfrage I Board member I Year of appointment: 2021 Anna Belfrage joined the Company as a board member and the chairman of the Audit Committee on 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 Univer- sity. Current directorships and senior management positions: Mycronic AB (publ.) (board member, chairman of the audit committee), Note AB (publ.)(board member, chairman of the audit committee), CINT AB (publ.)(board member, chairman of the audit committee), Ellevio AB (board member, chairman of the audit committee), Sveaskog AB (board member, chair of the audit committee. Previous directorships and senior management positions last five years: Södra Skogsägarna Ekonomisk Förening (CFO and Senior VP IT and Purchasing). Shares owned at year-end 2022: 0 Record of Attendance: 10 Sid Johari I Board member I Year of appointment: 2017 Sid Johari has been a board member of Elopak 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 indus- trialization. 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 management positions: Tech2M (founder) and Airgo Design (advisory board member). Previous directorships and senior management positions last five years: Datalase (advisory board member) and SAVEGGY AB (chairman). Shares owned at year-end 2022: 17 857 Record of Attendance: 12 Pursuant to the Companys 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 executive management team. Two of the Board members, Jo Lunder and Trond Solberg, are defined as non-independent of the Company’s main shareholders. 83 Sanna Suvanto-Harsaae I Board member I Year of appointment: 2021 Sanna Suvanto-Harsaae joined the Company as a board member on April 15, 2021. Suvan- to-Harsaae has extensive experience as a board member and director from several inter- national companies. Suvanto-Harsaae is currently the chairman of the Posti Group Corpo- ration, Altia Oyj, BoConcept AS, and Orthex Oyj. She has also previously served as a board member of SAS AS and as the chairman of Isadora AS, and Paulig Oy. Suvanto-Harsaae holds a Bachelor’s degree in Economics from Lund University. Current directorships and senior management positions: Posti Oyj (chairman of the board, chairman of the remuneration committee, member of the audit committee), BoConcept AS (chairman, member of the audit committee), TCM AS (chairman of the board, chairman of the remuneration committee, member of the audit committee), Orthex Oyj (chairman), Babysam AS (chairman), Altia Oyj (chairman of the board, chairman of the remuneration committee, member of the audit committee), Nordic Pet Care Group AS (chairman), Harvia Oyj (vice-chairman of the board, chairman 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 (chairman), and Paulig Oy (chairman). Shares owned at year-end 2022: 14 285 Record of Attendance: 11 Anette Bauer Ellingsen I Employee-elected board member I Year of appointment: 2021 Anette Bauer Ellingsen has served as an employee-elected board member on the Board of Elopak 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). She has no other current or previous (last five years) directorships or senior management positions. Shares owned at year-end 2022: 1 071 Record of Attendance: 10 84 Elopak Erlend Sveva I Employee-elected board member I Year of appointment: 2015 Erlend Sveva has served as an employee-elected board member since 27 August 2015. Sveva has been employed in Elopak since 2006 and currently holds the position of Specialist Manager on Fresh System Performance in Elopak. Sveva holds an MA in Science and Tech- nology from NTNU, Trondheim, and an MA in Business Studies from Leeds Beckett Univer- sity, Leeds, UK. He has no other current or previous (last five years) directorships or senior management positions. Shares owned at year-end 2022: 1 071 Record of Attendance: 12 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 expertise 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. 85 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 devel- opments, such as sustainability and compli- ance topics. The Nomination Committee has held individual discussions with each Board member (both shareholder and employee elected), with the CEO and other key members of the management 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 executive 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 participate 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. 12 board meetings were held in 2022. Board committees The Company has, in addition to the Nomi- nation Committee, appointed a Board Audit and Sustainability Committee (“BASC”) and a Board Compensation Committee ("BCC"). Both committees are appointed to assist the Board in discharging its oversight responsibilities, work as preparatory bodies 86 Elopak 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 consists 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 The Board has developed and approved a separate Board Audit and Sustainability Charter. The Board Compensation Committee The Board nominates the members and the chairperson of the BCC. The BCC consists 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 members of the BCC are Trond Solberg (chairperson), Jo Lunder (committee member), and Sanna Suvan- to-Harsaa (committee member). The purpose of the Committee is to assist the Board in fulfilling its responsibilities in: Discharging the Board’s responsibilities relating to the compensation of the CEO and the other members of the executive management team; 87 Annual Report Overseeing the administration of Elopak’s compensation and benefits plans and preparing and recommending proposals for the Board’s statement on executive remuneration under the Norwegian Act on Public Limited Liability Companies section 6-16a and 6-16b. Risk management and internal control Risk management As set out in the Principles for Corporate Governance of Elopak ASA, the Board shall ensure that Elopak has good internal control framework and appropriate systems for risk management given the scope and nature of the Company’s business activities. These systems shall be continuously developed in light of the Company’s growth and situation. Executing our sustainability-driven strategy depends on managing overall risk exposure and stand-alone 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 Board Audit and Sustainability Committee (“BASC”) assists the Board in discharging over- sight responsibilities, including ensuring the effectiveness of our internal control and risk management system. The management is responsible for operationalizing the risk management responses, including ensuring the Group’s primary strategic initiatives, as well as identifying, 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 will 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, are mapping, evaluating, and classifying risks based on likelihood, mitigating actions, and estimated impact. The framework of the process includes clear procedures to execute risk management throughout 88 Elopak 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 priori tization 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 the 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 moni- tored, managed, and mitigated throughout the year to manage the appropriate level of risk exposure and monitor the progress of risk response actions. Internal control The Board is through the BASC overseeing the internal control routines in the Company. Processes evaluated are including, but not limited to Procurement process, Production & inventory process, Sales process, Payroll process, Period end closing process and IT General control process. 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 managements plan for further development of the Company’s internal control system. Remuneration of The Board The general meeting determines the Board’s remuneration annually, on the basis of 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 sub-committees may be compensated in addition to the remuneration received for Board membership. This is further described in the Elopak’s Remuneration Guidelines and Remuneration Report for 2022. 89 Annual Report Remuneration of executive personnel The Board Compensation Committee assists the Board in discharging the Board’s responsibilities relating to the compensation of the executive management team. Remuneration of the executive management team is described in Elopak’s Remuneration Guidelines and in the Remuneration Report for 2022. Information and communications Elopak`s reporting of financial, sustainability and other information is based on transparency and equal treatment of shareholders. Elopak shall provide the public with accurate, comprehensive and timely information, in order to form a good basis for making decisions related to valuation and trade of the Elopak share. All information considered relevant and signif- icant for valuing the Company’s shares will be distributed and published in English via Oslo Børs disclosure system, www.newsweb. no, and via Elopak’s investor website simultaneously. Elopak gives weight to maintaining an open and ongoing dialogue with the investor community, hereunder 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 community, hereunder the Company’s shareholders. Elopak holds public presentations in connection with the announcement of quarterly and annual financial results as well as strategic updates. The presentations are available as live presentations via the internet (webcast) and the presentation material is also made available via Oslo Børs’ news site www.newsweb.no and via Elopak’s investor website. Takeovers The Board has established guidelines for take-over bids. If a take-over process should occur, the Board and the executive management team each have an individual responsibility to ensure that the Company’s share- holders are treated equally and that there are no unnecessary interruptions to the Company’s business activities. The Board 90 Elopak 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 take-over 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. 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 2022 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 disagreements between the external auditor and executive 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 executive management. • Confirmed its independence and provided an overview of non-audit services provided to Elopak. • During 2022, the external auditor attended 6 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. 91 Annual Report Elopak Management Thomas Körmendi I Chief Executive Officer I Year of appointment: 2018 Thomas Körmendi is the Group’s CEO and President. He joined the Group in 2018. Körmendi has more than 30 years of extensive management and business development experience from several international companies. Prior to joining the Group, 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. 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 Busi- ness School. Previous directorships and senior management positions last five years: One Nordic (board member), Kezzler A/S (CEO), and Körmendi & Co (Senior Business Advisor). Mr Körmendi holds 361,515 shares and 172,953 rights to shares in Elopak. Bent K. Axelsen I Chief Financial Officer I Year of appointment: 2019 Bent K. Axelsen is the Group’s CFO. He joined the Group in 2019. Axelsen is an experienced executive with broad international experience across a range of professions ranging from finance to business development, marketing, product management, and business operations. In addition to Norway, Axelsen has particular business experience from Asia, after living two years in Singapore and 4 years in Thailand. Prior to joining the Group, 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 positions in Norsk Hydro ASA. Axelsen holds a Master’s degree in Economics from BI Norwegian Business School. Mr Axelsen holds 191,576 shares and 61,289 rights to shares in Elopak. Ivar Jevne I EVP Material and Product Supply I Year of appointment: 2013 Ivar Jevne is the Group’s Executive Vice President MPS (Material and Product Supply) & Procurement. He first joined the Group 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 the Group, Jevne held the position of Principal at A.T. Kearney. Jevne holds a Master of Science from the Norwegian University of Science and Technology. Mr Jevne holds 227,411 shares and 60,110 rights to shares in Elopak. Wolfgang Buchkremer I Chief Technology Officer I Year of appointment: 2018 Wolfgang Buchkremer is the Group’s Chief Technology Officer. He first joined the Group in 2011 and was promoted to his current position as CTO in 2018. As such, Buchkremer has 10 years of experience from within the Elopak system, starting out as a Senior Manager within Research & Engineering. Prior to joining the Group, 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). Mr Buchkremer holds 68,148 shares and 52,453 rights to shares in Elopak. Nete Bechmann I Chief Human Resources Officer I Year of appointment: 2020 Nete Bechmann is the Group’s Chief Human Resources Officer. She joined the Group in 2020. Bechmann has more than 30 years’ experience within human resources, leadership, and finance. Prior to joining the Group, Bechmann held the position of executive 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 management positions: Aarhus Katedral Gymnasium (board member). Previous directorships and senior management positions last five years: Business Aarhus/International Community (member of the executive committee), Vestas Wind Systems A/S (executive HR business partner). Ms Bechmann holds 24,070 shares and 56,980 rights to shares in Elopak. Patrick Verhelst I Chief Marketing Officer I Year of appointment: 2019 Patrick Verhelst is the Group’s Chief Marketing Officer. He has been with the Group since 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 the Group, 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 Busi- ness 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 Universi- teit 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 manage- ment positions last five years: Wipak Group (Director of Sales, Marketing & Innovation) Mr Verhelst holds 61,562 shares and 50,556 rights to shares in Elopak. 93 Dag Grönevik I EVP Equipment & Service I Year of appointment: 2022 Dag Grönevik is the Group’s Executive Vice President for Equipment & Service. 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 the group, 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 Interna- tional 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) Mr Grönevik holds 0 shares and 48,301 rights to shares in Elopak. Lionel Ettedgui I EVP North America I Year of appointment: 2019 Lionel Ettedgui is the Group’s Executive Vice President for the North America region. Ettedgui has been appointed EVP Region America since September 2019. He has more than 20 years of experience in the operations of international large-scale corporations. Prior to joining the Group, 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 until it was sold to Grupo Bimbo in 2015. In 2005, he founded Kooll Desserts, a state-of-the-art dairy plant with products listed at all retailers in Canada. The Company was sold to Liberté (Yoplait Group) in 2008. In addition, Ettedgui has held various executive positions in Europe and Africa within trade, operations management, and business devel- opment. Ettedgui has also served on the board of directors of several companies, including 7 years at Montreal Sacré-Coeur Hospital Foundation and 7 years at CTAQ (Quebec Food processing council). 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 IY (board member). Previous directorships and senior management 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). Mr Ettedgui holds 78,099 shares and 87,272 rights to shares in Elopak. Stephen D. Naumann I EVP Region Europe North & CIS I Year of appointment: 2007 Stephen Naumann is the Group’s Executive Vice President for Region Europe North and CIS. He has been a member of the Elopak Group Leadership Team since 2007. Naumann has nearly 30 years of experience 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 & Mediterranean & Roll-Fed and has been the EVP for Europe North and CIS since 2019. Naumann holds a degree of Wirtschaftsas- sistent Industrie, comparable to a Bachelor’s degree in Economics. Current directorships and senior management positions: FKN e.V. (board member delegated by Elopak GmbH). Mr Naumann holds 180,495 shares and 100,560 rights to shares in Elopak. Finn M. Tørjesen I EVP Region Europe South & New Markets I Year of appointment: 2019 Finn M. Tørjesen is the Group’s Executive Vice President for Region Europe South and New Markets. Tørjesen has held the position of EVP since May 2019 and has been with the Group since 2000. Tørjesen has been an international 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 (chairman), Elopak Nampak JV (board member), and The Norwe- gian Spanish Chamber of Commerce in Madrid (board member). Previous directorships and senior management positions last five years: Elopak Obeikan JV (board member). Mr Tørjesen holds 69,171 shares and 53,226 rights to shares in Elopak. 95 Elopak Group consolidated nancial statements 2022 96 Elopak CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year to date ended December 31 (EUR 1,000) Note 2022 2021 Revenues 5 1,023,696 855,265 Other operating income 157 3 Total income 6 1,023,853 855,268 Cost of materials -681,474 -538,124 Payroll expenses 7,8 -176,721 -166,801 Depreciation and amortization expenses 9-13 -61,528 -52,879 Impairment of non-current assets 9-13 -6,599 -1,218 Other operating expenses 14,15 -55,757 -47,023 Total operating expenses -982,079 -806,044 Operating profit 6 41,774 49,224 Financial income and expenses Share of net income from joint ventures 16 4,378 3,575 Financial income 17 10,305 2,046 Financial expenses 17 -13,033 -9,660 Foreign exchange gain 2,983 375 Profit before tax from continuing operations 46,407 45,559 Income tax 18 -12,188 -15,288 Profit from continuing operations 34,220 30,271 Discontinued operations Russia 19 -23,622 3,538 Profit 10,598 33,809 Profit for the year attributable to: Elopak shareholders 10,856 33,809 Non-controlling interest -259 - Basic and diluted earnings per share from continuing operations (in EUR) 20 0.13 0.12 Basic and diluted earnings per share from discontinued operations (in EUR) -0.09 0.01 Basic and diluted earnings per share attributable to Elopak shareholders (in EUR) 0.04 0.13 98 Elopak OTHER COMPREHENSIVE INCOME (EUR 1,000) Year to date ended December 31 OTHER COMPREHENSIVE INCOME 2022 2021 Items that will not be reclassified subsequently to profit or loss Net value gains/losses (-) on actuarial benefit plans, net of tax 20 -309 Items reclassified subsequently to net income upon derecognition Exchange differences on translation foreign operations Elopak shareholders 6,406 8,048 Exchange differences on translation foreign operations non-controlling interest -467 - Net value gains/losses (-) on cash flow hedges, net of tax -6,972 4,218 Other comprehensive income, net of tax -1,013 11,957 Total comprehensive income 9,585 45,766 Total comprehensive income attributable to: Elopak shareholders 10,310 45,766 Non-controlling interest -726 - CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) December 31 ASSETS Note 2022 2021 Non-current assets Development cost and other intangible assets 9 71,331 56,862 Deferred tax assets 18 22,414 21,640 Goodwill 10,21 104,958 51,866 Property, plant and equipment 11,13,19,21 201,975 186,426 Right-of-use assets 12,13,19,21 76,784 62,952 Investment in joint ventures 16,22 34,673 27,527 Other non-current assets 23 19,841 13,501 Total non - current assets 531,976 420,775 Current assets Inventory 24 187,207 145,115 Trade receivables 25 102,197 91,533 Other current assets 18, 25 109,214 101,595 Cash and cash equivalents 25,883 24,262 Total current assets 424,502 362,506 Total assets 6 956,479 783,279 99 Annual Report (EUR 1,000) December 31 EQUITY AND LIABILITIES Note 2022 2021 EQUITY Share capital 20 50,155 50,155 Other paid-in capital 69,987 70,236 Currency translation reserve -27,477 -33,883 Cash flow hedge reserve -2,758 4,215 Retained earnings 169,584 178,330 Attributable to Elopak shareholders 259,491 269,054 Non-controlling interest 8,477 - Total equity 267,967 269,054 LIABILITIES Non-current liabilities Pension liabilities 26 2,668 2,563 Deferred taxes 18 17,240 11,488 Non-current liabilities to financial institutions 28 304,033 169,433 Non-current lease liabilities 12,28 73,536 62,342 Other non-current liabilities 1,867 2,900 Total non-current liabilities 399,344 248,726 Current liabilities Current liabilities to financial institutions 28 21,682 14,420 Trade payables 124,038 119,574 Taxes payable 18 2,198 4,335 Public duties payable 22,682 24,077 Current lease liabilities 12 17,139 18,261 Other current liabilities 29 101,429 84,832 Total current liabilities 289,167 265,499 Total liabilities 688,512 514,226 Total equity and liabilities 956,479 783,279 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 100 Elopak Skøyen, 30 March 2023 Board of Directors in Elopak ASA Trond Solberg Board Member Sid Johari Board Member Anette Bauer Ellingsen Board Member (employee representative) Sanna Suvanto-Harsaae Board Member Jo Olav Lunder Chairman of the Board Anna Belfrage Board Member Erlend Sveva Board Member (employee representative) Thomas Körmendi CEO 101 Annual Report CONSOLIDATED STATEMENT OF CASH FLOWS Year to date ended Dec 31 (EUR 1,000) Note 2022 2021 Profit before tax from: Continuing operations 46,407 45,559 Discontinued operations 19 -22,825 4,423 Profit before tax (including discontinued operations) 23,583 49,982 Interest to financial institutions 17 5,658 1,553 Lease liability interest 12,17 4,575 4,773 Profit before tax and interest paid 33,815 56,309 Depreciation, amortization and impairment 9-13 76,118 56,450 Write-down of financial assets 500 500 Net unrealised currency gain(-)/loss 2,297 -2,123 Income from joint ventures 16 -4,378 -3,575 Net gain(-)/loss on sale of non-current assets 137 6 Taxes paid 18 -13,683 -19,122 Change in trade receivables -10,615 -10,054 Change in other current assets -16,391 -6,937 Change in inventories -39,175 -5,582 Change in trade payables 4,893 2,998 Change in other current liabilities -8,117 4,296 Change in net pension liabilities -307 33 NET CASH FLOW FROM OPERATIONS 25,094 73,200 Purchase of non-current assets 23 -43,714 -37,381 Proceeds from sales of non-current assets 1,232 15 Proceeds from sales of business - - Acquisition of subsidiaries and joint ventures 21 -88,262 - Dividend from joint ventures 16 - 4,965 Change in other non-current assets 4,735 6,179 NET CASH FLOW FROM INVESTING ACTIVITIES -126,009 -26,222 Proceeds of loans from financial institutions 28 1,178,067 728,843 Repayment of loans from financial institutions 28 -1,030,217 -775,640 Interest to financial institutions 17 -5,658 -1,553 Dividend paid -19,623 -9,988 Capital increase 20 -241 47,523 Lease payments 12 -19,770 -19,969 NET CASH FLOW FROM FINANCING ACTIVITIES 102,558 -30,784 Foreign currency translation on cash -22 1,625 Net increase/decrease in cash 1,621 17,819 Cash at beginning of year 24,262 6,443 Cash at end of period 25,883 24,262 102 Elopak CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1,000) Year to date ended December 31, 2022 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 0 269,054 Profit for the period - - - - 10,856 -259 10,598 Other comprehensive income for the period net of tax - - 6,406 -6,972 21 -467 -1,013 Total comprehensive income for the period - - 6,406 -6,972 10,877 -726 9,585 Dividend paid - - - - -19,623 - -19,623 Settlement of share-based bonus 2021 - -330 - - - - -330 Provision for share-based bonus 2022 - 89 - - - - 89 Acquisition of GLS Elopak 21 - - - - - 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 Year to date ended December 31, 2021 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 47,482 15,332 -41,930 -3 164,564 - 185,444 Profit for the period - - - - 33,809 - 33,809 Other comprehensive income for the period net of tax - - 8,048 4,218 -309 - 11,957 Total comprehensive income for the period 8,048 4,218 33,500 - 45,766 Dividend paid - - - - -9,988 - -9,988 Transactions of treasury shares 58 1,112 - - - - 1,170 Settlement of share-based bonus 2020 5 -2,380 - - - - -2,375 Provision for share-based bonus 2021 - 330 - - - - 330 Bonus issue and reclassification within equity 120 9,626 - - -9,746 - - Issue of new shares in IPO 2,490 47,307 - - - - 49,797 Share issue expenses - -1,091 - - - - -1,091 Total capital transactions in the period 20 2,673 54,904 - - -19,734 - 37,843 Total equity 31.12 50,155 70,236 -33,883 4,215 178,330 - 269,054 103 Annual Report NOTES Note 1 General information Note 2 Basis of preparation Note 3 Material accounting policies Note 4 Critical accounting judgments and key sources of estimation uncertainty Note 5 Revenues Note 6 Operating segments Note 7 Payroll expenses, numbers of employees, benets etc. Note 8 Share-based payments Note 9 Development cost and other intangible assets Note 10 Goodwill Note 11 Property, plant and equipment Note 12 Leases Note 13 Impairment Ukraine Note 14 Other operating expenses Note 15 Fees to external auditors Note 16 Investment in joint ventures Note 17 Specication of nancial income and expenses 104 Elopak Note 18 Income tax Discontinued operations Note 20 Equity and shareholders information Note 21 Business combination Note 22 Shares in subsidiaries and joint ventures Note 23 Other non-current assets Note 24 Inventory Note 25 Trade receivables and other current assets Note 26 Employee retirement benet plans Note 27 Capital management Note 28 Interest-bearing loans and borrowings Note 29 Other current liabilities Note 30 Financial risk management Note 31 Change in obligations from nancial activities Note 32 Related Parties Note 33 Subsequent events Note 34 Financial climate impact 105 Annual Report Note 1 — General information 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 5. The address of the registered office and principal place of business is Industriveien 30, 3430 Spikkestad, Norway. Elopak ASA is listed on Oslo Børs. The Board of Directors and the CEO authorized these consolidated financial statements of Elopak ASA and its subsidiaries for the year ended December 31, 2022, for issue on March 30, 2023. Elopak's material accounting policies are included in the explanatory notes to the consolidated financial statements. Note 2 — Basis of preparation The consolidated financial statements of Elopak ASA and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) 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 Note 22. The consolidated financial statements incorporate the financial statements of the compa- nies 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. Note 3 — Material accounting policies Material accounting policies and information about management judgments, estimates, and assumptions are provided in the respective notes throughout the consolidated financial state- ments. 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. 106 Elopak 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 relevant 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 impair- ment 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. 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 estimated 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-gen- erating 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. 107 Annual Report 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 amor- tized 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 deter- mined 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, 2022, and earlier application is permitted. 108 Elopak Elopak has early adopted amendments to Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) and Definition of Accounting Estimates (Amendments at present, to IAS 8) standards in preparing these consolidated financial statements. Amendments to IFRS that are mandatorily effective for an accounting period that begins on or after January 1, 2022 have been adopted. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements. • Reference to the Conceptual Framework (Amendments to IFRS 3) • Property, Plant, and Equipment: Proceeds before Intended Use (Amendments to IAS 16) • Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) • Annual Improvements to IFRS Standards 2018–2020 The following new and amended standards are not expected to have a material impact on Elopak’s consolidated financial statement: • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amend- ments to IAS 12) • Classification of Liabilities as Current or Non-current (Amendments to IAS 1) • IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts Note 4 — Critical accounting judgments and key sources of estimation uncertainty I In the application of Elopak’s accounting policies, which are described in Note 3, 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. 109 Annual Report 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 allocation. 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 combination are assessed as either finite or indefinite and may in some cases involve considerable judgements. Intangible assets acquired with finite useful lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation 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 amortisation 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. Elopak has 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. 110 Elopak War in Ukraine In March 2022, Elopak suspended all activities in Russia and restarted operations in Ukraine after a temporary close-down. Due to the ongoing nature of the crisis, there is estimation uncertainty involved in the assessment of impairment in Ukraine and fair value of the shares in AO Elopak Russia. Impairment in Ukraine is presented in note 13 and discontinued opera- tions in Russia is presented in . 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 18. 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 18. 111 Annual Report Note 5 — Revenues Accounting Policy The Elopak 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 trans- ferred 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 C ompany an enforceable right to payment for work performed to date as described in IFRS 15. Most of the customer contracts include cancellation clauses that gives 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 function 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. 112 Elopak Sale of service The Group offers research and development support, after sales services and technical training and maintenance 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. 113 Annual Report Contract assets Contract assets consist of prepaid support (rebate) to customers which will be offset against contracted future purchases of carton 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 25 for disclosure of contract assets. 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. 114 Elopak Revenues specified by geographical area Year to date ended December 31 (EUR 1,000) 2022 2021 USA 193,839 141,246 Germany 161,629 146,790 Canada 68,778 51,417 Netherlands 56,215 51,530 Norway 25,645 24,769 Other 517,589 439,514 Total revenues 1,023,696 855,265 The revenues are specified by location (country) of the customer. Revenues by product and operating segment (EUR 1,000) Year to date ended December 31, 2022 EMEA Americas Other and eliminations To tal 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 revenues 785,976 260,535 -22,815 1,023,696 Year to date ended December 31, 2021 EMEA Americas Other and eliminations To tal Cartons and closures 570,565 185,246 -3,307 752,503 Equipment 38,477 5,015 -4 43,488 Service 42,823 - -495 42,329 Other 22,996 1,904 -7,954 16,945 Total revenues 674,862 192,166 -11,760 855,265 115 Annual Report Note 6 – 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 11 for disclosure of fixed assets specified by geographical area. Operating segments (EUR 1,000) Year to date ended December 31, 2022 EMEA Americas Other and eliminations To tal Total revenue and other operating income 786,133 260,535 -22,815 1,023,853 Operating expenses 1) -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 EBITDA 2) 92,149 46,976 -29,224 109,901 Adjusted EBITDA 2) 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 Year to date ended December 31, 2021 EMEA Americas Other and eliminations To tal Total revenue and other operating income 674,868 192,166 -11,760 855,268 Operating expenses 1) -577,764 -160,598 -13,590 -751,949 Depreciation and amortization -43,589 -6,644 -2,646 -52,879 Impairment -1,218 - - -1,218 Operating profit 52,297 24,924 -27,996 49,224 EBITDA 2) 97,103 31,568 -25,351 103,320 Adjusted EBITDA 2) 97,407 35,391 -19,083 113,715 Total assets 604,126 134,656 44,497 783,279 Purchase of non-current assets during the year 25,445 8,815 3,121 37,381 1) Operating expenses include cost of materials, payroll expenses, and other operating expenses. 2) See the APM disclosure for the reconciliation of EBITDA and adjusted EBITDA. 116 Elopak Note 7 –Payroll expenses, numbers of employees, benefits etc. (EUR 1,000) Year to date ended December 31, 2022 Year to date ended December 31, 2021 Salary 140,957 132,489 Social security 22,173 20,800 Pension defined benefit plans (Note 26) 84 36 Pension defined contribution plans (Note 26) 9,597 9,851 Other benefits 3,911 3,625 Tot al 176,721 166,801 Man-year Elopak employees (excl. equity investees) 2,100 1,883 Executive management compensation for the year ended December 31, 2022 is disclosed in the Remuneration Report which is presented on the Elopak website. Note 8 Share-based payments In November 2022 the Group introduced a new long-term incentive program for eligible employees. PSUs (Performance Share units) of the parent are granted to members of the Global Leadership Team members (GLT). 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. This arrangement replaces former long term-incentive plans. The key terms and conditions related to the grants are as follows: KPI Categories Weighted Metric Financial targets 50 % Ajdusted EBITDA less normalized capex People & Planet targets 20 % Environmental target (Co2 emission) 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 (with maximum allocation of 80% for CEO and 50% for Global Leadership Team members). The exercise price of the PSUs is equal to the market price of the underlying shares on the date of grant. The fair value of the PSUs is estimated at the grant date through Monte Carlo simulation. However, the above performance condition is only considered in determining the number of PSUs that will ultimately vest. The PSUs can be exercised up to two years after the three-year vesting period and there- fore, the contractual term of each option granted is five years. 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. 117 Annual Report Reconciliation of outstanding Performance share units Year to date ended December 31, 2022 Number of instruments in thousands (PSU) Number of options Weighted average exercise price Outstanding at January 1 - - Granted during the year 744 - Performance adjusted -45 - Forfeited during the year - - Exercised during the year 1) - - Expired during the year - - Outstanding at December 31 699 - Exercisable at December 31 (vested) - - 1) No shares have been exercised in 2022. The weighted average remaining contractual life for the share options outstanding as at 31 December 2022 was 2.52 years. The weighted average fair value of PSU granted during 2022 was € 2,32 The following tables list the inputs to the models used for the years ended 31 December 2022: Components of share-based payments employee benefit expenses Year to date ended December 31, 2022 Share based payment 89 Social security contribution 9 Total expenses related to share-based payments 98 Assumptions and inputs in model Year to date ended December 31, 2022 FV per instrument 2.32 Dividend yield 0.00 Expected volatility 7.95 % Interest rate (IRR) 0.928% Risk-free interest rate 3.09% Contractual life 2.63 Expected lifetime 0.03 Weighted average share price (€) 2.32 Model used Monte Carlo Weighted average parameters at grant of instrument Expected volatility has been based on an evaluation of the historical volatility of the Parents share price, particularly over the historical period commensurate with the expected term. The expected term of the instruments has been based on historical experience and general option holder behavior. Note 8 Share-based payments continued 118 Elopak Note 9 - 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 accumulated amortization and impairment losses. See Note 3 for impairment of non-financial assets accounting policy. Development cost and other intangible assets (EUR 1,000) 2022 Customer relations and other Development costs IT-software To ta l 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 119 Annual Report Note 9 – Development cost and other intangible assets continued Tot al2021 Customer relations and other Development costs IT-software Cost at 1.1 - 40,890 83,088 123,978 Additions - 3,293 3,258 6,551 Disposals - - -10,717 -10,717 Reclassification - - 807 807 Currency translation - - 144 144 Cost at 31.12 - 44,183 76,579 120,762 Acc. amortization and impairment losses at 1.1 - 18,062 44,705 62,767 Current year amortization charge - 3,678 8,095 11,773 Current year impairment charge - - - - Amortization disposals - - -10,765 -10,765 Impairment disposals - - - - Reclassification - - - - Currency translation amortization - - 124 124 Currency translation impairment - - - - Accumulated amortization at 31.12 - 21,740 41,876 63,616 Net accumulated impairment at 31.12 - - 284 284 Carrying amount 31.12 - 22,443 34,419 56,862 Customer relations and other includes 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 while the other contracts are fully amortized in 2022. See note 21 for further details. The additions under development costs relates to the development of new filling and produc- tion machine technology. The majority of 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 2022. Research and development The cost of research and development not eligible for capitalization which have been expensed in 2022 amounts to EUR 12,501 thousand. Comparable amount in 2021 was EUR 15,708 thousand. 120 Elopak Note 10 – 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 identi- fiable 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-gen- erating 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 impairment 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) 2022 2021 Cost at 1.1 58,089 58,511 Business combinations (note 21) 57,089 - Currency translation -3,997 -422 Cost at 31.12 111,181 58,089 Accumulated impairment 1.1. 6,223 6,220 Current year impairment charge - - Currency translation impairment - 3 Accumulated impairment at 31.12 6,223 6,223 Carrying amount 31.12 104,958 51,866 121 Annual Report 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. Cash generating units The goodwill items from 2021 (cost 1.1. 2022) are related to acquisition of Elopak Denmark A/S, Elopak AB, Elofin OY and Variopak and are allocated to the cash generating unit Europe, which consist of Elopak's European markets, including the internal production and supply organization. Following from business combinations in 2022 Goodwill has increased by EUR 3,591 thousand from acquisition of GLS Elopak and EUR 53,498 thousand from acquisition of Naturepak Beverage Packing Co. Ltd. Operations in GLS Elopak are mainly in India and is allocated to a separate CGU. Naturepak Beverage Packing Co. Ltd is integrated in the Elopak European value chain and is allocated to the CGU of Elopak Europe (renamed to Elopak EMEA). The basis to consider Elopak EMEA as one cash generating unit is the inherent structure of the EMEA 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 production 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 Note 10 – Goodwill continued 122 Elopak Note 10 – Goodwill continued 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 2022 and 2021 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 in a start-up phase, hence a significant increase of sales and profit is expected in 2023 followed by an estimate of 0% growth the years after. 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 2022 or 2021. 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 2022 2021 2022 2021 2022 2021 2022 2021 Elopak EMEA 7.7 % 3.6 % 11.0 % 5.2 % 0.0 % 0.0 % 0.0 % 0.0 % GLS Elopak 12.5 % 17.9 % 0.0 % 0.0 % 0.0 % 0.0 % The discount rates reflect the current markets assessment of the risk specific to the cash gener- ating unit. The rates are estimated based on the weighted average cost of capital for similar assets in the market. This rate has been further adjusted to reflect the specific risk factors related to the cash generating unit, which have not been reflected in the cash flow. 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 123 Annual Report Accounting Policy Capitalized property, plant and equipment are reflected at cost less accumulated depreciation and accumulated 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 3 for impairment of non- financial assets accounting policy. Note 11 - Property, plant and equipment Note 10 – Goodwill continued improves the assets performance. The related cash flows are treated correspondingly. Management believes that there is no reasonably possible change in any of the key assumption 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. 124 Elopak Note 11 - Property, plant and equipment continued Property, plant and equipment (EUR 1,000) 2022 Land and buildings Machinery and plant Office and transport To ta l Cost at 1.1 41,524 532,615 20,724 594,863 Business combinations (note 21) 10,184 11,305 135 21,623 Additions 227 37,940 304 38,471 Disposals -176 -6,153 -476 -6,805 Discontinued operations () -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) 1,530 25,831 1,697 29,057 Current year impairment charge 1) 868 5,272 173 6,312 Depreciation disposals -169 -4,514 -427 -5,110 Discontinued operations () -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 1 ) Depreciation charge for the year excludes following amounts () 7 899 64 970 Impairment charge for the year excludes following amounts () 18 5,535 280 5,833 125 Annual Report Note 11 – Property, plant and equipment continued The split by geographical area is based on the jurisdiction of legal owner. Property, plant and equipment specified by geographical area 2021(EUR 1,000) 2022 Canada 28,485 26,738 Denmark 25,940 27,947 Germany 69,025 68,550 India 9,944 - Morocco 6,508 - Netherlands 44,547 42,765 Norway 3,097 4,131 Russia - 7,290 Saudi Arabia 3,555 - Ukraine 3,281 8,566 United Kingdom 7,325 237 Other 267 203 Tot al 201,975 186,426 Office and transport To ta l2021 Land and buildings Machinery and plant Cost at 1.1 41,307 520,596 19,501 581,404 Additions - 30,638 136 30,774 Disposals -583 -13,479 -1,386 -15,448 Transfer to/from inventory / reclassification 657 -10,679 2,207 -7,815 Currency translation 143 5,539 266 5,948 Cost at 31.12 41,524 532,615 20,724 594,863 Acc. depreciation and impairment losses at 1.1 27,270 349,455 16,250 392,975 Current year depreciation charge 1,230 26,380 1,512 29,122 Current year impairment charge - 1,216 1 1,218 Depreciation disposals -581 -13,058 -1,376 -15,014 Impairment disposals - -411 -1 -412 Depreciation transferred to inventory / reclassification -692 -1,614 -199 -2,505 Impairment transferred to inventory / reclassification -15 -410 15 -410 Currency translation 102 3,157 207 3,466 Acc. depreciation and impairment losses at 31.12 27,314 364,715 16,410 408,439 Carrying amount 31.12 14,211 167,900 4,314 186,426 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 Note 12. The Company has not pledged property, plant and equipment as security for liabilities. 126 Elopak Note 11 – Property, plant and equipment continued Other off-balance sheet commitments and contingencies (EUR 1,000) 2022 2021 Commitments for the acquisition of property, plant and equipment 1269 2,145 Note 12 – Leases Accounting Policy The Group as a lessee The Group recognizes 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 recognizes 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 substantially 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 3 for impairment of non-financial assets accounting policy. 127 Annual Report At the reporting date the Group has future minimum lease receivables as follows (undiscounted) (EUR 1,000) 2022 2021 Due within year 1 11,242 7,679 Due within year 2 9,159 6,700 Due within year 3 7,863 5,150 Due within year 4 6,519 4,106 Due within year 5 4,509 2,971 Due after year 5 8,330 6,505 Tot al 47,621 33,113 Note 12 – Leases continued 2. The Group as lessor - finance lease receivables 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) 2022 2021 Due within year 1 2,648 4,843 Due within year 2 1,870 2,178 Due within year 3 1,302 1,378 Due within year 4 1,213 833 Due within year 5 804 754 Due after year 5 2,345 1,770 Total receivables under finance leases, undiscounted 10,181 11,756 Unearned finance income 2,162 1,536 Total receivables under finance leases, discounted 8,020 10,220 1. The Group as lessor - operating leases The Group leases out filling machines under operating leases. Rental income was EUR 9,326 thousand in 2022, compared to EUR 9,168 thousand in 2021. 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. 128 Elopak Note 12 – Leases continued There is no impairment loss allowance related to the finance lease receivables in 2022 and 2021. Credit risk related to the filling machine lease agreements is considered insignificant due to right to require return of the machine in case of default. The average effective interest rate contracted is approximately 4.59% per annum. The Group as lessee The Group leases several assets including buildings, plants, cars and filling machines. Right-of-use assets (EUR 1,000) December 31, 2022 Property and buildings Machinery Office and transport Tot al 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 December 31, 2021 Property and buildings Machinery Office and transport Tot al Carrying amount 1.1 42,502 15,645 11,123 69,270 Additions and adjustments 1,458 3,010 4,162 8,630 Disposals -233 -164 -213 -610 Current year depreciation charge -5,075 -5,505 -3,758 -14,338 Carrying amount at 31.12 38,652 12,986 11,314 62,952 129 Annual Report Note 12 – Leases continued The Group has no significant purchase options except from one purchase option related to the High Bay warehouse 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 reasonably certain, hence it is not recognised. Net additions in 2022 include EUR -3,955 thousand related to discontinued operations in Russia, other terminations in 2022 and 2021 are less than 1% of the right of use assets. The gross additions to right-of-use assets, excluding adjustments to existing contracts, were EUR 29,388 thousand in 2022 and EUR 4,460 thousand in 2021. The expired and terminated contracts in 2022 were replaced by new leases for similar underlying assets. Expenses related to short-term leases are EUR 350 thousand in 2022 and EUR 105 thousand in 2021. Expenses related to low value assets are EUR 615 thousand in 2022 and EUR 772 thousand in 2021. Expenses related to variable payments not included in the measurement of lease liabilities are EUR 98 thousand in 2022 and EUR 218 thousand in 2021. The Group has signed contracts for tethered Cap lines with a lease term of 5 years and a nominal value of EUR 45,284 thousand, which will commence at different stages during 2023 and Q1 2024. Lease liabilities (EUR 1,000) 2022 2021 Current Lease liabilities Note 26,29 17,139 18,261 Non-current lease liabilities Note 26,29 73,536 62,342 Tot al 90,674 80,604 At the reporting date the Group has lease liabilities as follows (undiscounted) (EUR 1,000) 2022 2021 Due within year 1 20,751 18,905 Due within year 2 20,449 14,515 Due within year 3 14,208 15,206 Due within year 4 12,282 8,700 Due within year 5 10,381 7,889 Due after year 5 75,623 41,989 Tot al 153,694 107,203 130 Elopak Note 13 - 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 operating segment EMEA. Total impairment of the Ukraine operations as per December 31 amounted to EUR 7,889 thousand. 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. See Discontinued 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 3,111 thousand, while all other non-current assets are written down to recoverable amount of zero. Effect of impairment (EUR 1,000) ASSETS December 31, 2022 Non-current assets Development cost and other intangible assets -26 Deferred tax assets -1,555 Property, plant and equipment -4,155 Right-of-use assets -8 Total non - current assets -5,744 Current assets Inventory -1,883 Trade receivables -32 Other current assets -230 Total current assets -2,145 Total assets -7,889 131 Annual Report (EUR 1,000) Year to date ended December 31 Comprehensive income 2022 Cost of materials 2,079 Depreciation, amortisation and impairment 4,189 Other operating expenses 67 Operating profit 6,335 Income tax 1,554 Profit/loss 7,889 Note 13 - Impairment Ukraine continued Note 14 - Other operating expenses Note 15 - Fees to external auditors PWC was elected as the principal auditor for 2019, while some Group companies are audited by other audit firms. Year to date ended December 31 (EUR 1,000) 2022 2021 Sales and administration expenses 6,908 5,865 Occupancy and maintenance expenses 4,907 4,033 Travel expenses 8,660 4,835 Losses and changes in allowance for bad debt 920 383 Consultants, auditors, lawyers, etc 17,759 15,643 IT expenses 10,332 11,095 Other expenses 6,271 5,169 Tot al 55,757 47,023 Expensed fees (EUR 1,000) Year to date ended December 31, 2022 Audit fee Other assurance services Tax services Other non-audit services To ta l PWC 840 33 7 42 922 Others 117 3 118 - 238 Tot al 957 36 125 42 1,159 132 Elopak Note 15 - Fees to external auditors continued Expensed fees (EUR 1,000) Year to date ended December 31, 2021 Audit fee Other assurance services Tax services Other non-audit services To ta l PWC 716 396 13 59 1,185 Others 172 13 104 3 292 Tot al 888 409 117 62 1, 477 Note 16 – 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 it's carrying value. 133 Annual Report Note 16 – Investment in joint ventures continued (EUR 1,000) 2021 Lala Elopak S.A. de C.V. Impresora Del Yaque Elopak Nampak Africa Ltd Tot al Ownership - and voting share 49 % 51 % 50 % Carrying amount 1.1 18,822 8,135 - 26,956 Additions during the year - - 4 4 Disposals - - - - Income from joint venture companies 2,588 1,123 -137 3,575 Dividend received -3,176 -1,790 - -4,965 Recognized to equity 27 - - 27 Currency translation 1,129 801 - 1,930 Carrying amount 31.12 19,390 8,270 -133 27,527 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. Investment in joint ventures (EUR 1,000) 2022 Lala Elopak S.A. de C.V. Impresora Del Yaque Elopak Nampak Africa Ltd Total Ownership - and voting share 49 % 51 % 50 % Carrying amount 1.1 19,390 8,270 -133 27,527 Additions during the year - - - - Disposals - - - - Income from joint venture companies 2,665 1,824 -112 4,378 Dividend received - - - - Recognized to equity -14 - - -14 Currency translation 2,169 613 - 2,783 Carrying amount 31.12 24,210 10,707 -244 34,673 134 Elopak Note 16 – Investment in joint ventures continued Summarized financial information (EUR 1,000) 2022 Lala Elopak S.A. de C.V. Impresora Del 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 0 507 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 (EUR 1,,000) 2021 Lala Elopak S.A. de C.V. Impresora Del Yaque Elopak Nampak Africa Ltd Tot al Revenue 58,996 16,128 - 75,123 Operating profit 6,834 2,602 - 274 9,161 Profit after tax (loss) 5,282 2,203 - 274 7,211 Other comprehensive income that may be reclassified to net income 2,303 1,571 - 3,874 Total comprehensive income 7,586 3,773 -2 74 11,085 Current assets 33,055 14,624 106 47,785 Non-current assets 12,907 3,617 1 16,524 Current liabilities 9,750 2,025 112 11,888 Non-current liabilities 2,109 - 260 2,369 Equity 34,102 16,216 -265 50,053 Group's share of profit after tax /loss (-) 2,588 1,123 -137 3,575 135 Annual Report Note 16 – Investment in joint ventures continued Note 17 - Specification of financial income and expenses Voting share (Ownership/voting share) 2022 2021 49 % 49 % Lala Elopak S.A. de C.V. 49 % 49 % Impresora Del Yaque 51 % 51 % Elopak Nampak Africa Limited 50 % 50 % Financial income Year to date ended December 31 (EUR 1,000) 2022 2021 Interest income from bank deposits 782 560 Other interest income 8,459 -241 Finance lease interest income 637 831 Other financial income 428 896 Tot al 10,305 2,046 Financial expenses Year to date ended December 31 (EUR 1,000) 2022 2021 Interest expenses to financial institutions 5,658 1,553 Other interest expenses 347 -59 Lease liability interest 4,575 4,138 Other financial expenses 2,453 4,029 Tot al 13,033 9,660 Other Interest Income In 2022 Includes gain from Interest rate derivatives of EUR 8.399 thou- sand. In 2021 these gains were EUR 1.404 thousand, reducing Interest expenses to financial Institutions. 136 Elopak Note 18 - Income tax Income tax expense (EUR 1,000) 2022 2021 Current income tax Current income tax charge 13,214 13,251 Adjustments in respect of current income tax of previous year -2,583 -237 Withholding tax 2,337 1,625 Total current income tax 12,968 14,639 Deferred tax Relating to origination and reversal of temporary differences -1,243 1,340 Adjustments in respect of changes to tax rate and deferred tax of previous year 463 -691 Total deferred tax -780 649 Income tax expense reported in the statement of profit or loss 12,188 15,288 Payable tax (EUR 1,000) 2022 2021 Payable tax opening balance -2,616 482 Current income tax 12,968 15,485 Translation 102 538 Net tax paid -13,638 -19,122 Payable tax closing balance -3,185 -2,616 137 Annual Report Note 18 - Income tax continued Reconciliation of tax expense (EUR 1,000) 2022 2021 Accounting profit before income tax 46,407 45,559 Expected tax at statutory tax rate 1) 11,138 10,934 Adjustments in respect of different local tax rates 1,300 1,957 Non-taxable income/expenses - - Share of results of joint ventures -1,051 -858 Adjustments in respect of current income tax of previous years -2,336 -223 Withholding tax, non-refundable 2,337 1,625 Adjustments in respect of changes to tax rates and regulations 564 -706 Currency translation effects -2,233 1,691 Other differences 2,468 867 Income tax expense at effective income tax rate 12,188 15,288 Effective income tax rate 26.3 % 33.6 % Change in deferred tax on items in Other Comprehensive Income/Equity (EUR 1,000) 2022 2021 Remeasurement gain/loss on actuarial gains and losses 266 38 Cash flow hedging -1,957 1,192 Equity transactions -330 -522 Change in deferred tax on items in Other Comprehensive Income/Equity -2,020 709 1) The expected tax at statutory tax rate of 24% (24% in 2021) is based on an estimate of where the Group taxes its profits and the corre- sponding applicable tax rates 138 Elopak Note 18 - Income tax continued Deferred tax (EUR 1,000) 2022 2021 Revaluation of inventories 13,564 11,431 Payables/receivables 13,977 18,341 Non-current assets -10,131 -8,258 Fixed assets depreciations -8,592 -7,649 Liquid assets -14,302 -13,090 Losses available for offsetting against future taxable income 9,101 5,468 Other differences 1,557 3,910 Total deferred tax 5,174 10,153 Deferred tax assets 22,414 21,640 Deferred tax liabilities 17,240 11,488 Net deferred assets/liabilities 5,174 10,153 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 substantively enacted at the balance sheet date. 139 Annual Report Note 18 - Income tax continued Reconciliation of tax expense (EUR 1,000) After 2025 Indefinite To ta l United States - 816 816 United Kingdom - 10,328 10,328 India 871 - 871 Norway - 27,646 27,646 Other - 879 879 Tot al 871 39,670 40,541 140 Elopak Note 18 - Income tax continued Tax losses carried forward of EUR 18,161 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. 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. A subsequent appeal to the tax tribunal resulted in a ruling on June 16, 2021 supporting the 2017 conclusion from the tax office. The company does not agree with the ruling and has initiated an appeal through the courts in Norway. Where transfer pricing adjustments have been made, mutual agreement procedure (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 the Group. Where a MAP process is available, the Group recognizes tax costs according to the probability of the outcome of the MAP process. If tax authorities within the EU do not agree, tax payers have the right to demand arbitration. 141 Annual Report Note 19 - Discontinued operations On 15 July 2022 Elopak and Packaging Management and Investing LLC, a company beneficially owned by management of JSC Elopak, have reached an agreement (the “SPA”) for the sale and purchase of all of Elopak’s shares in JSC Elopak. This represents a full divestment by Elopak from its existing Russian operations. Transfer of shares in JSC Elopak will take place under completion of the transaction after approval from the Russian Government. However, the terms of the SPA implies that Elopak lost control of JSC Elopak on the date it was signed, hence the entity is no longer consoli- dated in the Elopak Group Financial statements. Following from deconsolidation, the shares of JSC Elopak are recognized at fair value measured as the net present value of the agreed purchase price, adjusted for risks of not receiving the payments. The purchase price is payable in five annual instalments, the first of which becomes due shortly after completion of the transaction. In addition to the payments, Elopak has the option to buy back the shares of JSC Elopak. The purchase price in the buy-back option will be the price in the SPA adjusted for inflation, investments, capex, working capital and net debt in the intermediate period, and Elopak is therefore not exposed for variable returns in this period. As of December 2022, the buy-back option is considered to have a fair value close to zero. As per December 31, 2022 the shares in JSC Elopak are measured at EUR 4,829 thousand and the nominal value of the agreed purchase price is EUR 12,534 thousand (RUR 948,339 thousand). The comparative consolidated statement of comprehensive income profit or loss with notes have been re-presented to show the discontinued operation separately from continuing operations. Until all activities in Russia were suspended in March 2022, the Russian entity purchased raw materials from other entities in the Group, as well as generating some minor revenue. Although intra-group transactions have been fully eliminated in the consolidated financial statements, management has elected to attribute the elimination of transactions between the continued and discontinued operation to the continuing operation. This is to reflect that the Group does not intend to continue similar transactions with Russia, subse- quent to the disposal. 142 Elopak Note 19 - Discontinued operations continued As per date of loss of control, total impairment in 2022 related to JSC Elopak was EUR 20,282 thousand effecting the financial position and EUR 9,201 thousand effecting comprehensive income, the difference is due to fx variances. Loss on sale of discontinued operations reflects accumulated translation differences of EUR -7,086 thousand recycled from equity to profit or loss and the net of deconsolidated equity, redemption of loans from continuing operations to discontinued operations and fair value of the JSC Elopak shares. The fair value of JSC Elopak shares is presented as Other current assets in the consolidated statement of financial position. In December, 2022 the buyer received an informal approval from the Russian Government and the transaction was completed in February, 2023. See note 33 Subsequent events for further information. 143 Annual Report Note 19 - Discontinued operations continued Discontinued operation Year to date ended December 31 Year to date ended December 31 (EUR 1,000) 2022 2021 Revenues 18,184 84,984 Total income 18,184 84,984 Cost of materials -15,197 -69,789 Payroll expenses -2,311 -4,864 Depreciation, amortisation and impairment -9,921 -2,354 Other operating expenses -1,034 -3,125 Total operating expenses -28,463 -80,132 Operating profit -10,278 4,852 Net financial income -2,452 -429 Profit before tax -12,730 4,423 Income tax -797 -885 Results from discontinued operations, net of tax -13,527 3,538 Loss on sale of discontinued operations -10,095 - Income tax on gain on sale Profit/loss from discontinued operations -23,622 3,538 Net cash flow from operating activities 1,834 15,039 Net cash flow from investing activities - -1,470 Net cash flow from financing activities -186 -6,821 Foreign currency translations 635 109 Net change in cash and cash equivalents 2,283 6,858 144 Elopak Note 20- Equity and shareholders information As of December 31, 2022, the share capital is 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). All shares have equal voting rights and all authorised shares are issued and fully paid. Treasury shares / Share-based bonus: The provision for share based bonus per December 31, 2021 were settled in the second quarter of 2022 through shares bought in the market and sold to members of the Management. The provision of EUR 330 thousand in other paid-in capital was reversed. As part of the settlement, Elopak repurchased 170,000 shares, and settled the share-based bonus with 164,481 shares. As of December 31, 2022, the balance of treasury shares is 5,519. The treasury share capital is EUR 1 thousand and the treasury share premium is EUR 8 thousand. The new incentive program (see Note 8 for details) represents potential additional shares which could be dilutive. Dividend: The Board approved a dividend of NOK 0.75 per share for the financial year 2021 on May 19, 2022. The dividend payment was EUR 19,623 thousand based on 269 219 014 outstanding shares, of which EUR 11,740 thousand was paid to Ferd AS. The Board of Directors will propose to the Annual general Meeting a dividend of NOK 0.86 per share for 2022. 145 Annual Report Basic and diluted earnings per share Year to date ended 31 Dec (EUR 1,000, except number of shares) 2022 2021 Profit attributable to Elopak shareholders 10,856 33,809 Issued ordinary shares at beginning of period, adjusted for share split in the period 269,219,014 250,635,350 Effect of shares issued -3,024 10,150,955 Weighted-average number of ordinary shares in the period 269,215,990 260,786,305 Basic and diluted earnings per share (in EUR) 0.04 0.13 Note 20 – Equity and shareholder information continued Share capital Number of shares 2022 Ordinary shares issued Treasury shares 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 2021 Ordinary shares issued Treasury shares Ordinary shares outstanding Shares at 1.1 5,012,707 - 5,012,707 Shares issued for share-based bonus 8,959 - 8,959 Shares issued in stock split 246,061,634 - 246,061,634 Shares issued in IPO 18,135,714 - 18,135,714 Treasury shares purchased - -422,772 -422,772 Treasury shares re-issued - 422,772 422,772 Shares at 31.12 269,219,014 - 269,219,014 146 Elopak The Group's top 20 shareholders Shareholder's name Total shareholding Ferd As 59.83 % Nippon Paper Industries Co., Ltd. 5.00 % Artemis Investment Management Llp 3.37 % Folketrygdfondet 3.30 % Morgan Stanley Europe SE 2.73 % Pareto Asset Management As 1.87 % Handelsbanken Fonder Ab 1.24 % Dnb Asset Management As 1.01 % Pictet Asset Management Sa 1.01 % Skagen As (Investment Management) 0.79 % Fil Investment Advisors (Uk) Ltd. 0.69 % Oddo BHF Asset Management SAS 0.66 % Arctic Fund Management As 0.64 % Fondsfinans Kapitalforvaltning As 0.58 % Forsvarets Personellservice 0.57 % T.D. Veen As 0.55 % Ubs Asset Management Switzerland Ag 0.48 % Mfs International (Uk) Ltd. 0.46 % Sp-Fund Management Co. Ltd. 0.44 % Wenaasgruppen As 0.34 % The Executive team own directly, or indirectly the following number of shares in the Group Executive team Total number of shares Thomas Körmendi, CEO 361,515 Bent Axelsen, CFO 191,576 Patrick Verhelst, CMO 61,562 Wolfgang Buckhremer, CTO 68,148 Ivar Jevne, EVP MPS & Purchasing 227,411 Stephen Naumann, EVP Region Europe North & CIS 180,495 Finn Tørjesen, EVP Region Europe South & new markets 69,171 Lionel Ettedgui, Market Area Director - North Africa 78,099 Nete Bechmann, Chief Human Resource Officer 24,070 Tot al 1,262,047 Note 20 – Equity and shareholder information continued 147 Annual Report Note 21 - Business combination Accounting policies A business combination is as a transaction or other event in which an acquirer obtains control of one or more businesses. 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 integrated 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-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identi- fiable 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. 148 Elopak 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%)" Note 21 - Business combination continued 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 thou- sand 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 EUR -292 thousand profit before tax. From acquisition date to reporting date GLS Elopak has contributed EUR 5,217 thousand revenue and EUR -713 thousand profit before tax. 149 Annual Report Note 21 - Business combination continued Fair values of the identifiable assets in GLS Elopak at acquisition date (EUR 1,000) 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 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 12,793 150 Elopak Note 21 - Business combination continued 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. 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. Analysis of cash flows on acquisition (EUR 1,000) 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%)" 151 Annual Report Note 21 - Business combination continued Fair values of the identifiable assets in Naturepak Beverage Packaging Co Ltd at acquisition date (EUR 1,000) 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 The acquisition-date fair value of the total consideration transferred was EUR 85,383 thou- sand 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 EUR -2,527 thousand profit before tax. 152 Elopak Note 21 - Business combination continued Fair values of the identifiable assets in Naturepak Beverage Packaging Co Ltd at acquisition date continued 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) Net cash acquired with the subsidiary 1,495 Cash paid 85,383 Net cash flow from acquisition (included in investing activites) -83,888 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 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 85,383 153 Annual Report 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 Inc. 100 % 1987 USA Trading Elopak Denmark A/S 100 % 1988 Denmark Trading and manufacturing Elopak GesmbH 100 % 1989 Austria Trading PrJSC Elopak Fastiv 99 % 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 Ltd 100 % 2022 Morocco Trading and manufacturing GLS Elopak 50 % 2022 India Trading and manufacturing Note 22 - Shares in subsidiaries and joint ventures The following companies are consolidated as subsidiaries in Elopak Group 154 Elopak 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 Note 22 - Shares in subsidiaries and joint ventures continued The following joint ventures are accounted for in accordance with the equity method Note 23 - Other non-current assets Note 24 - Inventory Other current liabilities (EUR 1,000) 2022 2021 Contract assets (Note 25) 3,775 5,167 Non-current finance lease receivables (Note 12) 5,865 5,656 Financial instruments (Note 30) 6,811 690 Other non-current assets 3,390 1,988 Carrying amount 31.12 19,841 13,501 Accounting Policy Cost is calculated using the FIFO cost formula for cartons, filling machines and spare parts. Inventory (EUR 1,000) 2022 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 71,449 187,208 155 Annual Report Note 24 - Inventory continued (EUR 1,000) 2021 Raw materials Work in progress Finished goods Total Cost 31.12 20,292 62,800 66,857 149,949 Write down 01.01 3,028 519 3,423 6,970 Realised -3,028 -519 -219 -3,766 Write down -307 - 1,938 1,631 Write down per 31.12. -307 - 5,142 4,835 Carrying amount 31.12 20,599 62,800 61,715 145,115 156 Elopak 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 allowances 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 3 for 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 revenues 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. Note 25 – Trade receivables and other current assets 157 Annual Report Note 25 – Trade receivables and other current assets continued Trade receivables (EUR 1,000) 2022 2021 Accounts receivable, gross 106,243 95,764 Allowances -4,045 -4,231 Carrying amount 31.12 102,197 91,533 Trade receivables (EUR 1,000) 2022 Gross carrying amount Loss rate Expected credit loss Current 84,354 2.9 % 2,443 Up to 7 days 8,422 0.0 % - 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 Tot al 106,243 3.8 % 4,045 (EUR 1,000) 2021 Gross carrying amount Loss rate Expected credit loss Current 77,293 1.4 % 1,084 Up to 7 days 5,157 0.2 % 8 Up to 30 days 5,356 1.3 % 67 30-60 days 1,907 8.9 % 170 60-90 days 1,198 5.2 % 62 Over 90 days 4,853 58.5 % 2,840 Tot al 95,764 4.4 % 4,231 Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. 158 Elopak Note 25 – Trade receivables and other current assets continued Movement in the allowance for expected credit losses of trade receivables (EUR 1,000) 2022 2021 As at 1.1 4,231 3,834 Business combinations (note 21) 802 - Change in provision for expected credit losses -721 493 Change in write-off -16 -18 Foreign exchange movement -251 -78 Carrying amount 31.12 4,045 4,231 Other current assets (EUR 1,000) 2022 2021 Project income earned, not invoiced 39,195 36,276 Prepaid support 2,129 2,520 Contract assets 1) 41,324 38,796 Prepayments and accrued expenses 14,476 9,997 V.A.T. receivable 24,639 19,330 Accrued income tax receivables 5,382 6,951 Financial instruments 999 5,696 Finance leasing receivable short term 2,362 4,564 Current investments of shares 4,829 - Other current receivables 15,202 16,260 Carrying amount 31.12 1) 109,214 101,595 1) Contract assets consist of prepaid rebates to customers which will be offset against contracted future sales of carton and closures. Total of prepaid support was EUR 5,904 thousand in 2022 and EUR 7,687 thousand in 2021. Based on customer knowledge and experience of very few losses, the credit risk related to prepaid support is considered insignificant. 159 Annual Report Note 26 - 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 bene- fits. These defined benefit plans include in total 7 persons, which is one person less than for 2021. 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. Defined benefit plans are subject to actuarial calculations. The estimated pension cost for pension benefit plans in 2022 is EUR 84 thousand and in 2021 is EUR 36 thousand. Pension liability (EUR 1,000) 2022 2021 Defined benefit obligations -2,668 -2,580 Fair value of plan assets - 16 Net pension liability -2,668 -2,563 Pension expense (EUR 1,000) 2022 2021 Defined benefit plans net 84 36 Defined contribution plans 9,597 9,851 Total pension expenses 9,681 9,887 160 Elopak Note 27 - 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 minimize financing costs, while maintaining adequate liquidity and flexibility for short-term liquidity needs and M&A activities. 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 4.55x and to hold a minimum equity of EUR 100 million at all times. Furthermore, there is also a “Change of control” ownership clause in place that commits Ferd to hold at least 1/3 of the total shares outstanding. 161 Annual Report Note 28 – Interest-bearing loans and borrowings Accounting Policy See Note 3 for non-derivative financial instruments accounting policy. Interest-bearing loans and borrowings 2022 2021 (EUR 1,000) Available Utilised Available Utilised Current liabilities to financial institutions 57,073 21,682 56,804 14,420 Non-current liabilities to financial institutions 400,000 304,033 400,000 169,433 Tot al 325,715 183,854 Repayment profile (EUR 1,000) 2022 2021 2022 - 14,420 2023 21,682 170,000 2024 - - 2025 305,000 - Tot al 326,682 184,420 Weighted average interest rates on long term loans 2022 2021 (EUR 1,000) Rate in Ccy in EUR in Ccy in EUR EUR 2,04 % 305,000 305,000 170,000 170,000 Tot al 305,000 170,000 162 Elopak Other current liabilities (EUR 1,000) 2022 2021 Provisions 681 1,452 Accrued expenses 70,547 62,731 Derivatives (Note 30) 4,268 2,189 Prepaid from customers 25,932 18,459 Tot al 101,429 84,832 The values above are gross amounts excluding amortised borrowing costs. The long term loans are drawn under a EUR 400,000 multi currency revolving credit facility. The facility is available until May 2025. 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 several bank covenants related to the syndicate loan facility. The main covenants are: i) Net Interest Bearing Debt divided by 12 month rolling EBITDA, and ii) Nominal Equity. Elopak is in compliance with all covenants as of 31 December 2022 and expects to be compliant with all bank covenants under the syndicate loan agreement for the foreseeable future. Elopak factors its receivables in the ordinary course of business. The relevant receivables are derecognized and the utilised part of the facility is not presented as debt. Accounts receivables factoring facilities (EUR 1,000) Available 2022 Available 2021 Non-recourse 179,275 41,823 130,167 40,034 Tot al 41,823 40,034 Note 29 - Other current liabilities 163 Annual Report 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 accordance 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 deriv- atives 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. Note 30 - Financial risk management 164 Elopak 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 Note 30 – Financial risk management continued Derivatives December 31, 2022 December 31, 2021 (EUR 1,000) Assets Liabilities Total Assets Liabilities Total Currency derivatives 74 7 1,280 -534 836 2,079 -1,244 Commodity derivatives - 3,318 -3,318 5,303 - 5,303 Interest derivatives 7,063 - 7,063 248 2,058 -1,811 Tot al 7,810 4,598 3,212 6,386 4,138 2,249 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 unadjusted 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. 165 Annual Report Note 30 – Financial risk management continued Currency risk Elopak's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities, 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: Foreign exchange risk from operating activities such as salaries and personnel tax are managed by hedging transactions that are highly probable to occur within periods out 18 months by entering into 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 2022 Assets 2021 Assets 2022 Liabilities 2021 Liabilities BGN 222 76 238 89 CAD 22,928 9,145 95,182 89,004 CHF 4,337 3,440 4,252 3,420 CZK 57,588 49,460 68,479 50,082 DKK 2,494,348 2,080,113 2,403,598 2,017,377 DZD - - 4,577 2,969 EUR 4,910 11,270 3,910 13,611 GBP 26,313 20,198 27,076 20,763 HUF 638,998 481,147 603,176 471,430 NIS 8 861 - - JPY 4,091,538 3,364,767 2,077,533 1,868,580 MXN 65,240 62,284 65,645 65,329 NOK 2,093,232 1,702,841 2,089,246 1,689,129 PLN 47,729 33,010 51,036 33,795 RUR 1,344,703 1,932,644 1,344,978 2,759,817 SAR - - 3,274 - SEK 193,612 111,564 194,541 112,517 TND - - 57 34 UAH - 82,796 - 14,468 USD 86,368 65,150 51,649 38,433 166 Elopak 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 dedesignated at the date of recognition of the hedged item, however the derivatives are due at the date of expected payment. At dedesignation, 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. Note 30 – Financial risk management continued Nominal amount (EUR 1,000) December 31, 2022 December 31, 2021 Currency Ccy EUR Ccy EUR EUR -72,633 -72,633 -140,148 -140,148 JPY 9,461,714 67,267 3,927,814 30,126 NOK 255,426 24,294 256,305 25,659 USD -24,231 -22,718 95,000 83,878 Total nominal value -3,790 -485 Total fair value -534 -1,244 Outstanding derivatives Positive numbers represent purchases. 167 Annual Report 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 into interest rate swaps. These swaps are designated to hedge underlying debt obligations; however, they are not subject to hedge accounting. 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, 2022 the hedged amount of Polyethylene derivatives is 36% of expected purchase for the next 12 months. Note 30 – Financial risk management continued Outstanding derivatives Notional amounts and fair values December 31, 2022 December 31, 2021 (EUR 1,000) Currency Notional EUR Fair value Notional EUR Fair value Interest EUR 120,000 7,063 140,000 -1,811 Tot al 7,063 -1,811 Outstanding derivatives Notional amounts and fair values December 31, 2022 December 31, 2021 (EUR 1,000) Metric Tonnes Fair value Metric Tonnes Fair value Polyethylene 13,000 -2,576 7,800 5,084 Aluminium 8,400 -743 2,700 219 Tot al -3,318 5,303 Positive numbers represent purchases. Positive numbers represent purchases. 168 Elopak Note 30 – Financial risk management continued 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. 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 derivatives designated as cash flow hedges. Numbers are before tax December 31, 2022 December 31, 2021 (EUR 1,000) Movement Effect on profit Effect on equity Effect on profit Effect on equity Foreign exchange derivatives +5% -5% -1,414 213 -8,222 1,638 -4,119 4,289 -8,010 7,933 Commodity swaps +5% -5% - - 1,461 -1,461 - - 815 -815 Interest rate swaps +1% -1% 2,010 -2,093 - - 3,597 -3,773 3,597 -3,773 Positive numbers represent purchases. 169 Annual Report Contractual maturities of financial liabilities, including estimated interest payments 2022 Non-derivaties financial liabilities (EUR 1,000) Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings (Note 28) 325,715 32,760 319,451 - - 352,211 Accounts payable 124,038 124,038 - - - 124,038 Other liabilities 165,105 78,108 28,708 18,847 39,442 165,105 Tot al 614,859 2341906 348,159 18,847 39,442 641,354 Derivatives financial instruments (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 Tot al 4,598 4,269 330 - - 4,598 Note 30 – Financial risk management continued 2021 Non-derivaties financial liabilities (EUR 1,000) Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings (Note 28) 183,854 14,859 169,433 - - 184,292 Accounts payable 119,574 119,574 - - - 119,574 Other liabilities 167,345 78,222 29,562 16,024 43,538 167,345 Tot al 470,772 212,654 198,995 16,024 43,538 471,211 Derivatives financial instruments (EUR 1,000) Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Foreign exchange 2,079 2,077 2 - - 2,079 Interest rate swaps 2,058 112 1,928 18 - 2,058 Tot al 4,138 2,189 1,931 18 - 4,138 170 Elopak Note 30 - Financial risk management continued Contracts 2022 2021 (EUR 1,000) Opening position Movement Closing position Opening position Movement Closing position Commodity price hedges 5,303 -8,621 -3,318 35 5,268 5,303 Currency hedges 142 -318 -176 9 132 142 Tax effect -1,230 1,967 737 -48 -1,182 -1,230 Tot al 4,215 -6,972 -2,758 -3 4,218 4,215 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 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 independent 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: 171 Annual Report 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 30.2 Liquidity Risk, which is representative of when the hedge reserve in equity will be recycled to the statement of comprehensive income. These are included in the following line items in the income statement. Note 30 – Financial risk management continued 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 2022 was insignificant and is not recognised directly to profit and loss. In 2021 the hedge in-effectiveness was EUR 103 thousand, which was recognized directly to profit or loss. Movement in hedge reserve (EUR 1,000) 2022 2021 Sales - - Cost of goods sold -7,790 8,035 Other operating expenses -569 -1,146 Net financial items - - Tot al -8,359 6,888 Movement in hedge reserve due to changes in fair values 1,387 -2,670 Tot al -6,972 4,218 172 Elopak Note 30 – Financial risk management continued 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 comprehen- sive income (FVOCI) Financial instruments at amortised cost Tot al Quoted prices in active markets (Level 1) Significant observable inputs (Level2) Significant unobserv- able inputs (Level 3) Total instru- ments measured at fair value Assets Derivaties 30 7,810 - - 7,810 - 7,810 7,810 Finance lease receivable 23,25 - - 8,227 8,227 - - - Trade receivables 25 - - 102,197 102,197 - - - Other current assets 25 - - 113,018 113,018 - - - Cash and cash equivalents - - 25,883 25,883 - - - Tot al 7,810 - 249,325 257,135 - 7,810 0 7,810 Liabilities Liablities to financial institutions 30 - - 325,715 325,715 - - - Lease liabilities 12 - - - - - - - Derivaties 30 4,598 - - 4,598 - 4,598 4,598 Trade payables, and other payables - - 245,417 245,417 - - - Tot al 4,598 - 571,132 575,731 - 4,598 - 4,598 173 Annual Report Note 30 – Financial risk management continued Carrying amount of financial asset and liabilities December 31, 2021 Categories Fair value measurement using (EUR 1,000) Notes Fair value through profit and loss (FVPL) Fair value through other comprehen- sive income (FVOCI) Financial instruments at amortised cost Tot al Quoted prices in active markets (Level 1) Significant observable inputs (Level2) Significant unobserv- able inputs (Level 3) Total instru- ments measured at fair value Assets Derivaties 30 6,386 - - 6,386 - 6,386 - 6,386 Finance lease receivable 23,25 - - 10,220 10,220 - - - - Trade receivables 25 - - 91,533 91,533 - - - - Other current assets 25 - - 98,490 98,490 - - - - Cash and cash equivalents - - 24,262 24,262 - - - - Tot al 6,386 - 224,506 230,892 - 6,386 - 6,386 Liabilities Liablities to financial institutions 30 - - 184,292 184,292 - - - - Lease liabilities 12 - - - - - - - - Derivaties 30 4,138 - - 4,138 - 4,138 - 4,138 Trade payables, and other payables - - 226,848 226,848 - - - - Tot al 4,138 - 411,140 415,277 - 4,138 - 4,138 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. 174 Elopak Note 31 - Change in obligations from financial activities 2022 (EUR 1,000) Interest-bearing loans and borrowings (Note 23) Lease liabilities (Note 12) To ta l 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 expenses to financial institutions -5,658 - -5,658 Lease payments - -19,770 -19,770 Non-cash effects Interest expensed 5,258 4,575 9,833 Net additions lease liabilities - 25,266 25,266 Other non-cash items -5,588 0 -5,588 31.12 325,715 90,674 416,390 Current 21,682 73,536 - Non-current 304,033 17,139 - 2021 (EUR 1,000) Interest-bearing loans and borrowings (Note 23) Lease liabilities (Note 15) To ta l 1.1 228,687 88,175 316,861 Cash Flows Proceeds of loans from financial institutions 728,843 - 728,843 Repayment of loans from financial institutions -775,640 - -775,640 Interest expenses to financial institutions -1,553 - -1,553 Lease payments - -19,969 -19,969 Non-cash effects Interest expensed 1,953 4,138 6,091 Net additions lease liabilities - 8,260 8,260 Other non-cash items 1,564 0 1,564 31.12 183,853 80,604 264,457 Current 14,420 62,342 - Non-current 169,433 18,261 - 175 Annual Report Note 32- 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, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Joint Ventures Sales of goods and services 4,877 3,014 1,200 643 Purchase of goods and services 35,781 23,872 2,394 2,260 Dividends received - 4,965 - - Associates Sales of goods and services 69 227 - 6 Purchase of goods and services 1,198 4,465 26 819 Loan and related interest - - 836 834 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, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Jo Olav Lunder, Chairperson 65 59 107,142 107,142 Sanna Suvanto-Harsaae 43 32 14,285 14,285 Sid Johari 40 40 17,857 17,857 Anna Belfrage 48 36 - - Anette Bauer Ellingsen 15 11 1,071 1,071 Erlend Sveva 15 15 1,071 1,071 Marius Wiklund - 9 1,786 1,786 Per Thau - 9 - - Michael Francis Cronin - 9 - - Marianne Groven 1 - - - Other related party transactions Loans to employees were EUR 24 thousand in 2022 and EUR 20 thousand in 2021. No guar- antees have been provided. None of the Board Members or the CEO have executive loans or guarantees in the Company. None of the Board Members or the CEO have executive loans or guarantees in the Company. 176 Elopak Note 33 - Subsequent events Note 34 Financial climate impact On February 22, 2023, Elopak announced that the sale of all Elopak's shares in its former Russian subsidiary, JSC Elopak has been completed and Elopak has thus finalized its divestment of its Russian operations. Receipt of the purchase price remains pending the due dates for the various instalments. Sustainability Framework Elopak manages the risks related to sustainability. Climate risks, such as the rapidly changing regulatory environment 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 2022 Elopak sustainability report 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 and Spain from 2022 and in Italy starting in 2023. 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. 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 177 Annual Report Note 34 Financial climate impact continued 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 16 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; others are more specific to our industry and hence self-defined. See 2022 Elopak sustainability report 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 & 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 2022 consolidated annual financial statements. The table below summarizes the climate risk financial impact assessments from Elopak 2022 sustainability report: 178 Elopak 4 risks/opportunities are considered to have a potential of increased revenues at a short time horizon while 5 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 have been reassessed 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. 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 15 for further information. Note 34 Financial climate impact continued 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 CO 2 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 179 Annual Report Note 34 Financial climate impact continued 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 2022 consolidated Annual Financial Statements or the alternative performance measures (APMs). End of consolidated financial statements. 180 Elopak Elopak Group Consolidated Financial Statements Skøyen, March 30, 2023 Board of Directors in Elopak ASA Trond Solberg Board Member Sid Johari Board Member Anette Bauer Ellingsen Board Member (employee representative) Sanna Suvanto-Harsaae Board Member Jo Olav Lunder Chairman of the Board Anna Belfrage Board Member Erlend Sveva Board Member (employee representative) Thomas Körmendi CEO Responsibility statement We confirm to the best of our knowledge that the consolidated financial statements for the period January 1 to December 31, 2022 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, liabilities, 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. 181 Annual Report Elopak ASA nancial statements 2022 182 Elopak 183 Annual Report STATEMENT OF PROFIT AND LOSS (EUR 1,000) Note 2022 2021 Total revenues 2 574,580 532,327 Cost of materials -508,825 -458,521 Payroll expenses 3.4 -38,190 -38,370 Depreciation, amortization and impairment 5.6 -11,206 -11,120 Other operating expenses -33,856 -42,457 Total operating expenses -592,077 -550,469 Operating profit -17,497 -18,142 Financial income and expenses Share of net income from subsidiaries and joint ventures 7.8 40,728 17,357 Reversal / write-down of financial fixed assets 8 -13,017 - Financial income 9 15,100 7,624 Financial expenses 9 -980 -5,391 Net financial items 41,832 19,590 Profit before taxes 24,335 1,448 Income tax 10 -818 -16 Net profit or loss 23,517 1,432 Allocation of net profit Transfer from / to other equity 1,496 -18,782 Proposed dividend 22,021 20,214 Total allocation 11 23,517 1,432 184 Elopak STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER (EUR 1,000) Note 2022 2021 Assets Non-current assets Intangible assets 5 42,383 46,356 Deferred tax assets 10 12,468 10,355 Total intangible assets 54,851 56,711 Land, buildings and other property 6 485 583 Plant and machinery 6 2,561 3,479 Equipment, tools, office machines etc 6 50 69 Total fixed assets 3,097 4,131 Investments in subsidiaries 8 309,225 214,571 Loans to group companies 12 78,532 59,893 Investment in joint ventures 8 24,251 24,251 Other non-current assets 2,665 699 Total financial fixed assets 414,674 299,414 Total non-current assets 472,622 360,256 Current assets Inventory 13 90,777 75,502 Trade receivables 12 14,430 14,240 Other current assets 12 101,847 89,971 Total receivables 116,278 104,211 Cash and cash equivalents 14,981 18,000 Total current assets 222,036 197,713 TOTAL ASSETS 694,658 557,969 185 Annual Report STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER Equity and liabilities (EUR 1,000) Note 2022 2021 Equity Share capital (269,219,014 shares at NOK 1,40) 14, 11 50,155 50,156 Other paid-in capital 11 69,952 70,105 Total paid-in equity 120,106 120,261 Retained earnings 11 43,704 48,651 Total equity 163,811 168,912 LIABILITIES Non-current liabilities Pension liabilities 4 2,206 2,320 Total provisions 2,206 2,320 Liabilities to financial institutions 15 304,033 169,433 Liabilities to group companies 15 - 10,087 Other non-current liabilities 330 1,948 Total other non-current liabilities 304,363 181,469 Total non-current liabilities 306,569 183,789 Current liabilities Liabilities to financial institutions 19,977 13,676 Trade payables 12 81,157 83,680 Public duties payable 13,694 12,759 Taxes payable 10 - - Provision dividend 11 22,021 20,214 Other current liabilities 12 87,429 74,940 Total current liabilities 224,278 205,269 Total liabilities 530,847 389,057 Total equity and liabilities 694,658 557,969 186 Elopak Skøyen, 30 March 2023 Board of Directors in Elopak ASA Trond Solberg Board Member Sid Johari Board Member Anette Bauer Ellingsen Board Member (employee representative) Sanna Suvanto-Harsaae Board Member Jo Olav Lunder Chairman of the Board Anna Belfrage Board Member Erlend Sveva Board Member (employee representative) Thomas Körmendi CEO 187 Annual Report STATEMENT OF CASH FLOWS (EUR 1,000) Note 2022 2021 Profit before taxes 24,335 1,448 Depreciation, amortization and impairment fixed assets 5, 6 11,206 11,120 Depreciation, amortization and impairment financial assets 7 13,017 - Net unrealized currency gain / loss to equity -6,967 4,370 Dividend received 7 -40,728 -17,357 Cash flow from profit before tax 862 -420 Taxes paid 14 -2,251 -4,575 Change in account receivables -191 -6,412 Change in other receivables -11,876 -13,490 Change in inventories -15,275 -10,056 Change in account payables -2,522 -3,320 Change in other liabilities 13,536 -17,948 Change in net pension liabilities -182 -46 Net cash flow from operations -17,900 -56,266 Purchase and disposal of non-current assets 5, 6 -6,199 -6,482 Dividend received 7 40,728 17,357 Capital changes subsidiaries 7 -95,608 - Change in other non-current investments -1,967 -617 Net cash flow from investing activities -63,045 10,258 Capital deposits 10 - 49,888 Dividend paid 10 -19,623 -9,919 Change in current liabilities to credit institutions 6,301 -1,875 Change in long-term loans and liabilities 91,239 24,799 Net cash flow from financing activities 77,917 62,893 Net cash flow -3,028 16,884 Liquidity pr 1.1 18,000 1,115 Liquidity pr 31.12 14,981 18,000 188 Elopak Note 1 – 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. 189 Annual Report 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 remuneration 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 manufacturing 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. Note 1 – Significant accounting policies continued 190 Elopak Note 1 – Significant accounting policies continued 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 develop- ment expenses, are capitalized when it becomes 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 systematic basis. Intangible assets are written down to the recoverable amount if the expected economic benefits are not 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 recognized 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. 191 Annual Report For defined benefit plans, the cost of providing benefits is determined using actuarial valua- tions 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 transac- tions, 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 monetary 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, Note 1 – Significant accounting policies continued 192 Elopak Note 2 – Operating revenues 2022 2021 Sales revenue 556,571 515,295 Management and group services 18,009 17,032 Tot al 574,580 532,327 In, 2022, intra-group sales transactions amounts to EUR,538 million. Geographical distribution of operating revenues is as follows: 2022 2021 Europe 512,558 505,666 Asia, Middle East 6,722 226 Africa 34,077 19,392 America 21,224 7,043 Tot al 574,580 532,327 Operating revenues are specified according to the customer's location. Payroll expenses, number of employees, remuneration, loans to employees etc. Payroll expenses 2022 2021 Salary 18,678 18,603 Social security costs 2,822 3,175 Hired personnel from group companies 14,839 14,838 Pension cost (see note 4) 1,495 1,259 Other benefits 355 495 Tot al 38,190 38,370 Average number of FTE employees 159 167 Note 3 – Payroll expenses, number of employees, remuneration, loans to employees etc. 193 Annual Report Salaries and remunerations to the Group management CEO BoD Salary (incl bonus) 738 - Other benefits 49 239 Fees to external auditors 2022 2021 Audit fee 449 377 Other assurance services 33 386 Tax advisory services 7 5 Other non-audit services 23 42 Tot al 512 810 Note 3 – Payroll expenses, number of employees, remuneration, loans to employees etc. continued CEO is included in an annual bonus scheme. Targets are reviewedannually. The performance criteria are divided into shared and individual. Shared targets, accounting for 50%, reflects Elopak Group’s strategic priorities, profitability, cash flow, foundational as well as ESG value drivers. Individual targets, accounting for 50%, were 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 published on Elopak’s webpage. 194 Elopak Note 4 – Pension costs, pension assets and pension liabilities The Company is required to have an occupational pension plan in accordance with Norwegian legislation on occupational 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 contribu- tion plan for 2022 includes 167 employees with a cost of EUR 1,226 million compared to EUR 1,259 million in 2021. Pension cost relates 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 2022 2021 Interest cost on projected benefit obligations 32 20 Return on plan assets - - Accrued social security tax 5 3 Total pension costs recognized in profit an loss 37 23 Net pension obligations 2022 2021 Funded and unfunded obligations Funded and unfunded obligations Present value pension obligations (incl. payroll tax) -2,206 -2,337 Fair value of plan assets - 16 Net pension obligations -2,206 -2,320 2022 2021 Changes in estimates recognized directly in equity -68 -118 195 Annual Report Patents and sales rights IT software Total Intangible assets Acquisition cost 01.01.2022 20,687 67,531 88,217 Additions 4,422 2,047 6,469 Disposals - 362 362 Acquisition cost 31.12.2022 25,108 69,216 94,325 Accumulated amortization 31.12.2022 10,478 41,031 51,510 Accumulated impairment 31.12.2022 - 431 431 Carrying amount 31.12.2022 14,630 27,754 42,383 Current year amortization charge 2,195 8,247 10,442 Current year depreciation/write-down charge 2,195 8,247 10,442 Economic life 3-10 years 3-7 years Amortization % 10-33% 14-33% Amortization method Linear Linear Note 5 – Intangible assets 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 an ERP system. The actuarial assumptions for demographic factors and departure are based on the commonly used assumptions in insurance. Note 4 – Pension costs, pension assets and pension liabilities continued Financial preconditions: 2022 2021 Discount rate 2,40 % 1,60 % Expected salary increase 3,50 % 2,75 % Social security escalation rate 3,25 % 2,50 % Expected pension increase 2,60 % 1,75 % Expected return on plan assets 4,70 % 3,10 % 196 Elopak Expected profit from capitalized research and development cost exceed book values. The Company has also expensed EUR 4 million as research and development costs in 2022. (2021: EUR 14 million) In 2021 EUR 0.6 million was classified as depreciation in the statement of profit and loss related to recharged depreciation from subsidiaries. In 2022 recharged depreciation from subsidiairies has been classified under other operating expenses. Note 5 – Intangible assets continued Land and buildings Machinery and plant Furniture, tools, office machines and the like Total fixed assets Acquisition cost 1.1.2022 5,231 13,589 1,542 20,363 Additions 17 375 - 392 Disposals - 1,038 135 1,173 Acquisition cost 31.12.2022 5,248 12,926 1,407 19,582 Accumulated depreciation 31.12.2022 4,762 10,365 1,356 16,482 Carrying amount 31.12.2022 485 2,561 50 3,097 Current year depreciation charge 114 645 4 764 Current year depreciation/write-down charge 114 645 4 764 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 2,830 1,331 559 Total future lease obligation 53,722 6,102 826 Note 6 – Fixed assets 197 Annual Report In 2022, dividends of EUR 40.7 million were recognized from subsidiaries and associated companies. In 2021 the same number was EUR 17.4 million. See also notes 2, 8, 9, 12 and 15 for more information regarding transactions and items with related parties. Note 7 – Transactions with related parties 198 Elopak Note 8 – Shares and participations in other companies, etc. * Owned 50% directly, and 50% through wholly owned subsidiaries The percentage owned is equal to the voting share percentage. Company Percentage owned Acquisition cost Book value 2022 Equity 2022 Results 2022 Elopak Oy, Finland 100 % 1,862 231 472 176 Elopak Denmark A/S, Denmark 100 % 91,296 66,000 23,200 2,217 Elopak BV, Netherlands 100 % 105,456 105,456 124,898 4,340 Elopak Fastiv, Ukraine 99 % 2,289 2,285 10,387 -5,993 Elopak SPA, Italy 100 % 4,233 880 2,468 46 Elopak Systems AG, Switzerland 100 % 13,560 13,560 14,715 -556 Elopak Inc, USA 100 % 47,405 47,405 35,342 4,835 Elopak Israel AS, Norway 100 % 1,316 1,316 243 -12 Elopak Canada Inc, Canada 100 % 6,942 6,942 38,402 20,087 Elopak GsmbH, Austria 100 % 6,226 5,273 2,887 135 ZAO Russland, Russia 100 % 4,458 4,458 - -11,597 Elopak S.R.O, Czechia 100 % 197 197 974 58 Elopak UK Ltd, UK 100 % 47,191 - 8,151 2,608 Elopak BS D.O.O Serbia 100 % 160 160 324 70 Elopak AB, Sverige 100 % 10,593 6,820 10,480 233 Elopak KFT, Hungary 100 % 13 13 578 21 Elopak EOOD, Bulgaria 100 % 3 3 121 3 Elopak Poland SA, Poland 100 % 20,388 6,000 4,863 158 Elofill Gmbh, Germany 100 % 42,215 42,215 48,788 -130 Elopak Tunisie SARL, Tunisia 100 % 3 3 47 11 Elopak Egypt LLC, Egypt 100 % 6 6 49 7 Elopak Algerie SARL, Algeria 49 % - - 33 5 Total shares, subsidiaries 405,814 309,225 Envases Elopak S.A. de C.V., Mexico 49 % 24,247 24,247 21,237 2,665 Elopak Nampak Africa Ltd, Kenya 50 % 4 4 -244 -112 Total shares, joint ventures 24,251 24,251 Total shares 333,476 199 Annual Report During 2022, Elopak ASA increased the share capital in Elopak BV in order to finance the acquisition of all voting shares in Naturepak Beverage Packaging Co Ltd and GLS Elopak. Dividends from subsidiaries and joint ventures of EUR 40.7 million in 2022 (EUR 17.4 million in 2021) have been recognized as financial income. Impairment tests have been performed on those investments where the book value exceeds the equity in the Company. An impairment of EUR 1 million from Elopak GsmbH, Austria was deemed necessary in 2022. Note 8 – Shares and participations in other companies, etc. continued Note 9 – Net other financial items * Profit/loss on currency are presented net in the statement for profit and loss as part of other financial income. ** Gains on interest rate swaps are includes as a reduction of interest expense. 2022 2021 Interest income from companies in the same group 10,732 6,602 Other interest income 795 517 Interest costs for companies in the same group -1,465 -852 Other interest expenses ** 2,672 -1,407 Total interest income (+) / expense (-) 12,733 4,860 Net currency gain/loss * 3,469 442 Other financial income from enterprises in the same group 105 60 Other financial income - 2 Other financial cost -2,186 -3,132 Total other financial income / expense -2,081 -3,069 Total other financial income 15,100 7,624 Total other financial expenses (incl. profit/loss on exchange) -980 -5,391 200 Elopak Note 10 – Income tax Income tax expenses: 2022 2021 Tax cost payable outside Norway 2,251 1,457 Tax payable in Norway *** - -38 Change in deferred tax -1,434 -1,402 Total tax cost 818 16 Calculation of this year's tax base: 2022 2021 Profit before tax expenses 24,335 1,448 FX effect on loss carried forward from,2021 2,251 - Permanent differences 8,659 11,032 Change in temporary differences -1,976 -9,997 Non-taxable dividend income -41,114 -16,940 Differences recognized directly in equity ** -9,392 4,048 This year's tax base -17,237 -10,409 * Includes mainly translation differences due to the fact that tax is calculated in NOK and non-deductible expenses. ** Related to change in actuarial effects on pensions, change in cash flow hedges in equity, and share issuance cost taken net to equity. *** Tax payable in 2021 is related to an adjustment of taxes payable for 2020. 201 Annual Report Note 10 – Income tax continued Overview of temporary differences: 2022 2021 Inventory 3,038 2,498 Goodwill 5,539 6,764 Fixed Assets 16,623 16,250 Provisions 4,866 5,089 Pensions 2,206 2,320 Fair value of hedging instruments -3,243 -2,247 Temporary differences 29,029 30,675 Tax receivable on taxes paid outside of Norway * - 5,986 Tax losses carried forward 27,646 10,409 Tot al 56,675 47,070 Deferred tax asset 12,468 10,355 Temporary differences for the calculation of tax payable 29,029 30,675 Tax receivable on taxes paid outside of Norway - 5,986 Tax losses carried forward 27,646 10,409 Tot al 56,675 47,070 Deferred tax asset * 12,468 10,355 * Tax receivables on taxes paid outside of Norway carried forward are included in the deferred tax asset. The use of this tax receivable is presented as a reduction in taxes payable in the balance sheet. 202 Elopak Note 10 – Income tax continued * Includes non-deductible expenses, taxable income from NOKUS, as well as translation differences. Explanation of why this year's tax expense does not amount to 22% of profit before tax: 2022 2021 Profit before taxes 24,335 1,448 22% tax on profit before tax 5,354 318 Tax effect of: Permanent differences (22%) * 1,905 2,427 Taxes paid outside Norway 2,251 1,130 Change in tax receivable on taxes paid outside of Norway 0 326 Non-taxable dividend -9,045 -3,727 Currency effect on deferred tax asset 353 -459 Estimated tax expense (- income) 818 16 Effective tax rate as a percentage of profit before tax. 3.4 % 1.1 % Note 11 – Equity Company Share capital Other paid-in capital Other equity Total equity Equity 01.01.2022 50,156 70,105 48,651 168,912 This year's change in equity: Profit for the year - - 23,517 23,517 Dividend provision to shareholders - - -22,021 -22,021 Own shares (5.519) -1 -8 - -9 Currency effect dividend previous year - - 591 591 Provision for share-based bonus - -145 - -145 Change in actuarial gains and losses for pensions - - -68 -68 Change in cash flow hedge reserve - - -6,967 -6,967 Equity 31.12.2022 50,155 69,952 43,704 163,811 203 Annual Report Note 12 – Balances with companies in the same group, etc. Non-current liabilities to group companies 2022 2021 Elopak GmbH 59,000 55,000 Elopak Canada Inc 14,063 - ZAO Elopak Russia - 4,651 Elopak Israel AS, Israeli branch - 242 Elopak South Africa 469 - Elopak Marocco 5,000 - Tot al 78,532 59,893 204 Elopak Trade receivable Other current assets 2022 2021 2022 2021 Elopak BV - - 19,323 31,796 Elopak BV branch office Spain - - 185 1,082 Elopak Canada - - 8,898 2,644 Elopak BS d.o.o. 138 65 2 3 Elopak Denmark AS - - 11 - Elopak GmbH - - 50,938 28,501 Elopak Hungary - 1 - - Elopak Inc. - - - 4 Elopak Israel AS branch office 28 240 - - Elopak Poland S.A. - - 1 - Elopak EOOD, Bulgaria 1 1 - - Elopak UK Ltd - 47 4,088 1,960 ZAO Elopak Russia - 4,019 0 844 Elopak Ukraine - - 3 0 Elopak Fastiv 4,224 802 - - Elopak Algeria - 26 - - Elopak India 2,083 0 - - Elopak South Africa 917 0 15 - Elopak Marocco 2,816 0 81 - Elopak Czek - - 166 - Elopak US - - 9 - Intra-group positions 10,206 8,943 83,719 71,621 External positions 4,224 5,297 18,128 18,350 Tot al 14,430 14,240 101,847 89,971 Note 12 – Balances with companies in the same group, etc. continued 205 Annual Report Trade payables Other current liabilities 2022 2021 2022 2021 Elofill GmbH - - 2,542 20,321 Elopak AB 204 172 2,147 1,975 Elopak BV - - 2,867 8,366 Elopak BV branch office Spain - - 3 7 Elopak BV branch office France 11 8 617 11,044 Elopak Canada 24 417 403 565 Elopak BS d.o.o. 74 47 73 19 Elopak Denmark AS - - 1,906 6,381 Elopak Fastiv 36 8 - - Elopak Gesmbh - 18 5,647 5,932 Elopak GmbH - - 12,280 2,754 Elopak Hungary - - 576 372 Elopak Inc. - 856 19,402 10,131 Elopak Israel AS - 0 219 240 Elopak OY 10 4 563 396 Elopak Poland S.A. -114 40 4,966 4,839 Elopak S.p.A - 0 2,925 2,630 Elopak s.r.o. - - 1,135 942 Elopak EOOD, Bulgaria - - 114 13 Elopak Systems AG - - 8,187 5,899 Elopak UK Ltd - - - 149 ZAO Elopak Russia - 353 - 145 Intra-group positions 246 738 66,572 61,643 External positions 80,911 82,942 20,857 13,297 Tot al 81,158 83,680 87,429 74,940 Note 12 – Balances with companies in the same group, etc. continued 206 Elopak Note 13 – Inventory 2022 2021 Raw materials 22,603 15,555 Semi-finished products 24,853 18,940 Filling Machines 15,087 17,932 Finished goods 28,234 23,076 Tot al 90,777 75,502 Note 14 –Share capital and shareholder information The share capital is NOK 376,906,619.60, equivalent to EUR 50,155,321 consisting of 269,219,014 shares at face value NOK 1.40 pr share. Elopak ASA is listed on Oslo Børs - Euronext. Elopak ASA owned 5.519 treasury shares at 31.12.2022. Shareholders holding 1% or more of the total 269.219.014 shares issued as of 31 December 2022 are according to information from Euronext: Name Number of shares Holding (%) Ferd AS 161,079,280 59.83 % Nippon Paper Industries Co., Ltd. 13,460,950 5.00 % Artemis Investment Management Llp 8,997,614 3.34 % Folketrygdfondet 8,879,709 3.30 % Morgan Stanley Europe SE 7,356,462 2.73 % Pareto Asset Management AS 5,029,041 1.87 % Tot al 204,803,056 76.07 % 207 Annual Report Note 15 – Other non-current liabilities and non-current liabilities to group companies The external long-term loans are drawn under a EUR 400 million multi-currency revolving credit facility. The facility is available until 31.05.2025. Amounts are shown net of prepaid transaction costs, which explains the difference against liabilities in the balance sheet. As of 31.12.22, Elopak ASA has met all covenants related to the syndicate loan facility. Non-current liabilities to financial institutions 2022 2021 EUR 305,000 170,000 Tot al 305,000 170,000 Non-current liabilities to Group companies 2022 2021 ZAO Elopak Russia - 10,087 Tot al - 10,087 Note 16 – Guarantee obligations Note 17 -Commitments and contingencies 2022 2021 Guarantees issued for subsidiaries and associated companies 16,050 33,219 Other guarantees 2,010 2,456 Tot al 18,060 35,675 2022 2021 Commitments for acquisition of goods 18,692 22,866 Total commitments 18,692 22,866 208 Elopak Note 18 – 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 exposure in the 1st quarter and thereafter falls linearly each quarter to 15% in the 6th 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. Currency contracts at the end of the year 2022 2021 Currency Forward position in currency Forward position in EUR Forward position in currency Forward position in EUR NOK 255 24 256 26 JPY 9,462 67 3,928 30 Net purchases 92 Net purchases 56 Net sales - Net sales - 92 56 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. 209 Annual Report At the end of 2022, the fair value of Elopak ASA's currency derivatives amounts to a liability of EUR 0,5 million (a liability of EUR 0,6 million in 2021). 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. 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. Note 18 – Financial risk management continued Outstanding derivatives 2022 Real value EUR 2021 Real value EURCurrency Nominal value Nominal value EUR 120,000 7,063 140,000 -1,811 Tot al 7,063 -1,811 Positive values represent an asset. Outstanding derivatives 2022 Real value EUR 2021 Real value EUR 2022 Ton s 2021 Ton s Aluminium 8,400 (743) 2,700 219 Polyetylen 13,000 (2,576) 7,800 5,084 Tot al (3,319) 5,303 Positive values represent an asset ; negative values represent a liability. 210 Elopak On February 22, 2023, Elopak announced that the sale of all Elopak's shares in its former Russian subsidiary, JSC Elopak has been completed and Elopak has thus finalized its divest- ment of its Russian operations. Receipt of the purchase price remains pending the due dates for the various instalments. – Subsequent events 211 Annual Report 212 Elopak PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Elopak ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Elopak ASA, which comprise: • the financial statements of the parent company Elopak ASA (the Company), which comprise the statement of financial position pr 31 December 2022, the statement of profit and loss and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Elopak ASA and its subsidiaries (the Group), which comprise the consolidated statement of financial position as of 31 December 2022, and the consolidated statement of comprehensive income, other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of material accounting policies. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 4 years from the election by the general meeting of the shareholders on 10 April 2019 for the accounting year 2019. 213 Annual Report 2 / 7 Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Customer contracts – Point in time vs over time was identified as a key audit matter during the 2021 audit and is also considered a key audit matter this year. We also focused on Accounting for business acquisition and Accounting for divestment as these are non-recurring events which may be complex and require application of management judgment. Key Audit Matters How our audit addressed the Key Audit Matter Customer contracts – Point in time vs over time The majority of the Group's revenues and profits are derived from customer contracts for sale of cartons. The Group recognises revenue upon transfer of control of a performance obligation. Revenue is recognised over time in situations where the customer simultaneously re ceives and consumes the services provided, or where goods are produced without alternative use and the Group has an enforceable right to payment for work performed. Whether transfer of control is satisfied over time or at a point in time rely on complex as sessments of accounting, contractual terms and legal regulations in each country the Group operates. Due to this complexity , we assessed this to be a key audit matter. We refer to note 5 Revenues, to the consolidated financial statements, where management explain s their accounting policies for revenue recognition. We understood, evaluated, and tested internal control activities related to whether the transfer of control is satisfied over time or at a point in time. We tested management's assessment of whether the cartons had alternative use and whether there was an enforceable right to payment by way of sampling new and amended customer contracts. This included testing whether customers’ specifications for printing and labelling are defined in the customer contract. If so, this resulted in the view that no alternative use of such cartons was deemed possible. It also included testing of whether the contracts contained cancellation provisions and whether legal regulations in the relevant countries allowed cancellation. If so, this resulted in the view that an enforceable right to payment existed. Revenue for cartons with no alternative use should be recognised over time. We tested whether such cartons had been appropriately recognised over time by sampling whether finished goods were included in inventory. We found no material errors through our testing. Finally, we considered the adequacy of disclosures in the notes and found them appropriate. Accounting for business acquisition During the past year, Elopak ASA has made two business acquisitions, of which the acquisition of Naturepak Beverage Packaging Co Ltd was the most significant. We reviewed and evaluated the acquisition analysis and focused on how management identified goodwill and other intangible assets. To challenge management's judgement, we performed, among other, the following audit procedures: 214 Elopak 3 / 7 For each business combination, management prepared an acquisition analysis in which the difference between net assets in the acquired company and purchase price was allocated to identified assets in the acquired company. Customer relationships and order ba cklog were among the identified assets, as well as goodwill. To determine the value of the identified intangible assets, management used judgement and performed complex calculations based on estimates and forecasts of the acquired companies’ future develop ment. Customer relationships, unlike goodwill, are written off over their expected useful lives. An incorrect distribution of surplus values in the acquisition analysis may have a significant impact on the financial statements. Company acquisitions can be complex in nature and the reporting of such events depends on how the acquisition agreement is designed and usually on the use judgement from management, which is why we focus on this area. The Group’s disclosures and principles for business combination a re described in note 4 and note 21 to the consolidated financial statement . • Obtained the acquisition agreements and evaluated the terms of the agreements from an accounting perspective. • Examined management’s methods and assumptions for identifying intangible assets such as customer relationships, and order backlog, and the allocation of surplus values to these. Additionally, we confirmed the paid purchase price against bank account statements. We also considered whether the information provided in the notes to the annual report met the requirements in current accounting standards. Accounting for divestment In July 2022, Elopak ASA announced that it had entered into an agreement (SPA) to sell JSC Elopak to Packaging Management and Investing LLC. This company is beneficially owned by management of JSC Elopak. The completion of the sale is subject to local governmental approval and was not completed in 2022. Management applied judgement to evaluate the acc ounting treatment, as the SPA terms imply that Elopak ASA lost control of JSC Elopak on the date it was signed and that the completion of the sale is subject to local governmental approval. The Russian entity We obtained the documents supporting the divestment to understand the transaction. To further deepen our understanding, we held discussions with management about the details and terms in the agreement. Our discussions included an understanding of management’s assessment of lost control in JSC Elopak according to IFRS 10 following the signing of the SPA, the deconsolidation and whether the Russian business meets the definition of a discontinued operation given its size and importance to the group. Our procedures to evaluate management’s impairment assessment included challenging key 215 Annual Report 4 / 7 was deconsolidated and classified as discontinu ed operations on the date of signing the SPA. The financial statements report the “Discontinued operations Russia” in the income statement which comprises the Results from discontinued operations, net of tax up to the date of disposal, together with the Lo ss on sale. Until the completion of the sale, the fair value of the shares in JSC Elopak are presented as other current assets in the consolidated statement of financial position. Management applied judgement to estimate the fair value as it reflects cons iderations of credit risk, settlement risk and the payment profile over 5 years. Upon reclassifying the assets and liabilities as Shares in JSC Elopak, management has performed an impairment assessment of the Russian operations. As the estimated fair valu e was lower than the carrying value, an impairment charge of EUR 20 282 thousand was recorded as per date of loss of control. We considered the divestment, including the impairment charge recorded, the control assessment and the loss from discontinued ope rations to be a key area of focus due to the amounts and detailed calculations involved, as well as the judgements applied by management to arrive at the appropriate accounting treatment. See further information in notes 4 and 19 where management explains the impairment and discontinued operations and how they have accounted for them in the financial statements. assumptions such as the different possible scenarios: sale of shar es, nationalisation of assets, resuming operations, and winding down operations, and the weighting of these scenarios. We tested and recalculated management’s calculation of the loss on disposal, including the impairment charge recorded as per date of loss of control, based on our understanding of the supporting documentation and considered whether management's calculations appropriately reflected the terms of the sale and purchase agreement in respect of the agreed consideration from the purchaser. We also tested and recalculated management’s calculation of the fair value as it reflects considerations of credit risk, settlement risk and the payment profile over 5 years. We found no material errors through our testing. Finally, we considered the adequacy of disclosures in the notes and found them appropriate and in accordance with the requirements in current accounting standards. Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other 216 Elopak 5 / 7 information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appear to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable statutory requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an 217 Annual Report 6 / 7 opinion on the effectiveness of the Company's and the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of Elopak ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name 529900BIDQN2AOKV6N08-2022-12-31-en.zip, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation 218 Elopak 7 / 7 (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation. Management’s Responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Oslo, 30 March 2023 PricewaterhouseCoopers AS Vidar Lorentzen State Authorised Public Accountant 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) guidelines dated May 10, 2015, an APM is understood as a financial measure of historical or future financial perfor- mance, 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 compa¬rability between financial periods. The APMs also provide measures commonly reported and widely used by investors, lender, and other stakeholders as an indi- cator of the Group’s performance. These APMs are among other, used in planning for and forecasting 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). 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 Alternative Performance Measures (APMs) 219 Annual Report Group presents this APM because management considers it to be an important supplemental 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 share¬holders 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 share¬holders and for comparability purposes with other companies. Adjusted basic and diluted earnings per share (Adjusted EPS) Adjusted EPS represents adjusted profit attributable to Elopak shareholders 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 amor- tization 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 indicates the level of borrowings after taking into account cash and cash equivalents within the Group’s busi- ness 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 covenants compliance by management. 220 Elopak Adjusted EBITDA Items excluded from adjusted EBITDA (EUR 1,000) Year to date ended December 31 2022 Year to date ended December 31 2021 Impairment fixed and long term assets Ukraine 4189 - Impairment short term assets Ukraine 2146 - Onerous contracts 100 - Transaction costs 2888 6,820 Total adjusted items 9,322 6,820 Calculatory tax effect 1) 165 -1,637 Total adjusted items net of tax 9,487 5,183 1) Calculatory tax effect on adjusted items at 24% Reconciliation of EBITDA and adjusted EBITDA (EUR 1,000) Year to date ended December 31 2022 Year to date ended December 31 2021 Operating profit 21,774 49,224 Depreciation, amortisation and impairment adjusted 63,938 54,097 Impairment fixed and long term assets Ukraine 4189 - EBITDA 109,901 103,320 Total adjusted items with EBITDA impact 5134 6820 Share of net income from joint ventures (continued operations) 2) 3) 4,378 3,575 Adjusted EBITDA 119,413 113,715 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 (EUR 1,000) Year to date ended December 31 2022 Year to date ended December 31 2021 Profit from continuing operations 34,478 30,271 Total adjusted items net of tax 9,487 5,183 Adjusted profit 43,966 35,454 221 Annual Report Reconciliation of net income from joint ventures (EUR 1,000) Year to date ended December 31 2022 Year to date ended December 31 2021 Lala Elopak S.A. de C.V. 2,665 2,589 Impresora Del Yaque 1,824 1,124 Elopak Nampak Africa Ltd -112 -137 Total share of net income joint ventures 4,378 3,575 Adjusted earnings per share (EUR 1,000 except number of shares) Year to date ended December 31 2022 Year to date ended December 31 2021 Weighted-average number of ordinary shares 269,215,990 260,786,305 Profit from continuing operations 34,478 30,271 Adjusted profit 43,966 35,454 Basic and diluted earning per share (in EUR) 0.13 0.12 Adjusted basic and diluted earning per share (in EUR) 0.16 0.14 Net debt and leverage ratio (EUR 1,000) Year to date ended December 31 2022 Year to date ended December 31 2021 Bank debt 1) 305,000 170,000 Overdraft facilities 21,682 14,420 Cash and equivalents -25,883 -24,262 Lease liabilities 90,674 80,604 Net debt 391,473 240,762 1) Bank debt is excluding amortised borrowing costs of EUR,967 thousand as of December 31,,2022 and EUR,567 thousand as of December 31,,2021 Leverage ratio 2) 3,3 2) Leverage ratio per December 31,,2022 is calculated based on last twelve months adjusted EBITDA of EUR,119,413 thousand 222 Elopak Additional Information CONTACT INFORMATION Mirza Koristovic Head of Investor Relations +47 938 70 525 Bent Axelsen Chief Financial Officer +47 977 56 578 Cautionary note The annual report contains certain forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “plans,” “targets,” “aims,” “believes,” “expects,” “anticipates,” “intends,” “estimates,” “will,” “may,” “continues,” “should” and similar expressions. Any statement, estimate, or projections included in the Information (or upon which any of the conclusions contained herein are based) with respect to anticipated future performance (including, without limitation, any statement, estimate, or projection with respect to the condition (financial or otherwise), prospects, business strategy, plans or objectives of Elopak and/or any of its affiliates) reflect, at the time made, the Company’s beliefs, intentions, and current targets/ aims and may prove not to be correct. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies, and other important factors which are difficult or impossible to predict and are beyond its control. No representation or warranty is given as to the completeness or accuracy of any forward-looking statement contained in the Information or the accuracy of any of the underlying assumptions. FINANCIAL CALENDAR May 4, 2023 Quarterly Report – Q1 May 11, 2023 Annual General Meeting August 17, 2023 Half-Yearly Report November 2, 2023 Quarterly Report-Q3 Elopak reserves the right to alter dates. 223 Annual Report 529900BIDQN2AOKV6N082022-01-012022-12-31529900BIDQN2AOKV6N082021-01-012021-12-31529900BIDQN2AOKV6N082022-12-31529900BIDQN2AOKV6N082021-12-31529900BIDQN2AOKV6N082020-12-31529900BIDQN2AOKV6N082021-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082022-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082022-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082021-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082022-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082021-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082022-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082020-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082020-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082020-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082020-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082020-12-31ifrs-full:NoncontrollingInterestsMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares
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