Annual Report (ESEF) • Mar 31, 2022
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Download Source FileUntitled Annual Report 2021 Contents 04 CEO letter to shareholders 06 This is Elopak 08 At a glance 14 2021 Key Figures 20 Megatrend: sustainable packaging 22 Our strategy 30 Reecting on our performance 33 Executing our sustainability-driven growth strategy 41 Business performance 57 Business risks 62 The Elopak share 66 From the boardroom 68 Taking care of both consumers and the planet 79 Corporate governance 84 Board of directors 87 Committees 90 Elopak management 94 Consolidated nancial statements 104 Notes 166 Responsibility statement 168 Financial statements of Elopak ASA (parent company) 197 Auditor's report 202 Alternative performance measures 207 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 31 December 2021. The report is led with the Norwegian Register of company accounts. This report presents the Board of Director’s report on pages 41-83 and 87-89. CEO Letter to shareholders 2021 was a landmark year for Elopak. From listing on the Oslo Stock Exchange to securing a platinum EcoVadis sustainability rating and announcing the acquisition of Naturepak Beverage Packaging, our people worked tirelessly to position Elopak for future growth whilst at the same time pushing towards new sustainability-focused targets. I am incredibly proud of all that was achieved. As we look forward, we are deeply concerned by recent events in Ukraine. Elopak stands with those who are suering as a result of the conict, and we condemn the unprovoked attack by the Government of Russia on Ukraine. On 4th March 2022 the Elopak Board of Directors took the decision to temporarily suspend all activities in Russia until further notice. Elopak’s plant in Fastiv, Ukraine, has been temporarily closed since 24th February 2022, as we work to protect the safety of our colleagues and their families. I would like to take this oppor- tunity to reassure people that we are doing everything we can to support our sta during this dicult time. A strong start In June 2021 we were delighted to welcome 3400 new investors on board. Elopak’s IPO saw 18 million additional shares issued, raising EUR 50 million in new equity. As a listed company we now have greater exibility to grow and develop so that we can eectively meet the rising demand for sustainable packaging solutions. 2021 was a year marked by challenges, including the impact of the Covid -19 pandemic, the volatility of raw material pricing and disruptions to our supply chain. Despite this, Elopak delivered its highest ever revenue of 940 million Euro, up from 909 million Euro in 2020. We maintained a strong EBITDA margin, and net prot for the year stood at 54.1 million. Investing in innovation Elopak has a proud history of innovation and in 2021 we upgraded the Elopak Technology Centre – transforming it into a customer-centric hub ready for another century of innovation. We were delighted to unveil new products such as the more environmentally friendly Pure-Pak® eSense: our rst aseptic carton made without an aluminium layer. By eliminating this extra layer, we have reduced the carbon footprint of the carton by 30%. We also announced the Pure-TwistFlip™ – a tethered cap that remains attached to the carton throughout its entire lifecycle. This is our lightest cap to date, reducing the use of plastics while also delivering on the EU Single Use Plastics Directive ahead of 2024. Sustainability at our core In 2021 we shifted our focus from simply doing less harm towards doing more good, maintaining our focus on the three areas of people, planet and prot. The roll-out of our new vision, ‘Chosen by people, packaged by nature’, and our mission to remain our customers’ partner and consumers’ favourite across the business supports this positioning both externally and internally. Carbon neutral since 2016, Elopak stepped up a gear in 2021 and our eorts were recognised as we secured a platinum rating from EcoVadis – placing us in the top 1% of more than 75,000 companies rated worldwide by EcoVadis and their network. We continued to place strong emphasis on people, working to identify and strengthen initiatives designed to promote employee wellbeing and motivation, as well as keeping them safe during the Covid-19 pandemic. In 2021 we developed a human rights frame- work and performed a human rights risk assessment of suppliers. Meanwhile, eorts to raise safety awareness have contributed to a reduction in the number of recordable injuries by 23% since 2019. As a champion of the power of collaboration, we were also delighted to ocially join the UN Global Compact as a participant. We continue to track our performance against our targets, and I encourage those interested in learning more to read our latest Sustainability Report. Sustainability-driven growth strategy As a pioneer of sustainable packaging solutions, Elopak’s growth strategy is centred on invest- ment in innovation; the pursuit of new business opportunities in existing and new markets across both traditional and non-traditional segments; driving the plastic to carton conversion; and driving commercial excellence through margin optimization, value engineering, and operational improvement. Signicant progress was made on these fronts in 2021, from the announcement of our intention to acquire Naturepak Beverage Packaging Co Ltd to the rollout of our popular Natural Brown Board cartons in North America and the reintroduction of an old favourite in the form of the D-PAK™ range of cartons for household products. We delivered growth in more established segments, pursuing a strategic initiative to develop the UHT business, as well as growing high-value products in new segments like iced tea to boost our aseptic sales. As a result, there was a 9% volume growth in Pure-Pak® Aseptic compared to the previous year, with increased demand for our Pure-Pak® Aseptic systems. 2021 was indeed a landmark year for Elopak from which we have emerged stronger, more pioneering and with a clearer sense of direc- tion. We look forward to building on this strong foundation in 2022 and beyond. Thomas Körmendi CEO This is Elopak At a glance A Norwegian saga Headquartered in Norway, Elopak is a leading global supplier of carton-based packaging and lling machines, tracing our origins back to the original Pure-Pak® patent in 1915. Our iconic Pure-Pak® gable top carton has stood the test of time, and more than 100 years after its invention, it remains one of the world’s most popular packages for milk and juice products. Elopak was founded by Christian August Johansen and Johan H. Andresen in 1957. The Andresen family and Ferd, a private holding company, have been active and dedicated owners of Elopak until June 2021, when Elopak was listed on the Oslo Stock Exchange. Ferd continues to be a committed long-term owner. Through investment in innovation, Elopak has greatly expanded its product portfolio, pioneering solutions that help its customers lower their carbon footprint and provide consumers with more environmentally friendly packaging solutions. Today, the Pure-Pak® carton is a globally trusted, sustainable pack- aging solution for liquid content, used daily by consumers in over 100 countries. Elopak delivers complete and optimized packaging systems designed to support our ongoing ght against food waste. Each Pure-Pak® system consists of a lling line with all related services, ranging from installation to reactive and pro-active servicing, in addition to the Pure-Pak® gable top designs and a corresponding range of Elopak proprietary or customized closures. Through each of these system components, we add value and ensure eciency and eectiveness throughout the entire value chain. The Pure-Pak® gable top carton is Elopak’s most valued brand asset – we are Pure-Pak®. All other gable top cartons are copies of this legacy brand. Elopak’s roll-fed packaging material further supports our growth and deepens customer relationships in our stron- gest segments, dairy and juice beverages. Elopak employs 2,600 people and sells more than 14 billion cartons annually across more than 70 countries. * including joint ventures 1915 1957 1987 Patent for Pure-Pak® granted Elopak was founded Elopak becomes owner of Pure-Pak® license world-wide 2600 14 70 Employees incl. joint ventures Billion cartons sold annually Markets across the globe 98 Elopak Listed on the Oslo Stock Exchange since June 17th, 2021 On 17th of June 2021 Elopak became a listed company on the Oslo Stock Exchange - a landmark date in our history. The successful Initial Public Oering (IPO) resulted in a sell- down by Elopak’s majority owner Ferd and a primary issue of shares raising EUR 50m of additional equity for Elopak. The IPO attracted interest from a range of investors, both in Scandinavia and abroad. At a glance Elopak is pleased to have completed a successful IPO and welcomes more than 3400 new investors to our company. The IPO is a valuable enabler for our strategy and future growth ambitions, providing a stronger nancial position and access to equity capital markets. Photo: Steen Walstad A strong sustainability prole Carbon neutral since 2016, Elopak was an early mover to formally pledge to cut greenhouse gas (GHG) emissions in line with criteria set by the Science Based Targets initiative aimed at keeping the global average temperature increase below 1.5°C. In line with this commitment, and after already reducing GHG emissions by 70% between 2008 and 2018, Elopak has pledged a further 42% reduction in internal GHG emissions by 2030 and a 25% reduction in emissions across the value chain by 2030 from a 2020 baseline. This is a key step towards Net Zero, following the framework of Science Based Targets. In 2021, Elopak was admitted to the United Nations (UN) Global Compact in recognition of its commitment to advancing sustainability. This involves collaborating with more than 9,500 companies in 160 countries in pursuit of the UN Sustainable Development Goals (SDGs). The same year, Elopak was awarded a platinum rating for its sustainability performance by EcoVadis, the world’s largest and most trusted provider of business sustainability ratings. This achievement places Elopak in the top 1% of companies evaluated across all industries. EcoVadis is a trusted sustainability ratings provider with a global network of more than 75,000 rated companies. EcoVadis assesses sustainability performance and how well a Sustainability is not something we do; it is something we are – Thomas Körmendi, CEO “ 2010 FSC Certication of Elopak 2016 Carbon neutral Company 2019 Signing up to SBTs, < 1.5C 2020 UN Global Compact membership 2021 Platinum EcoVadis rating company has integrated Corporate Social Responsibility (CSR) principles into their business and management system. The methodology covers 21 criteria across four themes: environment, labor & human rights, ethics, and sustainable procurement. It is built on international sustainability standards, such as the Global Reporting Initiative, the United Nations Global Compact, and ISO 26000. In 2020, Elopak signed a pledge against green- washing, initiated by Skift and the Norwegian NGOs Future in Our Hands, Zero, and WWF Norway. As a signatory, Elopak agreed to specic commitments, including being honest and accountable in reporting, ensuring that actions to further sustainability in line with the United Nations Sustainable Development Goals (UNSDGs) are integrated across the company, and having a strong focus on reducing the company’s environmental footprint. Elopak’s 2021 Sustainability Report is fully digital and is available on our website elopak.com and at sustainabilityreport2021.elopak.com 13 Annual Report 2021 Key Figures 940 € * Revenue +3.5% Revenue % Di. vs PY 14bn Number of Cartons Sold * Numbers in EUR Million 120.9 € * Adjusted Ebitda 7.5 TRI Rate -1% Scope 3 Emissions Reduction 2600 Number of Employees Platinum Ecovadis Rating -10% Scope 1 and 2 Emissions Reduction 22% % of all milk cartons in Europe, fully renewable 100% Scope 2 - % of renewable electricity used 22% 78% Gender Split Female Male In December 2021, the volume of Elopak’s Natural Brown Board cartons surpassed 1.6 billion units. This milestone illustrates Elopak’s ambitions to leave our customers’ products unchanged and the world unharmed. The lower CO footprint of these cartons means that an estimated 5,000 tons of scope 3 GHG emissions have been avoided. Our Markets Elopak operates in a 17 BN Euro global, liquid carton packaging market. The market can be split into fresh and aseptic. With the main segments Dairy and Juice. Market denition includes lling machines, cartons, closures and aftermarket services. Consumables, cartons (80%) and closures (12%) make up the majority share. Cartons can be further divided into roll-fed and blank-fed systems. With the Pure-Pak® portfolio, Elopak oers a complete blank-fed system in fresh and aseptic. With its roll-fed business, Elopak participates in an unbundled manner to parts of the aseptic market. Elopak has a sophisticated production network with market units and associates in over 40 countries, serving customers worldwide. We have a long, proven track record coupled with deep system knowledge and collaboration with our customers and partners, making Elopak the complete industry partner for the future. Filling and carton packaging Roll-fed Blank-fed Roll-fed Blank-fed Fresh ~3% 2020 0,4bn 2020 13,5bn 2020 2,0bn 2020 0,9bn ~80% ~12% 5% Aseptic Juice Filling machines Oering and respective market size (EUR) % of total market Applications by type (based on carton market) Elopak´s presence Market ClosuresCartons Aftermarket services Dairy Other Fresh Aspetic 16 Elopak 17 Annual Report 9 manufacturing units 40 countries 70 markets across the globe MACHINE PRODUCTION COATING PLANTS CONVERTING PLANTS ROLL FED PRODUCTION JOINT VENTURES LICENSEE PARTNERS HEAD QUARTER CORPORATE OFFICE TECHNOLOGY CENTER Our oering Any Pure-Pak® carton is a sustainable choice. Beverage cartons have strong environmental credentials compared with alternatives such as plastic bottles. Studies have shown a reduction of 70.7% GHG emissions when packaging UHT milk in standard cartons compared with disposable PET bottles and an 83.6% reduction for fresh milk. 1 Filling machines State-of-the-art oerings across fresh and aseptic Packaging solutions Known for quality and innovation Aftermarket services Value-added after- market support 1 Life Cycle Assessment (LCA) performed by the Institute for Energy and Environmental Research (IFEU) in 2018. The study compared 1-liter beverage cartons with commercially available disposable and reusable systems in the German market, including glass and PET packaging. The entire life cycle of all market-relevant packaging was considered. Fresh Aseptic Roll fed Closures Elopak delivers a Full-Service Platform which covers the entire customer journey with frequent touch points. Through each touchpoint, we deliver value to customers and consumers. The tethered cap, Pure-TwistFlip™, is the latest sustain- ability-focused innovation announced by Elopak. The closure remains attached to the carton throughout its entire lifetime, helping tackle the serious problem of marine littering by ensuring that the cap is disposed of properly. It is also Elopak’s lightest screw cap to date, reducing the use of plastics. 18 Elopak 19 Annual Report Over 30% of all households are reluctant to use plastic packaging when shopping if they can avoid it (Kantar report “Who cares? Who does?”), and the environmental concerns are becoming broader and stronger. GfK asked its consumer panels amid the Covid-19 pandemic what keeps them awake at night, and the primary answer is climate change. Consumers want to make a change, and 22% of the global population can be classied as “eco-active.” Eco-actives are highly concerned about the environment, have a greater awareness, and take responsibility to act sustainably. It is predicted that Eco-actives will account for half the population by 2029 (Kantar report “Who cares? Who does?). This means that every self-respecting manu- facturer today needs a credible strategy for sustainable packaging. Consumers look to companies to provide them with climate- friendly choices and pro-active guidance. Manufacturers and retailers play an important role in creating transparency, educating, and guiding consumers to more eco-friendly products and packaging. Recurrent topics addressed are: • Reduction of CO emissions • Recyclability and/or recycled content • Plastic reduction and/or reduction of (virgin) fossil-based plastics Megatrend: sustainable packaging Plastic, especially bags and plastic bottles, is considered the most harmful packaging material. The environmental damage it causes is obvious, and if we continue on the current path, there will be more plastic than sh in the oceans. Brand trust is shaped more and more by ethical considerations and a coherent and authentic product and packaging concept. Brands need to demonstrate purpose. However, building transparency and creating guidance for consumers is challenging, with 400+ eco-labeling initiatives within Fast- moving consumer goods (FMCG). Cartons and other ber-based packaging provide the natural answer. Not only do consumer studies show that paper-based packaging achieves the highest liking and buying interest amongst eco-conscious communities, but objective facts also support it. The carbon footprint of a standard carton is up to 80% lower than a PET bottle. Although recycled content improves the carbon footprint of PET bottles, beverage cartons perform better from a carbon foot- print perspective. 54% Compared to HDPE 32% Compared to HDPE 73% Compared to PET 60% Compared to PET -350 -300 -250 -200 -150 -100 -50 Net zero g CO2 eq/half-gallon -60% -73% -32% -54% PET 349 206 141 95 HDPE White board Brown board 20 Elopak 21 Annual Report This dual approach – always taking care of both consumers and the planet – is at the core of Elopak’s vision and mission. Driving a circular economy. It is our obligation to leave the world unharmed for the next generation. The packaging we use matters. Packaging can play an important role in minimizing food waste. Roughly 1/3 of the food produced for human consumption is lost or wasted. Food waste alone generates about 8%-10% of global greenhouse gas emissions (EUFIC). Packaging also helps drive a more circular economy by minimizing emissions and maximizing the use of renewable and recyclable materials. Elopak is uniquely well-positioned to meet the growing demand for sustainable packaging solutions, thanks to its strong track record, growing geographical footprint, and investment in sustainability-focused innovations. Our strategy 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. As worldwide makers of carton-based packaging, we are committed to remaining our customers´ partner and the consumers´ favorite, through relentlessly developing new solutions for an expanding range of content. Chosen by people, packaged by nature Applying market-leading technology, skills and natural materials sourcing, we always aim to provide the highest quality products that leave the world unharmed. Our Mission Our Vision 22 Elopak 23 In 2021, Elopak upgraded its Elopak Technology Center into a true customer-centric hub of innovation, on-site or remotely accessible, ready for another century of innovation. Pure-Pak® is leading the way in sustainability 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 and products. A fundamental building block in all our innovational work is our close cooperation with our clients. We take care of the most demanding and delicate products, ensuring safe arrival at the consumer. Our Elopak Technology Center at Spikkestad in Norway has the knowledge and expertise to develop the optimal Pure-Pak® carton solution for our customers. All our Pure-Pak® cartons are already a sustainable choice, and further innovation can improve them both inside and out: boards, barriers, caps, and coatings of recyclable and renewable materials from responsible forestry; CarbonNeutral® Pure-Pak® cartons, made of 100% recycled and/or renewable content. Elopak has invested heavily in market-leading technology over decades to develop high- quality, sustainable Pure-Pak® packaging solutions that deliver convenience for the consumer and ensure product safety. The value that the Pure-Pak® carton oers is well recognized. Driven by consumer demand, Elopak has also translated the Pure-Pak® carton system solution to aseptic, ambient beverage applications supplying over a billion cartons. Pure-Pak® has become a very versatile packaging 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. 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-proong 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. Today, Elopak oers Pure-Pak® cartons for every conceivable need and has the competence to develop solutions for future needs, with sustainability at the core. 25 Annual Report In 2021, Arla Foods introduced the rst climate-neutral dairy products to the Dutch market. The dairy food giant launched the Arla organic climate-neutral range – the rst products with the independent ClimateNeutral® quality mark of the Climate Neutral Group. Juste Pressé in France, with its partner juice and smoothie producer Hermes Boissons, has launcahed the world’s rst High-Pressure Processing (HPP) juice products lled in cartons. Thanks to the new HPP technology, the juices have maintained the high quality of a fresh product and its nutritional benets. 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 to glass bottles, reducing complexity in the supply chain. A standout solution When battling for consumers’ attention, the Pure-Pak® carton excels in meeting rele- vant trends. The present growth in E-com- merce makes it more challenging to ensure a consistent consumer experience. 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 outperforms other sustainable packaging formats. Pure-Pak® cartons are considered best-in-use and strongly and positively inuence the consum- er’s brand perception and future buying decisions. A good user experience will more Today, Pure-Pak® has established itself as the natural and convenient alternative to plastic bottles. It ts within a low carbon circular economy, and it is made using renewable, recycled, and sustainably sourced materials. We call this Packaging by Nature®. 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. There are some expected impacts from the Covid-19 pandemic, such as increased demand for longer shelf life, stricter food safety, and a shift towards home consumption or larger formats. The Pure-Pak® carton can meet these shifting requirements. Meanwhile, “convenient and on-the-go” remains an underlying trend. The overall conclusion is that we all experience products in increasingly dierent ways. And, when focusing on the common points across these multitudes of consumer journeys, the right packaging can dramatically boost sales. Natural, healthy, and locally produced remain top drivers behind consumers’ choices when buying food & beverages, impacting 26 Elopak The Boxed Water™ brand communicates clearly that Pure-Pak® cartons are better than plastic bottles for the environment. So much so, they go beyond their 92% plant-based packaging to support the environment by planting trees in national forests and cleaning up oceans. Tropicana Brand Group has given its Organic juice range a sustainable carton makeover for the French market, shifting from non-returnable glass bottles. the demand for health and plant-based drinks. Sustainable packaging is also having an increasing inuence on consumers’ deci- sions. However, 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 nished product and ensures the product is kept safe and fresh, helping to minimize waste. But packaging can also help brands to communicate their commitment to the environment. Communi- cating clearly on sustainable packaging helps build and maintain trust with consumers. Reecting on our Performance Annual Report 2021 Reecting on our performance PROFITABLE GROWTH DRIVERS Elopak is a pioneer of sustainable solutions within the packaging industry. Leveraging our expertise, market-leading Pure-Pak® system technology, and skills, we set customer expectations and create demand for sustainable Pure-Pak® cartons. Elopak has prioritized ve key growth pillars, executing our sustainability-driven growth strategy. Executing our sustainability-driven growth strategy Elopak prides itself on its agility and high level of personal service. Elopak develops close and long- lasting relationships with its customers, working to deliver solutions that meet their needs and appeal to their consumers. 1. Expand our end-to-end, sustainable Pure-Pak® oer 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 Sharing our commitment to leave the world unharmed for the next generation is our strongest opportunity for protable growth. Mid to long term goal Global Liquid Food Packaging Company with a Diverse Product Portfolio and Footprint Tod ay Global Fresh Liquid Carton Packaging Company Fresh Opportunity in North America 1 Broaden Geographic Footprint 3 Plastic to Carton Conversion 4 Commercial Excellence 5 Aseptic Growth Roadmap 2 Elopak´s sustainability-driven growth strategy 33 Annual Report 4. Grow accessible potential, converting plastics to carton 5. Drive business performance leveraging our commercial excellence program: margin optimization, value engineering and operational improvement Fresh opportunity in North America With increasing consumer awareness, the growth potential for more sustainable carton- based packaging solutions is signicant in North America’s core fresh dairy markets. The market is characterized by an installed base of older lling equipment and consequently rather over-specied and heavy gable top packaging formats. Building on the success of the Natural Brown Board in Europe, we developed a new board structure in 2021. The new structure delivered on regional requirements of a heavier and more rigid board, enabling the launch of the rst Gable Top using Natural Brown Board in North America. The Natural Brown Board was introduced in Canada by Organic Meadow, a pioneer in the organic dairy market in October 2021. The launch was supported with a targeted PR program and the rst carbon neutral on-pack claim in North America. This represents a solid business case for all other customers, as the Natural Brown Board proved to be a solid visual cue for supporting sustainability claims. Furthermore, Elopak North America conducted a comprehensive Life Cycle Assessment study with Anthesis in 2021. The study showed that Regular Pure-Pak® can reduce the CO footprint by 32% versus HDPE bottles and 60% versus PET, and that the Natural Brown Board reduces CO footprint by 54% versus HDPE and 73% versus PET. This will further motivate companies to switch from plastic bottles to carton packaging. Aseptic growth roadmap In August, Elopak announced the more environmentally friendly aseptic carton – the Pure-Pak® eSense. The new Pure-Pak® eSense is the same shape as the consumer-friendly Pure-Pak® Sense Aseptic carton, with the ‘e’ standing for eco-friendly. It has been developed using technology from Elopak’s fresh portfolio, meaning that the carton can preserve product integrity, safety, and lifespan without requiring the aluminum layer commonly used in aseptic packaging. The elimination of the aluminum layer reduces the carton’s carbon footprint by 30% while facilitating full recyclability. The new Pure-Pak® eSense caters to brands and consumers who are constantly looking for new ways to reduce their environmental footprint. The Pure-Pak® eSense carton aligns with Elopak’s ambitions to contribute to a Net Zero circular economy. Elopak is on a mission to replace plastic bottles with fully renewable, low-carbon cartons that oer a natural, sustainable, and convenient alternative. The Pure-Pak® eSense carton comes with a new aseptic lling line, the E-PS120AH, capable of running both aluminum (Pure-Pak® Sense) and non-aluminum (Pure-Pak® eSense) aseptic congurations at the same time, oering maximum exibility. Broaden geographical footprint In October 2021, Elopak advanced its growth strategy by announcing the signing of a Share Purchase Agreement to acquire 100% of Naturepak Beverage Packaging Co Ltd, the leading gable top fresh liquid carton and packaging systems supplier in the MENA region. Present in 16 countries, Naturepak’s oering consists of fresh gable-top cartons and lling machines, accompanied by technical support and service. Naturepak is the leading fresh carton supplier in MENA and is considered one of the highest quality assets in the MENA region. With this acquisition, Elopak sees the addition of local production facilities in Morocco and Saudi Arabia to its extensive existing global network, which already encompasses customers across 70 countries. In addition, it boosts annual production capacity by 2.7 billion cartons, supporting Elopak’s ambition to meet the growing 34 Elopak 35 Annual Report demand for sustainable packaging solutions. The acquisition reinforces Elopak’s access to a strategic customer base in the fresh beverage carton segment in key growth markets, many of whom are global blue-chip FMCG players and strong regional champions. Naturepak Beverage’s sales were approximately $40 million (€35 million), and it employs approximately 140 people. The move marks a key milestone in Elopak’s growth strategy. The strategy targets an organic growth of 2-3% per annum by capitalizing on its strong track record, growing geographical footprint, and investment in sustainability- focused innovations. It also entails pursuing new business opportunities across both fresh and aseptic markets and all segments, as well as driving the plastic to carton conversion. Delivering Elopak’s brand portfolio and sharing our sustainable packaging solutions while leveraging the broadened geographical footprint in a growth market establishes a forceful engine for growth. The transaction reects our strong commitment to growth in the Middle East and Africa, applying our expertise, market-leading Pure-Pak® system technology, and skills in fresh markets while expanding into aseptic markets. Plastics to carton conversion: Growing accessible potential in core markets 2021 showed good traction, creating demand for sustainable Pure-Pak® cartons in a tradi - tional plastics market like the UK. According to Mintel, May 2020, up to 52% of UK consumers would prefer buying milk in cartons rather than plastic bottles. The UK fresh milk market amounts to up to 5BN liters and is traditionally packed in HDPE bottles, oering considerable growth potential to Elopak. Retail brands constitute a 90% share of the total fresh milk market. At these retailers, each having specic, multi-dimensional sustainability targets, we started our journey by presenting Elopak’s sustainable packaging solutions and gaining a deep understanding of the supply chains, consumer perceptions, and motivations. Together with our partner Graham’s, we built a market-specic value proposition based on extensive consumer research, backed up with facts from Life Cycle Analyses (LCA) studies. At the same time, Elopak raised awareness of sustainable Pure-Pak® solutions amongst retailers and dairies and, for the rst time, directly engaged with consumers through social media. 36 Elopak 37 Graham’s, Scotland’s largest independent dairy, started oering their own branded milk in cartons nationwide for the rst time in 20 years in the second largest UK retailer. With the carton launch, Graham’s aims to eliminate 1,000 tons of plastic per year. Graham’s also opted for a cap made from renewable materials, substituting fossil-based plastics. Graham’s’ launch of milk in cartons aligns with the most important sustainability aspects, according to their latest research. 59% of respondents conrmed that reducing plastic waste is most important for them, and 46% opted for packaging recycling as their environmental priority. Building on the same momentum, Freshways, UK’s largest independent milk processor, also signed up for two new lling lines, which will be operational in Q2 2022. Freshways will relaunch their “LoveMilk” brand in a carbon-neutral carton and is also looking to opt for renewable PE on both cartons and caps. Elopak supported the move with tech- nical and design advice and provided cartons with many environmental benets. Freshways see it as their responsibility as a major dairy supplier to the UK to help reduce the environ- mental damage from plastic waste. With the support of Elopak, they will do this one milk carton at a time. Morrisons, the fourth largest supermarket chain in the UK, is introducing sustainable Pure-Pak® cartons for its 100% juice range, just one of the ways the retailer is helping to look after the planet’s future is by switching from plastic bottles to 1-liter Pure-Pak® Sense cartons for its range of fresh juices. Morrisons is calling the new packs ‘our clever cartons’ and launched the Pure-Pak® cartons in November 2021 across its 497 UK stores. The environmental benets of the move from plastic to cartons are communicated clearly on the pack as a ‘more sustainable option, with a lower carbon footprint and 100% recyclable but with the same great taste. Plastics to carton conversion: Developing new markets In 2021, Elopak reintroduced a modernized version of the D-PAK™ range of cartons. Originally developed in the 90s for the laundry care segment, these gable top cartons designed for non-food applications are based on Elopak’s market leading Pure-Pak® technology. The D-PAK™ carton prioritizes convenience for the consumer and is also the naturally sustainable choice, oering a wood- based alternative to plastic bottles. Through the development of unique applicator technology, the freedom to design customer- or brand-specic carton packaging was greatly enhanced. Creating a carton pack design that meets all consumer and shopper marketing demands. Building on Elopak’s historical core competen- cies, we established a quality process for each new potential application of the D-PAK™ to ensure the solution meets all technical and regulatory demands. D-PAK™ illustrates the potential of leveraging Pure-Pak® know-how and market-leading technology to open whole new market segments by oering a sustainable packaging solution for personal care, laundry and other household cleaning products. In September 2021, Orkla launched re-ll hand soap and detergent products in cartons for its Klar brand, a series of sustainable, mild and fragrant products. Prior to this, Orkla had pre-launched the product in their e-commerce channel klardag.no. The results exceeded all expectations. The carton rells sold out in record time, and over 1000 people signed a waiting list. Orkla also got feedback from consumers through dierent communication channels that showed they were looking forward to seeing the product in-store. The results so far are very positive, with feedback from the consumers stating that they appreciate both the new carton’s user-friendly and environmentally-friendly features. This project takes Orkla closer to achieving its ambitious sustainability goals, with plastic reduction high on the agenda. Orkla introduced this packaging format in Q1 2022 across dierent major Home Care brands across Norway, Sweden and Finland. 38 Elopak 39 Key market comments Covid-19 In 2021 the Covid-19 pandemic continued to drive the key marked dynamics, which also inuenced the management and focus of the company. While the pandemic caused demand volatility in the initial phase of the pandemic in 2020, 2021 was mainly a contin- uation of a pattern of higher home-based consumption and lower consumption in the foodservice sector. In addition to changed consumption patterns, there was a gener- ally lower appetite in the market for making investment decisions and testing new solu- tions. While we adapted to a more virtual approach to business operations, fewer face-to-face meetings with customers and business partners will impact the speed of collaborative market-driven innovation and after-market service. Raw materials volatility As a consequence of the pandemic and lock- downs, supply/demand imbalance occurred in basically all raw materials worldwide. This was also the case for polymers and aluminum, used as barrier materials in packaging and produc- tion of closures. LDPE prices and aluminum prices increased 68% and 40%, respectively 1 , between 2020 and 2021. In addition, normally less signicant input costs were subject to price increases, like lling machine parts, pallets, and utility costs. A good illustration of the volatility is Euro pallets, where Elopak experienced a 175% change from high to low. Business performance 1 LME EUR/t and LDPE ICIS Low EUR/t 41 Annual Report Supply chain disruptions Another eect of the pandemic and the lock- downs were disruptions in supply chains leading to a more challenging sourcing situation for packaging raw materials and lling machine parts. Several of Elopak’s suppliers incurred issues and announced force majeures during 2021. Delays in getting goods also occurred due to transport interruptions. Travel restrictions reduced accessibility and the possibility to provide service to our customers. Consumption In 2021, we continued to experience tempo- rary, diverging patterns in demand induced by consumers adapting to the Covid-19 restrictions and consequences. These shifts, such as retail versus branded products, fresh versus aseptic, or spending between catego- ries, vary in intensity by country and in time, somehow reecting the spread or evolution of the pandemic. Although these aect the performance of individual market units in the given period of 2021, the total cartons market trend line remains. The larger White Milk segment showed signs of stabilization compared with the previous year, although still lower than 2019 (Global Data, Euromonitor). Dairy Segments like hay or meadow milk, bio milk, milk drinks, and plant-based drinks show signicant growth, driven by socially and environmentally responsible consumer considerations – the same sentiments as those fueling the tendency toward carton packaging. Environmental, Social, and Governance (ESG) focus Irrespective of the challenging market dynamics, the mega-trend towards sustainable pack- aging only strengthened during 2021. This eect comes with a lag time, as manufacturers invest in new lling lines. In 2021, we saw some good examples hitting the shelves, and we believe the conversion from plastic to carton will continue to be a growth driver. Continued resilience Despite the challenges resulting from the pandemic, raw material pricing and supply chain disruptions, Elopak’s performance in 2021 demonstrated our resilience. Elopak’s consistent approach to quality and our agile mindset helped deal with many new challenges. Being part of the essential food industry also provides some stability, as there is still a need for Elopak’s products during times of crisis. Covid-19 Global and local Covid-19 response teams have worked proactively and systematically to protect the employees’ health, the integrity of the prod- ucts, access to raw materials, a well-functioning supply chain, stable operations, and security of supply and service for customers. Any signif- icant disruption to Elopak’s operations would aect many families. To ensure production output, all of Elopak’s production plants have taken restrictive measures to minimize infection risk, thus reducing the risk of not being able to man production. Several of these measures have gone beyond legal requirements and depend on the goodwill of Elopak’s employees. Using video links, Elopak’s production employees have managed to execute projects outside their core skills with remote assistance. This has both reduced the risk of Covid infections and ensured the execution of projects. Through good union relations and the fantastic eort of Elopak’s employees, the required output of the production plants has been secured. Raw Materials and margin management The carton packaging industry is normally relatively stable in terms of prices and raw materials, so recent raw materials price increases and inationary pressure are quite unprecedented. However, the business model of Elopak is robust and has mitigated a large proportion of this volatility. A key focus in 2021 has been managing exposure and margins in a responsible manner that supports the nancial sustainability of the company as well as our customers. The starting point has been to price our products and solutions based on the value we create while managing the cost of raw materials These are the main features of our raw material exposure: In Europe, board contracts are typically 3-5 years with xed prices linked to CPI. In the Americas, board contracts are also multi-year, with spot prices linked to a range of indexes. Purchased boards are coated with polymer. Customer contracts in the Americas for blanks are linked to similar indexes as the board contracts, and consequently, the raw material exposure is very limited. The same mechanics apply to the Americas’ closure business. Polymers (PE) and aluminum for production in the European plants are multi-year contracts with spot prices, and the company enters 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 Elopak has mitigated raw material hikes to a large extent through a combination of commercial and commodity hedging arrangements. However, the company is still exposed to polymers and aluminum and other cost drivers such as energy utility costs, transportation, and pallets. 42 Elopak 43 Annual Report Supply chain Elopak works diligently to ensure a robust and reliable supply chain. With Covid-19, the organization was put through a live stress test. Elopak’s purchasing and supply chain team worked proactively throughout the year to avoid supply issues impacting Elopak’s customers and production. In addition to a close dialogue with suppliers, some of the measures Elopak uses to manage supply chain interruptions are planning of inventory, moving inventory internally in Elopak, switching supplier plants, change of suppliers, and change of specications. By proactively identifying and qualifying alternative suppliers and sourcing in dierent regions, Elopak has built resilience in case of supply interruptions. In 2020 the company took a leap in terms of EBITDA margin combined with stable revenues. In 2021, the year continued with a strong EBITDA margin, despite signicant raw material headwinds in the second half of the year. The revenues grew 3.5% (4.3% on a xed currency basis), driven by sales in higher-value segments and markets, price increases following raw materials in the Americas, and increased sales of lling machines. The company remains committed to the mid-term targets, as margins are expected to normalize over time combined with scale eects from our organic growth. Performance vs. mid-term targets Elopak has committed to the following mid-term targets: Targets Mid term 3-5 years 2019 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% 0.3% 3.5% 11.2% 13.5% 12.9% EUR 53m Eur 50m Eur 37m 45% 22% 52% 3.5 2.5 2.0 50-60% pay-out ratio % or adjusted net prot -2.0x net debt/ adjusted EBITDA mid-term EBITDA margin Capex Dividend policy Capital structure 44 Elopak 45 Annual Report Key nancials The following table summarizes key nancials as they have been reported through the year in the quarterly reports. The main developments in 2021 are described in the following sections of the report. Revenues Group For the full year of 2021, Group revenues increased by 3.5%, or EUR 31.4 million. Adjusting for currency translation eects, the revenue growth was 4.3%. Revenues group by geography and product Revenues Year to date ended EUR million 2021 2020 Change Europe 759.8 741.4 2.5 % Americas 192.2 194.0 -0.9 % Corporate and eliminations -11.8 -26.6 -55.8 % Total revenues 940.2 908.8 3.5 % Year to date ended EUR million 2019 2020 2021 Revenues 906.4 908.8 940.2 EBITDA 1) 88.3 122.9 110.5 Adjusted EBITDA 1) 101.3 122.3 120.9 Adjusted EBITDA 1) margin 11.2% 13.5% 12.9% Prot for the period 9.9 47.8 33.8 Adjusted prot for the period 1) 22.6 45.3 39.0 Leverage ratio 1) 3.5 2.5 2.0 Adjusted basic and diluted earnings per share (in EUR) 0.09 0.18 0.15 1) Denition of Alternative Performance Measures, including specication of adjustments, at the end of this report Revenues EMEA per product Europe Year to date ended EUR million 2021 2020 Change Cartons and closures 651.8 643.6 1.3% Equipment 41.1 36.2 13.6% Service 43.6 41.8 4.2% Other 23.3 19.8 17.6% Total revenues 759.8 741.4 2.5% Group Year to date ended EUR million 2021 2020 Change Cartons and closures 833.8 822.5 1.4 % Equipment 46.1 30.2 52.9 % Service 43.1 42.6 1.2 % Other 17.2 13.5 27.8 % Total revenues 940.2 908.8 3.5 % Europe Revenues in Europe increased by EUR 18.4 million, or 2.5%, driven by a range of initiatives. An important success factor in 2021 was our ability to grow high-value products in new segments, like iced tea in the aseptic juice segment (see BraTee case below). Also, our strategic initiative to grow the UHT business resulted in solid growth. Pure-Pak® Sense Aseptic features provide an outstanding brand image and user convenience and have been increasingly used by our customers as a valuable tool for milk market segmentation. As a result, Elopak has increased the installed base of Pure-Pak® Aseptic systems, contributing to a 9% total Pure-Pak® aseptic volume growth compared to the previous year. The achievements in the aseptic segments more than compensated for reduced reve- nues in fresh dairy in Europe. The decline in fresh dairy revenues is a combination of consumption decline and reduced volumes in segments that were not financially sustainable. In addition to the positive mix eects from an increased share of aseptic, 46 Elopak 47 Annual Report the company benetted from a full-year eect of price increases introduced in the second quarter of 2020 and further contract improvements in 2021. Revenue from equipment increased as the company delivered higher-capacity lling machines than in 2020, with a higher propor- tion of sales versus rental deals. With the Covid-19 pandemic, there have been frequent and signicant shifts in demand as our customers had to adapt to rapidly changing consumer preferences through lockdowns or re-openings. Investing in cross-capabilities has made Elopak better equipped to react and adapt to changes, like the surge in aseptic products experienced during the second quarter of 2021. Utilizing our capabilities secures customer satisfaction and prot. Americas In the Americas, revenues decreased by EUR 1.8 million compared to last year. Currency translation eects had a EUR 7.3 million unfavorable impact due to a stronger Euro against USD, and the underlying growth was 2.8%. Revenues were negatively impacted by the loss of a Roll Fed customer in Q2 2020. Pure-Pak® revenues increased compared to last year. The main reason was a healthier portfolio of customer contracts and a larger average size of the cartons produced in Montreal. Raw material indexing contributed to the revenue growth. Sales of school milk cartons produced in Mexico increased by more than 35%. Revenue from the sale of closures increased due to targeted sales eorts enabled by additional capacity see case example below. As a part of Elopak’s “plastic to carton” conversion strategy, we focused specically on the iced tea segment in some markets in 2021. In February, the German rap star Capital Bra launched the BraTee iced tea brand. The company behind BraTee, Unibev GmbH, specializes in artist collaborations and distrib- uting young, innovative brands. UniBev was quickly convinced by Pure-Pak®´s premium look, communication strengths, and envi- ronmental advantages. Elopak´s collaborative approach and service mentality, which led the initial idea quickly to market implementation, was also a determining factor. A exible and straightforward ordering process and alignment with customers’ lling capacities supported UniBev’s expanding distribution. At co-llers sites, Elopak’s highly exible aseptic lling technology, applicable to a large spec- trum of drinks and exible to alternate between sizes, shapes, and designs, enabled smooth application into existing processes. BraTee was one of 2021´s most successful iced tea launches, outperforming leading brands. The brand highly contributed to modernizing a stagnating market and inspired other brands to launch new concepts and pack formats. Case example BraTee: Driving high-value growth through agility Revenues Americas per product Americas Year to date ended EUR million 2021 2020 Change Cartons and closures 185.2 191.3 -3.2 % Equipment 5.0 1.3 289.8 % Service - 0.8 -100.0 % Other 1.9 0.6 240.5 % Total revenues 192.2 194.0 -0.9 % 48 Elopak 49 Case example Selling caps to full capacity in North America We started to see positive development in lling machines sales by the end of the year. At the end of 2019, Elopak implemented a new leadership team in America with the mandate to build a new vision for America with the ambition to capture all growth opportunities. America’s market was quickly identied as a strong growth opportunity for closures as more than 50% of our customers’ carton volumes were using caps from competitors. We reviewed our cap business and identi- ed our proprietary cap technology’s key competitive consumer benets, customer production and logistical advantages. We combined this with an internal incentive sales program and a contract re-negotiation with our business partners. Implementing this new strategy, Elopak managed to gain market shares increasing caps sales by 23% in 2020 and additional 19% in 2021. This growth strategy has been executed with discipline without damaging our contribution in this market segment. The new strategy opens new opportunities for cross selling for cartons and lling machines which are also part of Elopak growth vision for America. To support our ambition for coming years, we invested in additional capacity end of 2021. Adjusted EBITDA Group For the Group, adjusted EBITDA for 2021 decreased by 1.1%, or EUR 1.4 million. Operating prot for the full year 2021 decreased by EUR 16.6 million. The main reason for this is the EUR 5.2 million gain on the sale of the Speyer plant in the comparative period and EUR 6.8 million in transaction-related costs in 2021. Adjusted EBITDA by geography Adjusted EBITDA Year to date ended EUR million 2021 2020 Change Europe 104.3 111.3 -6.3 % Americas 35.4 33.3 6.4 % Corporate and eliminations -18.7 -22.3 -15.8 % Total adjusted EBITDA 120.9 122.3 -1.1 % Reconciliation of operating prot, EBITDA and adjusted EBITDA Adjusted EBITDA Year to date ended EUR million 2021 2020 Operating prot 54.1 70.7 Depreciation, amortisation and impairment 56.5 52.2 EBITDA 110.5 122.9 Total adjusted items 6.8 -5.2 Share of net income from joint ventures (continued operations) 3.6 4.6 Adjusted EBITDA 120.9 122.3 50 Elopak 51 Annual Report Annual Adjusted EBITDA (EURm) EMEA In EMEA, adjusted EBITDA in 2021 decreased by EUR 7.0 million. Adjusted EBITDA margin was 13.7%, down from 15.0% in the comparative period. Raw material price increases started to impact margins from Q2, and the calculated impact on European carton production was more than EUR 17m. As explained in the revenue section, mix eects and price increases had a signicant positive impact on the result. The plastic- to-carton strategy and the iced tea volume growth led to a better product and customer mix, and the company had an increase in protable volume in the UHT and plant-based segments. 121122 2020 EBITDA Net revenue mix Raw materials FX Other 2021 EBITDA Operations 10 5 2 -17 -1 * Raw materials are only related to carton production in Europa ** FX impact related to EURUSD Operations at the coating and converting plants were good during 2021. Elopak has a long history of continuous improvements, and the eciency and quality of the plants is generally at a high level. These results have been achieved through a structured opera- tional improvement program, Elovation. In 2021, production KPIs continued to improve despite signicant changes in product mix and a workforce heavily impacted by Covid-19. Production stability and reduced waste levels have been achieved despite uctuations in demand, both in volumes and type, and force majeures by suppliers. Americas In the Americas, adjusted EBITDA for the full year 2021 was EUR 35.4 million, an increase of EUR 2.1m, or 6 %, compared to last year. This increase is despite the decreased reve- nues resulting from the Covid-19 pandemic and the loss of a Roll Fed customer in 2020. Adjusted EBITDA margin was 18.4%, up from 17.2% last year. The main driver of the improved margins is a better mix of products and customers and better eciency in the Montreal plant. An important part of the mix eect is carton size, as the share of maxi sizes in production increased. The raw material indexing in customer agreements protects against higher raw material costs. Operations in the plant remained strong and contributed positively to the results. The Montreal plant received government grants related to Covid, reducing labor costs. Adjusted EBITDA was reduced by EUR 1.1m related to the share of results from the two joint ventures. In the Dominican Republic, schools were closed for a large part of the year due to Covid-19. The business in the two joint ventures in the Americas showed signicant improvement in the second half of the year, mainly due to growth in school milk volumes. Prot Net prot in 2021 decreased by EUR 16.6 million from EUR 70.7 million to EUR 54.1 million. The main reason for this develop- ment is the EUR 5.2m gain on the sale of the Speyer plant in the comparative period and the EUR 6.8m in transaction-related cost in 2021. Depreciation and amortization increased by EUR 4.2m, mainly related to software amortization. Net nancial costs for 2021 were EUR 7.7 million compared to EUR 13.6 million for 2020. The reduction was mainly due to lower interest expense due to reduced interest-bearing debt and lower interest rates. Income tax expenses for 2021 were EUR 16.1 million, corresponding to an eective tax rate of 32%. (2020 EUR 12.4m, or 21%). The expected eective tax rate for the group is approximately 24%, depending on the relative mix of prots and losses taxed at varying rates in the jurisdictions in which Elopak operates. 52 Elopak 53 Annual Report The main reasons for deviation from the anticipated eective tax rate are variations in the distribution of taxable prot within the Group and impact from the dierence in local and functional currency. The year-to-date currency eects for 2021 increased the tax expense by EUR 1.7 million and decreased the 2020 tax expense by EUR 1.8 million. Cash ow & capital structure Cash ows For the full year 2021, cash ow from operations was EUR 73.2 million. Cash from operations is impacted by tax payments and changes to working capital. Tax payments in 2021 increased based on the strong prot in 2020. The working capital level at the end of 2021 was EUR 19 million higher than the comparable gure end of 2020, which was lower than normal. The working capital at the end of 2021 is closer to the average level through the year. Net cash ows used in investing activities was EUR -26.2 million, which was a reduction of EUR 9.4 million compared to the year before. The main reason was lower lling machine CapEx due to a higher share of customer projects structured as sales and one large project being delayed into 2022. In the manufacturing plants, projects progressed according to plan and investments were in line with the comparable period. Dividends received from Joint Ventures were EUR 5 million in 2021. Net cash ows used in nancing activities were EUR -31 million, reecting a further reduction of bank loans and lease payments. The decrease is predominantly due to the proceeds from capital increase in relation to the IPO in June. Capital structure As of December 31, 2021, net interest-bearing bank debt has decreased to EUR 160.1 million from EUR 223.2 million at year end 2020. The main reason for the reduction is that proceeds from capital increase in relation to the IPO were used for repayment of long- term debt to nancial institutions. Lease liabilities decreased from EUR 88.2 million to EUR 80.6 million following down payment on lease contracts. Consequently, the Leverage Ratio as of December 31, 2021 was 2.0x. For a specication of the net debt, please refer to Alternative Performance Measures section. Equity increased by EUR 83.6 million, from EUR 185.4 million as of December 31, 2020 to EUR 269.1 million as of December 31, 2021. The increase was due to issue of new shares in relation to the IPO, with net proceeds at EUR 48.7 million. Total comprehensive income in 2021 was EUR 45.8 million. A dividend at EUR 10.0 million was paid during the second quarter. 54 Elopak Managing risks is an essential part of executing our sustainability-driven strategy. 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 accept- able and appropriate level of risk exposure through its business model, procedures, and actions. These measures include but are not limited to insurance and hedging programs, business model adjustments including contingency planning in operations, sourcing programs, pricing mechanisms ensuring pass- through of price uctuations in raw material, and planning and execution of risk mitigation. Elopak has a global business model that exposes the company to certain global risks, such as inherently relying on well-functioning sourcing and supply chains. The liquid carton packaging industry is also exposed to industry- specific risks, such as the underlying consumption of liquid food products in all markets. In addition, Elopak has certain company-specic risks, such as integrating new investments and introducing new prod- ucts and oerings. Elopak is exposed to risks inherent with operating as an international group involved in producing food packaging materials with individual consumers as the end-users of the products. Elopak products are in direct contact with the content that is packaged. Therefore, food safety risks Business risks 57 Annual Report are of critical importance. Elopak executes strict quality controls over the production of the packaging system components and strict controls on the system itself. During 2021 there were no signicant non-sterility or food safety issues. Risks in the production processes are managed through systematic process improvement work and detailed work safety standards. Elopak is covered by insurance that is normal for this type of industry, covering the nancial impact of unforeseen events that would cause signicant damage to the equipment or products. Elopak ASA has purchased and maintain a Directors and Ocers Liability Insurance. The insurance covers Directors & Ocers 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. Elopak’s responsible supply chain work follows a risk-based approach and is based on UN Guiding Principles and OECD framework. In 2021, Elopak conducted a high-level Human Rights risk assessment of our supply chain to identify salient human rights risk issues and Human Rights due diligence priorities. Read more in our sustainability report. The following is a consolidated overview of what Elopak considers its main strategic risk factors after mitigating actions. Market risk, credit risk and liquidity risk are discussed further in Note 25 of the Group Consolidated Financial Statements. Risk Type Risk Factor Macro Risks Raw materials – availability and price Inationary pressure and uneven recoveries of economies Cyber security risk Market Risks Market Dynamics- consumption Political and regulatory changes Market Presence - country risk Company Risks Investment and integration Currency exposure RISK FACTOR MITIGATING ACTION RAW MATERIAL AVAILABILITY AND PRICE INFLATIONARY PRESSURE AND UNEVEN RECOVERIES OF ECONOMIES CYBER SECURITY RISK Elopak’s primary raw materials are boards, plastic resin, low-density polyethylene (“LDPE”), and aluminum foil. The cost and availability uctuate due to economic, weather, and industry conditions. Prices for raw materials have uctuated rapidly during the Covid-19 pandemic, from historically low points in 2020 to record high prices towards the end of 2021. Elopak is highly dependent on third-party suppliers for the supply of key raw materials. As a result of the Covid-19 pandemic, several of Elopak’s suppliers incurred issues and announced force majeures during 2021. If Elopak’s supply agreements terminate or expire or contracted agreements are not met, Elopak may be forced to obtain deliveries from dierent suppliers. Elopak has price adjustments mechanisms in place in some customer agreements, adjusting pricing based on the price devel-opment of certain raw materials. To manage pricing volatility in Europe, Elopak also has a hedging strategy for LDPE and aluminum. To mitigate the risk of availability of key raw materials, Elopak aims for long-term relationships with a range of suppliers. As an example, boards are purchased under three- to ve-year contracts. Some of the measures for managing supply chain inter-ruptions are planning of inventory, moving inventory internally, changing supplier, etc. By proactively identifying and qual-ifying alternative suppliers and sourcing, Elopak has built resilience in case of supply interruptions. From 2020 to 2021, the annual ination rate in the EU was 5.2%, well above the ination goal of the ECB. Forecasting and predicting have never been harder, and world economists’ estimates dier signicantly. Uneven recoveries across the globe may lead to slower or lower recovery of demand for some products and markets. There is greater uncertainty regarding the recovery of emerging markets after Covid-19, and economies may have been hit dierently. Elopak is vulnerable to security breaches, including un- authorized access to systems, computer viruses, or 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 condential information, destroy data or systems, or cause interruptions in operations of Elopak and/or third parties. See mitigating actions on Raw Material – Availability and price. Operating in 40 countries across the globe, Elopak has a natural spread of operational risk both towards emerging and developed economies. Among the emerging markets Elopak is exposed to, the Middle East is reaping the rewards of being positively aected by high oil prices, increasing the likelihood of a quicker recovery relative to many other emerging econ- omies. This is encouraging with Elopak’s increased footprint through the Naturepak acquisition. 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 cybercrime and/or incidents. 58 Elopak RISK FACTOR RISK FACTORMITIGATING ACTION MITIGATING ACTION MARKET DYNAMICS CONSUMPTION INVESTMENT AND INTEGRATION POLITICAL AND REGULATORY CHANGES CURRENCY EXPOSURE MARKET PRESENCE COUNTRY RISK 78% of Pure-Pak® sales are made in the “Fresh” market, of which 85% are in the dairy segment. Although total carton sales in the fresh dairy segment are expected to stay stable (Total Carton Market (Units) – CAGR 2020-’25 of 0.1% in Europe, Roland Berger), downward pressure in the largest sub-segment, “White Milk” consumption, can be observed. Meanwhile, sub-segments like hay or meadow milk, bio-milk, and milk drinks are expected to compensate with signicant growth. Although these are longer-term trends, medium-term market imbalances can occur. Elopak may consider acquiring other companies, assets, and product lines that may complement or expand Elopak’s existing business. Completing and integrating acquisitions involves several risks, such as complying with new laws and regulations, market regulations, unexpected liabilities, incorporating acquired products into Elopak's product line, being unable to retain key employees of the acquired business, and failing to achieve the anticipated results. The Group may not be able to successfully integrate future acquisitions without incurring substantial costs, delays, or other issues. The political and regulatory risks are higher in developing markets due to less mature governance. Elopak has strong and long-lasting customer relationships and a sucient breadth of portfolio to mitigate medium-term risk for market imbalances. Risk is also mitigated by eectively managing the large account development tool for each of the top 25 customers. Continuous innovation and consequently strengthened value proposition enhance customer loyalty even further. Overall, the underlying trends, like plastic to carton conversion, also seem favorable, positively impacting the addressable potential. Our growth strategy is built to capture these and eectively realize Elopak’s growth potential more than o-setting the longer-term consumption risks in conventional markets. Through its daily business, Elopak illustrates the capability and capacity to manage geographical and cultural diversity through our presence in 40 countries across all continents and a diversied product portfolio. Elopak typically requires the sellers in acquisitions to indemnify the Group against certain undisclosed liabilities. Elopak is committed to high quality and adequate risk assessment throughout all investment processes and stages and does not hesitate to involve external support from experts when considered necessary. Elopak’s management and board closely monitor all signicant investment assessments and decisions. Elopak's global operations expose Elopak to political devel- opments which may impact the packaging industry. Political debates, government regulations, and judicial decisions could aect demand for Elopak’s products. Implementation of the European Green Deal, political action plans, directives, and taxes on plastic could aect the demand for Elopak’s products positively and negatively. Future legislation could also limit the use of carton packaging. Elopak's business is exposed to uctuations in exchange rates. Although Elopak's reporting currency is Euro ("EUR"), many of the subsidiaries of the Group have other functional curren- cies. Elopak is mainly exposed to exchange rate uctuations between EUR and United States Dollar “USD”), Russian rubles, and Norwegian kroner, respectively. Elopak has certain invest- ments in foreign operations whose net assets are exposed to currency exchange risk. Elopak primarily funds businesses in the local currencies to minimize currency translation risk, exposing the Group to interest rate risks associated with EUR and USD. Being present in 40 countries across all continents with production on seven dierent locations and sales to customers in 70 markets, Elopak is present in some countries where political, social, and economic instability may aect the performance of Elopak. The political and regulatory risks are higher in developing markets. In the past months, the conict between Ukraine and Russia has escalated. This has led to a temporary suspension of all business activities in Russia. See Note 29 Subsequent Events in the Financial Statements for more information. Elopak has a proactive approach to managing the shifting land- scape of new regulations in the industry. We welcome new regulations and legislation promoting sustainable packaging and see Elopak as part of the solution to the current sustain- able and just transition, ensuring our business is continuously prosperous. Elopak focuses on developing packaging solu- tions to meet new regulations and requirements and drive new sustainable innovations to the market to improve the competitiveness of our oering. Where possible, Elopak tries to minimize the impact of exchange rate uctuations by transacting in local currencies to create natural hedges. Where unable to naturally oset its exposure to these currency risks, Elopak enters derivative transactions to reduce such exposures. Nevertheless, exchange rate uctuations may increase or decrease Elopak's reported revenue and expenses. Further, Elopak aims to manage interest rate risk through interest rate swaps and borrowing at xed interest rates. However, it is not Elopak’s policy to hedge all its interest rate exposure. Elopak is following the situations across all present and potential markets closely and assesses the risks and opportunities that follow. As a part of the Group’s present business, Elopak illustrates capabilities and capacity to manage presence in a wide range of markets and the respective conditions that follow. Elopak has established a crisis response team dedi- cated to the situation in Ukraine and Russia with workstreams focusing on managing and mitigating risks in the extraordinary situation. Elopak's crisis response team is constantly monitoring the development in Ukraine and Russia and assessing the impact on Elopak's business, people and assets, in line with the Company’s risk management principles. See Note 29 Subsequent Events in the Financial Statements. 61 Market capitalization and turnover The Elopak share is listed on the Oslo Stock Exchange under the ticker code ELO. All shares have equal rights and are freely transferable. The market capitalization of Elopak as of 31 December 2021 was NOK 7.2 billion, and the average daily volume of ELO shares traded on the Oslo Stock Exchange was 0.3 million. Despite a high interest and attention for the IPO, Elopak will endeavor to increase trading volume and liquidity during 2022. Figure 1. Elopak share price development 2021, from IPO date to 31.12.2021 29 28 27 26 25 24 23 22 21 20 Jul Aug Sep Oct Nov Dec Share price The Elopak share Elopak aims to deliver long-term value creation for its shareholders, exceeding comparable investment alternatives. For our shareholders, this will be reected in the combination of the long-term price performance of the Elopak share and dividend pay-out. Figure 2. Geographic split of Elopak’s shareholder base, as of 31.12.2021 Norway 73% Other 11% United Kingdom 5% United States 5% Japan 5% 62 Elopak 63 Annual Report Dividend policy Elopak has a dividend policy and guiding to distribute 50-60% of adjusted net prot as an annual dividend. Shareholders of Elopak should expect a competitive return on their investment over time through a combination of dividends and an increase in the share price. The Board of Directors proposes to pay a dividend of [NOK 0.75] per share for the 2021 nancial year. The dividend will be paid out on [24 May 2022] to shareholders of record on the date of the Annual General Meeting. 2022 Annual General Meeting The Annual General Meeting will take place at 14:00 (CEST) on Thursday 12 May 2022. 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. 23 nancial analysts provide market updates and estimates for our nancial results. Broker Analyst Contact ABG Sundal Collier Martin Melbye [email protected] Carnegie Robin Santivirta robin.santavirta@carnegie. DNB Ole Martin Westgaard [email protected] Exane BNP George Borrows [email protected] Goldman Sachs Jack O’Brien [email protected] SEB Truls Kolsrud Engene [email protected] Financial Calendar Date Event 1 April 2022 Annual report 5 May 2022 Quarterly report – Q1 12 May 2022 Annual General Meeting 13 May 2022 Ex-dividend day 24 May 2022 Payment of dividend 18 August 2022 Half-yearly report 26 October 2022 Quarterly report – Q2 Top 20 shareholders, as of 31 December 2021 Shareholder # Shares Dec 21 % S/O Dec 21 # 1 Ferd As 157 183 013 58.38% # 2 Nippon Paper Industries Co., Ltd. 13 460 950 5.00% # 3 Folketrygdfondet 9 000 000 3.34% # 4 Neuberger Berman Investment Advisers LLC 5 823 955 2.16 % # 5 Handelsbanken Fonder AB 5 628 647 2.09 % # 6 Artemis Investment Management LLP 4 847 661 1.80 % # 7 Pareto Asset Management AS 4 611 541 1.71 % # 8 Alfred Berg Kapitalforvaltning AS 3 943 744 1.46 % # 9 Zadig Asset Management SA 3 900 000 1.45 % # 10 FIL Investment Advisors (UK) Ltd. 2 129 295 0.79 % # 11 Skagen AS (Investment Management) 2 099 920 0.78 % # 12 Blackwell Partners LLC - Series E 1 879 371 0,70 % # 13 UBS Asset Management Switzerland AG 1 852 107 0.69 % # 14 Boldhaven Management LLP 1 823 487 0.68 % # 15 Arctic Fund Management AS 1 804 930 0.67 % # 16 Fondsnans Kapitalforvaltning AS 1 750 000 0.65 % # 17 Pension Benet Guaranty Corporation 1 745 811 0.65 % # 18 DNB Asset Management AS 1 701 685 0.63 % # 19 Forsvarets Personellservice 1 450 600 0.54 % # 20 AEGON Investment Management BV 1 430 870 0.53 % 64 Elopak 65 Annual Report From the boardroom 66 Elopak 67 We will continue to pay the salaries of our 336 employees in Ukraine and Russia until further notice. Elopak continues to monitor and evaluate the situation. Our overriding priority is the personal safety and security of our employees in Ukraine. We are in constant dialogue with our co-workers in Kyiv and Fastiv and have established a steering group that is working to support them and their loved ones. 2021 marked a new chapter in Elopak’s 65-year-old history through the listing on the Oslo Stock Exchange. Consequently, the Board focused our work in the rst half of the year on the process leading to the listing in June 2021. Part of this process included establishing strengthened governance, with new committees and bodies as described in this report. In parallel, and through the second half of the year, the Board focused on executing the sustainability-driven Taking care of both consumers and the planet - a message from the board The recent tragic events in Ukraine have cast a deep shadow over the world. Elopak stands with all those who are suering at this time. As a result of the on- going and escalating conict, which also signicantly disrupts the situation in the market including supply chain and logistic issues, Elopak Board took the decision on 4th March to temporarily suspend all activities in Russia until further notice. Elopak’s plant in Fastiv, Ukraine was temporarily closed already on 24th February as we focused on the safety of our colleagues and their families. strategy. Towards the end of the year, the Board approved the acquisition of Naturepak Beverage Packaging Co Ltd, the leading gable top fresh liquid carton and packaging systems supplier in the MENA region. Company overview Elopak is a leading global supplier of carton packaging and lling equipment, using renew- able, recyclable, and sustainably sourced materials to provide innovative packaging solu- tions. Elopak was founded in 1957. The head oce is in Oslo, and the Elopak Technology Center is based in Spikkestad, Norway. Elopak has nine production plants in Europe and the Americas, including two joint ventures, and operates in more than forty countries through market units and associates. Governance Elopak ASA is committed to upholding high standards for corporate governance. We strongly believe that good corporate gover- nance is important for value creation. Elopak’s shares are listed on the Oslo Stock Exchange, 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 utilized the IPO process to identify areas for improvement, and we have imple- mented several new policies and procedures. Elopak has appointed two sub-committees of the Board of Directors, The Board Audit and Sustainability Committee (BASC) and the Compensation Committee, as part of converting the company from a privately held to a Norwegian public limited company in accordance with the Norwegian Private Limited Companies Act. In 2021, we updated our Code of Conduct, not only reecting the fact that Elopak is a listed company but also to reect a higher ambition and expectations from employees, investors, and society at large. The board updated the Code of Conduct in December 2021, and it will be rolled out to the organization in 2022 as part of a broader Ethics & Compliance program. A sustainability-driven strategy In 2021, we updated our vision and mission. The new vision, “Chosen by people, packaged by nature,” with the corresponding mission state- ment, aim to better 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 The business activities are reported externally in two segments, EMEA and Americas. 68 Elopak 69 From the board room in sustainability-focused innovations. Going forward, Elopak will build on these strengths to provide the best carton consumer experi- ence 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. Elopak has prioritized ve key growth pillars, executing the sustainability-driven growth strategy. 1. Expand our end-to-end, sustainable Pure-Pak® oer 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 prom- ises, were developed to align the organization on how to deliver on the strategy and guide leaders and employees in fullling the mission and realizing the vision. These were “Empower,” “Unite,” and “Accelerate” – all key features critical to successful strategy implementation. The Board was actively engaged in the process leading to approval in May 2021. Digital training sessions with top management and leaders ensured that the new set of values was communicated in a structured and engaging way. Through the annual Business Plan, the strategy is broken down to a one-year tactical plan that denes priorities for the coming year; a balanced set of targets focusing on People, Planet, and Prot, all supported by initiatives and action plans. This way, the Board believes that Elopak builds alignment – by connecting vision and mission to strategy and ultimately execution, by uniting the whole organization, and dening how to deliver together through our promises. In 2021 Elopak was awarded a platinum rating for our sustainability performance by EcoVadis, which places Elopak in the top 1% of companies evaluated across all industries. EcoVadis assesses sustainability performance, more specically how well a company has integrated Corporate Social Responsibility (CSR) principles into their business and management system. Working towards this achievement helps us to contin- uously improve in all dimensions. People At the end of 2021, Elopak had 2106 employees. The workforce consists of more than 50 nationalities with dierent back- grounds, expertise, culture, and experiences. Gender equality and diversity are funda- mental human rights reected in United Nations Sustainable Development Goals, and Elopak will 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. Please see the Sustainability Report presented on the Elopak website for further details. Elopak respects all applicable laws, rules, regulations, and industry standards concerning working hours, minimum wages, and rules related to the working environment in line with the human rights as dened by the United Nations. In 2021, Elopak developed a human rights framework and performed a human rights risk assessment of suppliers. In 2021, we continued to develop our interac- tive learning platform to keep our employees digitally connected in a dierent working environment. We also conducted an engage- ment survey to gain insight into the well-being and motivation of our employees after the Covid-19 pandemic’s challenges and restric- tions. Despite the diculties of the pandemic, the survey shows sustained strong employee engagement and trust in Elopak’s response. The survey also identied some potential areas of improvement, of which management has prioritized e-learning on how to better provide feedback and an upgrade of the performance dialogue process and system. In 2022, Elopak will continue to develop talent and performance management, including succession planning and an onboarding program. A key priority is to continue the rollout of the company’s vision, mission, and promises. Safety is a core value in Elopak, and we are committed to providing and maintaining a safe work environment in accordance with local legal requirements, company and industry stan- dards, and our Corporate Safety Policy. Each operational unit has its own Safety Ocer to drive our safety initiatives, share best practices, and monitor and secure compliance. From 2019 to 2021, Elopak has reduced the average number of recordable injuries by 23 %. The key focus in 2021 has been to lift overall safety awareness and to incorporate this more strongly in the company culture, as rules, procedures, reporting and investigation are not sucient to get closer to the target of zero 70 Elopak 71 From the board room accidents. This has been done through safety impact dialogues, visualization of residual safety risks, and discussion of the impact of accidents on personal life. Implementation of safety activity reports of incidents, near misses and severity level are followed up on a regular basis including in the Global Leadership Team and in the Board of Directors. Absence due to sickness has increased from 3.9% in 2020 to 4.0% in 2021, which is above the Group target of 3%. The main reason is sick leave and absence due to quaran- tine regulations related to the Covid-19 pandemic, both in 2020 and 2021. To protect people, supply chains, and products and secure supply to customers, Elopak continued with a Covid-19 Corpo- rate Response Team under the lead of the CHRO. Its role was to map and analyze risks, align and establish corporate processes and guidelines and develop communica- tion frameworks for internal and external stakeholders. Strict travel restrictions were maintained, continuing home-oce working for sta wherever possible. Temperature measurement equipment was used for on-site employees and visitors at all our manufacturing sites and oces. Planet As for People and Prot, the sustainability program sets clear targets and KPIs for the Planet dimension, both in terms of renew- ability, emission reductions and recycling. Although we have already achieved a lot, and oer environmentally-friendly products to the market, we are keeping our ambitions high. Through our Science Based Targets we commit the ambition of keeping global warming below 1.5°C, and through our RE100 membership, we commit to continue sourcing 100% renewable electricity for all global operations. We also have an ambitious goal of 100% renewable or recycled materials in cartons on the EU market by 2030. Reaching these targets requires new ways of thinking, collaboration with partners, and an ever-in- creasing focus on new product development. Renewability is important to Elopak, being an inherent part of this world and having a responsibility to maintain the planet’s scarce resources. Key stakeholders conrm the impor- tance of renewability and recycled content for Elopak. We have a systematic approach to renewability and recycled content in the supply chain through a Raw Material Sourcing Policy. In 2021, the Science Based Targets initiative (SBTi) launched its Net Zero Standard, the rst framework for corporate net-zero target setting in line with climate science. The new framework requires near-term and long- term targets focusing on rapid, deep cuts to emissions across the value chain. Elopak supports the SBTi and took part in the Net-Zero Road Test with 80 other compa- nies during the summer of 2021. We see it as imperative to reach net-zero by 2050 to stay on track towards the Paris Climate Agree- ment’s goal of limiting the consequences of climate change on the people on this planet. In 2021, Elopak updated near-term targets on the path to net-zero, committing to reducing absolute scope 1 and 2 GHG emissions by 42% by 2030 from a 2020 base year. We have also committed to reducing scope 3 (value chain) GHG emissions by 25% by 2030 from a 2020 base year. Being part of a larger value chain, Elopak needs to ensure responsible sourcing of raw materials through the supply chain, and a good way to do this is through certication schemes. Elopak’s main raw materials are paperboard and polymers. Some cartons also contain a thin layer of aluminum as an oxygen barrier. We have identied three main certication systems relevant to our products. Through our Raw Material Sourcing Policy, our Global Supplier Code of Conduct, and Sustainability Program, we secure a consistent approach aligned with our Procurement Team and our Sustainability Team. The certications are embedded in all relevant areas of the orga- nization, including supply chain, production, design, marketing, and sales. Our approach to environmental issues is rmly embedded throughout the company through our sustainability program, commitment to the SBT initiative, and RE100 membership. We report in line with the GRI framework and the GHG protocol. Please see the Sustainability Report presented on the Elopak website for further details. Prot Elopak delivered 3.5% growth in 2021 with revenues at EUR 940 million, up from 909 million in 2020. The growth was mainly in Europe, and the key drivers were increased sales of lling machines and growth in aseptic cartons, in line with the strategy. Adjusted EBITDA, as reported in the quar - terly reports to investors, was EUR 120.9m in 2021 compared to EUR 122.3m in 2020. We are satised with the overall performance of Elopak, delivering top-line growth and solid results in a very challenging business environment. Raw material prices started to increase during the second quarter, after pricing for 2021 had been agreed with customers. During the second half of the year, the pricing of polymers and aluminum 72 Elopak 73 From the board room reached unprecedented levels. In addition, normally less signicant input costs were subject to price increases, like lling machine parts, pallets, and utility costs. Net prot in 2021 decreased by EUR 12.4 million from EUR 70.7 million to EUR 54.1 million. The main reason for this development is the EUR 5.2m gain on the sale of the Speyer plant in the comparative period and the EUR 6.8m in transaction cost in 2021 related to the IPO and the Naturepak acquisition. Depreciation and amortization increased by EUR 4.2m, mainly related to software amortization. Cash ow from operations was EUR 73m, compared to EUR 104m the year before. The working capital level at the end of 2020 was low due to higher accounts payables and lower inventories and trade receivables than normal. The balance sheet at the end of 2021 is closer to the average level through the year. Net cash ows used in investing activities decreased by EUR 9 million. The main reason was lower lling machine capex as a higher share of customer projects were structured as sales. Net cash ows used in nancing activities decreased by EUR 45 million. The decrease is predominantly due to the proceeds from a capital increase in relation to the IPO in June. As of December 31, 2021, net interest-bearing bank debt has decreased to EUR 160.1 million from EUR 223.2 million at year-end 2020. The main reason for the reduction is that proceeds from the capital increase in rela- tion to the IPO were used to repay long-term debt to nancial institutions. Lease liabili- ties decreased from EUR 88.2 million to EUR 80.6 million following down payment on lease contracts. Consequently, the Leverage Ratio as of December 31, 2021, was 2.0x. Equity increased by EUR 83.6 million, from EUR 185.4 million as of December 31, 2020, to EUR 269.1 million as of December 31, 2021. The increase was due to the issue of new shares in relation to the IPO, with net proceeds at EUR 48.7 million. The total comprehensive income in 2021 was EUR 45.8 million. A dividend of EUR 10.0 million was paid during the second quarter. The Board conrms that the accounts are presented under a going concern assumption. The net result of the parent company Elopak ASA was EUR 1.4 million, down from EUR 30.8 million the year before. The parent company is responsible for sourcing raw materials and production in the European value chain and therefore carries the raw material pricing risk. In 2021 Elopak ASA also carried transaction costs related to the IPO and the Naturepak acquisition. Outlook The situation in Ukraine and Russia has become the main challenge for Elopak in 2022. At the time of writing this report, we do not have enough information to fully assess the long-term consequences to our business in Russia and Ukraine. The Board of Directors will actively monitor the situation and take appropriate actions, in line with Corporate Governance principles and legislation and with the safety our people in mind. More information can be found in note 29. We expect continued volatility related to raw material prices, and the situation in Ukraine and Russia is likely to contribute to this volatility. Through our business model and commodity hedging we seek to mitigate some of these uctuations. Elopak has a strong track record of managing margins responsibly over time. The inationary pressure increased throughout 2021, and this is expected to continue in 2022. As for most companies, Elopak will return to a moderately higher xed cost base, as various cost elements have been at low levels in 2020 and 2021 due to the pandemic. Cost discipline will therefore be another key priority. 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. In addition to dening the longer-term future in Ukraine and Russia, a key focus in 2022 will be to secure successful integration of Naturepak. An integration team has been established to ensure we deliver on the business case and realize synergy potentials. Elopak will continue to materialize its Aseptic growth strategy, responding to the need for long shelf-life solutions. Key elements in the strategy are successful completion of ongoing development projects, signing and delivering on contracts based on the momentum from recent innovations, while simultaneously managing innovation of new products. Elopak will continue to focus on executing the growth strategy in the Americas and leverage its fresh Pure-Pak® portfolio and system approach as already successfully deployed in Europe. To strengthen Elopak’s position in growth markets, we will actively pursue business opportunities in new geographies. The Middle East, Africa, and Asia will be devel- oped to deliver further growth for Elopak. 74 Elopak 75 From the board room Overall, we will continue to drive systematic improvements through commercial excellence, purchasing, and value engineering. The Board of Directors proposes a dividend to all shareholders of NOK 0.75 per share, for a total of EUR 20.2 million, in line with dividend policy and the statement in the Q4 report. Oslo, March 31, 2022 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 76 Elopak 77 Our objectives and principles Our objective is to ensure long-term value creation for our shareholders 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. We believe that 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 denes the criteria on which the trust of the company’s shareholders is based. In addition, the work of the Board of Directors is based on the existence of a clearly dened division of roles and responsibilities between the shareholders, the Board of Directors, and the management of Elopak ASA. Corporate governance In Elopak, we believe that eective corporate gover- nance 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. 78 Elopak 79 From the board room Implementing and reporting on corporate governance Effective corporate governance allows Elopak to work smoothly by ensuring that everyone has a clear understanding of the distribution of roles, responsibilities, rights, and accountability. The board of directors is responsible for the management of the company. The Board of Directors’ responsibilities are to ensure that the company’s business is adequately organized, make necessary plans and prepare strategic, nancial, and operational targets for the company’s business, supervise the company’s day-to-day management, and discuss all unusual or crucial company matters. Elopak ASA has a board of directors indepen- dent of the group’s management. The board of directors shall consist of a minimum of 3 and a maximum of 12 board members. The authority to sign on behalf of the company is held by the chairman of the board alone or by the Chief Executive Ocer and one board member jointly. The board may grant a power of procuration. Our Board of Directors actively adheres to good corporate governance standards. The Board will at all times ensure that Elopak ASA complies with the Norwegian Code of Prac- tice for corporate governance (the “Code of Practice”) or explains any deviations from the Code of Practice. The topic of corporate governance is subject to regular assessment and discussion by the Board of Directors. The Elopak Principles for corporate governance were approved by the Board of Directors in May 2021. The Norwegian Code of Practice is set by the Oslo Stock Exchange/NUES. Complementary information and deviations from the Code: Regarding business sustainability Elopak provides information on sustainability in a separate sustainability report in accor- dance with the Norwegian Accounting Act, where further details regarding sustain- ability can be found, such as the reporting according to the requirements of the Global Reporting Initiative. The sustainability report is also in accordance with the Oslo Stock Exchange’s guidance on the reporting of corporate responsibility. Regarding equal treatment of shares The Articles of Association place no restrictions on the transferability of Elopak shares, and the shares are freely negotiable. The Annual General Meeting has approved a bonus scheme (Long-Term Incentive plan) and authorization to acquire own shares. There are no voting restrictions linked to the shares. Following the listing of Elopak ASA on Oslo Stock Exchange on June 17th, 2021, the Company and their selling owners were subject to a 180 days lock-up period where they were restricted not to sell shares in the Company. The members of the Management and Board of Directors are restricted not to sell shares in the company for a period of 360 days after the listing. The long-term incentive program (LTIP) requests Management to re-invest the cash pay-out in Elopak shares at a 20% discounted market price with a 3-year lock-up period. The scheme shall apply for a period of three years from the date on which the Restricted Shares were awarded (the “lock-up period”). After the expiry of the lock-up period, the Participant shall be free to dispose of the Restricted Shares and the call options of the Company under certain terms. In 2021, there were no signicant transactions between the company and related parties. Members of the Board of Directors and Manage- ment are required to disclose all entities that would be considered “related parties” under applicable IFRS regulation. Transactions with such entities are subject to specic disclo- sure and approval requirements. Regarding composition of the Board of Directors Two of the Board members, Jo Lunder and Trond Solberg, are defined as non-independent of the company’s main shareholders. The majority of the Board of Directors (three members) are independent of the main shareholder. Regarding the work of the Board of Directors The Board has established written instructions for its work. The Board has also established an Annual Cycle which sets out all planned meeting dates, regular Board agenda items, and procedures for Board document preparations. The Board Procedure and Annual Cycle are both evaluated by the Board annually. The CEO reports regularly to the Board on operational and nancial developments, results, and other material company and industry developments, such as sustainability and compliance topics. Pursuant to Elopak’s Rules of Procedure for the Board and Elopak’s Code of Conduct, all Board members and management are committed to making the company aware of any material interest they may have in items to be considered by the Board. Neither a Board member nor the company CEO may partici- pate in Board discussions or decisions of such particular signicance that the member must be deemed to have a special or prominent personal or nancial interest in the matter. 80 Elopak 81 From the board room Ethics & Compliance Ethics & Compliance is a key license to operate and a part of sustainability. The Board has delegated supervision of the compliance function and sustainability reporting to the Board Audit and Sustainability Committee. Group Legal and Compliance is headed by the Chief Legal and Compliance Ocer, responsible for Elopak’s compliance program. The Chief Legal and Compliance Ocer reports administratively to the Chief Financial Ocer, regularly and when needed to BASC, and annually to the Board. Elopak has developed a compliance program to promote a culture of ethical and respon- sible business conduct. It is designed to prevent, detect, and respond to breaches of laws, regulations, or internal policies, i.e., non-compliances and misconduct. The compliance program is proportionate and risk based. An annual compliance risk assess- ment is conducted, where identied risks are evaluated and mitigated where appropriate. Corruption, business partners, sanctions, competitive information, and human rights are among the risks considered. The Elopak Code of Conduct reects the commitmentsand requirements for doing busi- ness in Elopak. The Code of Conduct applies to all employees, the Board, and those who act on behalf of or represent Elopak. We expect our suppliers to uphold similar standards and act consistently with the requirements set out in our Global Supplier Code of Conduct, and that they require the same from their suppliers. Several policies and procedures help us implement the code in our daily work, and employees receive annual, mandatory training in the Code of Conduct. Employees and external stakeholders are expected to report suspected violations of Elopak’s Code of Conduct. Employees are encouraged to maintain an open dialogue with their line manager regarding Ethics & Compliance topics. Through the ethics help- line available on our website, both employees and external stakeholders can report their concerns anonymously. Reports can be made via phone, e-mail, or online. More details on our Code of Conduct and ethical behavioral standards can be found in our sustainability report. Risk management 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 of Directors and management are committed to pro- active risk management to ensure eective 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) assist the Board in discharging over- sight responsibilities, including ensuring the eectiveness 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 oper- ations. The respective business areas, with their expertise and knowledge of their elds 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 inuence 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 the organization, from identication to managing and mitigating risks. Each risk factor identied is evaluated based on the potential materiality of the risk, nancially or otherwise aecting the Group, and the probability of the risk materializing. The cost of control and benets of adjusting the risk levels are considered to ensure the prioritization of benecial risk management. The same risk assessment routines are used in strategically important or nancially signi- cant projects. The risk management tool is also used to direct 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 appe- tite is very low, but for some commercial risks, there will be a risk/reward evaluation. As an integrated part of our business performance review process, risks are monitored, managed, and mitigated throughout the year to manage the appropriate level of risk exposure and monitor the progress of risk response actions. 82 Elopak 83 From the board room BOARD OF DIRECTORS 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 2021: 107 142 Trond Solberg I Board member I Year of appointment: 2008 Trond Solberg has been a board member since 2008. Solberg has 20 years of experience from public and private investments at Ferd AS, including his current position as Co-Head of Ferd Capital, which he has held since 2012. In addition, Solberg has extensive board experience as chair and board member for multiple companies, including Brav and Fürst. Prior to joining Ferd AS, Solberg was employed within consulting at Accenture. Solberg holds a Master’s degree in Economics (Norwegian: Siviløkonom) from BI Norwegian Business School. Current directorships and senior management positions: Ferd AS (co-head, Ferd Capital), Brav AS (chairman), Brav Norway AS (chairman), Blafre AS (chairman), Skolo AS (chairman), Seco Invest AS (board member), BVN 22 AS (chairman), FC-invest AS (chairman), Ferd lab invest AS (chairman), FC Well Invest AS (chairman), FC Holding VI AS (chairman), FC Holding VII AS (chairman), FC Holding VIII AS (chairman), FC Holding IX AS (chairman), FC Holding X AS (chairman) and FC Holding XI AS (chairman). Previous directorships and senior management positions last ve years: Fürst Holding AS (board member), AS Med-Lab (board member, Dr. Fürst Medisinsk Labratorium AS (board member), and ØPD AS (chairman). Shares owned at year-end 2021: 0 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 15 April 2021. Belfrage has over 30 years of experience within nance, rst as an auditor with PricewaterhouseCoopers, then as CFO in various industrial companies in Sweden. She has also been acting CEO of the listed company Beijer Electronics Group AB. Most recently, Belfrage was the CFO and Senior VP IT and Purchasing in the forestry group Södra Skogsägarna Ekonomisk Förening. Belfrage is currently working as a professional board member. Belfrage holds a Master’s degree in Economics (Norwegian: Siviløkonom) and additional courses in Business Administration and Corporate Law from Lund University. Current directorships and senior management positions: Mycronic AB (publ.) (board member, chairman of the audit committee), Isofol Medical 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), and Ellevio AB (board member, chairman of the audit committee). Previous directorships and senior management positions last ve years: Södra Skogsägarna Ekonomisk Förening (CFO and Senior VP IT and Purchasing). Shares owned at year-end 2021: 0 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 elds of R&D, product industrialization, and sales in large global companies. From running small teams of highly specialized technology development in theoretical uid dynamic at ABB to developing unique liquid packaging solutions for emerging markets at Tetra Pak and nally leading sales operations in ASIA and America and establishing a global industrial operation for Sidel, he has gathered vast knowledge and expertise within the eld of R&D and product industrialization. Johari is currently engaged in supporting young technology companies with disruptive technologies to enter the market by acting as a board member or advisory board member when needed. Johari holds a Master of Science in Mechanical Engineering from Lund University. Current directorships and senior management positions: Tech2M (founder), Saveggt AB (chairman) and Airgo Design (advisory board member). Previous directorships and senior management positions last ve years: Datalase (advisory board member) Shares owned at year-end 2021: 17 857 84 Elopak 85 From the board room Sanna Suvanto-Harsaae I Board member I Year of appointment: 2021 Sanna Suvanto-Harsaae joined the Company as a board member on 15 April 2021. Suvanto-Harsaae has extensive experience as a board member and director from several international companies. Suvanto-Harsaae is currently the chairman of the Posti Group Corporation, 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 ve years: SAS AS (board member), Isadora AS (chairman), and Paulig Oy (chairman). Shares owned at year-end 2021: 14 285 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 6 May 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 Grith University (Australia). She has no other current or previous (last ve years) directorships or senior management positions. Shares owned at year-end 2021: 1 071 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 Technology from NTNU, Trondheim, and an MA in Business Studies from Leeds Beckett University, Leeds, UK. He has no other current or previous (last ve years) directorships or senior management positions. Shares owned at year-end 2021: 1 071 Committees The Company has appointed a Board Audit and Sus- tainability Committee (“BASC”), a Board Compensation Committee, and a Nomination Committee. The Board Audit and Sustainability Committee The Board nominates the BASC members and the chairman 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 secretary of the BASC is the company secretary or other person as nomi- nated by the Board. The appointed members of the Audit committee are Anna Belfrage (chairperson) and Trond Solberg (committee member). The BASC oversees the reporting process to ensure the balance, transparency, and integrity of external nancial and sustainability reporting. The BASC shall also consider the following: • The eectiveness 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 86 Elopak 87 From the board room The Board Compensation Committee The Board nominates the chairperson and the other members of the Compensation Committee. The Committee 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 Board of Directors can at any time and without notice change the composition of the Committee, and any member of the Committee who resigns from the Board must also resign from the Committee. The secretary of the Committee will be the Chief Human Resources Ocer (CHRO) or such other person as nominated by the Board. The appointed members of the Compensation committee are Trond Solberg (chairperson), Jo Lunder (committee member), and Sanna Suvanto-Harsaa (committee member). The purpose of the Committee is to assist the Board of Directors in fullling its responsibilities in: 1. Discharging the Board’s responsibilities relating to the compensation of the Chief Executive Ocer (“CEO”) and the other members of the Group Leadership Team (GLT) 2. Overseeing the administration of Elopak’s compensation and benets plans, and 3. Preparing and recommending proposals for the Board’s statement on executive remu- neration under the Norwegian Act on Public Limited Liability Companies section 6-16a and 6-16b. The Nomination Committee The Nomination Committee’s responsibilities are to make recommendations to the general meeting regarding the election of shareholder- elected board members, the board members’ fees, the election of members to the Nomi- nation Committee , and the members of the Nomination Committee’s fees. The current members of the Nomination Committee are Tom Erik Myrland (chair) and Terje Valebjørg (member). The company shall have a Nomination Committee consisting of between two and four members. The members of the Nomi- nation Committee shall be shareholders or representatives of shareholders. The members of the Nomination Committee , including its chairman, are elected by the general meeting. The term of oce for the members of the Nomination Committee shall be two years unless the general meeting decides otherwise. The general meeting shall determine remu- neration for the members of the Nomina - tion Committee. The Nomination Committee shall have the following tasks: 1. To submit a recommendation to the general meeting on the election of shareholder- elected board members 2. To submit a recommendation to the general meeting on fees for the board members 3. To submit a recommendation to the general meeting on the election of members of the Nomination Committee 4. To submit a recommendation to the general meeting on fees for the members of the Nomination Committee The general meeting may lay down further guidelines for the Nomination Committee’s work. 88 Elopak 89 From the board room Elopak management Thomas Körmendi I Chief Executive Ocer 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 Business School. Previous directorships and senior management positions last ve years: One Nordic (board member), Kezzler A/S (CEO), and Körmendi & Co (Senior Business Advisor). Shares owned at year-end 2021: 344 077 Bent K. Axelsen I Chief Financial Ocer 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 nance 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. Shares owned at year-end 2021: 175 113. 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 rst 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 Ocer. 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. Shares owned at year-end 2021: 213 300 Wolfgang Buchkremer I Chief Technology Ocer I Year of appointment: 2018 Wolfgang Buchkremer is the Group’s Chief Technology Ocer. He rst 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). Shares owned at year-end 2021: 60 368 Nete Bechmann I Chief Human Resources Ocer I Year of appointment: 2020 Nete Bechmann is the Group’s Chief Human Resources Ocer. She joined the Group in 2020. Bechmann has more than 30 years’ experience within human resources, leadership, and nance. 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 ve years: Business Aarhus/International Community (member of the executive committee), Vestas Wind Systems A/S (executive HR business partner). Shares owned at year-end 2021: 18 108 Patrick Verhelst I Chief Marketing Ocer I Year of appointment: 2019 Patrick Verhelst is the Group’s Chief Marketing Ocer. He has been with the Group since 2019. Verhelst has more than 30 years of experience within marketing, sales, and leadership from holding managing positions in several international companies. Prior to joining the Group, Verhelst held the position of Director Sales, Marketing, and Innovation for the Wipak Group. He has also been the Vice President of Sales for Coveris Group, the Business Group Strategy Director, Program Director of Sales & Marketing Transformation, and Marketing Director Europe for SCA Packaging. In addition, Verhelst has held several managing positions for General Electric Plastic, including Global Business Manager, Product Manager Europe, and Sales & Marketing Manager Europe. Verhelst is a Civil Engineer in Chemistry and Agricultural Sciences and holds a Master’s in Business Management from the Vrije Universiteit in Brussel. In addition, Verhelst has a degree in Business-to-Business Marketing from the Economic School of Management in Brussel. Previous directorships and senior management positions last ve years: Wipak Group (Director Sales, Marketing & Innovation) Shares owned at year-end 2021: 55 240 91 From the board room 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 took several steps during the following years, with the rst milestone as General Manager of Elopak GmbH Germany in 1997. He followed by taking the 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 since 2019 been the EVP for Europe North and CIS. Naumann holds a degree as Wirtschaftsassistent Industrie, comparable to a Bachelor’s degree in Economics. Current directorships and senior management positions: FKN e.V. (board member delegated by Elopak GmbH). Shares owned at year-end 2021: 235 262 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 ocer 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 development. 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 manage- ment positions: Elopak Canada (board member), Elopak Inc. (board member), Envases (board member), and IY (board member). Previous directorships and senior management positions last ve 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). Shares owned at year-end 2021: 66 615 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 as 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 Norwegian Spanish Chamber of Commerce in Madrid (board member). Previous directorships and senior management positions last ve years: Elopak Obeikan JV (board member). Shares owned at year-end 2021: 61 892 93 Elopak group consolidated nancial statements 2021 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year to date ended 31 Dec (EUR 1,000) Note 2021 2020 Revenues 5 940,246 908,773 Other operating income 7 5,221 Total income 6 940,253 913,994 Cost of materials -607,913 -576,637 Payroll expenses 7 -171,664 -168,573 Depreciation, amortisation and impairment 12,13,14,15 -56,450 -52,209 Other operating expenses 8,9 -50,149 -45,918 Total operating expenses -886,177 -843,338 Operating prot 6 54,076 70,656 Financial income and expenses Share of net income from joint ventures 16 3,575 3,155 Financial income 10 2,626 2,455 Financial expenses 10 -10,633 -16,118 Foreign exchange gain/loss 338 61 Prot before tax 49,982 60,209 Income tax 11 -16,173 -12,381 Prot 33,809 47,828 Prot for the year attributable to: Elopak shareholders 33,809 47,828 Basic and diluted earnings per share (in EUR) 20 0.13 0.19 OTHER COMPREHENSIVE INCOME (EUR 1,000) Year to date ended 31 Dec OTHER COMPREHENSIVE INCOME Note 2021 2020 Items that will not be reclassied subsequently to prot or loss Net value gains / losses (-) on actuarial benet plans, net of tax -309 -71 Items reclassied subsequently to net income upon derecognition Exchange dierences on translation foreign operations 8,048 -10,998 Net value gains / losses (-) on cash ow hedges, net of tax 4,218 2,136 Other comprehensive income, net of tax 11,957 -8,934 Total comprehensive income 45,766 38,894 Total comprehensive income attributable to: Elopak shareholders 45,766 38,894 96 Elopak 97 Financial statements CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR 1,000) ASSETS Note 31 Dec 2021 31 Dec 2020 Non-current assets Development cost and other intangible assets 12 56,862 61,211 Deferred tax assets 11 21,640 23,544 Goodwill 13 51,866 52,291 Property, plant and equipment 14 186,426 188,429 Right-of-use assets 15 62,952 69,270 Investment in joint ventures 16,27 27,527 26,956 Other non-current assets 17 13,501 14,517 Total non-current assets 420,775 436,217 Current assets Inventory 18 145,115 135,523 Trade receivables 1) 19 91,533 77,958 Other current assets 1) 11,19 101,595 92,981 Cash and cash equivalents 24,262 6,443 Total current assets 362,505 312,906 Total assets 6 783,279 749,123 1) Contract assets of EUR 35,092 thousand are reclassied from trade receivables to other current assets as of December 31, 2020. Contract assets from similar transactions of EUR 36,276 thousand are classied as other current assets as of December 31, 2021. (EUR 1,000) EQUITY AND LIABILITIES Note 31 Dec 2021 31 Dec 2020 EQUITY Share capital 20 50,155 47,482 Other paid-in capital 70,236 15,332 Currency translation reserve -33,883 -41,930 Cash ow hedge reserve 4,215 -3 Retained earnings 178,330 164,564 Attributable to Elopak shareholders 269,054 185,444 Total equity 269,054 185,444 LIABILITIES Non-current liabilities Pension liabilities 21 2,563 2,554 Deferred taxes 11 11,488 11,994 Non-current liabilities to nancial institutions 23 169,433 213,135 Non-current lease liabilities 15 62,342 69,090 Other non-current liabilities 2,900 5,982 Total non-current liabilities 248,726 302,755 Current liabilities Current liabilities to nancial institutions 23 14,420 15,552 Trade payables 119,574 114,273 Taxes payable 11 4,335 8,978 Public duties payable 24,077 20,125 Current lease liabilities 15 18,261 19,085 Other current liabilities 24 84,832 82,911 Total current liabilities 265,499 260,923 Total liabilities 514,226 563,678 Total equity and liabilities 783,279 749,123 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 98 Elopak 99 Annual Report Oslo, March 31, 2022 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 100 Elopak 101 CONSOLIDATED STATEMENT OF CASH FLOWS Year to date ended 31 Dec (EUR 1,000) Note 2021 2020 Prot before tax 49,982 60,209 Interest to nancial institutions 10 1,553 5,897 Lease liability interest 10 4,773 5,184 Prot before tax and interest paid 56,308 71,289 Depreciation, amortisation and impairment 12,13,14,15 56,450 52,209 Write-down of nancial assets 500 332 Net unrealised currency gain(-)/loss - 2,123 - 3,951 Income from joint ventures 16 - 3,575 - 3,155 Net gain(-)/loss on sale of non-current assets 6 - 5,220 Taxes paid - 19,122 - 11,508 Change in trade receivables - 10,054 - 4,340 Change in other current assets - 6,937 4,289 Change in inventories - 5,582 - 7,674 Change in trade payables 2,998 - 184 Change in other current liabilities 4,296 12,094 Change in net pension liabilities 33 - 340 NET CASH FLOW FROM OPERATIONS 73,200 103,842 Purchase of non-current assets 17 - 37,381 - 50,152 Proceeds from sales of non-current assets 15 6,194 Proceeds from sales of business - 1,500 Dividend from joint ventures 16 4,965 - Change in other non-current assets 6,179 6,812 NET CASH FLOW FROM INVESTING ACTIVITIES -26,222 -35,647 Proceeds of loans from nancial institutions 23 728,843 960,649 Repayment of loans from nancial institutions 23 - 775,640 - 1,002,188 Interest to nancial institutions 10 - 1,553 - 5,897 Dividend paid - 9,988 - 9,480 Capital increase 20 47,523 2,388 Lease payments - 19,969 - 20,800 NET CASH FLOW FROM FINANCING ACTIVITIES - 30,784 - 75,329 Foreign currency translation on cash 1,625 - 1,929 Net increase/decrease in cash 17,819 - 9,063 Cash at beginning of year 6,443 15,507 Cash at end of period 24,262 6,443 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1,000) Year to date 31 Dec 2021 Note Share capital Other paid-in capital Currency translation reserve Cash ow hedge reserve Retained earnings Total equity Total equity 01.01 47,482 15,332 - 41,930 - 3 164,564 185,444 Prot 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 reclassication 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 Year to date 31 Dec 2020 Note Share capital Other paid-in capital Currency translation reserve Cash ow hedge reserve Retained earnings Total equity Total equity 01.01 47,482 13,188 - 30,932 - 2,139 126,290 153,889 Prot for the period - - - - 47,828 47,828 Other comprehensive income for the period net of tax - - - 10,998 2,136 -71 -8,934 Total comprehensive income for the period - - - 10,998 2,136 47,756 38,894 Provision for share based bonus - 2,388 - - - 2,388 Dividend paid - - - - -9,480 -9,480 Group contribution from owner - 865 - - - 865 Group contribution to owner - - 1,109 - - - -1,109 Total capital transactions in the period - 2,144 - - - 9,480 - 7,337 Total equity 31.12 47,482 15,332 - 41,930 - 3 164,564 185,444 102 Elopak 103 Financial statements NOTES Note 01 General information Note 02 Basis of preparation Note 03 Material accounting policies Note 04 Critical accounting judgments and key sources of estimation uncertainty Note 05 Revenues Note 06 Operating segments Note 07 Payroll expenses, numbers of employees, benets etc. Note 08 Other operating expenses Note 09 Fees to external auditors Note 10 Specication of nancial income and expenses Note 11 Income tax Note 12 Development cost and other intangible assets Note 13 Goodwill Note 14 Property, plant and equipment Note 15 Leases Note 16 Investment in joint ventures Note 17 Other non-current assets Note 18 Inventory Note 19 Trade receivables and other current assets Note 20 Equity and shareholder information Note 21 Employee retirement benet plans Note 22 Capital Management Note 23 Interest-bearing loans and borrowings Note 24 Other current liabilities Note 25 Financial risk management Note 26 Change in obligations from nancial activities Note 27 Shares in subsidiaries and joint ventures Note 28 Related Parties Note 29 Subsequent events 104 Elopak 105 Note 1 — General information Elopak ASA is a public limited company incorporated in Norway. Elopak is a global supplier of liquid carton packaging and lling 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 oce and principal place of business is Industriveien 30, 3430 Spikkestad, Norway. Elopak ASA is listed on the Oslo Stock Exchange (Oslo Bors). The Board of Directors and the CEO authorized these consolidated nancial statements of Elopak ASA and its subsidiaries for the year ended December 31, 2021, for issue on March 31, 2022. Elopak's material accounting policies are included in the explanatory notes to the consolidated nancial statements. Note 2 — Basis of preparation The consolidated nancial 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 nancial statements. The Elopak Group consists of Elopak ASA and its subsidiaries as set out in Note 27. The consolidated nancial statements incorporate the nancial statements of the companies controlled by Elopak ASA. The functional currency of Elopak ASA is the Euro (EUR). All numbers are presented in Euro 1,000 unless otherwise is clearly stated. 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 nancial statements. Accounting policies that relate to the nancial statements as a whole or are relevant for several notes are included in this “Material accounting policies” section. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by Elopak in exchange for control of the acquiree. The acquirer’s identiable assets, liabilities, and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date, except for non-current assets that are classied as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are recognized and measured at fair value less costs to sell. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over Elopak's interest in the net fair value of the identiable assets, liabilities, and contingent liabilities recognized. Foreign currencies The individual nancial 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 nancial statements, the results and nancial 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 nancial statements. For the purpose of presenting the consolidated nancial 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-nancial assets excluding goodwill At each reporting date, Elopak reviews the carrying amounts of its non-nancial assets to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, Elopak estimates the recoverable amount of the cash-generating unit to which the asset belongs. 106 Elopak 107 Financial statements Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market assessments of the time value of money and the risks specic 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 prot 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. A reversal of an impairment loss is recognized immediately in prot or loss. Non-derivative nancial instruments Non-derivative nancial 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 nancial instruments are measured as described below. Financial instruments at amortized cost Subsequent to initial recognition, non-derivative nancial instruments are measured at amortized cost using the eective 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 eective interest rate. The eective interest rate is the rate that exactly discounts estimated future cash ows through the expected life of the nancial 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 nancial 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 ow analysis or other valuation models. Trade and other payables Trade and other payables that contain signicant nancing 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 eective for annual periods beginning after January 1, 2021, and earlier application is permitted. Elopak has early adopted amendments to Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) and Denition of Accounting Estimates (Amendments at present, to IAS 8) standards in preparing these consolidated nancial statements. The following new and amended standards are not expected to have a material impact on Elopak’s consolidated nancial statement: • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) • Onerous contracts – Cost of Fullling a Contract (Amendments to IAS 37) • Covid-19-Related Rent Concessions beyond June 30, 2021 (Amendment to IFRS 16). • Annual Improvements to IFRS Standards 2018–2020. • Property, Plant, and Equipment: Proceeds before Intended Use (Amendments to IAS 16). • Reference to Conceptual Framework (Amendments to IFRS 3). • Classication of Liabilities as Current or Non-current (Amendments to IAS 1). • IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts. 108 Elopak 109 Financial statements Note 4 — Critical accounting judgments and key sources of estimation uncertainty 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 dier 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 aects only that period or in the period of the revision and future periods if the revision aects both current and future periods. 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 ows 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 11. 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 aected 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 11. Development costs Elopak capitalizes development costs in accordance with the recognition criteria in IAS 38. Initial capitalization of costs is based on management’s judgment that technological and economic feasibility is conrmed. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project and the expected benets. The development costs, include development of new lling and production machine technology, and the success of this technology is dependent on future demand from the customers. Development costs are presented in Note 12. Leasing Management estimates the useful life and residual value of lling machines when considering whether a lease arrangement is a nance lease or an operational lease when Elopak is the lessor. Finance and operational leases are presented in Note 15. Climate Risk A full climate risk assessment of material adverse physical impacts to the business from climate change such as extreme weather, oods or droughts, and sea level rise will be completed in 2022 in accordance with TCFD (Task Force on Climate-related Financial Disclosures), a framework organization to publicly disclose climate-related risks & opportunities. Based on our current knowledge at year end there were no identied factors that cause a reassessment in the useful life of the assets. Sustainability Framework Elopak manages the risks related to sustainability and the rapidly changing regulatory environment. We focus our eorts on monitoring EU-wide developments concerning sustainability and/or packaging, such as the EU Taxonomy framework, the Corporate Sustainability due diligence directive, and the upcoming review of the EU Packaging & Packaging Waste Directive. 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 eect as of July 3, 2024. In preparation for the changing legislation Elopak has signed a contract for Tethered Cap lines and is expecting to oer tethered cap solutions to customer in 2022. 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. 110 Elopak 111 Financial statements At present, Elopak will be subject to Plastic Product Tax in the UK and Spain starting in 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, dene 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. How Covid-19 has impacted the business Raw material supply and demand was impacted by a number of factors. Firstly, there was a demand surge and restocking in a number of industries in 2020 and 2021 after low demand periods due to Covid-19 lock-downs. Secondly, transport and supply chains were not working eciently as demand was high and supply chains were impacted by Covid-19 restrictions, transportation shortages in trucking and shipping, and incidents temporarily impacting capacity, including the blocking of the Suez Canal and the closure of Chinese ports. Thirdly, producers suered higher input costs and scarcities for energy and labor, which increased raw material prices. Fourthly, force majeures in industries supplying Elopak due to ooding and storms impacted purchase prices. Raw materials are largely global markets and inecient trade ows result in more captive volumes with resulting higher prices. These factors are considered temporary, with no material long-term impact due to Covid-19. Note 5 — Revenues Accounting Policy The Group is a global supplier of paper-based packaging system solutions for liquid products. Revenue from contracts with customers is derived from sale of lling equipment, Pure-Pak® carton and Roll Fed packaging material (hereby denominated as cartons), closures and related services. Revenue is recognised when control of the goods or services are transferred to the customer and is presented net of returns, trade discounts, volume rebates and other customer incentives. The Group also presents lease income from lease of lling 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 specications and are therefore without alternative use. Cancellation provisions in the customer contracts, combined with background law in the legal jurisdictions give the company an enforceable right to payment for work performed to date as described in IFRS 15. Most of the customer contracts include cancellation clauses that gives the company sucient 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 lling equipment Revenue from sale of lling 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 signicant costs to rework the design and function of the machine to adapt it to another customer. However, in most cases lling equipment is standard equipment and considered to have alternative use, hence they are recognised at point in time. Sale of service The Group oers 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 benet 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 eort/labor 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 signicant 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 112 Elopak 113 Financial statements on aggregate sales over several months. Revenue from these sales is recognised based on the price specied 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 signicant element of nancing is deemed present, and the Group had no right of return in the reporting period. Contract liabilities Payments for lling equipment are generally made in installments and a contract liability is recognised when a payment is received or due from a customer before the Group transfers the lling equipment. Contract liabilities are recognised as revenue when control of the lling equipment is transferred to the customer. Contract assets Contract assets consist of prepaid support (rebate) to customers which will be oset against contracted future purchases of carton and features. The prepaid support is allocated to the dierent performance obligations, hereunder lling equipment and cartons/closures. Contract assets include over time revenue for cartons before the right to payment becomes unconditional. See Note 19 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 lling equipment (1%). Revenues are primarily derived from the sale of cartons and closures, sales and rental income related to lling equipment and service. Revenues specied by geographical area (EUR 1,000) 2021 2020 Germany 146,790 151,917 USA 141,246 135,489 Russia 72,717 75,617 Netherlands 51,530 50,371 Norway 24,769 25,875 Other 503,194 469,504 Total revenues 940,246 908,773 The revenues are specied by location (country) of the customer. Revenues by product and operating segment (EUR 1,000) 2021 EMEA Americas Other and eliminations Tot al Cartons and closures 1) 651,838 185,246 - 3,307 833,776 Equipment 41,127 5,015 -4 46,138 Service 43,595 - - 495 43,100 Other 23,280 1,905 - 7,954 17,231 Total revenues 759,841 192,166 - 11,760 940,246 2020 EMEA Americas Other and eliminations Tot al Cartons and closures 2) 643,557 191,316 - 12,372 822,501 Equipment 36,215 1,287 - 7,326 30,176 Service 41,834 801 - 27 42,609 Other 2) 19,796 559 - 6,869 13,487 Total revenues 741,403 193,964 - 26,594 908,773 1) Decrease in cartons and closures in Americas is mainly due to the loss of a Roll Fed customer and the impact of currency translation. 2) Revenue of EUR 2,052 thousand is reclassied from Other to Cartons and closures as of December 31, 2020 related to over time revenue recognition. 114 Elopak 115 Financial statements 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 (including Commonwealth of Independent States) and Americas. Key gures representing the nancial performance of these segments are presented in the following note. Refer to Note 14 for disclosure of xed assets specied by geographical area. Operating segments (EUR 1,000) 2021 EMEA Americas Other and eliminations Tot al Total revenue and other operating income 759,847 192,166 -11,760 940,253 Operating expenses 1) -655,538 -160,598 -13,590 -829,726 Depreciation and amortisation -45,944 -6,644 -2,645 -55,233 Impairment -1,218 - - -1,218 Operating prot 57,148 24,924 -27,996 54,076 EBITDA 2) 104,309 31,568 -25,351 110,526 Adjusted EBITDA 2) 104,172 35,279 -18,531 120,921 Total assets 604,126 134,656 44,497 783,279 Purchase of non-current assets during the year 25,445 8,815 3,121 37,382 2020 EMEA Americas Other and eliminations Tot al Total revenue and other operating income 746,624 193,964 -26,594 913,994 Operating expenses 1) -630,168 -165,311 4,351 -791,128 Depreciation and amortisation -43,632 -5,191 -3,083 -51,905 Impairment -249 -6 -50 -304 Operating prot 72,575 23,456 -25,375 70,656 EBITDA 2) 116,456 28,652 -22,242 122,866 Adjusted EBITDA 2) 111,253 33,279 -22,242 122,290 Total assets 600,454 115,672 32,997 749,123 Purchase of non-current assets during the year 39,480 2,738 7,934 50,152 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. Note 7 – Payroll expenses, numbers of employees, benets etc. (EUR 1,000) 2021 2020 Salary 136,179 135,176 Social security 21,742 21,997 Pension benet plans (Note 21) 36 -196 Pension contribution plans (Note 21) 9,851 9,405 Other benets 3,856 2,192 Tot al 171 664 168 573 Man-year Elopak employees (excl. equity investees) 2 058 2 095 Executive management compensation for the year ended December 31, 2021 is disclosed in the Remuneration Report which is presented on the Elopak website. Note 8 – Other operating expenses (EUR 1,000) 20202021 Sales and administration expenses 6,115 5,673 Occupancy and maintenance expenses 4,483 5,449 Travel expenses 5,088 5,363 Losses and changes in allowance for bad debt 435 586 Consultants, auditors, lawyers, etc 16,005 10,579 IT expenses 11,225 13,296 Other expenses 6,797 4,972 Tot al 50,149 45,918 Other operating expenses include explenses related to the IPO of EUR 2,580 thousand in 2021. 116 Elopak 117 Financial statements Note 9 – Fees to external auditors PWC was elected as the principal auditor for 2019, while some group companies are audited by other audit rms. Expensed fees (EUR 1,000) 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 2020 PWC 582 35 50 50 717 Others 63 14 116 13 207 Tot al 645 49 166 63 924 Note 10 – Specication of nancial income and expenses Financial income 2020(EUR 1,000) 2021 Interest income from bank deposits 576 331 Other interest income 233 945 Finance lease interest income 831 637 Other nancial income 986 542 Tot al 2,626 2,455 Financial expenses 2020(EUR 1,000) 2021 Interest expenses to nancial institutions 1,553 5,897 Other interest expenses 224 238 Lease liability interest 4,773 5,184 Other nancial expenses 4,083 4,800 Tot al 10,633 16,118 Note 11 – Income tax Income tax expense 2020(EUR 1,000) 2021 Current income tax Current income tax charge 14,097 12,988 Adjustments in respect of current income tax of previous year -237 -196 Withholding tax 1,625 443 Total current income tax 15,485 13,234 Deferred tax Relating to origination and reversal of temporary dierences 1,379 -2 097 Adjustments in respect of changes to tax rate and deferred tax of previous year -691 1,244 Total deferred tax 688 -853 Income tax expense reported in the statement of prot or loss 16,173 12,381 Payable tax 2020(EUR 1,000) 2021 Payable tax opening balance 482 -865 Current income tax 15,485 13,234 Translation 538 -378 Net tax paid -19,122 -11,508 Payable tax closing balance -2,616 482 118 Elopak 119 Financial statements Note 11 – Income tax continued Change in deferred tax on items in Other Comprehensive Income/Equity 2020(EUR 1,000) 2021 Remeasurement gain/loss on actuarial gains and losses 38 259 Cash ow hedging 1,192 605 Group contribution - 259 Equity transactions - 522 - 368 Change in deferred tax on items in Other Comprehensive Income/Equity 709 755 Reconciliation of tax expense 2020(EUR 1,000) 2021 Accounting prot before income tax 49,982 60,209 Expected tax at statutory tax rate 1) 11,996 13,848 Adjustments in respect of dierent local tax rates 1,957 396 Non-taxable income/expenses - - Share of results of joint ventures - 858 - 726 Adjustments in respect of current income tax of previous years - 223 126 Withholding tax, non-refundable 1,625 443 Adjustments in respect of changes to tax rates and regulations - 706 281 Currency translation eects 1,691 - 1,666 Other dierences 691 - 322 Income tax expense at eective income tax rate 16,173 12,381 Eective income tax rate 32.4 % 20.6 % 1) The expected tax at statutory tax rate of 24% (23% in 2020) is based on an estimate of where the Group taxes its prots and the corresponding applicable tax rates Note 11 – Income tax continued Income tax expense 2020(EUR 1,000) 2021 Revaluation of inventories 11,431 9,892 Payables/receivables 18,341 9,416 Non-current assets - 8,258 - 8,153 Fixed assets depreciations - 7,649 - 8,213 Liquid assets - 13,090 - 1,473 Losses available for osetting against future taxable income 5,468 3,365 Other dierences 3,910 6,716 Total deferred tax 10,153 11,550 Deferred tax assets 21,640 23,544 Deferred tax liabilities 11,488 11,994 Net deferred assets/liabilities 10,153 11,550 Deferred tax assets are evaluated at each balance sheet date, and recognized to the extent that it is probable that sucient taxable prot will be available to allow the benet 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. Specication of tax losses carried forward - country and year of expiry (EUR 1,000) 2022 2023 After 2023 Indenite Tot al United States - - 3,112 2,131 5,243 United Kingdom - - - 7,152 7,152 Spain - - - 919 919 Norway - - - 10,409 10,409 Other - - - 231 231 Tot al - - 3,112 20,842 23,955 120 Elopak 121 Financial statements Tax losses carried forward of EUR 23,438 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 oce in 2017. The full tax cost of NOK 69,600 thousand was recognised and paid in accor- dance 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 oce. 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 aected 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. The estimated eect of a MAP procedure related to the tax audit in Denmark as of 31 December 2021 is EUR 1,600 thousand. Note 11 – Income tax continued Note 12 – Development cost and other intangible assets Accounting Policy Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated intangible asset arising from development is recognised in the statement of nancial 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-nancial assets accounting policy. Development cost and other intangible assets (EUR 1,000) Tot al2021 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 Reclassication - 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 Amortization disposals - - 10,765 - 10,765 Impairment disposals - - - Reclassication - - - Currency translation amortization - 124 124 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 Economic life 5-10 years 3-7 years Amortization method Linear Linear 122 Elopak 123 Financial statements Note 12 – Development cost and other intangible assets continued Tot al2020 Development costs IT-software Cost at 1.1 38,677 79,285 117,962 Additions 2,213 7,903 10,116 Disposals - - 4,005 - 4,005 Reclassication - 67 67 Currency translation - - 163 - 163 Cost at 31.12 40,890 83,088 123,978 Acc. amortization and impairment losses at 1.1 14,606 42,255 56,861 Current year amortization charge 3,457 6,659 10,116 Amortization disposals - - 4,061 - 4,061 Impairment disposals - - - Reclassication - - - Currency translation amortization - -148 -148 Accumulated amortization at 31.12 18,062 44,421 62,484 Net accumulated impairment at 31.12 - 284 284 Carrying amount 31.12 22,828 38,383 61,211 The additions under development costs relate to the development of new lling and production machine technology. Most of the IT-software entails additions related to investments in IT systems for management of materials ow and nances. The system roll-out started in 2017 and continued throughout 2021. Research and development The costs of research and development not eligible for capitalization which have been expensed in 2021 amount to EUR 15,708 thousand. The equivalent gure in 2020 was EUR 13,902 thousand. Note 13 – 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 iden- tiable assets, liabilities and contingent liabilities of the subsidiary at the date of acquisition. Goodwill is initially recognised 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-gener- ating units expected to benet 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 rst 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 recognised 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 prot 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) 2021 2020 Cost at 1.1 58,511 57,564 Currency translation - 422 947 Cost at 31.12 58,089 58,511 Accumulated impairment 6,220 6,203 Currency translation 3 17 Net accumulated impairment at 31.12 6,223 6,220 Carrying amount 31.12 51,866 52,291 124 Elopak 125 Financial statements 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 ows, based on the business plans for the cash generating units. The discount rate applied to the future cash ow 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 ows beyond the periods covered by the business plans. Cash generating units The goodwill items specied above are related to the Elopak Group. Goodwill related to acquisition of Elopak Denmark A/S, Elopak AB, Elon OY and Variopak are all allocated to the cash generating unit Europe, which consist of Elopak's European markets, including the internal production and supply organization. In accordance with the tables above, these goodwill items have a carrying value of EUR 51,866 thousand as of December 31, 2021 (EUR 52,291 thousand as of December 31, 2020). The basis for considering Europe as one cash generating unit is the inherent structure of the market. Customers are merging across borders and are increasingly treating Europe as one market. The historical requirement from customers to source from specic plants is no longer present. Elopak is adapting to this trend by allocating production exibly to the European plants in order to optimize logistics and production cost.t, 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 European business is as one unit. Impairment test and assumptions The recoverable amount for the cash generating unit, Europe, is calculated based on value in use. The cash ows that are basis for the impairment test are based on assumptions about future sales volume, selling prices and direct costs. These are uncertain factors. These assumptions are based on historical experience from the European market, adopted budgets and the Group's expectations of market changes. Upon completion of the impairment tests Note 13 – Goodwill continued Note 13 – Goodwill continued in 2021 and 2020 the Group does not expect signicant changes in current trade. This implies that expected future cash ows are mainly a continuation of observed trends. Determined cash ow is discounted with the discount rates presented in the table below. 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 2021 or 2020. Detailed description of the assumptions used: Discount rate after tax Discount rate before tax Growth rate 2-5 years Long-term growth rate 2021 2020 2021 2020 2021 2020 2021 2020 Elopak Europe 3.6 % 5.1 % 5.2 % 6.5 % 0.0 % 0.0 % 0.0 % 0.0 % The discount rate reects the current market assessment of the risk specic to the cash generating unit. The rate is estimated based on the weighted average cost of capital for similar assets in the market. This rate has been further adjusted to reect the specic risk factors related to the cash generating unit, which have not been reected in the cash ow. Average growth rate for the future 2 to 5 year period is based on Elopak Group's expectations for the market development that the business operates in. When estimating future cash ows, committed operating eciency improvement measures are taken into account. Changes in the outcomes for these initiatives may inuence future estimated cash ows. Investment costs necessary to meet expected future growth are taken into account. Based on management's assessment, the estimated investment costs do not include investments that improve the asset's performance. The related cash ows are treated correspondingly. Management believes that there is no reasonably possible change in any of the key assumptions that would cause the carrying value of the unit to materially exceed its recoverable amount. Sensitivity analysis has 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. 126 Elopak 127 Financial statements Accounting Policy Capitalized property, plant and equipment are reected 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-nancial assets accounting policy. Note 14 – Property, plant and equipment Property, plant and equipment (EUR 1,000) Oce 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 / reclassication 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 / reclassication - 692 - 1,614 - 199 - 2,505 Impairment transferred to inventory / reclassication - 15 -410 15 - 410 Currency translation 102 3,157 207 3,466 Accumulated depreciation at 31.12 27,330 360,056 16,357 403,744 Net accumulated impairment at 31.12 - 16 4,659 53 4,695 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 Useful life 0-40 years 3-15 years 3-12 years Depreciation method Linear Linear Linear Note 14 – Property, plant and equipment continued Oce and transport To ta l2020 Land and buildings Machinery and plant Cost at 1.1 47,233 512,956 20,397 580,586 Additions 302 39,360 375 40,037 Disposals - 10,205 - 13,335 - 2,157 - 25,697 Transfer to inventory / reclassication 4,098 - 10,303 1,383 - 4,822 Currency translation - 121 - 8,082 - 498 - 8,701 Cost at 31.12 41,307 520,596 19,501 581,404 Acc. depreciation and impairment losses at 1.1 34,297 344,036 17,123 395,456 Current year depreciation charge 1,326 24,383 1 329 27,038 Current year impairment charge 78 210 17 304 Depreciation disposals - 9,158 - 13,065 - 1,874 - 24,097 Impairment disposals 172 - 432 - 18 - 278 Depreciation transferred to inventory / reclassication 629 - 1,288 13 - 646 Currency translation - 72 - 4,389 - 339 - 4,800 Accumulated depreciation at 31.12 27,270 345,247 16,214 388,731 Net accumulated impairment at 31.12 - 4,208 36 4,244 Acc. depreciation and impairment losses at 31.12 27,270 349,455 16,250 392,975 Carrying amount 31.12 14,037 171,141 3,250 188,429 The lease revenues and commitments for Carton lling machines rented to customers as well as the lease expenses and commitments for equipment leased and used in our production are disclosed in Note 15. The company has not pledged property, plant and equipment as security for liabilities. 128 Elopak 129 Financial statements Note 14 – Property, plant and equipment continued 1) The split by geographical area is based on the jurisdiction of legal owner. Property, plant and equipment specied by geographical area 1) 2020(EUR 1,000) 2021 Canada 26,738 21,301 Denmark 27,947 31,870 Germany 68,550 74,167 Netherlands 42,765 40,271 Norway 4,131 5,166 Russia 7,290 6,157 Ukraine 8,566 9,290 United Kingdom 237 1 Other 203 207 Tot al 186,426 188,429 Other o-balance sheet commitments and contingencies (EUR 1,000) 2021 2020 Commitments for the acquisition of property, plant and equipment 2,145 4,485 Note 15 – Leases Accounting Policy The Group as a lessee The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases and leases of low value assets. For short-term leases and leases of low value assets, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benets 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 lling machines placed with customers. These leases are classied as nance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classied as a nance lease. All other leases are classied as operating leases. See Note 3 for impairment of non-nancial assets accounting policy. 130 Elopak 131 Financial statements At the reporting date the Group has future minimum lease receivables as follows (undiscounted) (EUR 1,000) 2021 2020 Due within year 1 7,679 8,156 Due within year 2 6,700 6,081 Due within year 3 5,150 2,521 Due within year 4 4,106 1,325 Due within year 5 2,971 867 Due after year 5 6,505 49 Tot al 33,113 19,000 Note 15 – Leases continued 2. The Group as lessor - nance lease receivables The group leases out lling machines under nance leases. Generally, lease terms are between 5 years to 10 years. Options to extend or purchase the leased asset will normally reect market pricing. Amounts receivable under nance leases (undiscounted) (EUR 1,000) 2021 2020 Due within year 1 4,843 5,535 Due within year 2 2,178 4,252 Due within year 3 1,378 1,611 Due within year 4 833 688 Due within year 5 754 385 Due after year 5 1,770 413 Total receivables under nance leases, undiscounted 11,756 12,883 Unearned nance income 1,536 1,057 Total receivables under nance leases, discounted 10,220 11,826 1. The Group as lessor - operating leases The Group leases out lling machines under operating leases. Rental income was EUR 9,168 thousand in 2021, compared to EUR 8,516 thousand in 2020. Lease terms are between 1 year to 10 years. Options to extend the lease term or purchase the leased asset reects market conditions at the time of exercising the option. Note 15 – Leases continued There is no impairment loss allowance related to the nance lease receivables in 2021 and 2020. Credit risk related to the lling machine lease agreements is considered very low. Credit risk is considered insignicant due to right to require return of the machine in case of default. The average eective interest rate contracted is approximately 3.99% per annum. The Group as lessee The Group leases several assets including buildings, plants, cars and lling machines. Right-of-use assets (EUR 1,000) 2021 Property and buildings Machinery Oce and transport Tot al Cost at 1.1 52,636 27,141 18,231 98,007 Net additions (disposals) 1,225 2,846 3,949 8,020 Cost at 31.12 53,861 29,987 22,179 106,027 Accumulated depreciation at 1.1 - 10,133 - 11,496 - 7,108 - 28,737 Current year depreciation charge - 5,075 - 5,505 - 3,758 - 14,338 Accumulated depreciation at 31.12 - 15,208 - 17,001 - 10,866 - 43,075 Carrying amount at 31.12 38,652 12,986 11,314 62,952 2020 Property and buildings Machinery Oce and transport Tot al Cost at 1.1 56,375 24,708 13,353 94,436 Net additions (disposals) - 3,739 2,433 4,878 3,571 Cost at 31.12 52,636 27,141 18,231 98,007 Accumulated depreciation at 1.1 - 5,018 - 5,583 - 3,386 - 13,986 Current year depreciation charge - 5,116 - 5,913 - 3,722 - 14,751 Accumulated depreciation at 31.12 - 10,133 - 11,496 - 7,108 - 28,737 Carrying amount at 31.12 42 502 15,645 11,123 69,270 132 Elopak 133 Financial statements Note 15 – Leases continued The Group has no signicant purchase options. Terminations in 2021 and 2020 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 4,460 thousand in 2021 and EUR 9,111 thousand in 2020. The expired and terminated contracts in 2021 were replaced by new leases for similar underlying assets. Expenses related to short-term leases are EUR 105 thousand in 2021 and EUR 20 thousand in 2020. Expenses related to low value assets are EUR 772 thousand in 2021 and EUR 768 thousand in 2020. The Group has signed a lease agreement for a High Bay warehouse adjacent to its existing warehouse in Terneuzen, Netherlands. The lease is for 20 years with a nominal value of EUR 46,720 thousand, with the commencement date in 2022. Additionally, the Group has signed a contract for Tethered Cap lines with a lease term of 5 years and a nominal value of EUR 17,941 thousand for the signed contract. The commencement dates are expected to be before the end of 2022. Due to the Single Use Plastic Directive the existing Caps lease contracts have been reassessed with a reduced useful life. Lease liabilities (EUR 1,000) 2021 2020 Current Lease liabilities Note 26 18,261 19,085 Non-current lease liabilities Note 26 62,342 69,090 Tot al 80,604 88,175 At the reporting date the Group has lease liabilities as follows (undiscounted) (EUR 1,000) 2021 2020 Due within year 1 18,905 19,562 Due within year 2 14,515 16,453 Due within year 3 15,206 13,156 Due within year 4 8,700 14,407 Due within year 5 7,889 7,211 Due after year 5 41,989 47,503 Tot al 107,203 118,293 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 nancial 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 nancial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of nancial 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 reects 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 identiable 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 dierence between the recoverable amount of the joint venture and its carrying value. The investment in the joint ventures specied 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. The Al-Obeikan Elopak factory for Packaging Co is a carton production facility in Saudi-Arabia selling cartons to customers in Middle East and North Africa and was a joint venture until the sale in 2020. 134 Elopak 135 Financial statements 1) The net investment in Al-Obeikan Elopak factory for Packaging Co was sold in 2020. An impairment loss of EUR 173 thousand is recog- nized in 2020 as part of the result from the joint venture. Upon disposal, EUR -1,446 thousand in currency translation dierences that has previously been recognized in equity, has been reclassied to prot and loss. Investment in joint ventures (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 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 Note 16 – Investment in joint ventures continued 2020 Al-Obeikan Elopak factory for Packaging Co Lala Elopak S.A. de C.V. Impresora Del Yaque Elopak Nampak Africa Ltd To ta l Ownership - and voting share 49% 49% 51% 50% Carrying amount 1.1 1,500 18,687 7,524 - 27,710 Income from joint venture companies 1) -1,472 2,595 2,032 - 3,155 Dividend received - - - - - Recognized to equity -25 -25 - - -50 Currency translation 51 -2,435 -1,420 - -3,804 Sale of company -54 - - - -54 Carrying amount 31.12 - 18,822 8,135 - 26,956 Note 16 – Investment in joint ventures continued Group's share of prot after tax (loss) (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 prot 6,834 2,602 -274 9,161 Prot after tax (loss) 5,282 2,203 - 274 7,211 Other comprehensive income that may be reclassied to net income 2,359 1,571 - 3,929 Total comprehensive income 7,641 3,773 -2 74 11,140 Group's share of prot after tax (loss) 2,588 1,123 -137 3,575 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 2020 Al-Obeikan Elopak factory for Packaging Co Lala Elopak S.A. de C.V. Impresora Del Yaque Elopak Nampak Africa Ltd To ta l Revenue 8,524 52,575 17,036 - 78,135 Operating prot 513 7,925 3,646 - 12,084 Prot after tax (loss) 299 5,296 3,985 - 9,580 Other comprehensive income that may be reclassied to net income 105 -5,021 -2,785 - -7,701 Total comprehensive income 404 275 1,200 - 1,879 Group's share of prot 147 2,595 2,032 - 4,774 Current assets - 28,217 14,578 - 42,796 Non-current assets - 12,862 3,677 - 16,539 Current liabilities - 5,776 2,304 - 8,080 Non-current liabilities - 2,074 - - 2,074 Equity - 33,230 15,951 - 49,181 136 Elopak 137 Financial statements Note 16 – Investment in joint ventures continued Note 17 – Other non-current assets Voting share (Ownership/voting share) 2021 2020 Al-Obeikan Elopak factory for Packaging Co 0% 0% Lala Elopak S.A. de C.V. 49% 49% Impresora Del Yaque 51% 51% Elopak Nampak Africa Limited 50% 50% Other non-current assets (EUR 1,000) 2021 2020 Contract assets (Note 19) 5,167 6,028 Non-current nance lease receivables (Note 15) 5,656 6,479 Other non-current assets 2,678 2,010 Carrying amount 31.12 13,501 14,517 Note 18 – Inventory Accounting Policy Cost is calculated using the FIFO cost formula for cartons, lling machines and spare parts. Inventory (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 2020 Raw materials Work in progress Finished goods Tot al Cost 31.12 25,484 49,458 67,551 142,493 Write down 01.01 3,220 26 4,632 7,879 Realised -3,220 493 -1,423 -4,151 Write down 3,028 - 214 3,242 Write down per 31.12. 3,028 519 3,423 6,970 Carrying amount 31.12 22,456 48,939 64,129 135,523 138 Elopak 139 Financial statements Note 19 – Trade receivables and other current assets Accounting Policy Trade and other receivables that are held to collect contractual cash ows only and the contractual cash ows are solely principal and interest are measured at amortised cost using the eective 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 classied as instruments held to collect contractual cash ows and for sale and are measured at fair value through other comprehensive income until they are derecognised. See Note 3 for non-derivative nancial instruments accounting policy. Impairment of nancial assets The loss allowance for expected credit losses is mostly related to individual assessments and is recognised for nancial 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 nancial 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 signicant nancing 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 signicant nancing 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 prot 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 prot or loss. Note 19 – Trade receivables and other current assets continued Trade receivables (EUR 1,000) 2021 2020 Accounts receivable, gross 95,764 81,792 Allowances -4,231 -3,834 Carrying amount 31.12 91,533 77,958 Trade receivables (EUR 1,000) 2021 Gross carrying amount Loss rate Expected credit loss Current 77,293 1.4 % 1,084 Up to 30 days 10,513 0.7 % 75 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 4.42% 4,231 Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. 2020 Gross carrying amount Loss rate Expected credit loss Current 63,579 0.1 % 88 Up to 30 days 9,527 0.7 % 63 30-60 days 1,589 13.8 % 220 60-90 days 776 4.8 % 37 Over 90 days 6,322 54.2 % 3,426 Tot al 81,792 4.69% 3,834 140 Elopak 141 Financial statements Movement in the allowance for expected credit losses of trade receivables (EUR 1,000) 2021 2020 As at 1.1 3,834 3,974 Change in provision for expected credit losses 491 -425 Change in write-o -18 -70 Foreign exchange movement -78 353 As at 31.12 4,231 3,834 Other current assets (EUR 1,000) 2021 2020 Project income earned, not invoiced 36,276 35,092 Prepaid support 2,520 2,408 Contract assets 1) 38,796 37,500 Prepayments 4,970 6,053 VAT receivables 19,330 19,609 Tax receivables 6,951 8,495 Financial instruments 5,696 2,053 Current nance lease receivables (Note 15) 4,564 5,347 Other current receivables 21,287 13,925 Carrying amount 31.12 101,595 92,981 Note 19 – Trade receivables and other current assets continued 1) Contract assets of EUR 35,092 thousand are reclassied from trade receivables to other current assets as of December 31, 2020. Contract assets from similar transactions of EUR 36,276 thousand are classied as other current assets as of December 31, 2021. In addition, contract assets consist of prepaid rebates to customers which will be oset against contracted future sales of carton and closures. Total of prepaid support was EUR 7,687 thousand in 2021 and EUR 8,435 thousand in 2020. Based on customer knowledge and experience of very few losses, the credit risk related to prepaid support is considered insignicant. Note 20 – Equity and shareholder information As of December 31, 2021, 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. Share-based bonus: The provision for share based bonus per December 31, 2020 was settled in the second quarter of 2021 through the issuance of 8,959 new shares to members of the Management. The provision of EUR 2,388 thousand in other paid-in capital was reversed, whereas the issuance of shares increased share capital by EUR 63 thousand and the other paid-in capital by EUR 1,120 thousand. The Group acquired 422,772 shares from Ferd AS in the second quarter of 2021 for EUR 1,170 thousand. All shares purchased from Ferd AS were re-issued during the second quarter as part of settling share-based bonuses to members of the Management. Stock split and reclassication within equity: Prior to the IPO, the Group issued 246,061,634 new shares in a stock split and transferred EUR 120 thousand from retained earnings to share capital. Additionally, the Group made a reclassication from retained earnings to other paid-in capital. Issue of shares in IPO: The Group issued 18,135,714 new shares for the IPO for NOK 28 (EUR 2.75) per share, resulting in gross proceeds from the IPO of EUR 49,798 thousand. The shares were issued with a face value of NOK 1.4 (EUR 0.14), which increased the share capital by EUR 2,490 thousand and the other paid-in capital (net of tax) by EUR 47,308 thousand. Transaction costs (net of tax) of EUR 1,091 thousand were directly attributable to the issue of new shares and have been recognised as a reduction of other paid-in capital. Net proceeds from the IPO amounted to EUR 48,707 thousand. Dividend: The Board approved a dividend of NOK 20 per share for the nancial year 2020 on May 6, 2021. The dividend payment was EUR 9,988 thousand based on 5,021,666 outstanding shares, of which EUR 9,960 thousand was paid to Ferd AS. The Board of Directors will propose to the Annual General Meeting a dividend of NOK 0.75 per share for 2021. 142 Elopak 143 Financial statements Basic and diluted earnings per share Year to date ended 31 Dec (EUR 1,000, except number of shares) 2021 2020 Prot attributable to Elopak shareholders 33,809 47,828 Issued ordinary shares at beginning of period, adjusted for share split in the period 250,635,350 250,635,350 Eect of shares issued 10,150,955 - Weighted-average number of ordinary shares in the period 260,786,305 250,635,350 Basic and diluted earnings per share (in EUR) 0.13 0.19 Note 20 – Equity and shareholder information continued Share capital Number of shares 2021 Ordinary shares issued Tre asur y 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 2020 Ordinary shares issued Tre asur y shares Ordinary shares outstanding Shares at 1.1 5,012,707 - 5,012,707 Shares at 31.12 5,012,707 - 5,012,707 The Group's top 20 shareholders Shareholder's name Total shareholding Ferd As 58.38% Nippon Paper Industries Co., Ltd. 5.00% Folketrygdfondet 3.34% Neuberger Berman Investment Advisers LLC 2.16% Handelsbanken Fonder AB 2.09% Artemis Investment Management LLP 1.80% Pareto Asset Management AS 1.71% Alfred Berg Kapitalforvaltning AS 1.46% Zadig Asset Management SA 1.45% FIL Investment Advisors (UK) Ltd. 0.79% Skagen AS (Investment Management) 0.78% Blackwell Partners LLC - Series E 0.70% UBS Asset Management Switzerland AG 0.69% Boldhaven Management LLP 0.68% Arctic Fund Management AS 0.67% Fondsnans Kapitalforvaltning AS 0.65% Pension Benet Guaranty Corporation 0.65% DNB Asset Management AS 0.63% Forsvarets Personellservice 0.54% AEGON Investment Management BV 0.53% The Executive team own directly, or indirectly the following number of shares in the Group Executive team Total number of shares Thomas Körmendi, CEO 344,077 Bent Axelsen, CFO 175,113 Patrick Verhelst, CMO 55,240 Wolfgang Buckhremer, CTO 60,368 Ivar Jevne, EVP MPS & Purchasing 213,300 Stephen Naumann, EVP Region Europe North & CIS 235,262 Finn Tørjesen, EVP Region Europe South & new markets 61,892 Lionel Ettedgui, Market Area Director - North Africa 66,615 Nete Bechmann, Chief Human Resource Ocer 18,108 Tot al 1,229,975 Note 20 – Equity and shareholder information continued 144 Elopak 145 Financial statements Note 21 – Employee retirement benet plans Dened contribution plans The Group operates dened 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 specied contributions. The plans cover 1,407 persons. Dened benet plans The Group also runs pension plans that grant the employees a right to dened future benets. These dened benet plans include in total 8 persons, which is one person less than for 2020. The benets are mainly dependent on years of service, the level of salary at age of retirement and size of contributions from the national insurance. The obligations are partly covered through insurance companies. Elopak has unfunded retiree medical insurance plans for certain of its employees located in the United States. Pension liability (EUR 1,000) 2021 2020 Dened benet obligations -2,580 -2,583 Fair value of plan assets 16 28 Net pension liability -2,563 -2,554 Pension expense (EUR 1,000) 2021 2020 Dened benet plans net 36 -196 Dened contribution plans 9,851 9,404 Total pension expenses 9,887 9,208 Dened benet plans are subject to actuarial calculations. The estimated pension cost for pension benet plans in 2021 is EUR 36 thousand and in 2020 is EUR 99 thousand. Note 22 – Capital Management Elopak’s level of capital and how this is managed relates closely to the company’s risk prole and the company’s ability to withstand turbulent times. The main objectives when Elopak assess their capital management is to minimize nancing costs, while maintaining adequate liquidity and exibility for short-term liquidity needs and M&A activities. The policy is to maintain unutilized and available liquidity of 40% of utilized debt. Elopak’s nancial guiding is to pay out dividends equal to 50% - 60% of adjusted net prots. All nancing 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 nancial guiding also targets constantly that the company reduces its gearing ratio and to be ~2.0x EBITDA on a mid-term basis. The nancial covenants under Elopak’s Revolving Credit Facility are limited to a maximum gearing ratio (Net Interest Bearing Debit/EBITDA) of 4.15x 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. 146 Elopak 147 Financial statements Note 23 – Interest-bearing loans and borrowings Accounting Policy See Note 3 for non-derivative nancial instruments accounting policy. Interest-bearing loans and borrowings 2021 2020 (EUR 1,000) Available Utilised Available Utilised Current liabilities to nancial institutions 56,674 14,420 56,354 15,552 Non-current liabilities to nancial institutions 400,000 169,433 400,000 213,135 Tot al 183,854 228,687 Repayment prole (EUR 1,000) 2021 2020 2021 - 15,552 2022 14,420 - 2023 170,000 214,102 Tot al 184 420 229 654 Weighted average interest rates on long term loans 2021 2020 (EUR 1,000) Rate in Ccy in EUR in Ccy in EUR EUR 0.77% 170,000 170,000 195,000 195,000 NOK 0.00% - - 200,000 19,102 Tot al 170,000 214,102 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 2023. Amounts are shown net of prepaid transaction costs. Changes to the Groups debt prole reect 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 December 31, 2021, 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 derecognised, and the utilised part of the facility is not presented as debt. Accounts receivables factoring facilities 2021 2020 (EUR 1,000) Available Utilised Available Utilised Non-recourse 130,167 40,034 130,167 37,613 Tot al 40,034 37,613 Note 23 – Interest-bearing loans and borrowings continued 148 Elopak 149 Financial statements 1) Provisions include provisions for customer claims of EUR 73 thousand in 2020. New provisions for customer claims of EUR 953 thousand have been included in the total of provisions EUR 1,026 thousand at the end of 2021. Note 24 – Other current liabilities Other current liabilities (EUR 1,000) 2021 2020 Provisions 1) 1,452 663 Accrued expenses 62,731 62,251 Derivatives (Note 25) 2,189 1,212 Prepaid from customers 18,459 18,784 Tot al 84,832 82,911 Accounting Policy The Group enters into derivative nancial instruments to manage its exposure to interest rate, foreign exchange rate and raw material risk arising from operational, nancing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative nancial instruments for trading purposes. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedging relationship. The Group designates certain derivatives as either hedge of the fair value of recognised assets or liabilities or rm commitments (fair value hedges), or hedge of highly probable forecast transactions or hedge of foreign currency risk of rm commitments (cash ow 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 eective in osetting changes in fair values or cash ows of the hedged item. 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 identied, 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 signicant changes in the management of risks related to nancials during the period. Interest Rate Benchmark Reform The loans and interest rate swaps utilise the EURIBOR as the reference rate. The transition date is not yet dened, therefore we will monitor the developments. Note 25 – Financial risk management 150 Elopak 151 Financial statements CATEGORIES OF FINANCIAL RISK TO OPERATIONAL BUSINESS 1. Market risk Market risk is the risk that the fair value of future cash ows of a nancial instrument will uctuate 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 in order to manage market risks, and seeks to apply hedge accounting in order to manage volatility in prot or loss. Hedge accounting is applied to currency and commodity derivatives, while interest rate derivatives and the derivative for the purchase price of NaturePak are not subject to hedge accounting. Note 25 – Financial risk management continued Derivatives 31 Dec 2021 31 Dec 2020 (EUR 1,000) Assets Liabilities To tal Assets Liabilities Tot al Currency derivatives 836 2,079 - 1,244 1,871 1,692 179 Commodity derivatives 5,303 - 5,303 267 232 35 Interest derivatives 248 2,058 - 1,811 - 4,286 - 4,286 Tot al 6,386 4,138 2,249 2,138 6,210 - 4,072 The full fair value of a derivative is classied as "Other non-current assets or "Other non-current liabilities" if the remaining maturity of the derivative is more than 12 months and, as a "Other current assets" or "Other current liabilities", if the maturity of the derivative is less than 12 months. The fair value estimation of derivative nancial 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 therefore recognized in the income statement. No other material nancial assets or liabilities are measured at fair value through prot or loss. Where eligible, derivatives used for hedging are designated in cash ow hedge accounting relationships. Currency risk Elopak's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities, nancing 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. Note 25 – Financial risk management continued Currency 2021 Assets 2020 Assets 2021 Liabilities 2020 Liabilities BGN 76 25 89 28 CAD 9,145 40,799 89,004 66,919 CHF 3,440 3,173 3,420 3,187 CZK 49,460 43,275 50,082 42,581 DKK 2,080,113 1,657,099 2,017,377 1,660,107 DZD - - 2,969 3,542 EUR 11,270 11,823 13,611 14,714 GBP 20,198 14,343 20,763 15,230 HUF 481,147 593,633 471,430 293,100 NIS 861 1,542 - 1,538 JPY 3,364,767 3,752,711 1,868,580 3,765,324 MXN 62,284 65,548 65,329 63,248 NOK 1,702,841 1,327,056 1,689,129 1,280,621 PLN 33,010 30,752 33,795 32,763 RUR 1,932,644 2,274,239 2,759,817 2,304,275 SEK 111,564 47,370 112,517 53,251 TND - - 34 52 UAH 82,796 98,951 14,468 17 USD 65,150 72,817 38,433 72,550 152 Elopak 153 Financial statements Currency exposures related to purchase of lling machines are hedged at a one-to-one basis (100% coverage at the specied date of payment). Elopak has entered into a deal contingent hedging arrangement for the purchase price of Naturepak Beverage Packaging, enterprise value of USD 96 million. The hedging arrangement will be eective upon completion of the transaction. In the event that the transaction does not close successfully, the hedging arrangement will become null and void. Hedge accounting is applied to all currency derivatives, except for the deal contingent and cross-currency interest rate swaps which are recognised as nancial income or nancial expense in prot 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. lling machine recognised in inventory) and to prot or loss to the same accounting line and at the same time as the hedged item is recognised to prot or loss. Note 25 – Financial risk management continued Nominal amount (EUR 1,000) 31 Dec 2021 31 Dec 2020 Currency Ccy EUR Ccy EUR CAD - - 6,159 3,940 EUR - 140,148 - 140,148 - 58,483 - 58,483 JPY 3,927,814 30,126 4,595,387 36,330 NOK 256,305 25,659 256,425 24,491 USD 95,000 83,878 - 8,329 - 6,788 Total nominal value - 485 - 510 Total fair value - 1,244 179 Outstanding derivatives Positive numbers represent purchases Interest risk Elopak's exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with oating interest rates. To manage this risk, the Group maintains a portion of its borrowings at xed rates of interest by entering into interest rate swaps. These swaps are designated to hedge underlying debt obligations, but 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 of December 31, 2021 the hedged amount of polyethylene derivatives is 17% of expected purchase for the next 12 months. Note 25 – Financial risk management continued Outstanding derivatives 31 Dec 2021 31 Dec 2020 Notional amounts and fair values Currency Notional EUR Fair value Notional EUR Fair value Interest EUR 140,000 - 1,811 150,000 - 4,286 Tot al - 1,811 - 4,286 Outstanding derivatives (EUR 1,000) 31 Dec 2021 31 Dec 2020 Notional amounts and fair values Metric Tonnes Fair value Metric Tonnes Fair value Polyethylene 7,800 5,084 30,000 81 Aluminum 2,700 219 1,800 - 46 Tot al 5,303 35 Positive numbers represent purchases Positive numbers represent purchases 154 Elopak 155 Financial statements Note 25 – Financial risk management continued 2. Liquidity risk Elopak's objective is to maintain a balance between continuity of funding, and exibility through the use of bank loans and overdraft facilities. The long term loans under the revolving credit facility become due in May 2023, and the Group is therefore in the process of renancing. The maturity prole of the Group's nancial assets and liabilities based on contractual undiscounted payments is summarised below. The tables only show balance sheet items classied as nancial instruments and do not include other balance sheet items aecting liquidity, such as inventories. Also, o-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 reected 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 ow hedges. Numbers are before tax 31 Dec 2021 31 Dec 2020 (EUR 1,000) Movement Eect on prot Eect on equity Eect on prot Eect on equity Foreign exchange derivatives +5% -5% - 4,119 4,289 - 8,010 7,933 - - - 3,760 - 1,009 Commodity swaps +5% -5% - - 815 - 815 - - 2,998 - 2,124 Interest rate swaps +1% -1% 3,597 - 3,773 3,597 - 3,773 5,093 - 5,385 5,093 - 5,385 Contractual maturities of nancial liabilities, including estimated interest payments 2021 (EUR 1,000) Non-derivaties nancial liabilities Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings (Note 23) 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 Deivatives nancial instruments Fair 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 Commodities - - - - - - Tot al 4,138 2,189 1,931 18 4,138 Note 25 – Financial risk management continued 2020 Non-derivaties nancial liabilities Carrying value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Loans and borrowings (Note 23) 228,687 16,235 213,135 - - 229,370 Accounts payable 114,273 114,273 - - - 114,273 Other liabilities 147,923 78,802 24,953 17,180 26,989 147,923 Tot al 490,883 209,309 238,088 17,180 26,989 491,566 Deivatives nancial instruments Fair value < 1 year 1-3 years 3-5 years > 5 years Total contractual maturities Foreign exchange 1,692 964 727 - - 1,692 Interest rate swaps 4,286 16 1,788 2,455 27 4,286 Commodities 232 232 - - - 232 Tot al 6,210 1,213 2,515 2,455 27 6,210 156 Elopak 157 Financial statements Note 25 - Financial risk management continued Contracts 2021 2020 (EUR 1,000) Opening position Movement Closing position Opening position Movement Closing position Commodity price hedges 35 5,268 - - 2,941 2,976 35 Currency hedges 9 142 151 289 - 280 9 Interest rate hedges - - - - 45 45 - Currency translation - - - 1 - 1 - Tax eect - 48 - 1,192 - 1,239 557 - 605 - 48 Tot al - 3 4,218 - 1,088 - 2,139 2,136 - 3 The fair value of all nancial assets and liabilities approximates to their carrying value. The fair value estimation of derivative nancial 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 nancial 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 nancial information and its own trading records to assess creditworthiness. Outstanding receivables are monitored regularly. 4. Hedge accounting Cash ow hedge accounting is applied to hedges of foreign currency risk and commodity price risk. The interest rate hedges were subject to cash ow hedge accounting until hedge accounting was stopped at 1 July 2017. Hedge reserves from the interest rate hedges are recycled to prot or loss over the lifetime of the hedged risks. The cash ow hedge reserve comprises the eective portion of the cumulative net change in the fair values of cash ow hedging instruments related to hedged transactions that have not yet occurred. Movements in the cash ow hedge reserve are detailed in the table below. The movement in the hedge reserve includes gains/(losses) transferred from the cash ow hedge reserve into the income statement during the period. Foreign exchange forwards and commodities hedge maturities are disclosed in Note 25.2 Liquidity Risk, which is representative of when the hedge reserve in equity will be recycled to the statement of comprehensive income. These are included in the following line items in the income statement. Note 25 – 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-eectiveness related to dierences in timing of settlement in 2021 was EUR 103 thousand recognized directly to prot and loss. In 2020 the total hedge in-eectiveness was insignicant and was not recognised directly to prot and loss. Movement in hedge reserve (EUR 1,000) 2021 2020 Sales - - Cost of goods sold 8,035 3,285 Other operating expenses - 1,146 1,127 Net nancial items - 45 Tot al 6,888 4,457 Movement in hedge reserve due to changes in fair values - 2,670 - 2,321 Tot al 4,218 2,136 158 Elopak 159 Financial statements Note 26 – Change in obligations from nancial activities 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 nancial institutions 728,843 - 728,843 Repayment of loans from nancial institutions - 775,640 - - 775,640 Interest expenses to nancial institutions - 1,553 - -1,553 Lease payments - - 19,969 - 19,969 Non-cash eects Interest expensed 1,953 4,773 6,726 Net additions lease liabilities - 7,625 7,625 Other non-cash items 1,564 - 1,564 31.12 183,853 80,604 264,457 Non-current 169,433 62,342 Current 14,420 18,261 2020 Interest-bearing loans and borrowings (Note 23) Lease liabilities (Note 15) To ta l 1.1 273,388 98,010 371,399 Cash Flows Proceeds of loans from nancial institutions 960,649 - 960,649 Repayment of loans from nancial institutions - 1,002,188 - - 1,002,188 Interest expenses to nancial institutions - 5,897 - - 5,897 Lease payments - - 20,799 - 20,799 Non-cash eects Interest expensed 6,297 5,183 11,479 Net additions lease liabilities - 5,781 5,781 Other non-cash items - 3,562 - - 3,562 31.12 228,687 88,175 316,861 Non-current 213,135 69,090 Current 15,552 19,085 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 AO Elopak Russia 100% 1999 Russia Trading and manufacturing Elopak Canada Inc. 100% 2000 Canada Trading and manufacturing Eloll 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 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 27 – Shares in subsidiaries and joint ventures The following companies are consolidated as subsidiaries in Elopak Group The following joint ventures are accounted for in accordance with the equity method 160 Elopak 161 Financial statements Note 28 – Related Parties Transactions with key management Transactions with Tech2M, a company owned by Sid Johari, have been carried out as part of normal operations at market terms. Sid Johari is a member of the Board of Directors of Elopak ASA. Purchase of services from Tech2M of EUR 4 thousand in 2021 and EUR 9 thousand in 2020 were for participation in a steering group. The consultancy agreement with Tech2M has been terminated. Related party transactions and balances Transaction values for the year ended Balance outstanding as of (EUR 1,000) 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 Joint Ventures Sales of goods and services 3,014 476 643 226 Purchase of goods and services 23,872 17,420 2,260 924 Dividends received 4,965 - - - Associates Sales of goods and services 227 - 6 - Purchase of goods and services 4,465 4,023 819 24 Loan and related interest - - 834 815 Other related party transactions Loans to employees were EUR 20 thousand in 2021 and EUR 28 thousand in 2020. No guarantees have been provided. None of the Board Members or the CEO have executive loans or guarantees in the company. Board of Directors: annual compensation and number of shares owned Compensation earned Number of shares (EUR 1,000, except number of shares) 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 Jo Olav Lunder, Chairperson 59 47 107,142 - Sanna Suvanto-Harsaae 32 - 14,285 - Sid Johari 40 39 17,857 - Anna Belfrage 36 - - - Anette Bauer Ellingsen 11 - 1,071 - Erlend Sveva 15 14 1,071 - Marius Wiklund 9 14 1,786 - Per Thau 9 39 - - Michael Francis Cronin 9 39 - - Note 28 – Related Parties continued 162 Elopak 163 Financial statements Note 29 – Subsequent events Elopak has signed a Share Purchase Agreement to acquire 100% of Naturepak Beverage from Gulf Industrial Group Company Plc and Evergreen Packaging International LLC, a wholly-owned subsidiary of Pactiv Evergreen Inc. Elopak acquires Naturepak Beverage for a cash-free debt-free purchase price of USD 96 million (EUR 83 million) and the transaction is funded through a combination of available cash balances and credit facilities. The transaction has been approved by relevant competition authorities and was completed on 29 March, 2022. Naturepak Beverage will be consolidated into Elopak's nancial statements from the date of completion. Due to short timing from completion of the transaction to issuing this annual report, disclosing the information required by IFRS 3.B64 is impractical for the annual report and will instead be provided in the Q1-2022 report. 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. Elopak has entered into a deal contingent hedging arrangement for the purchase price of Naturepak Beverage Packaging, enterprise value of USD 96 million. The hedging arrangement will be eective upon completion of the transaction. Ukraine/Russia crisis Elopak is deeply concerned by the escalating conict in Ukraine and we fully stand behind the international community’s reactions. Due to the evolving conict, Elopak’s Board of Directors therefore decided on 4 March 2022 to temporarily suspend all business activities in Russia with immediate eect. This includes import, export, production and sales in Russia. Elopak's crisis response team is constantly monitoring the development in both Ukraine and Russia and assessing the impact on Elopak's business, people and assets. The long-term impact to Elopak will be evaluated over the coming weeks. Note 29 – Subsequent events continued Update on Elopak’s business operations in Russia and Ukraine Our plant in St Petersburg primarily delivers to the Russian market. The book value of xed assets in our Russian operations was EUR 7 million as of year-end 2021. Elopak has 185 employees in Russia, placed in our plant in St Petersburg and oces location in Moscow. The annual sales revenue for our Russian business in 2021 was EUR 73 million to Russian customers and EUR 3 million to other smaller countries in the region. Our plant in Fastiv, Ukraine, is presently not operating, but is currently intact. The book value of xed assets in our Ukrainian operations was EUR 8 million as of year-end 2021. The plant primarily produces for delivery to the Russian market, and therefore the operation of the plant is closely related to the situation in Russia. The 2021 sales revenue is EUR 11 million from Ukrainian customers and EUR 3 million from other customers in the region. The business operations in Russia and Ukraine combined delivered around 10% EBITDA margin in 2021 (on a revenue of around EUR 90 million). End of consolidated nancial statements 164 Elopak 165 Financial statements Responsibility statement We conrm to the best of our knowledge that the consolidated nancial statements for the period January 1 to December 31, 2021 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, nancial position and result for the period. We also conrm to the best of our knowledge that the Board of Directors’ Report includes a fair review of signicant events that have occurred during the nancial year and their impact on the nancial statements, any signicant related parties transactions and a description of the principal risks and uncertainties for the nancial year. Elopak Group Consolidated Financial Statements Skøyen, March 31, 2022 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 166 Elopak 167 Annual Report Elopak ASA nancial statements 2021 STATEMENT OF PROFIT AND LOSS (EUR 1,000) Note 2021 2020 Total revenues 3 532,327 559,817 Cost of materials -458,521 -457,719 Payroll expenses -38,370 -36,590 Depreciation, amortization and impairment 4.11 -11,120 -9,095 Other operating expenses 5.6 -42,457 -41,643 Total operating expenses -550,469 -545,047 Operating prot -18,142 14,770 Financial income and expenses Share of net income from subsidiaries and joint ventures 2.7 17,357 16,785 Reversal / write-down of nancial xed assets 7 0 0 Financial income 17 7,624 10,661 Financial expenses 17 -5,391 -9,030 Net nancial items 19,590 18,416 Prot before taxes 1,448 33,185 Income tax 14 -16 -2,338 Net prot or loss 1,432 30,847 Allocation of net prot Transfer from / to other equity -18,782 21,272 Proposed dividend 20,214 9,575 Total allocation 10 1,432 30,847 STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER (EUR 1,000) ASSETS Note 2021 2020 Non-current assets Intangible assets 5 46,356 49,393 Deferred tax assets 14 10,355 10,179 Total intangible assets 56,711 59,572 Land, buildings and other property 6 583 620 Plant and machinery 6 3,479 4,515 Equipment, tools, oce machines etc 6 69 32 Total xed assets 4,131 5,167 Investments in subsidiaries 7 214,571 214,571 Loans to group companies 13 59,893 128,611 Investment in joint ventures 7 24,251 24,247 Other non-current assets 699 85 Total nancial xed assets 299,414 367,515 Total non-current assets 360,256 432,255 Current assets Inventory 8 75,502 65,446 Trade receivables 13 14,240 7,828 Other current assets 13 89,971 76,481 Total receivables 104,211 84,309 Cash and cash equivalents 18,000 1,115 Total current assets 197,713 150,871 TOTAL ASSETS 557,969 583,125 170 Elopak 171 Financial statements STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER (EUR 1,000) EQUITY AND LIABILITIES Note 2021 2020 EQUITY Share capital (269 219 014 shares at NOK 1,40) 9,10 50,156 47,483 Share Premium Reserve 10 69,906 22,570 Other paid-in capital 10 199 10,402 Total paid-in equity 120,261 80,455 Retained earnings 10 48,651 54,652 TOTAL EQUITY 168,912 135,107 LIABILITIES Non-current liabilities Pension liabilities 11 2,320 2,249 Total provisions 2,320 2,249 Liabilities to nancial institutions 12 169,433 213,135 Liabilities to group companies 12 10,087 7,256 Other non-current liabilities 1,948 4,997 Total other non-current liabilities 181,469 225,388 Total non-current liabilities 183,789 227,637 Current liabilities Liabilities to nancial institutions 13,676 15,552 Trade payables 13 83,680 87,000 Public duties payable 12,759 13,020 Taxes payable 14 0 3,157 Provision dividend 10 20,214 9,575 Other current liabilities 13 74,940 92,077 Total current liabilities 205,269 220,380 TOTAL LIABILITIES 389,057 448,018 TOTAL EQUITY AND LIABILITIES 557,969 583,125 Oslo, March 31, 2022 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 172 Elopak 173 STATEMENT OF CASH FLOWS (EUR 1,000) Note 2021 2020 Prot before taxes 1,448 33,185 Depreciation, amortization and impairment xed assets 5,6 11,120 9,095 Depreciation, amortization and impairment nancial assets 7 0 0 Net gain / loss on sale of non-current assets 0 - 139 Net unrealized currency gain / loss to equity 4,370 2,060 Dividend received 7 - 17,357 - 16,785 Cash ow from prot before tax - 420 27,416 Taxes paid 14 - 4,575 - 928 Change in account receivables - 6,412 3,678 Change in other receivables - 13,490 - 18,229 Change in inventories - 10,056 - 5,783 Change in account payables - 3,320 1,147 Change in other liabilities - 17,948 - 1,303 Change in net pension liabilities - 46 - 250 Net cash ow from operations - 56,266 5,750 Purchase of non-current assets 5,6 - 6,482 - 12,065 Dividend received 7 17,357 16,785 Capital changes subsidiaries 7 0 1,764 Change in other non-current investments - 617 1,663 Net cash ow from investing activities 10,258 8,146 Capital deposits 10 49,888 0 Dividend paid 10 - 9,919 - 9,477 Change in current liabilities to credit institutions - 1,875 - 8,789 Change in long-term loans and liabilities 24,799 474 Net cash ow from nancing activities 62,893 - 17,791 NET CASH FLOW 16,884 - 3,895 Liquidity as of 1.1 1,115 5,010 Liquidity as of 31.12 18,000 1,115 Note 1 – Signicant accounting policies General information This nancial 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 subsidiaries and shares in joint ventures as listed in note 7, are consolidated in the group nancial statement for Elopak ASA. The accounting and presentation currency is EUR, as the majority of underlying transactions are in euros. Signicant accounting policies Valuation and classication of assets and liabilities Assets intended for permanent ownership or use in the business are classied as non-current assets. Other assets are classied as current assets. Receivables due within one year are classied as current assets. The classication of current and non-current liabilities is based on the same criteria. Current assets are valued at the lower of historical cost and fair value. Fixed assets are carried at historical cost but are written down to their recoverable amount if this is lower than the carrying amount, and the decline is expected to be permanent. Fixed assets with a limited economic life are depreciated on a systematic basis in accordance with a reasonable depreciation schedule. Other non-current liabilities, as well as current liabilities, are valued at nominal value. Foreign currency All monetary balance sheet items denominated in foreign currencies are translated into EUR at the exchange rate prevailing at the balance sheet date. Currency derivatives are valued in the balance sheet at fair value on the balance sheet date. 174 Elopak 175 Financial statements 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 labor costs. Finished goods and work in progress also include a proportion of manufacturing overheads based on normal operating capacity that has been incurred in bringing the inventory to its present location and condition. Cost is calculated using the FIFO cost formula for cartons, lling machines, and spare parts. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling, and distribution. Receivables Trade receivables and other receivables are recognized at nominal value, less the accrual for expected losses of receivables. The accrual for losses is based on an individual assessment of each receivable. Note 1 – Signicant accounting policies continued Note 1 – Signicant accounting policies continued Intangible xed assets Expenses relating to the development of intangible assets, including research and development expenses, are capitalized when it becomes probable that the future economic benets 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 amortized on a systematic basis. Intangible assets are written down to the recoverable amount if the expected economic benets are not assets are written down to the recoverable amount if the expected economic benets 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 nancial income. Pensions Payments to dened contribution retirement benet plans are charged as an expense when employees have rendered service entitling them to the contributions. Payments made to public retirement benet schemes are accounted for as payments to dened contribution plans where Elopak's obligations under the plans are equivalent to those arising in a dened contribution retirement benet plan. For dened benet plans, the cost of providing benets is determined using actuarial valuations at each reporting date. Actuarial gains and losses are recognized in full in the period in which they occur in other comprehensive income. Past service cost is recognized immediately to the extent that the benets are already vested and otherwise is amortized on a straight-line basis over the average period until the benets become vested. The plan asset or pension liability recognized in the statement of nancial position consist of the net present value of the dened benet obligation, unrecognized past service cost, and fair value of plan assets. 176 Elopak 177 Financial statements Income taxes Tax expenses are matched with operating income before tax. Tax-related to equity transactions, e.g., group contribution, is recognized directly in equity. Tax expense consists of current income tax expense and change in net deferred tax. Deferred tax liabilities and deferred tax assets are presented net in the balance sheet. Cash and cash equivalents Cash and cash equivalents include cash, bank deposits, and other monetary instruments with a maturity of less than three months at the date of purchase. The statement of cash ow The statement of cash ow has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits, and other short-term, liquid investments. Note 1 – Signicant accounting policies continued In 2021, dividends of EUR 17.4 million were recognized from subsidiaries and associated companies. In 2020 the same number was EUR 16.8 million. See also notes 3, 4, 7, 10, 12, 13, 17, and 18 for more information regarding transactions and items with related parties. Note 2 – Transactions with related parties Note 3 – Operating revenues 2021 2020 Sales revenue 515,295 542,004 Management and group services 17,032 17,813 Tot al 532,327 559,817 In 2021, intra-group sales transactions amounts to EUR 509 million. Geographical distribution of operating revenues is as follows: 2021 2020 Europe 505,666 524,402 Asia, Middle East 226 10,426 Africa 19,392 4,458 North-America 7,043 20,530 Tot al 532,327 559,817 Operating revenues are specied according to the customer's location. 178 Elopak 179 Financial statements Geographical distribution of operating revenues is as follows: Payroll expenses 2021 2020 Salary 18,603 17,800 Social security costs 3,175 2,478 Hired personnel from group companies 14,838 15,078 Pension cost (see note 11) 1,259 1,030 Other benets 495 204 Tot al 38,370 36,590 Average number of FTE employees 167 157 Salaries and remunerations to the Group management Payroll expenses CEO BoD Salary (incl bonus) 1,472 - Other benets 47 224 Fees to external auditors 2021 2020 Audit fee 377 269 Other assurance services 386 46 Tax advisory services 5 45 Other non-audit services 42 0 Note 4 – Payroll expenses, number of employees, remuneration, loans to employees etc. Operating revenues are specied according to the customer's location. The CEO is included in an annual bonus scheme. Performance targets are related to the overall return on value adjusted equity of the Elopak Group as well as individual targets. Targets are reviewed annually. Maximum achievement within a nancial year is equal to 50% of an annual base salary. In addition to the annual bonus scheme, the CEO is also included in a long-term incentive scheme based on the value adjusted equity of Elopak Group. Guidelines for remuneration of the Group Leadership Team and Board Members are disclosed in the Remuneration Report which is published onElopak’s website. Patents and sales rights IT software Total Intangible assets Acquisition cost 01.01.2021 18,474 74,227 92,701 Additions 2,213 4,385 6,598 Disposals - 11,082 11,082 Acquisition cost 31.12.2021 20,687 67,531 88,217 Accumulated amortization 31.12.2021 8,283 33,146 41,429 Accumulated impairment 31.12.2021 - 431 431 Carrying amount 31.12.2021 12,404 33,954 46,356 Current year amortization charge 1,866 7,769 9,635 Current year write-downs charge - - - Current year depreciation/write-down charge 1,866 7,769 9,635 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 lling machine platform. IT software additions are mainly related to an ongoing project for the implementation of an ERP system. Expected prot from capitalized research and development costs exceed book values. The company has also expensed EUR 14 million as research and development costs in 2021. 180 Elopak 181 Financial statements Land and buildings Machinery and plant Furniture, tools, oce machines etc. Total xed assets Acquisition cost 1.1.2021 5,363 14,319 2,690 22,372 Additions* 80 - 250 53 - 116 Disposals 212 481 1,201 1,893 Acquisition cost 31.12.2021 5,231 13,589 1,542 20,363 Accumulated depreciation 31.12.2021 4,648 10,110 1,472 16,230 Accumulated write-downs 31.12.2021 - - - - Carrying amount 31.12.2021 583 3,479 69 4,131 Current year depreciation charge 117 787 16 920 Current year write-downs charge - - - - Current year depreciation/write-down charge 117 787 16 920 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 2-6 years 1-2 years Annual rental amount o-balance sheet 2,581 168 Total future lease obligation 9,100 231 Note 6 – Fixed assets * Negative additions to Machinery and Plant is related to reclassication of a lling machine from xed assets to inventory. ** EUR 0.6 million classied as depreciation in the statement of prot and loss relates to recharged depreciation from subsidiaries. Note 7 – Shares and participations in other companies, etc. * Owned 50% directly, and 50% through wholly owned subsidiaries Dividends from subsidiaries and joint ventures of EUR 17.4 million in 2021 (EUR 16.8 million in 2020) have been recognized as nancial income. Impairment tests have been performed on those investments where the book value exceeds the equity in the company. No impairment has been deemed necessary in 2021. The Group's top 20 shareholders Company Percentage owned Acquisition cost Book value 2021 Equity 2021 Results 2021 Elopak Oy, Finland 100% 1,862 230 546 148 Elopak Denmark A/S, Denmark 100% 91,296 66,000 20,983 1,356 Elopak BV, Netherlands 100% 9,856 9,856 18,959 3,954 Elopak Fastiv, Ukraine 100% 2,278 2,278 16,304 1,109 Elopak SPA, Italy 100% 4,233 880 2,422 35 Elopak Systems AG, Switzerland 100% 13,560 13,560 15,271 - 85 Elopak Inc, USA 100% 47,405 47,405 28,763 4,471 Elopak Israel AS, Norway 100% 1,316 1,316 268 - 5 Elopak Canada Inc, Canada 100% 6,942 6,942 49,936 14,495 Elopak GsmbH, Austria 100% 6,226 6,227 2,868 130 ZAO Elopak Russia, Russia 100% 4,458 4,458 12,043 3,548 Elopak S.R.O, Czechia 100% 197 197 1,048 1 Elopak UK Ltd, UK 100% 47,191 0 5,542 3,510 Elopak BS D.O.O Serbia 100% 160 160 373 83 Elopak AB, Sverige 100% 10,593 6,820 11,129 189 Elopak KFT, Hungary 100% 13 13 557 6 Elopak EOOD, Bulgaria 100% 3 3 118 2 Elopak Poland SA, Poland 100% 20,388 6,000 4,934 21 Eloll Gmbh, Germany 100% 42,215 42,215 48,918 15,861 Elopak Tunisie SARL, Tunisia 100% 3 3 37 1 Elopak Egypt LLC, Egypt 100% 0 6 43 - 9 Elopak Algerie SARL, Algeria 49% 0 0 20 3 Total shares, subsidiaries 310,197 214,571 Envases Elopak S.A. de C.V., Mexico 49% 24,247 24,247 16,281 2,595 Elopak Nampak Africa Ltd 50% 4 4 - 133 - 137 Total shares, joint ventures 24,251 24,251 Total shares 238,822 182 Elopak 183 Financial statements Note 8 – Inventory Note 9 – Share capital and shareholder information Fees to external auditors 2021 2020 Raw materials 15,555 11,740 Semi-nished products 18,940 23,371 Filling Machines 17,932 9,184 Finished goods 23,076 21,151 Tot al 75,502 65,446 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 per share. Elopak ASA is listed on Oslo Stock Exchange - Euronext. Elopak ASA did not own treasury shares as of 31.12.2021. Shareholders holding 1% or more of the total 269,219,014 shares issued as of 31 December 2021 are according to information from Euronext: Company Number of shares Holding (%) Ferd As 157,183,013 58.38% Nippon Paper Industries Co., Ltd. 13,460,950 5.00% Folketrygdfondet 9,000,000 3.34% Neuberger Berman Investment Advisers LLC 5,823,955 2.16% Handelsbanken Fonder AB 5,628,647 2.09% Artemis Investment Management LLP 4,847,661 1.80% Pareto Asset Management AS 4,611,541 1.71% Alfred Berg Kapitalforvaltning AS 3,943,744 1.46% Zadig Asset Management SA 3,900,000 1.45% Note 10 – Equity Company Share capital Share premium Other paid-in capital Other equity Total equity Equity 01.01.2021 47,483 22,570 10,402 54,652 135,107 This year's change in equity: Prot for the year - - - 1,432 1,432 Dividend provision to shareholders - - - - 20,214 - 20,214 Currency eect dividend previous year - - - - 344 - 344 Settlement of share-based bonus 63 1,120 - 1,409 - - 226 Bonus issue and reclass. within equity 120 - - 8,994 8,873 0 Issue of new shares in IPO 2,490 46,216 - - 48,706 Provision for share-based bonus - - 199 - 199 Change in actuarial gains and losses for pensions - - - - 118 - 118 Change in cash ow hedge reserve - - - 4,370 4,370 Equity 31.12.2021 50,156 69,906 199 48,651 168,912 184 Elopak 185 Financial statements Note 11 – 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 dened contribution plan. In addition, the company has agreed on a dened benet plan, individually, with some former employees. The dened contribution plan for 2021 includes 170 employees at a cost of EUR 1.22 million, compared to EUR 1.0 million in 2020. Pension cost relates to the dened benet plan includes change of the present value of pension obligations and pension assets. Net pension liabilities are recorded as long-term debt. The actuarial assumptions for demographic factors and departure are based on the commonly used assumptions in insurance. Pension obligations in balance sheet 2021 2020 Funded and unfunded obligations Funded and unfunded obligations Present value pension obligations (incl. payroll tax) - 2,337 - 2,277 Fair value of plan assets 16 28 Net pension obligations - 2,320 - 2,249 2,021 2,020 Changes in estimates recognized directly in equity - 118 54 Financial preconditions: 2021 2020 Discount rate 1.60% 1.00% Expected salary increase 2.75% 2.00% Social security escalation rate 2.50% 1.75% Expected pension increase 1.75% 1.00% Expected return on plan assets 3.10% 2.40% Note 11 – Pension costs, pension assets and pension liabilities continued Pension costs recognized in prot and loss 2021 2020 Interest cost on projected benet obligations 20 26 Return on plan assets 0 0 Accrued social security tax 3 4 Total pension costs recognized in prot and loss 23 30 Note 12 – 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 31.05.2023. Amounts are shown net of prepaid transaction costs, which explains the dierence against liabilities in the balance sheet. As of 31.12.21, Elopak ASA has met all covenants related to the syndicate loan facility. Non-current liabilities to nancial institutions 2021 170 million EUR 170,000 Tot al 170,000 Non-current liabilities to group companies 2021 2020 ZAO Elopak Russia 10,087 7,256 Tot al 10,087 7,256 186 Elopak 187 Financial statements Note 13 – Balances with companies in the same group, etc. Non-current liabilities to group companies 2021 2020 Elopak Denmark AS 0 10,751 Elopak GmbH 55,000 105,000 Elopak Canada Inc 0 4,075 ZAO Elopak Russia 4,651 8,401 Elopak Israel AS, Israeli branch 242 385 Tot al 59,893 128,611 Trade receivable Other current assets 2021 2020 2021 2020 Intra-group positions 8,943 5,201 71,621 66,835 External positions 5,297 2,627 18,350 9,646 Tot al 14,240 7,828 89,971 76,481 Trade payables Other current liabilities 2021 2020 2021 2020 Intra-group positions 738 1,923 61,643 83,118 External positions 82,942 85,077 13,297 8,959 Tot al 83,680 87,000 74,940 92,077 Note 14 – Income tax Income tax expenses: 2021 2020 Tax cost payable outside Norway 1,457 412 Tax payable in Norway *** - 38 2,892 Change in deferred tax - 1,402 - 966 Total tax cost 16 2,338 Calculation of this year's tax base: 2021 2020 Prot before tax expenses 1,448 33,185 Permanent dierences* 11,032 - 5,716 Change in temporary dierences - 9,997 5,714 Non-taxable dividend income - 16,940 - 17,645 Dierences recognized directly in equity ** 4,048 2,601 This year's tax base - 10,409 18,139 * Includes mainly translation dierences due to the fact that tax is calculated in NOK and non-deductible expenses. ** Related to change in actuarial eects on pensions, change in cash ow hedges in equity, and share issuance cost taken net to equity. A tax eect of EUR 891 thousand has been accounted for in equity in 2021. *** Tax payable in 2021 is related to an adjustment of taxes payable for 2020. 188 Elopak 189 Financial statements Note 14 – Income tax continued Overview of temporary dierences: 2021 2020 Receivables 0 0 Inventory 2,498 2,805 Goodwill 6,764 8,257 Fixed Assets 16,250 15,632 Provisions 5,089 5,601 Pensions 2,320 2,249 Fair value of hedging instruments - 2,247 4,257 Temporary dierences 30,675 38,801 Tax receivable on taxes paid outside of Norway * 5,986 7,469 Tax losses carried forward 10,409 0 Tot al 47,070 46,270 Deferred tax asset 10,355 10,179 Basis for tax payable 0 18,139 Calculated tax payable 0 3,991 Use of tax receivable on taxes paid outside of Norway * 0 - 834 Net tax payable in the balance sheet 0 3,157 Temporary dierences for the calculation of tax payable 30,675 38,801 Tax receivable on taxes paid outside of Norway 5,986 7,469 Tax losses carried forward 10,409 0 Tot al 47,070 46,270 Deferred tax asset * 10,355 10,179 * 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. Note 14 – Income tax continued Note 15 – Guarantee obligations * Includes non-deductible expenses, taxable income from NOKUS, as well as translation dierences. ** Tax expense as a percentage of prot before tax. Explanation of why this year's tax expense does not amount to 22% of prot before tax: 2021 2020 Prot before taxes 1,448 33,185 22% tax on prot before tax 318 7,301 Tax eect of: Permanent dierences (22%) * 2,427 - 1,258 Correction previous years 0 - 35 Taxes paid outside Norway 1,130 412 Change in tax receivable on taxes paid outside of Norway 326 - 785 Non-taxable dividend - 3,727 - 3,882 Currency eect on deferred tax asset - 459 586 Estimated tax expense (- income) 16 2,338 Eective tax rate ** 1.1 % 7.0 % 2021 Guarantees issued for subsidiaries and associated companies 33,219 Other guarantees 2,456 Tot al 35,675 190 Elopak 191 Financial statements Note 17 – Net other nancial items * Prot/loss on currency are presented net in the statement for prot and loss as part of other nancial income. ** Gains on interest rate swaps are included as a reduction of interest expense. 2021 2020 Interest income from companies in the same group 6,602 9,570 Other interest income 517 314 Interest costs for companies in the same group - 852 - 771 Other interest expenses ** - 1,407 - 6,646 Total interest income/expense 4,860 2,467 Net currency gain/loss * 442 567 Other nancial income from enterprises in the same group 60 49 Other nancial income 2 161 Other nancial expenses from companies in the same group 0 0 Other nancial cost - 3,132 - 1,613 Total other nancial income/expense - 3,069 - 1,403 Total other nancial income 7,624 10,661 Total other nancial expenses (incl. prot/loss on exchange) - 5,391 - 9,030 Note 16 – Commitments and contingencies 2021 2020 Commitments for acquisition of goods 22,866 23,703 Total commitments 22,866 23,703 See also description of lease obligation in note 6 Note 18 – Financial risk management Currency risks Elopak ASA's currency exposure is 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 decline linearly each quarter to 15% in the 6th quarter. The hedges are based on expected future cash ows for purchases. Elopak ASA is registered as a borrower for the group's long-term loan facility of Euro 400 million (see note 12). As parts of the loan were raised in NOK, the loan involved a currency risk. Exposure in NOK has been secured through a cross currency swap. NOK loan was repaid in 2021, and Elopak ASA does not have cross currency swaps at year-end. 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. 2021 2020 Currency Forward position in currency Forward position in EUR Forward position in currency Forward position in EUR NOK 256 26 456 44 JPY 3,928 30 4,595 36 USD - - - 2 - 2 Net purchases 56 Net purchases 80 Net sales 0 Net sales - 2 56 78 192 Elopak 193 Financial statements Elopak ASA has also entered into forward contracts on behalf of subsidiaries, where an external position is reected towards subsidiaries. This gives no net exposure, and these contracts are therefore not reected in the matrix above. At the end of 2021, the fair value of Elopak ASA's currency derivatives amounts to a liability of EUR 0.6 million (a liability of EUR 0.0 in 2020). 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 12). The loan has a oating 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 signicant risk associated with guarantees issued. Commodity price risk Elopak ASA's business requires ongoing supplies of aluminum and polyethylene. Based on 12 months' expected consumption, Elopak ASA includes commodity price contracts to manage this risk. Positive values represent an asset Note 18 – Financial risk management continued Outstanding derivatives Currency Nominal value 2021 Real value EUR Nominal value 2020 Real value EUR EUR 140,000 - 1,811 150,000 - 4,286 Tot al - 1,811 - 4,286 Elopak is deeply concerned by the escalating conict in Ukraine and we fully stand behind the international community's reactions. Due to the evolving conict, Elopak’s Board of Directors therefore decided on 4 March 2022 to temporarily suspend all business activities in Russia with immediate eect. This includes import, export, production and sales in Russia. Elopak's crisis response team is constantly monitoring the development in both Ukraine and Russia and assessing the impact on Elopak's business, people and assets. The long-term impact to Elopak will be evaluated over the coming weeks. Note 18 – Financial risk management continued Note 19 – Subsequent events Outstanding derivatives 2021 Ton s 2021 Real value EUR 2020 Ton s 2020 Real value EUR Aluminium 2,700 219 4,800 - 46 Polyetylen 7,800 5,084 30,000 81 Tot al 5,303 35 Positive values represent an asset 194 Elopak 195 Financial statements 196 Elopak 197 Annual Report 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 2021, 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 statement of financial position as at 31 December 2021, the statement of 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 significant 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 2021, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, 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 Board Audit and Sustainability 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 laws and regulations 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 198 Elopak 199 Annual Report Independent Auditor's Report - Elopak ASA (2) 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 3 years from the election by the general meeting of the shareholders on 10 April 2019 for the accounting year 2019. Key Audit Matters Key audit matters are those matters that, in our professional judgment, 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. Key Audit Matter How our audit addressed the Key Audit Matter Revenue recognition The majority of the Group's revenues and profits are derived from customer contracts for sale of cartons. The Group recognises revenue when the transfer of control, of a performance obligation, has taken place. Revenue is recognised over time in situations where the customer simultaneously receives 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 the transfer of control is satisfied over time or at a point in time rely on complex assessments 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, in the consolidated financial statements, where management explain 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 yes, this resulted in the view that no alternative use of such cartons was deemed possible. It also included testing whether the contracts contained cancellation provisions and whether legal regulations in the relevant countries allow for cancellation. If yes, this resulted in the view that an enforceable right to payment existed. Revenue for cartons with no alternative use and enforceable right to payment should be recognised over time. We investigated this 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 note 5 and found them appropriate. Independent Auditor's Report - Elopak ASA (3) 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 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 appears 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 legal 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 200 Elopak 201 Annual Report Independent Auditor's Report - Elopak ASA (4) 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 skepticism 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 opinion on the effectiveness of the Company's or 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 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 Board Audit and Sustainability 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 Independent Auditor's Report - Elopak ASA (5) 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 Regulation on European Single Electronic Format (ESEF) Opinion We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name 529900BIDQN2AOKV6N08-2021-12-31-en.zip have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF). In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF. Management’s Responsibilities Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements. 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, 31 March 2022 PricewaterhouseCoopers AS Vidar Lorentzen State Authorised Public Accountant Alternative Performance Measures (APMs) Elopak prepares and reports its consolidated nancial statements in accordance with International Financial Reporting Standards as issued by the IASB and as endorsed by the EU (IFRS). In addition, Elopak 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 nancial measure of historical or future nancial performance, nancial position, or cash ows, other than a nancial measure dened or specied in the applicable nancial 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 Elopak’s management. The APMs are reported in addition to but are not substitutes for Elopak’s consolidated nancial statements, prepared in accordance with IFRS. The APMs provide supplementary information to measure Elopak’s performance and to enhance comparability between nancial periods. The APMs also provide measures commonly reported and widely used by investors, lenders, and other stakeholders as an indicator of Elopak’s performance. These APMs are used in planning for and forecasting future periods, including assessing our ability to incur and service debt, including covenant compliance. APMs are dened consistently over time and are based on Elopak’s consolidated nancial statements (IFRS). EBITDA EBITDA is a measure of earnings before interest, taxes, depreciation, amortization, and impairments. Elopak presents this APM because management considers it to provide useful supplemental information for understanding the overall picture of prot generation in Elopak’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 aecting comparability (the Adjustment items) and further including Elopak’s share of net income from joint ventures (continued operations) presented as part of nancial income and expenses. Elopak presents this APM because management considers it to be an important supplemental measure for understanding the underlying prot generation in Elopak’s operating activities and comparing its operating performance with that of other companies. Adjusted prot attributable to Elopak shareholders Adjusted prot attributable to Elopak shareholders represents Elopak’s prot attributable to Elopak shareholders adjusted for certain items aecting comparability, taking into account the Adjustment items, related estimated calculatory tax eects based on a 24% statutory tax rate and excluding historical share of net income from joint ventures that have been discontinued. Elopak presents this APM because management considers it to provide useful supplemental information for understanding Elopak’s prot attributable to Elopak shareholders and for comparability purposes with other companies. Adjusted basic and diluted earnings per share (Adjusted EPS) Adjusted EPS represents adjusted prot 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 Elopak’s underlying prot for the year (period) on a per-share basis and comparing its prot 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 nancial institutions before amortization costs and including lease liabilities) less cash and cash equivalents for the period. Elopak presents this APM because management considers it as a useful indicator of Elopak’s debt level, nancial exibility, and capital structure because it indicates the level of borrowings after taking into account cash and cash equivalents within Elopak’s business that could be utilized to pay down outstanding borrowings. Net debt is also used for monitoring Elopak’s nancial covenants compliance by management. Net debt/adjusted EBITDA (Leverage ratio) Leverage ratio is a measure of net debt divided by adjusted EBITDA. Elopak presents this APM because management considers it as a useful indicator of Elopak’s ability to meet its nancial obligations. Net debt/adjusted EBITDA is also used for monitoring Elopak’s nancial covenants compliance by management. 202 Elopak 203 Financial statements Adjusted EBITDA Items excluded from adjusted EBITDA (EUR 1,000) 2021 2020 Gain on sale of property Speyer - - 5,203 Transaction costs 6,820 - Total adjusted items 6,820 - 5,203 Calculatory tax eect 1) - 1,637 1,197 Total adjusted items net of tax 5,183 - 4,006 Reconciliation of EBITDA and adjusted EBITDA (EUR 1,000) 2021 2020 Operating prot 54,076 70,656 Depreciation, amortisation and impairment 56,450 52,209 EBITDA 110,526 122,866 Total adjusted items 6,820 -5,203 Share of net income from joint ventures (continued operations) 2) 3) 3,575 4,627 Impairments on joint ventures investment (continued operations) 2) 3) - - Adjusted EBITDA 120,921 122,290 1) Calculatory tax eect on adjusted items at 24% for 2021 and 23% for 2020 2) Share of net income and impairment on investment from joint ventures included in adjusted gures 3) See reconciliation of net income from joint ventures Adjusted prot attributable to Elopak shareholders (EUR 1,000) 2021 2020 Prot 33,809 47,828 Total adjusted items net of tax 5,183 - 4,006 Excluding share of net income from joint ventures (discontinued operations) 1) - 1,472 Adjusted prot 38,992 45,293 1) See reconciliation of net income from joint ventures Reconciliation of net income from joint ventures (EUR 1,000) 2021 2020 Al-Obeikan Elopak factory for Packaging Co - - 1,472 Lala Elopak S.A. de C.V. 2,589 2,595 Impresora Del Yaque 1,124 2,032 Elopak Nampak Africa Ltd - 20 - Total share of net income joint ventures 3,575 3,155 Share of net income joint ventures discontiued operations - - 1,472 Share of net income joint ventures continued operations 3,575 4,627 Share of net income continued operations 3,575 4,627 Adjusted EPS (EUR 1,000 except number of shares) 2021 2020 Weighted-average number of ordinary shares 260,786,305 250,635,350 Prot 33,809 47,828 Adjusted prot 38,992 45,293 Basic and diluted earning per share (in EUR) 0.13 0.19 Adjusted basic and diluted earning per share (in EUR) 0.15 0.18 Net debt and leverage ratio (EUR 1,000) 2021 2020 Bank debt 1) 170,000 214,102 Overdraft facilities 14,420 15,552 Cash and equivalents - 24,262 - 6,443 Lease liabilities 80,604 88,175 Net debt 240,762 311,385 1) Bank debt is excluding amortised borrowing costs of EUR 567 thousand for the quarter ended December 31, 2021 and EUR 967 thousand for the year ended December 31, 2020 Leverage ratio 2) 2.0 2.5 2) Leverage ratio per December 31, 2021 is calculated based on last twelve months adjusted EBITDA of EUR 120,921 thousand 204 Elopak 205 Financial statements Additional Information CONTACT INFORMATION Thomas Askeland Head of IR +47 992 34 557 Bent Axelsen Chief Financial Ocer +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 identied 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 (nancial or otherwise), prospects, business strategy, plans or objectives of Elopak and/or any of its aliates) reect, 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 signicant known and unknown risks, uncertainties, contingencies, and other important factors which are dicult 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 5, 2022 Quarterly Report – Q1 May 12, 2022 Annual General Meeting August 18, 2022 Quarterly Report - Q2 October 26, 2022 Quarterly Report – Q3 Elopak reserves the right to alter dates 207 529900BIDQN2AOKV6N082021-01-012021-12-31529900BIDQN2AOKV6N082020-01-012020-12-31529900BIDQN2AOKV6N082021-12-31529900BIDQN2AOKV6N082020-12-31529900BIDQN2AOKV6N082019-12-31529900BIDQN2AOKV6N082020-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082020-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082021-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082020-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082020-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082021-01-012021-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082021-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082019-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082020-01-012020-12-31ifrs-full:IssuedCapitalMember529900BIDQN2AOKV6N082019-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082020-01-012020-12-31ifrs-full:AdditionalPaidinCapitalMember529900BIDQN2AOKV6N082019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900BIDQN2AOKV6N082019-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082020-01-012020-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900BIDQN2AOKV6N082019-12-31ifrs-full:RetainedEarningsMember529900BIDQN2AOKV6N082020-01-012020-12-31ifrs-full:RetainedEarningsMemberiso4217:EURiso4217:EURxbrli:shares
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