BME Germany Holding GmbH

Dortmund

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

BME Group B.V.

Amsterdam/ Niederlande

ANNUAL REPORT 2022

BME Group

TABLE OF CONTENTS

ANNUAL REPORT

BME directors' report

1 General information

2 The core business

3 Together We Build

4 The internal organizational structure and staffing

5 Financial information

6 Risks and uncertainties

7 Risk management policy of financial instruments

8 Corporate social responsibility information

9 Research and development activities

10 Future developments of the Group

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Consolidated statement of Financial position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

COMPANY FINANCIAL STATEMENTS

Company Income Statement

Company Balance Sheet

Notes to the Company Financial Statements

Other information

Independent auditor's report

BME DIRECTORS' REPORT

1 GENERAL INFORMATION

BME Group B.V. ('BME', 'the Group' or 'the Company') was incorporated as a new entity on 10 July 2019. On 31 October 2019, funds managed by The Blackstone Group acquired from CRH, through the Company, its entire European heavy-and light-side,sanitary, heating and plumbing building products distribution business. As a result of the carve-out, the Group became a separate company and it further refined its strategy to unlock value from strategic initiatives and accelerate its M&A activities, establishing itself as the natural consolidator in its markets.

The Group is one of Europe's leading multi-specialist building products distributors, holding scale and market leading positions across key European geographies. Our success is built on the deep knowledge, professionalism and 'can-do' attitude of our more than 14,000 employees who deliver what our customers need, wherever and whenever they need it, every single day across all our countries. Our multi-specialist building product and service offering helps address our customers' complex needs, providing reliable, time-critical solutions and value-added services through a dense branch network operating under trusted, well-known local brands, and supported by an experienced, specialist workforce.

The Group is active in different regions as a business-to-business distributor of building materials to professional contractors and installers mostly within the renovation segment of the construction market, as well as the supply of sanitary-ware, heating and ventilation and installation materials to plumbers, heating specialist and sanitary installers. As of 31 December 2022, the Group comprises of BME Group B.V. and a total of 110 consolidated subsidiaries (2021:105). The registered seat of the Company is Amsterdam, the Netherlands. The sole shareholder of the Company is Clay Topco S.a.r.l., established in Luxembourg, whilst ultimate control lies with (funds managed by) The Blackstone Group, Inc.

2 THE CORE BUSINESS

BME is a leading and fast-growing business-to-business distributor for building products across Europe. As a European distributor of significant size, the Group believes that it is a vital intermediary in the fragmented building products distribution market, providing over 18,000 suppliers with efficient access to its large and diverse customer base. By offering a broad product portfolio of over 1 million SKUs across multiple product categories, the Group delivers an attractive 'one-stop-shop' value proposition to over 275,000 customers, in particular addressing small and medium-sized enterprises ('SMEs') and installers who are active in the residential and renovation end-markets.

Since the inception of the Group's predecessor CRH Europe Distribution in 1973, the Group's business has achieved growth through the completion of over 70 value-enhancing acquisitions, completing23 acquisitions since the carve-out, and today operates more than 920 locations, including distribution centers, branches, showrooms and offices, in eight countries across its three geographical operating segments: the Netherlands and Belgium, Germany and Austria, and South Western Europe (Switzerland, France, Spain and Portugal).

The Group serves a large total relevant market with an estimated value of €115 billion in its geographical segments, providing SMEs with essential building products mainly for the growing and resilient residential and renovation end-markets. Amongst others, these markets benefit from a significant backlog in renovation and an energy-inefficient housing stock, a structural deficit of living space, and consolidation in the market.

In addition, it is expected that the implementation of the EU Green Deal will drive significant additional long-term structural investments in renovation, thereby driving incremental growth in the sector.

The Group estimates that over 60 % of its revenue comes from repair, maintenance, and improvements ('RMI') end-markets (in terms of gross profit this share is even larger and stands at approximately 70 % due to the higher profitability of the RMI end-market), with the remaining 40 % generated in the new build segment. Almost 75 % of the Group's revenue is in the residential segment, with the remainder generated in the non-residential segment ofthe market. The Group serves over 275,000 customers, of which 94 % are SMEs and the remaining 6 % large accounts, with no single customer accounting for more than 0.4 % of the Group's revenue (the Group's top 10 customers account for 1.8 % of the Group's revenue).

The Group holds leading national and regional market positions, including number one positions in the Netherlands, in Northern Germany, Flanders (Belgium) and Switzerland, and number two positions in Austria, Île-de-France (France), Portugal and Spain. As one of the largest distribution companies for building products in Europe, the Group combines scale, geographic reach and density across its distribution network in the regions, with scope, breadth and depth of its product and service offering.

Scale provides the Group with distinct advantages compared to its typically local or regional family-owned competitors, as it enables the aggregation of procurement spend, attracting talent and functional expertise, as well as investments in digital tools which enhance visibility and data access across its operations. By driving a systematic and industrialized approach to M&A, the Group leverages its scale to provide customers and suppliers with a differentiated, value-added service proposition vis-a-vis small and medium-sized competitors.

Although the Group's markets are local in nature, its scale, reach, local density and logistical and sales capabilities, supported by digital investments at Group level, differentiate it vis-a-vis local and regional competitors, thereby enabling the Group to fulfil a critical role in the building products value chain. On the customer side, the Group focuses on SMEs, a loyal and profitable customer group, mainly active in residential renovation projects. The Group adds value for these customers by providing immediate availability of a deep and broad product offering, at the right place and at the right time, as well as other crucial value-added services such as training, technical advice and digital tools.

Sustainability is also an increasingly important area of strategic focus for the Group, aiming to increase the stake of sustainable products in our portfolio. Additionally, the Group offers advice and training on using sustainable choices, as well as waste collection services (e.g., collecting the post-installation waste from customer building sites for recycling purposes). In doing so, the Group motivates its suppliers to increase their focus on innovation of sustainable products, and our customers to work in a more sustainable manner.

On the supplier side, the Group's scale, customer reach and logistic capabilities, have enabled it to develop strong relationships with its suppliers who rely on BME for the cost-efficient distribution of their products to a significant and diverse customer base. In addition, the Group's suppliers further benefit from its sales force, local brand reputation and branch networks with local market intelligence.

These value-added services are supported by the Group's digital infrastructure, which encompasses tools relating to footprint optimization (to ensure right level of proximity to customers), procurement and pricing (to secure fair pricing and conditions), inventory management (to ensure right level of availability of products) as well as transportation management (to ensure swift and correct deliveries).

The Group's operations include an extensive distribution network of more than 660 branches and pick-up locations and 80 DIY stores. These provide our customers with the ability to directly collect products as well as have them delivered in as little as three hours' notice from over 40 (regional/national) distribution centers. Additionally, the Group has more than 100 showrooms featuringa shopping area and offering access to sales representatives, who provide advice, technical support and other value-added services to our customers.

3 TOGETHER WE BUILD

The Group has been active for nearly 50 years and has a long history of and experience in developing and operating distribution businesses. Ahead of the carve-out, the Group implemented a strategy to drive operational excellence and consolidate its fragmented markets. Since the carve-out, the Group significantly invested in functional expertise to drive operational excellence, for instance through the appointment of additional Group's functional leads on Commercial Excellence, Transformation & Digital, Supply Chain and Procurement. This operational excellence program is called 'Together We Build' and its five pillars are the basis of our strong track record and enables our continuous responsible growth.

One of the pillars in the strategic framework 'Together We Build' relates to 'Focused Growth'. Focused Growth is the link to our ambition to accelerate growth by making targeted acquisitions to complement and strengthen our existing market positions and businesses across our current geographies or expend selectively to attractive new geographies. Since the carve-out, the Group has substantially accelerated its M&A activities, resulting in the acquisition of 23 targets since that date.

4 THE INTERNAL ORGANIZATIONAL STRUCTURE AND STAFFING

The Company has a two-tier board structure consisting of the Management Board and the Supervisory Board. The provisions of Dutch law that are commonly referred to as the 'large company regime' (structuurregime), do not apply to the Company, as the Company is exempted from this regime pursuant to the international holding exemption (internationale holding vrijstelling). This exemption applies to the Company as the activities of the Company are limited to the management and financing of Group Companies and the majority of the employees of the Group work outside the Netherlands.

Management board

The Management Board is responsible for the management of the Company's operations as well as the operations of the Group, under the supervision by the Supervisory Board. The Management Board's responsibilities include, among other things, defining and attaining the Company's objectives, determining the Company's strategy and risk management policy, and day-to-day management of the Company's operations. The Management Board as a whole is authorized to represent the Company. In addition, two Managing Directors, acting jointly, have the authority to represent the Company. Pursuant to the Articles of Association, the Management Board may grant a power of attorney to persons, whether or not employed by the Company, to represent the Company on a continuing basis or authorize in a different manner one or more persons to represent the Company.

The Articles of Association provide that the Supervisory Board determines the number of Managing Directors. According to the Management Board Rules, the number of Managing Directors is determined after consultation with the Management Board. As of the date of this report, the Management Board consists of two Managing Directors. Managing Directors are appointed by the General Meeting on a binding nomination by the Supervisory Board. The binding nomination shall be included in the notice of the General Meeting at which the appointment shall be considered. Pursuant to the Articles of Association, Managing Directors may be suspended or dismissed by the General Meeting. Unless proposed by the Supervisory Board, a resolution of the General Meeting to suspend or dismiss a Managing Director may only be adopted by a two/thirds majority of the votes cast, representing more than one half of the issued share capital.

The Supervisory Board may at any time suspend a Managing Director. A suspension by the Supervisory Board may, at any time, be discontinued by either the Supervisory Board or the General Meeting.

The Management board is composed of the following two Managing Directors:

Name	Date of birth	Position	Member as of	Term
Remco Johann Teulings	29 September 1970	CEO	31 October 2019	Not limited in time
Jan Petrus Paulus Bos	1 February 1965	CFO	22 May 2020	Not limited in time

Supervisory board

The Supervisory Board supervises the conduct and policies of the Management Board and the general course of affairs of the Company and its business enterprise. The Supervisory Board also provides advice to the Management Board. In performing their duties, the Supervisory Directors are required to be guided by the interests of the Company and its associated business enterprise, taking into consideration the interests of the Group's stakeholders (which includes but is not limited to its customers, its suppliers, its employees and the Shareholders). The Supervisory Board will also observe the corporate social and environmental responsibility issues that are relevant to the Group.

Pursuant to the Articles of Association, the Supervisory Board determines the number of Supervisory Directors. Pursuant to the Supervisory Board Rules, the Supervisory Board shall appoint one of its Supervisory Directors as chairperson and one of the other Supervisory Directors as vice-chairperson.

As of the date of this report, the Supervisory Board consists of six Supervisory Directors. The General Meetings appoints the Supervisory Directors upon a binding nomination by the Supervisory Board in accordance with the Articles of Association and the Relationship Agreement. Supervisory Directors may be suspended or dismissed by the General Meeting. Unless proposed by the Supervisory Board, a resolution to suspend or dismiss a Supervisory Director may only be adopted by a two/thirds majority of the votes cast, representing more than one half of the issued share capital.

Each of Mr. Assant, Mr. Pinker, Mr. Bonanomi and Ms. Jamar has been nominated as member of the Supervisory Board by the sole shareholder of the Company. Each of them is a representative of the Shareholder. The Supervisory Board does not expect that this will cause them to have a conflict with the duties they have towards the Company. The Company is not aware of any potential conflicts between the personal interests of other duties of Managing Directors and Supervisory Directors on the one hand and the interests of the Company on the other hand. There is no family relationship between any Managing Director and any Supervisory Director.

Both seats on the Management Board are currently held by men, whilst 33 % (2021:33 %) of the seats on the Supervisory Board are held by women and 67 % (2021:67 %) by men. The Group recognizes the importance of having a balanced Board, as required by the Act on Management and Supervision.

As positions become available in the future, and to the extent possible and practicable, the Board will strive for a more well-balanced composition. Leadership team diversity is one of the key KPIs of the Group in its ESG roadmap as further described in Section 8.

Ethics and compliance

Ethics & Compliance laws, rules and standards have various sources and often embrace broader standards of integrity and ethical conduct. BME defines Ethics & Compliance Risk as the exposure to legal penalties, lack of trust, financial loss, limited business opportunities or diminished reputation when the Company fails to actin accordance with laws and regulations and with our internal policies and procedures.

The Supervisory Board is composed of the following six Supervisory Directors:

Name	Date of birth	Position	Member as of	Term
Jean-Jacques Lafont	4 August 1959	Chairperson	31 October 2019	Not limited in time
Lionel Yves Assant	22 May 1972	Member	31 October 2019	Not limited in time
Juergen Pinker	7 August 1976	Member	31 October 2019	Not limited in time
Natacha Jamar	25 June 1987	Member	31 October 2019	Not limited in time
Luca Bonanomi	28 February 1989	Member	31 October 2019	Not limited in time
Marianne Culver	1 December 1956	Member	15 November 2021	Not limited in time

BME is strongly committed to maintaining the integrity and reputation of BME Group and the BME Group Companies for professional and ethical conduct everywhere the Group does business. The Management Board safeguards the integrity and reputation by ensuring that BME Group Companies adhere strictly to the applicable laws and regulations and standards in all the markets and jurisdictions in which BME Group (including the BME Group Companies) operates and adhere to the compliance policies and core values of BME Group. For this responsibility, they are advised and, where necessary, supported by the BME Group Ethics & Compliance function and the Ethics & Compliance Committee.

BME has defined its position regarding these applicable laws, regulations and standards in its BME Group Code of Business Conduct, which provides the foundation for BME and all of its employees for doing good business. BME also recognizes the importance of maintaining these standards throughout the supply chain. This is why the Company has defined minimum expectations for its business partners in the BME Group Supplier Code of Conduct.

5 FINANCIAL INFORMATION

BME Group delivered another successful year and reports a full year revenue of €5,465 million, an increase of €915 million (or 20.1 %, of which 5.6 % organic growth) with a strong revenue growth across all geographical segments. The Group was able to pass through most of the material price inflation, which was partly offset by a decline in volumes. Gross profit for the year was €1,550 million, an absolute increase compared to 2021 of €270 million (or 21.1 %). The 2022 gross profit margin was 28.4 %, an improvement compared to the 2021 of 30 bps. The Group maintained a stable Adjusted EBITDA margin, where a strong delivery of strategic initiatives compensated high inflation levels, impacting operating costs (mainly labor, energy and lease costs), and the impact of operational issues in STG Belgium. The Group had a strong operational cash flow amounting to €275 million.

Revenue and Adjusted EBITDA

Our businesses are managed from a geographic perspective across the following three operating segments: Netherlands and Belgium, Germany and Austria and South Western Europe. Management uses Adjusted EBITDA as a key performance indicator to measure the underlying performance of the business.

The bridge between reported operating income, as included in the consolidated statement of income, of €207 million and Adjusted EBITDA of €452 million is as follows:

€ million	Netherlands & Belgium	Germany & Austria	South Western Europe	Group	Total
Revenue	2,058	1,983	1,424	-	5,465
Adjusted EBITDA	193	169	115	(26)	452
Add back management adjustments:
• Initiatives					(17)
• M&A and financing fees					(16)
• Restructuring					(15)
• Pension and share based payments					(1)
• Other					(4)
EBITDA					398
Depreciation					(154)
Amortization					(36)
Income from Bauking joint ventures					(1)
Operating profit					207

Adjustments include costs related to strategic initiatives, restructuring, M&A and financing fees, pensions ¹ and share-based payments and other incidental items that management does not consider to be part of the Group's ordinary course of business.

The financial performance for each segment is as follows:

Revenue by geographical segment:

€ million	2022	2021	Change absolute	Change
				%
Netherlands & Belgium	2,058	1,582	476	30.1 %
Germany & Austria	1,983	1,806	177	9.8 %
South Western Europe	1,424	1,162	262	22.6 %
Total	5,465	4,550	915	20.1 %

Adjusted EBITDA per segment:

€ million	2022	2021	Change absolute	Change
				%
Netherlands & Belgium	193.3	169.0	24.3	14.4 %
Germany & Austria	169.5	154.2	15.3	9.9 %
South Western Europe	114.7	77.1	37.6	48.8 %
Group	(25.7)	(19,5)	(6.2)	(31.8 %)
Total	451.8	380.7	71.1	18.7 %

Netherlands & Belgium

Revenue in the Netherlands and Belgium increased by 30.1 % to €2,058 million, of which 3 % organically and the remainder from acquisitions. Acquisitions drove a revenue increase of €428 million in 2022, mainly reflected by the contribution of the Saint-Gobain distribution business acquired in 2021. Organic topline growth was supported by price inflation, which compensated lower volumes.

Adjusted EBITDA in the Netherlands and Belgium increased in 2022 by €24.3 million to €193.3 million. Organic results benefitted from a strong delivery on strategic initiatives in the Netherlands (especially in Commercial Excellence and Procurement), and the integration of the recent acquisitions, which more than compensated the impact of increasing operating costs (especially in labor and energy) in the current inflationary environment, a strong H1 2021 performance of BME Bouwmaten and operational issues in STG Belgium, which experienced a period of operational disruption following centralization of warehouses.

Germany & Austria

Revenue in Germany and Austria amounted to €1,983 million, an increase of €177 million, or 9.8 %, compared to 2021. Organic revenue growth amounted to €113 million, or 6.2 %, and was driven by favorable market conditions (such as price inflation) and a higher sales in Bauking(direct sales and the impact of the closure of DIY stores in Q1 2021) and SHK Germany. SHK Germany benefitted from increased sales in heating and ventilation products. M&A activity contributed for a total of €64 million in revenue in 2022, mainly the result of the full year contribution of Mahler Group which was acquired in 2021.

Adjusted EBITDA of the segment increased with €15.3 million compared to 2021. Organic EBITDA growth (of 5.6 %) was driven by Commercial Excellence and Procurement initiatives. Similar to the Netherlands and Belgium segment, operating costs in Germany & Austria increased by cost inflation.

South Western Europe

2022 revenues in South Western Europe amounted to €1,424 million, an increase of €262 million, or 22.6 %, compared to 2O21.The acquisitions made in 2021, such as, Maxmat, Grupo BMV and Silix, all delivered excellent results and contributed to an inorganic topline growth of almost €170 million. Organic growth in South Western Europe amounted to €32 million (which was partly offset by the divestment of Raboni Normandie in France and closing the plumbing business in the German speaking part of Switzerland), and the segment also benefitted from a positive impact of FX differences.

Adjusted segment EBITDA increased by €37.6 million to €114.7 million, mainly explained by these acquisitions and the contribution of a strong delivery on strategic initiatives, particularly in Switzerland, in Organizational Efficiency and Procurement.

Cash flows

Cash flow from operating activities

Cash flow from operating activities amounted to an inflow of €275,284 thousand (2021: inflow of €266,983 thousand), an increase of €8,301 thousand compared to 2021. The increase is mainly explained by an increase of EBITDA and lower income tax paid, partly offset by a lower net additional benefit from the non-recourse factoring program.

¹ Difference between pension premiums paid (cash) and the defined benefit IFRS pension expense (non-cash)

Cash flow from investing activities

The Group's cash flow from investing activities was a net outflow of €116,435 thousand (2021: outflow of €293,295 thousand) and mainly relates to the cash outflow of the various M&A transactions in 2022 (of €82,696 thousand), a deferred and contingent acquisition consideration paid to the former shareholders of Grupo BMV(of€12 million) and capital expenditure (of in total €54,812 thousand), partly offset by the proceeds obtained of disposed property, plant and equipment and assets held for sale of in total €40,507 thousand. The proceeds from disposed property were mainly obtained via sale-and-lease back transactions in Germany and Switzerland. The capital expenditure mainly relates to strategic investments such as, investments in SHK Germany related to the two new distribution centers, greenfields and reformats in BMN and the investments in new trucks mainly in Banking and SHK Germany. Lastly, the Group obtained €4,959 thousand in 2022 from the former shareholders of Mahler following the finalization of the purchase price.

Cash flow from financing activities

Cash flow from financing activities amounted to an outflow of €77,964 thousand (2021: inflow of €108,728 thousand) and mainly relates to the leases paid, primarily for our store locations and transport fleet, of in total €98,263 thousand. The 2021 inflow was mainly driven by two refinancing transactions, adding a total of €550 million gross to the existing Seniorcredit facility- Facility B, whilst voluntarily repaying a total of €100 million ofthe Seniorcredit facility- Facility A. The remainder of the 2021 cash flow from financing activities mainly relates to a capital distribution to Clay Topco S.a.r.l. of €264 million and leases paid amounting to a total of €83 million.

Financial ratios

The covenants for the 1st lien loan facilities are assessed on a quarterly basis and are applicable as from the second quarter of 2020, and only assessed if the Revolving Credit Facility ('RCF'), available up to an amount of €195 million, is drawn more than 45 %, which did not occur in 2022. The Group has complied with all the financial covenants of its borrowing facilities during 2022 and management expects that the Group will continue to meet these covenants in future.

The liquidity ratio at balance sheet date was 1.8 (2021: 2.0), calculated as current assets over current liabilities. The solvency ratio at balance sheet date was 6.8 (2021: 7.0) calculated as debt over equity.

6 RISKS AND UNCERTAINTIES

Main risks and uncertainties

The Management Board has the ultimate responsibility for managing risks and setting up the internal control framework. The Operating Companies are responsible for implementing the strategy, achieving results, identifying underlying opportunities and risk, and ensuring effective operations. They must act in accordance with the policies and standards set by the Board. Compliance with these policies and standards is discussed with, and reviewed by, management on Group level.

The Management Board aims to create a risk management strategy and applicable internal control framework that is designed in such a way that we have an effective enterprise risk and control framework. In our risk appetite we define which risks BME as a group is willing to accept, whilst still allowing us to achieve our strategic objectives.

Our risk management and internal control activities make a significant contribution to the prompt identification and adequate management of strategic, compliance, operational and financial risks.

The Group is actively involved in identifying, managing, and controlling the risks associated with its distribution business across its Operating Companies. In managing these risks, the Group relies on the Three Lines of Defense model, in which operational management forms the first line of defense in the Operating Companies. They provide day-to-day risk management and control and are responsible for implementing measures to address process and control deficiencies.

The second line of defense is responsible for providing independent oversight of and challenges to the risk management of the business and is organized per Operating Company through designated managers on business control, financial reporting and internal control and store auditors. In addition to the local second line of defense, the Group has installed Compliance and Internal Control and Risk Management functions to provide advice, share best practices and to monitor the activities across the Operating Companies. This second line of defense supports the first line of defense by defining and monitoring compliance with rules and limits needed for the business to stay within the Group's overall risk appetite.

The third line of defense is centrally organized by an Internal Audit team, conducting audits at the Operating Companies and on Group level, to ensure the effectiveness of the Group's control systems, in accordance with a risk-based audit plan, covering financial-, operational-, strategic- and compliance risks. The Group's Internal Control and Risk Management function performed risk assessments with all Operating Companies to further identify and reassess key systemic risks for each Operating Company.

The Group considers compliance an important element of its risk management, as non-compliance with the integrity, expertise and professionalism requirements of applicable laws, regulations, codes of conduct, good management practices and internal policies could have a detrimental effect on the performance and reputation of the Group. To mitigate this risk, the Group has drawn up a global Code of Conduct, consisting of a Code of Business Conduct, an Anti-fraud/theft policy and an Anti-bribery policy. Moreover, the Group has implemented a whistleblower hotline in each of the countries in which it operates, a privacy toolkit and a Supplier Code of Conduct. During 2022 the Group has further strengthened corporate functions within finance and control, HR, taxes and internal audit.

Below, an overview is provided of the primary risks that BME faces.

Strategic risks

A deterioration in global or regional economic conditions, market trends, uncertainty and other conditions in the markets in which the Group operates may adversely affect the profitability and financial stability of its customers, which could have material adverse effect on the Group's business, results of operations, financial condition and prospects.

The level of new build activities and, to a lesser extent, renovation activities, tends to be subject to cyclical fluctuations. It is mainly influenced by global and national economic and political circumstances and governments' ability to fund infrastructure projects, particularly in our core markets in the Netherlands, Belgium, Germany and Switzerland. The performance and financial position of the Group are also influenced by consumer sentiment and weather conditions. Unusual weather conditions or an unexpected downturn in the economic circumstances may lead to a slowdown in sales and higher inventory levels than initially foreseen. The strong competitive landscape within the building materials sector also poses a risk of lower sales volumes or margin erosion.

In addition, 'Focused Growth' is one of the key pillars in our strategic framework, where we face the risk that acquisitions do not deliver according to the business plan (including expected synergies) and/or the Group is unable to successfully integrate those acquisitions. The uncertain macroeconomic developments may cause a diminishing of the Group's acquisition pipeline, resulting in not meeting its growth ambitions.

The Company has a cautious strategic risk appetite and is prepared to accept risks if the benefits heavily outweigh the potential risk. These risks are managed actively, either through mitigating measures or by closely monitoring risks that cannot be mitigated. BME mitigates risks from adverse national economic circumstances and adverse weather conditions by having a diversified portfolio of brands and products, spread across eight countries. The competitive risk is mitigated by striving for number 1 or number 2 positions in each of the local markets or regions in which we operate as well by the exposure the Group has to the RMI-market (with the related expected long-term growth in this market).

Operational risks

BME is exposed to operational risks, mainly in the areas of information technology, the supply of goods, and shortages in qualified personnel. The Group is dependent on information technology systems that support its business activities. Any significant system outage, whether caused by an external (cyber)attack, insider threat or error, could lead to loss of access to our systems or data, thereby adversely impacting our business operations. Our business operations can also be disrupted by a disturbance in the distribution channels, either through disasters (such as, fires, criminal deeds, natural disasters, pandemic) or shortages in materials at our suppliers (as the Group is dependent on third-party suppliers), leading to the inability to deliver to key customers.

The Group encountered four cybersecurity incidents on its information technology systems in 2022, including 2 ransomware attacks. Our internal crisis teams were assembled and, together with the support of external forensic experts and legal experts, we were able to recover from both incidents successfully without material financial impact and without paying ransom. As a result of these incidents, the Group took an accelerated approach to improve its cyber security capabilities. The Group considers Information Security an important element of its IT strategy. All security capabilities are centralized within the Group. This includes aspects of Information Security Management, Managed Detection and Response, Endpoint Detection and Response, Incident Response and Vulnerability Management. In addition, the Group makes use of a reputable and professional Managed Security Service Provider, and all Operating Companies are staffed with security'champions' to detect and respond to cyber incidents across the Group. The Group has also deployed several training programs to create awareness of security risks among users of the Group's information systems.

The Group is active in a tight labor market where a risk arises to attract and retain qualified personnel and talent. Qualified personnel is key to the success of BME and our people are our greatest asset.

Failing to succeed in attracting, developing and retaining diverse and talented people and leaders may jeopardize BME's ability to execute its strategy and achieve its financial targets. Lastly, BME leases part of its branches and warehouses. Failure to renew or maintain these real estate leases on commercially acceptable terms, or at all, could harm our business.

The Company has a minimal operational risk appetite and is only accepting minimal disruptions (in a controlled manner) to its operations. These risks, originating from working with third-party suppliers, are actively managed by the Group working together with trustworthy and well-known parties. Residual risks are managed through a strong contracting (for example Service Level Agreements) and procurement process, for which we installed a separate procurement department.

Risks related to the financial position & financial reporting

BME's financial position has improved over the recent years. The 2022 full year results shows an operating profit of more than €207 million and the Company continued its deleveraging path by improving its Debt/EBITDA ratio. However, the uncertainty in the market, increasing interest rates and cost inflation may cause a slowdown in activities (for instance the cancellation/ delays of large renovation projects) which might impact the financial position of our customers. The risk of insolvent debtors therefore increase in uncertain times like this.

Next to managing our operational risks, risk mitigation is mainly achieved through the Group's business and financial control processes, which involve procedures for, amongst others budgeting, cost control, cash flow control, financial planning and analysis, and financial reporting controls. These procedures and controls are continued to be updated and implemented further.

Management is also aware of the risk of misstatement within complex elements of the financial position and reporting related to estimates and assumptions used. The Group has the intention to mitigate these risks as much as possible. The Company has a minimal financial risk appetite and is only prepared to take minimal risks in a controlled manner.

Risks related to laws and regulations

As BME operates in eight different countries, the Group is inherently exposed to legal risks, tax risks and risks in connection to reporting to the public authorities in all these countries. Changes in local and international tax laws and regulations or interpretations thereof may adversely affect our financial position. The Group fully intends to avoid these types of risks.

The Company has an adverse compliance risk appetite. The internal legal department is one way for the Group to reduce legal risks. In addition, if warranted by the situation, we engage external professional experts to assist us in the process of identifying and mitigating regulatory risks. During 2022, the Group further improved its internal control environment by expanding its internal audit department. Combined, these measures enable us to mitigate these risks to an acceptable level.

Risks related to environmental, social and governance

There is an increased focus from internal and external stakeholders on environmental, social and governance (ESG) matters. As one of the largest and fastest growing distributors of building materials in Europe, BME strives to become the leading driver of sustainability in the building sector. In addition, the focus of our customers may shift to sustainable building materials to create energy efficiency in their houses/ offices. This creates a risk that BME does not contribute effectively to the advancement of sustainable development either for its customers/ suppliers or within its own business, leading to declining stakeholder confidence, an adverse impact on the BME brand and reputation, failure to meet customer/suppliers demand (and therefore impacting operational results) and penalties of fines.

BME aligns its environmental strategies and ambitions to the Global Sustainable Development Goals (SDGs) and the European Union Sustainability Agenda (e.g., Paris agreement / EU Green Deal) and has set in motion emission reduction initiatives (such as, procuring green energy, led lightning initiatives, renewing fleet and fleet optimization) in its controlled operations.

BME has the goal to accelerate sustainability and responsible business practices in its sector, and increasingly invests in initiatives to improve the sustainability of its operations and grow its portfolio of sustainable products and services (e.g., by scaling and complementing its GreenWorks concept).

None of the risks identified above impacted this year's financial statements, nor last years.

7 RISK MANAGEMENT POLICY OF FINANCIAL INSTRUMENTS

We are aware of the principal risks arising from financial instruments that could affect the Group. These risks include price and market risks, foreign currency risks, interest rate risks, credit risk, and liquidity risks.

Price and market risk

Fluctuations in the availability and quality of building materials may have an adverse effect on our cost of sales and on our ability to meet customer demand. Fluctuations in price of raw materials, such as steel, cement, wood, and sand, can have the same impact on our cost of sales as the prices in our purchase process are dependent on market prices. However, the Group was able to increase prices even in challenging macro-economic environments as evidenced in 2022. This mechanism of passing on price increases, along with the ability to increase prices even in times of economic volatility, highlight the robustness and adaptability of the building products distribution business model. BME does not use financial instruments to hedge these risks.

Interest rate risk

Interest on loans is generally charged based on floating interbank market rates, plus a spread, resulting in exposure to market risk for changes in interest rates. Changes in interest rates may affect the future cash flows of the Group.

The Group acquired in 2022 deferred premium interest rate caps to reduce its exposure to variability in expected future cash outflows (forecasted interest payments) attributable to changes in 3 months Euribor for in total €445 million of 3 months Euribor-indexed floating-rate debt.

Foreign currency risk

The main foreign currency exposure relates primarily to the translation of net investments in subsidiaries denominated in functional currencies other than Euros, being CHF. The exposure to the risk of changes in foreign exchange rates to the Group's operating activities is very limited as only a small portion of the Group's products is sourced from foreign suppliers in USD. The Group does not hedge its exposure to changes in foreign exchange rates.

Credit risk

Management considers the credit risk towards financial institutions, caused by for example insolvency or a downgrade in their credit ratings, to be low. Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty. Limits primarily depend on the counterparty's credit rating and are reviewed regularly. Acceptable credit ratings are high investments-grade ratings. If the financial institution does not have a high investment-grade rating, BME Group reviews its respective counterparty risk on a regular basis, at least annually.

Customer credit risk is managed according to established policies, procedures, and controls. Customer credit quality is assessed in line with strict credit rating criteria and potential credit limits and mitigated through credit insurances when appropriate. Outstanding customer balances are regularly monitored and a reviewed for indicators of impairment.

Liquidity risk

BME manages its liquidity risk by maintaining a healthy level of cash and cash equivalents, appropriate to the expected cash flows of the Group. The Group's corporate treasury function ensures that enough resources are available to provide lending through a combination of cash and cash equivalents and committed bank facilities. Flexibility in funding is achieved in several ways amongst which are maintaining cash and cash equivalents only with a diverse group of highly rated counterparties and borrowing most of the debt under committed bank lines. These facilities span a wide number of highly rated financial institutions, thus minimizing any potential exposure arising from concentration in borrowing sources.

8 CORPORATE SOCIAL RESPONSIBILITY INFORMATION

BME Group strives to become the leading driver of sustainability in the building sector by integrating strong Environmental, Social and Governance (ESG) priorities in its strategic pillars and enablers, striving to achieve long term value creation for its stakeholders based on three focus areas:

Growing responsibly

The Group accelerates responsible business practices in its sector and across its value chain thanks to its increasing scale which allows it to grow profitably and puts it in a position to drive sustainability internally and externally. Internally, the focus is on reduction of its environmental footprint by eliminating carbon emissions and waste in controlled operations. Externally, the focus is on influencing other key stakeholders (customers, suppliers and competitors) to focus on improving the sustainability of their businesses by leading by example, and acting in a responsible and ethical manner.

Enabling a sustainable value chain

The Group contributes to more affordable, comfortable, and sustainable housing by sharing its deep knowledge on innovative building practices and the use of sustainable materials, inspiring others to do the same. This leads to the creation of a more sustainable value chain from suppliers to end-users which will ultimately drive the transition towards a more sustainable building sector, by:

―	working with suppliers who share the same values to adopt and uphold sustainable norms and practices in the Group's value chain;
―	supporting suppliers by creating transparency on the environmental footprint and impact of building products, enabling them to improve the sustainability of their products, and
―	supporting customers to build in more sustainable ways, by (i) offering a relevant and broad range of sustainable products, (ii) advising customers on how to build in a more sustainable way, with a lower environmental footprint.

Securing a great and safe place to work

The Group creates an inspiring and safe place to work and aim for a positive employee journey for its employees. With the ambition to become an industry leader in terms of employee engagement and have zero accidents, the Group ensure a healthy and diverse and inclusive work environment. Where employees can develop themselves and work with passion, delivering the best experience for suppliers and customers every day.

BME Group's ESG Roadmap

BME Group will publish its first Sustainability Report in Q2 2023. In this report, the Group will disclose more details around its ESG roadmap (as outlined below), the Group's ambitions on the most important topics, the targets the Group has set, and the main initiatives that are in place to achieve those targets.

Theme	KPIs	2025 target	2030 targets	2045 targets	Initiatives
Carbon emissions	CO ₂ emissions	>25 % reduction vs 2021 baseline	>45 % reduction vs 2021 baseline	100 % reduction vs 2021 baseline	• Switch to renewable energy and bio-fuel • Energy reduction initiatives such as LED-lighting and smart meters installations • Transport efficiency improvement via fleet management tools
Integrity	Supplier Code of Conduct	>75 % of supplier spend signed SCoC & >50 % periodically audited by Ecovadis, or equivalent	>90 % of supplier spend signed SCoC & >50 % periodically audited by Ecovadis, or equivalent	Zero tolerance policy towards Supplier Code of Conduct violations	• SCOC and CoBC roll out programs across all operations and supplier base • Collaboration with EcoVadis on periodic SCOC assessments
	Code of Business Conduct	>90 % of employees are periodically trained in CoBC and > 75 % of employees feel free /encouraged to make report (familiar with CoBC hotline)	>90 % of employees are periodically trained in CoBC and >85 % of employees feel free /encouraged to make report (familiar with CoBC hotline)	All employees adhere to CoBC, knows how to report issues and feel encouraged to act responsibly
Sustainable products	% of spend from sustainable products	>25 % of spend from sustainable products	>50 % of spend from sustainable products	Industry leader in offering and selling sustainable products and services	• Create transparency on environmental impact and footprint of the Group's product portfolio • Portfolio optimization activities to increase the number of sustainable products and services
Health & Safety	Frequency ratio of accidents	40 % reduction of accidents frequency ratio	50 % reduction of accidents frequency ratio	Zero accidents	• Set up a Group-wide H&S framework • Launch targeted H&S interactions to train and educate employees
Diversity & Inclusion	Leadership team diversity	20 %	30 %	BME Group's Leadership Team and applicant pools are a fair reflection of diversity in local communities	• Deliver trainings on unconscious bias • Target recruitment • Make D&I part of Leadership Training programs
Employee engagement	Employee engagement score	7,5	8,0	BME Group is the employer of choice in its sector	• Install strong performance management and talent review process • Offer personal development programs

9 RESEARCH AND DEVELOPMENT ACTIVITIES

The Group does not perform any research and development activities. Currently, there are also no intentions to do so soon.

10 FUTURE DEVELOPMENTS OF THE GROUP

As part of our strategy, we focus on our people, our customers, and our suppliers. Our strategy is to grow and to provide a best-in-class experience for customers along their purchasing journey, through which we offer truly relevant and innovative value-added solutions. We want to do so improving our business, hence we determined five pillars through which we want to grow organically. This organic growth is supported by selective inorganic growth primarily via acquisitions. The number of employees is expected - due to the combination of organic and inorganic developments - to remain stable in the mid-term.

Management expects more challenging market conditions in 2023 with further pressure on volumes, a slowdown of price increases and even a risk of deflation and finally, increasing inflation on our own cost base. To maintain our level of profitability, the Group launched a cost reduction program to reduce our own cost base and continuous to focus on delivering on strategic initiatives and continuing to be disciplined on the right, attractive, bolt-on acquisitions in our core markets. We maintain our focus on cash flow management and working capital. In addition to the operating cash flow to finance its activities, the Group may consider both interest-bearing loans and other alternative fundings.

We keep investing in our business by strategic investments to ensure our mid-term growth path, however we will evaluate and be disciplined on each investments given the uncertain macroeconomic environment we are currently in.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

CONSOLIDATED STATEMENT OF INCOME for the year ended 31 December 2022

€'000	Notes	2022	2021
Revenue	6	5,465,390	4,550,296
Cost of sales	7	(3,915,268)	(3,269,951)
Gross profit		1,550,122	1,280,345
Operating costs	7	(1,342,635)	(1,114,118)
Operating profit		207,487	166,227
Profit on disposal of property, plant and equipment and assets held for sale	11, 19	23,033	29,476
Other income	5	3,494	-
Profit on disposals	5, 13	-	16,674
Profit before finance costs		234,014	212,377
Finance income	7	1,648	1,181
Finance costs	7	(103,858)	(86,732)
Share of equity accounted investments' profit	13	2,006	7,842
Profit before income tax		133,810	134,668
Income tax expense	18	(56,020)	(34,943)
Profit for the year		77,790	99,725
Attributable to:
Equity holders of the company		76,796	97,996
Non-controlling interests		994	1,729
Profit for the year		77,790	99,725

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2022

€'000	Notes	2022	2021
Profit for the year		77,790	99,725
Other comprehensive income
Other comprehensive income/(loss) that may be reclassified to the statement of income in subsequent years:
Currency translation effects	20	20,413	18,985
Net gain on cash flow hedges	24	8,238	-
Net change in costs of hedging	24	(3,762)	-
Other comprehensive income that may be reclassified to the statement of income in subsequent years		24,889	18,985
Other comprehensive income/(loss) that will not be reclassified to the statement of income subsequent years:
Remeasurement income/(loss) of retirement benefit obligations	21	(72,116)	59,493
Tax on items recognized directly within other comprehensive income	18	10,768	(9,297)
Other comprehensive income/(loss) that will not be reclassified to the statement of income in subsequent years		(61,348)	50,196
Other comprehensive income/(loss) for the year		(36,459)	69,181
Total comprehensive income for the year		41,331	168,906
Attributable to:
Equity holders of the company		40,041	166,913
Non-controlling interests		1,290	1,993
Total comprehensive income for the year		41,331	168,906

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2022

€'000	Notes	2022	2021 (restated - Note 5)
Non-current assets
Goodwill	9, 10	438,125	424,160
Intangible assets	9, 10	314,905	323,863
Property, plant and equipment	11	581,208	549,792
Right-of-use assets	12	469,355	467,077
Investments accounted for using the equity method	13	19,227	19,112
Investments and other receivables	14	17,475	13,114
Derivative financial instruments	24	6,032	-
Retirement benefit assets	21	-	73,531
Deferred income tax assets	18	6,372	752
Total non-current assets		1,852,699	1,871,401
Current assets
Inventories	15	667,933	570,045
Trade and other receivables	16	640,726	544,057
Current income tax assets		1,474	1,946
Cash and cash equivalents	17	438,428	353,411
Assets classified as held for sale	19	-	1,616
Total current assets		1,748,561	1,471,075
Total assets		3,601,260	3,342,476
Equity
Issued share capital		215,769	215,769
Share premium		2,543	2,543
Other capital reserves		778	791
Foreign currency translation reserve		44,723	24,606
Cash flow hedge reserve		8,238	-
Cost of hedging reserve		(3,762)	-
Retained income		178,389	162,456
Equity attributable to equity holders of the company		446,678	406,165
Non-controlling interests		11,735	12,689
Total equity	20	458,413	418,854
Non-current liabilities
Retirement benefit obligations	21	19,665	22,804
Provisions	22	3,531	4,065
Interest-bearing liabilities	23	1,627,757	1,620,093
Lease liabilities	25	396,493	389,704
Other liabilities	26	5,287	16,387
Deferred income tax liabilities	18	112,467	119,328
Total non-current liabilities		2,165,199	2,172,381
Current liabilities
Interest-bearing liabilities	23	19,452	12,113
Lease liabilities	25	92,955	90,509
Trade and other payables	26	799,883	601,525
Provisions	22	5,321	8,889
Current income tax liabilities		60,038	38,205
Total current liabilities		977,649	751,241
Total liabilities		3,142,848	2,923,622
Total equity and liabilities		3,601,260	3,342,476

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2022

	Attributable to the equity holders of the company
€'000	Notes	Issued share capital	Share premium	Other capital reserves
At 31 December 2020		479,806	2,543	110
Profit for the year		-	-	-
Other comprehensive income for the year		-	-	-
Total comprehensive income for the year		-	-	-
Reduction of nominal share capital		(264,037)	-	-
Share-based compensation	29	-	-	681
Dividends		-	-	-
Non-controlling interests arising on acquisition of subsidiaries		-	-	-
Transactions with noncontrolling interests		-	-	-
At 31 December 2021		215,769	2,543	791
Profit for the year		-	-	-
Other comprehensive income/(loss) for the year		-	-	-
Total comprehensive income for the year		-	-	-
Share-based compensation	29	-	-	(7)
Dividends		-	-	-
Reclassifications		-	-	(6)
Transactions with noncontrolling interests		-	-	-
At 31 December 2022		215,769	2,543	778

	Attributable to the equity holders of the company
€'000	Retained income	Foreign currency translation reserve	Cash flow hedge reserve	Cost of hedging reserve	Non-controlling interests	Total equity
At 31 December 2020	14,264	5,885	-	-	12,867	515,474
Profit for the year	97,996	-	-	-	1,729	99,725
Other comprehensive income for the year	50,196	18,721	-	-	264	69,181
Total comprehensive income for the year	148,192	18,721	-	-	1,993	168,906
Reduction of nominal share capital	-	-	-	-	-	(264,037)
Share-based compensation	-	-	-	-	-	681
Dividends	-	-	-	-	(2,433)	(2,433)
Non-controlling interests arising on acquisition of subsidiaries	-	-	-	-	292	292
Transactions with noncontrolling interests	-	-	-	-	(30)	(30)
At 31 December 2021	162,456	24,606	-	-	12,689	418,854
Profit for the year	76,796	-	-	-	994	77,790
Other comprehensive income/(loss) for the year	(61,348)	20,117	8,238	(3,762)	296	(36,459)
Total comprehensive income for the year	15,448	20,117	8,238	(3,762)	1,290	41,331
Share-based compensation	-	-	-	-	-	(7)
Dividends	-	-	-	-	(621)	(621)
Reclassifications			-	-	-	(6)
Transactions with noncontrolling interests	485	-	-	-	(1,623)	(1,138)
At 31 December 2022	178,389	44,723	8,238	(3,762)	11,735	458,413

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2022

€'000	Notes	2022	2021
Cash flows from operating activities:
Profit before income tax		133,810	134,668
Finance costs (net)	7	102,210	85,551
Profit on disposal of subsidiaries		-	(4,952)
Fair value gain on remeasurement of PHEI - Maxmat	13	-	(11,722)
Gain on disposal of property, plant and equipment and assets held for sale	11, 19	(23,033)	(29,476)
Other income	5	(3,494)	-
Share of equity accounted investments' profit	13	(2,006)	(7,842)
Operating profit		207,487	166,227
Depreciation of property, plant and equipment and right-of-use assets	7	154,299	132,657
Amortization of intangible assets and impairment of goodwill	7	36,096	17,125
Share-based compensation	29	344	2,040
Movement in working capital and provisions		(445)	76,636
Cash generated from operations		397,781	394,685
Interest paid (including leases)		(83,872)	(70,745)
Corporation tax paid		(38,625)	(56,954)
Net cash inflow from operating activities		275,284	266,983
Cash flows from investing activities:
Purchase of property, plant and equipment	11	(54,812)	(50,048)
Capital expenditure on other intangible assets	9	(3,283)	(1,783)
Proceeds of disposed property, plant and equipment and assets held for sale	11, 19	40,507	83,100
Acquisition of subsidiaries (net of cash acquired)	5	(82,696)	(330,598)
Deferred and contingent acquisition considerations paid	26	(19,383)	(10,380)
Settlement purchase price acquisition of subsidiaries	5	4,959	-
Proceeds from divestment of investments	5	-	14,070
Other		(1,727)	2,344
Net cash outflow from investing activities		(116,435)	(293,295)
Cash flows from financing activities:
Repayment of capital to shareholder	20	-	(264,037)
Proceeds from senior facilities' borrowings	23	-	541,285
Principal elements of lease payments	25	(98,263)	(83,289)
Repayment of interest-bearing liabilities	23	(6,877)	(106,167)
Acquisition of non-controlling interests		(1,365)	-
Proceeds from factoring	23	29,086	23,172
Other		(546)	(2,236)
Net cash inflow / (outflow) from financing activities		(77,964)	108,728
Increase in cash and cash equivalents		80,884	82,416
Reconciliation of opening to closing cash and cash equivalents:
Cash and cash equivalents at 1 January	17	353,411	268,400
Increase in cash and cash equivalents		80,884	82,416
Translation adjustment		4,133	2,595
Cash and cash equivalents at 31 December	17	438,428	353,411

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 GENERAL INFORMATION

These consolidated financial statements comprise of the parent company BME Group B.V. ('BME' or'the Company') and its subsidiaries, together referred to as 'BME Group' or 'the Group'. The Company, registered in the Dutch trade register of the Chamber of Commerce under file number 75334763, was founded on 10 July 2019 to act as the holding company of the businesses of BME Group. The registered seat of the Company is Amsterdam, the Netherlands. The sole shareholder of the Company is Clay Topco S.a.r.l., established in Luxembourg, whilst ultimate control lies with (funds managed by) The Blackstone Group, Inc. Clay Topco S.a.r.l. includes the financial information of the Company in its consolidated financial statements.

BME is one of Europe's leading multi-specialist building products distributors, holding scale and market leading positions across its regions. The Group is active in different regions as a B2B distributor of building materials to professional contractors and installers mostly within the renovation segment of the construction market, as well as the supply of sanity-ware, heating and ventilation and installation materials to plumbers, heating specialist and sanitary installers. As at 31 December 2022, the Group comprises of BME Group B.V. and a total of 110 consolidated subsidiaries (2021:105) as listed in Note 33 of the Group's consolidated financial statements. Information on other related party relationships of the Group is provided in Note 27 of the Group's consolidated financial statements.

The consolidated financial statements for the year ended 31 December 2022 were authorized for issue in accordance with a resolution of the Board of Directors of the Company dated 5 April 2023.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The consolidated financial statements of BME Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU), which comprise standards and interpretations approved by the International Accounting standards Board (IASB), and also comply with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. IFRS as adopted by the EU differ in certain respects from IFRS as issued by the IASB. However, the consolidated financial statements for the year presented would be no different had IFRS as issued by the IASB been applied. The consolidated financial statements have been prepared on a historical cost basis, unless stated otherwise.

The Group has prepared the financial statements on the basis that it will continue to operate as a going concern.

Section 402, Book 2 of the Dutch Civil Code

Since the income statement of BME Group B.V. is included in the consolidated financial statements, an abridged income statement has been disclosed in the Company financial statements in accordance with Section 402, Book 2 of the Dutch Civil Code.

Reporting period

The figures presented in the consolidated statement of income and the consolidated statement of cash flows represent the full calendar years, except when otherwise indicated. Figures included in the consolidated statement of financial position reflect positions at 31 December.

The financial year-ends of the Group's subsidiaries, joint ventures, and associates are aligned with the financial year-end of the Company. The financial statements provide comparative information in respect of the previous period. Comparative figures may have been reclassified for comparability purposes and, if considered to be material, the relevant disclosure has been added to the applicable note.

Presentation and currency

The consolidated financial statements are presented in euros and all values are rounded to the nearest thousand (€000), except when otherwise indicated. Due to rounding, numbers presented may not add up precisely to the totals provided.

The following exchange rates of the euro (€) against the Swiss franc ('CHF') have been used in the preparation of these consolidated financial statements:

	2022	2021
Closing exchange rate at year-end	0.98470	1.03310
Average exchange rate	1.00471	1.08115

2.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

•	Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
•	Exposure, or rights, to variable returns from its involvement with the investee
•	The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

•	The contractual arrangement(s) with other vote holders of the investee
•	Rights arising from other contractual arrangements
•	The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in the consolidated statement of income. Any investment retained is recognized at fair value.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently by the Company and the Group's subsidiaries and joint ventures throughout the years presented in these consolidated financial statements.

3.1 Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. In the event of a step acquisition where control is acquired, the Company's previously held equity interest disposed of is remeasured at fair value upon acquisition date. Any gain or loss on remeasurement is recorded in the statement of income under 'profit on disposals'.

Acquisition-related costs are expensed as incurred and included in other general and selling expenses.

The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organized workforce with the necessary skills, knowledge or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort or delay in the ability to continue producing outputs.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquire Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognized in the statement of income in accordance with IFRS 9. Other contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in the statement of income.

3.2 Investment in associates, joint ventures and joint operations

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities of the joint venture require unanimous consent of the parties sharing control.

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group's investment in its associate and joint venture are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group's share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.

The statement of income reflects the Group's share of the results of operations of the associate or joint venture. Any change in Other Comprehensive Income of those investees is presented as part of the Group's Other Comprehensive Income. In addition, when there has been a change recognized directly in the equity of the associate or joint venture, the Group recognizes its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group's share of profit or loss of an associate and a joint venture is shown on the face of the consolidated statement of income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associates or joint venture.

After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investments in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognize the loss within 'Share of equity accounted investments' profit in the consolidated statement of income.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognized in the consolidated statement of income.

The Group recognizes its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These are incorporated in the consolidated financial statements under the appropriate headings.

3.3 Intangible assets and goodwill

Goodwill

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized as other income in the consolidated statement of income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the business combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Other intangible assets

An intangible asset is capitalized at cost upon its acquisition by the Group or at fair value at the date of acquisition in the context of a business combination, should the intangible asset be separately identifiable from goodwill. After initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in the consolidated statement of income in the period in which the expenditure is incurred. Intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Intangible assets are amortized on a straight-line basis over their economic useful life, which are as follows:

Brand names	indefinite
Software and other IT-intangibles	1-10 years
Customer relationships	9-23 years

Amortization periods, useful lives, expected patterns of consumption and residual values are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. Intangible assets that are assumed to have indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income.

3.4 Property, plant, and equipment

Property, plant, and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses. Repair and maintenance expenditure is included in an asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenditure is charged to the consolidated statement of income as incurred.

Property, plant, and equipment are depreciated on a straight-line basis over their economic useful life, which are as follows:

	Useful lives
Land	Not depreciated
Machinery and vehicles	5 years or less
Furniture, fittings and equipment	10 years or less
Buildings	40-50 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the depreciation period or method as appropriate on a prospective basis.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income when the asset is derecognized.

3.5 Leases

The Group enters leases for a range of assets, principally relating to real estate. These property leases have varying terms, renewal rights and escalation clauses, including periodic rent reviews linked to a consumer price and/or other indices. The Group further leases vehicles, plant and machinery and equipment. The terms and conditions of these leases do not impose significant financial restrictions on the Group.

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A lease liability and related right-of-use asset are recognized at the commencement date for contracts that are or contain a lease, except for (i) leases with a term of 12 months or less which do not contain a purchase option and (ii) leases where the underlying asset is of low value, typically €10 thousand or less.

Right-of-use assets

The Group recognizes right-of-use assets at the commencement date of the lease (i.e, the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated an a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are subject to impairment as described in section 3.6.

Lease liabilities

At commencement date, the Group recognizes lease liabilities measured at the present value of lease payments over the (remaining) lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate recognized as an expense in the period in which they are incurred.

Management applies judgement in determining whether it is reasonably certain that a renewal, termination or purchase option will be exercised.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily available. After initial recognition, the lease liability is measured at amortized cost using the effective interest method.

It is remeasured when there is a modification, a change in the lease term, a change in the lease payments or when the Group changes its assessment of whether it is reasonably certain to exercise an option within the contract.

Non-lease components in a contract such as maintenance and other service charges are separated from minimum lease payments and are expensed as incurred.

3.6 Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's orcash generating units (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on most recent budgets and forecast calculations, which are prepared separately for each of the Group's CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of four years. A longterm growth rate is calculated and applied to project future cash flows after the fourth year.

Impairment losses of continuing operations are recognized in the consolidated statement of income in expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset's or CGU's recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of income.

Goodwill and intangible assets with indefinite useful life are tested for impairment annually as at 31 December and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill and intangible assets with indefinite useful life by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill and intangible assets with indefinite useful life relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

3.7 Inventories

Inventories are measured at the lower of cost and their net realizable value. Cost is based on the first-in/first-out principle and includes all expenditure which meet the criteria to be capitalized incurred in acquiring the inventories and bringing them to their present location and condition. Net realizable value is the estimated proceeds of sales less any costs to be incurred in marketing, selling and distribution.

Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made, taking into consideration fluctuations of price or cost directly relating to events occurring after the end of the period, insofar as these events provide evidence supporting the value of the inventories at the reporting date, the likelihood of short-term changes in buyer preferences, product obsolescence or perishability and the purpose for which the inventory is held.

Inventories are derecognized either when sold or when written-off. When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. Allowance is made, when necessary, for obsolete, slow-moving and/or defective inventories. The amount of any write- down of inventories to net realizable value and all losses of inventories is recognized as an expense in the period the write-down or loss occurs.

The amount of any reversal of any write-downs of inventories, arising from an increase in their net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.

3.8 Cash and cash equivalents

Cash and cash equivalents comprise of cash balances held for the purpose of meeting short-term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Bank overdrafts are included within current interest-bearing loans and borrowings in the consolidated statement of financial position. Where the overdrafts are repayable on demand and form an integral part of cash management, they are netted against cash and cash equivalents for the purposes of the consolidated statement of cash flows.

3.9 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is met when a sale of the asset is highly probable, and it is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets. Management must be committed to the sale, and the sale should be expected to be completed sale within 12 months from the date of classification as held for sale.

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Property, plant and equipment and intangible assets are no longer depreciated or amortized once classified as held for sale.

Non-current assets classified as held for sale and liabilities directly associated with those assets are presented separately as current items in the consolidated statement of financial position.

3.10 Retirement benefit obligations

Costs arising in respect of the Group's defined contribution pension schemes are charged to the consolidated statement of income in the period in which they are incurred. All plans operated in Switzerland have a legal minimal funding requirement. If it is necessary to require supplemental contributions for recovering the underfunding, the employer has to pay at least 50 % of such contributions. No supplemental contributions related to the funding requirements have been introduced in 2022.

The liabilities and costs associated with the Group's defined benefit pension schemes (both funded and unfunded) are assessed based on the projected unit credit method by professionally qualified actuaries and are derived using actuarial assumptions based on market expectations at the reporting date. The discount rates employed in determining the present value of the schemes' liabilities are determined by reference to market yields at the reporting date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment benefit obligations.

The net surplus, taking into consideration the effect of a potential asset ceiling, or deficit arising on the Group's defined benefit pension schemes, together with the liabilities associated with the unfunded schemes, are shown either within non-current assets or non-current liabilities in the consolidated statement of financial position. Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest), are recognized in the consolidated statement of financial position with a corresponding debit or credit to other reserves through other comprehensive income in the period in which they occur. Remeasurements thus recorded are not reclassified to the consolidated statement of income in subsequent periods.

The defined benefit pension asset or liability in the consolidated statement of financial position comprises the total for each plan of the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Their fair value is based on market price information. Valuation of the excess fair value of plan assets over the scheme liabilities is limited to the present value of any economic benefits available in the form of refunds from the plan and reductions in the future contributions to the plan.

The net interest cost recorded in the consolidated statement of income within finance costs (income) is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of the plan assets. Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements are included in the consolidated statement of income within employee costs, which in turn are included within operating costs.

The assumptions underlying the actuarial valuations (including discount rates, rates of increase in future compensation levels and mortality rates), from which the amounts recognized in the consolidated financial statements are determined, are updated annually based on current economic conditions and for any relevant changes to the terms and conditions of the pension plans. These assumptions can be affected by changes in the rates of return on high-quality corporate bonds (as far as the discount rate is concerned) and future labor market conditions (regarding the estimates for future compensation levels).

Whilst management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the obligations and expenses recognized in future accounting periods. The assets and liabilities of defined benefit pension schemes may exhibit significant period-on-period volatility attributable primarily to changes in bond yields and longevity. In addition to future service contributions, cash contributions may be required to remediate past service deficits.

3.11 Provisions

A provision is recognized when the Group has a present obligation (either legal or constructive) as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group anticipates that a provision will be reimbursed, the reimbursement is recognized as a separate asset only when it is virtually certain that the reimbursement will arise. The expense relating to any provision is presented in the consolidated statement of income net of any reimbursement.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in the provision due to the passage of time is recognized as finance costs in the consolidated statement of income. Contingent liabilities arising on business combinations are recognized as provisions if the contingent liability can be reliably measured at its acquisition date fair value, and subsequently measured at the higher of (i) the amount that would be recognized in accordance with IAS 37 and (ii) the amount initially recognized less, if appropriate, the cumulative amount of income recognized in accordance with the Group's principles on revenue recognition. Provisions are not recognized for expected future operating losses.

3.12 Share-based compensation

Equity-settled transactions

The Group operates an equity-settled management co-in-vestment plan ('MIP') available to the Group's directors and senior management. Under the MIP, the plan participants can acquire shares in the direct parent company of the Company, Clay TopCo S.a.r.l.

A grant of a share-based compensation award to a plan participant is recorded if the plan participant acquires such shares at an amount favorable compared to the fair value of these shares. The positive difference in the purchase price paid for a share by a plan participant and its actual market value represents the fair value of the share-based payment grant, which is measured as of the date the plan participant acquires the share (i.e., the grant date fair value). An analysis regarding the existence and amount of a positive grant date fair value is performed at each grant date.

The grant date fair value is recorded as a share-based payment expense, together with a corresponding increase in equity of the Group, over the period during which the performance and/or service conditions related to the grant are fulfilled, also referred to as the vesting period, the end of which being the vesting date.

The amount recognized as an expense during the vesting period reflects the number of awards for which the related service and non-market vesting conditions are expected to be met. Any market conditions or non-vesting conditions are incorporated in the fair value of the share-based payment awards.

Cash-settled transactions

The group also operates a cash-settled long-term incentive plan ('LTIP'). Under the LTIP, eligible and selected participants have been awarded share appreciation rights ('Awards') related to B ordinary shares in the share capital of the Company's parent company, Clay Topco S.a.r.l. The Company accounts for the LTIP as a cash-settled sharebased payment arrangement since the Group has an obligation to settle the LTIP Awards with the participants.

The cash amount to be received by a participant for an Award shall represent the increase, if any, in value between (i) the fair market value of the B shares underlying an Award as at the grant date and (ii) the value of the B Shares upon an Exit. In general, the participants will only be entitled to a cash payment under the LTIP if they stay employed with a Group company until the completion of an Exit.

The fair value of the Awards, which is determined at each reporting date and at settlement, is expensed in the consolidated statement of income over the period between (i) the grant date and (ii) the estimated Exit date.

3.13 Financial instruments

Financial assets and liabilities are presented separately in the consolidated statement of financial position except for cases in which there is a legally enforceable right of offset, and the Group has the intention to settle the respective financial assets and liabilities on a net basis.

Financial assets

Initial recognition and measurement

Financial assets are classified and measured at fair value at initial recognition and subsequently measured atamortized cost, fair value through other comprehensive income or fair value through profit or loss. Subsequent measurement at amortized cost is based on the effective interest rate method minus any impairment losses. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing the financial assets. The Group has no financial assets at fair value through other comprehensive income.

Financial assets at amortized cost

Financial assets are measured at amortized cost if the objective of the business model is to hold the financial asset to collect contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest. Such assets are initially recognized at fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset, and are subsequently measured using the effective interest method and are subject to impairment. Any gains or losses are recognized in the consolidated statement of income when the asset is derecognized, modified, or impaired.

Financial assets at fair value through profit or loss (FVPL) Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through other comprehensive income, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the consolidated statement of financial position at fair value with net changes in fair value recognized in the consolidated statement of income. This category includes other investments (refer to Note 14 of the Group's consolidated financial statements) which the Group had not irrevocably elected to classify at fair value through other comprehensive income.

Regular way purchases and sales of financial assets are recognized on trade date, being the date on which the Group commits to purchase or sell the asset.

Derecognition

Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Impairment of financial assets

The Group applies the expected credit loss ('ECL') model for recognizing and measuring impairments on financial assets measured at amortized cost. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12 month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade and other receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial liabilities are initially measured at fair value, and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Financial liabilities at amortized cost

Financial labilities are subsequently measured at amortized cost using the EIR method, unless they are required to be measured at fair value through profit or loss, such as instruments held for trading, or when the Group has opted to measure them at fair value through profit or loss. Gains and losses are recognized in the consolidated statement of income when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR . The amortization is included as finance costs in the consolidated statement of income.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated statement of income.

3.14 Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement

The Group uses derivative financial instruments, such as deferred premium interest rate caps, to hedge its interest rate risk. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

For the purpose of hedge accounting, hedges are classified as:

•	Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment

At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined).

A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:

•	There is 'an economic relationship' between the hedged item and the hedging instrument
•	The effect of credit risk does not 'dominate the value changes' that result from that economic relationship
•	The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the consolidated statement of income. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.

The Group uses deferred premium interest rate cap contracts as hedges for its exposure to changes in interest cash flows. The ineffective portion relating to interest rate cap contracts is recognized as finance costs in the consolidated statement of income.

The amount accumulated in other comprehensive income is reclassified to the consolidated statement of income as a reclassification adjustment in the same period or periods during which the hedged cash flows affect profit or loss. If cash flow hedge accounting is discontinued, the amount that has been accumulated in other comprehensive income must remain in accumulated other comprehensive income if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately reclassified to the consolidated statement of income as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs, any amount remaining in accumulated other comprehensive income must be accounted for depending on the nature of the underlying transaction as described above.

Cost of hedging

When applying hedge accounting, the Company has excluded from the hedging instrument the time value element of the interest rate caps and designates as the hedging instrument only the change in intrinsic value of the caps.

Since the hedged cash flow is a time-period related hedged item, the change in fair value of the time value of the interest rate caps shall be recognized in other comprehensive income to the extent that it relates to the hedged item and shall be accumulated in a separate component of equity (i.e., cost of hedging).

The time value at the date of designation of the caps as a hedging instrument, to the extent that it relates to the hedged item, shall be amortized on a systematic and rational basis over the period during which the hedge adjustment for the option's intrinsic value could affect profit or loss. Hence, in each reporting period, the amortization amount shall be reclassified from the separate component of equity to profit or loss as a reclassification adjustment. However, if hedge accounting is discontinued for the hedging relationship that includes the change in intrinsic value of the option as the hedging instrument, the net amount (i.e., including cumulative amortization) that has been accumulated in the separate component of equity shall be immediately reclassified into the consolidated statement of income as a reclassification adjustment.

3.15 Fair value measurement

The Group measures financial instruments at fair value at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

•	In the principal market for the asset or liability; or
•	In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

•	Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
•	Level 2 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly or indirectly observable
•	Level 3 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognized in the consolidated financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Group determines the policies and procedures for both recurring fair value measurement, such as derivatives, and non-recurring measurement, such as impairment tests. At each reporting date, the Group analyzes the movements in the values of assets and liabilities which are required to be remeasured or reassessed as per the Group's accounting policies.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

3.16 Revenue recognition

Revenue comprises income generated from the distribution of building materials to customers, predominantly in Europe, through three different sales channels: Collect Sales, Delivery Sales and Direct Sales. Revenue is recognized at the point in time that the control of the product is deemed to have passed to the customer.

This is normally when goods leave the premises of the Group or when they are delivered to the customer's location, depending on the terms of the sale. The Group recognizes revenue at a point in time once all performance obligations have been satisfied and control of the goods have been transferred to the customer. The amount of revenue recognized is based on the consideration the Group is expected to be entitled to in exchange for the goods. Revenue includes trade discounts and excludes value-added tax/sales tax.

Across the Group, goods are often sold with discounts or rebates based on cumulative sales over a period. This variable consideration is only recognized when it is highly probable that it will not be subsequently reversed. It is recognized using the most likely amount or expected value methods, depending on the individual contract terms. In the application of an appropriate revenue recognition policy, judgement is exercised by management in the determination of the likelihood and magnitude of such items based on experience and historical trading patterns.

The Group operates loyalty programs where customers accumulate points for purchases made which entitle them to discounts on future purchases. A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative stand-alone selling price and recognized as a contract liability until the points are redeemed. Revenue related to awarded points is recognized when the points are redeemed or when they expire.

A contract liability is recognized if a payment is received or a payment is due (whichever is earlier) from a customer before the Group transfers the related goods. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers of goods to the customer).

No element of financing is deemed present as transactions are all made with average credit terms (usually between 30 and 90 days upon delivery), consistent with market practice.

3.17 Expenses

Cost of sales

Cost of sales includes the purchase price of the products sold and other costs incurred in bringing the inventories to the location and condition ready for sale, net of supplier rebates. These costs include costs of purchasing, inventory differences, transporting products to the extent that it relates to bringing the inventories to the location and condition ready forsale and any write-downs of inventories to net realizable value.

Operating costs

Operating costs are the costs directly related to the ordinary operational activities and comprises of employee costs, depreciation and amortization expenses and other general and administrative expenses, such as repair and maintenance costs, facility costs, sales and marketing costs, computer and network costs, audit and consulting fees. The operating costs are recognized in the consolidated statement of income to the period to which they relate.

3.18 Taxes

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to these items recognized directly in equity is recognized in equity and not in the statement of income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except:

•	When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
•	In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in foreseeable future

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses.

Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

•	When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
•	In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized

The carrying amounts of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is not longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, the Group relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and laws) that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are not subject to discounting.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in the consolidated statement of income.

The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

3.19 Foreign currencies

The Group's consolidated financial statements are presented in euros, which is also the parent company's functional currency. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions and balances

Transactions in foreign currencies are initially recorded at the exchange rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in the statement of income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss are also recognized in other comprehensive or profit or loss, respectively).

In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of advance consideration.

Group companies

On consolidation, the assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing at the reporting date and their statements of income are translated at the average exchange rates for the respective period. The exchange differences arising on translation for consolidation are recognized in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is reclassified to the consolidated statement of income.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the reporting date.

3.20 Cash flow statement

The consolidated statement of cash flows has been drawn up using the indirect method. With this method, the net result is adjusted for items in the consolidated statement of income that have no impact on income and expenses in the year under review and changes in items in the consolidated statement of financial position and consolidated statement of income whose income and expenses are not considered to belong to the operational activities.

Cash flows in foreign currencies are converted at an average exchange rate. Exchange differences with respect to cash and cash equivalents are presented separately in the consolidated statement of cash flows. Income taxes, paid and received interest are included in the cash flow from operating activities. Received dividends are included in the cash flow from investment activities, while paid dividends are included in the cash flow from financing activities.

The purchase price of acquisitions is included in the cash flow from investing activities, to the extent payment has taken place in cash or cash equivalents. Cash and cash equivalents that are present in the acquired subsidiaries are subtracted from the purchase price. Transactions, which do not involve a cash exchange, are not included in the consolidated statement of cash flows. The payments of the lease terms are presented as repayments on loans for the repayment component of debt and as paid interest for the interest component. Payment of lease installments that are not included in the lease obligation included in the consolidated statement of financial position are included under cash flow from operating activities.

3.21 Changes in accounting policies and disclosures

Effect of forthcoming accounting standards and/or changes to accounting standards

Several amendments to IFRS became effective for the first time in 2022, but did not have a material impact on the consolidated financial statements of the Group:

•	Amendments to IAS 16 Property, plant and equipment - Proceeds before intended use
•	Amendments to IAS 37 Provisions, contingent liabilities and contingent assets - onerous contracts - cost of fulfilling a contract
•	Amendments to IFRS 3 Business combinations - References to the conceptual framework
•	Annual improvement cycle - 2018-2020

The following IFRS standards and interpretations have been issued, but are not yet effective, as of the issuance date of the Group's financial statements:

•	Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
•	Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
•	Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
•	Amendments to IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
•	Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
•	Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information
•	IFRS 17 Insurance Contracts

The Company has not opted for an early adoption of these standards, amendments to standards and/or new IFRIC interpretations. The future application of these standards and interpretations is not expected to have a material impact on the results and the financial position of the Group.

4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Management believes that the estimates, assumptions, and judgements upon which it relies are reasonable based on the information available at the time that those estimates, assumptions, and judgements are made.

Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances or experiences on which the estimate was based or because of new information.

Russia-Ukraine war

The Group has assessed the direct and indirect impact of this political event on the Group, its customers and its suppliers. The Group's direct exposure to Russia and Ukraine is limited as only limited suppliers are located in either country, with an insignificant exposure.

The Group does not have any customers located or operating in either country. However, the indirect impact of the war on the Group was quite severe in form of, for example, strong inflation on our cost base (especially in energy and labor), disrupted supply chains and significant material price inflation.

Macroeconomic environment

The current macroeconomic developments are closely monitored by the Group. The developments are mainly visible in high inflation levels and increasing interest rates.

Inflation:

During 2022, the Group was faced with high inflation levels impacting our operating costs as well led to a significant increase in building materials costs. As a response to the material price inflation, the Group increased its pricing and was able to pass through most of the material price inflation to its customers. To manage its profitability in the near future, the Group identified several areas where it can achieve cost reductions to respond to the increasing operational costs.

In addition, inventory levels at balance sheet date increased compared to 2021, mainly explained by material price inflation.

Interest rates:

Interest rates increased significantly compared to 2021. In response to the increasing interest rates and to reduce its exposure to variability in expected future cash outflows (forecasted interest payments), the Group acquired two deferred premium interest rate caps of in total €445 million of 3 months Euribor-indexed floating-rate debt. Further details of these derivatives are disclosed in Note 24 of the Group's consolidated financial statements.

Other key areas impacted by macroeconomic developments are:

•	Goodwill and intangible assets with indefinite useful life: the key assumptions used in the annual impairment testing of goodwill and intangible assets with indefinite useful life, such as discount rate, terminal value growth rate, revenue growth and EBITDA margin, were updated to reflect management current best estimates, including economic uncertainty, and continuous inflation pressure on operational income. Further details of the impairment testing are disclosed in Note 10 of the Group's consolidated financial statements.
•	Deferred tax assets: the recoverability of deferred tax assets are, among others, based on the expected timing and level of future taxable profits. The key assumptions used in the assessment of the recoverability were updated based on the macroeconomic developments. Further details are disclosed in Note 18 of the Group's consolidated financial statements.
•	Retirement benefit obligations: the macroeconomic developments impacted the key assumptions used determining the retirement benefit obligations. Most notable impact is the accounting of the surplus in the plan operated in Switzerland. This surplus is restricted as the IAS 19 service cost is less than the expected employer contributions (mainly following the increase in the discount rate assumption), and according to IFRIC 14, there is currently no expected economic benefits available in the pension fund. Further details of the retirement benefit obligations are disclosed in Note 21 of the Group's consolidated financial statements.

Climate-related matters

Climate-related matters generates both an opportunity for the Group as well challenges in the business BME operates in. An example of an opportunity related to climate-related matters lies in the EU Green Deal, which is strongly supporting the reduction of the use of energy in buildings and shifting our product portfolio to a more sustainable portfolio.

The demand for sustainable/ energy-efficient building materials is expected to grow significantly. On the other hand, the focus on climate-related matters (such as, emission reductions) may change the economic lives of tangible assets (such as, trucks used to deliver the supplies to our customers as different type of fuel will be required) and other investments to improve sustainability.

Management took these developments (including any climate-related legislation) into account in, for instance, the key assumptions used in the impairment test of goodwill and intangible assets with indefinite useful lives, useful life assessment of Property, plant and equipment and Right- of-use assets and its assessment whether it is probable that deferred tax assets recognized on the consolidated statement of financial position will be realized. Climate-related matters did not have a material impact on assets, liabilities, judgements and estimates in 2022.

Information about the key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are presented in the notes as listed in the table below.

Topic	Note	Description
Goodwill and brands with an indefinite useful live	10	• Estimates and assumptions made in the context of the annual impairment test.
Property, plant and equipment, right-of-use assets and intangible assets (other than goodwill and brands)	9,11, 12	• Judgement as to the existence of a triggering event requiring the performance of an asset impairment test. • Useful life and residual value estimates.
Leases	25	• Judgement as to the reasonably certain lease term based on the existence of renewal and termination options.
Trade receivables and other receivables	16	• Estimates related to the expected future credit losses on trade receivable balances. • Estimates related to the measurement of receivables for supplier bonuses.
Inventories	15	• Estimates related to the measurement of the net realizable value of inventories.
Fair value measurement of financial instruments	24	• Judgements include considerations of inputs such as forward rate, credit risk and volatility.
Provisions and contingent considerations recognized in business combinations	5	• Estimates related to the outcome of provision for litigation and/or legal claims and related to the calculation of the contingent element in a business combination, if any.
Retirement benefit obligations	21	• Key actuarial and financial assumptions related to the measurement of defined benefit plans, estimates and assumptions made around pension assets (including asset ceiling) of the Swiss pension plan.
Revenue	6	• Estimates related to the expected periodic purchase volume rebates payable to customers.
Taxation	18	• Judgement as to the recoverability of deferred tax assets based on the expected timing and level of future taxable profits, as well as on uncertain tax positions and provisions.
Business combinations	5	• Estimates related to the fair value measurement of the net assets acquired and liabilities assumed including any non-controlling interest. • Estimates related to the (indefinite) useful life of the identified other intangibles (i.e., customer relationships and brand names).

5 CHANGES IN THE SCOPE OF CONSOLIDATION

During the year 2022, the Group conducted 11 business combinations (2021:10) and divested no subsidiaries (2021: one divestment).

2022 Business combinations

During 2022 the Group conducted the following business combinations:

Acquiree	Country	Acquisition date	Interest acquired
Heinrich's Fliesenmarkt	Germany	4 January 2022	100 %
Mager	France	1 April 2022	100 %
UMHS	France	2 May 2022	Asset deal
Villar	Spain	1 June 2022	100 %
Bouwcenter Nelemans	The Netherlands	1 June 2022	100 %
Rollwitzer	Germany	1 July 2022	100 %
Induscabel	Belgium	1 July 2022	Asset deal
Home Carrelage	France	1 August 2022	100 %
GBI Bakker	The Netherlands	1 September 2022	Asset deal
Bouwpunt van der Gucht	Belgium	2 November 2022	100 %
BVP Socca	France	9 December 2022	100 %

The acquisitions involved an aggregate net cash outflow of €82,696 thousand. The Group recognized an aggregated goodwill of €28,632 thousand, other intangible assets of €8,927 thousand and deferred tax liabilities generated from the intangible assets of €2,283 thousand. The Group was able to acquire the net assets of Mager, Induscabel and BVP Socca for a favorable purchase consideration and recognized an aggregated gain arising on acquisition of €3,494 thousand. This gain is included in the 'other income' in the consolidated statement of income.

The Group considers the business combination of Bouwcenter Nelemans as the only individual material business combination, and all others as individually immaterial. The individually immaterial business combinations involved an aggregated net cash outflow of €44,742 thousand. The individually immaterial business combinations resulted in an increase in goodwill of €14,610 thousand, other intangible assets of €6 thousand and deferred tax liabilities generated from the intangible assets of €2,678 thousand.

2022 Individually material business combinations

Bouwcenter Nelemans

On 1 June 2022 the Group completed the acquisition of Bouwcenter Nelemans, for a purchase consideration of €35,343 thousand (excluding cash acquired). Bouwcenter Nelemans is a distributor of building materials in the South and West of the Netherlands and owner of the TegelMegaStore formula. Nelemans operates 7 GBM branches, one including a showroom and 5 TegelMegaStore locations and employs a total of 140 employees.

The fair values of asset and liabilities recognized as at the date of acquisition in 2022 are as follows:

€'000	Notes	Nelemans	All others	Total 2022
Assets
Customer relationships	9	8,921	-	8,921
Software and other IT intangibles	9	-	6	6
Property, plant and equipment	11	14,161	16,279	30,440
Right-of-use assets	12	4,882	19,001	23,883
Investments and other long-term receivables		705	185	890
Deferred income tax assets	18	64	4,336	4,400
Inventories		4,804	22,421	27,225
Trade and other receivables		6,900	33,028	39,928
Cash and cash equivalents		382	15,142	15,524
Assets classified as held for sale		-	6,305	6,305
Total assets		40,819	116,703	157,522
Liabilities
Retirement benefit obligations	21	-	(721)	(721)
Other provisions	22	-	(1,621)	(1,621)
Interest-bearing liabilities		(3,519)	(12,072)	(15,591)
Bank overdrafts		(2,993)	-	(2,993)
Lease liabilities	25	(4,882)	(19,001)	(23,883)
Deferred income tax liabilities	18	(2,681)	(2,932)	(5,613)
Trade and other payables		(4,645)	(25,343)	(29,988)
Current income tax liabilities		(778)	(493)	(1,271)
Total liabilities		(19,498)	(62,183)	(81,681)
Net identifiable assets acquired		21,321	54,518	75,839
Add: goodwill	9	14,022	14,610	28,632
Add: negative goodwill		-	(3,494)	(3,494)
Purchase consideration		35,343	65,632	100,975
Of which deferred consideration		-	(5,748)	(5,748)
Cash and cash equivalents acquired		2,611	(15,142)	(12,531)
Net outflow of cash - investing activities		37,954	44,742	82,696
Gross contractual amounts of trade receivables		5,902	30,463	36,365
Trade receivables amounts not expected to be collected		(948)	(1,389)	(2,337)
Acquisition-related costs		1,133	1,815	2,948

The net assets recognized related to the conducted business combinations in 2022 were based on a provisional assessment of their fair values, except for the business combination of Heinrich's Fliesenmarkt (which is based on a final assessment). The valuation had not been completed by the date the 2022 consolidated financial statements were approved for issue by the Board of Directors. The acquisition date of the majority of the acquisitions is in the second half of 2022, therefore procedures are not yet finalized to determine the fair value of the net assets acquired and goodwill to be recognized as a result of the business combinations.

Goodwill is mainly attributable to the future customers and expected synergies of the acquired business. It will not be deductible for tax purposes. Acquisition-related costs are included in operating costs in the consolidated statement of income.

The following table summarizes the contributions by the acquired operations to the Group's revenue and profit before tax. It does not purport to represent what the actual results would have been, had the acquisitions been concluded on 1 January, nor is the information necessarily indicative for future results of the acquired operations. In determining the contributions by the acquisitions, management has assumed that the fair value adjustments that arose on the date of the acquisitions would have been the same as if the acquisitions had occurred on 1 January.

€'000	Revenue 2022	Profit before income tax 2022
Totals excluding the impact of acquisitions	5,371,330	123,597
Contribution of acquisitions
• Bouwcenter Nelemans	28,648	1,323
• All others	65,412	6,213
Total reported for the year	5,465,390	131,133
Pro forma contribution of acquisitions for the period 1 January up to acquisition date (unaudited)
• Bouwcenter Nelemans	22,276	2,413
• All others	81,267	2,041
Pro forma total for the year	5,568,933	135,587

2021 Business combinations

During 2021, the Group conducted the following business combinations:

Acquiree	Country	Acquisition date	Interest acquired
Mahler Group	Germany	31 May 2021	100 %, except for the 75 % investment in Hillari Fliesencenter GmbH
Grupo BMV	Spain	1 June 2021	100 %
Saint-Gobain Building Distribution the Netherlands	The Netherlands	30 July 2021	100 %
Planasdis	Spain	1 August 2021	Asset deal
Maxmat	Portugal	1 September 2021	Remaining 50 %
Silix	France	1 September 2021	100 %
De Jong & Roos	The Netherlands	2 September 2021	100 %
Cronrath	Germany	30 September 2021	Asset deal
Yesyforma	Spain	1 October 2021	Asset deal
Gedimat	Spain	2 November 2021	Asset deal

The Group considers the business combinations of Saint- Gobain Building Distribution the Netherlands, Grupo BMV and Maxmat as the only individual material business combinations, and all others as individually immaterial.

2021 Individually material business combinations

Grupo BMV

On 1 June 2021 the Group completed the acquisition of Grupo BMV ('BMV'), announced 15 April 2021, for an initial gross purchase consideration of €110 million (excluding cash acquired). The Group paid in 2022 a deferred consideration of €12 million to the former shareholders of BMV. BMV is active in the distribution of interior finishing and general building materials in Spain. Grupo BMV has 35 distribution outlets and upon completion date employed over 375 people.

Saint-Gobain Building Distribution the Netherlands

On 30 July 2021 the Group completed the acquisition of Saint-Gobain Building Distribution the Netherlands ('SGBDNL'), announced 5 January 2021, for a total gross purchase consideration in cash of €148 million (excluding cash acquired). This amount includes the settlement of an outstanding loan with the former shareholders of SGBDNL, amounting to €103,379 thousand. Subsequent to the acquisition, SGBDNL was renamed to Building Materials Distribution the Netherlands B.V. ('BMD NL'). BMD NL is active in the distribution of building materials, tiles, sanitary ware, and interior finishing materials, operating under the brands Raab Karcher, De Jager Tolhoek, Tegel Groep Nederland, Galvano and Van Keulen. BMD NL has 38 sales outlets and employs over 1,000 people.

Maxmat

On 1 September 2021 the Group completed the acquisition of the remaining 50 % of the shares in Modelo - Distribuição de Materiais de Construção S.A., also known as Maxmat, announced on 25 May 2021, for a total gross purchase consideration of €129,134 thousand (excluding cash acquired).

Maxmat, the no. 2 player in the Portuguese DIY-market, focuses on the renovation segment of the market, and - apart from DIY - is active in the construction, bath and garden categories. It is operating a network of 30 stores, supported by more than 500 employees.

Following the transaction and obtaining control, Maxmat became a fully consolidated subsidiary of the Group, having been accounted for as an equity-method joint venture investment so far. Upon closing of the transaction, the previously held equity interest was remeasured at fair value, resulting in a gain of €11,722 thousand, recognized in 'profit on disposals' in the consolidated statement of income.

The fair values of asset and liabilities recognized as at the date of acquisition in 2021 are as follows:

€'000	Notes	SGBDNL	Grupo BMV
Assets
Customer relationships	9	29,508	44,575
Brands	9	-	-
Software and other IT intangibles	9	5,450	76
Property, plant and equipment	11	45,942	2,288
Right-of-use assets	12	66,332	6,592
Investments and other long-term receivables		-	791
Deferred income tax assets	18	-	53
Inventories		43,730	12,760
Trade and other receivables		68,464	32,820
Cash and cash equivalents		13,300	19,745
Total assets		272,726	119,699
Liabilities
Retirement benefit obligations	21	(1,179)	-
Other provisions	22	(1,430)	-
Interest-bearing liabilities		-	(8,230)
Lease liabilities	25	(66,333)	(6,592)
Deferred and contingent acquisition considerations		-	(21,072)
Deferred income tax liabilities	18	(5,324)	(10,679)
Trade and other payables		(68,896)	(31,064)
Current income tax liabilities		-	(1,011)
Total liabilities		(143,162)	(78,648)
Net identifiable assets acquired		129,564	41,051
Add: goodwill	9	18,417	68,837
Purchase consideration		147,981	109,888
Of which deferred consideration		-	(10,603)
Cash and cash equivalents acquired		(13,300)	(19,745)
Fair value of previously held equity interest		-	-
Net outflow of cash - investing activities		134,681	79,540
Gross contractual amounts of trade receivables		58,999	29,410
Trade receivables amounts not expected to be collected		(2,858)	(90)
Acquisition-related costs		3,677	703

€'000	Maxmat	All others (restated)	Total 2021 (restated)
Assets
Customer relationships	-	19,577	93,660
Brands	19,885	-	19,885
Software and other IT intangibles	-	-	5,526
Property, plant and equipment	55,360	9,525	113,115
Right-of-use assets	12,965	16,928	102,817
Investments and other long-term receivables	-	77	868
Deferred income tax assets	-	10,333	10,386
Inventories	20,634	17,695	94,819
Trade and other receivables	2,197	16,517	119,998
Cash and cash equivalents	28,291	3,947	65,283
Total assets	139,332	94,600	626,357
Liabilities
Retirement benefit obligations	-	(147)	(1,326)
Other provisions	-	(551)	(1,981)
Interest-bearing liabilities	-	(4,877)	(13,107)
Lease liabilities	(8,882)	(16,928)	(98,735)
Deferred and contingent acquisition considerations	-	-	(21,072)
Deferred income tax liabilities	(10,559)	(10,899)	(37,461)
Trade and other payables	(27,611)	(14,396)	(141,967)
Current income tax liabilities	(4,539)	(5,529)	(11,079)
Total liabilities	(51,591)	(53,327)	(326,728)
Net identifiable assets acquired	87,741	41,272	299,628
Add: goodwill	41,393	30,957	159,604
Purchase consideration	129,134	72,229	459,232
Of which deferred consideration	(55)	8,351	(2,307)
Cash and cash equivalents acquired	(28,291)	(3,947)	(65,283)
Fair value of previously held equity interest	(61,044)	-	(61,044)
Net outflow of cash - investing activities	39,744	76,633	330,598
Gross contractual amounts of trade receivables	-	14,534	102,943
Trade receivables amounts not expected to be collected	-	(1,611)	(4,559)
Acquisition-related costs	255	672	5,307

The net assets recognized related to the conducted business combinations in 2021 were based on a provisional assessment of their fair values. The valuation had not been completed by the date the 2021 consolidated financial statements were approved for issue by the Board of Directors.

During 2022, the purchase price of the acquisition of Mahler Group has been finalized, resulting in an increase of the purchase consideration, with a corresponding increase in goodwill, of €2,981 thousand. Following the finalization of the purchase price, the Group obtained €4,959 thousand in 2022 from the former shareholders of Mahler. The 2021 comparative information was restated to reflect the adjustment in the provisional amounts.

The following table summarizes the contributions by the acquired operations to the Group's revenue and profit before tax. It does not purport to represent what the actual results would have been, had the acquisitions been concluded on 1 January, nor is the information necessarily indicative for future results of the acquired operations. In determining the contributions by the acquisitions, management has assumed that the fair value adjustments that arose on the date of the acquisitions would have been the same as if the acquisitions had occurred on 1 January.

€'000	Revenue 2021	Profit before tax 2021
Totals excluding the impact of acquisitions	4,125,235	117,227
Contribution of acquisitions
•SGBDNL	222,895	3,898
• Grupo BMV	86,944	6,001
• Maxmat	38,030	3,957
• All others	77,192	3,585
Total reported for the year	4,550,296	134,668
Pro forma contribution of acquisitions for the period 1 January up to acquisition date (unaudited)
• SGBDNL	329,480	8,762
• Grupo BMV	52,834	2,593
• Maxmat	81,752	9,708
• All others	91,654	4,302
Pro forma total for the year	5,106,016	160,033

2021 Divestments

On 1 October 2021, the Group completed the divestment of 12 branches of its Raboni business, operated through its subsidiary Raboni Normandie SAS, for a total cash consideration of €13,570 thousand. The divestment resulted in a profit on disposal of €5 million, recorded in the consolidated statement of income under 'profit on disposals'.

6 REVENUE

BME is one of Europe's leading multi-specialist building products distributors, holding scale and market leading positions across its regions. The Group is active in different regions as a B2B distributor of building materials to professional contractors and installers mostly within the renovation segment of the construction market, as well as the supply of sanity-ware, heating and ventilation and installation materials to plumbers, heating specialist and sanitary installers. The Group derives revenue from the transfer of goods at a point in time in the following geographical markets:

€'000	2022	2021
Primary geographic markets
Germany	1,786,470	1,617,398
Austria	196,439	188,649
Germany & Austria	1,982,909	1,806,047
Netherlands	1,626,519	1,181,964
Belgium	431,688	400,292
Netherlands & Belgium	2,058,207	1,582,256
Switzerland	853,225	802,184
France	260,574	232,614
Spain	182,564	89,165
Portugal	127,911	38,030
South Western Europe	1,424,274	1,161,993
Total	5,465,390	4,550,296

The Group recognizes revenue at a point in time once all performance obligations have been satisfied and control of the goods have been transferred to the customer. Payment is generally due within 30 to 90 days upon delivery. The amount of revenue recognized is based on the consideration the Group is expected to be entitled to in exchange for the goods. Revenue includes trade discounts and excludes value-added tax/sales tax.

Across the Group, goods are often sold with discounts or rebates based on cumulative sales over a period. This variable consideration is only recognized when it is highly probable that it will not be subsequently reversed. It is recognized using the most likely amount or expected value methods, depending on the individual contract terms.

The Group operates loyalty programs where customers accumulate points for purchases made which entitle them to discounts on future purchases. A portion of the transaction price is allocated to the loyalty points awarded to customers based on relative stand-alone selling price and recognized as a contract liability until the points are redeemed. Revenue related to awarded points is recognized when the points are redeemed or when they expire.

There are no revenue transactions with a single customer that accounted for 10 % or more of the Group's consolidated revenues for the years ended 31 December 2022 and 31 December 2021.

The individual entities within the Group have many customers spread across various activities, end-users, and geographies.

7 COST ANALYSIS

Cost of sales can be broken down as follows:

€'000	2022	2021
Cost of goods sold	4,457,117	3,726,823
Purchase bonus and volume rebates	(492,820)	(421,317)
Other cost of sales	(49,029)	(35,555)
Total costs of sales	3,915,268	3,269,951

Other cost of sales mainly include inventory revaluations, inventory differences, and any write-downs of inventories to net realizable value.

Operating costs can be broken down as follows:

€'000	Notes	2022	2021
Employee costs	8	767,023	660,256
Impairment of goodwill	10	14,667	-
Amortization expense	9	21,429	17,125
Depreciation expense	11,12	154,299	132,657
Other general and selling expenses		385,217	304,080
Total operating costs		1,342,635	1,114,118

Other general and selling expenses can be broken down as follows:

€'000	2022	2021
Temporary employee costs	30,143	20,057
Repair and maintenance costs	51,292	41,631
Short-term and low value lease expenses	15,023	9,447
Outbound logistic costs	95,118	73,787
Facility costs	55,887	38,854
Insurance costs	7,492	6,931
Sales and marketing costs	26,796	17,299
Computer and network costs	40,850	31,171
Audit and consultancy fees	9,296	11,020
Acquisition-related costs	26,134	29,927
Other costs	27,186	23,956
Total other general and selling expenses	385,217	304,080

The increase in operating costs in 2022 compared to 2021 is mainly explained by the contribution of acquisitions and rising operational costs, such as labor and energy costs, in the current inflationary environment.

In 2022, the Group recognized an impairment of goodwill of €14,667 thousand, explained by a revised forecast in STG Belgium in combination with the higher market interest rates. Further details of the goodwill impairment is disclosed in Note 10 of the Group's consolidated financial statements.

The finance income and costs and other gains and losses are as follows:

€'000	2022	2021
Finance income
Interest income from financial assets held for cash management purposes	1,269	1,181
Other income	379	-
Finance income	1,648	1,181
Finance costs
Interest and finance charges paid/payable for financial liabilities at amortized cost	80,027	75,469
Interest component on lease liabilities	12,609	8,199
Other finance costs	11,222	3,064
Finance costs	103,858	86,732
Net finance costs	(102,210)	(85,551)

Other finance costs mainly include costs relating to the Group's factoring program and revaluations of net debt items in foreign currency.

8 EMPLOYMENT

The average number of employees is as follows:

Average full-time equivalents	2022	2021
Germany	4,366	4,406
The Netherlands	2,987	2,859
Switzerland	1,606	1,639
Belgium	1,025	859
France	548	449
Austria	400	409
Spain	475	428
Portugal	595	591
Total	12,001	11,640

The total number of the Group's FTE's at the end of December is 12,070 (2021: 11,649). The net increase in the Group's number of FTE's compared to 2021 is mainly explained by the workforce of companies acquired in 2022. Employment costs charged to the consolidated statement of income are analyzed as follows:

€'000	Notes	2022	2021
Wages and salaries		574,258	484,074
Social welfare costs		109,084	94,295
Pension costs	21	32,605	30,738
Other employment- related costs		51,209	51,202
Total		767,156	660,309
Total charge analyzed between:
Operating costs		767,023	660,256
Finance costs (net) for defined benefit pension schemes	21	133	53
Total		767,156	660,309

Other employment-related costs include €344 thousand (2021: €2,040thousand) of share-based payment expenses as further disclosed in Note 29 of the Group's consolidated financial statements.

9 INTANGIBLE ASSETS AND GOODWILL

The carrying amounts of intangible assets and goodwill developed as follows:

€'000	Notes	Goodwill	Customer relationships
At 31 December 2021
Cost (restated ¹ )		424,160	323,306
Accumulated amortization and impairment charges		-	(28,493)
Net carrying amount		424,160	294,813
At 31 December 2020		266,121	215,821
Arising on acquisition (restated ¹ )	5	159,604	93,660
Capital expenditure on other intangible assets		-	-
Reclassifications		-	626
Amortization charge for the year		-	(15,295)
Other changes		(1,565)	-
At 31 December 2021 (restated ¹ )		424,160	294,813
Arising on acquisition	5	28,632	8,921
Capital expenditure on other intangible assets		-	-
Reclassification		-	-
Impairment	10	(14,667)	-
Amortization charge for the period		-	(18,486)
At 31 December 2022		438,125	285,248
At 31 December 2022
Cost		452,792	332,227
Accumulated amortization and impairment charges		(14,667)	(46,979)
Net carrying amount		438,125	285,248

€'000	Brands	Software and other IT intangibles	Total
At 31 December 2021
Cost (restated ¹ )	19,885	24,544	791,895
Accumulated amortization and impairment charges	-	(15,379)	(43,872)
Net carrying amount	19,885	9,165	748,023
At 31 December 2020	-	-	481,942
Arising on acquisition (restated ¹ )	19,885	5,526	278,675
Capital expenditure on other intangible assets	-	1,783	1,783
Reclassifications	-	3,686	4,312
Amortization charge for the year	-	(1,830)	(17,125)
Other changes	-	-	(1,565)
At 31 December 2021 (restated ¹ )	19,885	9,165	748,023
Arising on acquisition	-	6	37,559
Capital expenditure on other intangible assets	-	3,563	3,563
Reclassification	-	(19)	(19)
Impairment	-	-	(14,667)
Amortization charge for the period	-	(2,943)	(21,429)
At 31 December 2022	19,885	9,772	753,030
At 31 December 2022
Cost	19,885	24,524	829,428
Accumulated amortization and impairment charges	-	(14,752)	(76,398)
Net carrying amount	19,885	9,772	753,030

¹⁾ The amount of goodwill is restated and does not correspond to the figures in 2021 Group financial statements since adjustments to the final valuation of acquisition of Mahler Group were made, as detailed in Note 5 of the Group's consolidated financial statements

The customer relationships relate predominantly to non-contractual customer relationships. The remaining useful lives for the period ended 31 December 2022 range between 8 and 20 years (2021: 9 and 21 years). Arising on acquisition in 2022 relates to the customer relationships recognized as part of the purchase price allocation of Nelemans.

Brands reflect the Maxmat brand, following the acquisition of Maxmat during 2021. The brand is considered to have an indefinite useful life due to the stability of the industry and market in which the asset is deployed, the continuous technical, technological and commercial maintenance of the asset, and the resulting intended long-term usage. The brand is long-standing and well known in the market.

10 GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

For impairment testing, goodwill acquired through business combinations and brand names with indefinite useful lives are allocated to cash-generating units (CGUs) expected to benefit from the business combination. The carrying amounts of goodwill allocated to CGUs and brands recognized through business combinations are as follows:

	Goodwill		Brands
€'000	2022	2021 (restated ¹ )	2022	2021
Cash-generating unit
BME Bouwmaten	31,850	31,850	-	-
BMN Netherlands	108,269	93,817	-	-
BMB Belgium	3,090	2,091	-	-
STG Belgium	28,306	42,973	-	-
Bauking Germany	107,512	107,512	-	-
SHK Germany	29,414	27,404	-	-
BME France	12,596	6,446	-	-
BME Spain	75,686	70,667	-	-
Maxmat Portugal	41,393	41,393	19,885	19,885
Total	438,125	424,160	19,885	19,885

¹⁾ The amount of goodwill is restated and does not correspond to the figures in 2021 Group financial statements since adjustments to the final valuation of acquisition of Mahler Group were made, as detailed in Note 5 of the Group's consolidated financial statements

The Group's operations can be divided into eleven CGUs that represent the lowest level at which the associated goodwill (if any) is monitored for internal management purposes: BME Bouwmaten, Quester Austria, BMB Belgium, BMS Switzerland, Bauking Germany, BME France, BMN Netherlands, STG Belgium, SHK Germany, BME Spain and Maxmat Portugal. All businesses within the CGUs exhibit similar and/or consistent profit margins and asset intensity characteristics.

Goodwill increased by €28,632 thousand as a result of the eleven business combinations conducted in 2022. The Group considers the business combinations of Nelemans as the only individual material business combination. The Group allocated Goodwill of €14,022 thousand to BMN Netherlands as the result of the business combination of Nelemans.

The Group furthermore recognized an aggregated Goodwill of €14,610 thousand as the result of the individual immaterial business combinations.

Impairment testing

Goodwill and brand names with indefinite useful lives are subject to impairment testing on an annual basis. The recoverable amount of a CGU is based on fair value less costs of disposal. The fair value less costs of disposal represent the present value of the future cash flows, including the terminal value, discounted at a rate appropriate to each CGU (Level 3 valuation). Cash flow forecasts are based on a four-year forecast. The forecasts used are included in the Group's 2022 Strategic Plan, which considered market conditions and developments in the respective markets of the Group.

Key assumptions

The key assumptions used for the fair value less costs of disposal calculations relate to the discount rate, terminal value growth rate, revenue growth and EBITDA margin. The post-tax discount rates reflect specific risks relating to relevant CGUs and the key assumptions used in the cash flow projections and the composition of the assets and liabilities included in the CGUs carrying value.

The post-tax discount rates are as follows:

Cash-generating unit	2022	2021
BME Bouwmaten	10.8 %	8.7 %
BMN Netherlands	10.8 %	8.7 %
BMB Belgium	11.5 %	9.2 %
STG Belgium	11.5 %	9.2 %
Bauking Germany	10.7 %	8.7 %
SHK Germany	10.7 %	8.7 %
BME France	11.4 %	9.2 %
BME Spain	12.7 %	10.1 %
Maxmat Portugal	13.1 %	10.3 %

The revenue growth rates and EBITDA margins used to estimate future performance are based on past performance, external market growth assumptions and industry long-term growth averages. The average annual compounded revenue growth rates applied in the projected period ranged between 3.2 % and 10.1 % (2021: 3.1 % and 10.1 %).

The terminal value year EBITDA margins applied ranged between 5.4 % and 12.1 % (2021: 5.5 % and 12.2 %). Projected cash flows beyond the initial evaluation period of four years have been extrapolated using a terminal value growth rate of 2.0 % (2021: 0.0 %) for all CGUs, equaling the long-term eurozone inflation expectations.

2022 annual impairment test

The 2022 annual impairment testing process has resulted in an impairment of goodwill of €14,667 thousand (2021: € nil) in our STG Belgium business, explained by revisions to the expected future cashflows of the CGU. STG Belgium experienced a period of operational disruption following centralization of warehouses, which delayed the expected growth of the business. In combination with the higher market interest rates, the recoverable amount of the CGU reduced compared to prior years. The impairment charge is recorded within the operating costs in the consolidated statement of income. The key assumptions used to determine the recoverable amount of STG Belgium are presented below:

Key assumption
Post-tax discount rate	11.5 %
Terminal value growth rate	2.0 %
Terminal value EBITDA margin (pre-IFRS 16)	7.5 %
Average compounded revenue growth rate	10.1 %

The impact of a change in the key assumptions on the STG Belgium CGU impairment charge would be as follows:

Additional impairment that would arise as a result of		In €'000
Post-tax discount rate	Increase by 0.5 %	9,932
Terminal value growth rate	Decrease by 0.5 %	5,029
EBITDA margin	Decrease by 0.5 %	12,454

The 2022 annual impairment testing process for goodwill and brand names with indefinite useful lives has not resulted in any impairments for all other CGUs. The results of the annual impairment test of BME Spain indicates that the fair value less costs of disposal of the CGU is sensitive to the key assumptions used as presented below, with a headroom of 5.5 % (or €7.5 million). This means that there is a higher risk that deviations in the mentioned key assumptions could cause the recoverable amount to fall below the level of its carrying value. The key assumptions used to determine the recoverable amount of BME Spain are presented below:

Key assumption
Post-tax discount rate	12.7 %
Terminal value growth rate	2.0 %
Terminal value EBITDA margin (pre-IFRS 16)	10.1 %
Average compounded revenue growth rate	6.1 %

It was noted that an increase of 60 basis points in the post-tax discount rate, a 100 basis points decline in the terminal value growth rate or a 70 basis points decrease in terminal value EBITDA margin would, individually, cause its recoverable amount to fall to the level of its carrying value.

The results of the annual impairment test of all other CGUs indicate that a reasonably possible change in key assumptions would not cause the fair value less costs of disposal to fall to the level of the carrying value.

By their nature, forward-looking statements involve risks and uncertainties as they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, actual results of operations, financial condition and liquidity may differ from those assumed in the forward-looking statements.

11 PROPERTY, PLANT, AND EQUIPMENT

The carrying amounts of property, plant and equipment developed as follows:

€'000	Notes	Land and buildings	Furniture fittings and equipment
At 31 December 2021
Cost		565,189	129,504
Accumulated depreciation		(109,175)	(75,152)
Net carrying amount		456,014	54,352
At 31 December 2020		366,547	41,947
Arising on acquisition	5	91,728	17,204
Additions at cost		24,625	15,344
Disposals at net carrying amount		(3,367)	(294)
Divestment Raboni Normandie		(334)	(775)
Depreciation expense		(22,895)	(15,067)
Reclassifications		(6,176)	(4,232)
Translation adjustments		5,886	225
At 31 December 2021		456,014	54,352
Arising on acquisition	5	25,499	2,835
Additions at cost		15,463	15,601
Disposals at net carrying amount		(7,661)	(370)
Depreciation expense		(24,973)	(17,482)
Reclassifications		1,473	66
Translation adjustments		6,525	230
At 31 December 2022		472,340	55,232
At 31 December 2022
Cost		676,622	154,105
Accumulated depreciation		(204,282)	(98,873)
Net carrying amount		472,340	55,232

€'000	Machinery and vehicles	Assets in course of construction	Total
At 31 December 2021
Cost	69,200	3,863	767,756
Accumulated depreciation	(33,637)	-	(217,964)
Net carrying amount	35,563	3,863	549,792
At 31 December 2020	21,309	6,385	436,188
Arising on acquisition	3,959	224	113,115
Additions at cost	8,657	1,474	50,100
Disposals at net carrying amount	(186)	(26)	(3,873)
Divestment Raboni Normandie	12	(1)	(1,098)
Depreciation expense	(8,060)	-	(46,022)
Reclassifications	9,690	(4,194)	(4,912)
Translation adjustments	181	1	6,293
At 31 December 2021	35,563	3,863	549,792
Arising on acquisition	2,064	42	30,440
Additions at cost	8,857	14,891	54,812
Disposals at net carrying amount	(31)	(58)	(8,120)
Depreciation expense	(9,382)	-	(51,837)
Reclassifications	(447)	(1,901)	(809)
Translation adjustments	180	(5)	6,930
At 31 December 2022	36,804	16,832	581,208
At 31 December 2022
Cost	88,596	16,832	936,156
Accumulated depreciation	(51,792)	-	(354,947)
Net carrying amount	36,804	16,832	581,208

In 2022, the Group sold property, plant and equipment with a total net carrying amount of €8,120 thousand (2021: €3,873 thousand), which resulted in a profit on disposal of €18,354 thousand (2021: €29,476 thousand).

Capital expenditure contracted for at the end of the year but not recognized as liabilities amount to €45,458 thousand (2021: €20,203 thousand). No items of property, plant and equipment have been pledged as collateral.

12 RIGHT-OF-USE ASSETS

The carrying amounts of right-of-use assets related to leases entered by the Group, other than short-term leases and leases of low-value assets, developed as follows:

€'000	Notes	Land and buildings	Machinery and vehicles	Other	Total
At 31 December 2020		326,485	39,375	4,824	370,684
Arising on acquisition	5	85,712	14,859	2,246	102,817
Additions at cost		59,484	7,846	1,874	69,204
Divestment Raboni Normandie		(2,771)	(2,513)	(11)	(5,295)
Depreciation expense		(68,974)	(15,859)	(1,804)	(86,637)
Disposals at net carrying amount		-	(372)	-	(372)
Reclassifications		(1,347)	374	(707)	(1,680)
Adjustment as a result of remeasurement of the lease liability		15,630	178	27	15,835
Translation adjustment		2,058	463	-	2,521
At 31 December 2021		416,277	44,351	6,449	467,077
Arising on acquisition	5	22,327	1,498	58	23,883
Additions at cost		19,452	15,213	1,209	35,874
Depreciation expense		(81,582)	(18,792)	(2,088)	(102,462)
Disposals at net carrying amount		(246)	(308)	-	(554)
Reclassifications		(2,745)	(2,142)	2,260	(2,627)
Adjustment as a result of remeasurement of the lease liability		41,711	3,657	(55)	45,313
Translation adjustment		2,358	492	1	2,851
At 31 December 2022		417,552	43,969	7,834	469,355

Further details on the nature of Group's leasing activities are disclosed in Note 25 of the Group's consolidated financial statements.

13 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

The below table provides an overview of the Group's investments in joint ventures and associates accounted for using the equity method. The Group considers all investments as individually immaterial investments and information is therefore aggregated by country of incorporation of the investment. The percentages of ownership did not change compared to 2021. A full list of investments in joint ventures, associates, and other interests is disclosed in Note 33 of the Group's consolidated financial statements.

Investment	% of ownership interest	2022	2021
Joint ventures
Germany (10 investments)	50 %	10,483	10,491
Netherlands (3 investments)	50 %	1,259	1,299
Associates
Germany (8 investments)	25-49 %	4,268	4,105
Netherlands (1 investment)	31 %	2,998	2,998
France (1 investment)	25 %	219	219
Total equity-accounted investments		19,227	19,112

The following table provides a movement schedule for the investments accounted for using the equity method:

Reconciliation to carrying amounts	Maxmat	Other joint ventures & associates	Total
At 31 December 2020	44,599	21,574	66,173
Share of profit for the period/year	4,659	3,183	7,842
Reclassification	-	(2,650)	(2,650)
Dividends received	-	(2,346)	(2,346)
Fair value remeasurement upon obtaining control	11,722	-	11,722
Derecognition due to obtaining control	(60,980)	-	(60,980)
Disposal	-	(649)	(649)
At 31 December 2021	-	19,112	19,112
Share of profit for the year	-	2,006	2,006
Dividends received	-	(1,891)	(1,891)
At 31 December 2022	-	19,227	19,227

The 2021 share of profit for the year of Maxmat reflects the period from 1 January 2021 to 31 August 2021, as Maxmat became a consolidated subsidiary of the Group as 1 September 2021. The fair value remeasurementdue to obtaining control of Maxmat of €11,722 thousand has been recorded in the Group's consolidated statement of income under'profit on disposals'. Further details of the acquisition of Maxmat in 2021 is disclosed in Note 5 of the Group's consolidated financial statements.

Individually immaterial investments

The Group has interests in several individually immaterial joint ventures and associates that are accounted for using the equity method. The aggregate share of profit (after tax) attributable to the Group that has been recorded in the consolidated statement of income regarding these investments amounting to €2,006 thousand (2021: €3,183 thousand).

14 INVESTMENTS AND OTHER RECEIVABLES

€'000	2022	2021
Other minority stake investments	2,978	2,952
Other loan receivables	85	162
Deposits	6,634	4,821
Other receivables, prepayments and other income	3,695	1,503
Loans to related parties	4,083	3,676
Total investments and other receivables	17,475	13,114

The investments and other receivables relate to (minority) stakes in other entities - held at fair value through profit and loss - over which the Group neither has (joint) control nor significant influence - amounting to €2,978 thousand (2021: €2,952 thousand), loans receivable amounting to €4,168 thousand (2021: €3,838 thousand) and long-term deposits and down payments in relation to lease contracts for land and buildings amounting to €6,634 thousand (2021: €4,821 thousand).

15 INVENTORIES

Inventories consist of the following:

€'000	2022	2021
Finished goods	667,933	570,045
Total inventories at the lower of cost and net realizable value	667,933	570,045

The increase in inventories compared to 31 December 2021 is the result of the changes in the scope of consolidation, with €27 million of inventories acquired as a result of acquisitions throughout the year, as well as price increases of certain product categories such as outer wall bricks, tiles and mineral wool.

Inventories recognized as an expense within cost of sales amounted to €3,915,268 thousand (2021: €3,269,951 thousand), including write-downs (net of reversals and writeoffs of inventories) to net realizable value of inventories of €9,077 thousand (2021: €11,027 thousand).

16 TRADE AND OTHER RECEIVABLES

The below table presents the position of the trade and other receivables per 31 December:

€'000	Notes	2022	2021 (restated ¹ )
Trade receivables, gross		453,815	368,497
Loss allowance		(29,802)	(24,599)
Trade receivables, net		424,013	343,898
Other receivables (restated ¹ )		185,495	174,575
Receivables from associates	27	2,051	-
Short-term factoring receivables		16,017	14,481
Prepayments and accrued income		13,150	11,103
Total		640,726	544,057

¹⁾ The amount of other receivables is restated and does not correspond to the figures in 2021 Group financial statements since adjustments to the final valuation of acquisition of Mahler Group were made, as detailed in Note 5 of the Group's consolidated financial statements

The increase in trade receivables compared to 31 December 2021 is the result of higher sales, as well the changes in the scope of consolidation, with close to €34 million of trade receivables acquired as a result of acquisitions throughout the year.

Other receivables mainly consist of supplier bonusses of €157 million (2021: €134.3 million). Trade and other receivables are measured at amortized cost (less any allowance) as the Group's business model is to 'hold to collect' contractual cash flows, and the cash flows arising from trade and other receivables are solely payments of principal and interest.

Trade receivables are amounts due from customers for goods sold in the ordinary course of business. They are generally due for settlement within 30 to 90 days and are therefore all classified as current. The Group operates a non-recourse factoring program with Eurofactor GmbH ('Eurofactor'), as a result of which trade receivables are sold to Eurofactor and derecognized from the consolidated statement of financial position.

Short-term factoring receivables amounting to €16,017 thousand (2021: €14,481 thousand) represent customer invoices sold to Eurofactor under the program but not yet received as retained under the program conditions. These short-term factoring receivables are considered as non-operating trade and other receivables. Invoices sold to and paid by Eurofactor that have subsequently also been paid by customers are presented as a short-term factoring debt to Eurofactor as disclosed in Note 26 of the Group's consolidated financial statements.

In general, no interest is charged on outstanding trade and other receivables. The carrying amounts of trade and other receivables approximate their fair value largely due to the short-term nature (current receivables) of these financial instruments.

Impairment and exposure

The Group measures the loss allowance for trade and other receivables via a simplified approach at an amount equal to lifetime expected credit losses ('ECL'). The simplified approach allows the Group to recognize lifetime expected credit losses for trade and other receivables that do not contain a significant financing component.

An impairment analysis is performed at each reporting date. The expected credit losses on trade receivables are estimated by considering past default experience of the debtor and an analysis of the debtor's current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Generally, the Group writes-off a trade receivable (that is in default) when there is information indicating that the debtor is in severe financial difficulty and there are no realistic prospects of recovery or experience has indicated that these receivables are generally not recoverable.

The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

The aging analysis of trade receivables and expected credit losses at the reporting date was as follows:


2022	Total	Not past due
Gross value trade receivable	453,815	328,223
Loss allowance	29,802	551
Expected credit loss rate		0.2 %

	Past due
2022	1-30 days	31-60 days	61-120 days	> 121 days
Gross value trade receivable	70,824	21,587	11,369	21,812
Loss allowance	1,714	2,364	5,756	19,418
Expected credit loss rate	2.4 %	10.9 %	50.6 %	89.0 %


2021	Total	Not past due
Gross value trade receivable	368,498	244,863
Loss allowance	24,599	-
Expected credit loss rate		0.0 %

	Past due
2021	1-30 days	31-60 days	61-120 days	> 121 days
Gross value trade receivable	57,762	18,041	27,803	20,029
Loss allowance	6,280	1,962	4,899	11,459
Expected credit loss rate	10.9 %	10.9 %	17.6 %	57.2 %

The below table sets out the movements in the loss allowance for receivables:

€'000	Notes	2022	2021
At 1 January		24,599	22,999
Arising on acquisition	5	2,337	4,559
Divestment of subsidiaries		-	(497)
Provided during the year		11,016	7,235
Written-off during the year		(5,580)	(5,779)
Recovered during the year		(2,902)	(4,265)
Translation adjustment		332	347
At 31 December		29,802	24,599

17 CASH AND CASH EQUIVALENTS

Cash and cash equivalents balances are spread across a wide number of highly rated financial institutions with no material concentrations in credit or liquidity risk. Cash and cash equivalents are included in the consolidated statement of financial position and consolidated statement of cash flows at amortized cost, and comprise the following:

€'000	2022	2021
Cash on hand, bank balances and checks	438,428	353,411
Total	438,428	353,411

Cash at bank earns interest at floating rates based on daily deposit bank rates.

18 TAXES

The following section includes the disclosures related to the Group's income taxes, both current and deferred. The following table shows the tax expenses recorded in the consolidated statement of income and the consolidated statement of comprehensive income:

€'000	2022	2021
Recognized within the consolidated statement of income
Total current tax expense	(61,579)	(40,687)
Total deferred tax benefit	5,559	5,744
Income tax reported in the consolidated statement of income	(56,020)	(34,943)
Recognized within the consolidated statement of comprehensive income
Deferred tax benefit on retirement benefit obligations	10,768	9,297
Deferred tax expense on net gain on cash flow hedges	(1,556)	-
Income tax reported in the consolidated statement of comprehensive income	9,212	9,297

The current tax expense reported includes €1,987 thousand (2021: €168 thousand) of prior year taxes. The deferred tax expense includes €2,016 thousand (2021: €45 thousand) of prior year taxes.

Effective tax rate of the Group: Reconciliation

The income tax expense of €56,020 thousand in the year 2022 (2021: €34,943 thousand) represents an effective tax rate of 41.9 % (2021: 25.9 %). The following table provides a reconciliation of the Group's effective tax rate to the applicable tax rate, which is derived from multiplying the pre-tax profit with the respective applicable tax rates for the countries in which the Group operates:

Reconciliation of applicable tax rate to effective tax rate	€'000	%	€'000	%
Profit before tax	133,810		134,668
Tax charge expressed as a percentage of profit before tax (effective tax rate):		41.9 %		25.9 %
Total income tax expense (current and deferred)	(56,020)		(34,943)

	2022		2021
	€'000	%	€'000	%
Tax expense on profit before tax at weighted average taxable rate	(36,635)	27.4 %	(33,204)	24.7 %
Non-taxable income (including share of equity-accounted result after tax)	53	0.0 %	5,503	(4.1 %)
Non-tax-deductible expenses	(3,185)	2.4 %	(4,725)	3.5 %
Changes in respect of prior years	(4,939)	3.7 %	45	0.0 %
Change in deferred tax assets and liabilities due to change in tax rate	11	(0.0 %)	(1,648)	1.2 %
Change of (un)recognized deferred tax assets	(7,290)	5.4 %	(224)	0.2 %
Non-deductible impairment of goodwill	(3,206)	2.4 %	-	-
Other	(713)	0.5 %	(690)	0.5 %
Total income tax expense	(56,020)	41.9 %	(34,943)	25.9 %

The effective tax rate increased in 2022 compared to 2021.

The increase mainly relates to a non-recognized deferred tax asset on interest carryforward in the Netherlands. Another increasing effect is the prior year taxes. This is related to Germany and the Netherlands where additional tax returns are submitted which resulted in true-up's of the deferred and current tax position. The true-up adjustments are all changes in estimate. The goodwill impairment in STG Belgium impacts the effective tax rate for 2.4 % as this is a non-deductible impairment.

Deferred tax

The deferred taxes presented in the consolidated statement of financial position predominantly relate to intangible assets and property, plantand equipment.The movement of the net deferred tax position is presented below. The majority of the decrease in the deferred tax liabilities is related to the value of the retirement benefit obligations and Swiss dividends which are accounted for in 2022 for tax purposes.

€'000	2021	Arising on Acquisition	Equity	P&L 2022	2022
Net deferred tax movements on...
• Property, plant & equipment	(42,889)	(2,865)	-	1,859	(43,896)
• Right-of-use assets	(119,794)	(3,189)	-	4,047	(118,937)
• Lease liabilities	122,122	3,189	-	(2,407)	122,904
• Intangible assets	(78,020)	(2,302)	-	4,031	(76,291)
• Inventories	(2,257)	967	-	(2,081)	(3,371)
• Trade and other receivables/ payables	108	295	-	4,312	4,715
• Retirement benefits obligations	(8,014)	151	10,768	(1,167)	1,738
• Provisions	10,687	289	-	(2,803)	8,173
• Investments in subsidiaries	(5,152)	-	-	(1,342)	(6,494)
• Financial instruments	-	-	(1,556)	-	(1,556)
• Other deductible temporary differences	(54)	(998)	-	438	(614)
• Tax losses	4,690	2,181	-	671	7,542
Total	(118,574)	(2,283)	9,212	5,559	(106,085)

The deductible differences in respect of which deferred tax has been recognized are as follows:

€'000	2022	2021
Deferred income tax assets on ...
• Intangible assets	-	14
• Property, plant & equipment	27	865
• Inventories	2,195	2,701
• Trade and other receivables/ payables	4,731	445
• Lease liabilities	122,904	122,122
• Provisions	9,371	11,828
• Retirement benefit obligations	1,738	3,398
• Tax losses	7,541	4,689
• Other deductible temporary differences	546
Offsetting/netting	(142,682)	(145,312)
Total	6,372	752

The taxable differences in respect of which deferred tax has been recognized are as follows:

€'000	2022	2021
Deferred income tax liabilities on ...
• Intangible assets	76,291	78,034
• Property, plant & equipment	43,923	43,755
• Right-of-Use assets	118,937	119,794
• Investments in subsidiaries	6,494	5,152
• Inventories	5,566	4,958
• Trade and other receivables/ payables	16	337
• Retirement benefits obligations	-	11,412
• Financial instruments	1,556	-
• Provisions	1,197	1,141
• Other taxable temporary differences	1,159	55
Offsetting/netting	(142,682)	(145,312)
Total	112,467	119,328

The increase in the deferred income tax liability on investments in subsidiaries relates to Switzerland.

Deferred tax assets have been recognized in respect of all tax loss carry forwards and deductible temporary differences where recovery is probable. The unrecognized tax losses are mainly related to Switzerland (gross amount of €3.7 million, 2021: €12.2 million) and Germany (gross amount of €4.9 million, 2021: €5.4 million). The total amount of tax losses where recovery is not probable and therefore not recognized in the consolidated statement of financial position amounts to €14.1 million (2021: €21.4 million). The amount of deductible temporary differences where recovery is not probable and therefore not recognized in the consolidated statement of financial position amounts to €6.8 million (2021: €6.8 million) and relates fully to Austria. The remainder of €32.8 million relates to interest carry forward for which no deferred tax asset has been recognized in the Netherlands.

€'000	2022	2021
Expiry period of unrecognized tax losses & temporary deductible differences
Tax losses expiring within 1 year	899	576
Tax losses expiring in the next 2 to 10 years	2,829	11,387
Tax losses expiring after 10 years	-	-
Tax losses without expiration	10,327	9,398
Unrecognized temporary differences (no expiration date)	39,529	6,780
Total	53,584	28,141

Factors that may affect future tax charges and other disclosure requirements:

Changes in tax rates

The total tax charge in future periods will be affected by any changes to the tax rates in force in the countries in which the Group operates.

Investments in subsidiaries

At 31 December 2022, the temporary differences associated with investments in subsidiaries and associates, including potential income tax consequences on dividends, for which no deferred tax liabilities are recognized, are immaterial. This is due to the fact that BME operates only in European countries for which European tax guidelines are available to limit the taxation on dividend distribution or provides credits for taxes to be paid on distribution of unremitted earnings.

19 NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

The carrying amounts of non-current assets held for sale by the Group are as follows:

€'000	2022	2021
Land and buildings	-	1,616
Total non-current assets held for sale	-	1,616

Non-current assets held for sale as at 31 December 2021 consisted of one remaining property in Switzerland out of the entire portfolio of some of the Group's properties sold in December 2020 and March 2021. Proceeds of this property are received in 2022, with a profit on disposal of €4,679 thousand.

20 EQUITY AND CAPITAL MANAGEMENT

Shares and share capital

The number and value of ordinary shares issued by the Group are as follows:

	2022		2021
Share capital	Number	€'000	Number	€'000
Issued and fully paid
Ordinary shares of €0.4479 each	479,805,545	215,769	479,805,545	215,769

The share capital and share premium of the Group developed as follows during the period:

	Number of shares	Par value	Share premium	Total
		€'000	€'000	€'000
At 1 January 2021	479,805,545	479,806	2,543	482,349
Reduction of nominal share capital	-	(264,037)	-	(264,037)
In issue at 31 December 2021 and 31 December 2022	479,805,545	215,769	2,543	218,312

Ordinary shares

Ordinary shares have a par value of €0.4479 (2021: €0.4479). Clay Topco S.a.r.l. reduced in 2021 the nominal value of all shares in the capital of the Company from €1 to €0.04479. After this reduction, the share capital of the Company amounts €215,769 thousand.

The Company used the proceeds of the capital reduction for a capital distribution to Clay Topco S.a.r.l. in cash. The authorized number of shares is 479,805,545, equaling the number of issued shares. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally regarding the Company's residual assets.

Share premium

The share premium includes the proceeds from the issuing of shares in so far as these exceed the nominal value of the shares (proceeds above par value).

Other capital reserves

Other capital reserves include the costs related to the equity-settled management co-investment plan. Further details of the equity-settled management co-investment plan is disclosed in Note 29 of the Group's consolidated financial statements.

Legal reserves

The legal reserves of the Group relates to the foreign currency translation reserve, the cash flow hedging reserve and the cost of hedging reserve. Legal reserves are not available for distribution to the Company's shareholders. An amount of €56,723 thousand (2021: €24,606 thousand) is non-distributable. Further details of the legal reserves are disclosed in Note 10 of the company financial statements.

Non-controlling interests

The non-controlling interests relate to minority stakes held by third parties in the Group's consolidated subsidiaries. The total non-controlling interests as of 31 December 2022 amounted to €11,735 thousand (2021: €12,689 thousand).

Capital management

The Group's capital management strategy is to focus on cash flow management, working capital management and to remain a robust capital structure in order to maintain strong creditor and market confidence as well to maximize shareholder value.

The Group generated in 2022 a cash flow from operating activities of €275 million. To manage operating cash flows, changes in economic conditions are taken into account as well as the effects of working capital and other initiatives. Free cash flows are used to finance investments in capital expenditures and acquisitions.

To manage its capital structure, the Group may consider both interest-bearing loans and other alternative fundings. The capital structure is managed based on the leverage ratio.

The leverage ratio is calculated based on the Senior Net debt/ Adjusted EBITDA (Pro-forma) ². The leverage ratio at 31 December was as follows:

€ million	2022	2021
Cash and cash equivalents	(438)	(353)
Senior credit facility- Facility A commitment	180	180
Senior credit facility - Facility B commitment	1,470	1,470
Covenant Net debt	1,212	1,297
Pro forma adjustments	71	(22)
Covenant Net debt (Pro-forma)	1,283	1,275
Adjusted EBITDA (Pro-forma)	389	351
Covenant Net debt/ Adjusted EBITDA (Pro-forma)	3.3	3.6

21 RETIREMENT BENEFIT OBLIGATIONS AND OTHER LONG-TERM EMPLOYEE BENEFITS

The Group operates a mix of defined benefit pension schemes and defined contribution pension schemes, as well as early retirement indemnities and jubilee schemes. The Group has a mix of funded and unfunded defined benefit pension and jubilee schemes, resulting in the following net assets and liabilities presented in the consolidated statement of financial position, consisting of assets and obligations related to schemes in the following countries:

€'000 - Net asset/(liability) per country	Gross assets 2022	Gross liabilities 2022	Net liability 2022
Austria	-	(4,018)	(4,018)
Belgium	469	(495)	(26)
France	-	(2,144)	(2,144)
Germany	2,162	(10,480)	(8,318)
Netherlands	3,478	(7,231)	(3,753)
Switzerland	499,519	(500,925)	(1,406)
Total funded status	505,628	(525,293)	(19,665)

€'000 - Net asset/(liability) per country	Gross assets 2021	Gross liabilities 2021	Net asset/ (liability) 2021
Austria	-	(5,025)	(5,025)
Belgium	430	(464)	(34)
France	-	(1,711)	(1,711)
Germany	1,979	(14,159)	(12,180)
Netherlands	5,178	(9,032)	(3,854)
Switzerland	672,858	(599,326)	73,532
Total funded status	680,445	(629,717)	50,728

²⁾ Senior Net Debt is calculated as the drawn senior credit facilities (the Senior credit Facility A and Facility B commitments and Revolving Facility commitment disclosed in Note 23), less cash and cash equivalents. Adjusted EBITDA (Pro-forma) is earnings before interest, taxes, impairments, depreciation and amortization, excluding the effects of IFRS 16 and non-recurring costs. In addition, EBITDA is adjusted for run-rate cost savings, other run-rate initiative benefits, run-rate synergies and minority contributions (as included in the Senior Facility Agreement) and it has been agreed with the investors that in the calculation of the debt leverage ratio, signed acquisitions but not yet closed may be taken into account in the leverage ratio (Pro-forma).

The pension scheme in Switzerland is a contribution-based scheme with guarantees to provide further contributions if certain targets are not met, largely in relation to investment return and the annuity conversion factor on retirement. It therefore qualifies for recognition as a defined benefit pension plan.

The scheme is administered by a separate fund that is legally distinct from the Group under the jurisdiction of trustees. All plans operated in Switzerland have a legal minimal funding requirement. If it is necessary to require supplemental contributions for recovering the under- funding, the employer has to pay at least 50 % of such contributions. No supplemental contributions related to the funding requirements have been introduced in 2022 neither in 2021.

The trustees of this pension fund are required by law and by their articles of association to act in the best interests of the scheme participants and are responsible for the scheme administration and to define the investment strategy. Other schemes are equally administered in line with the respective local regulatory environments.

The level of benefits available to most members depends on the length of service and either their average salary over their period of employment or their salary in the final years leading up to retirement.

1) Defined benefit retirement and other long-term benefit schemes: Principal risks

Through its defined benefit retirement and other long-term benefit schemes, the Group is exposed to several risks, the most significant of which are detailed below:

Asset volatility: Under IFRS, the assets of the Group's defined benefit retirement and other long-term benefit schemes are reported at fair value. The majority of the schemes' assets comprise equities, bonds and property, all of which may fluctuate significantly in value from period to period. Given that liabilities are discounted to present value based on bond yields and that bond prices are inversely related to yields, an increase in the liability discount rate (which would reduce liabilities) would reduce bond values, though not necessarily by an equal magnitude.

Given the maturity of certain of the funded defined benefit retirement and other long-term benefit schemes, de-risking frameworks have been introduced to mitigate deficit volatility and enable better matching of investment returns with the cash outflows related to benefit obligations. These frameworks entail the usage of asset-liability matching techniques, whereby triggers are set for the conversion of equity holdings into bonds of similar average duration to the relevant liabilities.

Discount rates: The discount rates employed in determining the present value of the schemes' liabilities are determined by reference to market yields at the reporting date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment benefit obligations. Changes in discount rates impact the quantum of liabilities as discussed above.

Inflation risk: A significant amount of the Group's pension obligations are linked to inflation. Higher inflation will lead to higher liabilities (although in most cases, caps on the level of inflationary increases are in place to protect the schemes against extreme inflation).

Longevity risk: In most cases, the Group's defined benefit retirement and other long-term benefit schemes provide benefits for life with spousal and dependent child reversionary provisions; increases in life expectancy (decreases in mortality assumptions) will therefore give rise to higher liabilities.

2) Defined benefit retirement and other long-term benefit schemes: Financial and actuarial assumptions

The major long-term financial assumptions used by the Group in the computation of the principal scheme liabilities are as follows:

Financial assumptions in %	Discount rate		Salary increase rate
	2022	2021	2022	2021
Austria	3.95 %	0.54 %	2.20 %	1.50 %
Belgium	4.15 %	1.35 %	3.20 %	2.80 %
France	4.05 %	1.15 %	2.90 %	2.50 %
Germany	4.10 %	1.10 %	2.75 %	2.75 %
The Netherlands	4.05 %	0.91 %	2.20 %	1.80 %
Switzerland	2.25 %	0.20 %	2.50 %	1.25 %

Financial assumptions in %	Pension-in payment increase rate		Price inflation rate
	2022	2021	2022	2021
Austria	2.20 %	1.80 %	2.20 %	1.80 %
Belgium	N/a	N/a	2.20 %	1.80 %
France	N/a	N/a	2.20 %	1.80 %
Germany	2.20 %	1.80 %	2.20 %	1.80 %
The Netherlands	0.50 %	0.00 %	2.20 %	1.80 %
Switzerland	0.00 %	0.00 %	2.00 %	0.75 %

Mortality assumptions related to the Group's defined benefit retirement and other long-term benefit schemes factor in the future life expectations of the plan participants based on retirement at 65 years of age for current and future retirees. The following assumptions have been used in the valuation:

Life expectancy in years, at age 65	Austria		Germany
	2022	2021	2022	2021
Current retirees
- Male	23.4	23.0	20.6	20.3
- Female	25.8	25.5	24.0	23.8
Future retirees
- Male	26.7	26.3	24.0	23.7
- Female	28.8	28.5	26.8	26.6

Life expectancy in years, at age 65	The Netherlands		Switzerland
	2022	2021	2022	2021
Current retirees
- Male	21.5	21.2	22.7	22.7
- Female	24.3	23.9	24.5	24.8
Future retirees
- Male	24.1	23.6	25.5	24.8
- Female	26.7	26.1	26.9	26.8

3) Defined benefit retirement and other long-term benefit schemes: amounts recorded in the consolidated statement of income

The total retirement benefit expense recorded in the consolidated statement of income for the reporting period is as follows:

€'000	2022	2021
Defined contribution expense	18,419	14,091
Defined benefit expense	14,186	16,592
Total expense in consolidated statement of income	32,605	30,683

Defined benefit expenses recorded in the consolidated statement of income for the reporting period can be broken down as follows:

Analysis of defined benefit expense

€'000	2022	2021
Charged in arriving at profit before finance costs:
Current service cost	14,455	18,088
Administration expenses	671	598
Past service credit (net)	42	(2,123)
Remeasurements of Other Long-Term Benefits	(1,115)	(24)
Subtotal	14,053	16,539
Included in finance income and finance costs respectively:
Interest income on scheme assets	(6,175)	(1,924)
Interest cost on scheme liabilities	6,309	1,977
Net interest expense	133	53
Net expense in consolidated statement of income	14,186	16,592

4) Defined benefit retirement schemes: Amounts recorded in other comprehensive income

The following table provides an overview of the effects related to the period-end remeasurement of the defined benefit obligation and the plan assets related to the defined benefit retirement schemes. For these schemes, the below remeasurements related to actuarial gains, losses and experience adjustments are recorded in other comprehensive income.

	2022
€'000	On plan liabilities	On scheme assets	Net effect
Return on scheme assets (excluding interest income)	-	(92,594)	(92,594)
Experience variations	4,146	-	4,146
Actuarial gain from changes in financial assumptions	129,039	-	129,039
Actuarial gain from changes in demographic assumptions	(28)	-	(28)
Changes in asset ceiling (excluding interest income)	-	(112,679)	(112,679)
Total for the year	133,157	(205,273)	(72,116)

	2021
€'000	On plan liabilities	On scheme assets	Net effect
Return on scheme assets (excluding interest income)	-	40,131	40,131
Experience variations	(9,776)	-	(9,776)
Actuarial gain from changes in financial assumptions	5,870	-	5,870
Actuarial gain from changes in demographic assumptions	23,269	-	23,269
Changes in asset ceiling (excluding interest income)	-	-	-
Total for the year	19,363	40,131	59,493

Return on assets amounted to a loss of €92,594 thousand (2021: gain of €40,131 thousand), primarily driven by a decrease of equity and bond values compared to 2021 following macroeconomic developments.

The actuarial gain from changes in financial assumptions is mainly driven by the increase in the discount rate assumption. Due to changes in the market conditions, the yield on AA-corporate bonds increased significantly compared to 2021 which is reflected in a higher discount rate as of 31 December 2022.

As at 31 December 2022, there is a surplus in the plan operated in Switzerland of €114.4 million. This surplus is restricted as the IAS 19 service cost is less than the expected employer contributions (mainly following the increase in the discount rate assumption), and according to IFRIC 14, there is currently no expected economic benefits available in the pension fund. For this reason, the surplus is reduced to €0.5 million with a change in asset ceiling recorded in the consolidated other comprehensive income of €112,679 thousand.

5) Defined benefit retirement and other long-term benefit schemes: Reconciliation of opening to closing balances for scheme assets and defined benefit obligations

The following tables provide a reconciliation of the gross amounts recognized in the consolidated statement of financial position for the respective defined benefit retirement and other long-term benefits schemes.

Reconciliation of scheme assets

€'000	Notes	2022	2021
At 1 January		680,445	620,918
Interest income on scheme assets		6,175	1,924
Arising on acquisition	5	163	-
New plans added		-	-
Remeasurement adjustments:
- return on scheme assets excluding interest income		(92,594)	40,131
- changes in asset ceiling excluding interest income		(112,679)	-
Employer contributions paid		14,564	12,709
Contributions paid by plan participants		7,845	6,533
Benefit and settlement payments:
- from plan assets		(24,732)	(28,783)
- from employer		(1,840)	(1,728)
Administration and other expenses		(683)	(610)
Translation adjustment		28,961	29,351
At 31 December		505,628	680,445

Expected employer contributions for the year 2023 amount to approximately €14,854 thousand (2021: €14,045 thousand).

The scheme assets relate to defined benefit plans located in the following countries:

€'000	2022	2021
Belgium	469	430
Germany	2,162	1,979
Netherlands	3,478	5,178
Switzerland	612,198	672,858
Subtotal	618,307	680,445
Changes in asset ceiling excluding interest income	(112,679)	-
Total	505,628	680,445

Composition of scheme assets

The following table provides an overview of the composition of the scheme assets related to the Group's defined benefit retirement and other long-term benefit schemes as of the reporting date. Out of these scheme assets, a balance of €504,077 thousand (2021: €584,642 thousand) has a quoted market price, while a balance of €114,230 thousand (2021: €95,803 thousand) does not have a quoted market price.

€'000	2022	2021
Equity instruments	201,474	254,576
Debt instruments	266,804	290,140
Real estate	129,770	121,707
Cash and cash equivalents	14,302	6,422
Insurance contracts	5,957	7,600
Subtotal	618,307	680,445
Changes in asset ceiling excluding interest income	(112,679)	-
Total	505,628	680,445

Reconciliation of defined benefit obligations

€'000	Notes	2022	2021
At 1 January		629,717	627,946
Current service cost		14,455	18,088
Past service credit (net)		42	(2,123)
Interest cost on scheme liabilities		6,309	1,977
Arising on acquisition	5	884	1,326
Remeasurement adjustments:
- experience variations		(4,274)	9,774
- actuarial (gain)/loss from changes in financial assumptions		(130,094)	(5,872)
- actuarial gain from changes in demographic assumptions		108	(23,271)
Contributions paid by plan participants		7,845	6,533
Benefit and settlement payments:
- from plan assets		(24,732)	(28,783)
- by employer		(1,840)	(1,740)
Translation adjustment		26,873	25,862
At 31 December		525,293	629,717

These obligations relate to defined benefit plans located in the following countries:

€'000	2022	2021
Austria	4,018	5,025
Belgium	495	464
France	2,144	1,711
Germany	10,480	14,159
Netherlands	7,231	9,032
Switzerland	500,925	599,326
Total	525,293	629,717

The average duration of the defined benefit plan obligations at the reporting date is 10.9 years for Austria (2021: 7.6 years), 15.4 years for France (2021: 11.9 years), 10.8 years for Germany (2021: 13.4 years), 8.4 years for the Netherlands (2021: 10.8 years) and 12.0 years for Switzerland (2021: 15.0 years).

As at 31 December, expected total benefit payments for the next five years and beyond are as follows:

€'000	2022	2021
Year 1	28,665	27,085
Year 2	28,076	25,627
Year 3	26,647	25,466
Year 4	27,321	24,562
Year 5	27,360	24,696
Next 5 years	130,867	119,489
Total	268,936	246,925

6) Defined benefit retirement and other long-term benefit schemes: Additional disclosures

The below sections provide further information related to the Group's defined benefit retirement and other long-term benefit schemes.

Sensitivity analysis

The impact of a change in the principal actuarial assumptions on the Group's defined benefit obligation, both for defined benefit retirement and jubilee schemes, would be as follows. The sensitivity analysis only includes the defined benefit obligation arising from the plan operated in Switzerland. The Group considers the defined benefit obligation operated in Switzerland as the only material defined benefit obligation and therefore did not assess the impact of a change in the principal actuarial assumption on the schemes operated in other countries.

€'000	2022	2021
Defined benefit obligation as of 31 December	500,925	599,326
Revised liabilities:
Discount rate (defined benefit obligation)
Increase by 0.25 %	(14,420)	(21,787)
Decrease by 0.25 %	15,622	23,283
Post-retirement mortality assumption
Increase by 1 year	(12,466)	(21,646)
Decrease by 1 year	12,287	16,452
Salary increase rate
Increase by 0.25 %	(1,021)	(777)
Decrease by 0.25 %	(3,394)	(4,198)
Price inflation rate
Increase by 0.25 %	(1,215)	0,058)
Decrease by 0.25 %	(3,204)	(3,925)

Each sensitivity analysis on the significant actuarial assumptions was prepared by remeasuring the defined benefit obligation at reporting date, after first adjusting one of the current assumptions according to the applicable sensitivity increment or decrement, while all other assumptions remained unchanged. The sensitivities were expressed as the corresponding change in the defined benefit obligation.

22 PROVISIONS

The Group's provisions and movements therein are presented in the following table. Comparative figures have been reclassified for comparability purposes.

€'000	Notes	Restructuring	Dismantling costs
At 1 January 2021		665	3,426
Arising on acquisition	5	147	-
Divestment of subsidiaries		(47)	-
Additions		5,717	-
Utilized		(748)	(440)
Reclassifications		192	-
Unused amounts reversed		-	-
Translation adjustment		-	125
At 31 December 2021		5,926	3,111
Current portion		5,926	-
Non-current portion		-	3,111
At 1 January 2022		5,926	3,111
Arising on acquisition	5	-	-
Additions		2,391	-
Utilized		(5,923)	(228)
Unused amounts reversed		-	-
Discount unwinding		-	84
Translation adjustment		-	60
At 31 December 2022		2,394	3,027
Current portion		2,394	-
Non-current portion		-	3,027

€'000	Litigation	Other	Total
At 1 January 2021	366	1,947	6,404
Arising on acquisition	515	1,319	1,981
Divestment of subsidiaries	(5)	-	(52)
Additions	235	596	6,548
Utilized	(10)	(308)	(1,506)
Reclassifications	(186)	(6)	-
Unused amounts reversed	-	(550)	(550)
Translation adjustment	-	4	129
At 31 December 2021	915	3,002	12,954
Current portion	400	2,563	8,889
Non-current portion	515	439	4,065
At 1 January 2022	915	3,002	12,954
Arising on acquisition	57	1,564	1,621
Additions	428	192	3,011
Utilized	(207)	(2,015)	(8,373)
Unused amounts reversed	(515)	(76)	(591)
Discount unwinding	-	-	84
Translation adjustment	-	86	146
At 31 December 2022	678	2,752	8,852
Current portion	678	2,248	5,321
Non-current portion	-	504	3,531

Restructuring

The restructuring provision decreased by €3,532 thousand, mainly the result of the utilization of the restructuring provision recognized following the centralization of warehouses in Belgium in 2021. The additions in 2022 mainly relate to a restructuring as a result of centralization of warehouses in Germany. The provision is expected to be fully utilized over the next 12 months.

Dismantling costs

The provision for dismantling costs relates to real estate properties leased under IFRS 16 in Switzerland. The provision is expected to be utilized between 1 and 2 years.

Other provisions

Other provisions consist of environment & remediation costs and various other individually immaterial provisions. The utilization during the year mainly relates to a provision recognized part of the SGBDNL acquisition in 2021. These provisions are for €2,248 thousand expected to be utilized over the next 12 months and the remainder is expected to be utilized between 1 and 2 years.

Management is not aware of any potential changes to key assumptions that would have a significant risk of causing a material adjustment to the carrying value of provisions within the next financial year.

23 BORROWINGS

The below table provides a breakdown of the Group's outstanding borrowings:

	2022
€'000	Current	Non-current	Total
Interest-bearing loans and borrowings ^*	19,452	1,627,757	1,647,209
Short-term factoring debt	64,004	-	64,004
Lease liabilities	92,955	396,493	489,448
Total borrowings	176,411	2,024,250	2,200,661

	2021
€'000	Current	Non-current	Total
Interest-bearing loans and borrowings ^*	12,113	1,620,093	1,632,206
Short-term factoring debt	23,172	-	23,172
Lease liabilities	90,509	389,704	480,213
Total borrowings	125,794	2,009,797	2,135,591

^*) The 31 December 2022 balance of interest-bearing loans and borrowing includes capitalized transaction costs of €31,939 thousand (2021: €39,300 thousand), directly attributable to the issuance of the senior facilities' loans. Mandatory repayment of the Facility A commitment starts effective 31 March 2023.

In 2021, the Group entered into two refinancing transactions, adding a total of €550 million gross to the existing Senior credit facility - Facility B, whilst voluntarily repaying a total of €100 million of the Senior credit facility- Facility A. No early-repayment penalties were paid in connection with the repayment. The maturity profile of interest-bearing loans and borrowings and lease liabilities is included in Note 28 of the Group's consolidated financial statements. The carrying amounts of the interest-bearing liabilities approximate their fair values.

Interest-bearing loans and borrowings

The Group manages its borrowing ability by entering committed borrowing agreements. Revolving committed bank facilities are generally available to the Group of up to six years from the date of inception. The following table sets forth the main senior committed facilities available to be drawn by the Group per 31 December 2022.

€'000				2022	2021
Borrowing facilities and amounts	Effective date	Due	Interest rates ⁽¹⁾	Carrying amount	Carrying amount
Senior credit facility - Facility A commitment	30 October 2019	31 October 2025	Euribor + 4.00 %	180,200	180,200
Senior credit facility - Facility B commitment	30 October 2019	31 October 2026	Euribor + 3.50 %	700,000	700,000
Senior credit facility - Facility B commitment	4 November 2020	31 October 2026	Euribor + 3.50 %	220,000	220,000
Senior credit facility - Facility B commitment	22 March 2021	31 October 2026	Euribor + 3.50 %	300,000	300,000
Senior credit facility - Facility B commitment	11 June 2021	31 October 2026	Euribor + 3.50 %	250,000	250,000
				1,650,200	1,650,200
Senior credit facility - Revolving Facility commitment' ²	30 October 2019	31 October 2025	Euribor + 3.00 %	195,200	195,200

⁽¹⁾ Applicable margin as of 31 December 2022
⁽²⁾ The Revolving Facility commitment is undrawn per 31 December 2022 and 31 December 2021

The loans are secured by a negative pledge that imposes certain covenants on the party that receives the loans. The financial covenant enforces restrictions on:

•	Asset disposals, dividends and distributions, payments of shareholder debt, debt incurrence, liens and collateral interests, mergers, transactions with affiliates, implementing dividend blockers inside Group and impairing collateral arrangements;
•	Above restrictions are also applicable with regards to prepayments of second lien loans.

Under the terms of the A and B facilities, the Group is required to comply with the following financial covenants:

•	Net Debt / adjusted EBITDA Leverage Ratio measured on the last day of each relevant reporting period.

The covenants (including financial covenants) for the 1st lien loan facilities are assessed on a quarterly basis and are applicable as from the second quarter of 2020, and only assessed if the Revolving Credit Facility ('RCF'), available up to an amount of €195 million, is drawn more than 45 %, which did not occur in 2022 neither in 2021. The Group has complied with all the financial covenants of its borrowing facilities during 2022 and 2021.

The following table shows the effective interest rates on period-end fixed (excluding the impact of hedge accounting), gross and net debt:

	2022
	€'000	Interest rate	Weighted average fixed period (years)
Lease liabilities	489,448	0.10 %-8.00 %	7
Short-term factoring debt	64,004	n/a	<1
Interest-bearing loans and borrowings	1,647,209	Euribor +3.50-4.50 %	4
Net debt (excluding cash and cash equivalents)	2,200,661

	2021
	€'000	Interest rate	Weighted average fixed period (years)
Lease liabilities	480,213	0.10 % - 4.98 %	8
Short-term factoring debt	23,172	n/a	<1
Interest-bearing loans and borrowings	1,632,206	Euribor +3.50-4.50 %	5
Net debt (excluding cash and cash equivalents)	2,135,591

The Group believes that its financial resources (operating cash together with cash and cash equivalents) will be sufficient to cover the Group's cash requirements.

Changes in liabilities arising from financing activities

	Interest-bearing loans		Lease liabilities
€'000	2022	2021	2022	2021
At 1 January	1,632,206	1,175,431	480,213	371,973
Cash flows from financing activities
• Proceeds from interest-bearing loans	-	541,285	-	-
• Repayment of interest-bearing loans	(6,877)	(106,167)	-	-
• Payment of lease liabilities	-	-	(98,263)	(83,289)
• Proceeds from factoring	-	-	-	-
- Other	(546)	(244)	-	-
Total cash flows from financing activities	(7,423)	434,874	(98,263)	(83,289)
Non-cash changes:
• New leases and remeasurements	-	-	83,102	96,215
• Arising on acquisition	15,591	13,107	23,885	98,725
• Amortization of finance costs	7,854	8,791	-	-
• Other	(1,019)	3	(2,909)	(6,453)
• Translation adjustments	-	-	3,420	3,042
Total non-cash changes	22,426	21,901	107,498	191,529
At 31 December	1,647,209	1,632,206	489,448	480,213

	Short-term factoring debt		Total
€'000	2022	2021	2022	2021
At 1 January	23,172	-	2,135,591	1,547,404
Cash flows from financing activities
• Proceeds from interest-bearing loans	-	-	-	541,285
• Repayment of interest-bearing loans	-	-	(6,877)	(106,167)
• Payment of lease liabilities	-	-	(98,263)	(83,289)
• Proceeds from factoring	29,086	23,172	29,086	23,172
- Other	-	-	(546)	(244)
Total cash flows from financing activities	29,086	23,172	(76,600)	374,757
Non-cash changes:
• New leases and remeasurements	-	-	83,102	96,215
• Arising on acquisition	-	-	39,476	111,832
• Amortization of finance costs	-	-	7,854	8,791
• Other	11,458	-	7,530	(6,450)
• Translation adjustments	288		3,708	3,042
Total non-cash changes	11,746	-	141,670	213,430
At 31 December	64,004	23,172	2,200,661	2,135,591

24 HEDGING ACTIVITIES AND DERIVATIVES

The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments is the interest rate risk. The Group's risk management strategy and how it is applied to manage risk are explained in Note 28 of the Group's consolidated financial statements.

Derivatives designated as hedging instruments

Cash flow hedges

Interest rate risk

The Group acquired deferred premium interest rate caps to reduce its exposure to variability in expected future cash outflows (forecasted interest payments) attributable to changes in 3 months Euribor, the designated risk component being hedged, relation to in total €445 million of 3 months Euribor-indexed floating-rate debt. This hedging objective is consistent with the Company's overall risk management strategy of achieving a target mix between fixed and floating rate liabilities with interest rate caps. Based on the Group's analysis, the current mix of floating and fixed interest rates (with 37 % of the Senior Net Debt with a fixed interest rate) is considered within an acceptable range.

There is an economic relationship between the hedged item and the hedging instrument as the terms of the deferred premium interest rate caps match the terms of the loan (i.e., notional amount, 3 months Euribor, maturity, payment and repricing dates). The Group has established a hedge ratio of 1:1 for the hedging relationships as the full derivative notional will be used to hedge interest payments arising from a matching amount of the hedged floating rate loan principal. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in fair value of the hedged item attributable to the hedged risk. The hedge ineffectiveness can arise from:

•	The counterparties' credit risk differently impacting the fair value movements of the hedging instruments and hedged items.
•	Changes to the forecasted amount of cash flows of hedged items and hedging instruments.

The ineffectiveness recognized in the statement of income was immaterial.

The Group is holding the following interest rate cap contracts:

Notional amount in €'000	Strike rate	Maturity date	Fair value 2022	Fair value 2021
310,000	1.75 %	31 October 2026	6,434	-
135,000	2.25 %	31 October 2026	(402)	-

The impact of the hedging instruments on the consolidated statement of financial position is, as follows:

€'000	Notional amount	Carrying amount	Line item in statement of financial position	Change in fair value for measuring ineffectiveness for the period
Interest rate cap	445,000	6,032	Derivative financial instruments - assets	6,032

The effect of the cash flow hedge (net of deferred tax) in the consolidated statement of income and other comprehensive income in 2022 is, as follows:

€'000	Total hedging gain recognized in OCI	Cost of hedging recognized in OCI	Amount reclassified from OCI to statement of income	Line item in statement of income
Interest rate cap	8,238	(3,762)	(2,069)	Finance costs - other

25 LEASES

The Group's activities as a lessee primarily relates to the lease of real estate, from which the Group operates its stores, as well as the lease of vehicles. Leases of real estate regularly include rent payment indexation clauses and may include renewal options. The Group assesses these renewal options on an individual location basis to conclude whether it is reasonably certain that a renewal option may be exercised.

The below table provides an overview of the development in the carrying amounts of the Group's lease liabilities:

€'000	Notes	2022	2021
At 1 January		480,213	371,973
Arising on acquisition	5	23,883	98,735
Disposals		(563)	(5,374)
Reclassifications		(2,346)	(1,079)
Additions		37,766	80,818
Accretion of interest		12,604	8,199
Payments ^*		(110,867)	(91,488)
Remeasurements		45,336	15,397
Translation adjustment		3,420	3,032
As at 31 December		489,448	480,213
Current portion	-	92,955	90,509
Non-current portion		396,493	389,704

^* Payments include interest and repayment of lease liabilities.

Additions in 2022 mainly relate to new leases entered into for buildings and vehicles. The remeasurements mainly relate to extensions (exercising extension options) of leases for buildings.

The Group realized a gain on sale and leaseback transactions of €20 million, mainly the result of sale and leaseback transactions in Germany. In 2021, the gain on sale and leaseback transactions amounted to €25 million, mainly the result of sale and leaseback transactions in Switzerland.

The following amounts related to the Group's activities as a lessee have been recognized in the consolidated statement of income:

€'000	2022	2021
Depreciation expense on right-of-use assets	102,462	86,636
Interest expense on lease liabilities	12,609	8,199
Other expenses relating to leases	15,023	9,447
Total	130,094	104,282

Other expenses relating to leases includes expenses related to short-term leases of €6,038 thousand (2021: €3,013 thousand), leases of low-value assets of €1,757 thousand (2021: €686 thousand), as well as variable lease payments expensed as incurred during the year. The maturity analysis of the Group's lease liabilities is included in Note 28 of the Group's consolidated financial statements.

26 TRADE AND OTHER PAYABLES

The below table presents the current and non-current balances related to trade and other payables per 31 December:

€'000	2022	2021
Trade payables	411,656	287,002
Employment-related taxes	15,640	12,944
Value added tax	56,376	43,504
Deferred and contingent acquisition considerations	12,058	23,773
Other payables	41.434	41.111
Interest payable	16,120	11,544
Short-term factoring debt	64,004	23,172
Accruals and deferred income	187,882	174,862
Total	805,170	617,912
Of which non-current:
Accruals and deferred income	-	4,935
Deferred and contingent acquisition consideration	5,287	11,452
Total	5,287	16,387

The increase in trade and other payables compared to 31 December 2021 is the result of price inflation (i.e., resulting in higher level of inventories and increasing operational costs) as well the changes in the scope of consolidation, with close to €36 million of trade and other payables acquired as a result of acquisitions throughout the year.

Trade payables amounted to €411,656 thousand, compared to €287,002 thousand at 31 December 2021. The increase of €124,654 thousand is mainly explained by the contribution of acquisitions, rising costs and inventories and delayed payments (as 31 December 2022 was a weekend day).

The carrying amounts of trade and other payables approximate their fair value due to the short-term maturities (current trade and other payables) and the nature (non-current other payables) of these financial instruments.

Deferred and contingent acquisition considerations

The balance as per 31 December 2022 mainly relates to acquisitions made by Grupo BMV prior to its acquisition by the Group. The movement during the year mainly represents the deferred and contingent acquisition consideration paid to the former shareholders of Grupo BMV. The majority of the consideration is due in 2023 and 2024. Therefore, the time value of money is considered as not material.

Liabilities related to contracts with customers

Where cash is received prior to recognition of revenue, contract liabilities are recorded. The contract liabilities result from customer rebate and loyalty programs and are included in the consolidated statement of financial position within accruals and deferred income The balance as per 31 December 2022 amounts to €49,427 thousand (2021: €38,738 thousand). During 2022, an additional accrual of €54,842 thousand (2021: €37,397 thousand) was recognized, while an amount of €44,820 thousand (2021: €31,197 thousand) was paid, with the remaining movement being explained by acquisitions.

27 RELATED PARTIES

Transactions with related parties are assumed when a relationship exists between the Company and a natural person or entity that is affiliated with the Company. Per the definition included in IFRS, such affiliates include legal entities and natural persons that can exert significant influence on the Company and its subsidiaries or over which the Group can exercise significant influence. This includes the relationship between the Company and its subsidiaries, joint ventures and associates, shareholders, directors and other key management personnel. Transactions are transfers of resources, services or obligations, regardless of whether anything has been charged.

The Company is controlled by its sole shareholder Clay Topco S.a.r.l., which in turn is ultimately controlled by funds managed by The Blackstone Group.

Transactions and balances with related entities

The following transactions were entered into with related parties during the reporting period, resulting in the below disclosed income and expenses incurred as well as the closing balances included in the consolidated statement of financial position.

For key management personnel, the balances relate to transactions entered outside the context of key management personnel remuneration, which is described further below.

€'000	Income statement effect	Receivable balance 31 December
For the year 2022
Transactions with:
(a) Entities controlled by the Blackstone Group	(82)	1,000
(b) Associates of the Group	-	2,051
(c) Key management personnel of the Group	-	3,083
For the year 2021
Transactions with:
(a) Entities controlled by the Blackstone Group	(111)	800
(b) Associates of the Group	-	-
(c) Key management personnel of the Group	-	2,875

Note: Income statement effects are presented as negative amounts in case of expenses/ positive amounts in case of income.

The transactions entered into with related parties relate to services rendered and are conducted at arm's length. The receivables are due and demandable, unsecured and requires cash settlement. The Group has not recorded any impairment of receivables relating to amounts owed by related parties.

Group entities have provided loans to key management personnel of the Group, the outstanding balance of which amounts to €3,083 thousand (2021: €2,875 thousand) at the reporting date. This loan consists of a facility which may be drawn at any time on or before 28 October 2024. There is no interest charged for the provided loans. The carrying amount of the facility approximate its fair value given the demand feature (30 days' notice) included in the agreement. These loans are included in the above table under (c).

Key management personnel remuneration

During the years presented, the Group considers the Board of Directors and the Supervisory Board of BME Group to be the key management personnel as defined in IAS 24'Related Parties'. The Board of Directors of the Group comprises of 2 members (2021:2 members) and the Supervisory Board comprises of 6 (2021:6) members. No advance payments or guarantees have been extended to key management personnel, or any family members of such persons.

The table below specifies the remuneration of the Board of Directors and the Supervisory Board during the years presented.

€'000 - Board of Directors	2022	2021
Short-term employee benefits	2,903	2,014
Post-retirement benefits	66	64
Share-based compensation	27	118
Total	2,996	2,196

€ '000 - Supervisory Board	2022	2021
Short-term employee benefits	280	142
Share-based compensation	30	-
Total	310	142

Short-term employee benefits

Short-term employee benefits of the members of the Board of Directors relate to, among others, salaries and holiday allowances, bonus accruals, social security costs, lease car costs and contributions to professional insurances.

Supervisory Board short-term benefits relate to fixed remuneration agreements for independent members.

Post-retirement benefits

These benefits relate to contributions paid by the Group for the inclusion of the members of the Board of Directors in the pension schemes run by the Group's external pension provider. Supervisory Board members do not receive post-retirement benefits.

Share-based compensation

The members of the Board of Directors and the chairperson of the Supervisory Board participate in the management co-investment plan. Further details of the equity-settled management co-investment plan is disclosed in Note 29 of the Group's consolidated financial statements.

28 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Group's principal financial liabilities, other than derivatives, comprise interest-bearing loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group's operations. The Group's principal financial assets include trade and other receivables and cash and cash equivalents that derive directly from its operations. The Group also holds investments in equity instruments and enters into derivative transactions.

The Group's corporate treasury function provides services to the business units, co-ordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group.

The Group is exposed to interest rate risk, foreign currency risk, credit risk and liquidity risk. Systems and processes are in place to monitor and control the Group's financial risks. The Board of Directors has the ultimate responsibility for managing these risks and oversight of the systems and processes to monitor and control the Group's financial risks. The Board of Directors reviews and agrees policies to managing each of these risks, which are summarized below.

Interest rate risk

The Group's interest-bearing loans and borrowings are primarily owed to a consortium of investors. Interest is generally charged based on floating interbank market rates, plus a spread, resulting in exposure to market risk for changes in interest rates. The Group acquired in 2022 deferred premium interest rate caps to reduce its exposure to variability in expected future cash outflows (forecasted interest payments) attributable to changes in 3 months Euribor, the designated risk component being hedged, of in total €445 million of 3 months Euribor-indexed floating-rate debt. Further details of these derivatives are disclosed in Note 24 of the Group's consolidated financial statements.

Global regulators and central banks have been driving international efforts to reform key benchmark interest rates (Interbank Offered Rate or IBOR rates). The market has transitioned to alternative risk-free reference rates (RFRs) that are transaction-based. LIBOR has been discontinued for most currencies and maturities after 31 December 2021, except for the US-dollar for which certain maturities are expected to be phased out in 2023.

The company has evaluated the implications of such a phase out for the Senior Facilities Agreement in particular for the currently undrawn Revolving Credit Facility. The Group has declared to its investors that it will not withdraw in GBP neither in CHF until the agreement is amended. For all references to CHF LIBOR rates in other agreements, the Group followed the automatic replacement as of 1 January 2022 by the new Swiss Franc rate SARON. The interest rate risk of the Group is not significant for the currencies that are affected by this change after 31 December 2021 neither by the US-dollar Libor replacement after 30 June 2023.

Interest rate sensitivity

Based on the Group's sensitivity analysis, a 100 bps increase (decrease) in the cost of the Group's interest-bearing loans and borrowings, with all other variables held constant and after the impact of hedge accounting, would have had an impact of €12.2 (€15.2) million on the Group's profit before tax for the year ended 31 December 2022. The impact is calculated based on the closing date statement of financial position as of 31 December 2022.

Foreign currency risk

The main foreign currency exposure relates primarily to the translation of net investments in subsidiaries denominated in functional currencies other than Euros, being CHF. The exposure to the risk of changes in foreign exchange rates to the Group's operating activities is very limited as only a small portion of the Group's products is sourced from foreign suppliers in USD. The Group does not hedge its exposure to changes in foreign exchange rates.

Foreign currency sensitivity

Based on the Group's sensitivity analysis, a 5 % rise in the Euro/CHF exchange rate used in measuring the closing statement of financial position as of 31 December 2022 (translation risk of net investments in subsidiaries denominated in functional currencies other than Euros), with all other variables held constant, would have had an impact of €10.7 million on the Group's total equity as of 31 December 2022. The Group's exposure to foreign currency changes (i.e., arising from operating activities) for all other currencies is not material.

Credit/counterparty risk

In terms of counterparty risk related to financial institutions, the maximum exposure arising in the event of default on the part of the counterparty, including insolvency, is the cash balance held at the particular financial institution.

This counterparty risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty primarily depending on its credit rating and by regular review of these ratings. Acceptable credit ratings are high investments-grade ratings. If the financial institution does not have a high investment-grade rating, BME Group reviews its respective counterparty risk on a regular basis, at least annually.

Credit risk arising in the context of the Group's operations is managed according to established policies, procedures and controls including customer credit quality checks and potential credit limits and mitigated through credit insurances when appropriate. Outstanding customer balances are monitored regularly and a review for indicators of impairment is carried out at each reporting date. Information about the credit risk exposure on the Group's trade receivables is disclosed in Note 16 of the Group's consolidated financial statements.

Liquidity risk

The Group manages its liquidity risk by maintaining a healthy level of cash and cash equivalents, appropriate to the expected cash flows of the Group. The Group's corporate treasury function ensures that enough resources are available to provide lending through a combination of cash and cash equivalents and committed bank facilities. Information about the committed bank facilities is disclosed in Note 23 of the Group's consolidated financial statements.

Flexibility in funding is achieved in several ways amongst which are maintaining cash and cash equivalents only with a diverse group of highly rated counterparties and borrowing most of the debt under committed bank lines. These facilities span a wide number of highly rated financial institutions, thus minimizing any potential exposure arising from concentration in borrowing sources.

The table below shows the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group's trade and other payables and gross debt as of 31 December 2022, based on the interest and foreign exchange rates applying at the end of year ended 31 December 2022:

€'000	Within 1 year	Between 1 and 2 years	Between 2 and 3 years
Financial liabilities - cash outflows (Trade and other payables)	(735,879)	(1,331)	(456)
Other interest-bearing loans and borrowing ⁽¹⁾	(88,298)	(27,528)	(165,519)
Lease liabilities	(92,955)	(80,001)	(66,589)
Total	(917,132)	(108,860)	(232,564)

€'000	Between 3 and 4 years	Between 4 and 5 years	After 5 years	Total 2022
Financial liabilities - cash outflows (Trade and other payables)	(550)	(2,950)	-	(741,166)
Other interest-bearing loans and borrowing ⁽¹⁾	(1,475,240)	(963)	(3,751)	(1,761,299)
Lease liabilities	(54,451)	(43,160)	(152,294)	(489,448)
Total	(1,530,241)	(47,073)	(156,045)	(2,991,913)

⁽¹⁾ The short-term factoring debt is included in the line-item 'Other interest-bearing loans and borrowing'

€'000	Within 1 year	Between 1 and 2 years	Between 2 and 3 years
Financial liabilities - cash outflows (Trade and other payables)	(601,525)	(13,495)	(2,169)
Other interest-bearing loans and borrowing ⁽¹⁾	(35,285)	(6,899)	(21,693)
Lease liabilities	(90,512)	(76,917)	(66,242)
Total	(727,322)	(97,311)	(90,104)

€'000	Between 3 and 4 years	Between 4 and 5 years	After 5 years	Total 2021
Financial liabilities - cash outflows (Trade and other payables)	(723)	-	-	(617,912)
Other interest-bearing loans and borrowing ⁽¹⁾	(158,641)	(1,470,232)	1,927)	(1,694,678)
Lease liabilities	(53,075)	(42,784)	(150,682)	(480,212)
Total	(212,439)	(1,513,016)	(152,609)	(2,792,802)

⁽¹⁾ The short-term factoring debt is included in the line-item 'Other interest-bearing loans and borrowing'

29 SHARE-BASED COMPENSATION

Management Incentive Plan ('MIP')

In 2019, a management co-investment plan ('the Plan') was agreed between the shareholders, directors and senior management. Under the Plan, eligible and selected participants have made indirect investments in B ordinary shares ('the B Shares') in the share capital of the Company's parent company, Clay Topco S.a.r.l. ('TopCo').

The Plan is accounted for as an equity-settled share-based payment arrangement since the Company and its subsidiaries do not have an obligation to settle the Plan in cash or to repurchase any equity instruments from the participants.

The share capital of TopCo consists of 2,788,060 B Shares, and the B Shares comprise of 10.45 % of the total subordinated ordinary share capital of TopCo. The holders of B Shares are also entitled to an additional portion of the value of the subordinated ordinary shares in TopCo (maximum 1 %). This is subject to TopCo's majority shareholder meeting whereas certain pre-defined return targets upon the investment at a future Exit are defined.

Management has also invested in 4,332,654 Preference Shares and 227,126 A ordinary shares ('Strip Ordinary Shares') of TopCo. As these investments were made at fair value, they did not result in any share-based payment expenses to be recognized by the Company.

During the year, the movements in the number of B Shares in TopCo held by participants are as follows:

Shares	2022	2021 (restated ¹ )
Outstanding at 1 January	2,272,147	2,265,334
Granted/Acquired during the year	-	127,137
Forfeited during the year	(206,717)	(120,324)
Outstanding at 31 December	2,065,430	2,272,147

¹⁾ The number of shares is restated and does not correspond to the figures in 2021 Group financial statements as the shares held by the chairperson of the Supervisory Board was previously not included. The share-based payment expenses of 2022 includes the expenses allocated to 2020 and 2021 and amounts in total to €30 thousand.

In general, the participants will only be entitled to the fair market value of the underlying shares if they stay employed with a group company until the completion of an Exit. Accordingly, the grant fair value of the Plan awards is expensed in the consolidated statement of income for 2022 based on the period occurred between (i) the grant date and (ii) the estimated Exit date.

For accounting purposes, the fair value of an award is equal to the fair market value of the underlying shares in TopCo less the acquisition price paid by a participant. The value of the underlying shares as determined on the grant date depends on the proceeds realized by the majority shareholder upon an Exit. An independent valuation expert has prepared a valuation analysis using the probability weighted expected returns methodology. As a cross-check to the expected returns analysis, a Monte Carlo simulation model has also been applied. This model makes use of the formula which underpins the Black-Scholes option pricing method, but also considers factors such as exit date probabilities, transaction costs, and the impact of the capital structure in deriving a value for the B Shares in TopCo.

The weighted average grant date fair value and the main inputs used in the measurement of the grant date fair values of the equity-settled awards are as follows:

	2022	2021
Fair value at grant date (weighted-average)	€21,11	€21.11
Expected life	3.8 years	5.5 years
Expected dividends	0 %	0 %

Since no participants have acquired shares under the MIP in 2022, no additional fair value measurements were performed in 2022 and the fair value at grant date did not change compared to 2021. The share-based payment expense recognized in 2022 for the equity-settled plan amounted to an income of €7 thousand (2021: expense of €681 thousand).

Long-term Incentive Plan ('LTIP')

In 2020, a long-term incentive plan ('LTIP') was agreed between the Company's shareholders, directors and senior management. Under the LTIP, eligible and selected participants have been awarded share appreciation rights ('SAR') related to B ordinary shares in the share capital of the Company's parent company, Clay Topco S.a.r.l. For a total of 140,028 of outstanding awards, the cash amount paid to participants shall not exceed €25 per Award.

The cash amount to be received by a participant for an Award shall represent the increase, if any, in value between (i) the fair market value of the B shares underlying an Award as at the grant date and (ii) the value of the B Shares upon an Exit. The Company accounts for the LTIP as a cash-settled share-based payment arrangement since the Group has an obligation to settle the LTIP Awards with the participants. During the year, the movements in the number of SAR's are as follows:

Awards	2022	2021
Outstanding at 1 January	159,861	129,500
Granted/Acquired during the year	83,467	50,361
Forfeited during the year	(23,500)	(20,000)
Outstanding at 31 December	219,828	159,861

In general, the participants will only be entitled to a cash payment under the LTIP if they stay employed with a group company until the completion of an Exit. Accordingly, no awards have vested as of 31 December 2022.

The fair value of the Awards, which is determined at each reporting date and at settlement, is expensed in the consolidated statement of income over the period between (i) the grant date and (ii) the estimated Exit date.

The weighted average reporting date fair value has been determined using the Black and Scholes formula and, in addition to the estimated share value, the main inputs used in the measurement of the Awards are as follows:

	2022	2021
Fair value at reporting date (weighted-average)	€25.37	€25.00
Exercise price (weighted-average)	€14.50	€18.23
Expected volatility	38.5 %	37.0 %
Expected life	3.8 years	3.0 years
Expected dividends	0 %	0 %
Risk-free interest rate (ECB AAA-rated government bonds)	2.46 %	(0.62 %)

The total share-based payment expense allocated to 2022 for the cash-settled Awards amounted to €351 thousand (2021: €1,359 thousand).

30 COMMITMENTS AND CONTINGENCIES

Capital investment commitments

Refer to Note 11 of the Group's consolidated financial statements for the future purchase commitments of property, plant and equipment.

Bank guarantees

A total of off-balance-sheet business-related guarantees on behalf of third parties and associates amount to €19 million as of 31 December 2022.

Legal proceedings

BME Group and its subsidiaries are involved in legal proceedings, which include general litigation and inquiries arising out of their business operations. The Group believes that the ultimate resolution of these proceedings will not, in the aggregate, have a material adverse effect on the Group's financial position, results of operations or cash flows. Such legal proceedings, however, are subject to inherent uncertainties and the outcome of individual matters is unpredictable. It is possible that the Group could be required to make expenditures, more than established provisions, in amounts that cannot reasonably be estimated.

On 3 July 2015, the Secretariat of the Swiss Competition Commission announced its decision to impose an antitrust fine of approximately CHF 34 million on subsidiaries of CRH that are currently part of the Group, relating to practices dating back more than 10 years at the date of the decision by the Secretariat of the Swiss Competition Commission. CRH appealed this decision, and the case is still under review at the Federal Administrative Court in Switzerland. However, as part of the Carve-Out in 2019, CRH agreed to fully indemnify the Group for the relevant fine and reasonable costs incurred. The Group therefore does not expect this proceeding to have a significant effect on the Company's and/or the Group's financial position or profitability.

Liability

The company has issued downstream guarantees pursuant to Section 403 of Book 2 of the Dutch Civil Code for all (except for one) Dutch subsidiaries. The total liabilities of these group companies amount to €2,426,331 thousand (2021: €2,261,893 thousand).

The Company forms a fiscal unity with its Dutch subsidiaries for income tax, and - except for BME Group Holding B.V. - value added tax purposes. The Company is jointly and severally liable for the tax liabilities of these Dutch group companies forming part of the fiscal unity. The total tax liabilities of these group companies amount to €78.3 million (2021: €64.3 million) of which €44.6 million (2021: €40.3 million) relates to deferred tax liabilities.

31 OTHER DISCLOSURES

Fees for professional services provided by the Group's independent auditor in respect of the following categories were as follows:

	2022
€'000	EYNL (statutory auditor)	EY (network firms)	Total
Audit fees	722	1,444	2,166
Other audit-related assurance fees	346	217	563
Tax advisory services	22	213	235
Other non-audit services	81	98	179
Total	1,171	1,972	3,143

	2021
€'000	EYNL (statutory auditor)	EY (network firms)	Total
Audit fees	611	1,203	1,814
Other audit-related assurance fees	320	271	591
Tax advisory services	58	151	209
Other non-audit services	243	31	274
Total	1,232	1,656	2,888

The audit fees listed above relate to the audit procedures applied to the Company and its consolidated subsidiaries. The audit fees include the costs for the legal audit of the annual report by Ernst & Young Accountants LLP, being the ultimate external auditor (EY Netherlands) and other EY external auditors involved in foreign countries (together the 'Auditors') in the total amount of €2,166 thousand (2021: €1,814 thousand). The audit fees for the annual report contain the amounts attributable to the fiscal year. Other non-audit services mainly relate to ESG related advisory costs.

32 EVENTS AFTER THE REPORTING PERIOD

Business combinations

Since 1 January 2023, the Group conducted the following business combinations:

Acquiree	Country	Acquisition date	Interest acquired
Van Engeland	The Netherlands	3 January 2023	Asset deal
Bouwgroep	Belgium	3 January 2023	100 %
Gebhardt Bauzentrum	Germany	1 March 2023	100 %
Bathge Baustoffe	Germany	1 March 2023	100 %
Decoplack	Spain	1 March 2023	100 %

The acquisitions involved an aggregate cash outflow of €60,435 thousand (excluding cash acquired). The Group considers the business combination of Gebhardt Bauzentrum as the only individual material business combination, and all others as individually immaterial. Measurement is now underway of the fair value of the net assets acquired and any goodwill to be recognized as a result of the business combinations.

Individually material business combinations after the reporting date

Gebhardt Bauzentrum

On 1 March 2023, the Group completed the acquisition of Gebhardt Bauzentrum, for a cash outflow of €41,599 thousand (excluding cash acquired). Gebhardt is a leading distributor of building materials in Northern Bavaria. Gebhardt operates 7 GBM branches and employs over 290 employees.

Other

No other significant activities or events have taken place after 31 December 2022 that have had a material impact on the key figures and earnings presented. Similarly, no other non-adjusting events after 31 December 2022 have taken place that would require further disclosure.

33 INVESTMENTS OF BME GROUP B.V.

The following tables provide an overview of the direct and indirect investments of BME Group B.V, split into subsidiaries, joint ventures, associates and other interests.

Subsidiaries	Seat	2022
Austria
BME Austria Holding GmbH	Vienna	100.00 %
Quester Baustoffhandel GmbH	Vienna	100.00 %
Belgium
BMB Bouwmaterialen B.V.	Hamme	100.00 %
Jeca BVBA	Hoogstraten	100.00 %
Lambrechts N.V.	Genk	100.00 %
Sax Sanitair N.V.	Melle	100.00 %
Schrauwen Sanitair en Verwarming N.V.	Herentals	100.00 %
Induscabel Sanitaire & Techniques S.A.	Charleroi	100.00 %
Fortius Group B.V.	Temse	100.00 %
Van der Gucht Bouw N.V.	Temse	100.00 %
Agutrans N.V.	Temse	100.00 %
bouwBIM B.V.	Antwerp	100.00 %
France
Academi du Batiments et des Travaux Publics SAS	Boulogne Billancourt	100.00 %
BME France Holding SAS	Boulogne Billancourt	100.00 %
BME France SAS	Boulogne Billancourt	100.00 %
Busca TP Distribution SAS	Boulogne Billancourt	100.00 %
CID1 SAS	Boulogne Billancourt	100.00 %
Raboni Ile de France SAS	Boulogne Billancourt	100.00 %
Mager SAS	Paris	100.00 %
Home Carrelage	Pontault-Combault	100.00 %
Agepar SAS	Seclin	100.00 %
BVP-Socca SAS	Seclin	100.00 %
Germany
AGP Bauzentrum GmbH	Wernigerode	100.00 %
Andreas Paulsen GmbH	Kiel	100.00 %
Andreas Paulsen Grundstücks Holding GmbH	Kiel	100.00 %
TURA Bauelemente Beteiligungsgesellschaft mbH	Attendorn	68.08 %
August Prelle Baustoffgesellschaft mbH	Goslar	100.00 %
August Prelle Baustoffgesellschaft mbH & Co. KG	Goslar	100.00 %
Bauking GmbH	Iserlohn	100.00 %
BAUKING Berlin-Brandenburg GmbH	Berlin	100.00 %
BAUKING Direkt GmbH	Dortmund	100.00 %
BauKing EDV-Service GmbH	Finnentrop	100.00 %
BAUKING Immobilien GmbH & Co. KG	Dortmund	100.00 %
BAUKING Immobilien Verwaltungs GmbH	Dortmund	100.00 %
BAUKING Immobilienbeteiligungs GmbH & Co. KG	Dortmund	100.00 %
BAUKING ImmobilienBeteiligungs Verwaltungs GmbH	Dortmund	100.00 %
BAUKING Ostfalen GmbH	Helmstedt	100.00 %
BAUKING Südwestfalen GmbH	Finnentrop	100.00 %
BAUKING Weser-Ems GmbH	Bad Essen	100.00 %
BAUKING Westfalen GmbH	Dortmund	100.00 %
Baustoffcenter Oschersleben Verwaltungsgesellschaft mbH	Oschersleben	100.00 %
Baustoffcenter Oschersleben GmbH & Co KG	Oschersleben	100.00 %
BME Germany Holding GmbH	Dortmund	100.00 %
BME SHK Deutschland GmbH	Berlin	100.00 %
BVG Cementmüller Baustoffvertrieb GmbH & Co. KG	Soltau	75.00 %
BVG Cementmüller Baustoffvertrieb Verwaltungs GmbH	Soltau	75.00 %
D.F. Liedelt Heizungs- and Sanitär-Grosshandels GmbH	Norderstedt	100.00 %
Dekker & Detering Beteiligungsgesellschaft mbH & Co. KG	Emden	100.00 %
ELG Baustoffhandel Oschersleben GmbH &Co KG	Oschersleben	100.00 %
F. Rodenburg GmbH Sanitär- und Heizungsbedarf	Emden	100.00 %
Friedrich Detering GmbH	Emden	100.00 %
Friedrich Detering Verwaltungsgesellschaft mbH Er Co. KG	Emden	100.00 %
Friedrich Detering Verwaltungsgesellschaft mbH	Emden	100.00 %
Hagebaucentrum Schönebeck GmbH & Co. KG	Schönebeck	100.00 %
Hagebaucentrum Schönebeck Verwaltungsgesellschaft mbH	Schönebeck	100.00 %
Hagebaucentrum Wolfsburg Investment GmbH & Co. KG	Helmstedt	100.00 %
hagebaumarkt Bad Berleburg GmbH	Bad Berleburg	66.67 %
hagebaumarkt Damme GmbH & Co. KG	Damme	65.00 %
hagebaumarkt Damme Verwaltungsgesellschaft mbH	Damme	65.00 %
hagebaumarkt Lohne GmbH & Co. KG	Lohne	90.00 %
hagebaumarkt Lohne Verwaltungsgesellschaft mbH	Lohne	90.00 %
Heinrichs Fliesenmarkt GmbH	Lübeck	100.00 %
Krüger & Scharnberg GmbH	Hamburg	100.00 %
Bauwaren Mahler GmbH &Co. KG Bayerische Bauwaren	Augsburg	100.00 %
Mahler Bauwaren und Fliesen GmbH	Augsburg	100.00 %
Mahler Bayerische Bauwaren GmbH	Feldkirchen	100.00 %
Mahler Fliesen- und Glasbau GmbH	Augsburg	100.00 %
Paul Hintze GmbH	Berlin	100.00 %
Paulsen & Braeuninger GmbH	Kiel	100.00 %
Paulsen & Eckhardt GmbH	Martendsdorf	100.00 %
Rollwitzer Heizungs-, Sanitär- und Baustoffhandel GmbH	Rollwitz	100.00 %
Schneider & Holding hausen GmbH	Siegen	100.00 %
Schriever Immobilien GmbH	Meinerzhagen	100.00 %
SHK Bergmann & Franz GmbH	Berlin	100.00 %
W. Tebbenjohanns Nachf. GmbH	Emden	100.00 %
The Netherlands
BME \| Building Materials Europe B.V.	Amsterdam	100.00 %
BME Group Holding B.V.	Amsterdam	100.00 %
BME Group Sourcing B.V.	Amsterdam	100.00 %
BME Bouwmaten Nederland B.V.	Breukelen	100.00 %
BME Netherlands Holding B.V.	Amsterdam	100.00 %
BMN Bouwmaterialen B.V.	Nieuwegein	100.00 %
BMN Bouwmaterialenhandel B.V.	Nieuwegein	100.00 %
Bouts B.V.	Roermond	100.00 %
Galvano Groothandel B.V.	Tilburg	100.00 %
De Jong en Roos B.V.	Schagen	100.00 %
Jonker Deurenmontage B.V.	Schagen	100.00 %
Luijten B.V.	Breukelen	100.00 %
Tegelgroep Nederland B.V.	Andelst	100.00 %
BME Nasa Holding B.V.	Amsterdam	100.00 %
Portugal
Cimentos Estrada Pedra S.G.P.S. Limitada	Porto	100.00 %
Maxmat - Distribuição de Materials de Construção S.A.	Porto	100.00 %
Spain
Building Materials Ventures S.A.	Barcelona	100.00 %
BME Iberia Holding S.L.U.	Barcelona	100.00 %
Compañía Española de Aislamientos, S.A.	Madrid	100.00 %
Isolana Ahorro Energético, S.L.	Madrid	100.00 %
Isolana Aislamientos, S.L.	Madrid	100.00 %
Isopractic Sistemas, S.L.	Madrid	100.00 %
Isopractic, S.L.	Madrid	100.00 %
La Especialista Distribuidora de Sistemas Constructivos, S.L.	Madrid	100.00 %
La Especialista Sistemas Pyltec S.L.	Barcelona	100.00 %
La Instaladora de Sistemas y Aislamientos, S.L.	Barcelona	100.00 %
Villar Materiales de Construcción S.A.	La Rioja	100.00 %
Switzerland
BR Bauhandel AG	Rümlang	100.00 %
BME Swiss Holding AG	Zug	100.00 %
Getaz-Miauton S.A.	Saint-Légier-La-Chiésaz	100.00 %
Miauton S.A.	Villeneuve	100.00 %
Regusci Reco S.A.	Bellinzona	100.00 %
Barit Baubedarf AG	Chur	81.83 %
United Kingdom
Clay UK Bidco 1 Ltd	London	100.00 %
Clay UK Bidco 2 Ltd	London	100.00 %

Joint ventures, associates and other investments	Nature	Seat	2022
France
Matériaux Construction Distribution SAS	Associate	Strasbourg	25.00 %
Germany
BVG Knothe Baustoffe GmbH & Co. KG	Joint venture	Schlüchtern	50.00 %
Hagebau Blankenburg GmbH G Co. KG	Joint venture	Blankenburg	50.00 %
hagebaumarkt Diepholz GmbH & Co. KG	Joint venture	Diepholz	50.00 %
hagebaumarkt Diepholz Verwaltungsgesellschaft mbH	Joint venture	Diepholz	50.00 %
hagebaumarkt Espelkamp GmbH & Co. KG	Joint venture	Espelkamp	50.00 %
hagebaumarkt Espelkamp Verwaltungsgesellschaft mbH	Joint venture	Espelkamp	50.00 %
hagebaumarkt Lippstadt-Warstein GmbH	Joint venture	Warstein	50.00 %
hagebaumarkt Lotte-Wersen GmbH & Co. KG	Joint venture	Lotte	50.00 %
hagebaumarkt Lotte-Wersen Verwaltungsgesellschaft mbH	Joint venture	Lotte	50.00 %
Knothe Baustoffe Verwaltungs GmbH	Joint venture	Schlüchtern	50.00 %
hagebaucentrum Wolfsburg Investment Verwaltung GmbH	Associate	Helmstedt	49.00 %
hagebaumarkt Cloppenburg GmbH & Co. KG	Associate	Cloppenburg	35.00 %
hagebaumarkt Cloppenburg Verwaltungsgesellschaft mbH	Associate	Cloppenburg	35.00 %
hagebaumarkt Lahde GmbH & Co. KG	Associate	Petershagen	25.00 %
hagebaumarkt Lahde Verwaltungsgesellschaft mbH	Associate	Petershagen	25.00 %
hagebaumarkt Leer GmbH & Co. KG	Associate	Leer	33.33 %
hagebaumarkt Leer Verwaltungsgesellschaft mbH	Associate	Leer	33.33 %
TURA Bauelemente GmbH & Co. KG	Associate	Attendorn	45.14 %
Lenne Immobilien GmbH & Co. KG	Interest	Hagen	14.35 %
Bigge-Lenne Transportbeton Gesellschaft mbH & Co. KG	Interest	Attendorn	8.00 %
Elbe-West Investment GmbH & Co. KG	Interest	Hainichen	25.00 %
Lüdingerhauser Holz- und Essen handelsgesellschaft mbH & Co. KG Besitzgesellschaft	Interest	Lüdinghausen	16.67 %
TVS Transportbeton Vertriebs GmbH & Co. KG	Interest	Eslohe	28.42 %
TVS Transportbeton Vertrieb Verwaltungs GmbH	Interest	Eslohe	25.00 %
The Netherlands
Bleijenbergh-Fassaert B.V.	Joint venture	Hulst	50.00 %
Van Neerbos - Ter Steege Bouwmaten v.o.f.	Joint venture	Breukelen	50.00 %
V.O.F. De Amstel	Joint venture	Leeuwarden	50.00 %
Bouwmaat Nederland B.V.	Associate	Bunschoten Spakenburg	31.24 %
Ampere Holding B.V.	Interest	Heerhugowaard	2.38 %

COMPANY FINANCIAL STATEMENTS

COMPANY INCOME STATEMENT

€'000	Notes	2022	2021
Share in result of participating interest	6	83,855	107,717
Other income and expenses from operations after tax		(7,059)	(9,721)
Profit for the year		76,796	97,996

COMPANY BALANCE SHEET

Before proposed appropriation of profit

€'000	Notes	2022	2021
ASSETS
Non-current assets
Financial assets	6	467,554	419,969
Other receivables		-	15
Deferred income tax assets		-	76
Total non-current assets		467,554	420,060
Current assets
Trade and other receivables	7	24,004	13,877
Current income tax assets	8	-	4,303
Cash and cash equivalents	9	113	2
Total current assets		24,117	18,182
Total assets		491,671	438,242
EQUITY
Issued share capital		215,769	215,769
Share premium		2,543	2,543
Other capital reserves		778	791
Foreign currency translation reserve		44,723	24,606
Legal reserve participating interest		35,528	10,909
Cash flow hedge reserve		8,238	-
Cost of hedging reserve		(3,762)	-
Retained income		142,861	151,547
Capital and reserves attributable to equity holders of the company	10	446,678	406,165
LIABILITIES
Current liabilities
Trade and other payables	11	43,277	32,077
Current income tax liabilities	12	1,716	-
Total current liabilities		44,993	32,077
Total liabilities		44,993	32,077
Total equity and liabilities		491,671	438,242

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1 GENERAL

These financial statements constitute the statutory financial statements of BME Group B.V. ('BME'or'the Company'). The financial information of the Company is included in the Company's consolidated financial statements, as presented on pages 17 to 86. The registered seat of the Company is Amsterdam, the Netherlands. BME Group B.V. is registered in the Trade Register of the Chamber of Commerce under the file number: 75334763. The address of BME Group B.V. is Walaardt Sacréstraat 405, Schiphol. The financial statements for the year ended 31 December 2022 were drawn up on 05 April 2023.

For details of the Company's activities, please refer to the consolidated financial statements.

2 BASIS OF PREPARATION

These separate financial statements have been prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. For setting the principles for the recognition and measurement of assets and liabilities and determination of results for its company financial statements, the Company makes use of the option provided in section 2:362(8) of the Dutch Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the company financial statements are the same as those applied for the consolidated financial statements. These principles also include the classification and presentation of financial instruments, being equity instruments or financial liabilities. In case no other principles are mentioned, reference is made to the accounting principles as described in the consolidated financial statements. For an appropriate interpretation of these company financial statements, the company financial statements should be read in conjunction with the consolidated financial statements.

Information on the use of financial instruments and on related risks for the Company, is provided in the notes to the consolidated financial statements of the Company. The company financial statements are presented in thousands of euros and prepared under the historical cost convention unless otherwise stated. Due to rounding, numbers presented may not add up precisely to the totals provided.

3 JUDGMENTS, ESTIMATES, ASSUMPTIONS AND UNCERTAINTIES

For details of the judgements, estimates, assumptions and uncertainties applied, please refer to the consolidated financial statements.

4 ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these company financial statements are set out below.

4.1 Participating interests in group companies

Group companies are all entities over which the Company has direct or indirect control. The Company controls an entity when it is exposed or has rights to variable returns from its involvement with the group company and can affect those returns through its power over the group company.

Group companies are recognized from the date on which control is obtained by the Company and derecognized from the date that control by the Company over the group company ceases to exist.

Participating interests in group companies are accounted for in the company financial statements according to the equity method, with the principles for the recognition and measurement of assets and liabilities and determination of results as set out in the notes to the consolidated financial statements.

Participating interests with a negative net asset value are valued at nil. This measurement also covers any receivables provided to the participating interests that are, in substance, an extension of the net investment. This relates to loans for which settlement is neither planned nor likely to occur in the foreseeable future.

A share in the profits of the participating interest in subsequent years will only be recognized if and to the extent that the cumulative unrecognized share of loss has been absorbed. If the Company fully or partially guarantees the debts of the relevant participating interest, or if has the constructive obligation to enable the participating interest to pay its debts (for its share therein), then a provision is recognized accordingly to the amount of the estimated payments by the Company on behalf of the participating interest.

4.2 Share of results of participating interests

The share in the result of participating interests consists of the share of the Company in the result of these participating interests. Results on transactions involving the transfer of assets and liabilities between the Company and its participating interests and mutually between participating interests themselves are eliminated to the extent that they can be considered as not realized.

The Company makes use of the option to eliminate intragroup expected credit losses against the book value of loans and receivables from the Company to participating interests, instead of elimination against the net asset value of the participating interests.

5 CORPORATE TAX

BME Group B.V. is the head of the Dutch fiscal unity. The Company recognizes the portion of corporate income tax that it would owe as an independent taxpayer, taking into account the allocation of the advantages of the fiscal unity.

Settlement within the fiscal unity between the Company and its subsidiaries takes place through current account positions.

6 FINANCIAL ASSETS- PARTICIPATING INTEREST IN GROUP COMPANIES

The Company has a 100 % interest in BME Group Holding B.V., which is accounted for under the equity method. The following table provides a movement schedule for the investment:

€' 000 - Reconciliation to carrying amounts	2022	2021
Opening balance 1 January	419,969	507,372
Movements during the period:
• Share in result of participating interest	83,855	107,717
• Share premium repayment by subsidiary	-	(264,037)
• Other direct equity movements of participating interest:
- Currency translation effects	20,117	18,721
- Net gain on cash flow hedges	8,238	-
- Net change in costs of hedging	(3,762)	-
- Transactions with non- controlling interests	485	-
- Actuarial gains and losses on defined benefit plans, net of tax	(61,348)	50,196
Closing balance 31 December	467,554	419,969

During 2021, BME Group Holding B.V. repaid €264,037 thousand of its share premium to BME Group B.V.

7 TRADE AND OTHER RECEIVABLES

The below table presents the position of current trade and other receivables per 31 December:

€'000	2022	2021
Current
Other receivables from group companies	22,307	12,600
Value added tax	185	1,256
Other receivables	1,512	21
Total	24,004	13,877

The other receivables from group companies relates to administrative and other expenses charged to group companies. The carrying amount of the recognized receivables approximates their fair value, given the short maturity of the positions. Due to the short-term character, no interest is accounted for on other receivables from group companies. There are no trade and other receivables with a due date longer than one year.

8 CURRENT INCOME TAX ASSETS

Current income tax assets consist of the following:

€'000	2022	2021
Income tax receivables	-	4,303
Total	-	4,303

9 CASH AND CASH EQUIVALENTS

€'000	2022	2021
Cash on hand, bank balances and checks	113	2
Total	113	2

All cash on hand, bank balances and checks are at the Company's free disposal.

10 SHAREHOLDER'S EQUITY

Reconciliation of movements in capital and reserves

€'000	Issued share capital	Share premium	Other capital reserves	Foreign currency translation reserve
At 31 December 2020	479,806	2,543	110	5,885
Profit for the year	-	-	-	-
Reduction of nominal share capital	(264,037)	-	-	-
Share-based compensation	-	-	681	-
Transfer to legal reserve	-	-	-	-
Direct equity movements in participating interest	-	-	-	18,721
At 31 December 2021	215,769	2,543	791	24,606
Profit for the year	-	-	-	-
Share-based compensation	-	-	(7)	-
Transfer to legal reserve	-	-	-	-
Reclassifications	-	-	(6)	-
Direct equity movements in participating interest	-	-	-	20,117
Transactions with non-controlling interest	-	-	-	-
At 31 December 2022	215,769	2,543	778	44,723

€'000	Legal reserve participating interset	Retained income	Cash flow hedge reserve	Cost of hedging reserve	Total equity
At 31 December 2020	5,705	8,559	-	-	502,608
Profit for the year	-	97,996	-	-	97,996
Reduction of nominal share capital	-	-	-	-	(264,037)
Share-based compensation	-	-	-	-	681
Transfer to legal reserve	5,204	(5,204)	-	-	-
Direct equity movements in participating interest	-	50,196	-	-	68,917
At 31 December 2021	10,909	151,547	-	-	406,165
Profit for the year	-	76,796	-	-	76,796
Share-based compensation	-	-	-	-	(7)
Transfer to legal reserve	24,619	(24,619)	-	-	-
Reclassifications	-	-	-	-	(6)
Direct equity movements in participating interest	-	(61,348)	8,238	(3,762)	(36,755)
Transactions with non-controlling interest	-	485	-	-	485
At 31 December 2022	35,528	142,861	8,238	(3,762)	446,678

Shares and share capital

The number and value of ordinary shares issued by the Company are as follows:

	2022		2021
Share capital	Number	€'000	Number	€'000
Issued and fully paid
Ordinary shares of €0.4479 each	479,805,545	215,769	479,805,545	215,769

The share capital and share premium of the Group developed as follows during the period:

	Number of shares	Par value €'000	Share premium €'000	Total €'000
At 1 January 2021	479,805,545	479,806	2,543	482,349
Reduction of nominal share capital	-	(264,037)	-	(264,037)
In issue at 31 December 2021 and 31 December 2022	479,805,545	215,769	2,543	218,312

Ordinary shares

Ordinary shares have a par value of €0.4479 (2021: €0.4479). Clay Topco S.a.r.l. reduced in 2021 the nominal value of all shares in the capital of the Company from €1 to €0.04479. After this reduction, the share capital of the Company amounts €215,769 thousand. The Company used the proceeds of the capital reduction for a capital distribution to Clay Topco S.a.r.l. in cash. The authorized number of shares is 479,805,545, equaling the number of issued shares. Holders of these shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally regarding the Company's residual assets.

Share premium

The share premium includes the proceeds from the issuing of shares in so far as these exceed the nominal value of the shares (proceeds above par value).

Other capital reserves

Other capital reserves include the costs related to the equity-settled management co-investment plan. Further details of the equity-settled management co-investment plan is disclosed in Note 29 of the Group's consolidated financial statements.

Legal reserves

The legal reserves of the Group relates to the foreign currency translation reserve, legal reserve participating interest, the cash flow hedging reserve and the cost of hedging reserve. Legal reserves are not available for distribution to the Company's shareholders. An amount of €92,251 thousand (2021: €35,515 thousand) is non-distributable. Further details of the legal reserves is disclosed in Note 20 of the Group's consolidated financial statements.

Proposed appropriation of result

Following the appropriation of result proposed by the Board of Directors and pursuant to article 19 of the articles of association, the profit for the period is proposed to be added to retained income.

11 TRADE AND OTHER PAYABLES

€'000	2022	2021
Payables to group companies	40,740	24,297
Accruals and other payables	2,537	7,780
Total	43,277	32,077

The carrying amounts of trade and other payables approximate their fair value due to the short-term maturities.

Accruals and other payables include the liability related to the cash-settled long-term incentive plan ('LTIP'), amounting to €1,716 thousand (2021: €1,359 thousand). Reference is also made to Note 29 of the Group's consolidated financial statements.

12 CURRENT INCOME TAX LIABILITIES

Current income tax liabilities consist of the following:

€'000	2022	2021
Income tax liabilities	1,716	-
Total	1,716	-

13 RELATED PARTIES TRANSACTIONS

The related parties transactions are disclosed in Note 27 of the Group's consolidated financial statements.

14 COMMITMENTS AND CONTINGENCIES

Contingencies and commitments to which the Company is exposed are disclosed in Note 30 of the Group's consolidated financial statements.

15 BOARD REMUNERATION

The Board remuneration is disclosed in Note 27 of the Group's consolidated financial statements.

16 OTHER DISCLOSURES

Audit fees

The audit fees are disclosed in Note 31 of the Group's consolidated financial statements.

Workforce

The Company did not employ any personnel during 2O22 (2021: 0).

17 EVENTS AFTER THE END OF THE REPORTING PERIOD

The events after the end of the reporting period are disclosed in Note 32 of the Group's consolidated financial statements.

18 INVESTMENTS OF BME GROUP B.V.

The following table provides an overview of the direct investment of BME Group B.V. over a subsidiary:

Entity name	Seat	Country	Ownership
BME Group Holding B.V.	Amsterdam	The Netherlands	100.00 %

Signatories to the financial statements

Schiphol, 5 April 2023

Management board:

R.J. Teulings, CEO

J.P.P. Bos, CFO

Supervisory board:

JJ. Lafont, Chairperson

L.Y. Assant

L. Bonanomi

M. Culver

N. Jamar

J. Pinker

OTHER INFORMATION

PROVISIONS IN THE ARTICLES OF ASSOCIATION GOVERNING THE APPROPRIATION OF PROFIT

Under article 19 of the Company's Articles of Association, the profit is at the disposal of the General Meeting, which can allocate said profit either wholly or partly to the formation of - or addition to - one or more general or special reserve funds.

INDEPENDENT AUDITOR'S REPORT

To: the shareholder, supervisory board and the board of directors of BME Group B.V.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2022

INCLUDED IN THE ANNUAL REPORT

Our opinion

We have audited the financial statements for the financial year ended 31 December 2022 of BME Group B.V. based in Amsterdam. The financial statements comprise the consolidated and company financial statements.

In our opinion:

•	The accompanying consolidated financial statements give a true and fair view of the financial position of BME Group B.V. as at 31 December 2022 and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code.
•	The accompanying company financial statements give a true and fair view of the financial position of BME Group B.V. as at 31 December 2022 and of its result for 2022 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The consolidated financial statements comprise:

•	The consolidated statement of financial position as at 31 December 2022.
•	The following statements for 2022: the consolidated statement of income, the consolidated statements of comprehensive income, changes in equity and cash flows.
•	The notes comprising a summary of the significant accounting policies and other explanatory information.

The company financial statements comprise:

•	The company balance sheet as at 31 December 2022.
•	The company income statement for 2022.
•	The notes comprising a summary of the accounting policies and other explanatory information.

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the Our responsibilities for the audit of the financial statements section of our report.

We are independent of BME Group B.V. in accordance with the 'Wet toezicht accountantsorganisaties' (Wta, Audit firms supervision act), the 'Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten' (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the 'Verordening gedrags- en beroepsregels accountants' (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion and any findings were addressed in this context, and we do not provide a separate opinion or conclusion on these matters.

Our focus on fraud and non-compliance with laws and regulations

Our responsibility

Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the financial statements, taken as a whole, are free from material misstatement, whether caused by fraud or error.

Our audit response related to fraud risks

We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the BME Group B.V. and its environment and the components of the system of internal control, including the risk assessment process and the board of directors' process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes. We refer to Section 6 of the director's report for the board of directors' (fraud) risk assessment.

We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.

We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance.

As in all of our audits, we addressed the risks related to management override of controls. For these risks we have performed procedures among others to evaluate key accounting estimates for management bias that may represent a risk of material misstatement due to fraud, in particular relating to important judgment areas and significant accounting estimates as disclosed in 'Significant accounting judgements, estimates and assumptions' in Note 4 to the financial statements, including estimates related to the measurement of receivables for supplier bonuses. Specifically for the risk related to the measurement of receivables for supplier bonuses, we assessed the key assumptions applied by performing (i) retrospective analysis, (ii) subsequent events procedures and (iii) assessing important assumptions applied including consistency with prior years, and evaluation of the underlying supplier agreements.

In relation to management override of controls, we have also used data analysis to identify and address high-risk journal entries and evaluated the business rationale (or the lack thereof) of significant extraordinary transactions.

When identifying and assessing fraud risks we presumed that there are risks of fraud in revenue recognition. We considered among others the Company's revenue targets and their realization as well as the different revenue streams as disclosed in Note 6 of the financial statements. Our risk is mainly focusing on improper revenue recognition through manual journal entries. We designed and performed our audit procedures relating to revenue recognition responsive to this presumed fraud risk, including testing of manual entries and applying data-analytics.

These risks did however not require significant auditor's attention during our audit.

We considered available information and made enquiries of relevant executives, directors, general counsel, human resource department, internal audit, the audit committee and the supervisory board.

The fraud risks we identified, enquiries and other available information did not lead to specific indications for fraud or suspected fraud potentially materially impacting the view of the financial statements.

Our audit response related to risks of non-compliance with laws and regulations

We performed appropriate audit procedures regarding compliance with the provisions of those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. Furthermore, we assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general industry experience, through discussions with the board of directors, reading minutes, inspection of internal audit reports and performing substantive tests of details of classes of transactions, account balances or disclosures.

We also inspected lawyers' letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally, we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us.

Our audit response related to going concern

As disclosed in section 'Basis of preparation' in the financial statements, the financial statements have been prepared on a going concern basis. When preparing the financial statements, the board of directors made a specific assessment of BME Group B.V.'s ability to continue as a going concern and to continue its operations for the foreseeable future.

We discussed and evaluated the specific assessment with the board of directors exercising professional judgment and maintaining professional skepticism.

We considered whether the board of directors going concern assessment, based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, contains all relevant events or conditions that may cast significant doubt on the BME Group B.V.'s ability to continue as a going concern.

Based on our procedures performed, we did not identify material uncertainties about 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 a company to cease to continue as a going concern.

Report on other information included in the annual report

The annual report contains other information in addition to the financial statements and our auditor's report thereon.

Based on the following procedures performed, we conclude that the other information:

•	Is consistent with the financial statements and does not contain material misstatements.
•	Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.

The board of directors is responsible for the preparation of the other information, including the board of directors' report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.

DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS

Responsibilities of the board of directors and the supervisory board for the financial statements

The board of directors is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the board of directors is responsible for such internal control as the board of directors determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the board of directors is responsible for assessing the company's ability to continue as a going concern. Based on the financial reporting framework mentioned, the board of directors should prepare the financial statements using the going concern basis of accounting unless the board of directors either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The board of directors should disclose events and circumstances that may cast significant doubt on the company's ability to continue as a going concern in the financial statements.

The supervisory board is responsible for overseeing the company's financial reporting process.

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. The 'Information in support of our opinion' section above includes an informative summary of our responsibilities and the work performed as the basis for our opinion. Our audit further included among others:

•	Performing audit procedures responsive to the risks identified, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
•	Obtaining 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 internal control.
•	Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors.
•	Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.
•	Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.

Communication

We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit.

Rotterdam, 5 April 2023

Ernst & Young Accountants LLP

Signed by P.W.J. Laan