SIG Euro Holding GmbH

Linnich

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

SIG Combibloc Gruppe AG

Neuhausen am Rheinfall/Schweiz

Consolidated financial statements for the year ended 31 December 2022

Annual Report 2022

Consolidated financial statements for the year ended 31 December 2022

Consolidated statement of profit or loss and other comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes

Basis of preparation

Our operating performance

Our operating assets and liabilities

Our financing and financial risk management

Our Group structure and related parties

Our people

Other

Report of the statutory auditor on the audit of the consolidated financial statements

See note 3 for further details on the consolidated financial statements.

Consolidated statement of profit or loss and other comprehensive income

(In € million)	Note	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Revenue	6, 7	2,779.9	2,061.8
Cost of sales		(2,204.7)	(1,577.2)
Gross profit		575.2	484.6
Other income	8	24.7	78.6
Selling, marketing and distribution expenses		(110.6)	(90.8)
General and administrative expenses		(200.6)	(181.8)
Other expenses	8	(173.9)	(33.2)
Share of profit/(loss) of joint ventures	28	-	(1.6)
Profit from operating activities		114.8	255.8
Finance income		35.9	16.0
Finance expenses		(61.9)	(47.4)
Net finance expense	23	(26.0)	(31.4)
Profit before income tax		88.8	224.4
Income tax expense	32	(51.0)	(52.3)
Profit for the period	9	37.8	172.1
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
- recognised in translation reserve		43.1	101.9
- transferred from translation reserve	26, 27	-	(3.5)
Cash flow hedges:
- effective portion of changes in fair value	27	38.3
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans	30	(81.8)	45.7
Total other comprehensive income, net of income tax		(0.4)	144.1
Total comprehensive income		37.4	316.2
Basic earnings per share (in €)	10	0.10	0.51
Diluted earnings per share (in €)	10	0.10	0.51

Consolidated statement of financial position

(In € million)	Note	As of 31 Dec. 2022	As of 31 Dec. 2021
Cash and cash equivalents	17	503.8	304.5
Trade and other receivables	16	460.3	279.9
Inventories	15	402.7	194.5
Current tax assets	32	18.0	4.4
Other current assets	20	26.8	40.4
Total current assets		1,411.6	823.7
Non-current receivables	16	18.8	4.2
Investments in joint ventures	28	0.6	0.6
Deferred tax assets	32	60.0	46.0
Property, plant and equipment	12	1,667.8	1,270.5
Right-of-use assets	13	243.6	174.6
Intangible assets	14	4,246.2	2,920.5
Employee benefits	30	114.6	230.2
Other non-current assets	20	35.9	23.9
Total non-current assets		6,387.5	4,670.5
Total assets		7,799.1	5,494.2
Trade and other payables	18	1,036.8	666.3
Loans and borrowings	22	489.2	29.4
Current tax liabilities	32	46.3	42.1
Employee benefits	30	60.9	56.0
Provisions	19	26.6	19.1
Other current liabilities	20	116.2	88.2
Total current liabilities		1,776.0	901.1
Non-current payables	18	17.4	9.4
Loans and borrowings	22	2,185.5	1,693.2
Deferred tax liabilities	32	261.3	147.4
Employee benefits	30	104.6	129.0
Provisions	19	21.1	17.7
Other non-current liabilities	20	378.0	268.2
Total non-current liabilities		2,967.9	2,264.9
Total liabilities		4,743.9	3,166.0
Share capital	24	3.4	3.0
Additional paid-in capital	24	2,868.6	2,140.0
Translation reserve		(79.2)	(122.3)
Treasury shares	24	(1.3)	(0.1)
Retained earnings		263.7	307.6
Total equity		3,055.2	2,328.2
Total liabilities and equity		7,799.1	5,494.2

Consolidated statement of changes in equity

(In € million)	Note	Share capital	Additional paid-in capital	Trans- lation reserve	Hedging reserve
Equity as of 1 January 2022		3.0	2,140.0	(122.3)	-
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
- recognised in translation reserve				43.1
Cash flow hedges:
- effective portion of changes in fair value 27					38.3
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans					(81.8)
Total other comprehensive income, net of income tax		-	-	43.1	38.3
Total comprehensive income for the period		-	-	43.1	38.3
Adjustment of goodwill	27				(38.3)
Issue of shares, net of costs	24, 27	0.4	886.3
Share-based payments	31
Purchase of treasury shares	24
Settlement of share-based payment
plans and arrangements	24, 31		(9.8)
Dividends	24		(147.9)
Total transactions with owners		0.4	728.6	-	-
Equity as of 31 December 2022		3.4	2,868.6	(79.2)	-
Equity as of 1 January 2021		2.8	1,945.0	(220.7)	-
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
- recognised in translation reserve				101.9
- transferred from translation reserve	26, 27			(3.5)
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans
Total other comprehensive income, net of income tax		-	-	98.4	-
Total comprehensive income for the period		-	-	98.4	-
Issue of shares	24, 27	0.2	323.1
Share-based payments	31
Purchase of treasury shares	24		-
Settlement of share-based payment plans and arrangements	24		-
Dividends	24		(128.1)
Total transactions with owners		0.2	195.0	-	-
Equity as of 31 December 2021		3.0	2,140.0	(122.3)	-

(In € million)	Note	Treasury shares	Retained earnings	Total equity
Equity as of 1 January 2022		(0.1)	307.6	2,328.2
Profit for the period			37.8	37.8
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
- recognised in translation reserve				43.1
Cash flow hedges:
- effective portion of changes in fair value 27				38.3
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans		(81.8)
Total other comprehensive income, net of income tax		-	(81.8)	(0.4)
Total comprehensive income for the period		-	(44.0)	37.4
Adjustment of goodwill	27			(38.3)
Issue of shares, net of costs	24, 27			886.7
Share-based payments	31		5.4	5.4
Purchase of treasury shares	24	(16.3)		(16.3)
Settlement of share-based payment
plans and arrangements	24, 31	15.1	(5.3)	-
Dividends	24			(147.9)
Total transactions with owners		(1.2)	0.1	727.9
Equity as of 31 December 2022		(1.3)	263.7	3,055.2
Equity as of 1 January 2021		(0.1)	86.7	1,813.7
Profit for the period			172.1	172.1
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translations of foreign operations:
- recognised in translation reserve				101.9
- transferred from translation reserve	26, 27			(3.5)
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans			45.7	45.7
Total other comprehensive income, net of income tax		-	45.7	144.1
Total comprehensive income for the period		-	217.8	316.2
Issue of shares	24, 27			323.3
Share-based payments	31		3.8	3.8
Purchase of treasury shares	24	(0.7)		(0.7)
Settlement of share-based payment plans and arrangements	24	0.7	(0.7)	-
Dividends	24			(128.1)
Total transactions with owners		-	3.1	198.3
Equity as of 31 December 2021		(0.1)	307.6	2,328.2

Consolidated statement of cash flows

(In € million)	Note	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Cash flows from operating activities
Profit for the period		37.8	172.1
Adjustments for:
Depreciation and amortisation	12, 13, 14	366.7	306.6
Impairment losses	12	6.3	4.4
Net change in fair value of operating derivatives		39.5	(7.4)
Realised gain on settlement of deal-contingent derivatives	27	(16.6)	-
Share-based payment expense	31	5.4	3.8
Gain on sale of property, plant and equipment and non-current assets		(0.5)	(0.8)
Loss on sale of subsidiary	26	-	12.1
Gain on pre-existing interest in former joint ventures	27	-	(48.8)
Share of loss of joint ventures	28	-	1.6
Net finance expense	23	26.0	31.4
Interest paid		(52.2)	(40.6)
Payment of transaction and other costs relating to financing	22	(3.3)	-
Income tax expense	32	51.0	52.3
Income taxes paid, net of refunds received		(94.4)	(73.0)
		365.7	413.7
Change in trade and other receivables		(34.0)	(4.0)
Change in inventories		(53.1)	(9.4)
Change in trade and other payables		234.3	62.5
Change in provisions and employee benefits		(14.4)	14.9
Change in other assets and liabilities		79.7	53.2
Net cash from operating activities	11	578.2	530.9
Cash flows from investing activities
Acquisition of businesses, net of cash acquired	27	(700.4)	(63.6)
Settlement of deal-contingent derivatives	27	61.1	-
Sale of subsidiary, net of cash disposed of	26	-	3.1
Acquisition of property, plant and equipment and intangible assets	12, 14	(299.7)	(245.9)
Proceeds from sale of property, plant and equipment and other assets	27	19.1	1.1
Proceeds from sale of securities		0.4	-
Interest received		1.6	1.5
Net cash used in investing activities	11	(917.9)	(303.8)
Cash flows from financing activities
Proceeds from issue of shares	24	203.5	-
Payment of costs for placement of shares	24	(3.6)	-
Proceeds from loans and borrowings	22	1,710.0	100.0
Repayment of loans and borrowings	22	(1,189.0)	(239.5)
Settlement of deal-contingent derivative	27	15.5	-
Payment of lease liabilities	22	(34.5)	(26.7)
Purchase of treasury shares	24	(16.3)	(0.7)
Payment of dividends	24	(147.9)	(128.1)
Other		1.1	1.4
Net cash from/(used in) financing activities	11	538.8	(293.6)
Net increase/(decrease) in cash and cash equivalents		199.1	(66.5)
Cash and cash equivalents as of the beginning of the period		304.5	355.1
Effect of exchange rate fluctuations on cash and cash equivalents		0.2	15.9
Cash and cash equivalents as of the end of the period	17	503.8	304.5

NOTES

BASIS OF PREPARATION

This section includes information on the parent company and the Group. It further contains details about the preparation of the consolidated financial statements, including general accounting policies and topics. An overview of the structure of the consolidated financial statements is also provided. In addition, the key events and transactions are highlighted.

1 Reporting entity and overview of the Group

SIG Group AG ("SIG" or the "Company") is domiciled in Switzerland and has since 28 September 2018 been listed on SIX Swiss Exchange. On 13 April 2022, the Company changed its name from SIG Combibloc Group AG to SIG Group AG.

The consolidated financial statements for the year ended 31 December 2022 comprise the Company and its subsidiaries (together referred to as the "Group"). The subsidiaries and joint venture reflected in the consolidated financial statements are listed in note 26.

For information about the acquisitions of Scholle IPN on 1 June 2022 and Evergreen Asia on 2 August 2022, see notes 4 and 27. For information about the acquisition of the remaining shares of the joint ventures in the Middle East and the sale of the paper mill in New Zealand in the year ended 31 December 2021, see notes 26 and 27.

The Group is a global system supplier of aseptic carton packaging solutions for both beverage and liquid food products. Following the acquisitions in 2022, the Group also offers bag-in-box and spouted pouch packaging solutions on a global basis for beverage, food and non-food products as well as chilled carton packaging solutions in Asia. The packaging solution offerings consist of filling lines and other related equipment, packaging material and after-market services.

2 Preparation of the consolidated financial statements

The consolidated financial statements for the year ended 31 December 2022 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). They were approved by the Company's Board of Directors on 23 February 2023. They also comply with the Listing Rules of SIX Swiss Exchange and with Swiss company law.

The consolidated financial statements are presented in Euros ("€" or "EUR") as the Euro is deemed to be the currency most representative of the Group's activities. The functional currency of the Company is Swiss Franc.

The consolidated financial statements are prepared on a historical cost basis except for certain financial instruments such as derivatives, contingent purchase price obligations relating to business combinations and liabilities for cash-settled share-based payment plans that are measured at fair value, certain components of inventory that are measured at net realisable value and defined benefit obligations that are measured under the projected unit credit method.

3 Structure of the consolidated financial statements

The consolidated financial statements are structured into different sections that should facilitate an overview and understanding of the Group's operations, financial position and performance. The notes are included in these sections based on their relevance and provide information that is material and relevant to the consolidated financial statements.

BASIS OF PREPARATION	OUR OPERATING PERFORMANCE	OUR OPERATING ASSETS AND LIABILITIES	OUR FINANCING AND FINANCIAL RISK MANAGEMENT	OUR GROUP STRUCTURE AND RELATED PARTIES	OUR PEOPLE	OTHER
1 Reporting entity and overview of the Group	6 Revenue	12 Property, plant and equipment	21 Capital management	26 Group entities	30 Employee benefits	32 Income tax
2 Preparation of the consolidated financial statements	7 Segment information	13 Right-of-use assets	22 Loans and borrowings	27 Business combinations	31 Share-based payment plans and arrangements	33 Financial instruments and fair value information
3 Structure of the consolidated financial statements	8 Other income and expenses	14 Intangible assets	23 Finance income and expenses	28 Joint ventures		34 Contingent liabilities
4 Key events and transactions	9 Alternative performance measures	15 Inventories	24 Equity	29 Related parties		35 Subsequent events
5 General accounting policies and topics	10 Earnings per share	16 Trade and other receivables	25 Financial risk management
	11 Cash flow information	17 Cash and cash equivalents
		18. Trade and other payables
		19 Provisions
		20 Other assets and liabilities

Significant accounting policies and information about management judgements, estimates and assumptions are provided in the respective notes throughout the consolidated financial statements. Accounting policies that relate to the financial statements as a whole or are relevant for several notes are included in this "Basis of preparation" section.

4 Key events and transactions

The following key events and transactions took place in the year ended 31 December 2022 or were announced in 2023 before the consolidated financial statements were approved.

Acquisition of Scholle IPN

On 1 June 2022, the Group acquired 100% of the shares of Clean Flexible Packaging Holding B.V. (together with the acquired subsidiaries, "Scholle IPN") from CLIL Holding B.V. ("CLIL"). CLIL is controlled by Laurens Last and has subsequently been renamed Clean Holding B.V. Scholle IPN provides packaging solutions for beverage, food and non-food products.

The cash consideration for Scholle IPN amounted to €424.3 million. The Group also transferred 33.75 million newly issued SIG shares with a fair value of €686.8 million to CLIL as part of the consideration. In addition, there is contingent consideration of a maximum of $300 million (with an estimated fair value of €113.2 million as of 31 December 2022). The Group also repaid the external loans of Scholle IPN at the closing. For additional information about the acquisition, see note 27.

Acquisition of Evergreen's chilled carton business in Asia Pacific ("Evergreen Asia")

On 2 August 2022, the Group acquired Evergreen Asia from Evergreen Packaging International LLC ("Evergreen"). Evergreen Asia offers chilled carton packaging solutions in Asia.

The Group paid €329.5 million in cash (subject to customary closing adjustments) at the time of the closing as consideration for Evergreen Asia. For additional information about the acquisition, see note 27.

Financing of the acquisitions

The initial cash portion of the consideration for Scholle IPN and the repayment of the external loans of Scholle IPN were initially financed by proceeds from an unsecured bridge loan facility. A large portion of this unsecured bridge loan facility was repaid on 30 June 2022 using proceeds from an unsecured Schuldscheindarlehen ("SSD", a private German debt placement). The remaining proceeds from the unsecured SSD, together with proceeds received from a placement of newly issued SIG shares, were used to finance the consideration for Evergreen Asia. On 28 July 2022, the Group entered into a US Dollar- denominated term loan. The major part of the proceeds from the term loan was used to repay the remaining portion of the unsecured bridge loan facility.

The impact on the Group's financial position of these financing transactions, including the SIG shares issued and transferred to CLIL as part of the consideration for Scholle IPN, is described in more detail in notes 22 and 24.

Organ is ational changes in the Group Executive Board and the Board of Directors

The following persons joined the Group Executive Board in the year ended 31 December 2022.

•	Fan Lidong - President and General Manager Asia Pacific North
•	Angela Lu - President and General Manager Asia Pacific South
•	Suzanne Verzijden - Chief People and Culture Officer
•	Ross Bushnell - President Scholle IPN

Ross Bushnell became a member of the Group Executive Board on 1 June 2022, while all other changes became effective as of 1 January 2022.

Frank Herzog, Chief Financial Officer, resigned as of 31 December 2022. See further notes 29 and 31.

Gavin Steiner will join the Group Executive Board as Chief Technology Officer on 1 April 2023. Ian Wood will take on the role of Chief Supply Chain Officer.

The following changes took place in the Board of Directors in the year ended 31 December 2022.

•	Laurens Last, the former owner of Scholle IPN, was elected to the Board of Directors at the Annual General Meeting on 7 April 2022. He is the second largest disclosed shareholder in SIG (see also notes 24 and 29).
•	Nigel Wright decided not to stand for re-election and stepped down from the Board of Directors upon the conclusion of the Annual General Meeting on 7 April 2022.

Annual Report 2022 Annual Report 2022 Bridge loan financing

The Group signed a €400 million unsecured bridge loan facility agreement on 9 January 2023. The facility may be accessed in June 2023, when €450 million of the Group's senior unsecured notes is due for repayment. See note 22.

5 General accounting policies and topics

5.1 Application of accounting policies

The accounting policies applied by the Group in the consolidated financial statements for the year ended 31 December 2022 are consistent with those applied in the consolidated financial statements for the year ended 31 December 2021, with one exception. The Group applied cash flow hedge accounting for the first time in the year ended 31 December 2022. See note 27 for details about the accounting for the derivatives entered into by the Group in relation to the acquisitions of Scholle IPN and Evergreen Asia.

5.2 Impact of new or amended standards and interpretations

A number of new or amended standards and interpretations became effective for annual periods beginning on 1 January 2022. The applicable standards and interpretations had no, or no material, impact on the consolidated financial statements.

5.3 Adoption of standards and interpretations in 2023 and beyond

A number of new or amended standards and interpretations are effective for annual periods beginning on 1 January 2023 or later and have not been applied in preparing these consolidated financial statements. The Group does not plan to adopt these standards and interpretations before their effective dates. Many of them are not applicable to the Group or are expected to have no, or no material, impact on the consolidated financial statements.

5.4 Critical accounting judgements, estimates and assumptions

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses and disclosure of contingent assets and liabilities. The estimates and associated assumptions are based on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from estimates and assumptions made. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both the current and future periods.

Management believes that the following accounting policies involve the most significant judgements, estimates and assumptions:

•	Liabilities for various customer incentive programmes - see notes 6 and 18.
•	Impairment testing and recognition of impairment losses - see notes 12 and 14.
•	Business combinations and fair value assessments, including fair value assessment of contingent consideration - see notes 25, 27 and 33.
•	Measurement of obligations under defined benefit plans - see note 30.
•	Determination of income tax liabilities - see note 32.
•	Realisation of deferred tax assets - see note 32.

Global economic uncertainty

Various events such as COVID-19, the war in Ukraine, the increase in raw material and energy prices as well as rising inflation are contributing to global economic uncertainty.

The progress of the business during the COVID-19 pandemic has shown that the Group is well placed to withstand the effects of COVID-19 due to its role in the supply chain for essential food and beverages and its broad geographic reach. The Group overall has not been, and is currently not, significantly impacted by the outbreaks of COVID-19 around the world.

The ongoing war in Ukraine has had significant impacts on the global economy in general, with sanctions against Russia impacting many areas such as the supply of raw materials and energy prices. However, the Group overall has not been, and is currently not, significantly impacted by these effects. The Group has not experienced any significant shortfalls of raw materials, even if the Group is impacted by the global increase in raw material and energy prices as well as higher inflation. These effects can be partially mitigated by the Group's diversified supply chain, its hedging strategy, long-term supply contracts and ability to pass on higher costs to its customers.

The impact of sanctions against Russia on the Group's sales is not significant, with sales to customers in Russia and Ukraine representing less than 2% of the Group's revenue in 2021 (including Scholle IPN's unaudited revenue in 2021). Prior to the acquisition of Scholle IPN, the Group had only sales and service activities in Ukraine and Russia. One of the acquired Scholle IPN entities is incorporated and has a production plant in Russia, which represents an insignificant part of the acquired net assets. For the year ended 31 December 2022, sales to customers in Russia represented less than 1% of the Group's revenue.

5.5 Accounting policies and other topics relating to the consolidated financial statements as a whole

5.5.1 Foreign currency

Items included in the financial statements of individual Group entities are recognised in their respective functional currency, which is the currency of the primary economic environment in which each Group entity operates.

Foreign currency transactions

Foreign currency transactions are translated into the respective functional currency of the Group entity at the exchange rates at the dates of the transactions. Monetary assets and liabilities in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. Non-monetary assets and liabilities in foreign currencies that are measured based on historical cost are translated at the exchange rates at the dates of the transactions. Foreign currency exchange gains or losses are generally recognised in profit or loss.

Foreign operations

Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisitions, are translated into Euro at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Euro at average rates for the reported periods, which approximate the exchange rates at the dates of the transactions. This also applies to the statement of cash flows and all movements in assets and liabilities as well as any items of other comprehensive income. The foreign currency exchange gains and losses arising on the translation of the net assets of foreign operations are recognised in other comprehensive income, in the translation reserve.

When a foreign operation is disposed of or liquidated, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal (or liquidation). The Group does not apply hedge accounting to the foreign currency exchange differences arising between the functional currency of the foreign operation and the Euro.

Significant exchange rates

The following significant exchange rates against the Euro applied during the periods presented:

	Average rate for the year		Spot rate as of
	31 Dec. 2022	31 Dec. 2021	31 Dec. 2022	31 Dec. 2021
Brazilian Real (BRL)	5.42968	6.37706	5.63860	6.31010
Chinese Renminbi (CNY)	7.07715	7.63193	7.35820	7.19470
Mexican Peso (MXN)	21.15826	23.99444	20.85601	23.14380
Swiss Franc (CHF)	1.00514	1.08142	0.98470	1.03310
Thai Baht (THB)	36.86058	37.78863	36.83504	37.65298
US Dollar ($ or USD)	1.05277	1.18341	1.06660	1.13260

5.5.2 Lease accounting

The Group as lessor

The Group deploys aseptic carton filling lines at its customers' sites under both lease and sale contracts. In the newly acquired businesses, filling lines and other related equipment are primarily deployed under sale contracts and in limited cases also under lease contracts.

The aseptic carton filling line contracts generally contain certain terms showing that the Group retains control of the filling line and does not transfer the significant risks and rewards of ownership to the customer. Due to these contractual terms, the majority of the Group's aseptic carton filling line contracts qualify to be accounted for as operating leases in accordance with IFRS 16 Leases. See further notes 6, 12, 18 and 20. Sale contracts that do not contain such terms are accounted for in accordance with IFRS 15 Revenue from Contracts with Customers.

The Group's aseptic carton filling line lease contracts do not include unconditional rights for customers to extend the lease or to purchase the filling line at the end of the stated lease term. Due to the Group's long-term relationships with its customers and changing customer needs, contracts can be modified or terminated at any time. Customers may for example want to change to a different filling machine model. Filling lines taken back from customers are generally overhauled and redeployed with other existing or new customers.

Filling line lease contracts in the newly acquired businesses generally qualify to be accounted for as finance leases in accordance with IFRS 16 Leases. The impact of these finance lease contracts is not material for the Group.

The Group as lessee

The Group leases office buildings, production-related buildings and equipment, warehouses and cars.

The majority of the Group's leased assets are recognised as right-of-use assets with corresponding lease liabilities. See notes 13 and 22 for details about the accounting for right-of-use assets and lease liabilities.

Leases of low-value assets and short-term leases (leases with a lease term of 12 months or less) are accounted for off-balance sheet. The lease payments are recognised as an expense on a straight-line basis over the lease term. Variable lease payments that are not included in the measurement of lease liabilities are also accounted for off-balance sheet and are recognised as an expense when incurred. The Group's off-balance sheet leases have an insignificant impact on the Group's result.

5.5.3 Impairment of non-financial assets

The carrying amounts of the Group's property, plant and equipment, right-of-use assets and intangible assets with finite useful lives are reviewed regularly and at least annually to identify whether there is an indication of impairment. If an impairment indicator exists, the asset's recoverable amount is estimated. Goodwill and intangible assets with indefinite useful lives are tested for impairment on an annual basis and whenever there is an indication that they may be impaired.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units ("CGU").

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. In assessing the 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 or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. An impairment loss is allocated to first reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro-rata basis. Impairment losses are recognised in profit or loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Further details on impairment testing are provided in the respective notes on property, plant and equipment, right-of-use assets and intangible assets (see notes 12, 13 and 14).

5.5.4 Contingent assets

Contingent assets are possible assets arising from a past event to be confirmed by future events not wholly within the control of the Group. Contingent assets are not recognised in the statement of financial position but are disclosed separately. If realisation of a contingent asset becomes virtually certain, it is no longer considered contingent and is recognised as an asset.

OUR OPERATING PERFORMANCE

This section covers our operating performance at Group as well as at segment level. It includes alternative performance measures that management believes are relevant in evaluating the Group's performance and liquidity.

6 Revenue

Revenue derives from the sale of goods such as carton sleeves, closures, bag-in-box and spouted pouches with associated materials (barrier film and fitments), filling lines and other related equipment as well as the provision of after-market services. Revenue is presented net of returns, trade discounts, volume rebates and other customer incentives. In addition, the Group presents income from the deployment of filling lines and other related equipment under contracts that qualify to be accounted for as operating leases as part of revenue.

Composition of revenue

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Revenue from sale and service contracts	2,621.0	1,932.5
Revenue from filling line and other related equipment contracts accounted for as operating leases	158.9	129.3
Total revenue	2,779.9	2,061.8

The Group's total revenue is disaggregated by major product/service line in the table below.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Revenue from the sale of carton, bag-in-box and spouted pouches	2,415.1	1,758.6
Filling line and other related equipment revenue	200.3	141.1
Service revenue	164.0	140.1
Other revenue	0.5	22.0
Total revenue	2,779.9	2,061.8

Revenue from the sale of carton, bag-in-box and spouted pouches is mainly composed of revenue from the sale of aseptic carton sleeves and closures. Since the acquisitions of Scholle IPN on 1 June 2022 and Evergreen Asia on 2 August 2022, this line item also includes revenue from the sale of bag-in-box and spouted pouches as well as carton sleeves for the chilled market in Asia.

Filling line and other related equipment revenue is composed of revenue from the deployment of equipment under contracts that qualify to be accounted for as operating leases and from the sale of equipment.

Service revenue relates to after-market services in relation to the Group's equipment.

Other revenue for the year ended 31 December 2021 included revenue under royalty agreements and from the sales of liquid paper board and folding box board. As a consequence of the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021, the royalty agreement with the former joint ventures was terminated. The Group's sales of liquid paper board are mainly to the former joint ventures and, since the acquisition, are intra-group sales rather than third-party sales. Sales of folding box board have ceased as the Group sold its paper mill in June 2021 (see note 26).

The sale of the paper mill has resulted in the Group no longer making a distinction between revenue from core and non-core activities. This has been reflected in the presentation of revenue in the comparative period.

The Group's revenue is disaggregated by type of business in the table below.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Revenue from the carton business	2,417.3	2,061.8
Revenue from the bag-in-box and spouted pouch business	362.6	-
Total revenue	2,779.9	2,061.8

Revenue from the carton business relates to the provision of aseptic carton packaging solutions and, since the acquisition of Evergreen Asia, chilled carton packaging solutions in Asia. Revenue from the bag-in-box and spouted pouch business relates to the provision of packaging solutions by Scholle IPN.

Notes 18 and 20 include information about the Group's liabilities relating to various incentive programmes, advance payments from customers and deferred revenue, which had or will have an impact on the amount of revenue recognised.

Accountingpolicy, significant judgements and estimates

Revenue from sale of carton, bag-in-box and spouted pouches with associated products, deployment of filling lines and other related equipment under contracts accounted for as sale contracts and provision of service is measured at the fair value of the consideration received or receivable net of returns, trade discounts, volume rebates and other customer sales incentives.

Revenue is recognised when the Group transfers control over a product or service to a customer. Transfer of control varies depending on the individual contract terms. Revenue from the sale of carton, bag-in-box and spouted pouches with associated products as well as deployment of filling lines and other related equipment under contracts accounted for as sale contracts is recognised at a point in time, while revenue from service contracts is recognised over time.

Lease payments for filling lines and other related equipment that are deployed under operating lease contracts are recognised on a straight-line basis over the lease period. The payment (ie. the sale price) for the use of aseptic carton filling lines that are deployed under sale contracts that qualify to be accounted for as operating leases is recognised as a deferred revenue liability in the statement of financial position, and recognised as revenue on a straight-line basis over the shorter of the period over which the customer relationship is expected to last and the ten-year estimated useful life of a filling line. The control and significant risks and rewards of ownership are retained by the Group in respect of such sale contracts (see further note 5.5.2).

When sales incentives are offered to customers, only the amount of revenue that is highly probable not to be reversed is recognised. The amount of sales incentives expected to be earned or taken by customers in conjunction with incentive programmes is therefore estimated and deducted from revenue. Estimates in respect of the incentives are based on historical and current sales trends, which are affected by the business seasonality and competitiveness of promotional programmes being offered. Estimates are reviewed quarterly for possible revisions.

7 Segmentinformation

The Group has four operating segments, which are also the reportable segments: Europe, Middle East and Africa ("MEA"), Asia Pacific ("APAC") and Americas.

Prior to the acquisition of Scholle IPN on 1 June 2022, all segments provided the same aseptic carton packaging solutions, comprising aseptic carton filling lines, aseptic carton sleeves and closures as well as after-market services. The acquisition of Scholle IPN has not resulted in a change in the Group's segmentation. The business of Scholle IPN has been allocated to Europe, MEA, APAC and Americas. The segments now also provide bag-in-box and spouted pouch packaging solutions, including barrier film and fitments as well as filling lines and other equipment for bag-in-box and spouted pouches with related after-market services. Since the acquisition of Evergreen Asia on 2 August 2022, APAC also provides chilled carton packaging solutions, comprising carton filling lines, carton sleeves and closures as well as after-market services.

Prior to the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021, the Group had three operating (and reportable) segments: Europe, Middle East and Africa ("EMEA"), APAC and Americas. The acquisition resulted in a split of EMEA into two segments: segment Europe and segment MEA.

Overview of the segments and Group Functions

Europe includes production of aseptic carton sleeves and closures as well as barrier film and fitments for bag-in-box and spouted pouches for the Group's customers in Europe. Europe also supplies the other segments with aseptic carton sleeves and, to a lesser extent, closures from its plants in Europe. The Group's central procurement activities, including commodity hedging, are part of Europe, with the European production entities being the main internal customers. In addition, Europe includes the European-based assembly plant for equipment used for bag-in-box and spouted pouches.

MEA covers the Group's customers in the Middle East and Africa. The operations of the former joint ventures in the Middle East, including an aseptic carton sleeves production plant, are part of this segment. MEA will include sales of bag-in-box and spouted pouch packaging solutions to customers in the Middle East and Africa.

Until the end of February 2021, the former segment EMEA included the same activities as included in segment Europe before the acquisition of Scholle IPN (see above). In addition, EMEA included the result from the sale of supply from the Group's European production entities to the Middle Eastern markets. The Group's former joint ventures in the Middle East contributed to the performance of EMEA through dividend payments and royalty payments related to the use of SIG technical solutions and aseptic carton sleeves sales in the Middle East and Africa.

APAC includes production of aseptic carton sleeves, carton sleeves for the chilled market as well as barrier film and fitments for bag-in-box and spouted pouches for the Group's customers in China, South East Asia and Oceania. In addition, APAC supplies the other segments with aseptic carton sleeves. APAC also includes the aseptic carton filling machine assembly plant in China, the assembly plant for filling lines and other related equipment used for bag-in-box and spouted pouches in India and the assembly of filling machines for the chilled market in Asia. Until the beginning of June 2021, when the Group sold its paper mill in New Zealand, APAC also included production of liquid paper board and folding box board (see note 26). The liquid paper board was mainly used by the sleeves plants in Asia and the former joint ventures in the Middle East.

Americas covers the Group's customers in North and South America. South America has its own aseptic carton sleeves production plant. North America has so far primarily been supplied with aseptic carton sleeves from the Group's European and Asian plants. However, commercial production of aseptic carton sleeves for the North American market started in the Group's first plant in Mexico in February 2023. Americas also includes the production of film and fitments for bag-in-box and spouted pouches as well as the American-based assembly plant for filling lines and other related equipment used for bag-in-box and spouted pouches.

The Group Functions include activities that support the Group's business, such as the global aseptic carton filling machine assembly, global technology (including R&D), information technology, marketing, finance, legal, human resources and other support functions. Global filling machine assembly sells aseptic carton filling machines and spare parts, and provides assembly-related services, to all segments. The Group Functions are not involved in any significant transactions with third parties. Their sales of filling lines to the former joint ventures in the Middle East were reported as third-party sales until the Group obtained control over the joint ventures as of the end of February 2021.

Inter-company transactions between the segments, and between the segments and the Group Functions, are eliminated in consolidation. These mainly relate to the sale of aseptic carton filling machines, aseptic carton sleeves and closures. Pricing is determined on a cost-plus basis. The Group has limited inter-segment sales of products related to the chilled carton operations.

Information about the Group's segments is reported to the Chief Operating Decision Maker ("CODM") on a regular basis for the purposes of resource allocation and assessment of performance of the segments. The performance of the segments is assessed by the CODM primarily on the basis of adjusted EBITDA (as defined in note 9).

Segment financial in formation

The following tables present financial information about the Group's segments and Group Functions. The same measurement basis is used when presenting the segment information as is used in the Group's consolidated financial statements.

	Year ended 31 December 2022
(In € million)	Europe	MEA	APAC	Americas	Total segments
Revenue from transactions with external customers	849.4	331.5	900.0	697.4	2,778.3
Revenue from inter-segment transactions	397.2	4.9	16.7	7.9	426.7
Segment revenue	1,246.6	336.4	916.7	705.3	3,205.0
Adjusted EBITDA ¹	201.4	86.3	278.7	141.1	707.5
Capital expenditure: ²	(70.1)	(23.0)	(127.4)	(54.4)	(274.9)
PP&E and intangible assets ^3,4	(25.0)	(3.2)	(36.5)	(17.0)	(81.7)
Net filling lines and other related equipment ⁴	14.5	(11.4)	(31.1)	(28.6)	(56.6)
Net capital expenditure ²	(10.5)	(14.6)	(67.6)	(45.6)	(138.3)

	Year ended 31 December 2022
(In € million)	Group Functions	Reconciling items	Total
Revenue from transactions with external customers	1.6	-	2,779.9
Revenue from inter-segment transactions	74.7	(501.4)	-
Segment revenue	76.3	(501.4)	2,779.9
Adjusted EBITDA ¹	(55.3)	-	652.2
Capital expenditure: ²	(5.7)	-	(280.6)
PP&E and intangible assets ^3,4	(26.0)	-	(107.7)
Net filling lines and other related equipment ⁴	20.3	-	(36.3)
Net capital expenditure ²	(5.7)	-	(144.0)

Annual Report 2022 Annual Report 2022	Year ended 31 December 2021
(In € million)	EMEA ⁵	Europe ⁶	MEA ⁶	APAC	Americas	Total segments
Revenue from transactions with external customers	119.3	615.7	251.9
Revenue from inter- segment transactions	40.8	260.7	0.6	14.5	-	316.6
Segment revenue	160.1	876.4	252.5	720.1	365.6	2,374.7
Adjusted EBITDA ¹	38.4	203.7	78.5	211.8	96.7	629.1
Capital expenditure: ²	(15.5)	(84.7)	(12.4)	(89.6)	(34.0)	(236.2)
PP&E and intangible assets ^3,4	(3.3)	(29.0)	(3.3)	(33.4)	(16.4)	(85.4)
Net filling lines ⁴	(7.1)	(14.5)	(2.9)	(5.8)	(17.3)	(47.6)
Net capital expenditure ²	(10.4)	(43.5)	(6.2)	(39.2)	(33.7)	(133.0)

Annual Report 2022 Annual Report 2022	Year ended 31 December 2021
(In € million)	Group Functions	Reconciling items	Total
Revenue from transactions with external customers	3.7	-	2,061.8
Revenue from inter- segment transactions	62.3	(378.9)	-
Segment revenue	66.0	(378.9)	2,061.8
Adjusted EBITDA ¹	(58.5)	-	570.6
Capital expenditure: ²	(9.7)	-	(245.9)
PP&E and intangible assets ^3,4	(7.5)	-	(92.9)
Net filling lines ⁴	(2.2)	-	(49.8)
Net capital expenditure ²	(9.7)	-	(142.7)

¹ The performance of the segments is presented with reference to adjusted EBITDA, excluding intra-group trademark and royalty payments. Refer to note 9 for additional details about adjusted EBITDA.

² Refer to note 11 for additional details about capital expenditure and net capital expenditure.

³ PP&E (excluding filling lines and other related equipment) and intangible assets.

⁴ Group Functions may report positive net filling lines and other related equipment capital expenditure if the capital expenditure of the global aseptic carton filling machine assembly during a period is smaller than the payments it received under intra-group sales of filling machines. This could also happen occasionally in the case of PP&E and intangible asset capital expenditure, excluding filling lines and other related equipment.

⁵ Segment financial information presented for January-February 2021.

⁶ Segment financial information presented for March-December 2021.

The increase from three to four segments in the year ended 31 December 2021 did not result in any material changes that would have required restatement of segment information. The Group's reporting structure changed due to the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021. The Group did not have control over these entities before the acquisition. The Group accounted for the joint ventures using the equity method as it only had joint control. The results of the former joint ventures in the Middle East are fully consolidated and reported in the new segment MEA since the end of February 2021, while the European activities of the former EMEA segment are reported in the new segment Europe. Prior to the acquisition, the former joint ventures in the Middle East contributed to the performance of EMEA through dividend payments and royalty payments. The royalty agreement was terminated and dividend payments ceased upon the Group's acquisition of the remaining shares of the joint ventures. No dividends were paid by the joint ventures to the former joint venture partners in the first two months of 2021. Sales by various Group companies to the former joint ventures were, prior to the acquisition, reported as external sales. Since the acquisition, sales to the former joint ventures are reported as inter-segment transactions. Based on these facts, the Group does not believe that a meaningful quantitative comparability could have been achieved considering the nature of changes in the relationship between the parties pre- and post-acquisition. Therefore, the table above for the year ended 31 December 2021 should be read in conjunction with the descriptions in this section.

Disaggregation of segment revenue

The following table presents revenue from transactions with external customers for the segments for the year ended 31 December 2022, split by major product/service line.

	Year ended 31 December 2022
(In € million)	Europe	MEA	APAC	Americas
Revenue from the sale of carton, bag-in-box and spouted pouches	759.5	275.6	766.0	614.0
Filling line and other related equipment revenue	46.2	31.2	76.6	45.8
Service revenue	43.7	24.7	57.4	37.6
Other revenue	-	-	-	-
Total revenue	849.4	331.5	900.0	697.4

	Year ended 31 December 2022
(In € million)	Total segments	Group Functions	Total
Revenue from the sale of carton, bag-in-box and spouted pouches	2,415.1	-	2,415.1
Filling line and other related equipment revenue	199.8	0.5	200.3
Service revenue	163.4	0.6	164.0
Other revenue	-	0.5	0.5
Total revenue	2,778.3	1.6	2,779.9

With regard to the Group's sale of aseptic carton packaging solutions in the year ended 31 December 2021, the split of revenue between revenue from sale of sleeves and closures, filling line revenue and service revenue is broadly the same at Group level, between the Group's segments and over recent years (see note 6). Other revenue, until the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021, was mainly divided between APAC and the former segment EMEA.

The following table presents revenue from transactions with external customers for the segments for the year ended 31 December 2022, split by type of business.

	Year ended 31 December 2022
(In € million)	Europe	MEA	APAC	Americas
Revenue from the carton business	761.7	331.5	855.0	467.5
Revenue from the bag-in-box and spouted pouch business	87.7	-	45.0	229.9
Total revenue	849.4	331.5	900.0	697.4

	Year ended 31 December 2022
(In € million)	Total segments	Group Functions	Total
Revenue from the carton business	2,415.7	1.6	2,417.3
Revenue from the bag-in-box and spouted pouch business	362.6	-	362.6
Total revenue	2,778.3	1.6	2,779.9

Geographic in formation

The Group operates nine plants that produce aseptic carton sleeves (two each in Germany and in China, and one each in Austria, Thailand, Saudi Arabia, Brazil and Mexico). The plant in Saudi Arabia was part of the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021 (see note 27). The plant in Mexico became operational in February 2023. The Group also intends to build an aseptic carton sleeves plant in India.

The Group operates two assembly plants for aseptic carton filling machines in Germany and China, and a production plant for closures in Switzerland. For the aseptic carton business, it also operates three R&D centres (one each in Germany, Switzerland and China), three technology centres (one each in Germany, the UAE and China) and five training centres (one each in Germany, the UAE, China, Thailand and Brazil). The Group sold its paper mill in New Zealand in 2021 (see notes 9 and 26).

In addition, the Group operates 15 plants that produce barrier film and fitments for bag-in- box and spouted pouches (four in the USA, two each in the Netherlands and India, and one each in Germany, Russia, Australia, China, Canada, Brazil and Chile), three assembly plants for filling lines and other related equipment used for bag-in-box and spouted pouches (one each in Spain, India and the USA) as well as two equipment-related R&D centres (one in Spain and one in the USA).

For the chilled carton business, the Group has three plants in China, South Korea and Taiwan that produce carton sleeves and one assembly plant for carton filling machines in China.

The following table includes information about the Group's non-current assets on a country basis. Non-current assets exclude financial instruments, deferred tax assets and net defined benefit assets.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Germany	1,132.6	1,111.2
USA	973.4	218.3
China	916.9	692.5
United Arab Emirates	616.0	630.8
Switzerland ¹	505.4	478.6
Thailand	494.6	460.2
Other countries	1,547.2	797.3
Total non-current assets	6,186.1	4,388.9

¹ The Company's country of domicile is Switzerland.

The non-current assets are reported based on the geographic location of the business operations. The non-current assets are predominantly located in the countries in which the Group's production and assembly plants are situated. The Group's intellectual property is primarily held by a company based in Switzerland.

The following table includes information about the Group's revenue from external customers on a country basis.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
China	410.4	324.7
USA	290.2	95.8
Germany	235.4	217.9
Switzerland	13.4	12.4
Other countries	1,830.5	1,411.0
Total revenue from external customers	2,779.9	2,061.8

Revenue is reported based on the geographic location of customers. The customer base of the Group includes international companies, large national and regional companies as well as small local companies.

Information about major customers

The Group does not have revenue from transactions with a single external customer amounting to 10% or more of the Group's revenue in any of the periods presented.

8 Other income and expenses

Other income and expenses relate to activities and transactions that are outside the Group's principal revenue-generating activities. Foreign currency exchange gains and losses as well as fair value changes on commodity and foreign currency derivatives entered into as part of the operating business are also presented as other income and expenses. Activities and transactions of a significant or unusual nature are generally adjusted for in the performance measures adjusted EBITDA and adjusted net income used by management (see note 9).

Composition of other income and expenses

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Net change in fair value of operating derivatives	-	7.8
Realised gain on settlement of deal-contingent derivatives	16.6	-
Income from miscellaneous services	2.6	2.8
Rental income	0.7	0.7
Gain on pre-existing interest in former joint ventures	-	48.8
Indirect tax recoveries	-	12.1
Other	4.8	6.4
Total other income	24.7	78.6
Net foreign currency exchange loss	(19.2)	(2.1)
Net change in fair value of operating derivatives	(39.5)	-
Transaction- and acquisition-related costs	(24.1)	(16.5)
Integration costs	(17.1)	(2.5)
Change in fair value of contingent consideration	(74.0)	-
Loss on sale of subsidiary	-	(12.1)
Total other expenses	(173.9)	(33.2)

For the year ended 31 December 2022, the Group recognised a net foreign currency exchange loss of €19.2 million. This mainly relates to a realised net loss on foreign currency derivatives.

For the year ended 31 December 2022, the Group recognised an unrealised net loss on commodity and foreign currency derivatives of €39.5 million. This arose primarily because the Group has entered into commodity derivative contracts fixing prices for polymers and aluminium at levels above the currently lower forward prices.

The indirect tax recoveries of €12.1 million in the year ended 31 December 2021 relate to a Supreme Court ruling on sales tax in Brazil that was beneficial to the Group. Out-of-period indirect tax recoveries of €10.3 million are excluded in the calculation of adjusted EBITDA and adjusted net income (see note 9).

See note 9 for information about the realised gain on settlement of the deal-contingent derivatives (relating to the acquisitions of Scholle IPN and Evergreen Asia), transaction- and acquisition-related costs, integration costs, the change in the fair value of the contingent consideration, the gain on the pre-existing interest in joint ventures and the loss on sale of a subsidiary. These items are excluded in the calculation of adjusted EBITDA and adjusted net income.

9 Alternative performance measures

Management uses a number of measures to assess the performance of the Group that are not defined in IFRS, including adjusted EBITDA, adjusted net income, adjusted earnings per share, net capital expenditure, free cash flow and net leverage ratio.

These alternative non-IFRS performance measures are presented as management believes that they are important supplemental measures of the Group's performance. Management believes that they are useful and widely used in the markets in which the Group operates as a means of evaluating performance. In certain cases, these alternative performance measures are also used to determine compliance with covenants in the Group's credit agreements and compensation of certain members of management. However, these alternative performance measures should not be considered as substitutes for the information contained elsewhere in these consolidated financial statements.

This note includes information about adjusted EBITDA and adjusted net income. Adjusted earnings per share is presented in note 10 while net capital expenditure and free cash flow are presented in note 11. Information about the Group's net leverage ratio is included in note 21. In the prior period, management also used core revenue as an alternative performance measure (see note 6). Core revenue excluded revenue from the sale of folding box board.

Adjusted EBITDA

Adjusted EBITDA is used by management for business planning and to measure operational performance. Management believes that adjusted EBITDA provides investors with further transparency on the Group's operational performance and facilitates comparison of the performance of the Group on a period-to-period basis and versus peers.

EBITDA is defined by the Group as profit or loss before net finance expense, income tax expense, depreciation of property, plant and equipment and right-of-use assets, and amortisation of intangible assets. Adjusted EBITDA is defined by the Group as EBITDA, adjusted to exclude certain non-cash transactions and items of a significant or unusual nature including, but not limited to, transaction- and acquisition-related costs, integration costs, restructuring costs, unrealised gains or losses on operating derivatives, gains or losses on the sale of non-strategic assets, asset impairments and write-downs, and share of profit or loss of joint ventures, and to include the cash impact of dividends received from joint ventures.

The following table reconciles profit for the period to EBITDA and adjusted EBITDA.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Profit for the period	37.8	172.1
Net finance expense	26.0	31.4
Income tax expense	51.0	52.3
Depreciation and amortisation	366.7	306.6
EBITDA	481.5	562.4
Adjustments to EBITDA:
Unrealised loss/(gain) on operating derivatives	39.5	(7.8)
Replacement of share of profit or loss of joint ventures with cash dividends received from joint ventures	-	1.6
Restructuring costs, net of reversals	4.9	26.0
Loss on sale of subsidiary	-	12.1
Transaction- and acquisition-related costs	24.1	16.5
Integration costs	17.1	2.5
Realised gain on settlement of deal-contingent derivatives	(16.6)	-
Fair value adjustment on inventories	20.6	10.4
Change in fair value of contingent consideration	74.0	-
Gain on pre-existing interest in former joint ventures	-	(48.8)
Out-of-period indirect tax recoveries	-	(10.3)
Impairment losses	6.3	4.4
Other	0.8	1.6
Adjusted EBITDA	652.2	570.6

The transaction- and acquisition-related costs as well as the integration costs for the year ended 31 December 2022 mainly relate to the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see notes 4 and 27). For the year ended 31 December 2021, the transaction- and acquisition-related costs related to costs incurred for the acquisitions of Scholle IPN and Evergreen Asia in 2022 as well as the acquisition of the remaining shares of the joint ventures in the Middle East in 2021 (€6.5 million).

The settlement of the deal-contingent foreign currency derivatives that the Group entered into relating to the consideration paid in cash for Scholle IPN on 1 June 2022 and for Evergreen Asia on 2 August resulted in a total realised gain of €61.1 million in the year ended 31 December 2022 (€25.5 million for Scholle IPN and €35.6 million for Evergreen Asia), of which €16.6 million is recognised in profit or loss as part of other income (€11.9 million for Scholle IPN and €4.7 million for Evergreen Asia). Due to the designation of the derivatives as hedging instruments in a cash flow hedge, the larger part of the realised gain reduced the amounts of goodwill recognised for Scholle IPN and Evergreen Asia. See further note 27.

The fair value adjustment on inventories of €20.6 million in the year ended 31 December 2022 relates to the fair value increases of the inventories of Scholle IPN and Evergreen Asia that were made in connection with the acquisition accounting (see note 27). These inventories have subsequently been sold. The fair value adjustment on inventories of €10.4 million in the year ended 31 December 2021 related to the fair value increase of the inventories of the former joint ventures in the Middle East that was made in connection with the acquisition accounting (see note 27). These inventories were subsequently sold.

The change in the fair value of the contingent consideration of €74.0 million relates to the remeasurement of the US Dollar contingent consideration for Scholle IPN at fair value as of 31 December 2022 (see further notes 27 and 33).

The restructuring costs for the year ended 31 December 2021 mainly related to the Group's paper mill in New Zealand (€9.8 million, net of reversals of provisions - see note 26) and to the closure of the Australian sleeves manufacturing operations (€8.6 million). In light of the opening of the Group's new plant for aseptic carton sleeves in China in 2020, the Group decided to close its Australian sleeves manufacturing operations and consolidate the production of aseptic carton sleeves into the Group's existing plants. The Australian sleeves plant was vacated in 2022.

A loss of €12.1 million arose upon the sale of the Group's paper mill in New Zealand in the year ended 31 December 2021 (see note 26).

The remeasurement to fair value of the Group's pre-existing 50% interest in the former joint ventures in the Middle East resulted in a gain of €48.8 million in the year ended 31 December 2021 (see note 27).

Adjusted net income

Adjusted net income is used by management to measure performance. Management believes that adjusted net income is a meaningful measure because by removing certain non-recurring charges and non-cash expenses, the Group's operating result directly associated with the period's performance is presented. The use of adjusted net income may also be helpful to investors because it provides better consistency and comparability with past performance and facilitates period-to-period comparisons of results of operations.

Adjusted net income is defined by the Group as profit or loss adjusted to exclude certain items of a significant or unusual nature including, but not limited to, the non-cash foreign exchange impact of non-functional currency loans, amortisation of transaction costs, the net change in fair value of financing-related derivatives, purchase price allocation ("PPA") depreciation and amortisation, adjustments made to reconcile EBITDA to adjusted EBITDA and the estimated tax impact of the foregoing adjustments. The PPA depreciation arose due to the acquisition accounting that was performed when the Group was acquired by Onex in 2015. The PPA amortisation relates to all acquisitions of the Group.

The following table reconciles profit for the period to adjusted net income.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Profit for the period	37.8	172.1
Non-cash foreign exchange impact of non-functional currency loans and realised foreign exchange impact due to refinancing	(4.6)	(10.6)
Amortisation of transaction costs	7.0	3.6
Net change in fair value of financing-related derivatives	(9.0)	-
Realised gain on settlement of deal-contingent derivative (relating to repayment of loan)	(15.5)	-
PPA depreciation and amortisation - Onex acquisition	103.5	103.1
PPA amortisation - other acquisitions1	34.1	14.1
Net effect of early repayment of loans	1.0	3.7
Interest on out-of-period indirect tax recoveries	-	(3.1)
Adjustments to EBITDA2	170.7	8.2
Tax effect on above items	(38.2)	(25.4)
Adjusted net income	286.8	265.7

¹ For the year ended 31 December 2022, the Group has adjusted out of net income all PPA amortisation (net of tax) related to acquisitions. The comparative information has been adjusted to reflect the refined definition. Had the Group remained with its former definition of adjusted net income, adjusted net income for the year ended 31 December 2022 would have been €257.9 million compared with €252.4 million for the year ended 31 December 2021. Management believes that this change brings adjusted net income closer to the operational performance of the Group in the period.

² For the different adjustments to EBITDA, refer to the adjusted EBITDA table at the beginning of this note.

See note 27 for information about the realised gain on settlement of the deal-contingent derivative of €15.5 million, which relates to the repayment of the acquired US Dollar loan of Scholle IPN.

10 Earnings per share

Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the consolidated profit for the period by the weighted average number of shares in issue during the period, excluding the weighted average number of treasury shares.

Diluted earnings per share reflects the effect of dilutive potential (ordinary) shares under the Group's equity-settled share-based payment plans and arrangements. Awards granted under these equity-settled plans and arrangements have been included in the determination of diluted earnings per share considering the level of achievement of the set targets (see note 31) at the reporting date, and to the extent to which they are dilutive. Awards granted with only a service condition are included in the determination of diluted earnings per share to the extent to which they are dilutive. The dilutive effect of the share- based payment plans and arrangements is mainly related to the management PSU plans.

The following table shows the weighted average number of shares outstanding before and after adjustments for the effect of all dilutive potential shares. The Group issued shares on 22 February 2021, 18 May 2022 and 23 May 2022 (see note 24).

	Weighted average number of ordinary shares
Issued shares as of 1 January 2021	320,053,240
Effect of issue of shares on 22 February 2021	14,979,092
Effect of treasury shares held	(147,880)
Weighted average number of shares as of 31 December 2021 - basic	334,884,452
Effect of share-based payment plans and arrangements	777,937
Weighted average number of shares as of 31 December 2021 - diluted	335,662,389
Issued shares as of 1 January 2022	337,520,872
Effect of issue of shares on 18 May 2022	6,871,233
Effect of issue of shares on 23 May 2022	20,619,863
Effect of treasury shares held	(903,281)
Weighted average number of shares as of 31 December 2022 - basic	364,108,687
Effect of share-based payment plans and arrangements	466,019
Weighted average number of shares as of 31 December 2022 - diluted	364,574,706

The following table shows the calculation of basic and diluted earnings per share.

(In € million unless indicated)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Profit for the period	37.8	172.1
Weighted average number of shares for the period - basic (in numbers)	364,108,687	334,884,452
Basic earnings per share (in €)	0.10	0.51
Profit for the period	37.8	172.1
Weighted average number of shares for the period - diluted (in numbers)	364,574,706	335,662,389
Diluted earnings per share (in €)	0.10	0.51

Adjusted earnings per share

Adjusted earnings per share is defined by the Group as adjusted net income divided by the weighted average number of shares. Management believes that adjusted earnings per share is a useful measure as adjusted net income is used to measure performance. Adjusted net income and adjusted earnings per share are not defined performance measures in IFRS (see note 9).

The table below shows the calculation of basic and diluted adjusted earnings per share.

(In € million unless indicated)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Adjusted net income	286.8	265.7
Weighted average number of shares for the period - basic (in numbers)	364,108,687	334,884,452
Adjusted earnings per share - basic (in €)	0.79	0.79
Adjusted net income	286.8	265.7
Weighted average number of shares for the period - diluted (in numbers)	364,574,706	335,662,389
Adjusted earnings per share - diluted (in €)	0.79	0.79

11 Cash flow information

This note includes information about the Group's cash flows as well as non-cash transactions. Where more relevant for the understanding of a transaction, cash inflows and outflows are described in the notes on the respective assets or liabilities to which the cash flows relate. The same applies to non-cash transactions.

Net capital expenditure

The Group's capital expenditure primarily relates to investments in own production, plant and equipment (PP&E capital expenditure, excluding filling lines and other related equipment) and to the assembly and deployment of filling lines and other related equipment with customers under contracts accounted for as operating leases (filling lines and other related equipment capital expenditure). The Group's investments in intangible assets are less significant.

Net capital expenditure is defined by the Group as capital expenditure (net of proceeds from sales of PP&E, other than filling lines and other related equipment, and intangible assets) less upfront cash. Upfront cash is defined as consideration received as an upfront payment for filling lines and other related equipment from customers. Net capital expenditure is not a defined performance measure in IFRS (see note 9).

Management uses net capital expenditure as it demonstrates better than capital expenditure how cash-generative the business is. As the Group typically receives a portion of the total consideration for a filling line and other related equipment as an upfront payment from the customer (see also note 20), the cash outflow relating to filling lines and other related equipment is generally lower than implied by the gross filling lines and other related equipment capital expenditure figure. Payments received for filling lines and other related equipment (including upfront payments) are included in cash flows from operating activities.

The following table reconciles capital expenditure to net capital expenditure.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
PP&E and intangible assets (net of sales and excl. filling lines and other related equipment) ¹	107.7	92.9
Filling lines and other related equipment	172.9	153.0
Capital expenditure	280.6	245.9
Upfront cash	(136.6)	(103.2)
Net capital expenditure	144.0	142.7

¹ For the year ended 31 December 2022, the Group also considers proceeds from sales in its calculation of capital expenditure for PP&E and intangible assets. Had the Group remained with its former definition of capital expenditure, for the year ended 31 December 2022, capital expenditure for PP&E and intangible assets would have been €126.8 million, total capital expenditure would have been €299.7 million and net capital expenditure would have been €163.1 million. The impact of the refined definition on the comparative information is not material. Management has made this change to align with the refined definition of free cash flow (see the section below).

Free cash flow

Free cash flow is used by management to evaluate the performance of the Group. Free cash flow is defined by the Group as net cash from operating activities plus dividends received from joint ventures less capital expenditure (net of proceeds from sales of PP&E, other than filling lines and other related equipment, and intangible assets) and payments of lease liabilities. Free cash flow is not a defined performance measure in IFRS (see note 9).

The following table reconciles net cash from operating activities to free cash flow.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Net cash from operating activities	578.2	530.9
Acquisition of property, plant and equipment and intangible assets (net of sales) ¹	(280.6)	(245.9)
Payment of lease liabilities	(34.5)	(26.7)
Free cash flow	263.1	258.3

¹ For the year ended 31 December 2022, the Group also considers proceeds from sales of PP&E, other than filling lines and other related equipment, and intangible assets in its calculation of free cash flow. Had the Group remained with its former definition of free cash flow, free cash flow for the year ended 31 December 2022 would have been €244.0 million. The impact of the refined definition on the comparative information is not material. Management believes that this change better reflects the cash available to the Group after operational investments and divestments.

Non-cash transactions

Non-cash transactions for the year ended 31 December 2022 include the issue and subsequent transfer of 33,750,000 SIG shares (with a nominal value of CHF 0.01 per share) to CLIL on 1 June 2022 as part of the consideration for Scholle IPN. The fair value of the shares was €686.8 million (see notes 24 and 27).

Non-cash transactions for the year ended 31 December 2021 included the issue and subsequent transfer of 17,467,632 SIG shares (with a nominal value of CHF 0.01 per share) to OIG on 25 February 2021 as part of the consideration for the remaining shares of the joint ventures in the Middle East. The fair value of the shares was €323.3 million (see notes 24 and 27).

Other non-cash transactions include the initial recognition of leases on the statement of financial position (see notes 13 and 22) and the granting of instruments under the Group's 2022 and 2021 share-based plans and arrangements (see note 31). Notably for the year ended 31 December 2022, the 15-year lease of the Group's first aseptic carton sleeves production plant in Mexico commenced in October 2022 (with an initial lease liability and related right-of-use asset recognised of approximately €29 million each).

There are no other material non-cash transactions for the years ended 31 December 2022 and 31 December 2021.

Cash outflows under lease contracts

The total cash outflow for the Group's lease contracts for the year ended 31 December 2022 was €48.8 million (€38.2 million for the year ended 31 December 2021).

OUR OPERATING ASSETS AND LIABILITIES

This section includes information about the Group's operating assets and liabilities. The main operating assets relate to the Group's production equipment and its deployed filling lines and other related equipment accounted for as operating leases. The Group also has right-of-use assets resulting from lease contracts entered into as a lessee. The Group's trade receivables balance is reduced by selling trade receivables under securitisation and factoring programmes. A substantial part of the Group's assets relates to goodwill and other intangible assets. Impairment testing of goodwill and trademarks with indefinite useful lives is described in this section. The main operating liabilities relate to trade payables and accruals for various incentive programmes. Other liabilities mainly comprise deferred revenue relating to advance payments received for filling lines deployed under contracts accounted for as operating leases, but also the contingent consideration for Scholle IPN (see note 27).

12 Property, plant and equipment

Property, plant and equipment ("PP&E") is mainly composed of filling lines that are deployed at customers' sites under contracts that qualify to be accounted for as operating leases (see note 5.5.2) and the Group's plant and production equipment. PP&E also includes work in progress, which relates to construction of filling machines and to filling lines and other related equipment under installation at customers' sites as well as to construction of various types of production equipment used by the Group in its production and assembly plants. The Group is a lessor in respect of its filling lines and other related equipment deployed with its customers.

Composition of P&E (In € million)	Land	Buildings	Plant and equipment	Work in progress	Filling lines	Total
Cost	36.4	174.7	750.1	241.0	1,133.8	2,336.0
Accumulated depreciation and impairment losses	(8.7)	(71.4)	(477.4)	(6.5)	(501.5)	(1,065.5)
Carrying amount as of 31 December 2021	27.7	103.3	272.7	234.5	632.3	1,270.5
Cost	112.0	265.2	920.5	364.2	1,274.8	2,936.7
Accumulated depreciation and impairment losses	(8.6)	(83.8)	(542.1)	-	(634.4)	(1,268.9)
Carrying amount as of 31 December 2022	103.4	181.4	378.4	364.2	640.4	1,667.8
Carrying amount as of 1 January 2021	28.6	108.8	166.5	178.5	504.2	986.6
Additions	-	0.6	1.0	239.8	2.0	243.4
Additions through business combination	-	0.7	58.7	25.7	97.4	182.5
Sale of subsidiary	(0.8)	-	(0.1)	-	-	(0.9)
Disposals	-	-	(0.1)	-	(0.2)	(0.3)
Depreciation	-	(8.3)	(51.7)	-	(107.4)	(167.4)
Impairment losses	-	-	(1.4)	(0.1)	(2.7)	(4.2)
Transfers	-	0.7	88.8	(217.1)	126.1	(1.5)
Effect of movements in exchange rates	(0.1)	0.8	11.0	7.7	12.9	32.3
Carrying amount as of 31 December 2021	27.7	103.3	272.7	234.5	632.3	1,270.5

(In € million)	Land	Buildings	Plant and equipment	Work in progress	Filling lines	Total
Carrying amount as of 1 January 2022	27.7	103.3	272.7	234.5	632.3	1,270.5
Additions	-	0.6	7.1	280.2	3.8	291.7
Additions through business combinations	77.2	80.8	101.9	35.8	-	295.7
Disposals	-	-	(1.5)	-	(0.5)	(2.0)
Depreciation	-	(12.1)	(57.9)	-	(122.2)	(192.2)
Impairment losses	-	-	-	-	(6.3)	(6.3)
Transfers	-	9.0	53.7	(185.4)	122.1	(0.6)
Effect of movements in exchange rates	(1.5)	(0.2)	2.4	(0.9)	11.2	11.0
Carrying amount as of 31 December 2022	103.4	181.4	378.4	364.2	640.4	1,667.8

The increase in PP&E since 31 December 2021 is impacted by the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see note 27).

Notes 7 and 11 include further information about the Group's capital expenditure with regard to its production equipment and filling lines and other related equipment.

Depreciation of PP&E

Depreciation of PP&E is recognised in the following components in the statement of profit or loss and other comprehensive income.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Cost of sales	185.4	161.0
Selling, marketing and distribution expenses	1.3	0.7
General and administrative expenses	5.5	5.7
Total depreciation	192.2	167.4

Capital expenditure commitments

As of 31 December 2022, the Group had entered into contracts to incur capital expenditure of €144.7 million (€112.6 million as of 31 December 2021) for the acquisition of PP&E. The commitments relate to filling machine and other related equipment assembly, certain downstream equipment and various equipment for the Group's production plants and similar facilities (both existing production-related buildings and production-related buildings under construction that will be leased by the Group once finalised - see note 13).

Accountingpolicy, significant judgements and estimates

Items of PP&E are measured at cost less accumulated depreciation and accumulated impairment losses. Gains and losses on disposals of items of PP&E are recognised in profit or loss as part of other income or expenses.

The cost of an acquired or self-constructed item of PP&E includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset. The cost of the Group's filling lines and other related equipment also includes the estimated cost of dismantling to the extent such an amount is recognised as a provision. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group and the cost can be measured reliably. The costs of the day-to-day servicing of PP&E are recognised in profit or loss as incurred.

Items of PP&E are depreciated on a straight-line basis over their estimated useful lives, with depreciation generally recognised in profit or loss. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows:

Buildings	15 to 40 years
Plant and equipment:
Production-related equipment and machinery	4 to 25 years
Furniture and fixtures	3 to 8 years
Filling lines (leased assets, SIG as lessor)	10 years

In connection with the building of the Group's first Mexican aseptic carton sleeves plant and the future project to build an aseptic carton sleeves plant in India, the Group reassessed and extended the useful life of core production-related equipment and machinery from 12 to 25 years as of 1 July 2022. The change has been accounted for on a prospective basis as of 1 July 2022. For the year ended 31 December 2022, the change resulted in a €5.7 million lower amount of depreciation (net of tax) for the core production-related equipment and machinery that were in use as of 1 July 2022. The average annual decrease in depreciation for this equipment over the next three years is approximately €10 million (net of tax). The future annual impact will decline as this equipment (with different remaining useful lives) will reach the end of its respective useful life at different times.

The Group as lessor - filling lines

The Group mainly deploys aseptic carton filling lines under contracts that qualify to be accounted for as operating leases (see note 5.5.2 for additional details). As further described in this accounting policy section, the filling lines are measured at cost and depreciated from the deployment date over their estimated useful life of ten years and tested for impairment when there is an impairment indicator.

Impairment of PP& E

Items of PP&E are reviewed regularly and at least annually to identify whether there is an indication of impairment. If an impairment indicator exists, the asset's recoverable amount is estimated. See note 5.5.3 for details about impairment testing of non-financial assets.

A change in the Group's intended use of certain assets, such as a decision to rationalise production locations, may trigger a future impairment. Value in use calculations require management to estimate the future cash flows expected to arise from an individual asset or CGU and to determine a suitable discount rate to calculate present value.

13 Right-of-use assets

The Group generally purchases its production-related buildings and equipment (see note 12). However, it also enters into lease contracts. Right-of-use assets relate to lease contracts that the Group has entered into as lessee. The contracts mainly cover leases of assets such as office buildings, production-related buildings and equipment, warehouses and cars.

Composition of right-of-use assets (In € million)	Land and buildings	Plant and equipment	Cars	Total
Cost	156.7	65.8	9.6	232.1
Accumulated depreciation and impairment losses	(26.9)	(24.8)	(5.8)	(57.5)
Carrying amount as of 31 December 2021	129.8	41.0	3.8	174.6
Cost	219.2	107.7	11.8	338.7
Accumulated depreciation and impairment losses	(44.0)	(42.8)	(8.3)	(95.1)
Carrying amount as of 31 December 2022	175.2	64.9	3.5	243.6
Carrying amount as of 1 January 2021	100.5	36.7	3.9	141.1
Additions	5.8	13.7	2.2	21.7
Additions through business combination	26.5	0.2	-	26.7
Depreciation	(13.6)	(11.5)	(2.3)	(27.4)
Impairment losses	-	(0.1)	(0.1)	(0.2)
Effect of movements in exchange rates	10.6	2.0	0.1	12.7
Carrying amount as of 31 December 2021	129.8	41.0	3.8	174.6
Carrying amount as of 1 January 2022	129.8	41.0	3.8	174.6
Additions	39.2	33.7	2.2	75.1
Additions through business combinations	23.7	5.8	-	29.5
Depreciation	(16.9)	(17.3)	(2.5)	(36.7)
Effect of movements in exchange rates	(0.6)	1.7	-	1.1
Carrying amount as of 31 December 2022	175.2	64.9	3.5	243.6

The increase in right-of-use assets since 31 December 2021 is mainly due to new leases of production equipment for closures and the commencement in October 2022 of the 15-year lease of the Group's first aseptic carton sleeves production plant in Mexico (the building). The production equipment for the plant has been invested in directly by the Group. Commercial production started in February 2023. A purchase option, exercisable by the Group after 15 years, has been considered when estimating the lease term and the lease liability (with an impact also on the related right-of-use asset). In addition, a right- of-use asset relating to a pre-paid land right-of-use in China was recognised in connection with the Evergreen Asia acquisition accounting in 2022 (see note 27).

The Group's most significant leases relate to its aseptic carton sleeves production plants in China (the second plant), Saudi Arabia and Mexico as well as the lease of the SIG Tech Centre in China. These leases, with a remaining lease term of between 11 and 18 years, make up the larger part of the carrying amount of leased land and buildings. Another significant lease is the pre-paid land right-of-use in China, with a remaining lease term of 22 years. The larger part of the plant and equipment category relates to leases of production equipment for closures with a lease term of four to six years. The lease term of other assets is most commonly in the range of three to five years.

Depreciation of right-of-use assets

Depreciation of right-of-use assets is recognised in the following components in the statement of profit or loss and other comprehensive income.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Cost of sales	27.7	19.7
Selling, marketing and distribution expenses	5.5	4.4
General and administrative expenses	3.5	3.3
Total depreciation	36.7	27.4

Lease commitments

The Group has entered into lease contracts that have not yet commenced. The present value of estimated future lease payments under these lease contracts is approximately €106 million as of 31 December 2022 (€77 million as of 31 December 2021).

These contracts mainly relate to leases of production equipment for closures that are expected to commence within the next twelve months. As of 31 December 2022, the committed lease payments also concern leases of production-related buildings in APAC that are expected to commence within the next eight to eighteen months (see also note 12). As of 31 December 2021, the committed lease payments also concerned the lease of the Group's first aseptic carton sleeves production plant in Mexico, which commenced in October 2022.

Accountingpolicy

At the lease commencement date, the Group recognises a lease liability and a related right-of-use asset. The accounting for lease liabilities is described in note 22.

The right-of-use asset represents the Group's right to use the leased asset. A right-of-use asset is initially measured at cost, which in many cases will equal the amount recognised as a lease liability. However, adjustments are required for any lease payments made at or before the lease commencement date and any initial direct costs incurred. The cost also includes the estimated cost to dismantle and remove the leased asset, to restore it to the condition required under the lease contract or to restore the site on which it is located, to the extent such an amount is recognised as a provision.

Subsequent to initial recognition, a right-of-use asset is measured at cost less accumulated depreciation and impairment losses. A right-of-use asset is subsequently also adjusted for certain remeasurements of the related lease liability.

Right-of-use assets are depreciated on a straight-line basis from the lease commencement date over the shorter of the lease term and their useful lives, unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

As for PP&E, right-of-use assets are reviewed regularly and at least annually to identify whether there is an indication of impairment. If an impairment indicator exists, the asset's recoverable amount is estimated. See note 5.5.3 for details about impairment testing of non-financial assets.

14 Intangible assets

The largest portion of the Group's intangible assets is goodwill. Around half of the goodwill arose as a result of the acquisition of the SIG Group by Onex in 2015. The remaining half of the goodwill mainly arose as a result of the acquisitions of Scholle IPN and Evergreen Asia in 2022 and the remaining shares of the joint ventures in the Middle East in 2021. The other intangible assets mainly consist of trademarks, customer relationships and technology- related assets. The SIG trademarks have indefinite useful lives.

Composition of intangible assets (In € million)	Goodwill	Trade- marks	Customer relation- ships	Technology and other assets	Total
Cost	2,128.1	325.3	774.1	389.7	3,617.2
Accumulated amortisation and impairment losses	-	-	(433.1)	(263.6)	(696.7)
Carrying amount as of 31 December 2021	2,128.1	325.3	341.0	126.1	2,920.5
Cost	3,186.2	357.7	1,035.4	517.3	5,096.6
Accumulated amortisation and impairment losses	-	(1.4)	(526.5)	(322.5)	(850.4)
Carrying amount as of 31 December 2022	3,186.2	356.3	508.9	194.8	4,246.2
Carrying amount as of 1 January 2021	1,566.7	311.1	262.9	152.1	2,292.8
Additions	-	-	-	2.8	2.8
Additions through business combination	518.4	-	146.1	3.1	667.6
Amortisation	-	-	(74.0)	(37.8)	(111.8)
Effect of movements in exchange rates	43.0	14.2	6.0	5.9	69.1
Carrying amount as of 31 December 2021	2,128.1	325.3	341.0	126.1	2,920.5
Carrying amount as of 1 January 2022	2,128.1	325.3	341.0	126.1	2,920.5
Additions	-	-	-	19.2	19.2
Additions through business combinations	1,060.8	16.3	260.9	91.2	1,429.2
Disposals	-	-	(1.5)	-	(1.5)
Amortisation	-	(1.4)	(89.9)	(46.5)	(137.8)
Effect of movements in exchange rates	(2.7)	16.1	(1.6)	4.8	16.6
Carrying amount as of 31 December 2022	3,186.2	356.3	508.9	194.8	4,246.2

The increase in intangible assets since 31 December 2021 is primarily due to the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see note 27). In the year ended 31 December 2021, the Group acquired the remaining shares of the joint ventures in the Middle East, which resulted in an increase in intangible assets (see note 27).

Research and development

Research and development costs (excluding depreciation and amortisation expense) recognised as a component of general and administrative expenses amount to €45.0 million for the year ended 31 December 2022 (€56.3 million for the year ended 31 December 2021). In the year ended 31 December 2022, the Group has capitalised development costs of €15.3 million, mainly relating to the ongoing development of the next-generation SIG NEO VITA aseptic carton filling machine (included in "Technology and other assets" in the table above).

Amortisation of in tangible assets

Amortisation of intangible assets is recognised in the following components in the statement of profit or loss and other comprehensive income.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Cost of sales	92.0	75.1
Selling, marketing and distribution expenses	1.7	0.2
General and administrative expenses	44.1	36.5
Total amortisation	137.8	111.8

Annual impairment tests of goodwill and trademarks with in definite useful lives

Goodwill with a carrying amount of €3,186.2 million as of 31 December 2022 (€2,128.1 million as of 31 December 2021) and the SIG trademarks with indefinite useful lives with a carrying amount of €341.3 million as of 31 December 2022 (€325.3 million as of 31 December 2021) are not subject to amortisation but are tested for impairment on an annual basis and whenever there is an impairment indicator. The annual impairment tests are performed in the fourth quarter each year.

The Group does not monitor goodwill at a lower level than Group level for internal management purposes but, for impairment testing purposes, goodwill must be allocated to a CGU, or group of CGUs, that is not larger than an operating segment before aggregation. The Group has allocated the goodwill for impairment testing purposes to its four operating segments (Europe, MEA, APAC and Americas).

Goodwill

For the impairment test of goodwill, the recoverable amount has been estimated with reference to value in use. In assessing the value in use, the estimated future cash flows (in Euros) have been discounted to their present values using a pre-tax discount rate that reflects current market assessments of the time value of money as well as the risks specific to each segment. The weighted average cost of capital ("WACC") is used to determine the discount rate. Cash flows for the first five years are based on financial plans approved by management. Cash flows after the five-year internal planning period are extrapolated using terminal growth rates that are aligned with the estimated long-term inflation. The terminal growth rates used by the Group for impairment testing purposes do not exceed the estimated long-term growth rates in the packaging industry.

Goodwill is allocated to the Group's four operating (and reportable) segments as per the following table. The goodwill that arose upon the acquisition of Scholle IPN on 1 June 2022 has been allocated to all four segments, while the goodwill that arose upon the acquisition of Evergreen Asia on 2 August 2022 has been fully allocated to APAC. The goodwill that arose upon the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021 has been allocated to MEA (see also note 7). At the same time, the goodwill that had been allocated to the former segment EMEA was fully reallocated to Europe. The table also includes information about the key assumptions used in the impairment test.

	Year ended 31 December 2022			Year ended 31 December 2021
(In € million or %)	Carrying amount	Growth rate	Pre-tax discount rate	Carrying amount	Growth rate	Pre-tax discount rate
Europe	1,000.7	2.5%	8.1%	757.2	2.0%	6.6%
MEA	533.4	2.5%	11.0%	526.4	2.0%	8.0%
APAC	949.2	2.5%	8.6%	656.3	2.0%	5.6%
Americas	702.9	2.5%	10.1%	188.2	2.0%	8.9%
Total goodwill	3,186.2			2,128.1

No impairment of goodwill was identified in either of the periods. Management considers it unlikely that any realistic change in the assumptions used, including changes in the assessed future cash flows, would result in an impairment loss. The estimated recoverable amounts of the goodwill allocated to the segments significantly exceed the respective carrying amounts in both periods. The Group overall has not been, and is currently not, significantly impacted by the COVID-19 pandemic and the effects of the war in Ukraine. Management does not believe that these events and the current global economic uncertainty in general will have any significant long-term negative impacts on the Group's estimated future cash flows (see note 5.4). However, there is no assurance that the Group's experience to date, which has been reflected in the assessment of future cash flows, will be representative of future periods.

Trademarks with indefinite useful lives

The value of the SIG trademarks with indefinite useful lives is associated with the Group as a whole. Trademarks are tested for impairment at Group level as all SIG entities benefit from the trademarks. The entities are charged a royalty fee for the use of the SIG trademarks. For the impairment test, the recoverable amount has been estimated with reference to value in use. The assessed royalty fees have been discounted to their present value using a pre-tax discount rate at Group level of 9.2% (6.6% in the 2021 annual impairment test) and a terminal growth rate at Group level of 2.5% (2.0% in the 2021 annual impairment test). The WACC is used to determine the discount rate. The royalty fees for the first five years are based on financial plans approved by management. Cash flows after the five-year internal planning period are extrapolated using a terminal growth rate that is aligned with the estimated long-term inflation. The terminal growth rate used by the Group for impairment testing purposes does not exceed the estimated long-term growth rates in the packaging industry.

No impairment of the SIG trademarks with indefinite useful lives was identified in any of the periods. Management considers it unlikely that any realistic change in the assumptions used would result in an impairment loss.

Annual Report 2022 Annual Report 2022

Accountingpolicy

Goodwill arising upon business combinations is measured at cost less accumulated impairment losses. With respect to investments in joint ventures accounted for using the equity method, the carrying amount of goodwill is included in the carrying amount of the investment.

The SIG trademarks are assessed to have indefinite useful lives considering the long history of the SIG brand and its expected future continuous use. They are measured at cost less accumulated impairment losses. Other intangible assets, including customer relationships, Scholle trademarks and technology assets, have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses. Gains and losses on disposals of intangible assets are recognised in profit or loss as part of other income or expenses.

Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technologically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete the development and to use or sell the asset. If the capitalisation criteria are not met, development expenditure is recognised in profit or loss as incurred. Expenditure on research activities is recognised in profit or loss as incurred.

Intangible assets with finite useful lives are amortised on a straight-line basis over their estimated useful lives, with amortisation generally recognised in profit or loss. The estimated useful lives of amortisable intangible assets for the current and comparative periods, considering also the acquisitions of Scholle IPN and Evergreen Asia in 2022, are as follows:

Customer relationships	10 to 15 years
Scholle trademarks	7 years
Technology assets (including patented and non-patented technology and know-how)	6 to 10 years
Other intangible assets (including software)	3 to 6 years

Capitalised development costs are amortised over the period that is assessed to reflect the expected useful life of the particular innovation.

Impairment of goodwill and other intangble assets

Intangible assets with finite useful lives are reviewed regularly and at least annually to identify whether there is an indication of impairment. If an impairment indicator exists, the asset's recoverable amount is estimated. Goodwill and intangible assets with indefinite useful lives are tested for impairment on an annual basis and whenever there is an indication that they may be impaired. See note 5.5.3 for details about impairment testing of non-financial assets.

Significant judgementsn and estimates

Significant judgement is involved in the annual impairment testing of goodwill and trademarks with indefinite useful lives. The judgements and assumptions used in estimating the recoverable amount are included above under "Annual impairment tests of goodwill and trademarks with indefinite useful lives", where the outcome of the annual impairment tests is also described.

15 Inventories

Composition of inventories and other financial in formation

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Raw materials and consumables	143.0	71.2
Work in progress	96.7	22.6
Finished goods	163.0	100.7
Total inventories	402.7	194.5

The increase in inventories since 31 December 2021 is impacted by the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see notes 9 and 27).

As of 31 December 2022, inventories include a provision of €24.2 million due to write- downs to net realisable value (€20.5 million as of 31 December 2021).

Raw materials and consumables recognised as an expense in cost of sales in the statement of profit or loss and other comprehensive income amount to €1,257.0 million in the year ended 31 December 2022 (€856.5 million in the year ended 31 December 2021).

Accountingpolicy

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost formula and includes costs incurred in acquiring the inventories and bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price less the estimated costs of completion and estimated costs necessary to make the sale.

16 Trade and other receivables

Trade and other receivables mainly comprise trade receivables. The Group has a securitisation programme under which it sells a portion of its aseptic carton sleeves- related trade receivables without recourse. It also maintains a small number of minor factoring programmes.

Composition of trade and other receivables

The table below provides an overview of the Group's current and non-current trade and other receivables. Trade receivables that will be sold under the securitisation and factoring programmes are presented as trade receivables at fair value. Trade receivables that will not be sold are presented as trade receivables at amortised cost.

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Trade receivables at amortised cost	294.1	171.3
Trade receivables at fair value	33.7	25.7
Related party trade receivables	3.8	0.4
VAT receivables	56.3	35.4
Other receivables	72.4	47.1
Total current trade and other receivables	460.3	279.9
Non-current receivables	18.8	4.2
Total current and non-current receivables	479.1	284.1

The increase in trade receivables at amortised cost since 31 December 2021 is impacted by the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see note 27).

The payment terms for the Group's trade receivables for packaging material is an average of 30 to 45 days (an average of 40 days in the comparative period).

Trade receivables at amortised cost - loss allowance and ageing

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Current	226.5	122.8
Past due up to 29 days	31.4	21.4
Past due 30 days to 89 days	17.2	7.0
Past due 90 days or more	19.0	20.1
Trade receivables at amortised cost, net of loss allowance	294.1	171.3
Loss allowance	(9.7)	(6.6)
Trade receivables at amortised cost, gross	303.8	177.9

The loss allowance represents the Group's estimate of individually impaired trade receivables as well as expected credit losses on trade receivables that are not individually impaired. It primarily relates to trade receivables past due up to 29 days and past due more than 90 days. The expected credit losses are calculated using a provision matrix based on historical credit loss experience and assessments of current and future Annual Report 2022 Annual Report 2022 conditions. The expected loss rate for trade receivables past due more than 90 days that are not individually impaired is between 25% and 100% (with an expected loss rate of 100% when past due more than 270 days). For trade receivables past due 30 to 89 days that are not individually impaired, the expected loss rate is around 5%.

Management believes that the recognised loss allowance sufficiently covers the risk of default based on historical payment behaviour and assessments of future expectations of credit losses, including regular analysis of customer credit risk. The acquired trade receivables of Scholle IPN, Evergreen Asia and the former joint ventures in the Middle East were recognised at fair value at their respective acquisition dates in 2022 and 2021 (see note 27). See also the section "Credit risk" in note 25.

The table below shows the movements in the loss allowance for trade receivables at amortised cost.

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Loss allowance as of 1 January	6.6	5.0
Change in loss allowance recognised in profit or
loss during the year	2.9	1.6
Foreign currency exchange differences	0.2	-
Loss allowance as of 31 December	9.7	6.6

Securitisationprogramme

The Group has an asset-backed securitisation programme under which it sells without recourse a portion of its aseptic carton sleeves-related trade receivables to a special purpose entity. This entity is not controlled by the Group and therefore not consolidated. The trade receivables sold qualify for derecognition by the Group. The Group transfers the contractual rights to the cash flows of the trade receivables at their nominal value less a retained reserve in exchange for cash. The net amount is presented as part of other current receivables and represents the Group's right to receive this amount once the trade receivables sold have been settled by the customers.

Trade receivables sold under the securitisation programme amounted to €165.2 million as of 31 December 2022 (€119.5 million as of 31 December 2021), of which €140.8 million (€106.1 million as of 31 December 2021) has been derecognised and €24.4 million (€13.4 million as of 31 December 2021), representing the retained reserve, is presented as part of other current receivables. The retained reserve represents the Group's maximum exposure to any losses in respect of trade receivables previously sold under the programme. The interest expense paid under the asset-backed securitisation programme amounted to €2.2 million in the year ended 31 December 2022 (€1.4 million as of 31 December 2021) and is presented as part of other finance expenses.

Factoringprogrammes

The Group has a small number of minor factoring programmes under which trade receivables sold by the Group qualify for derecognition.

Accounting policy

Trade and other receivables at amortised cost

Trade and other receivables that will not be sold under the Group's securitisation and factoring programmes are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these receivables are measured at amortised cost using the effective interest method less a loss allowance. The loss allowance represents the Group's estimate of individually impaired trade receivables as well as expected credit losses on trade receivables that are not individually impaired. The expected credit losses are calculated using a provision matrix based on historical credit loss experience and assessments of current and future conditions. Any subsequent recoveries of amounts previously written off relating to individually impaired trade receivables are credited to the same line item in profit or loss where the original write-off was recognised. The Group holds these trade receivables to collect the contractual cash flows, and these cash flows are solely payments of principal and interest on the principal outstanding.

Trade receivables at fair value through profit or loss

Trade receivables that will be sold under the Group's securitisation and factoring programmes are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are recognised at fair value. These trade receivables are sold and derecognised shortly after their initial recognition in the statement of financial position. Any change in fair value is recognised through profit or loss. The objective of these trade receivables is to realise the cash flows primarily through selling them.

Derecognition of trade receivables

A financial asset is derecognised when the contractual rights to the cash flows from the asset have expired, when the contractual rights to receive the cash flows have been transferred and the Group has transferred substantially all of the risks and rewards of ownership, or when the Group transfers a financial asset but retains the contractual rights to receive the cash flows but at the same time assumes a contractual obligation to pay the cash flows to another recipient (and remits the cash flows to the other recipient without material delay once it has collected an amount from the original asset, and is also prohibited to sell or pledge the original asset). Any interest in such a derecognised financial asset that is retained by the Group is recognised as a separate asset or liability.

17 Cash and cash equivalents

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Cash and cash equivalents (unrestricted)	490.0	300.2
Restricted cash	13.8	4.3
Total cash and cash equivalents	503.8	304.5

Cash and cash equivalents mainly consist of cash at bank but may, from time to time, also include short-term bank deposits (€64.0 million as of 31 December 2022) with maturities of three months or less that are subject to an insignificant risk of changes in value. The restricted cash relates to cash collected for the benefit of the Group's securitisation partner.

17 Trade and other payables

Trade and other payables mainly comprise trade payables, accruals for various customer incentives and other accrued expenses.

Composition of trade and other payables

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Trade payables	406.6	218.4
Related party payables	2.4	-
Liability for various customer incentive programmes	369.5	304.5
VAT payables	17.5	10.0
Accrued interest, third parties	8.5	6.9
Other current payables and accrued expenses	232.3	126.5
Current trade and other payables	1,036.8	666.3
Other non-current payables	17.4	9.4
Non-current payables	17.4	9.4
Total current and non-current trade and other payables	1,054.2	675.7

The increase in current trade and other payables since 31 December 2021 is impacted by the acquisitions of Scholle IPN and Evergreen Asia in 2022.

Liabilities with an impacton the Group'srevenue

The Group has refund and contract liabilities in respect of liabilities relating to contracts with customers accounted for under the revenue standard.

The Group's incentive programmes relate to trade discounts, volume rebates and other customer incentives linked primarily to aseptic carton sleeves volumes (see also note 6). These programmes generally run over a calendar year, resulting in a gradual build-up over the year of an accrual liability against revenue from the sale of aseptic carton sleeves. As of 31 December 2022 and 31 December 2021, the liabilities for customer incentive programmes mainly represent incentives earned by customers under programmes running over a calendar year that have not yet been settled by the Group. The remaining part represents accruals built up for incentive programmes running over periods other than a calendar year (ie. refund liabilities). The Group has recognised an insignificant amount as revenue in the current period that was included in the balance of liabilities for customer incentive programmes at the beginning of the period but was never paid out as the conditions for the incentive payments were not met (also applicable to the comparative period).

The Group's contract liabilities mainly comprise advance payments received from customers in relation to the sale of aseptic carton sleeves and the sale of aseptic carton filling lines under contracts accounted for under the revenue standard, but also to advance payments in relation to the bag-in-box and spouted pouch business. These advance payments are recognised as revenue within a short time frame from their initial recognition in the statement of financial position. As of 31 December 2022, the Group had contract liabilities of €58.0 million (€24.9 million as of 31 December 2021). These advance payments are presented in the table above as part of other current payables and accrued expenses. The amount of advance payments recognised as of 31 December 2021 relating to the sale of sleeves and the sale of filling lines under contracts accounted for under the revenue standard has been recognised as revenue in 2022.

The Group also has advance payments received from customers relating to aseptic carton filling lines that will be deployed under contracts that qualify to be accounted for as operating leases. If payments are received from customers before the filling line deployment date, they are initially presented as part of "Trade and other payables" and included in other current payables and accrued expenses in the table above (€78.8 million as of 31 December 2022 and €39.7 million as of 31 December 2021). Upon deployment of the filling lines, the advance payments are reclassified to "Other liabilities" and presented as deferred revenue liabilities. These deferred revenue liabilities are then released and recognised as revenue over a certain period (see further note 20).

Accounting policy and significant estimates

Trade and other payables are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are carried at amortised cost using the effective interest method. The liability for accruals for various customer incentives is estimated based on historical and current market trends as further described in note 6. The accruals are presented against revenue.

19 Provisions

The Group's provisions mainly relate to dismantling costs, warranties, restructuring programmes as well as legal and regulatory matters.

Composition of provisions (In € million)	Dismantling	Product warranty	Restructur- ing	Other	Total
Carrying amount as of 1 January 2021	12.9	9.6	3.9	6.2	32.6
Additions through business combination	-	0.7	-	0.2	0.9
Sale of subsidiary	-	(0.3)	(9.6)	(1.8)	(11.7)
Provisions made	1.8	7.1	39.6	1.9	50.4
Provisions used	(0.4)	(2.5)	(10.4)	(2.4)	(15.7)
Provisions reversed	-	(6.0)	(13.6)	(0.3)	(19.9)
Effect of movements in exchange rates	0.2	-	-	-	0.2
Carrying amount as of 31 December 2021	14.5	8.6	9.9	3.8	36.8
Current	-	8.6	9.4	1.1	19.1
Non-current	14.5	-	0.5	2.7	17.7
Carrying amount as of 31 December 2021	14.5	8.6	9.9	3.8	36.8
Carrying amount as of 1 January 2022	14.5	8.6	9.9	3.8	36.8
Additions through business combinations	-	1.0	-	16.0	17.0
Provisions made	1.5	6.9	5.3	1.5	15.2
Provisions used	(0.1)	(1.5)	(10.9)	(0.9)	(13.4)
Provisions reversed	-	(7.1)	(0.4)	(0.3)	(7.8)
Effect of movements in exchange rates	0.2	0.3	0.2	(0.8)	(0.1)
Carrying amount as of 31 December 2022	16.1	8.2	4.1	19.3	47.7
Current	-	7.9	3.2	15.5	26.6
Non-current	16.1	0.3	0.9	3.8	21.1
Carrying amount as of 31 December 2022	16.1	8.2	4.1	19.3	47.7

Restructuring provision

The Group has a small number of ongoing restructuring programmes. The Group's restructuring programmes are generally focused on reducing costs, streamlining the organisation and adjusting headcount to be more closely aligned with the Group's needs and changing market demands. The main portion of the restructuring provision as of 31 December 2021 related to the closure of the Group's Australian sleeves manufacturing operations. Payments are usually expected to be executed within the next one or two years. For further details, see note 9.

Other provisions

Other provisions mainly relate to legal and regulatory matters.

Accounting policy

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be reliably estimated and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are discounted if the time value of money is material. The unwinding of the discount is recognised as part of finance expenses. A provision is classified as current or non-current depending on whether the expected timing of the payment of the amounts provided for is more than 12 months after the reporting date.

A provision for dismantling is recognised when the Group has an obligation to pay for dismantling costs arising upon the return of a filling line and other related equipment. This obligation typically arises upon deployment of aseptic carton filling lines (see also note 12). As such, the majority of the obligations are non-current.

A provision for warranties is recognised for products under warranty as of the reporting date based upon known failures and defects as well as sales volumes and past experience of the level of problems reported and products returned. Warranty claims are expected to be settled within 12 months.

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been publicly announced. The provision only includes direct costs that are necessarily entailed by the restructuring and not associated with ongoing activities. No provision is made for future operating costs.

A provision for onerous contracts is recognised when the benefits expected to be derived by an entity from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

A provision for legal and regulatory matters reflects management's best estimate of the outcome based on the facts known as of the reporting date.

20 Other assets and liabilities

Other assets mainly comprise accrued income, prepaid expenses and deferred expenditure. Other liabilities mainly comprise deferred revenue relating to advance payments received relating to aseptic carton filling lines deployed under contracts that are accounted for as operating leases. The contingent consideration for Scholle IPN is also part of other liabilities. Moreover, the Group's derivative assets and liabilities are presented as part of other assets or other liabilities. The derivatives primarily relate to commodity and foreign currency derivatives but also to an interest rate swap. See notes 25 and 33 for additional details about the Group's derivatives.

Composition of other assets

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Derivative assets	4.3	26.3
Other current assets	22.5	14.1
Other current assets	26.8	40.4
Derivative assets	8.9	-
Other non-current assets	27.0	23.9
Other non-current assets	35.9	23.9
Total other current and non-current assets	62.7	64.3

Composition of other liabilities

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Derivative liabilities	23.4	6.3
Deferred revenue	92.8	81.9
Other current liabilities	116.2	88.2
Contingent consideration	113.2	-
Deferred revenue	264.8	268.2
Other non-current liabilities	378.0	268.2
Total other current and non-current liabilities	494.2	356.4

Deferred revenue mainly relates to aseptic carton filling lines deployed under lease and sale contracts that qualify to be accounted for as operating leases (see notes 5.5.2, 6, 12 and 18 for further details). Advance payments received under such contracts vary between contracts and customers but are recognised as a deferred revenue liability in the statement of financial position at the deployment date and released to profit or loss to achieve recognition of revenue on a straight-line basis, generally over ten years for sale contracts and over six years for lease contracts. Advance payments received before the filling line deployment date are initially presented as part of "Trade and other payables" and reclassified to this balance sheet position at the deployment date (see note 18).

See notes 9, 27 and 33 for details about the contingent consideration, which relates to the acquisition of Scholle IPN.

OUR FINANCING AND FINANCIAL RISK MANAGEMENT

This section includes information about the Group's financing in the form of loans and borrowings and equity. The expenses for financing are also presented in this section. Lastly, the Group's financial risk management policy and exposure to liquidity, market and credit risks are described.

21 Capitalmanagement

The Board of Directors is responsible for monitoring and managing the Group's capital structure, which comprises equity (share capital and additional paid-in capital) as well as loans and borrowings.

The policy of the Board of Directors is to maintain an acceptable capital base to give confidence to the Group's shareholders and debtholders, and to sustain the future development of the business. The Board of Directors monitors the Group's financial position to ensure that it complies at all times with its financial and other covenants as set out in the indenture governing the senior unsecured notes, the SSD agreement and the other credit agreements, as well as to ensure the payment of an appropriate level of dividends to the shareholders.

As part of monitoring the Group's financial position, the Board of Directors evaluates the Group's net debt and development of its net leverage ratio. Net leverage is defined by the Group as net debt divided by adjusted EBITDA. Net debt comprises the Group's current and non-current loans and borrowings (including lease liabilities, and with notes and credit facilities at principal amounts) less cash and cash equivalents (including any restricted cash). See note 9 for the definition of adjusted EBITDA. Under the credit agreement for its senior unsecured credit facilities, the Group is required not to exceed a net leverage ratio of 4.0x (4.25x until 31 December 2021). As per the credit agreement for the US Dollar term loan, the net leverage ratio cannot exceed 4.4x. Note 22 includes additional details about the Group's loans and borrowings.

The gross debt as of 31 December 2022 was higher compared with 31 December 2021 as a result of the financing of the acquisitions of Scholle IPN and Evergreen Asia in 2022, and an increase in lease liabilities.

The table below presents the components of net debt and the net leverage ratio.

(In € million)	As of 31 Dec. 2022 ¹	As of 31 Dec. 2021 ²
Gross debt	2,684.1	1,732.4
Cash and cash equivalents	503.8	304.5
Net debt	2,180.3	1,427.9
Net leverage ratio	3.1x	2.5x

^1. In the calculation of the net leverage ratio as of 31 December 2022, adjusted EBITDA includes the adjusted EBITDA of Scholle IPN and Evergreen Asia from 1 January 2022.

^2. In the calculation of the net leverage ratio as of 31 December 2021, adjusted EBITDA includes the adjusted EBITDA of the former joint ventures in the Middle East from 1 January 2021.

The Company purchases its own shares on the market. The repurchased shares are intended to be used to settle obligations under the Group's equity-settled share-based payment plans and arrangements (see also notes 24 and 31).

In order to maintain or adjust the capital structure, the Board of Directors may elect to take a number of measures, for example disposing of assets of the business, altering its short- to medium-term plans with respect to capital projects and working capital levels, or rebalancing the level of equity and debt in place.

22 Loans and borrowings

To finance in part the acquisition of Scholle IPN and the repayment of the acquired Scholle IPN external loans, the Group accessed an unsecured bridge loan facility of €800 million on 27 May 2022. On 30 June 2022, the Company issued unsecured Schuldscheindarlehen ("SSD", a private German debt placement) totalling €650 million. Of this amount, €555 million was used on 30 June 2022 to reduce the unsecured bridge loan facility. The remaining €95 million was used to partly finance the consideration for Evergreen Asia. On 28 July 2022, the Company entered into a new unsecured credit facility, consisting of a US Dollar-denominated term loan ($270.0 million). The major part of the proceeds from the term loan was used to repay the remaining portion of the unsecured bridge loan facility. Refer also to notes 4, 24 and 27.

Apart from the borrowings taken up in June and July 2022, the Group's loans and borrowings mainly consist of senior unsecured Euro-denominated notes and senior unsecured credit facilities. The senior unsecured credit facilities consist of one Euro- denominated term loan and a multi-currency revolving credit facility. Liabilities under lease contracts where the Group is the lessee are also included in loans and borrowings.

Composition of loans and borrowings

The table below shows the carrying amount of the Group's loans and borrowings.

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Senior unsecured notes	449.3	-
Lease liabilities	39.9	29.4
Current loans and borrowings	489.2	29.4
Senior unsecured notes	547.5	994.5
Senior unsecured Euro term loan	546.9	545.7
Unsecured US Dollar term loan	252.5	-
Unsecured SSD	647.6	-
Lease liabilities	191.0	153.0
Non-current loans and borrowings	2,185.5	1,693.2
Total loans and borrowings	2,674.7	1,722.6

Senior unsecured notes

The Group has two issues of senior unsecured notes from June 2020 at an aggregate amount of €1,000 million. The notes are traded on the Global Exchange Market of Euronext Dublin. The table below provides an overview of the main terms.

	Principal amount	Maturity date	Interest rate
2023 notes	€450 million	18 June 2023	1.875%
2025 notes	€550 million	18 June 2025	2.125%

Interest on the notes is paid semi-annually. The notes can be redeemed in whole or in part prior to 18 March 2023 for the 2023 notes, and prior to 18 March 2025 for the 2025 notes, at par plus a make-whole premium. The notes can be redeemed in whole or in part on or after 18 March 2023 for the 2023 notes, and on or after 18 March 2025 for the 2025 notes, at a price equal to 100% of their respective principal amounts.

The obligations under the notes are guaranteed on a senior subordinated basis by the Company on a stand-alone basis. Until September 2022, when the guarantor structure changed, the obligations under the notes were guaranteed by Group subsidiaries. The indenture governing the notes contains customary restrictive covenants and customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022 and 31 December 2021.

The Group has signed a €400 million unsecured bridge loan facility agreement (see note 4). This facility may be used to repay the €450 million of the notes due in June 2023.

Senior unsecured credit facilities (Euro term loanand revolving credit facility)

The Group's senior unsecured credit facilities from June 2020 consist of one Euro- denominated term loan and a committed multi-currency revolving credit facility. The table below provides an overview of the main terms.

	Principal amount	Maturity date	Interest rate
Term loan	€550 million	June 2025	Euribor+1.00%, with a Euribor floor of 0.00%
Revolving credit facility	€300 million	June 2025	Euribor+1.00%, with a Euribor floor of 0.00%

Interest on the Euro term loan is paid semi-annually. The margin of 1.00% is subject to semi-annual adjustments based on the Group's net leverage (as defined in the credit agreement). The margin is also subject to a maximum 0.05% per annum increase or decrease based upon the achievement of certain annual sustainability-linked targets (greenhouse gas emissions, or "GHG" emissions, and rankings per the EcoVadis Report). No repayments of the term loan are due prior to maturity. The Group has the right to repay the term loan in whole or in part without premium or penalty.

The amount available under the multi-currency revolving credit facility is €295.1 million as of 31 December 2022 (€294.2 million as of 31 December 2021), due to €4.9 million (€5.8 million as of 31 December 2021) in letters of credit being outstanding under an ancillary facility. The Group pays a fee for the undrawn revolver amount per year for the right to use the revolving credit facility (35% of the margin percentage on an annualised basis, applied to the undrawn balance of the revolving credit facility).

The obligations under the senior unsecured credit facilities are guaranteed by the Company on a stand-alone basis. Until September 2022, when the guarantor structure changed, the obligations under the senior unsecured credit facilities were guaranteed by Group subsidiaries. The credit agreement contains customary positive and negative covenants as well as customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022 and 31 December 2021.

Unsecured bridge loan facility

On 27 May 2022, the Group accessed an unsecured bridge loan facility of €800 million, with an interest rate of Euribor+0.8% and a Euribor floor of 0.00%.

On 30 June 2022, the Group repaid €555 million of the bridge loan facility using part of the proceeds from the SSD (see below), without premium or penalty. On 29 July 2022, the Group repaid the remaining €245 million of the bridge loan facility using the majority of the proceeds from the new US Dollar term loan (see below), without premium or penalty.

Part of the proceeds from the bridge loan facility was used to finance the €415.5 million cash portion of the consideration for Scholle IPN that was transferred to CLIL on 1 June 2022. The remaining part of the proceeds was used to repay external Euro and US Dollar loans of Scholle IPN of €387.7 million. See notes 23 and 27 for the impact of a deal- contingent derivative relating to the repayment of the US Dollar loan.

Unsecured SSD

On 30 June 2022, the Group issued unsecured Schuldscheindarlehen ("SSD", a private German debt placement) totalling €650 million. Directly attributable transaction costs in the form of arrangement and advisory fees for the six SSD tranches amounted to €2.6 million. The table below provides an overview of the main terms of the six SSD tranches.

	Principal amount	Maturity date	Interest rate
SSD tranches 1-3	€557.5 million	June 2025-June 2029	Euribor+1.1%-1.6%, with a Euribor floor of 0.00%
SSD tranches 4-6	€92.5 million	June 2025-June 2029	2.79%-3.66%

The largest SSD tranche amounts to €423.5 million and is due in June 2027. The interest rate is Euribor+1.3%, with a Euribor floor of 0.00%.

Interest on the SSD tranches with variable interest rates is paid semi-annually, while interest on the SSD tranches with fixed interest rates is paid annually. The margin on the SSD tranches is subject to a maximum 0.05% per annum increase or decrease based on the achievement of certain annual sustainability-linked targets (with reference to the Group's EcoVadis score). The Group has the right to repay before maturity the three SSD tranches with variable interest rates in whole or in part, without premium or penalty. The three tranches with fixed interest rates can be repaid early against the payment of a make-whole premium.

The obligations under the SSD are guaranteed by the Company on a stand-alone basis. The SSD agreement contains customary events of default. There were no events of default as of 31 December 2022.

Unsecuredcredit facility (US Dollar term loan)

On 28 July 2022, the Group entered into a new unsecured credit facility, consisting of one US Dollar-denominated term loan of $270.0 million. Directly attributable transaction costs in the form of arrangement and advisory fees for the US Dollar term loan amounted to €0.7 million. The table below provides an overview of the main terms.

	Principal amount	Maturity date	Interest rate
Term loan	$270 million	29 July 2027	SOFR+1.25%, with an SOFR floor of 0.00%

Interest on the US Dollar term loan is payable quarterly. The margin of 1.25% is subject to half-yearly adjustments based on the Group's net leverage (as defined in the credit agreement). The Group has entered into an interest rate swap to hedge the interest rate cash flow exposure relating to the term loan (see also notes 25 and 33). No repayments of the term loan are due prior to maturity. The Group has the right to repay the term loan in whole or in part at the end of each interest period without premium or penalty.

The obligations under the US Dollar term loan are guaranteed by the Company on a stand- alone basis. The credit agreement contains customary positive and negative covenants as well as customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022.

Unsecured credit facility

In March 2021, the Group accessed an unsecured credit facility of €100.0 million. Cash from the new credit facility was drawn in two tranches of €50.0 million each on 31 March 2021 (at an interest rate lower than the applicable interest rate on the revolving credit facility). The two tranches, as per the agreement, were repaid in September and December 2021.

The amounts drawn in March 2021, together with available cash, were used to repay external loans of €139.5 million of one of the former joint ventures in the Middle East. The difference of €3.7 million between the carrying amount of the loans as of the repayment date and the amount paid is presented as part of the net finance expense (see note 23).

Leaseliabilities

A maturity analysis of the Group's lease liabilities is provided below.

	Contractual undiscounted cash flows		Interest		Lease liabilities
(In € million)	2022	2021	2022	2021	2022	2021
Less than 1 year	52.8	37.9	12.9	8.5	39.9	29.4
Between 1 and 5 years	139.1	105.4	41.6	29.8	97.5	75.6
More than 5 years	146.3	133.3	52.8	55.9	93.5	77.4
	338.2	276.6	107.3	94.2	230.9	182.4

The Group's lease liabilities mainly relate to leases of office buildings, production-related buildings and equipment, warehouses and cars. See also note 13.

Note 13 includes information about lease contracts to which the Group has committed but where the lease has not yet commenced.

Changes in liabilities arising from financing activities

The following two tables present changes in liabilities arising from financing activities.

The main transactions in the year ended 31 December 2022 relate to the drawing and subsequent repayment of an unsecured bridge loan facility, the repayment of the external loans of Scholle IPN, the issue of SSD and the drawing of a new US Dollar term loan. The main transactions in the year ended 31 December 2021 related to the drawing and subsequent repayment of two tranches under a new credit facility as well as the repayment of external loans of one of the former joint ventures in the Middle East.

		Cash flows from/(used in):
(In € million)	1 Jan. 2022	Financing activities	Operating activities	Effect of business combinations ²
Principal amount ¹	1,550.0	536.5	-	389.4
Transaction costs	(8.7)	(3.0)	(3.3)	-
Original issue discount	(1.1)	-	-	-
Loans and borrowings, excl. lease liabilities	1,540.2	533.5	(3.3)	389.4
Lease liabilities	182.4	(34.5)	-	5.3
Total loans and borrowings	1,722.6	499.0	(3.3)	394.7
Capitalised cost for revolving credit facility	(1.2)	-	-	-
Interest: Accrued/(paid)	6.9	-	(52.2)	1.1
	1,728.3	499.0	(55.5)	395.8
Derivative (assets)/liabilities from financing activities	-	-	-	-
Total (assets)/liabilities from financing activities and cash/non-cash changes	1,728.3	499.0	(55.5)	395.8

(In € million)	Non-cash movements	Effect of movements in exchange rates	31 Dec. 2022
Principal amount ¹	-	(22.7)	2,453.2
Transaction costs	6.5	(0.1)	(8.6)
Original issue discount	0.3	-	(0.8)
Loans and borrowings, excl. lease liabilities	6.8	(22.8)	2,443.8
Lease liabilities	75.1	2.6	230.9
Total loans and borrowings	81.9	(20.2)	2,674.7
Capitalised cost for revolving credit facility	0.4	-	(0.8)
Interest: Accrued/(paid)	52.6	0.1	8.5
	134.9	(20.1)	2,682.4
Derivative (assets)/liabilities from financing activities	(9.0)	0.1	(8.9)
Total (assets)/liabilities from financing activities and cash/non-cash changes	125.9	(20.0)	2,673.5

^1. The financing cash inflow of €536.5 million relating to the principal amount of loans and borrowings (excluding lease liabilities) shows the net effect of accessing the unsecured bridge loan facility in May 2022 (€800.0 million of cash inflow), the repayment of external loans of Scholle IPN in June 2022 (€387.7 million of cash outflow and €15.5 million of cash inflow resulting from the settlement of the foreign currency deal-contingent derivative that the Group had entered into for the repayment of the US Dollar external loans - see notes 23 and 27), the issue of unsecured SSD in June 2022 (€650.0 million of cash inflow), a new unsecured US Dollar term loan (€260.0 million of cash inflow), the subsequent repayments in June and July 2022 of the unsecured bridge loan facility that was accessed in May 2022 (in total €800.0 million of cash outflow) and the repayment of other third-party debt of Scholle IPN (€1.3 million of cash outflow). See also the sections "Unsecured bridge loan facility", "Unsecured SSD" and "Unsecured credit facility (US Dollar term loan)" in this note.

^2. The addition of €389.4 million to the principal amount of loans and borrowings (excluding lease liabilities) and the addition of €5.3 million to lease liabilities presented in the column "Effect of business combinations" result from the accounting for the acquisitions of Scholle IPN and Evergreen Asia (see note 27).

		Cash flows from/(used in):
(In € million)	1 Jan. 2021	Financing activities	Operating activities	Effect of business combination ²
Principal amount ¹	1,550.0	(139.5)	-	139.5
Transaction costs	(11.9)	-	-	-
Original issue discount	(1.4)	-	-	-
Loans and borrowings, excl. lease liabilities	1,536.7	(139.5)	-	139.5
Lease liabilities	147.0	(26.7)	-	26.7
Total loans and borrowings	1,683.7	(166.2)	-	166.2
Capitalised cost for revolving credit facility	(1.5)	-	-	-
Interest: Accrued/(paid)	5.9	-	(40.6)	2.7
Total (assets)/liabilities from financing activities and cash/non-cash changes	1,688.1	(166.2)	(40.6)	168.9

(In € million)	Non-cash movements	Effect of movements in exchange rates	31 Dec. 2021
Principal amount ¹	-	-	1,550.0
Transaction costs	3.2	-	(8.7)
Original issue discount	0.3	-	(1.1)
Loans and borrowings, excl. lease liabilities	3.5	-	1,540.2
Lease liabilities	21.7	13.7	182.4
Total loans and borrowings	25.2	13.7	1,722.6
Capitalised cost for revolving credit facility	0.3	-	(1.2)
Interest: Accrued/(paid)	38.8	0.1	6.9
Total (assets)/liabilities from financing activities and cash/non-cash changes	64.3	13.8	1,728.3

^1. The financing cash outflow of €139.5 million relating to the principal amount of loans and borrowings (excluding lease liabilities) shows the net effect of using the new unsecured credit facility in March 2021 (two tranches totalling €100.0 million of cash inflow), repayment of external loans of one of the former joint ventures (€139.5 million of cash outflow) and the subsequent repayments in September and December 2021 of the two tranches that had been drawn in March 2021 under the new unsecured credit facility (in total €100.0 million of cash outflow). See also the section "Unsecured credit facility" in this note and note 23.

^2. The addition of €139.5 million to the principal amount of loans and borrowings (excluding lease liabilities) and the addition of €26.7 million to lease liabilities presented in the column "Effect of business combination" result from the accounting for the acquisition of the remaining shares of the joint ventures in the Middle East (see note 27). The line "Transaction costs" is also impacted by the acquisition of the remaining shares of the joint ventures, even if the net impact is zero. The Group initially recognised transaction costs of €3.7 million relating to the external loans, but derecognised the same amount on the early repayment of the loans that took place shortly after the acquisition.

Accounting policy

Loans and borrowings (the Group's notes, the SSD and the term loans) are initially recognised at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method. Loans and other borrowings are classified as current or non-current liabilities depending on whether the Group has an unconditional right to defer settlement for at least twelve months after the reporting period.

The accounting for a change to the cash flows of a financial liability measured at amortised cost (such as the Group's notes, SSD and term loans) depends on the nature of the change. If a floating- rate debt instrument is modified to change its interest rate, the modification is regarded as a repricing to the new market interest rate, which is accounted for prospectively by adjusting the effective interest over the remaining life of the debt instrument. A floating-rate instrument is one whose original contractual terms contain a provision such that the cash flows will (or might) be reset to reflect movements in market interest rates. If a change in cash flows arises due to renegotiation or other modifications (including modifications that do not reflect movements in market interest rates), and the renegotiation or modification does not result in the derecognition of the financial liability, the gross carrying amount is recalculated and any gain or loss recognised in profit or loss as part of the net finance expense. If a renegotiation or modification represents a settlement of the original debt, it is accounted for as being extinguished.

A financial liability (or a part of it) is derecognised when it is extinguished, ie. when the contractual obligations are discharged, cancelled, expired or replaced by a new liability with substantially modified terms. The difference between the carrying amount of the financial liability (or part of a financial liability) extinguished and the consideration paid is recognised in profit or loss as part of the net finance expense. Any costs or fees incurred are recognised as part of the gain or loss on extinguishment.

Lease liabilities

The Group's lease liabilities are initially measured at the present value of the lease payments outstanding as of the lease commencement date, discounted at the interest rate implicit in the lease or, if that rate cannot be determined (which is normally the case), at the incremental borrowing rate. Lease payments included in the measurement of the lease liabilities include fixed lease payments and variable lease payments that depend on an index. Other variable lease payments are recognised in profit or loss. The Group does not separate non-lease components from lease components in its lease contracts. Extension, termination and purchase options that, at the lease commencement date, are reasonably certain to be exercised are considered when assessing the lease term and/or measuring the lease liability.

Subsequent to initial recognition, the lease liabilities are measured by increasing the carrying amount to reflect interest on the lease liability (applying the effective interest method); reducing the carrying amount to reflect lease payments made; and remeasuring the carrying amount to reflect any contract modifications or reassessments relating to, for example, changed future lease payments linked to changes in an index and changes in the assessment of whether an extension, termination or purchase option will be exercised.

When a lease liability is remeasured, the corresponding adjustment is generally made to the carrying amount of the related right-of-use asset (see note 13).

23 Finance income and expenses

The Group's net finance expense is mainly related to finance expenses for its loans and borrowings, fair value changes on associated derivative instruments and foreign currency exchange gains and losses relating to the loans and borrowings.

Composition of net finance expense

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Interest income	2.1	4.6
Net foreign currency exchange gain	8.8	11.4
Realised gain on settlement of deal-contingent derivative	15.5	-
Net change in fair value of financing-related derivatives	9.0	-
Net interest income on interest rate swap	0.5	-
Finance income	35.9	16.0
Interest expense on:
- Loan and borrowings (excluding lease liabilities)	(35.9)	(25.4)
- Lease liabilities	(10.8)	(9.1)
Amortisation of original issue discount	(0.3)	(0.3)
Amortisation of transaction costs	(7.0)	(3.6)
Net effect of early repayment of loans	(1.0)	(3.7)
Other	(6.9)	(5.3)
Finance expenses	(61.9)	(47.4)
Net finance expense	(26.0)	(31.4)

For the year ended 31 December 2022, the net foreign currency exchange gain primarily consists of positive translation effects on the portion of the Euro-denominated term loan that is held by an entity with the US Dollar as its functional currency resulting from the strengthening of the US Dollar against the Euro. For the year ended 31 December 2021, the net foreign currency exchange gain primarily consisted of positive translation effects on Euro-denominated debt held by an entity with the US Dollar as its functional currency resulting from the strengthening of the US Dollar against the Euro.

The settlement of the deal-contingent foreign currency derivative that the Group entered into relating to the repayment of the external US Dollar loan of Scholle IPN resulted in a realised gain of €15.5 million in the year ended 31 December 2022 (see note 27).

See notes 25 and 33 for information about the net change in fair value of financing- related derivatives (an interest-rate swap) and the net interest income on the interest swap.

For the year ended 31 December 2021, interest income included interest of €3.1 million on out-of-period indirect tax recoveries (see note 8).

Other finance expenses primarily consist of revolver commitment fees, securitisation and factoring expenses and interest expense on current tax liabilities.

24 Equity

This note includes information about the Company's share capital and dividend payments. The other components of equity consist of additional paid-in capital, the translation reserve, treasury shares and retained earnings. See note 27 for information about the hedging reserve (the sections "Deal-contingent derivatives" and "Accounting policy"). The Group applied cash flow hedge accounting for the first time in the year ended 31 December 2022.

The Company's shares are listed on SIX Swiss Exchange.

Issued share capital

The Company has 382,270,872 shares in issue as of 31 December 2022 (337,520,872 shares as of 31 December 2021), all fully paid. The table below provides an overview of these shares.

Number of shares	Total shares
Balance as of 1 January 2021	320,053,240
Issue of shares on 22 February 2021	17,467,632
Balance as of 31 December 2021	337,520,872
Balance as of 1 January 2022	337,520,872
Issue of shares on 18 May 2022	11,000,000
Issue of shares on 23 May 2022	33,750,000
Balance as of 31 December 2022	382,270,872

On 18 May 2022, the Company issued 11,000,000 ordinary shares with a nominal value of CHF 0.01 per share from authorised share capital under exclusion of the subscription rights of existing shareholders. The new shares were offered to investors as part of an accelerated book building process. The placement of the shares at a price of CHF 19.40 per share generated gross proceeds of CHF 213,400,000 (€203.5 million), resulting in an increase in the share capital of €0.1 million and an increase in the additional paid-in capital of €203.4 million. The costs incurred of €3.6 million that are directly attributable to the placement of the shares have been recognised as a deduction from equity (additional paid-in capital). The net proceeds from the capital increase amounted to €199.9 million and were used to fund, in part, the acquisition of Evergreen Asia (see also notes 4, 22 and 27). The new shares were listed and admitted to trading on SIX Swiss Exchange on 19 May 2022. The newly issued shares have the same rights as the Company's other ordinary shares.

On 23 May 2022, the Company issued 33,750,000 ordinary shares with a nominal value of CHF 0.01 per share from authorised share capital under exclusion of the subscription rights of existing shareholders. The shares, together with a cash payment, were part of the consideration for Scholle IPN that was transferred to CLIL on 1 June 2022 (see notes 27 and 29). The difference of €686.5 million between the nominal value of the issued shares and the fair value of the shares at the acquisition date is presented as additional paid-in capital. The newly issued shares have the same rights as the Company's other ordinary shares. CLIL has agreed to a lock-up period for these shares of 18-24 months, subject to customary exceptions.

On 22 February 2021, the Company issued 17,467,632 ordinary shares with a nominal value of CHF 0.01 per share from authorised share capital under exclusion of the subscription rights of existing shareholders. The shares, together with a cash payment, were part of the consideration transferred to OIG upon the acquisition of the remaining shares of the joint ventures in the Middle East on 25 February 2021 (see note 27). The difference of €323.1 million between the nominal value of the issued shares and the fair value of the shares at the acquisition date is presented as additional paid-in capital. The newly issued shares have the same rights as the Company's other ordinary shares. OIG has agreed to a lock-up period for these shares of 24 months, subject to customary exceptions.

The 382,270,872 shares in issue as of 31 December 2022 represent €3.4 million of share capital (€3.0 million as of 31 December 2021).

Authorised share capital and conditional share capital

The Company has authorised share capital of CHF 565,062.61 as of 31 December 2022 (CHF 675,041.74 as of 31 December 2021) and conditional share capital of CHF 640,106.48 (CHF 640,106.48 as of 31 December 2021).

Before the Annual General Meeting held on 7 April 2022, the Board of Directors was authorised, at any time until 21 April 2023, to increase the Company's share capital through the issue of up to 67,504,174 shares. The authority to issue shares from authorised share capital under exclusion of the subscription rights of existing shareholders was limited to a maximum of 33,752,087 shares, equalling CHF 337,520.87.

The Annual General Meeting held on 7 April 2022 approved, subject to consummation of the acquisition of Scholle IPN having occurred or being imminent, the creation of additional authorised share capital of 10% of the then issued share capital (ie. CHF 337,520.87), corresponding to 33.75 million shares that could be issued without subscription rights of existing shareholders. Hence, the authority to issue shares from authorised share capital under exclusion of the subscription rights of existing shareholders increased to a maximum of 67,504,174 shares, equalling CHF 675,041.74, subject to the acquisition of Scholle IPN having occurred or being imminent. This allowed the Company, after the issue of shares from authorised share capital on 18 May 2022, again to use authorised share capital to issue and transfer shares to CLIL as part of the consideration for Scholle IPN (see the section above and note 27).

As of 31 December 2022, the Board of Directors is authorised, at any time until 21 April 2023, to increase the Company's share capital through the issue of up to 56,506,261 shares. Capital increases from authorised and conditional share capital are subject to a single combined limit, and may not exceed 64,010,648 shares, equalling CHF 640,106.48. However, the authority to issue shares from authorised and conditional share capital under exclusion of the subscription and advance subscription rights respectively is limited to a single combined maximum of 22,754,174 shares, equalling CHF 227,541.74.

The authorised share capital can be used for various purposes. This provides flexibility to seek additional capital, if required, for investment and acquisition opportunities or to take advantage of favourable market conditions to further improve the Group's capital position. The conditional share capital is divided into CHF 160,026.62 for employee benefit plans and CHF 480,079.86 for equity-linked financing instruments as of 31 December 2022 (also as of 31 December 2021).

Treasury shares

The Company purchases its own shares on the market to settle its obligations under the Group's equity-settled share-based payment plans and arrangements (see note 31). The Company held 23,295 shares for this purpose as of 31 December 2022 (2,430 shares as of 31 December 2021), representing an amount of €1.3 million (€0.1 million as of 31 December 2021) and including foreign currency translation impacts. All treasury shares are carried at acquisition cost.

In the year ended 31 December 2022, the Company transferred 728,261 treasury shares (representing €15.1 million) to participants in the Group's equity-settled share-based payment plans and arrangements.

		2022		2021
(Number of treasury shares or in € million)	Number	Amount	Number	Amount
Balance as of 1 January	2,430	(0.1)	6,274	(0.1)
Purchases	749,126	(16.3)	26,739	(0.7)
Transfer under equity-settled share-based payment plans and arrangements	(728,261)	15.1	(30,583)	0.7
Balance as of 31 December	23,295	(1.3)	2,430	(0.1)

Dividends

For the year ended 31 December 2022, the Board of Directors will propose to the Annual General Meeting to be held on 20 April 2023 a dividend payment of CHF 0.47 per share, totalling CHF 179.7 million (which, as per the exchange rate as of 31 December 2022, would equal €182.5 million). The dividend payment to be proposed is not recognised as a liability.

A dividend of CHF 0.45 per share, totalling CHF 151.9 million (€147.9 million), was paid to shareholders from the capital contribution reserve (additional paid-in capital) in April 2022. The dividend payment was not recognised as a liability as of 31 December 2021.

A dividend of CHF 0.42 per share, totalling CHF 141.8 million (€128.1 million), was paid to shareholders from the capital contribution reserve (additional paid-in capital) in April 2021.

Accounting policy

Incremental costs directly attributable to the issue of shares and purchase of treasury shares are recognised as a deduction from equity. Any resulting tax effects of any transaction costs that are recognised in equity are also reflected in equity.

Treasury shares

The cost of repurchased shares is presented as a deduction from equity, in the separate category treasury shares. When treasury shares are subsequently transferred to settle the Group's obligations under its equity-settled share-based payment plans and arrangements (or sold, if applicable), the related amount recognised as a share-based payment expense (or any amount received under a sale) is recognised as an increase in equity. Any resulting surplus or deficit is presented as an adjustment to additional paid-in capital. The Group applies the average cost method to calculate the surplus or deficit on the transfer or sale of treasury shares.

25 Financial risk management

In the course of its business, the Group is exposed to a number of financial risks: liquidity risk, market risk (including currency risk, commodity risk and interest rate risk) and credit risk. This note presents the Group's objectives, policies and processes for managing its exposure to these financial risks. Note 33 includes an overview of the derivative financial instruments that the Group has entered into to mitigate its market risk exposure.

Exposure to liquidity, market and credit risks arises in the normal course of the Group's business. Management and the Board of Directors have overall responsibility for the establishment and oversight of the Group's financial risk management framework. Management has established a treasury policy that identifies risks faced by the Group and sets out policies and procedures to mitigate those risks. These policies and procedures are now also followed by Scholle IPN and Evergreen Asia. Financial risk management is primarily carried out by the Group's Treasury function. Management has delegated authority levels and authorised the use of various financial instruments to a restricted number of personnel within the Treasury function.

Liquidity risk

Liquidity risk is the risk that the Group will not meet its contractual obligations as they fall due. The Group evaluates its liquidity requirements on an ongoing basis using various cash and financial planning analyses and ensures that it has sufficient cash to meet expected operating expenses, repayments of and interest payments on its debt and lease payments.

The Group generates sufficient cash flows from its operating activities to meet obligations arising from its financial liabilities. It has a multi-currency revolving credit facility in place to cover potential shortfalls and access to local working capital facilities in various jurisdictions, which are available if needed to support the cash management of local operations. The Group had unrestricted cash and cash equivalents of €490.0 million as of 31 December 2022 (€300.2 million as of 31 December 2021). Furthermore, as of 31 December 2022, it had access to an additional €295.1 million under its committed multi-currency revolving credit facility (€294.2 million as of 31 December 2021).

The following table includes information about the remaining contractual maturities for the Group's non-derivative financial liabilities as of 31 December 2022. The table includes both interest and principal cash flows. Balances due within one year are equal to their carrying amounts as the impact of discounting is not significant.

		Contractual cash flows
(In € million)	Carrying amount	Total	Up to 1 year	1-2 years	2-5 years	More than 5 yaers
As of 31 December 2022
Trade and other payables	(1,036.7)	(1,036.7)	(1,019.4)	(4.5)	(6.2)	(6.6)
Loans and borrowings:
- Senior unsecured notes	(996.8)	(1,032.8)	(465.6)	(11.7)	(555.5)	-
- Senior unsecured Euro term loan	(546.9)	(603.9)	(21.8)	(22.0)	(560.1)	-
- Unsecured US Dollar term loan	(252.5)	(318.2)	(13.7)	(13.7)	(290.8)	-
- Unsecured SSD	(647.6)	(762.4)	(24.8)	(25.2)	(622.7)	(89.7)
- Lease liabilities	(230.9)	(338.2)	(52.8)	(45.7)	(93.4)	(146.3)
Contingent consideration	(113.2)	(212.3)	-	(67.5)	(144.8)	-
Total non-derivative financial liabilities	(3,824.6)	(4,304.5)	(1,598.1)	(190.3)	(2,273.5)	(242.6)

The agreements with the Group's note holders and other lenders contain covenants and certain clauses that may require earlier repayments than indicated in the table above. The Group monitors the covenants as well as the aforementioned clauses on a regular basis to ensure that it is in compliance with the agreements at all times.

The interest payments on the two term loans and three of the SSD tranches are variable. The interest rate amounts included in the table above that relate to those borrowings will therefore change if the market interest rates (Euribor or SOFR) change. The interest rate amounts are also subject to change depending on the Group's net leverage and/or the achievement of sustainability-linked targets. See note 22.

The Group has entered into an interest rate swap that fixes the variable interest rate on its US Dollar term loan for three years, which is not considered in the table above (see section "Interest rate risk" in this note). As of 31 December 2022, the interest rate swap is estimated to reduce the interest payments on the US Dollar term loan by approximately €5 million in 2023, €3 million in 2024 and €1 million in 2025.

Significant judgement is involved in assessing the future cash flows relating to the contingent consideration for Scholle IPN (see notes 27 and 33), and the final payments may be different from the amounts in the table above. The contingent consideration is included in other non-current liabilities.

The Group enters into derivative contracts as part of operating the business and may, from time to time, also enter into financing-related derivatives. Commodity derivative contracts are net cash-settled. Foreign currency derivative contracts and financing- related derivative contracts are net or gross cash-settled. The related derivative assets and liabilities recognised as of 31 December 2022 and 31 December 2021 represent the Group's liquidity exposure as of that date (see note 33). The cash flows resulting from a settlement of the derivative contracts may change as commodity prices, exchange rates and interest rates change. However, the overall impact on the Group's liquidity from the derivative contracts is not deemed to be significant. The expected impact of the Group's interest rate swap is described above. See sections "Currency risk" and "Commodity price risk" in this note for additional details about the Group's outstanding foreign currency and commodity derivative contracts.

The following table includes information about the remaining contractual maturities for the Group's non-derivative financial liabilities as of 31 December 2021.

		Contractual cash flows
(In € million)	Carrying amount	Total	Up to 1 year	1-2 years	2-5 years	More than 5 years
As of 31 December 2021
Trade and other payables	(665.7)	(665.7)	(656.2)	(2.5)	(4.5)	(2.5)
Loans and borrowings:
- Senior unsecured notes	(994.5)	(1,052.9)	(20.2)	(465.6)	(567.1)	-
- Senior unsecured Euro term loan	(545.7)	(573.0)	(6.5)	(6.7)	(559.8)	-
- Lease liabilities	(182.4)	(276.6)	(37.9)	(33.3)	(72.1)	(133.3)
Total non-derivative financial liabilities	(2,388.3)	(2,568.2)	(720.8)	(508.1)	(1,203.5)	(135.8)

Market risk

Market risk is the risk that changes in market prices, such as foreign currency exchange rates, commodity prices and interest rates, will affect the cash flows or the fair value of the Group's holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters.

The Group buys and sells derivatives in the ordinary course of business to manage market risks. The Group does not enter into derivative contracts for speculative purposes. Hedge accounting under IFRS 9 is not applied. However, see the section "Currency risk" below and note 27 for an exception to this policy in the year ended 31 December 2022.

Currency risk

As a result of the Group's international operations, it is exposed to foreign currency risk on sales, purchases, borrowings and dividend payments that are denominated in currencies that are not the functional currency of the entity involved in the transaction. The Group is also exposed to translation currency risk arising from the translation of the assets, liabilities and results of its foreign entities from their respective functional currencies into Euro, the Group's presentation currency. The functional currencies of the subsidiaries are mainly Euro, US Dollar, Swiss Franc, Chinese Renminbi, Thai Baht, Brazilian Real and Mexican Peso.

In accordance with the Group's Treasury policy, the Group seeks to minimise transaction currency risk via natural offsets wherever possible. Therefore, when commercially feasible, the Group incurs costs in the same currencies in which cash flows are generated. In addition, the Group systematically hedges its major transactional currency exposures (by entering into foreign currency derivative contracts), using a twelve-month rolling layered approach. See also note 8. The Group does not hedge its exposure to translation gains or losses related to the financial results of its entities with a functional currency other than the Euro.

To manage the foreign currency exposure arising from the US Dollar payments relating to the acquisitions of Scholle IPN and Evergreen Asia, the Group entered into deal- contingent foreign currency derivatives in the year ended 31 December 2022. These derivatives were designated as hedging instruments. See note 27 for further details.

The following table provides an overview of the outstanding foreign currency derivative contracts entered into as part of the operating business as of 31 December 2022.

Type	Contract type	Curr- ency	Contracted volume	Countercurrency	Contracted conversion range	Contracted date of maturity
Non-deliverable forwards	Buy	€	17,380,000	BRL	5.1890 - 6.7060	Jan. 2023 - Dec. 2023
Currency forwards	Buy	€	61,828,988	THB	36.3065 - 37.7894	Jan. 2023 - Dec. 2023
Currency forwards	Buy	$	13,099,223	THB	34.5900 - 34.5930	Jan. 2023 - Jan. 2023
Currency forwards	Sell	$	34,625,000	THB	31.9681 - 37.7439	Jan. 2023 - Dec. 2023
Currency forwards	Buy	€	16,550,000	CNY	6.9113 - 7.4471	Jan. 2023 - Dec. 2023
Currency forwards	Buy	$	17,000,000	CNY	6.6625 - 7.2636	Apr. 2023 - Apr. 2023
Currency forwards	Buy	€	6,520,880	AUD	1.5295 - 1.5698	Jan. 2023 - Jul. 2023
Currency forwards	Buy	€	73,980,000	$	0.9905 - 1.1581	Jan. 2023 - Dec. 2023
Currency forwards	Buy	$	388,000	AUD	1.4801 - 1.4836	Jan. 2023 - Mar. 2023
Currency forwards	Buy	$	36,180,000	MXN	19.5333 - 22.8202	Jan. 2023 - Dec. 2023

The following table provides an overview of the outstanding foreign currency derivative contracts entered into as part of the operating business as of 31 December 2021.

Type	Contract type	Curr- ency	Contracted volume	Countercurrency	Contracted conversion range	Contracted date of maturity
Non-deliverable forwards	Buy	€	15,055,000	BRL	6.3595 - 7.1603	Jan. 2022 - Oct. 2022
Currency forwards	Buy	€	51,015,000	THB	36.7497 - 39.5041	Jan. 2022 - Oct. 2022
Currency forwards	Sell	€	9,315,000	THB	36.9116 - 38.0044	Jan. 2022 - Mar. 2022
Currency forwards	Sell	$	1,610,000	THB	30.0091 - 31.1080	Jan. 2022 - Mar. 2022
Currency forwards	Buy	€	26,880,000	CNY	7.2701 - 8.1547	Jan. 2022 - Dec. 2022
Currency forwards	Buy	$	12,865,000	CNY	6.4166 - 6.7201	Jan. 2022 - Dec. 2022
Currency forwards	Buy	€	28,610,000	$	1.1327 - 1.2342	Jan. 2022 - Oct. 2022
Currency forwards	Buy	$	20,280,000	MXN	20.4200 - 22.0138	Jan. 2022 - Oct. 2022
Currency forwards	Buy	€	5,638,368	AUD	1.5532 - 1.6039	Jan. 2022 - Jun. 2022
Currency forwards	Buy	$	103,787	AUD	1.3256 - 1.3508	Jan. 2022 - Jun. 2022

The Group's primary transaction currency exposure as of 31 December 2022 relates to intra-group Euro-denominated loan receivables of entities with the Swiss Franc as their functional currency and to US Dollar-denominated loan payables of entities with the Euro as their functional currency. A 5% weakening of the Euro against the Swiss Franc as of 31 December 2022 would have resulted in an additional unrealised foreign currency exchange loss of €18.4 million as of 31 December 2022. A 5% weakening of the Euro against the US Dollar as of 31 December 2022 would have resulted in an additional unrealised foreign currency exchange loss of €19.6 million as of 31 December 2022.

The Group's primary transaction currency exposure as of 31 December 2021 related to intra-group Euro-denominated loan receivables of entities with the Swiss Franc as their functional currency and to intra-group US Dollar-denominated loan payables of entities with the Euro as their functional currency. A 5% weakening of the Euro against the Swiss Franc as of 31 December 2021 would have resulted in an additional unrealised foreign currency exchange loss of €5.6 million as of 31 December 2021. A 5% weakening of the Euro against the US Dollar as of 31 December 2021 would have resulted in an additional unrealised foreign currency exchange loss of €3.2 million as of 31 December 2021.

Commodity price risk

Commodity price risk is the risk that changes in the prices of commodities purchased by the Group and used as inputs in the production process may impact the Group, as such price changes cannot always be passed on to the customers on a timely basis (see also note 5.4). The majority of the Scholle IPN customer contracts include clauses that enable commodity price fluctuations to be passed on to the customers. As this is not the case for the customer contracts in the carton business, there is generally a time lag between increased commodity prices and the implementation of higher customer prices.

The Group's exposure to commodity price risk arises principally from the purchase of polymers and aluminium. The Group's objective is to ensure that the commodity price risk exposure in the current year is kept at an acceptable level. The Group generally purchases commodities at spot market prices and uses derivatives to hedge the exposure in relation to the cost of polymers (and their feedstocks) and aluminium. This strategy means that the Group is able to fix the raw material prices for the majority of its anticipated polymer and aluminium purchases, which substantially reduces the exposure to raw material price fluctuations over that period.

The realised gain or loss arising from derivative commodity contracts is recognised in cost of sales, while the unrealised gain or loss associated with derivative commodity contracts is recognised in other income or expenses.

The Group recognised an unrealised loss of €46.0 million in the year ended 31 December 2022 and an unrealised gain of €12.7 million in the year ended 31 December 2021 relating to its derivative commodity contracts as a component of other income. The Group recognised a realised gain of €33.5 million in the year ended 31 December 2022 and a realised gain of €63.2 million in the year ended 31 December 2021 relating to its derivative commodity contracts as a component of cost of sales.

The following table provides an overview of the outstanding commodity derivative contracts as of 31 December 2022.

Type	Unit of measure	Contracted volume	Contracted price range	Contracted date of maturity
Aluminium swaps	metric tonne	18,060	$2,268 - $3,409	Jan. 2023 - Dec. 2023
Aluminium premium swaps	metric tonne	9,050	$294 - $445	Jan. 2023 - Dec. 2023
Polymer swaps	metric tonne	19,580	€2,025 - €2,307	Jan. 2023 - Dec. 2023
Polymer swaps	metric tonne	2,040	€2,112	Jan. 2023 - Dec. 2023
Polymer swaps	metric tonne	6,660	$1,250	Jan. 2023 - Dec. 2023
Polymer swaps	metric tonne	4,200	$1,665	Jan. 2023 - Dec. 2023
Polymer swaps	metric tonne	8,100	$1,560	Jan. 2023 - Dec. 2023
Monomer swaps	metric tonne	29,775	€1,230 - €1,566	Jan. 2023 - Dec. 2023
Electricity swaps	megawatt hour	12,500	€200 - €235	Feb. 2023 - Oct. 2023

The following table provides an overview of the outstanding commodity derivative contracts as of 31 December 2021.

Type	Unit of measure	Contracted volume	Contracted price range	Contracted date of maturity
Aluminium swaps	metric tonne	23,060	$2,063 - $3,055	Jan. 2022 - Dec. 2022
Aluminium premium swaps	metric tonne	6,630	$174 - $353	Jan. 2022 - Dec. 2022
Polymer swaps	metric tonne	16,620	€1,507 - €1,930	Jan. 2022 - Dec. 2022
Polymer swaps	metric tonne	9,780	€1,230 - €1,477	Jan. 2022 - Dec. 2022
Polymer swaps	metric tonne	6,000	$1,265	Jan. 2022 - Dec. 2022
Polymer swaps	metric tonne	21,820	$1,265 - $1,620	Jan. 2022 - Dec. 2022
Monomer swaps	metric tonne	39,410	€911 - €1,239	Jan. 2022 - Dec. 2022

Assuming a 10% parallel upward or downward movement in the price curve used to value the commodity derivative contracts with all other variables remaining constant, a remeasurement of commodity derivative contracts as of 31 December 2022 would have had an impact of €15.9 million on the Group's profit before income tax (an impact of €19.7 million on the profit before income tax as of 31 December 2021).

Interest rate risk

The Group's interest rate risk arises primarily from variable interest rates on its Euro and US Dollar term loans, three of the tranches of its SSD and on potential drawings on its revolving credit facility but also from cash and cash equivalents. The Group pays a fixed interest rate on its notes and on three of the tranches of its SSD.

The Group has entered into a three-year interest rate swap to hedge the cash flow exposure arising on its US Dollar term loan at variable interest rate. The swap is presented as a financing-related derivative as part of other non-current assets. The fair value changes are recognised in finance income or finance expenses. See section "Liquidity risk" and note 33 for additional details.

The interest rate profile of the Group's significant interest-bearing financial instruments as of 31 December 2022 and 31 December 2021 is presented in the following table.

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Fixed rate instruments
Financial assets	6.9	2.7
Financial liabilities	(1,323.4)	(1,182.4)
	(1,316.5)	(1,179.7)
Effect of interest rate swap	(253.2)	-
	(1,569.7)	(1,179.7)
Variable rate instruments
Financial assets	503.8	304.5
Financial liabilities	(1,360.7)	(550.0)
	(856.9)	(245.5)
Effect of interest rate swap	253.2	-
	(603.7)	(245.5)

A 100 basis point increase in the variable component (six-month Euribor) of the interest rate on the Euro term loan and the three SSD tranches at variable interest rates would increase the annual interest expense by €11.1 million as of 31 December 2022. The US Dollar term loan is not included in this analysis as the interest rate of this loan has been fixed for three years with an interest rate swap. A 100 basis point increase in the variable component (six-month Euribor) of the interest rate on the Euro term loan would have increased the annual interest expense by €2.5 million as of 31 December 2021.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit exposure.

Credit risk arises principally from the Group's receivables from its customers. Historically, there has been a low level of losses resulting from default by customers. This also applies for the customers of Scholle IPN and Evergreen Asia. As the Group's customers are in the food and beverage industry, management has not experienced any material changes to the Group's exposure to credit risk due to the COVID-19 pandemic (see note 5.4).

The credit risk relating to trade receivables is influenced mainly by the individual characteristics of each customer. Given the diverse global operations and customers across the Group, credit control procedures are jointly managed by the Group's Treasury function and each of the operating businesses within the Group. These joint responsibilities include, but are not limited to, reviewing the individual characteristics of new customers for creditworthiness before accepting the customer and agreeing upon purchase limits and terms of trade as well as regularly reviewing the creditworthiness of existing customers and previously agreed purchase limits and terms of trade.

The Group limits its exposure to credit risk by executing a credit limit policy, requiring advance payments in certain instances, taking out insurance for specific debtors as well as utilising securitisation and non-recourse factoring programmes. See further note 16.

In addition, concentration of credit risk is limited due to the customers comprising a diversified mix of international companies, large national and regional companies as well as small local companies, most of which have been customers of the Group for many years.

Management believes that the recognised loss allowance sufficiently covers the risk of default based on historical payment behaviour and assessments of future expectations of credit losses, including regular analysis of customer credit risk.

In line with its Treasury policy, the Group generally enters into transactions only with banks and financial institutions having a credit rating of at least investment grade (long term: BBB or Baa rating or higher and short term: A-2 or P-2 rating or higher as per Standard & Poor's or Moody's).

OUR GROUP STRUCTURE AND RELATED PARTIES

This section provides information about the Group's subsidiaries and other related parties. It includes details about the acquisitions of Scholle IPN on 1 June 2022 and Evergreen Asia on 2 August 2022. It also covers certain information about the acquisition of the remaining shares of the joint ventures in the Middle East and the sale of the paper mill in New Zealand in the comparative period.

26 Group entities

The Company has changed its name from SIG Combibloc Group AG to SIG Group AG. The name change became effective on 13 April 2022.

Overview of Group entities

The following table provides an overview of all the Group's subsidiaries and joint venture, including the subsidiaries acquired in the Scholle IPN acquisition (marked with ^*) and the three subsidiaries acquired in the Evergreen Asia acquisition. For the other subsidiaries, the ownership interests are the same as of 31 December 2022 and 31 December 2021, unless specifically stated. The ownership and voting interests are the same for all Group entities. The Group owns 100% of the shares, unless specifically stated. The reporting date of the entities is 31 December, unless specifically stated. The joint venture does not have any subsidiaries.

	As of 31 December 2022
Companies and countries	Share capital ¹		Interest
Parent company Switzerland
SIG Group AG, Neuhausen am Rheinfall ²	3,822,709	CHF	100%
Subsidiaries Argentina
Combibloc S.R.L., Buenos Aires ³	724,015,120	ARS	100%
Australia
Scholle IPN Pty Ltd., Edinburgh North ^*	2	AUD	100%
SIG Australia Holding Pty Ltd., Canberra	32,100,000	AUD	100%
SIG Combibloc Australia Pty Ltd., Broadmeadows	40,000,001	AUD	100%
Austria
SIG Austria Holding GmbH, Saalfelden	1,000,000	EUR	100%
SIG Combibloc GmbH, Saalfelden	35,000	EUR	100%
SIG Combibloc GmbH & Co. KG, Saalfelden	4,500,000	EUR	100%
Bangladesh
SIG Combibloc Bangladesh Ltd., Dhaka	50,000,000	BDT	100%
Brazil
Scholle Ltda., Vinhedo ^*	86,258,020	BRL	100%
SIG Beverages Brasil Ltda., Sao Paulo	109,327,434	BRL	100%
SIG Combibloc do Brasil Ltda., Sao Paulo	722,386,462	BRL	100%

	As of 31 December 2022
Companies and countries	Share capital ¹		Interest
Canada
Scholle IPN Canada Ltd., Québec ^*	1,000	CAD	100%
Chile
Scholle IPN SpA, Santiago ^*	9,006,501,235	CLP	100%
SIG Combibloc Chile SpA, Santiago	5,016,722,134	CLP	100%
China
Scholle IPN Packaging (Suzhou) Co. Ltd., Suzhou ^*	15,400,000	USD	100%
SIG Combibloc (Suzhou) Co. Ltd., Suzhou	95,000,000	USD	100%
SIG Combibloc (Suzhou) Technology Co. Ltd., Suzhou4	3,800,000	USD	100%
SIG Packaging (Shanghai) Co., Ltd., Shanghai5	11,700,000	USD	100%
Czechia
SIG Combibloc s.r.o., Hradec Králové	200,000	CZK	100%
Egypt
SIG Combibloc Egypt LLC, Cairo ⁶	10,000	EGP	100%
France
Scholle IPN France SAS, Schalbach ^*	1,000,000	EUR	100%
SIG Combibloc S.à.r.l., Courbevoie	31,000	EUR	100%
Germany
Scholle IPN Germany GmbH, Eisfeld ^*	500,000	EUR	100%
Scholle IPN Investment GmbH, Linnich ⁷	25,000	EUR	100%
SIG Combibloc GmbH, Linnich	34,494,382	EUR	100%
SIG Combibloc Systems GmbH, Linnich	1,000,000	EUR	100%
SIG Combibloc Zerspanungstechnik GmbH, Aachen	256,000	EUR	100%
SIG Euro Holding GmbH, Linnich	10,000,000	EUR	100%
SIG Information Technology GmbH, Linnich	500,000	EUR	100%
SIG International Services GmbH, Linnich	1,000,000	EUR	100%
India	17,649,000	INR	84.71%
Bossar Packaging Private Ltd., Pune ^{* 8,9}
Scholle IPN India Packaging Private Ltd., Palghar ^{* 8,9}	15,290,240	INR	90%
Scholle Packaging (India) Private Ltd., Palghar ^{* 8}	155,254,700	INR	100%
SIG Combibloc India Private Ltd., Gurgaon, Haryana ⁸	34,000,000	INR	100%
Indonesia
P.T. SIG Combibloc Indonesia, Jakarta Selatan	13,549,682,000	IDR	100%
Italy
SIG Combibloc S.r.l., Parma	101,400	EUR	100%
Luxembourg
SIG Combibloc Holdings S.à r.l., Munsbach	2,000,001	EUR	100%
SIG Combibloc PurchaseCo S.à r.l., Munsbach	4,012,500	EUR	100%
Malaysia
Scholle IPN Packaging (SEA) SDN. BHD, Kuala Lumpur ^*	445,500	MYR	100%
SIG Combibloc Malaysia SDN. BHD, Kuala Lumpur	1,000,000	MYR	100%
Mexico
SIG Combibloc Manufacturing México, S. de R.L. de C.V., Queretaro	142,010,000	MXN	100%
SIG Combibloc México, S.A. de C.V., Mexico City	1,000,000	MXN	100%

	As of 31 December 2022
Companies and countries	Share capital ¹		Interest
Netherlands
Clean Flexible Packaging B.V., Tilburg ^*	2	EUR	100%
Clean Flexible Packaging Holding B.V., Tilburg ^*	2	EUR	100%
Scholle IPN Europe B.V., Tilburg ^*	20,000	EUR	100%
Scholle IPN Europe Holding B.V., Tilburg ^*	18,000	EUR	100%
Scholle IPN Holding B.V., Tilburg ^*	20,220	EUR	100%
Scholle IPN IP B.V., Tilburg ^*	18,000	EUR	100%
Scholle IPN Netherlands B.V., Tilburg ^*	18,000	EUR	100%
SIG Combibloc B.V., Hengelo	40,000	EUR	100%
New Zealand
Scholle IPN New Zealand Ltd., Auckland ^*	0	NZD	100%
SIG Combibloc New Zealand Ltd., Auckland	0	NZD	100%
Nigeria
SIG Combibloc Nigeria Ltd., Lagos10	10,000,000	NGN	100%
Poland
SIG Combibloc Sp. z o.o., Warsaw	249,934	PLN	100%
Romania
SIG Combibloc Services S.R.L., Cluj	1,000,000	RON	100%
Russia
OOO SIG Combibloc, Moscow	5,000,000	RUB	100%
Scholle IPN Eastern Europe LLC, Voronezh ^{* 9}	221,331,321	RUB	99.9%
Saudi Arabia
Al Obeikan SIG Combibloc Company Ltd., Riyadh	75,000,000	SAR	100%
Serbia
SIG South East Europe d.o.o. Beograd, Beograd ¹¹	939,200	RSD	100%
Singapore
SIG Combibloc Singapore Private Ltd., Singapore ¹²	1,000	SGD	100%
South Africa
SIG Combibloc (South Africa) Pty. Ltd., Cape Town ¹³	1,000	ZAR	100%
South Korea
SIG Combibloc Korea Ltd., Seoul	260,000,000	KRW	100%
SIG Packaging Korea Ltd., Seoul14	899,480,000	KRW	100%
Spain
Bossar Packaging SL, Barbera del Valles ^*	1,248,000	EUR	100%
SIG Combibloc S.A., Madrid	330,550	EUR	100%
Sweden
SIG Combibloc AB, Eslöv	100,000	SEK	100%
Switzerland
SIG allCap AG, Neuhausen am Rheinfall	7,000,000	CHF	100%
SIG Combibloc Procurement AG, Neuhausen am Rheinfall	2,000,000	CHF	100%
SIG Combibloc Receivables Management AG, Neuhausen am Rheinfall	1,000,000	CHF	100%
SIG Combibloc Services AG, Neuhausen am Rheinfall ¹⁵	37,931,400	CHF	100%
SIG Schweizerische Industrie-Gesellschaft GmbH, Neuhausen am Rheinfall	20,000	CHF	100%
SIG Technology AG, Neuhausen am Rheinfall ¹⁵			-
Taiwan
SIG Combibloc Taiwan Ltd., Taipei	15,000,000	TWD	100%
SIG Packaging (Taiwan) Co., Ltd., Hsinchu Hsien ¹⁶	1,000,000	TWD	100%
Thailand
SIG Combibloc Ltd., Rayong	3,070,693,000	THB	100%
Turkey
SIG Combibloc Paketleme ve Ticaret Ltd. Şirketi, Istanbul ³	170,000	TRY	100%
United Kingdom
Scholle IPN UK Ltd., Gateshead ^*	1	GBP	100%
SIG Combibloc Ltd., Gateshead	1,500,000	GBP	100%
UAE
SIG Combibloc FZCO, Dubai	24,000,000	AED	100%
USABBI Company Inc., Northlake ^*	13,700	USD	100%
Clean Flexible Packaging Inc., Northlake ^*	20	USD	100%
Scholle IPN Atlanta Corporation, Peachtree City ^*	0	USD	100%
Scholle IPN Corporation, Northlake ^*	0	USD	100%
Scholle IPN Packaging Inc., Northlake ^*	10,000	USD	100%
SIG Combibloc Inc., Wilmington	27,000,000	USD	100%
SIG Combibloc US Acquisition Inc., Wilmington	10	USD	100%
SIG Combibloc US Acquisition II Inc., Wilmington	10	USD	100%
SIG Holding USA, LLC, Wilmington	1,000	USD	100%
Vietnam
SIG Vietnam Ltd., Ho Chi Minh City	2,000,000,000	VND	100%
Joint venture
Japan DNP • SIG Combibloc Co. Ltd., Tokyo	75,000,000	JPY	50%

^* Subsidiary acquired as part of the acquisition of Scholle IPN on 1 June 2022 (see note 27).

¹ Unaudited.

² Previously SIG Combibloc Group AG. The name was changed to SIG Group AG on 13 April 2022. The registered address of SIG Group AG is Laufengasse 18, 8212 Neuhausen am Rheinfall, Switzerland.

³ Argentina and Turkey are regarded as hyperinflationary as of 31 December 2022. The impacts of applying hyperinflationary accounting as per IAS 29 Financial Reporting in Hyperinflationary Economies is not material to the Group.

⁴ New entity, incorporated in the second quarter of 2022.

⁵ Evergreen Packaging (Shanghai) Co. Ltd. was acquired as part of the Evergreen Asia acquisition on 2 August 2022 (see note 27). The name was changed to SIG Packaging (Shanghai) Co. Ltd. after the acquisition.

⁶ Previously SIG Combibloc Obeikan Egypt LLC. The name was changed to SIG Combibloc Egypt LLC in the second quarter of 2022.

⁷ New entity, incorporated in the fourth quarter of 2022.

⁸ Reporting date is 31 March. Financial information prepared as of 31 December is used for consolidation purposes.

⁹ The non-controlling interests are not significant, which is why the Group does not make a distinction between profit, total comprehensive income and equity attributable to the owners of the Company and the non-controlling interests.

¹⁰ Previously SIG Combibloc Obeikan Nigeria Ltd. The name was changed to SIG Combibloc Nigeria Ltd. in the second quarter of 2022.

¹¹ New entity, incorporated in the third quarter of 2022.

¹² New entity, incorporated in the first quarter of 2022.

¹³ Previously SIG Combibloc Obeikan (South Africa) Pty Ltd. The name was changed to SIG Combibloc (South Africa) Pty. Ltd in the first quarter of 2022.

¹⁴ Evergreen Packaging Korea Ltd. was acquired as part of the Evergreen Asia acquisition on 2 August 2022 (see note 27). The name was changed to SIG Packaging Korea Ltd. after the acquisition.

¹⁵ SIG Technology AG was merged with SIG Combibloc Services AG in the third quarter of 2022.

¹⁶ Evergreen Packaging (Taiwan) Co. Ltd. was acquired as part of the Evergreen Asia acquisition on 2 August 2022 (see note 27). The name was changed to SIG Packaging (Taiwan) Co. Ltd., after the acquisition.

Sale of New Zealand paper mill

The Group announced in March 2021 that it would close its paper mill in New Zealand (Whakatane Mill Ltd.) and increase the sourcing of liquid paper board from existing third- party suppliers. The mill primarily produced liquid paper board for use by SIG entities and the Group's former joint ventures in the Middle East. After the closure announcement, the Group was approached by potential buyers and the paper mill was sold on 3 June 2021 for NZD 1. The net working capital and other adjustments to the completion settlement were finalised in August 2021. The sale resulted in a loss of €12.1 million and a net cash inflow of €3.1 million. See note 9 for information about restructuring costs relating to the closure of the mill recognised in the year ended 31 December 2021.

Accounting policy/basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from their respective acquisition date, which is the date on which the Group obtains control.

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Interests in joint ventures

A joint venture is a contractual arrangement in which the Group has joint control and has rights to the net assets of the arrangement rather than rights to its assets and obligations for its liabilities. Investments in joint ventures are accounted for using the equity method. On the date joint control is obtained, joint ventures are recognised at cost (including transaction costs). Subsequent to initial recognition, the Group's share of the profit or loss and other comprehensive income is included in the consolidated financial statements until the date on which joint control ceases.

Intra-group transactions and balances

Intra-group transactions and balances are eliminated upon consolidation. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same manner as unrealised gains, but only to the extent that there is no evidence of impairment.

27 Business combinations

Overview

This note covers the acquisitions of Scholle IPN on 1 June 2022 and Evergreen Asia on 2 August 2022. It also provides certain details about the acquisition of the remaining 50% of the shares of the Group's two joint ventures in the Middle East on 25 February 2021.

Scholle IPN

Overview

On 1 June 2022, the Group acquired 100% of Scholle IPN from CLIL. CLIL is controlled by Laurens Last and has subsequently been renamed Clean Holding B.V. He was elected to the Company's Board of Directors on 7 April 2022.

Scholle IPN provides packaging solutions for food and beverages, with retail, institutional and industrial customers and has production plants mainly in the Americas and Europe but also in Asia and Australia. Scholle IPN is the global leader in bag-in-box and number two in spouted pouches. It has approximately 2,500 employees globally.

This acquisition will enable the Group to expand its product portfolio, increase its presence in the USA and leverage its established presence in emerging markets. Synergies and cost efficiencies are expected in areas such as commercial operations, technology, innovation and sustainability as well as procurement and manufacturing.

The following table provides an overview of the consideration transferred, the recognised amounts of assets acquired and liabilities assumed at the acquisition date and the resulting goodwill. Since the close of the acquisition on 1 June 2022, the Group has finalised the completion accounts (see further section "Consideration" below) and the fair valuation of inventories, property, plant and equipment and intangible assets. There have been no material adjustments to the fair values initially recognised. As of 31 December 2022, the fair value of "Other net assets acquired" as well as current assets and liabilities has been measured on a provisional basis.

(in € million)
Cash	424.3
Shares (33,750,000 ordinary SIG shares)	686.8
Contingent consideration	38.6
Fair value of consideration	1,149.7
Cash and cash equivalents	46.6
Trade and other current receivables	117.2
Inventories	125.0
Property, plant and equipment	210.3
Intangible assets	290.3
Asset held-for-sale	15.1
Trade and other current payables	(88.9)
Loans and borrowings	(393.5)
Deferred tax liabilities	(120.9)
Other net assets acquired	5.1
Fair value of identifiable net assets acquired	206.3
Goodwill, before impact of cash flow hedge accounting	943.4
Impact of deal-contingent derivative	(13.6)
Goodwill	929.8

"Other net assets acquired" mainly relates to deferred and current tax assets, right-of- use assets and employee benefits.

For the seven months ended 31 December 2022, the acquisition of Scholle IPN contributed revenue of €362.6 million and a profit of €2.1 million to the Group's result (excluding acquisition-related and integration costs reflected in the acquired business but including the impact of provisional fair value adjustments, of which €19.4 million of fair value adjustments on inventories). If the acquisition had occurred on 1 January 2022, management estimates that for the year ended 31 December 2022, consolidated revenue would have been €3,021.5 million and consolidated profit would have been €42.1 million (including the gains on settlement of the deal-contingent derivatives). In determining these amounts, management has assumed that the provisional fair value adjustments as of the acquisition date would have been the same if the acquisition had occurred on 1 January 2022.

The Group has incurred total acquisition-related costs relating to Scholle IPN of €21.6 million in 2021 and 2022, of which €16.5 million has been recognised in the year ended 31 December 2022 (as part of other expenses).

Consideration

The consideration of €1,149.7 million for Scholle IPN is split between cash payments, newly issued SIG shares and contingent consideration.

At the acquisition date, the Company transferred €415.5 million ($445.1 million) in cash and 33,750,000 newly issued SIG ordinary shares with a fair value of €686.8 million to the former owner as consideration for Scholle IPN. The shares were issued from authorised share capital on 23 May 2022 (see note 24). The fair value of the shares was determined by reference to SIG's share price of CHF 20.92 as of closing of the transaction on 1 June 2022. See notes 24 and 29 for additional information on the shareholding of the former ultimate beneficial owner of Scholle IPN, Laurens Last, who is also a related party to the Company via his representation on the Group's Board of Directors.

The Group had retained an amount of €18.7 million ($20.0 million) as per the share purchase agreement. This was recognised as a current other liability and payable upon finalisation of the completion accounts, when cash, third-party debt and net working capital balances as of the acquisition date would be finally determined. The completion accounts were finalised in September 2022 and resulted in a total cash consideration of €424.3 million.

The contingent consideration depends on Scholle IPN outperforming the top end of the Group's mid-term revenue growth guidance of 4-6% per year for the years ending 31 December 2023, 2024 and 2025, and would be payable in cash in three annual instalments of up to $100 million per year. Payments for growth rates ranging from 6 to 11.5% per the respective year will be made based on a pre-agreed ratchet structure. The fair value of the contingent consideration estimated as of the acquisition date is €38.6 million. The contingent consideration is presented as part of other non-current liabilities. As of 31 December 2022, the fair value of the contingent consideration is €113.2 million (see further notes 9 and 33).

Identifiable net assets acquired

The intangible assets mainly comprise customer relationships with a useful life of 12.5 years but also technology-related assets with a useful life of ten years and trademarks with a useful life of seven years. The property, plant and equipment balance primarily comprises production-related buildings and equipment.

One of the acquired production-related buildings was classified as held for sale at the acquisition date. It is now leased by the Group. The production-related building was sold by the Group in June 2022 for €15.1 million (its assessed fair value) in a sale and leaseback transaction that had been entered into before the closing of the acquisition. The transfer of the production-related building by the Group to the buyer qualifies to be accounted for as a sale under IFRS 16 Leases. The derecognition of the production-related building did not result in any gain or loss.

The fair value of trade receivables is assessed at €96.5 million. Trade receivables comprise gross contractual amounts due of €97.0 million, of which €0.5 million is expected to be uncollectible as of the acquisition date.

The Group repaid the external Euro and US Dollar loans of Scholle IPN in connection with the acquisition (see note 22). See the section "Deal-contingent derivatives" below for the impact of the settlement of a deal-contingent foreign currency derivative that the Group entered into for the repayment of the US Dollar loan.

Goodwill

Goodwill of €929.8 million for Scholle IPN has been recognised as of the acquisition date. The designation of a deal-contingent derivative as a hedging instrument in a cash flow hedge reduced the goodwill by €13.6 million (see the section "Deal-contingent derivatives" below). As of 31 December 2022, the goodwill amounts to €917.8 million. The decrease from the amount initially recognised as goodwill relates to foreign currency exchange rate changes.

The goodwill mainly comprises expectations about expansion of existing markets, expansion into new geographical markets and product categories, the skills and competences of the workforce as well as cost savings and synergies. The goodwill is not expected to be deductible for tax purposes. It has been allocated to the segments Europe, MEA, APAC and Americas.

Assessment of fair values

The Group has applied generally accepted valuation methods in the assessment of the fair values of the acquired net assets, including the multi-period excess earnings method to assess the fair value of customer relationships. The fair value of the contingent consideration has been estimated using a Monte Carlo simulation (see further note 33).

Deal-contingent derivatives

To manage the foreign currency exposure arising from the part of the consideration for Scholle IPN that was payable in US Dollar and the repayment of the acquired US Dollar loan at the acquisition date, the Group entered into deal-contingent foreign currency derivatives after having signed the share purchase agreement.

The derivative for the consideration payable in cash was designated as a cash flow- hedging instrument in April 2022. For further details about the cash flow hedge accounting, refer to the section "Accounting policy" at the end of this note.

At the acquisition date, the cumulative positive fair value changes of the derivative of €13.6 million recognised in other comprehensive income ("OCI") (net of the cost of hedging) reduced the amount of goodwill. Positive fair value changes recognised in other income in the year ended 31 December 2022 amount to €11.9 million (see notes 8 and 9). In total, the settlement of the derivative relating to the consideration paid in cash for Scholle IPN resulted in a net cash inflow of €25.5 million.

The Group did not apply hedge accounting under IFRS for the derivative relating to the repayment of the US Dollar loan. Positive fair value changes of this derivative are recognised in finance income (see notes 9 and 23). The settlement of the derivative relating to the repayment of the US Dollar loan resulted in a net cash inflow of €15.5 million.

Evergreen Asia

Overview

The Group acquired Evergreen's chilled carton business in Asia Pacific ("Evergreen Asia") on 2 August 2022 on a debt-free basis. It acquired 100% of the shares of Evergreen Packaging Korea Ltd., Evergreen Packaging (Shanghai) Co. Ltd. and Evergreen Packaging (Taiwan) Co. Ltd. from Evergreen Packaging International LLC ("Evergreen").

Evergreen Asia provides filling machines, carton sleeves, closures and after-sales service to its customers in the chilled segment for dairy and non-carbonated soft drinks and has production plants in China, South Korea and Taiwan. Evergreen Asia has approximately 400 employees.

The acquisition will allow the Group access to a new customer base in an attractive growth market in Asia, especially in China, and to expand its offering to existing customers. The Group will use its experience to further develop the chilled carton business by drawing on its regional R&D presence and innovation capabilities as well as its marketing expertise to introduce more innovative packaging formats in the Asian chilled market. Synergies are expected from commercial opportunities and cost optimisation.

The following table provides an overview of the consideration transferred, the recognised amounts of assets acquired and liabilities assumed at the acquisition date and the resulting goodwill. As of 31 December 2022, the fair value of "Other net liabilities acquired" as well as current assets and liabilities has been measured on a provisional basis.

(in € million)
Cash	329.5
Fair value of consideration	329.5
Cash and cash equivalents	7.5
Trade and other current receivables	31.2
Inventories	26.8
Property, plant and equipment	85.4
Right-of-use assets	23.7
Intangible assets	78.2
Trade and other current payables	(35.7)
Deferred tax liabilities	(33.0)
Other net liabilities acquired	(16.4)
Fair value of identifiable net assets acquired	167.7
Goodwill, before impact of cash flow hedge accounting	161.8
Impact of deal-contingent derivative	(30.9)
Goodwill	130.9

"Other net liabilities acquired" mainly relates to deferred tax assets, current tax liabilities, provisions and employee benefits.

For the five months ended 31 December 2022, the acquisition of Evergreen Asia contributed revenue of €60.2 million and a profit of €2.8 million to the Group's result (excluding acquisition-related and integration costs reflected in the acquired business but including the impact of provisional fair value adjustments). If the acquisition had occurred on 1 January 2022, management estimates that for the year ended 31 December 2022, consolidated revenue would have been €2,857.1 million and consolidated profit would have been €42.2 million (including the gain on settlement of the deal-contingent derivative). In determining these amounts, management has assumed that the provisional fair value adjustments as of the acquisition date would have been the same if the acquisition had occurred on 1 January 2022.

The Group has incurred total acquisition-related costs relating to Evergreen Asia of €10.0 million in 2021 and 2022, of which €7.2 million has been recognised in the year ended 31 December 2022 (as part of other expenses).

Consideration

The Group transferred €329.5 million ($335.9 million) in cash to Evergreen as consideration for Evergreen Asia on 2 August 2022. The final consideration was determined upon the completion settlement in February 2023, with no significant impact on the consideration transferred.

Identifiable net assets acquired

The intangible assets mainly comprise customer relationships with a useful life of 15 years but also technology-related assets with a useful life of seven years. The property, plant and equipment balance primarily comprises production-related buildings and equipment. The right of-use assets primarily relate to a prepaid land right-of-use in China.

The fair value of trade receivables is assessed at €30.3 million. Trade receivables comprise gross contractual amounts due of €30.5 million, of which €0.2 million is expected to be uncollectible as of the acquisition date.

Goodwill

Goodwill of €130.9 million for Evergreen Asia has been recognised as of the acquisition date. The designation of a deal-contingent derivative as a hedging instrument in a cash flow hedge reduced the goodwill by €30.9 million (see the section "Deal-contingent derivative" below). As of 31 December 2022, the goodwill amounts to €121.1 million. The decrease from the amount initially recognised as goodwill relates to foreign currency exchange rate changes.

The goodwill mainly comprises expectations about access to a new customer base in Asia, expansion of product offerings to existing customers, the skills and competences of the workforce as well as cost savings and synergies. The goodwill is not expected to be deductible for tax purposes. It has been allocated to the APAC segment.

Assessment of fair values

The Group has applied generally accepted valuation methods in the assessment of the fair values of the acquired net assets, including the multi-period excess earnings method to assess the fair value of customer relationships.

Deal-contingent derivative

To manage the foreign currency exposure arising from the consideration for Evergreen Asia that was payable in US Dollar, the Group entered into a deal-contingent foreign currency derivative after having signed the share purchase agreement. The derivative was designated as a cash flow-hedging instrument in April 2022. For further details about the cash flow hedge accounting, refer to the section "Accounting policy" at the end of this note.

At the acquisition date, the cumulative positive fair value changes of the derivative of €30.9 million recognised in OCI (net of the cost of hedging) reduced the amount of goodwill. Positive fair value changes recognised in other income in the year ended 31 December 2022 amount to €4.7 million (see notes 8 and 9). In total, the settlement of the derivative resulted in a net cash inflow of €35.6 million.

Former joint ventures in the Middle East

Overview

On 25 February 2021, the Company acquired the remaining 50% of the shares of its two joint ventures in the Middle East from its joint venture partner Al Obeikan Group for Investment Company CJS ("OIG"). The former joint ventures provide aseptic carton packaging solutions in the Middle East and Africa.

The fair value of the consideration transferred to OIG was €490.3 million. The Group transferred €167.0 million in cash and 17,467,632 newly issued SIG ordinary shares with a fair value of €323.3 million as consideration for the remaining shares of the joint ventures on 25 February 2021. The shares were issued from authorised share capital on 22 February 2021 (see note 24). There have been no post-closing adjustments to the consideration transferred.

The remeasurement to fair value of the Group's pre-existing 50% interest in the joint ventures resulted in a gain of €48.8 million (including reclassification of amounts in the foreign currency translation reserve to profit or loss). The gain is recognised as part of other income (see notes 8 and 9).

The net assets acquired mainly consisted of property, plant and equipment, customer relationships and loans. Cash and cash equivalents acquired amounted to €103.4 million.

For the ten months ended 31 December 2021, the acquisition of the former joint ventures contributed incremental revenue of €166.0 million and a profit of €8.5 million to the Group's result (excluding the gain on pre-existing interest in the former joint ventures and acquisition-related costs but including fair value adjustments). If the acquisition had occurred on 1 January 2021, management estimates that for the year ended 31 December 2021, consolidated revenue would have been €2,077.8 million and consolidated profit would have been €173.7 million.

The acquisition accounting was finalised in the fourth quarter of 2021 and resulted in acquired net assets of €202.8 million and goodwill of €518.4 million as of the acquisition date. Additional details about this acquisition and the outcome of the acquisition accounting are included in note 27 of the consolidated financial statements for the year ended 31 December 2021.

Accounting policy

Business combinations are accounted for using the acquisition method at the acquisition date when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group.

The consideration transferred is generally measured at fair value, as are the identifiable net assets acquired. The consideration transferred does not include amounts related to the settlement of pre- existing relationships. Such amounts are generally recognised in profit or loss.

Contingent consideration is measured at fair value at the acquisition date. When contingent consideration is payable in cash, and therefore recognised as a financial liability, it is remeasured to fair value at each reporting date until it is settled. Any changes in the fair value are recognised in profit or loss as part of other income and expenses.

Goodwill is measured at the acquisition date as the fair value of the consideration transferred (including, if applicable, the fair value of any previously held equity interests and any non-controlling interests) less the net recognised amount (which is generally fair value) of the identifiable assets acquired and liabilities assumed. If the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities incurred in connection with a business combination, are expensed as incurred.

Subsequent changes in the fair value of acquired net assets or contingent consideration, and recognition of additional assets and liabilities, that result from new or additional information about facts and circumstances existing at the acquisition date that is obtained during the measurement period (maximum one year from the acquisition date) are measurement-period adjustments. Such adjustments are recognised retrospectively, and comparative information restated as if the accounting for the business combination had been completed at the acquisition date. After the end of the measurement period, the acquisition accounting is only adjusted to correct an error.

In a business combination achieved in stages, the equity interest in the acquired entity that was held by the Group before obtaining control is treated as if it were sold and subsequently repurchased. The pre-existing interest in the acquired entity is remeasured at fair value at the acquisition date. Any resulting gain or loss is recognised in profit or loss. Amounts recognised in other comprehensive income in prior periods that are related to the previously held interest are treated on the same basis as if the Group had disposed of the interest to a third party.

Cash flow hedging of the foreign currency risk on forecasted business combinations

To manage the foreign currency exposure arising from the US Dollar cash considerations for Scholle IPN and Evergreen Asia, the Group entered into deal-contingent foreign currency derivatives. These two derivatives have been accounted for as cash flow hedges. The derivatives were designated as hedging instruments when the respective acquisitions were assessed to be highly probable. The contingency element of the derivatives does not have a significant impact on the change in fair value of the derivatives during the hedge designation period.

From the hedge designation dates in April 2022, the effective portion of the fair value changes of the deal-contingent derivatives is recognised and accumulated in a hedging reserve in OCI (net of tax). The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item from inception of the hedge. Fair value changes up to inception of the hedges are recognised in other income and expenses.

Accounting policy (continued)

The Group designated only the change in fair value of the spot component of the respective derivative as the hedging instrument. The hedge relationship is therefore highly effective. The change in fair value of the forward component of the derivative is accounted for separately as a cost of hedging and recognised in equity. For simplicity, the cost of hedging is not presented separately in a cost of hedging reserve but presented net of the accumulated fair value changes in the hedging reserve. The cost of hedging is not significant.

The cash received on settlement of the hedging instrument when an acquisition takes place is not part of the consideration paid to the seller. However, the accumulated fair value changes in OCI (less the cost of hedging) are treated as a basis adjustment to goodwill under IFRS, ie. they impact the amount of goodwill recognised upon the acquisition.

Significant judgements and estimates

Significant judgements and estimates were made by management relating to the accounting for the acquisitions of Scholle IPN and Evergreen Asia in 2022 and of the remaining shares of the former joint ventures in 2021. For example, the assessments of the fair value of the contingent consideration for Scholle IPN and customer relationships involve significant judgement and estimates. The assessment of the fair value of the pre-existing interest in the former joint ventures also involved significant judgement and estimates.

28 Joint ventures

The Group does not have any significant investments in joint ventures as of 31 December 2022 and 31 December 2021. It has only a small investment in a joint venture in Japan (see note 26). The Company acquired the remaining 50% of the shares of its two joint ventures in the Middle East on 25 February 2021 (see note 27).

Overview

The Japanese joint venture, DNP

• SIG Combibloc Co., Ltd, was formed in 2018 with the joint venture partner DNP and provides aseptic carton packaging solutions in Japan.

There have been no significant transactions with the joint venture in Japan in the years ended 31 December 2022 and 31 December 2021. Its net assets are also not significant.

Summary joint venture financial in formation

The following table provides certain summary financial information for the year ended 31 December 2021, representing the amounts presented in the IFRS financial statements of the current and former joint ventures and not adjusted for the Group's ownership percentage.

(In € million)	Revenue	Expenses	Profit after tax
2021
Al Obeikan SIG Combibloc Company Ltd., Saudi Arabia1	14.9	(15.4)	(0.5)
SIG Combibloc FZCO, UAE1	17.6	(20.8)	(3.2)
DNP • SIG Combibloc Co., Ltd., Japan	1.1	(0.6)	0.5
Total	33.6	(36.8)	(3.2)

1 Information presented for January-February 2021.

Joint venture impact on the consolidated financial statements

(In € million)	2022	2021
Carrying amount as of 1 January	0.6	184.5
Share of profit/(loss) (net of income tax)	-	(1.6)
Derecognition of pre-existing interest in the former joint ventures
in the Middle East (business combination achieved in stages)	-	(178.8)
Effect of movements in exchange rates	-	0.4
Other	-	(3.9)
Carrying amount as of 31 December	0.6	0.6

Accounting policy

The accounting policy for joint ventures is included in note 26.

The Group's share of the profit or loss of joint ventures (net of income tax) is presented as part of the Group's profit or loss from operating activities due to the Group's close interaction with its current and former joint ventures.

29 Related parties

The Company has related party relationships with its shareholders, subsidiaries, a joint venture in Japan and key management.

Certain information and updates about the Company's related parties is provided in this note. Information about the acquisitions of Scholle IPN and Evergreen Asia in 2022 and the remaining 50% of the shares of the joint ventures in the Middle East in 2021 is included in note 27. The subsidiaries acquired in the Scholle IPN and Evergreen Asia acquisitions are listed in note 26.

Shareholders

The Company's shares are listed on SIX Swiss Exchange.

The members of the Group Executive Board directly held 0.14% and indirectly held 0.06% of the Company's shares as of 31 December 2022 (directly 0.2% as of 31 December 2021). The members of the Board of Directors directly held 0.08% and indirectly held 9.7% of the Company's shares as of 31 December 2022 (directly 0.08% and indirectly 0.5% as of 31 December 2021).

Laurens Last (via CLIL, subsequently renamed Clean Holding B.V) received 33.75 million shares in the Company as part of the consideration for Scholle IPN and, with additional shares he has purchased in the open market, indirectly held 9.19% of the Company's shares as of 31 December 2022 according to the disclosure notifications reported to the Company and published by the Company via the electronic publishing platform of SIX Swiss Exchange (see also the section "Key management" below and note 24).

Key management

The Company's key management includes the members of the Group Executive Board and the Board of Directors.

Laurens Last, the former ultimate beneficial owner of Scholle IPN, joined the Board of Directors on 7 April 2022 and thereby became a related party to the Company. See note 4 for other organisational changes in the Group Executive Board and the Board of Directors that took place in the year ended 31 December 2022 or were announced before the consolidated financial statements were approved on 23 February 2023.

The table below includes information about compensation to the Group Executive Board.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Short-term employee benefits	7.6	6.7
Post-employment benefits	0.5	0.4
Share-based payments	3.1	2.3
Termination benefits	0.6	1.1
Total compensation to the Group Executive Board	11.8	10.5

The expense of €0.6 million recognised for termination benefits (garden leave agreement) in the year ended 31 December 2022 relates to Frank Herzog, the former Chief Financial Officer, who resigned as of 31 December 2022.

The expense of €1.1 million recognised for termination benefits (garden leave and non- compete agreement) in the year ended 31 December 2021 related to Lawrence Fok, the former President and General Manager of Asia Pacific, who left his role on the Group Executive Board as of 31 December 2021. Due to the Group's growth in Asia Pacific, his role was split into two newly created roles with effect from 1 January 2022: a President and General Manager of Asia Pacific North and a President and General Manager of Asia Pacific South (see also note 4). Lawrence Fok left the Group in 2022.

The employee terminations have been reflected in the measurement of the amount recognised as a share-based payment expense in the respective periods, considering the good and bad leaver clauses in the share-based payment plans in which the former members of the Group Executive Board participated.

Compensation to the members of the Board of Directors totalled €2.3 million for the year ended 31 December 2022 (€1.8 million for the year ended 31 December 2021). The members of the Board of Directors receive part of their compensation in blocked shares.

Information about the participation of the members of the Group Executive Board and the Board of Directors in share-based payment plans and arrangements is included in note 31.

Further information about compensation paid to the members of the Group Executive Board and the Board of Directors can be found in the Compensation Report included in the 2022 Annual Report. Details about these persons' SIG shareholdings are included in the section "Shareholders" above and in the Compensation Report.

Other related parties

The Group's subsidiaries are listed in note 26. Certain information about the current and former joint ventures is included in note 28.

Related party transactions

Since the former joint ventures in the Middle East became fully owned subsidiaries on 25 February 2021, the Company has not had any significant related party transactions. The nature of the Company's related party relationships, balances and transactions for the year ended 31 December 2022 has not changed compared with information disclosed in the consolidated financial statements for the year ended 31 December 2021, with one significant exception.

On 1 June 2022, the Group acquired Scholle IPN from CLIL. CLIL is controlled by Laurens Last. See note 27 for details about transaction values and outstanding balances concerning the acquisition. Notes 25 and 33 provide additional information about the contingent portion of the consideration for Scholle IPN.

Following Laurens Last's election to the Board of Directors on 7 April 2022, companies controlled or jointly controlled by him are related parties to the Company. However, there have been no significant transactions and there are no outstanding balances as of 31 December 2022 relating to companies controlled or jointly controlled by Laurens Last, except for an outstanding payable of €1.6 million.

The Group has entered into a transitional service agreement in relation to an entity controlled by Laurens Last that was not part of the acquisition of Scholle IPN. This agreement, ending in May 2023, has no significant impact on the Group.

The following table provides information about related party transactions and balances not covered above.

	Transaction values for the year ended		Balance outstanding as of
(In € million)	31 Dec. 2022	31 Dec. 2021	31 Dec. 2022	31 Dec. 2021
Joint ventures ¹
Sale of goods and services (sleeves, filling machines and related goods and services) and other transactions/Net receivables	4.4	9.5	3.0	0.4
Purchase of goods	-	0.1	-	-

¹ Transactions with the former joint ventures in the Middle East are reported until 25 February 2021, when they became fully owned subsidiaries.

There were no other significant related party transactions during the years ended 31 December 2022 and 31 December 2021. As of 31 December 2022 and 31 December 2021, the Group had no commitments to incur capital expenditure with related parties.

OUR PEOPLE

This section covers information about the Group's employee-related expenses and pension plans as well as the Group's share-based payment plans and arrangements. Details about compensation concerning the Group's key management are included in note 29 on related parties.

30 Employee benefits

The Group operates various defined benefit plans, including the defined benefit plans of Scholle IPN and Evergreen Asia. The largest defined benefit plan, also after the acquisitions, is in Switzerland. In addition, the Group has a number of defined contribution plans.

Over view of employee benefits

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Salaries and wages accrued	46.5	47.0
Provision for annual leave	14.4	9.0
Provision for other employee benefits	6.6	2.2
Net defined benefit obligations:
Pension benefit liabilities	98.0	126.8
Total employee benefit liabilities	165.5	185.0
Current	60.9	56.0
Non-current	104.6	129.0
Total employee benefit liabilities	165.5	185.0

The Group has a net defined benefit asset of €114.6 million as of 31 December 2022 (€230.2 million as of 31 December 2021). This relates to the defined benefit pension plan in Switzerland. The Group's net defined benefit liabilities relate to defined benefit pension plans in other countries.

Personnel expenses

Personnel expenses recognised in the statement of profit or loss and other comprehensive income were €482.4 million in the year ended 31 December 2022 (€387.3 million in the year ended 31 December 2021), of which €33.0 million relates to contributions to defined contribution plans (€27.6 million in the year ended 31 December 2021).

Defined benefit pensionplans

The Group makes contributions to defined benefit pension plans. It operates defined benefit pension plans in countries including Austria, France, Germany, India, Indonesia, Saudi Arabia, South Korea, Switzerland, Taiwan, Thailand, the UAE and the USA. The majority of the Group's pension obligations are in Switzerland. The retirement plans are subject to governmental regulations relating to how they are funded. The Group usually funds its retirement plans at an amount equal to the annual minimum funding requirements specified by the government regulations covering each plan.

This note generally includes aggregated disclosures in respect of the Group's pension plans as the plans are not exposed to materially different risks. However, certain information relating to the Swiss retirement plan is disclosed separately as it is the Group's largest pension plan.

As of 31 December 2022, the Swiss retirement plan comprises 70% of the present value of the Group's pension plan obligations (73% as of 31 December 2021). As of 31 December 2022, the fair value of the assets of the Swiss retirement plan exceeded the present value of its pension obligations by €176.0 million (€230.2 million as of 31 December 2021). However, see the section "Expense recognised in other comprehensive income, including impact of the asset ceiling" below for the impact of the asset ceiling in the year ended 31 December 2022. An assessment of the investment strategy for the Swiss retirement plan is performed yearly.

Expected annual contributions to the Group's defined benefit pension plans during the year ending 31 December 2023 are estimated to be €9.6 million. The Group's pension plans had a weighted average duration of 13 years as of 31 December 2022 (13 years as of 31 December 2021).

Movement in net defined benefit obligation

Information about the net defined benefit obligation as of and for the year ended 31 December 2022 and the year ended 31 December 2021 is included below.

	Defined benefit obligation		Fair value of plan assets
(In € million)	2022	2021	2022	2021
Carrying amount as of the beginning of the year	484.1	509.2	(587.5)	(559.1)
Service cost	8.9	8.4	-	-
Interest expense/(income)	3.9	1.6	(3.1)	(0.6)
Administrative expenses	-	-	0.7	0.5
Curtailments and settlements	(0.4)	(2.0)	-	-
Total expense/(income) recognised in profit or loss	12.4	8.0	(2.4)	(0.1)
Actuarial (gains)/losses arising from:
Demographic assumptions	8.7	(18.0)	-	-
Financial assumptions	(45.7)	(4.0)	-	-
Return on plan assets, excluding interest income	-	-	67.0	(33.2)
Change in asset ceiling	-	-	-	-
Total remeasurement (gains)/losses included in other comprehensive income	(37.0)	(22.0)	67.0	(33.2)
Contributions by the Group	-	-	(6.2)	(5.9)
Contributions by plan participants	1.7	1.8	(1.7)	(1.8)
Benefits paid by the plans	(36.1)	(38.1)	36.1	38.1
Addition through business combinations	60.1	9.3	(59.0)	-
Effect of movements in exchange rates	16.7	15.9	(26.2)	(25.5)
Total other movements	42.4	(11.1)	(57.0)	4.9
Carrying amount as of the end of the year	501.9	484.1	(579.9)	(587.5)
Comprised of:
Swiss retirement plan	349.5	352.9	(525.5)	(583.1)
All other plans	152.4	131.2	(54.4)	(4.4)
Carrying amount as of the end of the year	501.9	484.1	(579.9)	(587.5)
Included in the statement of financial position as:
Employee benefits (asset)
Employee benefits (liability)
Total net defined pension benefits

	Impact of asset ceiling		Net defined benefit liability/(asset)
(In € million)	2022	2021	2022	2021
Carrying amount as of the beginning of the year	-	-	(103.4)	(49.9)
Service cost	-	-	8.9	8.4
Interest expense/(income)	-	-	0.8	1.0
Administrative expenses	-	-	0.7	0.5
Curtailments and settlements	-	-	(0.4)	(2.0)
Total expense/(income) recognised in profit or loss	-	-	10.0	7.9
Actuarial (gains)/losses arising from:
Demographic assumptions	-	-	8.7	(18.0)
Financial assumptions	-	-	(45.7)	(4.0)
Return on plan assets, excluding interest income	-	-	67.0	(33.2)
Change in asset ceiling	60.1	-	60.1	-
Total remeasurement (gains)/losses included in other comprehensive income	60.1	-	90.1	(55.2)
Contributions by the Group	-	-	(6.2)	(5.9)
Contributions by plan participants	-	-	-	-
Benefits paid by the plans	-	-	-	-
Addition through business combinations	-	-	1.1	9.3
Effect of movements in exchange rates	1.3	-	(8.2)	(9.6)
Total other movements	1.3	-	(13.3)	(6.2)
Carrying amount as of the end of the year	61.4	-	(16.6)	(103.4)
Comprised of:
Swiss retirement plan	61.4	-	(114.6)	(230.2)
All other plans	-	-	98.0	126.8
Carrying amount as of the end of the year	61.4	-	(16.6)	(103.4)
Included in the statement of financial position as:
Employee benefits (asset)			(114.6)	(230.2)
Employee benefits (liability)			98.0	126.8
Total net defined pension benefits			(16.6)	(103.4)

Expense recognised in profit or loss

The net pension expense is recognised in the following components in the statement of profit or loss and comprehensive income.

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Cost of sales	4.7	3.7
Selling, marketing and distribution expenses	1.0	0.7
General and administrative expenses	4.3	3.5
Total net pension expense	10.0	7.9
thereof the Swiss retirement plan	5.3	5.1

Expense recognised in other comprehensive income, including impact of the asset ceiling

The remeasurement of the Group's defined benefit pension plans as of 31 December 2022 resulted in a €81.8 million decrease in other comprehensive income (net of tax), of which €101.6 million relates to the Group's Swiss pension plan. The decrease is due to negative asset performance, partially offset by an increase in the discount rate, and to reaching the asset ceiling for the first time.

An increase in the discount rate in the year ended 31 December 2022 resulted in a significant decrease of the asset ceiling, which limited the amount that is recognised as a net defined benefit asset for the Group's Swiss pension plan to €114.6 million as of 31 December 2022 (€230.2 million as of 31 December 2021). The recognised asset as of 31 December 2022 is limited to the present value of future economic benefits available in the form of reductions in future contributions to the plan. This first-time impact of the asset ceiling for the Group is included in the amount recognised in other comprehensive income.

The remeasurement of the Group's defined benefit pension plans in the year ended 31 December 2021 resulted in an increase of €45.7 million, net of income tax, in other comprehensive income.

Plan assets

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Equity instruments	125.8	163.9
Debt instruments	246.2	226.6
Real estate	173.3	177.0
Other	34.6	20.0
Total plan assets	579.9	587.5

Approximately 91% of total plan assets are held by the Swiss retirement plan as of 31 December 2022 (99% as of 31 December 2021). The debt instruments consist principally of corporate and government bonds. The equity and debt instrument values are based on quoted market prices in active markets. The real estate is held through unlisted funds. The investment policy of the Swiss retirement plan is to target an asset mix of around 25% equity instruments, 45% debt instruments and 25% real estate funds, and to hold 5% in cash.

Actuarial assumptions

The amounts recognised under the Group's defined benefit pension plans are determined using actuarial methods. The actuarial valuations involve assumptions regarding discount rates, expected salary increases and the retirement age of employees. These assumptions are reviewed at least annually and reflect estimates as of the measurement date. Any change in these assumptions will impact the amounts reported in the statement of financial position, plus the net pension expense or income that may be recognised in future years. The mortality table used for the Swiss retirement plan for 2022 and for 2021 was BVG 2020 GT.

While the Swiss retirement plan does not provide for compulsory benefit increases for pensioners, increases have been granted from time to time at the discretion of the foundation board, depending on the funding situation at the time.

The discount rate and future salary increases are the assumptions with the most significant effect on the defined benefit obligation. They are presented in the table below.

	Swiss retirement plan		All plans
(In %)	As of 31 Dec. 2022	As of 31 Dec. 2021	As of 31 Dec. 2022	As of 31 Dec. 2021
Discount rates Future salary increases	2.30% 2.00%	0.30% 1.50%	1.4% - 7.3% 0.0% - 9.0%	0.3% - 6.8% 0.0% - 9.0%

The table below shows the effect on the defined benefit obligation of a change in the discount rate and future salary increases.

	Swiss retirement plan		All plans
(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021	As of 31 Dec. 2022	As of 31 Dec. 2021
Discount rates
50 basis points increase	(4.6)	(5.1)	(13.7)	(15.4)
50 basis points decrease	4.9	12.0	15.0	23.7
Future salary increases
50 basis points increase	0.9	1.2	2.6	2.8
50 basis points decrease	(0.9)	(1.1)	(2.3)	(2.7)

For the year ended 31 December 2021, a 50 basis points decrease of the discount rate for the Swiss retirement plan would have resulted in a negative discount rate, which explains the increased sensitivity to downward changes in discount rates.

Accounting policy

Short-term employee benefits

Short-term employee benefits are expensed in profit or loss as the related services are provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit- sharing plans and outstanding annual leave balances if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably.

Defined benefit plans

The Group's obligation with respect to its defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits to which employees are entitled in return for their services in the current and prior years, discounting that amount to determine the present value of the Group's obligation and then deducting the fair value of any plan assets. The discount rate used is the yield on high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the Group's obligations. The calculations are performed annually by qualified actuaries using the projected unit credit method.

If the calculation results in a potential asset for the Group (such as for the Group's Swiss retirement plan), the recognised asset is limited to the present value of economic benefits available in the form of reductions in future contributions to the plan (the case for the Swiss retirement plan) or any future refunds from the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined liability, comprising actuarial gains and losses, the return on plan assets (excluding interest) and, if any, the effects of the asset ceiling (excluding interest), are recognised immediately in other comprehensive income.

The net interest expense/(income) on the net defined benefit liability/(asset) for the period is determined by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined liability/(asset) as of that time, taking into account any changes from contributions and benefit payments. Net interest expense and other plan expenses are recognised in profit or loss.

Accounting policy (continued)

If the benefits of a plan are changed or a plan is curtailed, the resulting change in benefit that relates to past services or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Defined contribution plans

The Group's obligation for contributions to defined contribution plans is expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The Group has no further obligations once the contributions have been paid.

Termination benefits

Termination benefits, when applicable, are payable when employment is terminated by the Group before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for such benefits. Termination costs are expensed when the Group can no longer withdraw the offer of the benefits or when the Group recognises any related restructuring costs, whichever occurs earlier.

Significant judgements and estimates

Amounts recognised under the Group's defined benefit pension plans are determined using actuarial methods. These actuarial valuations involve various assumptions that reflect estimates as of the measurement date. See the section "Actuarial assumptions" above for an overview of the impact of any change in these assumptions.

31 Share-based payment plans and arrangements

The Group has share-based long-term incentive plans for certain members of management and other key employees and talents. The members of the Board of Directors receive a part of their total compensation under share-based payment arrangements. These plans and arrangements have an insignificant impact on the Group's result.

The Group expects to settle its obligations under its equity-settled plans and arrangements using own shares (treasury shares) or, alternatively, using shares issued from its conditional share capital (see note 24). The majority of the Group's share-based payment plans and arrangements are equity-settled.

Share-based long-term in centive plans for SIG employees

Performance share unit plan

Since 2019, the Group has granted performance share units ("PSUs") to the members of the Group Executive Board and certain other members of management on an annual basis. The PSU plans have equivalent terms and vesting conditions, including a three-year service vesting condition.

One PSU represents the contingent right to receive one SIG share. The number of granted PSUs is determined by dividing each participant's award under the plan by the volume- weighted average of the closing prices of the SIG share over the last 20 trading days prior to the grant date as per the PSU regulations (for the 2019 to 2021 plans: by the fair value of one PSU at the grant date as per IFRS). The number of PSUs that vest depends on the Group's long-term performance over the three-year vesting period. The plans include the following vesting conditions:

•	Service condition: Continuous employment through to the vesting date.
•	Two non-market performance conditions: Achievement of a cumulative diluted adjusted earnings per share target and a cumulative free cash flow target.
•	One market performance condition: Achievement of a relative total shareholder return target, measured relative to the SPI® ICB Industry 2000 "Industrials" Total Return Index (with a vesting factor capped at 1.0 for a negative absolute TSR).

At vesting, the three performance conditions are first assessed individually to determine the level of achievement of the set targets (in a range from 0% to 200%). The achievement percentage of each performance condition is then combined based on a relative weighting of the performance conditions (50% for the relative total shareholder return target and 25% each for the earnings per share and cash flow targets). The combined vesting multiple determines how many shares the plan participants are entitled to at the end of the vesting period.

The fair value of one PSU is calculated based on a Monte Carlo simulation model, which reflects the probability of over- or underachieving the market performance condition. The model also takes into account various inputs such as the closing share price of one SIG share on the grant date and adjusts for expected dividends (discounted at a risk-free interest rate) to which the plan participants are not entitled until the PSUs vest after three years.

The table below provides an overview of the annual management PSU plans.

	Overview of PSU plans
	2022	2021	2020	2019
Grant date	13 June 2022	1 April 2021	1 April 2020	1 April 2019
Vesting date	31 March 2025	31 March 2024	31 March 2023	31 March 2022
Fair value of one PSU at grant date (in CHF)	19.56	22.31	15.05	9.49
Number of employees granted PSUs	15	9	8	9
Granted number of PSUs	234,753	201,707	342,198	537,414
thereof to members of the Group
Executive Board	215,169	187,139	325,586	495,263

The table below provides a reconciliation of the outstanding management PSUs.

	Outstanding PSUs
Number of PSUs	2022	2021
As of 1 January	692,119	538,198
Granted PSUs	234,753	201,707
Vested PSUs (2019 plan)	(350,814)	-
Forfeited PSUs	(50,348)	(47,786)
As of 31 December	525,710	692,119
thereof held by members of the Group Executive Board	491,547	522,059

A total of 350,814 PSUs under the 2019 PSU plan vested on 31 March 2022, of which 205,482 PSUs relate to current members of the Group Executive Board. Based on the achievement of the targets described above, the participants were entitled to 631,469 shares, of which 369,870 shares relate to current members of the Group Executive Board.

The Group settled its obligation under the 2019 PSU plan by delivering treasury shares (see note 24). The total amount of €4.0 million recognised as a share-based payment expense for the 2019 PSU plan has been recognised as a decrease in equity. The difference between this amount and the sum of the cost of the delivered treasury shares is presented as a reduction of additional paid-in capital.

One member of the Group Executive Board resigned as of 31 December 2022, while another former member of the Group Executive Board announced in October 2021 that he would resign (see note 29). As per the good and bad leaver clauses in the PSU plan regulations, these terminations resulted in forfeitures of a certain number of granted PSUs.

Restricted share unit plan

Since 2019, the Group has granted a small number of restricted share units ("RSUs") to a limited number of employees on an annual basis. One RSU represents the contingent right to receive one SIG share, subject to the fulfilment of a three-year service vesting condition.

RSUs under the 2019 RSU plan vested on 31 March 2022. The Group settled its obligation by delivering treasury shares. Under the 2022 RSU plan, 6,831 of the granted RSUs relate to a member of the Group Executive Board.

Equity investment plan

In 2020, the Group introduced an annual equity investment plan ("EIP") for a wider group of management in leadership positions and other key employees and talents, under which the participants may choose to invest in SIG shares at market value. The shares are blocked for three years. For each purchased share, the Group grants the participants two matching options to purchase another two shares at a pre-defined exercise price at the end of a three-year vesting period.

The grant date for the 2022 EIP award was 27 May 2022 (31 May 2021 for the 2021 EIP). Under the 2022 EIP, 69 employees were granted a total of 149,450 options (64 employees were granted a total of 124,680 options under the 2021 EIP). The fair value of one option, calculated using the Black-Scholes model, was CHF 2.74 as of the grant date for the 2022 EIP (CHF 3.63 for the 2021 EIP). A total of 459,272 options under all EIPs were outstanding as of 31 December 2022 (316,382 as of 31 December 2021).

Integration plans

As part of the integration of Scholle IPN and Evergreen Asia into the Group, 41 employees who are key to the integration were granted a total of 302,792 PSUs under two smaller PSU integration plans in August 2022. One of the plans is cash-settled. The number of PSUs that will vest on 31 December 2025 depends on the achievement of certain targets, including targets linked to the performance and integration of the two acquired businesses.

Share-based payment arrangements for members of the Board of Directors

The members of the Board of Directors receive 40% of their total compensation in SIG shares that are blocked for three years. The grant date is the date of the Annual General Meeting (normally held in April), when the total compensation package for the next term of office is approved. The compensation is paid out four times during the one-year term of office (ie. there are four award dates, each relating to work performed during the quarter before the respective award date). The fair value of one blocked share is calculated based on the closing share price of one SIG share on the grant date.

The Group granted 39,932 blocked shares to the members of the Board of Directors in the year ended 31 December 2022 (30,583 blocked shares in the year ended 31 December 2021). The fair value of one granted instrument was CHF 23.40 as of the grant date in the year ended 31 December 2022 (CHF 23.10 in the year ended 31 December 2021). The blocked shares have been delivered using treasury shares (see note 24).

In 2019, two members of the Board of Directors received 14,236 RSUs instead of blocked shares. These RSUs vested in the year ended 31 December 2022. The Group settled its obligation by delivering 14,236 treasury shares.

Share-based payment expense

The share-based payment expense recognised as a personnel expense for the year ended 31 December 2022 relating to the PSU, RSU, equity investment and integration plans for SIG employees amounts to €4.8 million, of which €3.1 million relates to members of the Group Executive Board (€3.1 million for the year ended 31 December 2021, of which €2.3 million related to members of the Group Executive Board).

The share-based payment expense recognised as part of general and administrative expenses for the year ended 31 December 2022 relating to the arrangement for the Board of Directors amounts to €0.9 million (€0.7 million for the year ended 31 December 2021).

Accounting policy

The Group's share-based payment plans and arrangements are primarily equity-settled payment arrangements.

For the equity-settled plans, the grant date fair value of the awards is recognised as an expense, with a corresponding increase in equity (retained earnings), over the vesting period. The amount recognised as an expense is adjusted to reflect the number of instruments awarded for which the related service and any non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of instruments awarded that meet the related service and any non-market performance conditions at the vesting date. Any market performance conditions are reflected in the grant date fair valuation of the instruments awarded and there is no true-up during the vesting period or at the vesting date for differences between expected and actual outcomes. If there is no vesting period, the grant date fair value is immediately recognised as an expense.

For cash-settled plans, the fair value of the amounts payable to employees is recognised as an expense, with a corresponding increase in liabilities (employee benefits), over the vesting period. The liability is remeasured at each reporting date and at the settlement date so that the ultimate liability equals the cash payment on the settlement date. Any changes in the fair value of the liability are recognised in profit or loss.

OTHER

This section provides details about the Group's income tax exposure and different categories of financial instruments (including derivative instruments). It further covers fair value information, off-balance sheet items and subsequent events.

32 Income tax

This note covers the Group's current and deferred income tax exposure, with corresponding impacts on the statement of profit or loss and other comprehensive income and the statement of financial position.

Management believes that its accruals for tax liabilities are sufficient for all open tax years based on its assessment of existing facts, prior experiences and interpretations of tax laws.

Management does not yet have sufficient information to determine the quantitative impact of the major reform of the international tax system initiated by the OECD, under which multinational corporations will be subject to a global minimum tax rate of 15% from 2024 onwards. The Group will be negatively impacted by the reform in countries where the corporate tax rate is currently below 15%. Management is closely monitoring the nature and timing of legislative tax changes in the countries in which the Group operates.

Amounts recognised in profit or loss

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Current year	(88.6)	(78.0)
Adjustments for prior years	1.3	7.5
Current tax expense	(87.3)	(70.5)
Origination and reversal of temporary differences	36.6	18.5
Tax rate modifications	0.4	-
Recognition of previously unrecognised tax losses	-	1.4
Adjustments for prior years	(0.7)	(1.7)
Deferred tax benefit	36.3	18.2
Income tax expense	(51.0)	(52.3)

Amounts recognised in other comprehensive in come

The Group has recognised in other comprehensive income a deferred tax income of €8.3 million relating to the remeasurement of defined benefit plans for the year ended 31 December 2022 (€9.5 million deferred tax expense for the year ended 31 December 2021).

Reconciliation of effective tax expense

The following table presents the Group's reconciliation between profit before income tax and the income tax expense. The reconciliation is based on the Company's applicable Swiss tax rate and adjusts for the effect of tax rates applied by Group companies in other jurisdictions as the Group's business activities and taxable income are mostly located outside Switzerland. The effect of tax rates in foreign jurisdictions comprises the difference between the Company's applicable Swiss tax rate and the statutory tax rates per each individual jurisdiction. The Company's applicable Swiss tax rate of 13.94% for the year ended 31 December 2022 is slightly lower than for the comparative period (14.29%).

(In € million)	Year ended 31 Dec. 2022	Year ended 31 Dec. 2021
Profit before income tax	88.8	224.4
Income tax using the Swiss tax rate of 13.94% (2021: 14.29%)	(12.4)	(32.1)
Effect of tax rates in foreign jurisdictions	(16.1)	(8.4)
Non-deductible expenses	(21.2)	(9.8)
Tax-exempt income	14.0	8.8
Withholding tax	(9.5)	(8.1)
Tax rate modifications	0.4	-
Recognition of previously unrecognised tax losses	-	1.4
Unrecognised tax losses and temporary differences	(2.7)	(4.2)
Tax uncertainties	(1.2)	(1.2)
Tax on undistributed profits	(2.9)	(4.5)
Adjustments for prior years	0.6	5.8
Income tax expense	(51.0)	(52.3)

Current tax assets and liabilities

Current tax assets of €18.0 million as of 31 December 2022 (€4.4 million as of 31 December 2021) represent the amount of income taxes recoverable with respect to current and prior periods and arise from the payment of tax in excess of the amounts due to the relevant tax authorities. Current tax liabilities of €46.3 million as of 31 December 2022 (€42.1 million as of 31 December 2021) represent the amount of income taxes payable with respect to current and prior periods.

Current tax liabilities as of 31 December 2022 include an amount of €1.1 million (€5.8 million as of 31 December 2021) for prior periods that will be reimbursed by PEI Holdings Company LLC (a company associated with Reynolds Group Holdings Limited, the owner of the Group prior to 13 March 2015) in line with the share purchase agreement that was signed when Onex acquired the Group in 2015. The same amount has been recognised as part of other receivables.

Recognised deferred tax assets and liabilities

(In € million)	As of 31 Dec. 2022	As of 31 Dec. 2021
Included in the statement of financial position as:
Deferred tax assets	60.0	46.0
Deferred tax liabilities	(261.3)	(147.4)
Total recognised net deferred tax liabilities	(201.3)	(101.4)

The following table provides details about the components of deferred tax assets and liabilities.

(In € million)	PP&E	Intangible assets	Inventories	Receivables	Other pay- ables
Carrying amount as of 1 Jan. 2021	(86.0)	(103.5)	16.9	29.4	23.8
Additions through business combination	(2.5)	(7.2)	(0.8)	-	-
Recognised in profit or loss	(26.0)	21.4	12.5	0.2	5.5
Recognised in other comprehensive income	-	-	-	-	-
Effect of movements in exchange rates	2.8	(3.2)	0.9	(0.6)	2.9
Carrying amount as of 31 Dec. 2021	(111.7)	(92.5)	29.5	29.0	32.2
Carrying amount as of 1 Jan. 2022	(111.7)	(92.5)	29.5	29.0	32.2
Additions through business combinations	(41.6)	(87.6)	(3.3)	0.9	1.8
Recognised in profit or loss	9.6	22.1	(2.9)	(30.0)	6.8
Recognised in other comprehensive income	-	-	-	-	-
Effect of movements in exchange rates	(0.1)	(1.8)	0.3	0.4	(0.7)
Carrying amount as of 31 Dec. 2022	(143.8)	(159.8)	23.6	0.3	40.1

(In € million)	Deferred revenue	Unremitted earnings	Other items	Net deferred tax assets/ (liabilities)
Carrying amount as of 1 Jan. 2021	27.6	(18.0)	7.9	(101.9)
Additions through business combination	-	-	1.1	(9.4)
Recognised in profit or loss	7.9	(4.5)	1.2	18.2
Recognised in other comprehensive income	-	-	(9.5)	(9.5)
Effect of movements in exchange rates	1.0	-	(2.6)	1.2
Carrying amount as of 31 Dec. 2021	36.5	(22.5)	(1.9)	(101.4)
Carrying amount as of 1 Jan. 2022	36.5	(22.5)	(1.9)	(101.4)
Additions through business combinations	0.1	(21.3)	9.8	(141.2)
Recognised in profit or loss	36.1	(2.9)	(2.5)	36.3
Recognised in other comprehensive income	-	-	8.3	8.3
Effect of movements in exchange rates	0.9	0.1	(2.4)	(3.3)
Carrying amount as of 31 Dec. 2022	73.6	(46.6)	11.3	(201.3)

"Other payables" mainly includes a deferred tax asset relating to liabilities for various customer incentive programmes. "Other items" mainly includes net deferred tax assets or liabilities relating to employee benefits and tax loss carry-forwards. Tax loss carry- forwards recognised as a deferred tax asset amount to €9.4 million as of 31 December 2022 (€2.9 million as of 31 December 2021).

The increase in net deferred tax liabilities since 31 December 2021 is mainly due to the acquisitions of Scholle IPN and Evergreen Asia in 2022 (see note 27).

Unrecognised deferred tax assets

Deferred tax assets have not been recognised with respect to tax losses of €9.2 million (gross amount €28.1 million) as of 31 December 2022 (€8.1 million, gross amount €26.6 million as of 31 December 2021) because management has assessed that it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom. Under the current applicable tax legislation, €22.6 million of the unrecognised tax losses as of 31 December 2022 does not expire while €2.6 million expires in three to five years and €2.9 million expires after more than five years.

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or in other comprehensive income.

For subsidiaries in which the profits are not considered to be permanently reinvested, the additional tax consequences of future dividend distributions are recognised as income tax expense.

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years. Current tax assets and liabilities are only offset if certain criteria are met.

Deferred tax

Deferred tax is recognised, using the balance sheet method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and joint arrangements to the extent that they will probably not reverse in the foreseeable future and the Group is in a position to control the timing of the reversal of the temporary differences. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for individual subsidiaries in the Group. The recoverability of deferred tax assets is reviewed at each reporting date. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax assets and liabilities are only offset if certain criteria are met.

Significant judgements and estimates

Determining the Group's worldwide income tax liability requires significant judgement and the use of estimates and assumptions, some of which are highly uncertain. Each tax jurisdiction's laws are complex and subject to different interpretations by the taxpayer and the respective tax authorities. Significant judgement is required in evaluating the Group's tax positions, including evaluating uncertainties. To the extent actual results differ from these estimates relating to future periods and depending on the tax strategies that the Group may implement, the Group's financial position may be directly affected.

Deferred tax assets represent deductions available to reduce taxable income in future years. The Group evaluates the recoverability of deferred tax assets by assessing the adequacy of future taxable income, including reversal of taxable temporary differences, forecasted earnings and available tax-planning strategies. Determining the sources of future taxable income relies heavily on the use of estimates. The Group recognises deferred tax assets when the Group considers it probable that the deferred tax assets will be recoverable.

33 Financial instruments and fair value information

This note provides an overview of the Group's financial instruments, including derivative financial instruments, and their categorisation under IFRS. Further details about the different types of financial assets and financial liabilities are provided throughout these consolidated financial statements. This note also contains information about the fair value of the Group's financial instruments and some general accounting policies covering more than one type of financial assets and liabilities.

Categories of financial instruments and fair value information

The following tables present the carrying amounts of the Group's different categories of financial assets and liabilities as of 31 December 2022 and 31 December 2021. They also present the respective levels in the fair value hierarchy for financial assets and liabilities measured at fair value.

	Carrying amount as of 31 December 2022
	At amortised cost	At fair value through profit or loss (mandatorily)	Total	Fair value hierarchy Level
				1	2	3
Cash and cash equivalents	503.8		503.8
Trade and other receivables	388.2	33.7	421.9		x
Derivatives		13.2	13.2		x
Total financial assets	892.0	46.9	938.9
Trade and other payables	(1,036.7)		(1,036.7)
Loans and borrowings:
- Senior unsecured notes	(996.8)		(996.8)
- Senior unsecured Euro term loan	(546.9)		(546.9)
- Unsecured US Dollar term loan	(252.5)		(252.5)
- Unsecured SSD	(647.6)		(647.6)
- Lease liabilities	(230.9)		(230.9)
Derivatives		(23.4)	(23.4)		x
Contingent consideration		(113.2)	(113.2)			x
Total financial liabilities	(3,711.4)	(136.6)	(3,848.0)

	Carrying amount as of 31 December 2021
	At amortised cost	At fair value through profit or loss (mandatorily)	Total	Fair value hierarchy Level
				1	2	3
Cash and cash equivalents	304.5		304.5
Trade and other receivables	221.5	25.7	247.2		x
Other financial assets	2.7		2.7
Derivatives		26.3	26.3		x
Total financial assets	528.7	52.0	580.7
Trade, other payables and other liabilities Loans and borrowings:	(665.7)		(665.7)
- Senior unsecured notes	(994.5)		(994.5)
- Senior unsecured Euro term loan	(545.7)		(545.7)
- Lease liabilities	(182.4)		(182.4)
Derivatives		(6.3)	(6.3)		x
Total financial liabilities	(2,388.3)	(6.3)	(2,394.6)

Fair value of financial assets and liabilities at amortised cost

The carrying amount of the financial assets and liabilities that are not measured at fair value is a reasonable approximation of fair value. Excluding transaction costs and an original issue discount (for one loan), this is also the case for the Euro and US Dollar term loans and the SSD. The fair value of the notes was €973 million as of 31 December 2022 (€1,035 million as of 31 December 2021).

Fair value of trade receivables to besold under securitisation and factoring programmes

Trade receivables that will be sold under the Group's securitisation and factoring programmes are categorised as measured at fair value through profit or loss. They are sold shortly after being recognised by the Group and the amount initially recognised for these trade receivables is representative of their fair value.

Fair value of derivatives

The following tables show the types of derivatives the Group had as of 31 December 2022 and 31 December 2021, and their presentation in the statement of financial position. The derivatives have been entered into as part of the Group's strategy to mitigate operational risks (commodity and foreign currency derivatives) and to mitigate financing risks (interest rate swap).

(In € million)	Current assets	Non- derivative current assets	Total assets	Current liabilities	Non- current liabilities	Total derivative liabilities
Commodity derivatives	0.2	-	0.2	(21.6)	-	(21.6)
Foreign currency derivatives	4.1	-	4.1	(1.8)	-	(1.8)
Total operating derivatives	4.3	-	4.3	(23.4)	-	(23.4)
Interest rate swap	-	8.9	8.9	-	-	-
Total financing-related derivatives	-	8.9	8.9	-	-	-

(In € million)	Current assets	Non- derivative current assets	Total assets	Current liabilities	Non- current liabilities	Total derivative liabilities
Total derivatives as of 31 December 2022	4.3	8.9	13.2	(23.4)	-	(23.4)
Commodity derivatives	26.2	-	26.2	(1.8)	-	(1.8)
Foreign currency derivatives	0.1	-	0.1	(4.5)	-	(4.5)
Total operating derivatives	26.3	-	26.3	(6.3)	-	(6.3)
Total derivatives as of 31 December 2021	26.3	-	26.3	(6.3)	-	(6.3)

The Group measures derivative assets and liabilities at fair value. The fair value is calculated based on valuation models commonly used in the market. These include consideration of credit risk, where applicable, and discount the estimated future cash flows based on the terms and maturity of each contract, using forward interest rates extracted from observable yield curves and market forward exchange rates at the reporting date. The derivatives are categorised as level 2 fair value measurements in the fair value hierarchy as the measurements of fair value are based on significant observable market data, either directly (ie. as prices) or indirectly (ie. derived from prices). Changes in fair value are recognised in profit or loss as the Group generally does not apply hedge accounting under IFRS 9. As an exception to this policy, the Group applied cash flow hedge accounting in two instances in the year ended 31 December 2022. See note 27 for information about the accounting for the deal-contingent derivatives that the Group entered into in relation to the acquisitions of Scholle IPN and Evergreen Asia in 2022.

Fair value of contingent consideration

The Group's liability for contingent consideration relates to the acquisition of Scholle IPN on 1 June 2022 and depends on Scholle IPN outperforming the top end of the Group's mid-term revenue growth guidance of 4-6% per year for the years ending 31 December 2023, 2024 and 2025. The maximum amount payable is $300 million ($100 million per year). For further details, refer to note 27.

As significant unobservable inputs are used in the assessment of the fair value of the contingent consideration, it is categorised as a level 3 fair value measurement in the fair value hierarchy. The fair value has been assessed using a Monte Carlo simulation, under which the simulated contingent consideration payments (for each of the three payment streams) have been discounted to present value at a corresponding risk-free rate.

The fair value of the US Dollar contingent consideration has increased from €38.6 million as of the acquisition date to €113.2 million as of 31 December 2022. The unrealised loss of €74.6 million (including an unrealised foreign currency exchange loss of €0.6 million) is presented as part of other expenses, where the foreign exchange component is presented separately (see notes 8 and 9). The increase in fair value is mainly due to revised revenue projections.

The fair value of the contingent consideration of €113.2 million as of 31 December 2022 would increase by approximately €10 million if the revenue growth rates increased by 1.0 percentage point (decrease by approximately €11 million if the revenue growth rates decreased by 1.0 percentage point), and increase by approximately €5 million if the discount rates decreased by 1.0 percentage point (decrease by approximately €5 million if the discount rates increased by 1.0 percentage point).

Accounting policy

The specific accounting policies for the Group's different types of financial assets and liabilities are included in other sections of these consolidated financial statements. This section includes the accounting policy for topics that are covered in more than one note.

Initial recognition of financial assets and liabilities

The Group initially recognises loans and receivables and any debt issued on the date when they are originated. All other financial assets and liabilities are initially recognised on the trade date when the entity becomes party to the contractual provisions of the financial instrument.

Off setting

Financial assets and financial liabilities are only offset and the net amount presented in the statement of financial position if the Group currently has a legally enforceable right to offset the amounts and intends to either settle them on a net basis or realise the asset and settle the liability simultaneously.

Derivatives

Derivatives are measured at fair value with any related transaction costs expensed as incurred. Derivatives with a positive fair value are presented as other current or non-current assets in the statement of financial position, while derivatives with a negative fair value are presented as other current or non-current liabilities.

The gain or loss on remeasurement to fair value is recognised in profit or loss. Net changes in the fair value of derivatives entered into as part of the operating business are presented as part of profit from operating activities, while net changes in the fair value of derivatives entered into in relation to the financing of the Group (if any) are presented in other finance income or expenses. The Group does not generally apply hedge accounting under IFRS 9.

A derivative embedded in another contract is separated and accounted for separately if its economic characteristics and risks are not closely related to those of its host contract, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the host contract is not measured at fair value with the fair value changes recognised in profit or loss. Changes in the fair value of a separated embedded derivative are recognised immediately in profit or loss.

34 Contingent liabilities

The Group has contingent liabilities relating to legal and other matters arising in the ordinary course of business. Based on legal and other advice, management is of the view that the outcome of any such proceedings will have no significant effect on the financial position of the Group beyond the recognised provision.

Accounting policy

Contingent liabilities are possible obligations arising from a past event to be confirmed by future events not wholly within the control of the Group, or present obligations arising from a past event for which an outflow of economic benefits is not probable, or which cannot be measured reliably. Contingent liabilities are not recognised in the statement of financial position, except for certain items assumed in a business combination, but are separately disclosed. If it becomes probable that an outflow of economic benefits will be required for an item previously disclosed as a contingent liability, a provision is recognised when the change in probability occurs.

35 Subsequent events

There have been no events between 31 December 2022 and 23 February 2023 (the date these consolidated financial statements were approved) that would require an adjustment to or disclosure in these consolidated financial statements, except that the Group signed an unsecured bridge loan facility agreement on 9 January 2023 and announced certain changes in the composition of the Group Executive Board on 21 February 2023 (see note 4).

Report of the statutory auditor

to the General Meeting of SIG Group AG

Neuhausen am Rheinfall

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of SIG Group AG and its subsidiaries (the Group), which comprise the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2022, the consolidated statement of financial position as at 31 December 2022, the consolidated statement of changes in equity, the consolidated statement of cash flows, and notes to the consolidated financial statements for the year then ended, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements (pages 239 to 336) give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for opinion

We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the 'Auditor's responsibilities for the audit of the consolidated financial statements' section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the International Code of Ethics for Professional Accountants (including International Independence Standards) of the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.

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

Our audit approach

Overview

Overall Group materiality: EUR 27,700,000

We concluded full scope audit work at 11 wholly owned Group companies in 10 countries. Our audit scope addressed 80% of the Group's revenue and 80% of the Group's assets. In addition, specified procedures were performed on a further 6 Group companies in 3 countries representing a further 3% of the Group's assets.

As key audit matters the following areas of focus have been identified:

•	Recoverability of goodwill
•	Scholle IPN provisional purchase price accounting
•	Evergreen Asia provisional purchase price accounting

Materiality

The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole.

Overall Group materiality	EUR 27,700,000
Benchmark applied	Revenue
Rationale for the materiality benchmark applied	We chose revenue as the benchmark as, in our view, it is the most appropriate measure considering the Group's current year's result is impacted by effects from purchase price accounting, transaction and acquisition-related costs as well as restructuring costs. It is further a generally accepted benchmark.

We agreed with the Audit and Risk Committee that we would report to them misstatements above EUR 2,000,000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

Audit scope

We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where subjective judgements were made; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Recoverability of goodwill

Key audit matter

As per 31 December 2022, the carrying amount of goodwill was €3,186.2 million.

The recoverable amount of the cash-generating units is calculated on the basis of their value in use, applying discounted cash flow models.

The valuation of goodwill is a key audit matter based on the magnitude of the balance and inherent judgement involved in determining the cash-generating units for impairment testing. Additionally, the assumptions related to future cash flows and the determination of discount rates and long-term growth rates require a significant level of judgement by Management.

Refer to Note 14 - Intangible assets and Note 5.4 - Critical accounting judgements, estimates and assumptions in the consolidated financial statements.

How our audit addressed the key audit matter

We assessed whether the groups of cash-generating units (CGUs) identified by Management are appropriate.

We further assessed whether the allocation of goodwill to the respective group of CGUs, including the implication of the acquisitions of Scholle IPN and Evergreen's chilled carton business in Asia, is the appropriate basis for impairment testing.

With the involvement of our internal valuation experts, we assessed the methodology used to perform the impairment test in accordance with the provisions of IAS 36 and challenged and evaluated Management's value in use calculation for each group of CGUs.

This included an assessment of the appropriateness of the model used, as well as challenging the key assumptions made by Management.

•	We evaluated the reasonableness of the discount rates, as determined by Management, by assessing the cost of capital for the Group, as well as considering territory-specific factors.
•	We challenged Management's cash flow assumptions and sensitivity analyses applied to such cash flows based on other internal forward-looking documentation available and by benchmarking them against external market data for respective regions.
•	We evaluated the planning accuracy of Management's forecast model by performing lookback procedures and ensured the consistency of Management's cash flow assumptions by comparing them to the Group's current 5-year business plan as approved by the Board of Directors.

We further performed independent sensitivity analyses around the key assumptions to ascertain the extent of changes in those assumptions that either individually or collectively would be required for the goodwill to be impaired.

We also considered the market capitalisation of the Group in comparison with the Group's equity value.

As a result of our procedures, we determined that the conclusions reached by Management with regard to the recoverability of the carrying amount of goodwill are reasonable and supportable.

Scholle IPNprovision alacquisition accounting

Key audit matter

On 1 June 2022, the Group acquired 100% of the shares of Clean Flexible Packaging Holding B.V. (together with the acquired subsidiaries, "Scholle IPN").

The consideration included cash of €424.3 million, a transfer of 33.75 million newly issued SIG shares with a fair value of €686.8 million and a contingent consideration of a maximum of USD 300 million.

The acquisition resulted in the recognition of goodwill of €929.8 million and other intangible assets of €290.3 million, which were allocated to the different segments.

As of the acquisition date, all identifiable assets acquired and liabilities assumed were recognised and measured at their fair value at that date.

The acquisition was deemed a key audit matter because the assumptions used by Management as part of the provisional acquisition accounting, in particular the fair value determination of newly identified intangible assets, acquired assets and assumed liabilities and the contingent consideration, required a significant level of judgement by Management.

Refer to Note 27 - Business combinations, Note 14 - Intangible assets and Note 5.4 - Critical accounting judgements, estimates and assumptions in the consolidated financial statements.

How our audit addressed the key audit matter

We audited whether the provisional acquisition accounting was performed in accordance with the provisions of IFRS 3 "Business Combinations".

We read the underlying purchase agreement and agreed the cash payment, the issuance of shares and the contingent consideration parameters to it.

Wespecificallyauditedthevaluationreportpreparedby Management's external expert:

•	We compared the fair value of newly identified intangible assets, acquired assets and assumed liabilities as outlined in the valuation report of Management's external expert with the consolidated financial statements.
•	We assessed the qualification and independence of Management's external expert to prepare the valuation report.
•	We assessed the process of identifying assets acquired and liabilities assumed through discussions with Management and its external expert as well as the expertise of our valuation experts.
•	With the involvement of our valuation experts, we further assessed the appropriateness of the valuation models applied as well as the technical and arithmetical correctness of the calculations in the valuation report.
•	We discussed the assumptions and valuation methods for the fair value adjustments on assets and liabilities assumed with Management, its external expert and the Audit and Risk Committee.
•	For newly identified intangible assets and the valuation step-up on property, plant and equipment and inventories, we independently assessed the assumptions made and valuation methods used.
•	We assessed whether the discount rate and the long-term growth rate are within reasonable ranges.
•	We recalculated the fair value of the shares transferred at the time of closing.
•	We assessed the methodology applied and the parameters used in Management's determination of the fair value of the contingent consideration.

As a result of our procedures, we determined that the conclusions reached by Management with regard to the provisional acquisition accounting for Scholle IPN are reasonable and supportable.

Evergreen Asia provisional acquisition price accounting

Key audit matter

On 2 August 2022, the Group acquired Evergreen Asia from Evergreen Packaging International LLC ("Evergreen Asia").

The consideration for Evergreen Asia amounts to €329.5 million and has been paid in cash.

The acquisition resulted in the recognition of goodwill of €130.9 million and other intangible assets of €78.2 million, which were allocated to the APAC segment.

As of the acquisition date, all identifiable assets acquired and liabilities assumed were recognised and measured at their fair value.

The acquisition was deemed a key audit matter because the assumptions used by Management as part of the provisional acquisition accounting, in particular the fair value determination of newly identified intangible assets, acquired assets and assumed liabilities, required a significant level of judgement by Management.

Refer to Note 27 - Business combinations, Note 14 - Intangible assets and Note 5.4 - Critical accounting judgements, estimates and assumptions in the consolidated financial statements.

How our audit addressed the key audit matter

We audited whether the provisional acquisition accounting was performed in accordance with the provisions of IFRS 3 "Business Combinations".

We read the underlying purchase agreement and agreed the cash payment to it.

Wespecificallyauditedthevaluationreportpreparedby Management's external expert:

•	We compared the fair value of newly identified intangible assets, acquired assets and assumed liabilities as outlined in the valuation report of Management's external expert with the consolidated financial statements.
•	We assessed the qualification and independence of Management's external expert to prepare the valuation report.
•	We assessed the process of identifying assets acquired and liabilities assumed through discussions with Management and its external expert as well as the expertise of our valuation experts.
•	With the involvement of our valuation experts, we further assessed the appropriateness of the valuation models applied as well as the technical and arithmetical correctness of the calculations in the valuation report.
•	We discussed the assumptions and valuation methods for the fair value adjustments on assets and liabilities assumed with Management, its external expert and the Audit and Risk Committee.
•	For newly identified intangible assets and step-up on land, we independently assessed the assumptions made and valuation methods used.
•	We assessed whether the discount rate and the long-term growth rate are within reasonable ranges.

As a result of our procedures, we determined that the conclusions reached by Management with regard to the provisional acquisition accounting for Evergreen Asia are reasonable and supportable.

Other information

The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements, the consolidated financial statements, the remuneration report and our auditor's reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Board of Directors' responsibilities for the consolidated financial statements

The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and SA-CH will always detect a material misstatement when it exists. 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 consolidated financial statements.

A more detailed description of our responsibilities for the audit of the consolidated financial statements can be found on the EXPERTsuisse website: http://www.expertsuisse.ch/en/ audit-report. This description forms an integral part of our report.

Report on other legal and regulatory requirements

In accordance with article 728a paragraph 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

Basel, 23 February 2023

PricewaterhouseCoopers AG

Bruno Rossi

Audit expert

Auditor in charge

Manuela Baldisweiler

Audit expert