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21. Capital management

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


As of
31 Dec. 2021

Gross debt





Cash and cash equivalents





Net debt





Net leverage ratio






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.


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.

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