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 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

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		How our audit addressed the 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.		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 IPN provisional acquisition accounting

Key audit matter		How our audit addressed the 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.		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. We specifically audited the valuation report prepared by 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		How our audit addressed the 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.		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. We specifically audited the valuation report prepared by 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.

PricewaterhouseCoopers AG

Bruno Rossi

Audit expert

Auditor in charge

Manuela Baldisweiler