5. General accounting policies and topics

5.1 Application of material accounting policies

The accounting policies applied by the Group in the consolidated financial statements for the year ended December 31, 2024 are consistent with those applied in the consolidated financial statements for the year ended December 31, 2023.

The Group became subject to the global minimum 15% top-up tax under the OECD Pillar Two Model Rules from January 1, 2024. For further details, see note 31.

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 January 1, 2024.

The Group has applied Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements) since January 1, 2024. The clarified guidance on current/non-current classification and compliance with covenants has not resulted in a change to the classification of the Group’s loans and borrowings that were in place as of January 1, 2024. The committed multi-currency revolving credit facility that was terminated in June 2024 was not drawn down as of December 31, 2023. The amounts used as of December 31, 2024 under the Group’s new committed Euro revolving credit facilities are classified as non-current in line with the revised guidance (see also notes 23 and 26). Some additional disclosures are now also required regarding compliance with covenants after the reporting date (see note 23). Other clarifications in IAS 1 amended are not applicable to the Group.

The other applicable standards and interpretations also had no, or no material, impact on the consolidated financial statements for the year ended December 31, 2024.

5.3 Adoption of standards and interpretations in 2025 and beyond

A number of new or amended standards and interpretations are effective for annual periods beginning on or after January 1, 2025 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.

IFRS 18 Presentation and Disclosure in the Financial Statements is effective from January 1, 2027 on a retrospective basis. The adoption of this standard introduces some changes to notably the presentation of items in the statement of profit and loss and other comprehensive income but also to the presentation of items in the statement of financial position and the statement of cash flows. There is also additional guidance on aggregation/disaggregation of information and requirements on disclosure and audit of certain management-defined performance measures. The Group has started its impact assessment of adopting IFRS 18. It does not expect to be materially impacted by the changes introduced by IFRS 18.

5.4 Significant accounting judgments, estimates and assumptions

In preparing these consolidated financial statements, management has made judgments, 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 recognized 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 judgments, estimates and assumptions:

• Liabilities for various customer incentive programs – see notes 6 and 18.
• Impairment testing and recognition of impairment losses – see notes 12, 13 and 14.
• Fair value assessment of contingent consideration – see notes 26 and 32.
• Measurement of obligations under defined benefit plans – see note 29.
• Determination of income tax liabilities – see note 31.
• Realization of deferred tax assets – see note 31.

The impacts of global economic uncertainty on the SIG Group broadly remain unchanged compared with the year ended December 31, 2023 as described below.

Global economic uncertainty

Geopolitical events such as the war in Ukraine, the conflicts in the Middle East, disruption on major shipping routes and increased tariffs can have significant impacts on the global economy in general, impacting areas such as the supply of raw materials as well as energy prices and other prices. However, the Group overall has not been, and is currently not, significantly impacted by these effects. These effects can be, and have been, partially mitigated by the Group’s diversified supply chain, its hedging strategy, long-term supply contracts and the ability to pass on higher costs to its customers.

5.5 Material 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 recognized 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, or at average rates that approximate 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 recognized 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 generally translated into Euro at average rates for the reported periods as these rates generally 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 recognized 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:

5.5.2 Lease accounting

The Group as lessor

The Group deploys filling lines and other related equipment at its customers’ sites under both lease and sale 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 also 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.

Lease contracts in the bag-in-box, spouted pouch and chilled carton businesses are accounted for as operating or finance leases in accordance with IFRS 16 Leases. The impact of these 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 recognized as right-of-use assets with corresponding lease liabilities. See notes 13 and 23 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 recognized 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 recognized 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 the SIG trademarks 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 recognized in profit or loss if the carrying amount of an asset or CGU exceeds its recoverable amount. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss may be reversed.

Additional 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 recognized in the statement of financial position but are disclosed separately. If realization of a contingent asset becomes virtually certain, it is no longer considered contingent and is recognized as an asset.