13723540 2021-01-01 2021-12-31 13723540 2021-01-01 2021-12-31 0 13723540 2021-01-01 2021-12-31 1 13723540 2021-01-01 2021-12-31 2 13723540 2021-01-01 2021-12-31 3 13723540 2021-01-01 2021-12-31 0 13723540 2021-01-01 2021-12-31 1 13723540 2021-01-01 2021-12-31 2 13723540 2021-01-01 2021-12-31 3 13723540 2021-01-01 2021-12-31 4 13723540 2021-01-01 2021-12-31 5 13723540 2021-01-01 2021-12-31 6 13723540 2021-01-01 2021-12-31 7 13723540 2021-01-01 2021-12-31 8 13723540 2021-01-01 2021-12-31 cmn:PreviousYearMember 13723540 2020-01-01 2020-12-31 13723540 2021-12-31 13723540 2020-12-31 13723540 2021-01-01 2021-12-31 0 13723540 2020-01-01 2020-12-31 1 13723540 2021-01-01 2021-12-31 0 13723540 2020-01-01 2020-12-31 1 13723540 2021-01-01 2021-12-31 2 13723540 2020-01-01 2020-12-31 3 13723540 2021-01-01 13723540 2020-01-01 13723540 2021-01-01 2021-12-31 0 13723540 2021-01-01 2021-12-31 1 iso4217:EUR xbrli:pure Regnskabsklasse C, stor virksomhed Faerch A/S Rasmus Færchs Vej 1 7500 Holstebro Denmark 13723540 2022-03-18 Henrik Poulsen 2021-01-01 2021-12-31 <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Management statement</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">The Executive Management and Board of Directors have today considered and adopted the Annual Report of Faerch A/S for the financial year 1 January — 31 December 2021.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements in the Danish Financial Statements Act and the Parent Company Financial Statements are prepared in accordance with the Danish Financial Statements Act. Management's Review is prepared in accordance with the Danish Financial Statements Act.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at 31 December 2021 of the Group and the Company and of the results of the Group and Company operations and consolidated cash flows for the financial year 1 January -31 December 2021.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">In our opinion, Management's Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Company, of the results for the year and of the financial position of the Group and the Company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Company.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">We recommend that the Annual Report be adopted at the Annual General Meeting.</td></tr></table> Holstebro 2022-03-04 <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="5">SUSTAINABILTY</td></tr><tr><td colspan="5">Creating circularity in food packaging</td></tr><tr><td colspan="5">Building a circular future for rigid food packaging</td></tr><tr><td colspan="5">Thomas Bak Thellesen</td></tr><tr><td colspan="5">Senior Director Group Sustainability and External Affairs</td></tr><tr><td colspan="5">As a global frontrunner in circular solutions for rigid PET food packaging, we are conscious of our impact on the world around us. We believe that our success and circularity offerings go hand in hand, and we are determined to grow our business in a way that supports a long-term, sustainable future. Making food packing truly circular is at the heart of our vision and strategy, and we are constantly leveraging our scale and reach across markets to achieve our ambition of driving the industry towards circularity. 2021 was no exception.</td></tr><tr><td colspan="5">Industry first, closed loop recycling programme</td></tr><tr><td colspan="5">In 2021, we launched an industry first, closed loop recycling programme - Back of Store by Faerch - in collaboration with UK supermarket chain Tesco. The programme sees back of store rigid trays collected, recycled and turned back into primary food contact trays or pots. Through the programme, Tesco will be diverting 2,000 tonnes of retail ready packaging tray waste back into food packaging applications. We are excited to be working with Tesco in bringing this concept to market.</td></tr><tr><td colspan="5">As an integrated tray recycler, we have the capability, capacity and expertise to roll out the programme with other European supermarket chains — supporting progress towards a circular economy for primary food packaging.</td></tr><tr><td colspan="5">Preparing for future scaling of our recycling capacity</td></tr><tr><td colspan="5">Our strategic focus is to make food packaging circular, and our recycling capacity is key to achieving our ambition. We have succeeded in closing the loop on food trays and have upscaled our recycling capacity significantly to expand our reach. Entering 2021, the monthly volumes recycled by Faerch reached 25 million food trays. By the end of 2021, the monthly volumes had quadrupled to almost 100 million trays or 1.2 billion per year, equalling the entire Dutch market of sorted PET household food packaging.</td></tr><tr><td colspan="5">But we need to go even further to lead the transition to a circular food packaging future. Being able to leverage the scale of our recycling division is key, and we are therefore currently testing input (waste) from several European countries to validate material properties and compositions.</td></tr><tr><td colspan="5">Closing the circularity gap</td></tr><tr><td colspan="5">Each year, we are making significant progress on our journey to make food packaging circular. In this respect, design is fundamental. Our packaging solutions are designed to not only keep food safe and protected, but they are also designed for circularity. Evolve by Faerch, which was introduced in 2019, is the perfect example of a packaging concept designed to achieve a closed loop. The concept offers packaging solutions made from post-consumer recycled material and can be fully recycled into new food packaging after use without compromising on performance.</td></tr><tr><td colspan="5">Over the course of 2021, the Evolve by Faerch concept has been further strengthened to include even more product categories, ranging from dairy pots to ready meals packaging. In partnership with Wiltshire Farm Foods, we launched the world's first large scale closed loop initiative for ready meal packaging. Going forward, collaborations and partnerships like these will form a vital part of our strategy, and we will continue to launch new products in the concept.</td></tr><tr><td colspan="5">Looking forward</td></tr><tr><td colspan="5">As a business Faerch seeks out ways to improve its metrics concerning all ESG factors (environmental, social, and governance), but to set long term goals and truly reach a tangible impact level, Faerch now needs to adopt and implement an ESG integration framework based on a robust data driven baseline. As Faerch is expanding in size, impact and reach, we need to have a clear, strategic and well-documented approach to our impact on the environment and climate. Building a position as a leader within our field and a true progressor in both the packaging and circular economy space, we need to prioritise reporting and communication as an essential part of our business.</td></tr><tr><td colspan="5">The landscape of sustainability reporting is changing at pace. To further enhance our sustainability, and corporate responsibility and to ensure that our sustainability reporting is transparent and in line with EU taxonomy regulations, we are embedding ESG management into the core of our business by forming a dedicated ESG team responsible for handling internal data collection, strategy alignment and project management. This will enable us to report en ESG performance and prepare us for the EU Corporate Sustainability Reporting Directive, due to be implemented in 2023.</td></tr><tr><td colspan="5">At the start of 2022, Faerch has initiated the deployment of an ESG framework that will act as a tool in our continued work en creating a more resilient business and strengthen a general sector push towards new frontiers within sustainability.</td></tr><tr><td colspan="5">The process of integrating ESG into the business</td></tr><tr><td colspan="5">Phase 1: Materiality Assessment (importance and impact of ESG) and establish the current state of affairs — CO2e baseline for all Faerch sites (scope 1-3 baseline).</td></tr><tr><td colspan="5">Phase 2: Strategy implementation and target setting (KPIs).</td></tr><tr><td colspan="5">Phase 3: Executing impact programmes and tracking KPIs.</td></tr><tr><td colspan="5">At Faerch, we are determined to reduce our carbon footprint and as an ESG focused company, Faerch will continue to revaluate its strategic priorities to ensure its sustainability and relevance. Our initiatives will follow a clearly-defined path to reduce emissions at a pace and scale necessary to join the Science Based Targets initiative (SBTI — and set targets in line with the reductions required to keep warming to 1.5C, in alignment with the ambitious goal of the Paris Agreement. We see great potential in the synergies between Faerch's overall business strategy and the EU Taxonomy as we will continue to drive growth through sustainable investments.</td></tr><tr><td colspan="5">We are determined to drive change at scale and to play our part in helping and influencing others. I am thankful to our colleagues, partners and suppliers for supporting us en our journey.</td></tr><tr><td colspan="5">Learn more about our progress and work en sustainability en the following pages.</td></tr><tr><td colspan="5">Thomas Bak Thellesen</td></tr><tr><td colspan="5">Senior Director Group Sustainability &amp; External Affairs</td></tr><tr><td colspan="5">Sustainability governance structure</td></tr><tr><td colspan="5">Sustainability is core to Faerch's values both in terms of our business thinking and practices. Doing business with integrity has always been part of the way we operate. It defines how we behave, and it guides how we do business. We work with responsibility, fundamental respect for labour rights, environmental and climate consideration, principles of anti-corruption and fair competition.</td></tr><tr><td colspan="5">We support the OECD's Principles of Corporate Governance, the UN Sustainability Development Goals and comply with recognised best practice.</td></tr><tr><td colspan="5">Managing performance</td></tr><tr><td colspan="5">Our sustainability governance structure provides the platform for keeping our goals and ambitions on track, and it sets a clear framework for our priorities, roles and responsibilities. The structure makes sure that our sustainability strategy and targets are continuously developed and anchored across the Group. lt enables us to embed sustainability into our businessagenda - from our long-term, corporate strategy to our daily operations and priorities.</td></tr><tr><td colspan="5">The governance structure is divided into four levels: The executive management level, business unit level, regional level and local level. Through policies, standards, management systems, procedures and risk management, we ensure that sustainability is truly embedded across the Faerch Group.</td></tr><tr><td colspan="5">Executive management level</td></tr><tr><td colspan="5">- Setting direction for the comprehensive long-term work related to Faerch's sustalnabillty development.</td></tr><tr><td colspan="5">Business unit level</td></tr><tr><td colspan="5">- Resource allocation to enhance continuous sustainabIllty development In the Indlvidual business units</td></tr><tr><td colspan="5">- Reporting on non-flnancial data.</td></tr><tr><td colspan="5">Regional level</td></tr><tr><td colspan="5">- Specifik focus areas supportIng Faerch's ambition levels and prioritles</td></tr><tr><td colspan="5">- Stakeholder engagement and collaboration.</td></tr><tr><td colspan="5">Local level</td></tr><tr><td colspan="5">- Implementation of concrete InItlatives and improvements Inline with the Group's overall long-term plans and vision.</td></tr><tr><td colspan="5">Assessing our areas of priority</td></tr><tr><td colspan="5">Faerch operates in a constantly changing world, and we need to be aware of and react to the external changes that can impact our business. Assessing materiality helps us identify and prioritise the sustainability issues that matter the most to our business and stakeholders. And it helps us channel our resources and activities to the areas where we can have the strongest impact.</td></tr><tr><td colspan="5">As part of our materiality assessment identifying our main economic, environmental, ethical and social impacts, a set of key areas were identified. The assessment engaged both external and internal stakeholder groups. The materiality matrix below shows the 14 most important areas that were identified, their relevance to our stakeholders, their influence on our business, as well as their link to the UN Sustainable Development Goals. We still believe that these 14 issues are relevant and important to Faerch today as an overall guidance, and they therefore continue to form the basis of our defined five focus areas.</td></tr><tr><td colspan="5">Sustainable packaging</td></tr><tr><td colspan="5">Food safety</td></tr><tr><td colspan="5">Responsible operations</td></tr><tr><td colspan="5">People &amp; organisation</td></tr><tr><td colspan="5">Business ethics</td></tr><tr><td colspan="5">Our key stakeholders</td></tr><tr><td colspan="5">- Our customers (food producers, distributors and retailers)</td></tr><tr><td colspan="5">- NGOs</td></tr><tr><td colspan="5">- End-users</td></tr><tr><td colspan="5">- Employees Local communities</td></tr><tr><td colspan="5">- Academia</td></tr><tr><td colspan="5">Our focus areas &amp; ambition levels</td></tr><tr><td colspan="5">At Faerch, we recognise the severe economic, social and environmental challenges our planet is facing. As a leading company within rigid plastic packaging and recycling for the food industry, we are committed to acting as a responsible company and define priorities and actions for our business, now and in the future.</td></tr><tr><td colspan="5">We have chosen to dedicate our focus to five specific areas that are directly linked to our core business. These focus areas are directly linked to six UN Sustainable Development Goals where we believe we can create the biggest impact.</td></tr><tr><td colspan="5">Each focus area has a long-term level of ambition supported by actions. Our ambition is to be the leader in sustainable packaging and food safety. Each focus area has defined KPIs supporting our long-term ambition and sustainable development.</td></tr><tr><td colspan="5">Sustainable packaging</td></tr><tr><td colspan="5">Lead the way in creating true circularity in food packaging</td></tr><tr><td colspan="5">13 Climate Action</td></tr><tr><td colspan="5">12 Responsible Consumption and Production</td></tr><tr><td colspan="5">9 Industry, innovation and infrastructure</td></tr><tr><td colspan="5">Food safety</td></tr><tr><td colspan="5">Be the leader in methods and products, which protect food, extend shelf life and reduce food waste</td></tr><tr><td colspan="5">12 Responsible Consumption and Production</td></tr><tr><td colspan="5">LEVEL OF AMBITION</td></tr><tr><td colspan="5">LEAD</td></tr><tr><td colspan="5">We will create competitive advantages and market differentiation through innovative and sustainable products.</td></tr><tr><td colspan="5">Responsible operations</td></tr><tr><td colspan="5">To minimise CO2 emissions from own activities</td></tr><tr><td colspan="5">12 Responsible Consumption and Production</td></tr><tr><td colspan="5">7 Affordable and clean energy</td></tr><tr><td colspan="5">People and organisation</td></tr><tr><td colspan="5">To secure workplace with focus on employee development</td></tr><tr><td colspan="5">8 Decent work and economic growth</td></tr><tr><td colspan="5">LEVEL OF AMBITION</td></tr><tr><td colspan="5">DEVELOP</td></tr><tr><td colspan="5">We will strengthen and ensure our position and good practice by being a responsible producer and company.</td></tr><tr><td colspan="5">Business ethics1</td></tr><tr><td colspan="5">To ensure orderly and responsible business practice</td></tr><tr><td colspan="5">16 Peace, Justice and strong institutions</td></tr><tr><td colspan="5">LEVEL OF AMBITION</td></tr><tr><td colspan="5">COMPLY</td></tr><tr><td colspan="5">We will adhere to legislation and applicable standards within responsible and ethical business practice.</td></tr><tr><td colspan="5">1The focus area "Business Ethics" is covered red in section "Governance".</td></tr><tr><td colspan="5">The UN Sustainable Development Goals</td></tr><tr><td colspan="5">In 2015, the United Nations drew up a roadmap for peace and prosperity for people and the planet, flow and in the future. This resulted in 17 Sustainable Development Goals (SDGs) that represent an unprecedented opportunity to take sustainability to a new level.</td></tr><tr><td colspan="5">While we support all the SDGs, we focus our efforts on the goals and targets that are the most important to our business and where we believe we can make the most meaningful contribution. As we move forwards, we will continue to add actions and initiatives to support the SDGs.</td></tr><tr><td colspan="5">CLOSED LOOP RECYCLING PROGRAMME</td></tr><tr><td colspan="5">Faerch is a global pioneer in PET food packaging. Our packaging solutions are designed to keep food safe and reduce food waste while driving the industry towards circularity. Our aim is a world where rigid food packaging pots, tubs and trays are collected, recycled and tumed into new food grade packaging — without becoming waste.</td></tr><tr><td colspan="5">As part of our ongoing efforts to drive circularity in food packaging, in 2021 we launched Back of Store by Faerch with UK supermarket chain Tesco. In an industry first, the programme provides a closed loop recycling solution that sees back of store rigid trays collected, recycled and turned back into primary food grade trays efter use. The programme is a first, not just in the UK, but across Europe.</td></tr><tr><td colspan="5">Until recently secondary and tertiary clear PET shelf ready packaging - widely used in the UK to transport products - was used once and downcycled. Now, thanks to the new tray to tray initiative, PET packaging will be collected by Faerch and through an advanced recycling process, the packaging materiel will be used to make new food contact PET pots, tubs and trays.</td></tr><tr><td colspan="5">Our approach</td></tr><tr><td colspan="5">Circularity and recycling form an important part of Faerch's sustainability strategy. To make sure that PET is treated as a valuable resource and kept in the recycling loop, we need to strengthen collection and sorting. This is at the heart of the Back of Store by Faerch programme. Using Faerch's recycling facility in the Netherlands, Tesco's back of store rigid trays are used for making new food trays across Faerch's production sites.</td></tr><tr><td colspan="5">Why it matters</td></tr><tr><td colspan="5">The Back of Store programme ensures that each year 2,000 tonnes of Tesco's packaging tray waste are recycled to make new food grade packaging, preventing valuable material from being lost from the packaging supply chain.</td></tr><tr><td colspan="5">Seen from a recycling perspective, used PET packaging is a valued materiel, as it can be fully recycled into new food grade materiel without any loss of quality. However, the quality of the incoming material determines the yield and value that can be generated. Through a closed loop system, the Back of Store Programme ensures a high and homogeneous input quality, allowing for efficient recycling.</td></tr><tr><td colspan="5">Transforming the rPET supply chain</td></tr><tr><td colspan="5">In today's production of PET trays, there is a heavy reliance on the use of raw material from recycled PET bottles. With the Back of Store by Faerch programme we are able create an additional materiel recovery stream of post-consumer recycled material, assisting to decouple the tray production from the surging demand for PET bottle flakes across producers.</td></tr><tr><td colspan="5">We see an increasing demand for recycled PET, not just in Europe but globally. This makes it difficult for the entire packaging industry to source enough supply to meet the need. A tray-to-tray initiative such as the Back of Store by Faerch programme not only provides a solution for the shortfall in recycled PET availability, but it also contributes to reducing the dependency on bottle flakes in general.</td></tr><tr><td colspan="5">The project demonstrates that secondary and tertiary PET packaging can be recovered and recycled at an industrial scale. We will continue to explore innovative opportunities to secure that PET packaging which is produced in alignment with the Food Contact Plastics Regulation 'EU 10/2011', is protected, and ensure that this materiel, initially produced as a food contact material, is recovered and introduced to the circular economy again, says Thomas Bak Thellesen, Senior Director Group Sustainability &amp; External Affairs.</td></tr><tr><td colspan="5">As an integrated tray recycler, Faerch has the capability, capacity and expertise to roll out the Back of Store by Faerch programme with other European supermarket chains — supporting progress towards a circular economy for primary food packaging.</td></tr><tr><td colspan="5">CLOSING THE CIRCULARITY GAP ON FOOD PACKAGING</td></tr><tr><td colspan="5">Designing for circularity is a fundamental part of our strategy and we are committed to minimising our impact and ensuring a sustainable future for food packaging. Dur packaging solutions are designed to keep food safe and protected, but they are also designed for circularity.</td></tr><tr><td colspan="5">Evolve by Faerch was launched in 2019 and it is the perfect example of a packaging concept designed for true circularity. The concept offers food packaging made from collected and recycled mixed coloured bottles and PET pots, tubs and trays. The Evolve by Faerch trays are fully recyclable into new food grade packaging after use.</td></tr><tr><td colspan="5">Rethinking rigid food packaging</td></tr><tr><td colspan="5">Plastic is a valuable resource, but we need to use better and more sustainable materials. At Faerch, we promote PET as the material of choice when it comes to food packaging, as it is the only material allowing for true circularity while meeting the strictest food safety requirements. Faerch is committed to enabling a waste-free future, and the Evolve by Faerch concept is a great example of how to design for circularity.</td></tr><tr><td colspan="5">Now more than ever, we need to rethink food packaging. To prevent plastic waste, we need to advance the transition to a circular economy in which plastic products are kept at their highest value throughout their lifecycle, rather than being wasted and downgraded after use. When it comes to making food packaging circular, material choice is key. Without the right materials, we are not able to achieve true circularity. Evolve by Faerch applications provide our customers with long-awaited guidance to easily choose food packaging made from recycled content. At the same time, the concept is designed to overcome the limitation of the existing infrastructure.</td></tr><tr><td colspan="5">A unique look</td></tr><tr><td colspan="5">Evolve by Faerch pots, tubs and trays are made from recycled content. No colour is added during the production process, and the pots will therefore have fluctuating colours, reflecting the specific blend of recycled content the trays are made from.</td></tr><tr><td colspan="5">This will allow consumers to immediately recognise the circular nature of the packaging which can help them make conscious decisions when making their packaging decision.</td></tr><tr><td colspan="5">The majority of most thermoformed rPET trays on the market consists of clear bottle flake as the primary recycled materials. However, the market is currently seeing a surge in demand for flakes made from recycled PET bottles. The Evolve by Faerch concepts enable circularity with mixed and jazz flakes from coloured bottles and trays, ensuring an additional circular outlet for a valuable material like PET.</td></tr><tr><td colspan="5">Carbon black share vs. Evolve by Faerch share</td></tr><tr><td colspan="5">of total Faerch UK market CPET</td></tr><tr><td colspan="5">Achievements</td></tr><tr><td colspan="5">Since the release on the UK market in 2019, Evolve by Faerch has achieved a significant increase in sales volumes, and many retailers have successfully moved to this new material platform. In 2021, Evolve by Faerch accounted for a total of 62% of Faerch's total CPET volume in UK and Ireland.</td></tr><tr><td colspan="5">In 2021, the concept was further strengthened to cover even more food packaging categories, ranging from dairy pots to ready meals trays. Going forward, we will continue to launch new products in the Evolve by Faerch concept to support our customers towards fully circular packaging.</td></tr><tr><td colspan="5">QUALITY ACQUISITIONS AND AN OVERALL INDUSTRY PUSH</td></tr><tr><td colspan="5">Adding quality companies to our portfolio is an essentiel part our strategy to strengthen our business and create value. Besides expanding our geographical footprint, it accelerates our ability to offer cutting-edge, innovative food packaging solutions to leading food manufacturers and retailers around the world. However, as we wekome new companies into the Faerch Group, we need to ensure that they become fully aligned with Faerch's requirements and quality standards while we get inspired by their innovations and practices to lead the Group on the path towards a circular economy for food packaging.</td></tr><tr><td colspan="5">What we do</td></tr><tr><td colspan="5">Being a global frontrunner in sustainable rigid food packaging, we invest in and transform businesses that share our ambition of accelerating action on circularity within food packaging. When new entities become part of the Faerch Group, we are working actively to reduce their carbon footprint by transforming them into more resource and energy efficient entities. We also drive the businesses towards more recyclable materials through a group-wide push for mono-materials.</td></tr><tr><td colspan="5">Accelerating materiel conversion</td></tr><tr><td colspan="5">In 2020, Faerch acquired Sirap food packaging business activities in Italy, Poland and Spain. In 2021, at our new site in Olvan in Spain, we successfully converted 50% of the site's Oriented Polystyrene (OPS) material into PET.</td></tr><tr><td colspan="5">Olvan in Spain 50% of the site's Oriented Polyatyrene (OPS) material converted successfully into PET</td></tr><tr><td colspan="5">The remaining OPS material volume will be converted in 2022. We do this to push the local industry towards a more circular future, as the material is a fundamental part of ensuring an economy around our European recycling streams. As an industry, we need to push for less complex material compositions, and we support joint and bold commitments from the packaging industry, complemented by ambitious company-specific targets.</td></tr><tr><td colspan="5">Within the industry, there might be discussions about details like definitions, specific targets and timelines. However, as plastic converters, we need to enable a circular choice for the rest of the value chain and for society. We need to</td></tr><tr><td colspan="5">- Ensure that all packaging placed in the market is fully recyclable, i.e. tax or ban those materials that cannot realistically be recycled.</td></tr><tr><td colspan="5">- Foster the use of recycled content in packaging across all applications, by introducing mandatory minimum shares of post-consumer content.</td></tr><tr><td colspan="5">- Strengthen collection and sorting to make sure plastics are made fully available for recycling, i.e. kept in the economy and out of the environment.</td></tr><tr><td colspan="5">- Protect and increase the quality of waste streams, not polluting them with multi-materials.</td></tr><tr><td colspan="5">As a direct response to these principles, the focus in the coming years will be to reduce the use of problematic packaging materials and further accelerate the transformation toward a circular economy through the use of recyclable materials — across the Faerch Group.</td></tr><tr><td colspan="5">SUSTAINABILITY IN OUR VALUE CHAIN</td></tr><tr><td colspan="5">Faerch is a leading manufacturer of plastic packaging and we are aware that the scale of our business and our activities have far-reaching environmental, social and economic impacts.</td></tr><tr><td colspan="5">A circular economy</td></tr><tr><td colspan="5">Creating circularity in food packaging has topped our agenda for many years and in 2018, we took a significant step in closing the loop on food trays with the acquisition of 4PET Group. The acquisition enables 100% recycling of the same material, for the same use, turning used food trays into a valuable resource rather than waste. When a tray has been used by the consumer, it is disposed, collected and processed into a new tray — and the circle repeats itself.</td></tr><tr><td colspan="5">To reduce negative impacts and to make sure that we continue to add value and deliver competitive advantages to our customers, we have defined a set of actions to each stage in our value chain.</td></tr><tr><td colspan="5">Suppliers &amp; Sourcing</td></tr><tr><td colspan="5">•Supplier Code of Conduct</td></tr><tr><td colspan="5">•Supplier audits</td></tr><tr><td colspan="5">•Responsible packaging activities</td></tr><tr><td colspan="5">Product Development</td></tr><tr><td colspan="5">•Delivering technical solutions for circularity</td></tr><tr><td colspan="5">•Packaging to extend food shelf life and reduce food waste</td></tr><tr><td colspan="5">•Reducing packaging weight</td></tr><tr><td colspan="5">•Reducing stacking height</td></tr><tr><td colspan="5">•Meeting high standards &amp; going beyond food safety legislation</td></tr><tr><td colspan="5">•Innovative mono-material solutions improving recyclability</td></tr><tr><td colspan="5">Production</td></tr><tr><td colspan="5">Extrusion/Thermoforming</td></tr><tr><td colspan="5">•Paw material: Recycled plastic</td></tr><tr><td colspan="5">•Reducing energy consumption through specific environmental projects</td></tr><tr><td colspan="5">•Minimising plastic waste in the production</td></tr><tr><td colspan="5">•Investing in energy effective technology</td></tr><tr><td colspan="5">•Implementing specific activities to reduce work-related accidents</td></tr><tr><td colspan="5">•Training our employees in occupational health</td></tr><tr><td colspan="5">Logistics</td></tr><tr><td colspan="5">•Reducing shipment by producing trays doser to customer locations</td></tr><tr><td colspan="5">•Compiling transportation by delivering more trays in one truckload due to reduced stacking height</td></tr><tr><td colspan="5">•Optimising motor vehicles</td></tr><tr><td colspan="5">•Reducing outer packaging</td></tr><tr><td colspan="5">At the customer</td></tr><tr><td colspan="5">•Helping customers to extend food shelf life and optimise their packaging solutions</td></tr><tr><td colspan="5">•Working with retailers on improving recycling rates of plastic trays</td></tr><tr><td colspan="5">•Bringing new knowledge on sustainable packaging to our customers</td></tr><tr><td colspan="5">•Testing packaging used in a closed loop system</td></tr><tr><td colspan="5">•Helping customers reduce their CO2 footprint by offering alternatives to aluminium foil and cans</td></tr><tr><td colspan="5">•Training our employees in anti-corruption and fair competition</td></tr><tr><td colspan="5">At the end-user</td></tr><tr><td colspan="5">•Convenient packaging for single household, helping reduce food waste</td></tr><tr><td colspan="5">•Long shelf life reducing food waste</td></tr><tr><td colspan="5">•Positive food experience</td></tr><tr><td colspan="5">MAIN IMPACTS</td></tr><tr><td colspan="5">Minimising plastic waste</td></tr><tr><td colspan="5">Minimising CO2 emissions</td></tr><tr><td colspan="5">Reducing work-related accidents</td></tr><tr><td colspan="5">SUSTAINABLE DEVELOPMENT GOALS</td></tr><tr><td colspan="5">The UN's 2030 Sustainable Development Goals have created a framework for addressing sustainability issues and creating a plan of actions in the areas of critical importance to the global society.</td></tr><tr><td colspan="5">We are committed to making the SDGs operational and to identifying future business opportunities. By reviewing the areas of importance determined by the materiality assessment, we explore how we can support the SDGs linking them to our value chain and our business.</td></tr><tr><td colspan="5">Currently, the Faerch business will focus on how we can make the biggest impact on the five UN SDG's highlighted in the table below.</td></tr><tr><td>Materiality Area</td><td>SDG</td><td /><td>Sustainable Development Target</td></tr><tr><td>Reduction of CO2 emissions</td><td>13 Climate Action</td><td>Take urgent action to combat climate change and its impacts</td><td>13.2. integrate climate change measures into policies, strategies and planning</td></tr><tr><td>Recycled plastic</td><td>12 Responsible Consumption and Production</td><td>Ensure sustainable consumption and production patterns</td><td>12.4. Achieve the environmentally sound management of chemicals and all wastes throughouttheir life cycle, and significantly reduce their release to air, water and soli in order to minimise their adverse impacts on human health and the environment</td></tr><tr><td>Technical solutions for waste sorting</td><td>9 Industry, innovation and infrastructure</td><td>Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation</td><td>9.4. Upgrade infrastructure and retrofit Industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes</td></tr><tr><td>Reduction of food waste</td><td>12 Responsible Consumption and Production</td><td>Ensure sustainable consumption and production patterns</td><td>12.3. Reduce food waste at the retail and consumer levels and reduce food losses along production and supply chains</td></tr><tr><td>Recycled plastic</td><td>12 Responsible Consumption and Production</td><td>Ensure sustainable consumption and production patterns</td><td>12.5. Substantially reduce waste generation through prevention, reduction, recycling and reuse</td></tr><tr><td>Effecient production</td><td>7 Affordable and clean energy</td><td>Ensure access to affordable, reliable, sustainable and modern energy for all</td><td>7.2. lncrease substantially the share of renewable energy</td></tr><tr><td>Safe workplace</td><td>8 Decent work and economic growth</td><td>Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all</td><td>8.8. Protect labour rights and promote safe and secure vvorking environments for all workers</td></tr><tr><td>Business ethics</td><td>16 Peace, Justice and strong institutions</td><td>Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable, and inclusive institutions at all levels</td><td>16.5. Substantially reduce corruption and bribery</td></tr><tr><td>Faerch’s Focus Area</td><td>Faerch’s KPI</td><td>Value chain involvement</td></tr><tr><td>Sustainable Packaging</td><td>CO2 emissions with increased use of recycled plastic</td><td>Suppliers &amp; Sourcing</td></tr><tr><td /><td /><td>Product Development</td></tr><tr><td /><td /><td>Production</td></tr><tr><td>Sustainable Packaging</td><td>Quantity of recycled plastic used in production</td><td>Production</td></tr><tr><td /><td /><td>Product Development</td></tr><tr><td>Sustainable Packaging</td><td>Develop solutions such as the Evolve by Faerch concept and further innovate the technology in Faerch's recycling devision</td><td>Customers</td></tr><tr><td /><td /><td>End-users</td></tr><tr><td>Food Safety</td><td>Number of reported cases of migration tests</td><td>Suppliers &amp; Sourcing</td></tr><tr><td /><td /><td>Product Development</td></tr><tr><td /><td>lmprovement sealing properties of trays to prolong food shelf life and reduce food waste</td><td>Customers</td></tr><tr><td /><td /><td>End-users</td></tr><tr><td>Responsible Operations</td><td>Plastic waste as percentage of raw materials</td><td>Product Development</td></tr><tr><td /><td /><td>Production</td></tr><tr><td>Responsible Operations</td><td>Energy consumption</td><td>Production</td></tr><tr><td /><td>100% powered by electricity from renewable energy sources'</td><td>Logistics</td></tr><tr><td>People &amp; Organisation</td><td>Accident frequency</td><td>Production</td></tr><tr><td>Business ethics</td><td>Number of reported compliance cases</td><td>Complete value chain</td></tr><tr><td colspan="5">SUPPOR TING INTERNATIONAL STANDARDS</td></tr><tr><td colspan="5">Our progress and reporting are based on the principles of the UN Declaration of Human Rights, the ILO conventions and the UN Global Compact.</td></tr><tr><td colspan="5">Even though Faerch has not joined the UN Global Compact, we see it as an important framework for our sustainability efforts. To meet fundamental responsibilities in areas of human rights, labour, environment and anti-corruption, we therefore align our strategies, policies and procedures to its principles and guidelines.</td></tr><tr><td colspan="5">The table below illustrates how we approach and implement the ten principles of the UN Global Compact.</td></tr><tr><td colspan="5">Our Policies</td></tr><tr><td colspan="5">•Sustainability Policy</td></tr><tr><td colspan="5">•Human Rights Policy</td></tr><tr><td colspan="5">•Statement on the Prevention of Slavery and Human Trafficking</td></tr><tr><td colspan="5">•Trade Sanctions in the Product Supply Agreements for raw materials and packaging</td></tr><tr><td colspan="5">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="5">Ensuring continuous growth and development supporting and respecting the protection of interhationally proclaimed human rights and good business ethics,</td></tr><tr><td colspan="5">Example of Policy Implementation</td></tr><tr><td colspan="5">Anchoring sustainability by ensuring that roles and responsibilities related to sustainable development in Faerch are defined and communicated through Group Forum on Sustainability Governance,</td></tr><tr><td colspan="5">Monitoring and measuriny progress towards sustainability through Group Procedure on non-financial data on sustainable development.</td></tr><tr><td colspan="5">Ensuring that our ecenomic and financial transactions are in line with the applicable economic sanction laws and international trade restrictions, including providing information to our distributors about product final destination.</td></tr><tr><td colspan="5">Our Policies</td></tr><tr><td colspan="5">Supplier Code of Conduct</td></tr><tr><td colspan="5">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="5">Ensuring responsible supplier management, defining and cornmunicating expectations to our suppliers in terms of developing responsible business practices.</td></tr><tr><td colspan="5">Example of Policy Implementation</td></tr><tr><td colspan="5">Carrying out supplier audits of top suppliers of raw materials, additives, colours, packaginy and supplementary range.</td></tr><tr><td colspan="5">Our Policies</td></tr><tr><td colspan="5">Environment, Health &amp; Safety Policy</td></tr><tr><td colspan="5">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="5">Reducing own footprint, meeting high health &amp; safety standards and creating a workplace culture based on commitment and responsibility.</td></tr><tr><td colspan="5">Example of Policy Implementation</td></tr><tr><td colspan="5">•ISO 14001 Management System</td></tr><tr><td colspan="5">•Pisk assessment of production equipment</td></tr><tr><td colspan="5">•Prevention of work-related injuries through analysis tools.</td></tr><tr><td colspan="5">Our Policies</td></tr><tr><td colspan="5">People Policies</td></tr><tr><td colspan="5">•Health Promotion Policy</td></tr><tr><td colspan="5">•Employee Development Policy</td></tr><tr><td colspan="5">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="5">Ensuring equal opportunities at the workplace, dminating discrimination in respect of employment and occupation and recognising the right to collective bargaining.</td></tr><tr><td colspan="5">Example of Policy Implementation</td></tr><tr><td colspan="5">lnitiating health promoting inItiatives; performing external training; defining individual development plans (as a part of Employee Performance and Development Review); supporting employee intercultural &amp; professional development through international secondments.</td></tr><tr><td colspan="5">Our Policies</td></tr><tr><td colspan="5">Legal Compliance Policy</td></tr><tr><td colspan="5">•Gifts Policy</td></tr><tr><td colspan="5">•Anti-corruption Policy</td></tr><tr><td colspan="5">•Fair Competition Policy</td></tr><tr><td colspan="5">•Procurement Policy</td></tr><tr><td colspan="5">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="5">Working against corruption in all its forms, increasing employees understandina of the rules and minimising the risk of breaking the rules.</td></tr><tr><td colspan="5">Example of Policy Implementation</td></tr><tr><td colspan="5">Training in fair competition and anti-corruption, including e-learning programme,</td></tr><tr><td colspan="5">SUSTAINABLE PACKAGING</td></tr><tr><td colspan="5">The focus area "Sustainable Packaging" involves everything we do to minimise the environmental impact of our products. In terms of manufacturing, it is important that we look at the composition of our products and continuously aim to increase the share of recycled PET derived from trays in our product recipes and production processes, and aim to integrate a truly closed loop where used trays are collected and processed into new trays.</td></tr><tr><td colspan="5">This will help us reduce plastic waste and CO2 emissions. Our aim is to take a leading position in the use of recycled plastic.</td></tr><tr><td colspan="5">Scope</td></tr><tr><td colspan="5">Manufacturing and recycling of plastic trays creatIng a closed loop within food packaging.</td></tr><tr><td colspan="5">13 CLIMATE ACTION</td></tr><tr><td colspan="5">12 RESPONSIBLE CONSUMPTION AND PRODUCTION</td></tr><tr><td colspan="5">9 INDUSTRY, INNOVATION AND INFRASTRUCTURE</td></tr><tr><td colspan="5">Guidelines</td></tr><tr><td colspan="5">European Strategy for Plastics in a Circular Economy.</td></tr><tr><td colspan="5">Reuse and recyclability of own materials in own operational setup and the market, reaching a true "closed loop".</td></tr><tr><td colspan="5">Impact</td></tr><tr><td colspan="5">Impact waste</td></tr><tr><td colspan="5">Impact mitigation by optimising design proposals to minimise materiel consumption, by developing partitioned packaging, and by designing trays with smaller portion sizes to avoid dispose of surplus food.</td></tr><tr><td colspan="5">CO2 emissions</td></tr><tr><td colspan="5">Impact mitigation by increasing the share of recycled plastic in our product formulas and manufacturing processes; by rethinking product composition in existing and new products, material and processes.</td></tr><tr><td colspan="5">Risk &amp; challenges</td></tr><tr><td colspan="5">Plastic waste management, mainly outside Europe, remains an immense challenge. We need to build a new mentality and customer behaviour moving away from the throwaway culture.</td></tr><tr><td colspan="5">Performance progress</td></tr><tr><td colspan="5">CO2 emissions with increased use of recycled plastic (219 CPET tray)1</td></tr><tr><td colspan="5">Kg/CO2 equivalents per 1,000 trays</td></tr><tr><td colspan="5">Bottom bars = Emissions with initiatives</td></tr><tr><td colspan="5">Middle bars = Saved via rPET</td></tr><tr><td colspan="5">Top bars = Saved via renewable energy</td></tr><tr><td colspan="5">CO2 emissions with increased use of recycled plastic (129 APET tray)1</td></tr><tr><td colspan="5">Bottom bars = Emissions with initiatives</td></tr><tr><td colspan="5">Middle bars = Saved via rPET</td></tr><tr><td colspan="5">Top bars = Saved via renewable energy</td></tr><tr><td colspan="5">Quantity of recycled plastic used in production</td></tr><tr><td colspan="5">2010 = index 100</td></tr><tr><td colspan="5">1Changed calculation principle. The historical figures were recalculated accordingly.</td></tr><tr><td colspan="5">FOOD SAFETY</td></tr><tr><td colspan="5">Food safety is essential to our business, and even more so than ever, consumers should always be confident that the food that they bug is packaged and designed for food contact.</td></tr><tr><td colspan="5">Our aim is to maintain a leading position within rigid food packaging while complying with the strictest food safety requirements. Guaranteeing food safety is our key priority. Without that, our efforts to achieve circularity and reduced environmental impacts will have little value. At Faerch, we therefore continuously develop methods and processes to ensure and validate food safety for our products.</td></tr><tr><td colspan="5">Scope</td></tr><tr><td colspan="5">Continuously monitor methods and approaches to improve or uphold food safety requirements.</td></tr><tr><td colspan="5">12 RESPONSIBLE CONSUMPTION AND PRODUCTION</td></tr><tr><td colspan="5">Guidelines</td></tr><tr><td colspan="5">FCM shall comply with Article 3 of 1935/2004; this applies to all food contact material.</td></tr><tr><td colspan="5">Regulation (EU) 10/2011, explains in g reat detail "what plastic converters have to do in order to comply" with 1935/2004.</td></tr><tr><td colspan="5">Impact</td></tr><tr><td colspan="5">Impact mitigation by developing food safe mono-PET packaging solutions with a high content of recycled materiaI that additionally enables long shelf life, consequently reducing the carbon footprint from food waste and enabling circularity.</td></tr><tr><td colspan="5">Risk &amp; challenges</td></tr><tr><td colspan="5">It may be difficult for end-users to distinguish between different types of plastic packaging and their purpose. Hence, we will continue to promote and produce food safe mono-material PET solutions and work with academia on topics such as food safety and circularity.</td></tr><tr><td colspan="5">Performance progress</td></tr><tr><td colspan="5">Number of reported cases of migration 0 out of 25 tests in 2021</td></tr><tr><td colspan="5">2020 0 of 24 tests</td></tr><tr><td colspan="5">2019 1 of 26 tests</td></tr><tr><td colspan="5">2018 0 of 32 tests</td></tr><tr><td colspan="5">2017 0 of 21 tests</td></tr><tr><td colspan="5">RESPONSIBLE OPERATIONS</td></tr><tr><td colspan="5">We have a responsibility to minimise negative environmental impacts from our operations, in compliance with regulations, and to live up to the requirements and expectations of our customers and other key stakeholders.</td></tr><tr><td colspan="5">The focus area "Responsible Operations" involves everything we do to ensure that our production is efficient. We are aware that the reach and scale of our activities can impact the environment, society, and people. It is therefore important to keep our factory environmental footprints as low as possible.</td></tr><tr><td colspan="5">To ensure that we significantly reduce the environmental impact of producing, using, and disposing our packaging solutions, we continuously pursue new ways and methods to reduce emissions and to improve resource consumption and waste management. Environmental risks include spillage of raw materials, chemicals, and untreated waste water. Numerous mitigating activities and procedures are in places to reduce these risks.</td></tr><tr><td colspan="5">Scope</td></tr><tr><td colspan="5">Ensure that our production is effecient in the way we utilise resources and by this, minimising our environmental footprint.</td></tr><tr><td colspan="5">12 RESPONSIBLE CONSUMPTION AND PRODUCTION</td></tr><tr><td colspan="5">7 AFFORDABLE AND CLEAN ENERGY</td></tr><tr><td colspan="5">Guidelines</td></tr><tr><td colspan="5">Group Quality Policy</td></tr><tr><td colspan="5">Group Environment, Health &amp; Safety Policy</td></tr><tr><td colspan="5">ISO 14001 Management System</td></tr><tr><td colspan="5">Impact</td></tr><tr><td colspan="5">Plastic waste</td></tr><tr><td colspan="5">Impact mitigatiori by establishing a common solution for transparent and comparable reporting on waste management.</td></tr><tr><td colspan="5">CO2 emissions</td></tr><tr><td colspan="5">Impact mitigation by defining and implementing specific projects; investing in sustainable technology, optimising transportation and minimising imperfections resulted in repeated work.</td></tr><tr><td colspan="5">Risk &amp; challenges</td></tr><tr><td colspan="5">It is important that we strive to strike a balance between sustaining a high level of product quality while also ensuring high production elficiency and responsible manufacturing processes.</td></tr><tr><td colspan="5">Performance progress</td></tr><tr><td colspan="5">Energy Consumption1</td></tr><tr><td colspan="5">Mwh / tonne produced finished goods</td></tr><tr><td colspan="5">1Changed calculation principle. The historical figures were recalculated accordingly.</td></tr><tr><td colspan="5">Plastic Waste</td></tr><tr><td colspan="5">Plastic waste as a percentage of raw materials</td></tr><tr><td colspan="5">PEOPLE &amp; ORGANISATION</td></tr><tr><td colspan="5">Health &amp; safety</td></tr><tr><td colspan="5">We strongly believe that it is our people and organisation that bring our values to life and generate our business results. Their commitment to our business and our customers is vital to the success and long-term growth of our business. People &amp; Organisation is therefore an important focus area.</td></tr><tr><td colspan="5">Many aspects of our business touch on human rights, including our employees' working conditions, and health and safety. Our conduct within our own business and through our business relationships can therefore have an impact on society, both positive and negative. Further, increasing regulation and growing expectations from our stakeholders confirm that human rights is a material topic for Faerch. A key area is health and safety, and we are committed to maintaining high standards of health and safety across the Group's business units and we continue to implement new initiatives to help us ensure that our workplace is attractive. We believe this is key to achieving our long-term objectives.</td></tr><tr><td colspan="5">Several initiatives have been started to reduce the number of work-related accidents. These initiatives include awareness campaigns throughout the organisation, sharing of best practice procedures and standards, all to support the development of a safety culture and mindset.</td></tr><tr><td colspan="5">Scope</td></tr><tr><td colspan="5">Maintaining high standards of health &amp; safety at our workplace.</td></tr><tr><td colspan="5">8 Decent work and economic growth</td></tr><tr><td colspan="5">Guidelines</td></tr><tr><td colspan="5">Environment, Health &amp; Safety Policy</td></tr><tr><td colspan="5">Health Promotion Policy</td></tr><tr><td colspan="5">Impact</td></tr><tr><td colspan="5">Work-related accidents/heavy Ming</td></tr><tr><td colspan="5">Impact mitigation by automating work processes in the operation areas and investing in equipment to remedy risk of manual movements and muscular strain.</td></tr><tr><td colspan="5">Risk &amp; challenges</td></tr><tr><td colspan="5">It is important to continue addressing safety performance as a key element of our operations and to drevent workplace hazards and occupational risk in a busy working environment.</td></tr><tr><td colspan="5">Performance progress</td></tr><tr><td colspan="5">Accident frequency</td></tr><tr><td colspan="5">Total work accidents per one million working hours</td></tr><tr><td colspan="5">PEOPLE &amp; ORGANISATION</td></tr><tr><td colspan="5">People</td></tr><tr><td colspan="5">The way we treat our employees is fundamental to the way we want to do business, and not to discriminate against our employees is a core value for Faerch and basic responsibility for any organisation. Discrimination bars people from living up to their full potential, creates inequality and less stable and prosperous societies.</td></tr><tr><td colspan="5">Scope</td></tr><tr><td colspan="5">Ensuring our position as an ambitious and responsible company by focusing on employee development and succession management.</td></tr><tr><td colspan="5">Guidelines</td></tr><tr><td colspan="5">Human Rights Policy including our focus on development, training and diversity.</td></tr><tr><td colspan="5">People Policies including the Employee Development Policy.</td></tr><tr><td colspan="5">Tools</td></tr><tr><td colspan="5">Employee Development Review</td></tr><tr><td colspan="5">Individual Development Plan</td></tr><tr><td colspan="5">Career Development Paths</td></tr><tr><td colspan="5">On-boarding Programme</td></tr><tr><td colspan="5">Impact</td></tr><tr><td colspan="5">We wish to develop and scale our organisation to support our strong growth and realise our targets.</td></tr><tr><td colspan="5">Risk &amp; challenges</td></tr><tr><td colspan="5">To scale up the organisation and thereby continue to support our strong growth, it is important that we develop our people and structures further.</td></tr><tr><td colspan="5">We will strengthen our core skills and competences in and across specific functions and expand our succession management.</td></tr><tr><td colspan="5">We will optimise new employee integration through enhanced on-boarding.</td></tr><tr><td colspan="5">Performance progress</td></tr><tr><td colspan="5">Our Culture and Heritage</td></tr><tr><td colspan="5">As a rapidly growing company, we want to ensure that our strong culture is integrated into our acquired companies. We are true to our heritage, while evolving with the needs of our business.</td></tr><tr><td colspan="5">With the acquisition of PACCOR, with 18 sites across Europe, USA and Asia, we have completed our largest acquisition to date. This calls for an even further strengthening of our culture and people development agenda to make sure it reflects our accelerating growth.</td></tr><tr><td colspan="5">Building on a deep technical, material and operational knowledge, we know that our efficient production set-up provides a competitive advantage. As a leader in sustainable packaging for the food industry, and to meet the needs of the future to further drive a closed loop on an industrial scale, we are aware that our unique culture of simplicity, agility, execution and dignity will be essential to scale up our business even further and to go globally.</td></tr><tr><td colspan="5">Our Leadership Values reflect our company's heritage and DNA, providing clear guidance when recruiting and developing the organisation further. Our accelerating growth calls for a reinforced effort to establish a common, in-depth understanding of the Faerch Leadership Values in all senior positions and within our acquired companies.</td></tr><tr><td colspan="5">People Factor</td></tr><tr><td colspan="5">We are a people business, and another central pillar in our efforts to strengthen our values and culture is our new People Factor Platform. The aim of the platform approach is to ensure that our leadership values are translated into concrete actions across all of our sites. We want all of our employees to feel welcome when they enter a Faerch site.</td></tr><tr><td colspan="5">Our People Factor Platform ensures the right framework is in place across of our sites, and that we treat our employees with dignity and respect and that we show them we care. The purpose of this is to ensure employee engagement and retention, and to increase attractiveness for new employees. The platform describes the way we treat our employees from their first dag of work and within areas such as physical work environment, on-boarding, working conditions, compensation, training and being part of the team. The platform will be rolled out from 2022.</td></tr><tr><td colspan="5">Employee and Career Development</td></tr><tr><td colspan="5">The limiting factor for our growth is neither our market opportunities, nor our innovation potential. We are lean, agile and fast, which is part of our value proposition. As in 2021, our focus going forward is to scale up the organisation and processes to our increased size and complexity at the speed needed. Developing the organisation therefore represents one of the most important enablers of our strategy.</td></tr><tr><td colspan="5">We have installed a systematic talent development and internal feeding system for succession, where we identify and prepare potential successors and back-up candidates for all critical roles, developing a pool of high potentials and constant flow of talents into the organisation.</td></tr><tr><td colspan="5">•ldentify critical roles and map current and future requirements</td></tr><tr><td colspan="5">•Establish successor pipeline and identify development and retention needs</td></tr><tr><td colspan="5">•Establish Future Faerch Generation (FFG) to ensure a continuous flow of new young talent into the organisation, complementing feeding programme with graduates, trainees and apprentices</td></tr><tr><td colspan="5">•Quickly identify and integ rate key resources from acquired companies into the feeding process</td></tr><tr><td colspan="5">Furthermore, our Employee Development Review process supports the individual development of our employees.</td></tr><tr><td colspan="5">The purpose of the Individual Development Plan is to ensure a structured approach in agreeing on, working with and following up on long-term career development objectives. It provides an overview of learnings and reflections from both employee, manager and other possible stakeholders, and it helps to measure progress and success and ultimately reaching the long-term objectives.</td></tr><tr><td colspan="5">We practice career development through training and internal recruitment.</td></tr><tr><td colspan="5">Career development</td></tr><tr><td colspan="5">internal recruitments for salaried employees</td></tr><tr><td>29%</td><td>27%</td><td>35%</td><td>38%</td><td>43%</td></tr><tr><td>2017</td><td>2018</td><td>2019</td><td>2020</td><td>2021</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="7">Gender Proportion among the Members of the Board of Directors and Executive Management</td></tr><tr><td colspan="7">lt is our goal that the Board of Directors and executive management is composed in such a way that it is effectively able to perform its tasks. In 2021 a new Board of Directors was established with the new ownership from A.P. Møller Holding. With our new Chairman and Deputy Chairman plus two new externally elected Board members, the gender proportion has changed. The Board of Directors consists of 2 women and 4 men. Our goal for future gender proportion is to maintain at least 33% of the under-represented gender in the Board of Directors.</td></tr><tr><td colspan="7">The executive management was expanded from 6 to 8 members with the appointment of Chief Integration Officer Patricia Requena (1 March 2021) and Chief People Officer Karina Kviesgård Hounisen (1 January 2022). The executive management consists of 2 women and 6 men. Our goal for future gender proportion is to reach at least 33% of the under-represented gender in the Executive Management, up from the present level of 25%.</td></tr><tr><td colspan="7">The goals for Gender Proportion will be reviewed further in 2022 as part of our ESG strategy.</td></tr><tr><td colspan="7">PEOPLE &amp; ORGANISATION</td></tr><tr><td colspan="7">People (continued)</td></tr><tr><td colspan="7">Members of the Executive management</td></tr><tr><td colspan="7">Goal to be reviewed in 2022</td></tr><tr><td /><td /><td /><td /><td>25%</td><td>33%</td><td>women</td></tr><tr><td>100%</td><td>100%</td><td>100%</td><td>100%</td><td>75%</td><td>67%</td><td>men</td></tr><tr><td>2017</td><td>2018</td><td>2019</td><td>2020</td><td>2021</td><td>GOAL</td></tr><tr><td colspan="7">Members of the Board elected at the annual general meeting</td></tr><tr><td colspan="7">Goal to be reviewed in 2022</td></tr><tr><td /><td /><td /><td /><td>33%</td><td>33%</td><td>women</td></tr><tr><td>100%</td><td>100%</td><td>100%</td><td>100%</td><td>67%</td><td>67%</td><td>men</td></tr><tr><td>2017</td><td>2018</td><td>2019</td><td>2020</td><td>2021</td><td>GOAL</td></tr><tr><td colspan="7">Gender Proportion on Manager Level</td></tr><tr><td colspan="7">By the end of 2021, the gender distribution among managers* was 79% men and 21% women, which means no changes compared to 2020. This calls for an evaluation of our ability to attract women to leadership positions and not least to retain women in leadership positions.</td></tr><tr><td colspan="7">We report on the total gender proportion for all managers in the Faerch Group.</td></tr><tr><td colspan="7">Manager level</td></tr><tr><td>26%</td><td>24%</td><td>21%</td><td>21%</td><td>33%</td><td>women</td></tr><tr><td>74%</td><td>76%</td><td>79%</td><td>79%</td><td>67%</td><td>men</td></tr><tr><td>2018</td><td>2019</td><td>2020</td><td>2021</td><td>GOAL</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Data ethics</td></tr><tr><td colspan="1">The responsible use of data is an enabler for Faerch's business model. In line with Faerch's core values we strive to ethically manage and use data, with customers trusting that the company uses their data appropriately. To avoid abuse and privacy infringement issues, and to safeguard the company from legal, business and reputational risks, it is vital to manage and control the storage and use of customers' and employees' data ethically and proactively. No formal data ethics policy was adopted in 2021 due to the strong existing data governance, but in context of the Paccor and MCP acquisitions Faerch will establish a data ethics policy in 2022, with accompanying governance measures, including a target of all relevant employees trained on data ethics by 2023.</td></tr></table> 2237 <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Independent auditor's report</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">To the Shareholders of Faerch A/S</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Opinion</td></tr><tr><td colspan="1">In our opinion, the Consolidated Financial Statements give a true and fair view of the Group's finan-cial position at 31 December 2021 and of the results of the Group's operations and cash flows for the financial year 1 January to 31 December 2021 in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.</td></tr><tr><td colspan="1">Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company's financial position at 31 December 2021 and of the results of the Parent Company's operations for the financial year 1 January to 31 December 2021 in accordance with the Danish Financial Statements Act.</td></tr><tr><td colspan="1">We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of Faerch A/S for the financial year 1 January -31 December 2021, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies, for both the Group and the Parent Company, as well as statement of comprehensive income and cash flow statement for the Group ("financial statements").</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Basis for Opinion</td></tr><tr><td colspan="1">We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, 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.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Statement on Management's Review</td></tr><tr><td colspan="1">Management is responsible for Management's Review.</td></tr><tr><td colspan="1">Our opinion on the financial statements does not cover Management's Review, and we do not express any form of assurance conclusion thereon.</td></tr><tr><td colspan="1">In connection with our audit of the financial statements, our responsibility is to read Management's Review and, in doing so, consider whether Management's Review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated.</td></tr><tr><td colspan="1">Moreover, it is our responsibility to consider whether Management's Review provides the information required under the Danish Financials Statements Act.</td></tr><tr><td colspan="1">Based on the work we have performed, in our view, Management's Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement in Management's Review.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Management's Responsibilities for the Financial Statements</td></tr><tr><td colspan="1">Management is responsible for the preparation of Consolidated Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act and for the preparation of Parent Company Financial Statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from materiel misstatement, whether due to fraud or error.</td></tr><tr><td colspan="1">In preparing the financial statements, Management is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Auditor's Responsibilities for the Audit of the Financial Statements</td></tr><tr><td colspan="1">Our objectives are to obtain reasonable assurance about whether the 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 ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can anse from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.</td></tr><tr><td colspan="1">As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also</td></tr><tr><td colspan="1">- ldentify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.</td></tr><tr><td colspan="1">- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control.</td></tr><tr><td colspan="1">- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.</td></tr><tr><td colspan="1">- Conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern.</td></tr><tr><td colspan="1">- Evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view.</td></tr><tr><td colspan="1">- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.</td></tr><tr><td colspan="1">We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.</td></tr></table> Aarhus 2022-03-04 558800000 429000000 129700000 66800000 29400000 1800000 2100000 -11500000 21600000 12900000 60000000 -25400000 600000 -26000000 1800000 400000 6300000 3200000 -21500000 -21500000 115700000 -26400000 23000000 0 8500000 32400000 2100000 39200000 1200000 152300000 -192300000 -162600000 1063700000 1217800000 148000000 -12000000 1000000 Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup xWizard version 1.1.1112.0, by EasyX Aps. www.easyx.eu 2020-01-01 2020-12-31 Revisionspåtegning Grundlag for konklusion Konklusion Lars Gade Hansen CEO Arne Holme CTO Jesper Emil Jensen Regional CEO Continental Europe Tom Sand-Kristensen CFO Henrik Poulsen Chairman Marianne Kirkegaard Brian Troldtoft Pedersen Employee representative Jaska de Bakker Jan Thorsgaard Nielsen Torben Toft Jensen Employee representative Ronald John Edward Marsh Sven Seidel Thomas Skovgaard Lauridsen Employee representative 1468 370900000 271600000 99200000 45800000 19100000 500000 1000000 -9500000 24300000 26000000 41800000 8500000 1700000 6800000 1200000 300000 -6000000 -2800000 4600000 4600000 67700000 10300000 30700000 0 14500000 41200000 2900000 21400000 300000 100000 -24200000 17000000 0 13500000 -13500000 3600000 -1500000 576500000 155700000 180400000 912600000 99200000 173000000 25500000 23000000 320800000 10000000 1243300000 102000000 93600000 14700000 200000 1900000 8900000 221300000 1464600000 9800000 500000 643900000 654200000 505500000 0 93800000 599300000 44900000 22300000 86100000 6200000 50500000 1100000 211100000 810400000 1464600000 -8900000 493600000 155600000 196400000 845700000 72300000 158200000 22800000 6400000 259700000 7800000 1113200000 54900000 32900000 11400000 100000 4200000 6900000 110400000 1223600000 1900000 -2700000 159300000 158500000 631100000 237300000 97500000 965800000 17900000 0 37000000 4900000 38600000 800000 99200000 1065100000 1223600000 2100000 Profit before tax -25400000 Profit before tax 8500000 Proceeds from shareholder contribution 280000000 Proceeds from shareholder contribution 0 Borrowings from parent company 22100000 Borrowings from parent company 0 2100000 0 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Claus Lindholm Jacobsen State Authorised Public Accountant mne23328 Jens Weiersøe Jakobsen State Authorised Public Accoun tant mne30152 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab