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Financials
Annual Report 2023 1
Stories Information for shareholdersFinancialsGovernanceSustainability
Report of the Board of Directors 2023
Purmo Group is at the centre of the
global sustainability journey, offering
full solutions and sustainable ways
of heating and cooling homes to
mitigate global warming. We provide
complete heating and cooling solutions
to residential and non-residential
buildings, including underfloor heating
and cooling systems, a broad range
of radiators, heat pumps, flow control
and hydronic distribution systems, as
well as smart products. Our mission is
to be the global leader in sustainable
indoor climate comfort solutions. Our
approximately 3,190 employees operate
in 24 countries, manufacturing and
distributing top-quality products and
solutions to our customers in more
than 100 countries. Purmo Group’s
shares are listed on Nasdaq Helsinki
with the ticker symbol PURMO. More
information: www.purmogroup.com.
Market overview for 2023
In 2023, construction activity across Purmo Group’s
key markets remained weak. This was a result of
high inflation and interest rates which undermined
consumer confidence and decreased demand,
leading to lower volumes in residential renovation
and new construction projects.
During 2023, the decline in demand was
particularly intense in Germany, Italy and China. The
decline in demand in Italy was significant due to the
exceptional corresponding period last year, when
demand was high because of government incentives
for improving the energy efficiency of buildings
and homes. However, market in Italy picked up in
the fourth quarter of the year. At the end of 2023,
inventory levels of wholesalers in Purmo Group’s core
markets were stabilised.
Energy efficiency requirements for new and
existing buildings are expected to favorably influence
demand for Purmo Group’s indoor climate comfort
solutions. Governments and local authorities are
incentivising the shift to renewable energy sources,
energy efficiency through low-temperature systems
and well-insulated housing, and also the introduction
of energy performance requirements for new and
renovated buildings. The European Union’s Green
Deal, aiming at making Europe the first carbon-
neutral continent by 2050, is one example of a
generic longer-term initiative. Furthermore, as a
result of global warming and rising energy prices,
consumers show an increasing preference and need
for combatting climate change and supporting
sustainability. Consumer preferences are moving
towards sustainable solutions and products.
According to the European Commission, up to
75% of the buildings in the EU require deep energy
renovation, implying that the addressable energy
renovation market opportunity is significant. Energy
renovations in existing dwellings will often include
the replacement of fossil-fuel-based heat sources
(e.g. gas boilers) with renewable-energy-based
heat sources (e.g. heat pumps). Importantly, the
growth of heat pumps also drives a shift from high-
temperature to low-temperature heat distribution
systems to enable the energy efficiency of the heat
pump installation. This implies that emitters such as
radiators will need to be upgraded when combined
with heat-pump systems by becoming larger or
more efficient, so they can generate equal heating
output given the lower water temperature of the
system.
Purmo Group is well positioned to support this
transition, being a provider of complete heating
and cooling solutions, including air-to-water heat
pumps, low temperature emitters and smart controls.
The company’s indoor climate comfort solutions are
sold primarily across Europe mainly to residential
buildings, but also to non-residential buildings.
Around 60 per cent of Purmo Group’s net sales are
generated from renovation, with the remainder
from new construction projects. The secular trend for
energy renovations also helps to make the business
even less reliant on new build construction markets.
The estimated compounded annual growth rate
for Purmo Group’s products and systems varies.
As an example, the demand for air-to-water heat
pumps is expected to grow by 19 per cent annually
(CAGR) within the company’s addressable markets in
2021-2026 (BRG, December 2023).
The energy renovation trend in Europe requires an
upgrade of radiators in conjunction with heat pump
installations for consumers to capture full energy
savings. This trend is expected to grow the radiator
market by 5.6 per cent annually during 2022-2030
(CAGR) (Third party independent analysis).
Annual Report 2023 22
Stories Information for shareholdersFinancialsGovernanceSustainability
The construction markets in new build and
renovation segments are expected to remain
challenging in 2024. Increased geopolitical risks and
high overall uncertainties can also have an impact
on Purmo Group’s core markets.
Group financial overview
Net sales
EUR million 2023 2022 Change, %
Net sales, by segment
Climate Products &
Systems 591.9 720.6 -18%
Climate Solutions 151.6 183.9 -18%
Eliminations -0.3 -0.4
Total
743.2 904.1 -18%
Key figures
EUR million 2023 2022 Change, %
Net sales 743.2 904.1 -18%
Adjusted EBITDA
1
92.3 92.9 -1%
Adjusted EBITDA margin
1
12.4% 10.3%
Adjusted EBITA
1
66.3 64.6 3%
Adjusted EBITA margin
1
8.9% 7.1%
EBIT 9.7 39.0 -75%
EBIT margin 1.3% 4.3%
Profit for the period -9.3 13.1
Adjusted profit for the period
1
3
32.2 32.7 -2%
Earnings per share, basic, EUR -0.32 0.32
Adjusted earnings per share, basic, EUR
1
3
0.68 0.79 -14%
Cash flow from operating activities 40.4 31.1 30%
Adjusted operating cash flow, last 12 months
1
2
75.1 44.0 71%
Cash conversion
1
2
81.4% 47.4%
Operating capital employed
1
294.7 305.0 -3%
Return on operating capital employed
1
3
2.9% 12.2%
Net debt
1
219.6 275.2 -20%
Net debt / Adjusted EBITDA
1
2.38 2.96 -20%
1
Purmo Group presents certain measures of financial performance, financial position and cash flows, which are alternative performance
measures in accordance with the guidance issued by the European Securities and Markets Authority ('ESMA'). For the detailed definitions and
reconciliation of alternative performance measures, see page 24.
2
Change in net working capital includes assets held for sale. The 2022 comparison figure has been restated by EUR 9.6 million impairment
charges related to the business in Russia.
3
Comparative figures have been restated due to change in calculation of the key figure, see page 25.
In January–December 2023, Purmo Group’s net sales
were EUR 743.2 million (904.1); the decrease was 18
per cent. The organic decline in net sales, excluding
currency effect, acquisitions and divestments was
17 per cent. Acquisitions did not have a material
contribution to net sales. The net impact of changes
in currencies was -1 per cent.
Net sales for the Group declined due to slowdown
in residential new building and renovation markets
during the year. Most of the regions in both business
divisions remained weak in 2023, although partial
recovery were seen in some markets towards the end
of the year. Net sales declined in all clusters in the
Climate Products & Systems division, with stabilisation
in some markets towards the end of the year, Poland
in particular. In the Climate Solutions division, the
Italian market recovered after a period of downturn
during the last quarter of the year. The corresponding
period last year in Italy was strong when demand
was high due to government incentives for improving
energy efficiency of buildings and homes. Markets in
France and in Ireland grew during the year, whereas
The mid- to long-term market outlook is positive
for Purmo Group given the support from secular
green transition tailwinds. The need for radiator
upgrades in conjunction with heat pump installations
across Europe also drives the demand for the
heating and cooling products offered by the Group.
the slowdown in the Nordics impacted negatively on
the Group’s net sales for 2023.
Net sales in Northern Europe declined by 13 per
cent to 166.4 million (191.0). Western Europe declined
by 15 per cent, amounting to EUR 287.5 million (337.2).
Central and Eastern Europe declined by 22 per cent
to EUR 135.4 million (174.5). Southern Europe declined
by 23 per cent to EUR 110.3 million (142.4) and the
Rest of the world region declined by 26 per cent to
EUR 43.5 million (58.9).
Net sales,
EUR million
843.6
904.1
743.2
2021 2022 2023
Annual Report 2023 33
Stories Information for shareholdersFinancialsGovernanceSustainability
Adjusted EBITDA,
by segment
Climate Products &
Systems 78.5 71.7 10%
Climate Solutions 23.7 29.9 -21%
Other and
unallocated -9.9 -8.7 14%
Total
92.3 92.9 -1%
Adjusted EBITDA
margin, % 12.4% 10.3%
Cash flow and financial position
In January-December 2023, cash flow from
operating activities increased to EUR 40.4 million
(31.1). The cash flow was positively impacted by the
increase in net working capital of EUR -2.1 million
(-31.5) during the review period. The cash flow was
reduced by increase in financial items and income
taxes paid, totalling EUR -36.0 million (-28.3). The
development in net working capital was positively
impacted by the Accelerate PG programme.
Adjusted operating cash flow for the last 12
months increased by 71 per cent to EUR 75.1 million
(44.0), and the cash conversion increased to 81.4
per cent (47.4). The change was mainly a result of
an improvement in net working capital of EUR 3.2
million (-24.8). The adjusted EBITDA during the last 12
months was EUR 92.3 million and, consequently, on
the same level compared to previous year (92.9).
Cash flow from investing activities was EUR -20.2
million (-32.9). The change was primarily attributable
to the Thermotech acquisition in 2022 of EUR 14.6
million. In the reporting period, the investments
in property, plant and equipment, and intangible
assets were EUR -20.3 million (-24.0). Cash flow from
financing activities was EUR 32.6 million (-110.8) and
was mainly related to the proceeds from the hybrid
bond of EUR 60.0 million in February 2023.
At the end of December 2023, the Group’s net debt
was EUR 219.6 million (31 Dec 2022: 275.2), and the
net debt to adjusted EBITDA ratio, based on the last
12 months adjusted EBITDA, was 2.38 (31 Dec 2022:
2.96). The hybrid bond is treated as equity according
to IFRS and, therefore, not included in net debt.
At the end of December 2023, the equity ratio was
43.7 per cent (31 Dec 2022: 41.0), and it improved
compared to the corresponding period last year
mainly due to the issuance of the hybrid bond.
The equity ratio calculation has been updated to
be calculated from total equity instead of equity
attributable to the owners of the company from the
beginning of 2023.
At the end of December 2023, the liquidity position
in terms of cash and cash equivalents totalled EUR
111.7 million (31 Dec 2022: 56.3). The company has
a Finnish commercial paper programme totalling
EUR 100.0 million (31 Dec 2022: 100.0), which was
unutilised at the end of reporting period (31 Dec
2022: EUR 10.0 million). The company also had
an EUR 80.0 million (31 Dec 2022: 80.0) undrawn
committed revolving credit facility, EUR 20.5 million
(31 Dec 2022: 20.5) of undrawn overdraft facilities
with core financial institutions and EUR 125.0 million
(31 Dec 2022: 125.0) unutilised uncommitted M&A
facility.
Total equity was EUR 435.7 million (31 Dec 2022:
403.3). The increase in total equity was mainly due to
the hybrid bond.
Adjusted EBITDA margin, %
Adj. EBITDA,
EUR million
103.9
12.3
12.4
10.3
92.9
92.3
2021 2022 2023
Profit before tax was EUR -9.6 million (21.6).
Income tax expenses were EUR 0.3 million (-8.4),
corresponding to an effective tax rate of 2.7 per cent
(39.1). Taxes relating to comparability adjustments
amounted to EUR -11.2 (-2.2). The adjusted effective
tax rate was -27.8 per cent (20.1).
Profit for the review period was EUR -9.3 million
(13.1), and adjusted profit for the period was EUR 32.2
million (32.7). Earnings per share were EUR -0.32
(0.32), and adjusted earnings per share were EUR
0.68 (0.79).
Results and profitability
EUR million 2023 2022 Change, %
In January–December 2023, Purmo Group’s adjusted
EBITDA was EUR 92.3 million (92.9); the decrease
was 1 per cent. The decline in adjusted EBITDA for
the Group was a result of lower volumes for both
divisions.
The adjusted EBITDA margin improved to 12.4
(10.3) per cent.
Comparability adjustments affecting EBITDA
and EBITA amounted to EUR 52.8 million (21.7). The
adjustments were mainly related to EUR 46.0 million
costs associated with the Accelerate PG programme.
Furthermore, an EUR 1.3 million increase in the
redemption liability and an additional impairment of
EUR 3.9 million on inventory and other assets related
to Purmo Group’s Russian business classified as
assets held for sale was realised.
Net financial items amounted to EUR -19.3 million
(-17.4).
Annual Report 2023 44
Stories Information for shareholdersFinancialsGovernanceSustainability
Climate Products & Systems Division
EUR million 2023 2022 Change, %
Net sales 591.9 720.6 -18%
Adjusted EBITDA 78.5 71.7 10%
Adjusted EBITDA
margin, % 13.3% 9.9%
Depreciations,
amortisations and
impairments -31.7 -34.9 -9%
The Climate Products & Systems division sells via
wholesalers to residential and non-residential
sectors. Its sales regions are Northern, Western,
Southern and Eastern Europe, and Rest of the
World, including Brazil, China, Japan and the United
States. The main product categories within the
division are panel, tubular and electric radiators as
well as products for radiant heating and cooling
(RHC); including underfloor heating, air heating and
cooling, water distributions systems, and system
components and controls.
Net Sales
In January–December 2023, net sales for the Climate
Products & Systems division decreased by 18 per
cent to EUR 591.9 million (720.6). The organic decline
in net sales was 16 per cent. Acquisitions did not
contribute to the division’s net sales. The net impact
of changes in currencies was -1 per cent.
Net sales of radiators for the full year 2023
amounted to EUR 392.2 million (473.1). The weak
demand environment led to a decline in the organic
sales volume in radiators of around 20 per cent
during the year.
In 2023, net sales for the Climate Products &
Systems division declined due to weak market
environment throughout the year. The demand
remained weak in all regions, although some
markets stabilised towards the end of the year.
Profitability
In January–December 2023, adjusted EBITDA of the
Climate Products & Systems division increased by
10 per cent to EUR 78.5 million (71.7). The adjusted
EBITDA margin improved to 13.3 per cent (9.9).
For 2023, adjusted EBITDA margin increased due to
margin management actions in the divisions, which
was supported by the Accelerate PG programme.
Climate Solutions Division
EUR million 2023 2022 Change, %
Net sales 151.6 183.9 -18%
Adjusted EBITDA 23.7 29.9 -21%
Adjusted EBITDA
margin, % 15.6% 16.3%
Depreciations,
amortisations and
impairments -5.1 -4.5 14%
The Climate Solutions division sells integrated
solutions directly to installers from the company’s
Emmeti business in South Europe, its Thermotech
business in the Nordic region and its Merriott
business in the United Kingdom and Ireland. The
Climate Solutions division provides a comprehensive
set of heating and cooling solutions for customers
whose goal is to achieve energy savings and reduce
emissions generated by energy consumption.
Net sales
In January–December 2023, net sales for the Climate
Solutions division decreased by 18 per cent to EUR
151.6 million (183.9). The organic decline in net
sales was 19 per cent. The Thermotech business
contributed 2 per cent to the division’s net sales
growth. The net impact of changes in currencies was
-1 per cent.
In 2023, net sales for the Climate Solutions division
declined as a result of period of downturn in the
Italian market. The corresponding period last year in
Italy was strong due to governmental incentives. The
slowdown in the Nordics also impacted negatively to
the division’s net sales for 2023. The Emmeti business
in France and the Merriot business in Ireland
performed well instead and grew in net sales during
the year.
Profitability
In January–December 2023, adjusted EBITDA for the
Climate Solutions division decreased by 21 per cent
to EUR 23.7 million (29.9). The Thermotech business
contributed about EUR 1.0 million to the adjusted
EBITDA. The adjusted EBITDA margin was 15.6 per
cent (16.3).
The slight decrease in adjusted EBITDA margin
in 2023 was a result of lower volumes in the main
markets of the division, Italy and the Nordics. As a
response to lower volumes, margin management
actions were completed in the division, including
cost-saving actions within the Emmeti and the
Thermotech businesses.
Investments, acquisitions, structural
changes and R&D
Investments
Capital expenditure, excluding business
combinations and leased assets, totalled EUR
21.5 million (24.0) in January–December 2023. The
investments during the review period were related
primarily to strategic projects as well as factory
expansions and maintenance. The investments in
the comparison periods comprised mainly of factory
expansions.
Acquisitions and disposals
On 28 April 2023, Purmo Group announced that
it had signed an agreement to divest all of its
Russian operations to IPLS, including all related
assets and liabilities. Subsequent to the closing of
the transaction, Purmo Group will not have any
redemption liabilities in relation to the Russian
business. Completion of the transaction is subject
Annual Report 2023 55
Stories Information for shareholdersFinancialsGovernanceSustainability
to the approval of the relevant regulatory authority
in Russia. The process has taken longer than
expected. The company will publish the closing of the
transaction separately as soon as possible.
Purmo Group has classified its Russian business
as assets held for sale, resulting in non-recurring
impairments totaling EUR 12.9 million in 2022.
In March 2023, the redemption liability related
to Purmo Group’s Russian business increased
by EUR 1.3 million and, in September 2023, an
additional impairment on inventory of EUR 1.7
million was recognised. In the last quarter, the
Group recognised an additional impairment of
EUR 2.6 million on inventory and other assets.
For accounting purposes, the Russian business is
presented as continuing operations as it does not
meet the criteria for discontinued operations. Russia
represented circa 3 per cent of Purmo Group’s total
net sales in 2023.
Structural changes
On 28 November 2023, Purmo Group announced that
it has completed the consultation process concerning
the discontinuation of its radiator production plant in
Zonhoven, Belgium. According to the plan, part of the
radiator production in Zonhoven ceased at the end
of the fourth quarter of 2023, and the remainder will
close by the end of the first quarter of 2024.
According to the plan, the horizontal radiator
production was transferred during the fourth quarter
of 2023 from Zonhoven to be manufactured at the
Group’s most efficient production lines at its plant in
Rybnik, Poland.
Research and development
Product development within Purmo Group focuses
on connecting smart HVAC equipment, from the
energy source to thermal emitters, in one unified
and intelligent system. Combining and connecting
heat pumps with the heat emitters and other systems
offered by the Group maximises energy savings for
end-users. Additionally, focus is placed on minimising
material usage, including product packaging, and
on smart design that improves system performance.
Purmo Group also continues collaboration with its
network in the field of control systems.
In line with its strategy, Purmo Group’s pipeline
of smart products focuses on three clear strategic
priorities: intelligence and connectivity, sustainability
and aesthetics.
Research and development (R&D) expenditure
totaled EUR 5.3 million (6.1) in January–December 2023.
During 2023, Purmo Group launched new
products and improved its existing product ranges.
As an example, the company launched a new
radiator version of Kaba, called Kaba2, an oil-filled
radiator which is small in size and with a digital,
programmable thermostat. It has similar heat output
compared to radiators of larger size and its intuitive
control-interface allows for quick product setup and
selection of operating mode. Kaba2 comes in fully
recyclable packaging.
Purmo Group also launched the Unisenza Plus
App, which is a control system for heating or air
conditioning. The application includes an intuitive
user interface, which gives a fast overview of
heating and cooling system status. It is connected
to heating or cooling system remotely through
the Cloud and can be connected to other Purmo
thermal devices in the house.
In 2023, an upgraded range of oil-filled electric
radiators called Yali Plus was launched. The next
generation radiators include the Unisenza Plus
control system, with which users can decide when
their heating is active and avoid excess energy
consumption. The Unisenza application is available
for smart phones.
A significant improvement was also made to our
underfloor heating pipe material. The company now
offers the world’s most flexible PE-Xc pipe, enabling
easy and quick installation for customers.
Furthermore, Purmo Group launched a new iQ
control system. This advanced control system is
wirelessly connected and comes with several benefits,
such as a smart fireplace function, an option to
regulate both heating and cooling via any heat pump,
and radiator control for each desired room or zone.
In complete solutions, the company launched an
easy-to-install offering in Austria, which will expand
across Europe in the future. This solution combines
Purmo Group’s ULOW heat pump radiator, underfloor
heating products and a heat pump from a partner
of Purmo Group. It also includes other products from
Purmo Group as well as service and support.
During the year, the Group delivered first set of
improved, Radson-branded horizontal radiators
produced at its largest plant in Rybnik to the
customers across Benelux and France. The horizontal
radiator production was transferred from Zonhoven,
Belgium, to be manufactured at the Group’s most
efficient production lines at its plant in Rybnik,
Poland.
The new radiator offers an increased maximum
operating pressure and suits well for higher
buildings or buildings that are connected to district
heating. Pre-settled valve inserts of the radiator
makes hydraulic balancing easy and saves time
of an installer. Furthermore, it includes a range of
accessories, is offered in more than 70 colours and
comes with improved, sustainable packaging.
Strategy
The company’s growth strategy is built on three
pillars:
(i) scaling-up of solution-selling to provide complete
solutions and to capture growth potential in
underpenetrated markets;
(ii) launching and delivering smart products that are
more intelligent, sustainable and aesthetic; and
(iii) focusing on growth markets to capture the
biggest opportunities outside of current markets.
Annual Report 2023 66
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Growth is supported by M&A opportunities, which
will foster consolidation and expansion.
The strategy is further supported by continuous
improvement of operational excellence and by
investments in people and culture.
Strategy acceleration programme
On 5 October 2022, Purmo Group announced a
strategy acceleration programme, 'Accelerate PG',
to strengthen the execution of the strategy. The
programme focuses on improving net sales growth,
profitability and net working capital efficiency
to support reaching its financial targets. The
programme supports the financial development of
the Group.
Thanks to the good results within the programme
in 2023, Purmo Group will move beyond
implementing cost savings to growth initiatives in
2024. The company also updates the programme’s
target. The programme targets cumulative adjusted
EBITDA run-rate improvements of EUR 50 million
(previously: EUR 40 million), which are expected to be
reached by the end of 2024. The programme also
targets net working capital improvements of EUR
45 million by the end of 2024 (previously: more than
EUR 30 million).
Profitability improvements include both variable
and fixed cost savings. Additionally, the company
continues to assess opportunities for optimising its
manufacturing and supply chain footprint.
The costs for the programme, excluding non-
cash items, are expected to be approximately EUR
45 million, of which approximately EUR 34 million
was generated before the end of 2023, and the
remainder will incure in the first half of 2024. In
addition, non-cash costs for the programme were
EUR 11.0 in 2023 and, in 2024, non-cash costs are
expected to be below EUR 5.0 million.
Accelerate PG is delivering improvements ahead
of plan. Implemented adjusted EBITDA run-rate
improvements at the end of the fourth quarter
amounted to EUR 30.1 million. This was above
the original target of EUR 25 million at the end of
2023. For 2023, adjusted EBITDA periodic impact
amounted to EUR 16.0 million. The programme
has also realised a cumulative net working capital
improvement of EUR 20.6 million.
The most significant improvements within the
strategy acceleration programme have been
generated from pricing optimisation, procurement
savings and overhead cost reductions from operating
model changes. In addition, the Group achieved
improvements in net working capital efficiency. The
savings reported in the programme are incremental
and recurring and, thus, do not include inflationary
effects on either sales price or input costs.
As part of the programme, on 28 November 2023,
Purmo Group announced that it has completed the
consultation process with employee representatives
concerning the discontinuation of its radiator
production plant in Zonhoven, Belgium. According to
the plan, part of the radiator production in Zonhoven
was ceased by the end of the fourth quarter of 2023,
and the remainder will be closed by the end of the
first quarter of 2024. Consequently, the termination of
the employment of 136 employees follows.
After the review period, on 10 January 2024,
the Group announced that it has entered into
consultation with employee representatives
regarding its intention to relocate the production
from its plant in Hull, United Kingdom, with a
possible collective redundancy. The plant employs
37 employees working in the manufacturing of low
surface-temperature radiators, fan convectors and
other components.
Events after the review period
On 20 January 2024, Purmo Group announced
Shareholders’ Nomination Board proposal to the
Annual General Meeting 2024 planned to be held on
9 April 2024.
The Shareholders’ Nomination Board proposes to
the Annual General Meeting that the remuneration
would not change and the members of the Board of
Directors be paid annual fees as follows:
• EUR 92,000 for the Chairman of the Board;
• EUR 53,000 for the Vice Chairman of the Board;
• EUR 53,000 for each of the Chairmen of the Board
committees; and
• EUR 48,000 for each ordinary Board member.
The Shareholders’ Nomination Board proposes
that approximately 40% of the annual fee be paid in
Purmo Group’s class C shares. The Board members
are encouraged to keep such shares for the entire
duration of their board assignment.
The Shareholders’ Nomination Board proposes
to the Annual General Meeting that, in addition to
annual fee, a meeting fee be paid to the members of
the Board of Directors for each meeting of the Board
and its committees as follows:
• EUR 800 per meeting held in the Board member’s
country of residence;
• EUR 1,400 per meeting held outside the Board
member’s country of residence but on the same
continent as the Board member’s country of
residence;
• EUR 2,600 per meeting held on another continent
than the Board member’s country of residence; or
• EUR 800 per meeting held by telephone or
through virtual communication channels.
In addition, it is proposed that an additional
meeting fee of EUR 800 be paid to the Chairman
of the Board and the Chairmen of the Board
Committees for each meeting of the Board and its
committees.
The Shareholders’ Nomination Board proposes
to the Annual General Meeting that the number of
members of the Board of Directors shall be seven (7).
The Shareholders’ Nomination Board proposes
that the present members of the Board of Directors
Tomas von Rettig, Matts Rosenberg, Alexander
Ehrnrooth, Carina Edblad, Carlo Grossi, Jyri
Luomakoski and Catharina Stackelberg-Hammarén
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would be re-elected as members of the Board of
Directors until the end of the next Annual General
Meeting.
On 10 January 2024, Purmo Group announced
that it launches a consultation process to relocate its
manufacturing from Hull, United Kingdom. The plant
employs 37 employees working in the manufacturing
of low surface-temperature radiators, fan convectors
and other components. The production of these
products could possibly be relocated to other
manufacturing locations in the United Kingdom.
Financial targets and dividend policy
Purmo Group has set the following financial targets
and dividend policy.
Growth
Purmo Group is targeting organic net sales growth
in excess of market growth. In addition, Purmo
Group aims for notable inorganic growth through
acquisitions.
In January-December 2023, the organic decline
in net sales was 17 per cent, while total net sales
decreased by 18 per cent to EUR 743.2 million (904.1).
Net sales for the Group declined due to slowdown
in residential new building and renovation markets
during the year. Most of the regions in both business
divisions remained weak in 2023, although partial
recovery were seen in Italy and Poland towards the
end of the year.
Profitability
Purmo Group is targeting an adjusted EBITDA margin
above 15 per cent in the medium- to long-term.
In January-December 2023, the adjusted EBITDA
margin improved to 12.4 (10.3) per cent.
The increase in adjusted EBITDA was driven
by systematic margin management and good
performance in the Accelerate PG programme.
The strategic transition to a solutions business
and the Accelerate PG programme are expected to
expand the adjusted EBITDA margin towards the 15
per cent medium- to long-term target.
Leverage
The leverage ratio is targeted not to exceed 3.0x,
measured as interest bearing net debt / Adjusted
EBITDA on a rolling twelve-month basis. However,
leverage may temporarily exceed the target level,
for example, in conjunction with acquisitions or
restructuring actions.
At the end of December 2023, net debt / adjusted
EBITDA was 2.38 (2.96). The decrease in the ratio
was due to lower level of net debt mainly as a result
of the issuance of the hybrid bond of EUR 60.0 million
in February 2023.
Dividend
Purmo Group’s aim is to distribute at least 40 per
cent of annual net profit as dividends or return of
capital, intended to be paid out after considering
earnings trends for the Group, its financial position
and future growth potential.
For financial year 2023, the Board of Directors of
Purmo Group Plc proposes to the Annual General
Meeting planned to be held on 9 April 2024 that a
return of capital of EUR 0.36 per class C share and
EUR 0.07 per class F share shall be paid. The return
of capital is proposed to be paid in four instalments
on 26 April 2024, 26 July 2024, 25 October 2024 and
24 January 2025.
Financial guidance for 2024
Adjusted EBITDA in 2024 is expected to be on a
similar or higher level than in 2023 (EUR 92.3 million).
The stock levels of wholesalers have stabilised,
and the lower interest rates support the expectations
for gradual market activity improvement during
2024. Strong margin management actions, which will
continue in 2024, provide confidence in the guidance
for the Group.
The strategy acceleration programme, Accelerate
PG, performs ahead of plan and further underpins
Purmo Group’s outlook for 2024. The company
updates the target for the programme. The
programme targets cumulative adjusted EBITDA
run-rate improvements of EUR 50 million (previously:
EUR 40 million), which are expected to be reached
by the end of 2024. The programme also targets net
working capital improvements of EUR 45 million by
the end of 2024.
Non-Financial information
This section describes Purmo Group’s non-
financial information as required in Chapter Finnish
Accounting Act on non-financial information
(NFI). For more information about Purmo Group’s
Sustainability, please visit the company’s website.
Business model
Purmo Group, headquartered in Finland, is a leading
manufacturer and supplier of sustainable indoor
climate comfort solutions, specialising in heating and
cooling solutions. Purmo Group makes embedded
radiant-heating and cooling systems, air-based
heating and cooling systems (including ventilation),
hydronic and electric radiators, dedicated hydronic
and electronic controls and piping distribution
systems. Purmo Group products are manufactured
for residential buildings (both new builds and
renovations), commercial buildings, industrial
buildings, and public spaces such as airports,
schools, and hospitals. The products are mainly
sold via sanitary and heating wholesalers, but also
directly to installers.
The company's strategy is to leverage its leadership
position in sustainable indoor comfort climate
solutions with a well-known brand portfolio and
strong relationships with key technical wholesalers to
increasingly provide integrated solutions.
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With heating and cooling of household buildings
making up 18% of total energy consumption in
Europe, the company’s vision is that indoor climates
should not cost the planet’s climate. The industry
can help to create a significant positive impact on
the planet’s future, which is why Purmo Group’s aim
is to create value for society by delivering smart,
connectable, sustainable, and aesthetic solutions.
Purmo Group’s Complete Care sustainability
strategy puts climate at the heart of its business
and covers four key areas, our production, our
solutions, our people, and our communities. These
are enabled by strong governance, safe working
practices, and ethical behaviour.
Material issues in sustainability
To comply with the new EU legislation, Corporate
Sustainability Reporting Directive (CSRD), and to drive
sustainability work forward, Purmo Group conducted
a double materiality analysis in 2023 based on
Corporate Social Reporting Directive (CSRD) and
European Sustainability Reporting Standards (ESRS).
Through the double materiality analysis,
Purmo Group's material sustainability matters
were identified. A sustainability matter is material
from an impact perspective when it pertains
to the company’s impact on people and/or
the environment. It is material from a financial
perspective if the sustainability-related risks and
opportunities trigger a material financial effect.
The process of double materiality started with
mapping Purmo Group’s impacts (actual/potential,
positive/negative, and over short-, medium- or
long-term
1
) as well as sustainability-related financial
risks and opportunities (over short-, medium- or
long-term). This led to a ‘long’ list of IROs (impacts,
risks, and opportunities). The identification of
IROs was focused on both activities within Purmo
Group’s operations and across the upstream and
downstream value chain.
Desktop research involving a review of internal
and external sources, such as Purmo Group’s last
sustainability report and industry reports, was also
carried out.
To complement the desktop research, a
stakeholder dialogue was carried out with selected
members from Purmo Group’s operations and
external stakeholders (e.g. supplier, customer) and
experts both from within the industry and other
relevant organizations to provide views of affected
stakeholders.
1
Short-term is defined as 1-3 years, medium-term is 3-5 years and long-term is 5-10 years.
Purmo Group's value chain
Purmo Group
Raw material ProductionSuppliers
Head Quarter &
Sales offices CustomerLogistics End-user
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‘Net’ list and material sub-topics based on set thresholdThis was followed by an assessment of each
identified sustainability matter to arrive at a shorter
‘net’ list. The assessment of the ‘net’ list was based on
factors as defined in the ESRS. For actual negative
impacts, the severity
2
was analysed and for potential
negative impacts, the likelihood was also considered.
For actual positive impacts, the scale and scope
were analysed and for potential positive impacts,
their likelihood was also considered. Sustainability-
related financial risks and opportunities, on the other
hand, were assessed based on the magnitude of
financial effect and likelihood of occurrence.
An appropriate threshold was discussed together
with external experts, and the defined threshold was
then applied to determine the identified impacts,
risks and opportunities as material sub-topics. The
following graph is a representation of the ‘net’ list
and material sub-topics for Purmo Group.
The material sub-topics were grouped into five
material topics and thirteen sub-topics which were
validated by Purmo Group’s management team.
Severity or financial effect
IMPACT, negative
2
Greenhouse gas emissions
3
Energy consumption
4
Substances of concern
5
Water consumption
6
Land degradation as a result of
mining of raw materials
8
Packaging materials
9
Decent working conditions for
migrant workers
10
Employees’ health and safety
11
Value chain workers health
and safety
13
Management of relationships
with suppliers
IMPACT, positive
1
Energy efficient products
7
Sustainable material choices
12
End-users' health and safety
Financial RISK
14
Climate change crisis management
15
Waste management
17
Employees’ health and safety
18
Corruption and bribery
Financial OPPORTUNITY
16
Climate change driven market demand
19
Legislation related toenergy efficiency
5
4
3
2
1
1 2 3 4 5
Likelihood
15
12
9
4
13
10
1
8
3
5
7
16
14
2
6
11
19
18
17
2
Severity is a measure of impact’s scale, scope, and irremediable character.
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Purmo Group’s material topics including sub-topics
Code of Conduct and policies
Purmo Group respects in all activities the International
Labour Organisation’s (ILO) Declaration on
Fundamental Principles and Rights at Work and
complies with local and international laws, regulations
and guidelines to ensure the well-being and rights of
Group personnel. The Purmo Group Code of Conduct
sets the ethical principles that lead all activities in
the Group. The Code of Conduct is aligned with
the United Nations Global Compact. Purmo Group
expects its employees, suppliers and other business
partners to comply with the same ethical principles.
In addition, specific policies have been established
on Group and local levels where relevant to ensure
sustainable compliance with the Code of Conduct.
Purmo Group has a whistleblowing channel for
both internal and external parties where anyone can
anonymously report any suspected wrongdoing via a
link found in the Group intranet and corporate website.
The channel provides the opportunity for personnel
and external parties to report any suspected
breach of laws or principles laid out in the Code of
Conduct. All reports are treated as confidential and
in accordance with legal requirements. Promoting
the importance of reporting observations is part of
continuous internal communication.
Tax transparency review
Purmo Group is a responsible taxpayer. By paying
and collecting direct and indirect taxes, companies
contribute to the societies where they operate.
Purmo Group has a Tax Policy, which is reviewed
and approved by the Audit Committee and Board
of Directors. It covers tax management principles
(including control of tax risk), accountabilities and
responsibilities of the Group Tax Function and
the companies, use of tax advisors as well as
governance. Purmo Group follows below principles
in the tax management:
• Purmo Group is committed to comply with
applicable domestic as well as international
and EU tax regulations, standards and guidance
concerning both the letter and spirit of the law
• Purmo Group tax management is based on
sustainability goals, and taxes should be an
integral part of Purmo Group’s business planning,
processes and decision making
• Purmo Group entities are not to engage in any
artificial arrangements or aggressive tax planning
• OECD transfer pricing principles are followed, and
the pricing of transactions is at arm’s length
• The Group does not engage in uncooperative
jurisdictions identified by OECD or EU
Group Tax also seeks an open dialogue with our
stakeholders, including customers, business partners,
employees and the communities in which the Group
operates.
Risk management
Purmo Group’s risk management approach is a
Group-wide process that is guided by the Enterprise
Risk Management Policy and encompasses all
business units. The risk management process maps
Group-wide risks annually. The process is monitored
by the Core Leadership Team and reviewed by the
Board of Directors. Sustainability issues are assessed
as their own risk category, which is the responsibility
of the Head of Sustainability, Safety and Wellbeing.
Governing sustainability
Purmo Group’s Board of Directors approves the
Sustainability Policy and decides on the Group-level
sustainability strategy and target-setting that will guide
the annual business planning. They also review Purmo
Group’s sustainability performance and reporting.
Purmo Group’s Core Leadership Team ('CLT') is
responsible for setting the sustainability objectives and
proposing Purmo Group’s sustainability targets for
approval by the Board of Directors. The CLT monitors
the sustainability performance on a bi-monthly basis.
Purmo Group’s Head of Sustainability, Safety
and Wellbeing, with the support of the ESG
steering Group, is responsible for coordinating
and developing sustainability at the Purmo Group
level. This includes the Sustainability Policy and
related Group-level instructions and manuals. The
Head of Sustainability, Safety and Wellbeing is also
responsible for monitoring the policy implementation
and for performance reporting to the CLT on a bi-
monthly basis. Purmo Group’s Head of Sustainability,
Energy, water and emissions Product development Circular economy Health and safety Responsible Sourcing
• Energy consumption
• Water consumption
• Greenhouse gas emissions
• Energy efficient products
• Legislation related to energy efficiency
• Climate change-driven market demand
• Sustainable material choices
• Packaging materials
• Employees’ health
and safety
• Management of relationships with suppliers
• Value chain workers’ health and safety
• Climate change crisis management
• Land degradation as a result of mining of raw materials
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Stories Information for shareholdersFinancialsGovernanceSustainability
Safety and Wellbeing leads sustainability in the
development of common goals, targets, instructions,
and procedures in the whole company.
Environment
Purmo Group’s environmental commitments are to
align its operations to a 1.5 celsius future, increase
resource efficiency, reduce waste, and source key
materials responsibly. In 2023, Purmo Group's Scope
1 and Scope 2 emissions decreased by 19 per cent
and GHG emissions from produced steel declined by
24 per cent. These were a result of lower production
volumes during the year.
All Purmo Group’s manufacturing plants manage
environmental impacts through environmental
management systems that have locally determined
procedures in place to monitor and continuously
promote its environmental performance. All the
manufacturing plants are ISO14001 certified. In
addition, Purmo Group aims to achieve ISO 50001
energy management certification in all its plants. Two
of Purmo Group’s manufacturing plants, in Germany
and Hungary, were ISO 50001 certified in 2023.
In 2023, Purmo Group announced its cooperation
with H2 Green Steel for near zero-emission steel
supply. Under the binding agreement, the Group will
purchase 140,000 tonnes of green steel during 2026-
2033. Furthermore, the Group submitted its Science
Based Targets to the SBTi organisation for validation,
which is expected in 2024.
Environmental risks deal with increasing regulation
on topics such as the energy efficiency of products
and the EU’s Carbon Border Adjustment Mechanism
(CBAM), which entered its transitional phase from
October 2023 with the permanent system in force
from 1 January 2026, which may negatively impact
Purmo Group’s business operations and investments.
To mitigate these risks, Purmo Group aims to develop
and source products that comply with the highest
energy efficiency ranking in their category. Purmo
Group also plans to take the possibility of a carbon
tax into consideration in the Group’s investment
activities, where the carbon tax would be relevant to
the planned operating model. The risk of a potential
carbon tax is further diminished by the fact that
Purmo Group's business units primarily serve their
home region, mainly to and from Europe.
Investor Relations
Sustainability, Safety
and Wellbeing
Risk management
Legal
Human Resources
Finance
Communications
ESG Governance model
ESG Governance model illustrates the relationship between management,
ESG steering group, company functions and business divisions.
ESG steering group
Stakeholders
Investors
Climate
Products &
Systems
Climate
Solutions
Board of Directors
Audit committee
Core leadership team
Scope 1 and Scope 2 emissions,
tCO
2
e
86,780
79,035
63,898
2021 2022 2023
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EU taxonomy assessment
Purmo Group is subject to the Non-Financial
Reporting Directive (NFRD) and is required, under
EU Taxonomy Regulation 2020/852, to disclose
the extent to which its economic activities have a
substantial positive environmental impact.
Taxonomy-eligibility describes if an economic
activity is included in the scope of activities
recognised in the Taxonomy Regulation. In the
Annual Reports for 2022, published in 2023,
companies were obligated to report also the share of
Taxonomy-alignment in their operations. Taxonomy-
alignment describes if an economic activity is
sustainable based on defined science-based
technical screening criteria specified for the activity.
During the first two reporting years (2021-2022)
of the EU Taxonomy, the focus was on activities
contributing to climate objectives, climate change
mitigation and adaptation, according to the EU
Climate Delegated Act. In 2023, four additional
activities were added to the scope of EU taxonomy:
sustainable use and protection of water and marine
resources, transition to a circular economy, pollution
prevention and control and, finally, protection and
restoration of biodiversity and ecosystems.
An economic activity is classified as taxonomy
aligned if it:
• Contributes substantially to one or more of the
taxonomy’s six environmental objectives: climate
change mitigation, climate change adaptation, the
sustainable use and protection of water and marine
resources, the transition to a circular economy,
pollution prevention and control, and the protection
and restoration of biodiversity and ecosystems;
• Does not do any significant harm to any other
environmental objective;
• Is in alignment with the OECD Guidelines for
Multinational Enterprises and UN Guiding
Principles on Business and Human Rights,
including the International Labour Organisation’s
(‘ILO’) declaration on Fundamental Rights and
Principles at Work, the eight ILO core conventions
and the International Bill of Human Rights.
Minimum safeguards
Taxonomy Regulation specifies that in addition to
substantial contribution and 'do no significant harm'
criteria, an economic activity can be considered
environmentally sustainable only if it is carried out
in compliance with the minimum safeguards. The
minimum safeguards prevent activities from being
labelled sustainable if they violate human or labour
rights, or engage in corrupt, anti-competitive or
noncompliant taxation practices. The compliance
can be assessed by ensuring there are adequate
processes and controls in place in the areas of human
rights, corruption, taxation and fair competition and
there are no breaches or violations existing.
Purmo Group assessed compliance with minimum
safeguards by reviewing the company processes for
human rights, corruption, taxation and fair competition.
Whilst we recognise the need to continuously improve,
Purmo Group considers its processes to be on a robust
level and with no violations to meet the alignment
with the minimum safeguards. In 2023, Purmo Group
prepared human rights impact assessment with the
aim to have formalised continuous human rights due
diligence process in place.
EU taxonomy eligible products of Purmo
Group based on 2023 assessment:
• Radiators: Radiators are included under
economic activity 3.5 Manufacture of energy
efficiency equipment, where the description refers
to, among others, NACE code C25 (including
C25.21 Manufacture of central heating radiators
and boilers as defined in chapter 1.1.3.1. in Annex
I to the Taxonomy regulation Delegated Act).
Electric radiators have been excluded as they are
not part of central heating.
• Heating and cooling: Cooling and ventilation
systems are included under economic activity
3.5, where the technical screening criteria refers
in particular to 3.5 (i) cooling and ventilation
systems, 3.5(k) heat pumps.
• Convectors: Included under economic activity 3.5
(Manufacture of central heating radiators and
boilers).
• Radiant heating and cooling: Underfloor heating
systems (UFH) are included under economic activity
3.5 Manufacture of energy efficiency equipment as
they are part of central heating systems.
• System components: Included under economic
activity 3.5, in particular, 3.5(m) energy-efficient
building automation and control systems, 3.5(n)
zoned thermostats and devices for the smart
monitoring of the main electricity loads and heat
loads, 3.5(o) products for heat metering and
thermostatic controls for individual homes, and for
central heating systems.
• Water distribution systems: The product category
mainly includes generic pipes and related
equipment, which are not listed as relevant
economic activities.
• Chimneys: Chimneys are not listed as a relevant
economic activity.
EU taxonomy aligned products of Purmo
Group based on 2023 assessment:
In June 2023, the European Commission published
an Environmental Delegated Act, covering the four
remaining environmental objectives. In accordance
with the regulation, Purmo Group performed an
eligibility assessment for the activities listed under
the Environmental Delegated Act. No new material
economic activities were identified in the 2023
eligibility assessment.
During 2023 EU Taxonomy assessment, Purmo
Group also covered the amendments to the Climate
and Disclosure Delegated Acts, yielding no major
adjustments to our prior reporting. An update on
the DNSH (Do No Significant Harm) analysis as
well as MS (Minimum Safeguards) analysis were
Annual Report 2023 1313
Stories Information for shareholdersFinancialsGovernanceSustainability
also performed as part of our 2023 EU taxonomy
evaluation.
Purmo Group’s taxonomy aligned turnover
consists mostly of solution sales (total package
installations) under the activity 3.5. Manufacture
of energy efficiency equipment for buildings. The
total package deliveries include underfloor heating
equipment, automation, control valves and, in some
cases, also heat pumps.
In 2023, Purmo Group identified the following as
EU taxonomy aligned products and carried out the
assessments for Taxonomy-eligibility and Taxonomy-
alignment based on the best interpretation of the
Taxonomy Regulation and the Climate Delegated
Act and the currently available guidelines from the
European Commission.
• Radiant heating and cooling: underfloor heating
systems under economic activity 3.5; underfloor
heating systems specifically sold through the
company’s business Thermotech in the Nordics.
• System components: in particular solutions sold
by the company’s business Emmeti in Italy, which
includes a FEBOS system.
The portion of the aligned turnover is lower than
that of the eligible turnover, due to the fact that
Purmo Group’s radiator and underfloor heating
product categories initially identified as eligible do
not fulfil the substantial contribution criteria due to
the fact that there is no required energy labelling
currently available for these products.
Social and employee matters
Purmo Group is committed to building and maintaining
a diverse workforce and inclusive work environments,
opposing all forms of bullying and discrimination, and
fostering equal opportunities in recruitment, learning
and development, and remuneration, where decisions
are made against objective selection criteria. These
commitments are outlined in our global Equality,
Diversity, and Inclusion Policy.
Other global policies specific to social and
employee-related matters include the Health and
Wellbeing Policy as well as policies on recruitment
and onboarding, learning and development, and
employee engagement, for which policies are
complemented with local policies and, where
relevant, with additional global guidelines.
The Human Resources Department is responsible
for monitoring and updating the global policies,
whereas local policies and procedures are subject
to monitoring and continuous improvement at the
country level.
Purmo Group operates many factories and
warehouses with heavy equipment and materials
that can pose risks on employees’ health if proper
procedures and processes are not followed. To tackle
this risk, safe working practices have been embedded
in the sustainability strategy, and all Purmo Group’s
operations are covered by health and safety policies
and procedures implemented on the country level.
In 2023, a strong focus in Health and Safety
continued due to the increase in LTIFR and number
of accidents for the Group. The Lost Time Injury
Frequency Rate increased by 29 per cent and
number of accidents increased by 18 per cent.
The Health and Safety strategy was developed
followed by an extensive stakeholder engagement.
Furthermore, a Safety network and Safety steering
group along with clear governance was established
during the year.
Loss of key people or inability to attract talent can
have an adverse impact on Purmo Group’s business
and operations. To continue to attract and retain top
talent, Purmo Group aims to offer a mix of interesting
career opportunities and employee benefits at an
industry-leading and fast-developing company.
Employee turnover and satisfaction are monitored
regularly at Purmo Group. In 2023, the Group carried
out a company-wide employee survey, covering
ten areas and including an Employer net promoter
score: 'How likely is it that you would recommend
Purmo Group as an employer to a friend or an
acquaintance?'. The score from the 2023 survey
reached -8, remaining on the same level at -8 in
the previous year. The Group increased learning
and development discussions in addition to regular
feedback mechanisms for all company’s employees
during the year.
During 2023, Purmo Group launched or organised
several compulsory trainings for its office employees,
including trainings related to Code of Conduct
(99 per cent completion rate), Anti-Bribery and
Corruption (92 per cent completion rate) and Circular
Economy (92 per cent completion rate).
Human rights
Purmo Group is committed to respecting
internationally acknowledged human rights and has
focused on human rights matters in its own operations,
such as labour rights and health and safety.
In 2023, Purmo Group established Human Rights
Policy that outlines commitment to respect and
support Human Rights, based on the principles
and values set forth in the United Nations Guiding
Principles on Business and Human Rights (UNGPs).
Accordingly, Purmo Group completed Human Rights
Impact Assessment, and the work on developing
a robust Human Rights Due Diligence (HRDD)
approach was started. The implementation of the
HRDD will expand the human rights work under the
topic of sustainable supply chain and sourcing.
The steps of the impact assessment included
mapping the company's operations, products, country
context and value chain. In addition, the assessment
identified the key stakeholders in the company's value
chain that are relevant to human rights responsibilities,
and analysed the human rights impacts and risks
in the value chain. Finally, the risks identified were
prioritised. The company focuses in particular on
health and safety and the supply chain in relation to
human rights issues. Purmo Group further complies
with all relevant local and international regulations,
such as the United Kingdom Modern Slavery Act
2015. Purmo Group expects equivalent standards of
conduct from all persons acting on its behalf, such as
suppliers, agents, and business partners.
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Anti-corruption and bribery
Ethical behaviour and strong governance are part
of the foundation for Purmo Group’s sustainability
strategy. Purmo Group has zero tolerance towards
bribery and corruption.
The Code of Conduct outlines the approach for
ethical business conduct and is complimented by
global policies, such as Anti-Corruption and Anti-
Bribery Policy, Competition Law Compliance Policy,
and Financial Crime Risks Policy.
All Purmo Group employees are expected to
familiarise themselves with the Anti-Corruption and
Anti-Bribery Policy, conduct annually mandatory
training on the Code of Conduct’s anti-corruption
elements, and speak up and report concerns.
Employees at greatest risk of facing corruption –
especially those in the supply chain, international
sales, contracting or procurement – are provided
with additional training on avoiding, preventing,
recognising, and reporting bribery and corruption.
All business units are also expected to reasonably
investigate intermediaries and to include anti-
corruption clauses in contracts.
Purmo Group’s most significant risks in corruption
and bribery deal with corrupt arrangements that
may involve extortion or collusion by Purmo Group’s
employees and other individuals to steal, falsify, or
destroy company assets or business information for
personal gain. Purmo Group mitigates these risks
through annual training to increase risk awareness,
via internal procedures, implementation of
prevention processes, and investigation of red flags.
Summary of key non-financial performance indicators
EUR million 2023 2022 Change, %
Production
Scope 1 and 2 GHG emissions, tCO
2
e
1
⁸ 63,898 79,035 -19%
Scope 3 GHG emissions from procured steel, tCO
2
e
2
211,445 279,578 -24%
Scope 1 and 2 carbon intensity
3
⁸ 86.0 87.4 -2%
Solutions
Customer Net Promoter Score, cNPS
4
46 33 39%
Customer Sustainability Net Promoter Score, sNPS
5
21 8 163%
People
Lost Time Injury Frequency Rate, LTIFR
6
⁸ 6.3 4.9 29%
Number of safety observations
⁸ 1,032 1,218 -15%
Number of accidents
⁸ 33 28 18%
Employee Net Promoter Score, eNPS⁷ -8 -8
Proportion of women in senior management positions 26% 27%
Communities
Number of volunteering hours
⁸ 7,213 6,680 8%
1
Market based GHG emissions based on Purmo Group’s procurement mix of electricity and gas in countries with manufacturing operations.
2
2021 World Steel Association data of 1.89 tCO
2
e embodied carbon produced for every tonne of crude steel cast.
3
tCO
2
e/net sales in EUR million.
4
Question asked: ‘How likely is it that you would recommend <Purmo brand> to a friend or colleague?‘
5
Question asked: ‘How likely is it that you would recommend <Purmo brand> to a friend or colleague as a leader in sustainable indoor climate comfort?‘
6
Lost Time Injury Frequency Rate (LTIFR) is the number of lost time injuries occurring in a workplace per 1 million hours worked.
7
Question asked: ‘How likely is it that you would recommend Purmo Group as an employer to a friend or an acquaintance?’
⁸ Comparison figures recalculated due to additional data received after the publication of previous interim reports.
Annual Report 2023 1515
Stories Information for shareholdersFinancialsGovernanceSustainability
EU taxonomy accounting principles
The KPIs reported in the EU Taxonomy are presented
in separate tables for turnover, CapEx and OpEx as
defined in the regulation. The accounting principles
for the KPIs have been described below. Purmo
Group avoids double counting by having a clear cost
structure in reporting which ensures that the cost
elements are separate for each activity.
Turnover
The total turnover is the Group’s total net sales in
2023, which respectively includes the IFRS 15 income
according to the EU Taxonomy turnover definition.
The external sales connected to the economic
activities are correspondingly reported under
Taxonomy-eligible turnover, either under Taxonomy-
aligned or not Taxonomy-aligned.
Operating Expenses
The total Operating Expenses (OpEx) consist of the
Group’s direct non-capitalised expenses related to
research and development and maintenance and
repair related to maintaining tangible fixed assets.
Purmo Group’s taxonomy OpEx figures include
expenses presented in Cost of sales and Research
and development expenses in the Consolidated
Financial Statements. OpEx excludes depreciations,
amortisations and impairments. The OpEx figures
only include the proportion of expenses which are
within the scope of the EU taxonomy regulation.
The total OpEx used in the calculation was EUR 17.0
million in 2023.
Breakdown of
the OpEx KPI
Taxonomy
aligned activities
(A.1)
EUR million
Taxonomy-
eligible but not
taxonomy-aligned
activities
(A.2)
EUR million
R&D related 0.5 3.8
Building renovation
measures,
maintenance &
repair 0.0 11.7
Total OpEx
(A.1 + A.2) 0.5 15.5
Capital Expenditure
The total CapEx is the Group's total property, plant
and equipment expenditure in 2023, as presented
in the Note 3.3 Property, plant and equipment in the
Consolidated Financial Statements on the line of
additions, excluding line transfers. The investments
are related to the assets or processes associated with
the respective economic activities. The total CapEx
used in the calculation was EUR 19.7 million in 2023.
Breakdown of
the CapEx KPI
Taxonomy
aligned activities
(A.1) EUR million
Taxonomy-eligible
but not taxonomy-
aligned activities
(A.2) EUR million
Additions, less
transfers, to
property, plant
and equipment 0.2 12.8
Total CapEx
(A.1 + A.2) 0.2 12.8
Annual Report 2023 1616
Stories Information for shareholdersFinancialsGovernanceSustainability
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')
Economic activties Code Turnover
Proportion
of turnover,
year 2023
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Minimum
safeguards
Proportion
of Taxonomy
aligned (A.1.) or
eligible (A.2.)
turnover,
year 2022
Category
enabling
activity
Category
transitional
activity
MEUR %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
Manufacture of energy efficiency
equipment for buildings CCM 3.5 26.8 4% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 6% E
Turnover of environmentally sustainable
activities (Taxonomy-aligned) (A.1) 26.8 4% 4% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 6%
Of which Enabling 26.8 4% 4% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y % E
Of which Transitional 0 0% 0% Y Y Y Y Y Y Y % T
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
Manufacture of energy efficiency
equipment for buildings CCM 3.5 598.6 81% EL N/EL N/EL N/EL N/EL N/EL 79%
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2) 598.6 81% 81% 0% 0% 0% 0% 0% 79%
A. Turnover of Taxonomy eligible activities
(A.1+A.2) 625.4 84% 84% 0% 0% 0% 0% 0% 84%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible
activities 117.8 16%
Total 743.2 100%
Y - Yes, Taxonomy eligible and Taxonomy-aligned activity with the relevant environmental objective
N - No, Taxonomy eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
EL - Taxonomy eligible activity for the relevant objective
N/EL - Taxonomy non-eligible activity for the relevant objective
Annual Report 2023 1717
Stories Information for shareholdersFinancialsGovernanceSustainability
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')
Economic activties Code CapEx
Proportion
of CapEx,
year 2023
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Minimum
safeguards
Proportion
of Taxonomy
aligned (A.1.)
or eligible (A.2.)
CapEx,
year 2022
Category
enabling
activity
Category
transitional
activity
MEUR %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
Manufacture of energy efficiency
equipment for buildings CCM 3.5 0.2 1% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 3% E
CapEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1) 0.2 1% 1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 3%
Of which Enabling 0.2 1% 1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y % E
Of which Transitional 0% 0% 0% Y Y Y Y Y Y Y % T
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
Manufacture of energy efficiency
equipment for buildings CCM 3.5 12.8 65% EL N/EL N/EL N/EL N/EL N/EL 78%
CapEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2) 12.8 65% 65% 0% 0% 0% 0% 0% 78%
A. CapEx of Taxonomy eligible activities
(A.1+A.2) 13.0 66% 66% 0% 0% 0% 0% 0% 81%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities 6.7 34%
Total 19.7 100%
Y - Yes, Taxonomy eligible and Taxonomy-aligned activity with the relevant environmental objective
N - No, Taxonomy eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
EL - Taxonomy eligible activity for the relevant objective
N/EL - Taxonomy non-eligible activity for the relevant objective
Annual Report 2023 1818
Stories Information for shareholdersFinancialsGovernanceSustainability
Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm')
Economic activties Code OpEx
Proportion
of OpEx,
year 2023
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Climate
Change
Mitigation
Climate
Change
Adaptation Water Pollution
Circular
Economy
Bio-
diversity
Minimum
safeguards
Proportion of
Taxonomy
aligned (A.1.)
or eligible (A.2.)
OpEx,
year 2022
Category
enabling
activity
Category
transitional
activity
MEUR %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
Manufacture of energy efficiency
equipment for buildings CCM 3.5 0.5 3% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 2% E
OpEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1) 0.5 3% 3% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 2%
Of which Enabling 0.5 3% 3% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y % E
Of which Transitional 0 0% 0% Y Y Y Y Y Y Y % T
A.2 Taxonomy-Eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
EL; N/EL
(f)
EL; N/EL
(f)
EL; N/EL
(f)
EL; N/EL
(f)
EL; N/EL
(f)
EL; N/EL
(f)
Manufacture of energy efficiency
equipment for buildings CCM 3.5 15.0 88% EL EL N/EL N/EL N/EL N/EL 91%
OpEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2) 15.0 88% 88% 100% 0% 0% 0% 0% 91%
A. OpEx of Taxonomy eligible activities
(A.1+A.2) 15.5 91% 91% 100% 0% 0% 0% 0% 93%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities 1.5 9%
Total 17.0 100%
Y - Yes, Taxonomy eligible and Taxonomy-aligned activity with the relevant environmental objective
N - No, Taxonomy eligible but not Taxonomy-aligned activity with the relevant environmental objective
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
EL - Taxonomy eligible activity for the relevant objective
N/EL - Taxonomy non-eligible activity for the relevant objective
Annual Report 2023 1919
Stories Information for shareholdersFinancialsGovernanceSustainability
Template 1 Nuclear and fossil gas related activities
Row Nuclear energy related activities
1
The undertaking carries out, funds or has exposures to research, development, demonstration
and deployment of innovative electricity generation facilities that produce energy from nuclear
processes with minimal waste from the fuel cycle. NO
2
The undertaking carries out, funds or has exposures to construction and safe operation of new
nuclear installations to produce electricity or process heat, including for the purposes of district
heating or industrial processes such as hydrogen production, as well as their safety upgrades,
using best available technologies. NO
3
The undertaking carries out, funds or has exposures to safe operation of existing nuclear
installations that produce electricity or process heat, including for the purposes of district heating
or industrial processes such as hydrogen production from nuclear energy, as well as their safety
upgrades. NO
Fossil gas related activities
4
The undertaking carries out, funds or has exposures to construction or operation of electricity
generation facilities that produce electricity using fossil gaseous fuels. NO
5
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation
of combined heat/cool and power generation facilities using fossil gaseous fuels. NO
6
The undertaking carries out, funds or has exposures to construction, refurbishment and operation
of heat generation facilities that produce heat/cool using fossil gaseous fuels. NO
Annual Report 2023 2020
Stories Information for shareholdersFinancialsGovernanceSustainability
Shares and shareholders
Basic share information
Listed on Nasdaq Helsinki
Stock Purmo Group C
Trading code PURMO
ISIN code FI4000507488
Number of class C shares 41,112,713
Number of class F shares 1,565,217
High, EUR 9.04
Low, EUR 5.92
Volume-weighted average price, EUR 7.31
Closing price, EUR, 29 December 2023 6.70
Market capitalisation, class C share,
EUR million, 31 December 2023 275.5
Number of shareholders
3,254
(31 Dec 2022: 3,315)
Number of traded shares 1,185,061
Purmo Group Plc has two share classes of which
class C shares are listed, and class F shares are held
by Purmo Group Plc’s founding shareholder, Virala
Corporation.
The company’s class F shares are subject to
redemption and consent clauses in accordance with
the Articles of Association, which restrict the rights
to transfer and acquire class F shares. The holder
of class F shares have right to demand conversion
into class C shares subject to certain price hurdles
calculated in accordance with the Articles of
Association. Further, class F shares carry a right to
asset distribution equivalent to a certain proportion
of asset distributed to class C shares in accordance
with the Articles of Association.
The number of shares outstanding on 31
December 2023 was 41,112,713 class C shares and
1,565,217 class F shares. The company’s registered
share capital on 31 December 2023 was EUR
3,080,000. The company has no treasury shares.
On 31 December 2023, the five largest
shareholders were Rettig Ltd (61.80 per cent of total
shares), Virala Corporation (15.16 per cent), Ahlström
Invest B.V. (2.81 per cent), Varma Mutual Pension
Insurance Company (2.34 per cent) and Jussi Capital
Oy (1.42 per cent).
Board authorisation regarding share issue
and share repurchase
The Annual General Meeting held on 12 April 2023
resolved that the Board of Directors is authorised
to resolve on the issuance of class C shares as well
as the issuance of special rights entitling to class
C shares referred to in Chapter 10, Section 1 of the
Finnish Companies Act in one or several tranches.
The number of class C shares to be issued based on
this authorisation shall not exceed 8,000,000 shares
(including shares to be received based on special
rights), which corresponds to approximately 19.46
per cent of all of class C shares in Purmo Group. The
authorisation may be used to improve Purmo Group’s
capital structure, to finance or carry out corporate
acquisitions or other arrangements, for incentive
arrangements and remuneration schemes or for other
purposes resolved by the Board of Directors. However,
a maximum of 25 per cent of the authorisation, i.e., a
maximum of 2,000,000 class C shares (including shares
to be received based on special rights) may be used for
incentive arrangements and remuneration schemes.
The Annual General Meeting resolved that the
Board of Directors is authorised to resolve on the
repurchase of class C shares owned by the Company
as well as on the acceptance of them as pledge.
The number of class C shares to be repurchased
or accepted as pledge by virtue of this authorisation
shall not exceed 4,000,000 class C shares owned by
the Co mpany, which corresponds to approximately
9.73 per cent of all of class C shares in Purmo Group,
subject to the provisions of the Finnish Companies’
Act on the maximum number of own shares owned
by or pledged to the Company and its subsidiaries.
The shares will be repurchased to be used
to improve Purmo Group’s capital structure, to
finance or carry out corporate acquisitions or other
arrangements, for incentive arrangements and
remuneration schemes or to be retained by the
Company as treasury shares, transferred, cancelled
or for other purposes resolved by the Board. The
Board of Directors shall decide on all other terms
and conditions regarding the repurchase of the
Company’s own shares and acceptance thereof as
pledge.
The authorisations are effective until the end of the
next Annual General Meeting, however, no longer
than until 30 June 2024.
Flagging notifications
During 2023, Purmo Group did not receive flagging
notifications from major shareholders.
More information on flagging notifications is
available on the company's website.
Managers’ transactions
Purmo Group’s managers’ transactions are
published as stock exchange releases, and they are
available on the company's website.
Closing price, EUR
Closing share price and daily trading volume
1 Jan 2023–31 December 2023, EUR
10
8
6
4
2
0
135,000
108,000
81,000
54,000
27,000
0
Total daily volume
31/1/2023
28/2/2023
31/3/2023
28/4/2023
31/5/2023
30/6/2023
31/7/2023
31/8/2023
29/9/2023
31/10/2023
30/11/2023
29/12/2023
Share price performance in 2023
Annual Report 2023 2121
Stories Information for shareholdersFinancialsGovernanceSustainability
Largest shareholders
on 31 December 2023
Name Shares % of shares % of votes
1 Rettig Ltd 26,373,971 61.8% 61.8%
2 Virala Corporation 6,460,217 15.2% 15.2%
3 Ahlstrom Invest B.V. 1,200,700 2.8% 2.8%
4 Varma Mutual Pension Insurance Company 1,000,000 2.3% 2.3%
5 Jussi Capital Oy 606,951 1.4% 1.4%
6 Fennia Mutual Insurance Company 500,000 1.2% 1.2%
7 Oy Julius Tallberg Ab 442,000 1.0% 1.0%
8 John Peter Leesi 418,927 1.0% 1.0%
9 Alcur Fonder 414,291 1.0% 1.0%
10 Svenska Litteratursällskapet i Finland 400,000 0.9% 0.9%
Total 10 36,263,362 88.6% 88.6%
Others 4,849,351 11.4% 11.4%
Total number of shares 42,677,930 100.0% 100.0%
Shareholders by type
on 31 December 2023
Owner type
Number
of shares
% of
shares
Family-owned investment companies 36,019,159 84.40%
Private Individuals 2,014,712 4.72%
Pension & insurance 1,719,038 4.03%
Other 1,439,386 3.37%
Fund company 627,400 1.47%
Foundation 604,170 1.42%
Unknown type 254,065 0.59%
Total number of shares 42,677,930 100.00%
Shareholders by holding
on 31 December 2023
Owner distribution by holdings
Number
of shares
% of
shares
1–100 87,701 0.21%
101–500 292,899 0.69%
501–1,000 193,301 0.45%
1,001–5,000 452,652 1.06%
5,001–10,000 231,914 0.54%
10,001–50,000 981,017 2.30%
50,001–100,000 321,873 0.75%
100,001–500,000 4,209,147 9.86%
500,001–1,000,000 1,606,951 3.77%
1,000,001– 34,046,410 79.78%
Unknown holding size 254,065 0.59%
Total 42,677,930 100.00%
Shareholders by country
on 31 December 2023
Country
Number of
shares
% of
shares
Finland 39,217,900 91.89%
Netherlands 1,202,174 2.82%
Sweden 1,090,231 2.55%
United Kingdom 746,617 1.75%
Austria 62,051 0.15%
Luxembourg 51,580 0.12%
Poland 35,628 0.08%
Italy 3,990 0.01%
Belgium 3,354 0.01%
Germany 2,630 0.01%
Others 7,710 0.02%
Unknown country 254,065 0.59%
Total 42,677,930 100.00%
Board of Directors’ shareholdings
on 31 December 2023
Board of Directors’ shareholdings
Class C
shares
Class F
shares
Tomas von Rettig* 0 0
Matts Rosenberg* 4,932 0
Alexander Ehrnrooth** 7,766 0
Carina Edblad 3,990 0
Carlo Grossi 3,990 0
Jyri Luomakoski 4,406 0
Catharina Stackelberg 4,682 0
Total 29,766 0
Out of total shares outstanding 0.07% 0.00%
*Influence in Rettig Ltd, which held 26,373,971 class C shares in Purmo
Group on 31 December 2023.
**Influence in Virala Corporation, which held 4,906,522 class C shares
and 1,565,217 class F shares in Purmo Group on 31 December 2023.
Management team’s shareholdings
on 31 December 2023
Management team's shareholdings
Class C
shares
Class F
shares
John Peter Leesi 418,927 0
Jan-Elof Cavander 12,800 0
Erik Hedin 253,256 0
Mike Conlon 31,770 0
Linda Currie 23,582 0
Barry Lynch 10,752 0
Total 751,087 0
Out of total shares outstanding 1.83 % 0.00 %
Annual Report 2023 2222
Stories Information for shareholdersFinancialsGovernanceSustainability
Governance
A Corporate Governance Statement, required by
the Corporate Governance Code 2020, is presented
as a separate report in connection with the
Financial Statements. In addition, compliance with
the Corporate Governance Code and Corporate
Governance Statements are publicly available on the
company’s website.
Personnel
The number of Group full-time-equivalent
employees averaged 3,228 (3,476) in January–
December. At the end of the period, the Group had
3,193 (3,372) full-time-equivalent employees. The
decrease in full-time-equivalent employees was
mainly due to organisational effectiveness related to
the Accelerate PG programme.
Personnel
2023 2022 2021
Number of employees
at the end of the period 3,193 3,372 3,471
Average number of employees 3,228 3,476 3,360
Personnel by region
2023 2022 2021
Northern Europe 629 678 661
Western Europe 891 950 927
Central and Eastern Europe 1,227 1,265 1,421
Southern Europe 306 329 317
Rest of the world 140 150 145
Total 3,193 3,372 3,471
Wages and salaries
EUR million 2023 2022 2021
Wages and salaries total 124.4 127.6 128.2
Changes in the management team
On 22 February 2023, Purmo Group announced
that Jan-Elof Cavander (MSc. Ind. Eng.) has been
appointed Chief Financial Officer of Purmo Group
Plc and a member of the Management team. He
joined Purmo Group on 22 June 2023, when the role
of interim CFO of Purmo Group for Matts Rosenberg
ended. Mr. Rosenberg acted as an interim CFO of
Purmo Group during 1 January 2023-22 June 2023.
The current organisational structure of Purmo
Group, which is based on the Climate Products &
Systems and the Climate Solutions divisions, has
been effective from 1 January 2023.
The management team within the current
organisational structure is as follows:
• John Peter Leesi, Chief Executive Officer
• Jan-Elof Cavander, Chief Financial Officer
(from 22 June 2023)
• Erik Hedin, Chief Operating Officer
• Mike Conlon, President, Climate Solutions division
• Barry Lynch, President, Climate Products &
Systems division
• Linda Currie, Chief People Officer
Share-based incentive plans
On 20 July 2022, Purmo Group announced that
the Board of Directors had decided to launch a
new share-based incentive plan for management
and key employees. The purpose of the plan
is to align the targets of shareholders and key
employees in order to increase the long-term value
of the company, retain key employees and offer a
competitive incentive plan that is based on company
share ownership and successful performance.
The performance criterion of the plan is Total
Shareholder Return (TSR) of the class C share and
the reward will be paid in both Purmo Group class C
shares and in cash.
The performance period covers the financial years
of 2022–2025, and payout period covers the financial
years of 2026–2027. A total of 174 396 class C shares
and 33 participants belong to the share-based
incentive plan.
More information about Purmo Group Plc’s
remuneration is available on the company’s website.
Annual General Meeting
The Annual General Meeting held on 12 April 2023
approved the financial statements, adopted the
proposed Remuneration Report, and discharged
the members of the Board of Directors and the
company’s CEO from liability for the financial year
2022. All current Board members were re-elected
for the following term of office. All resolutions of
the Annual General Meeting are available on the
company’s website.
Return of capital
The Annual General Meeting resolved that a return
of capital of EUR 0.36 per class C share and EUR
0.07 per class F shares will be paid for the financial
year 2022. The return of capital will be paid in four
instalments.
The first instalment of the return of capital of EUR
0.09 per class C share and EUR 0.02 per class F share
was paid on 21 April 2023. The second instalment of
the return of capital of EUR 0.09 per class C share
and EUR 0.02 per class F share was paid on 22
September 2023. The third instalment of the return of
capital of EUR 0.09 per class C share and EUR 0.02
per class F share was paid on 19 December 2023.
The fourth instalment of the return of capital of EUR
0.09 per class C share and EUR 0.01 per class F share
will be paid on 22 March 2024.
Annual Report 2023 2323
Stories Information for shareholdersFinancialsGovernanceSustainability
Remuneration of the members of the
Board of Directors
The Annual General Meeting resolved that the fees
are kept unchanged, and the members of the Board
of Directors should be paid annual fees as follows:
• EUR 92,000 for the Chairman of the Board of
Directors;
• EUR 53,000 for the Vice Chairman of the Board of
Directors;
• EUR 53,000 for each of the Chairmen of the
Committees of the Board of Directors; and
• EUR 48,000 for each ordinary member of Board
of Directors.
Approximately 40% of the annual fee will be paid
in Purmo Group’s class C shares.
Board of Directors
The Annual General Meeting resolved that the number
of members of the Board of Directors be seven (7). The
present members of the Board of Directors Tomas von
Rettig, Matts Rosenberg, Alexander Ehrnrooth, Carina
Edblad, Carlo Grossi, Jyri Luomakoski and Catharina
Stackelberg-Hammarén were re-elected as members
of the Board of Directors for a term that ends at the
close of the next Annual General Meeting.
Tomas von Rettig was elected as the Chairman of
the Board of Directors and Matts Rosenberg as the
Vice Chairman of the Board of Directors.
Board authorisations
Board authorisations decided by the Annual General
Meeting are presented in the section ‘Shares and
Shareholders’.
Committees nominated by the Board
In the constitutive meeting held subsequent to the
Annual General Meeting of Purmo Group on 12 April
2023, the Board of Directors appointed the following
members to its committees:
• Jyri Luomakoski was re-elected as the Chairman
of the Audit Committee with Matts Rosenberg
and Alexander Ehrnrooth as members of the
Committee. Matts Rosenberg accepted his role as
a member of the Audit Committee when his role
as interim CFO of Purmo Group ended and Jan-
Elof Cavander started as a CFO of Purmo Group
on 22 June 2023.
• Matts Rosenberg was re-elected as the Chairman
of the M&A Committee with Alexander Ehrnrooth
and Carlo Grossi as members of the Committee.
• Tomas von Rettig was re-elected as the Chairman
of the Remuneration Committee with Catharina
Stackelberg-Hammarén and Carina Edblad as
the members of the Committee.
Shareholders’ Nomination Board
In June 2023, Purmo Group Plc’s three largest
shareholders nominated the following
representatives to the Shareholders’ Nomination
Board:
• Matts Rosenberg (Chairman)
• Alexander Ehrnrooth
• Sebastian Burmeister
Auditor
KPMG Oy Ab was re-elected as the Company’s
auditor for a term that ends at the close of the next
Annual General Meeting. The Authorized Public
Accountant Kim Järvi will continue as the auditor in
charge and auditor’s fees will be paid against an
invoice approved by the Company.
Amendment of Section 10 § of the
Articles of Association
The Annual General Meeting resolved that Section 10
§, item 5 of the Company’s Articles of Association will
be amended so that the Company’s class F shares’
conversion right into class C shares in connection
with certain corporate events is aligned with the new
share-based incentive plan.
The amendments will limit the rights of the holders
of class F shares to get class F shares held by them
converted with respect to the provision in the current
Articles of Association in events where a public
tender offer for the Company’s shares or a 'Dilution
Event', as defined in the Articles of Association, is
announced. A 'Dilution Event' stands for an event
where the Company decides to issue class C shares
or any other special rights entitling to class C shares
in a directed issue, where the holders of class F
shares will not be given pre-emptive rights. The
proposed amendment will not change or reduce any
rights or obligations related to class C shares.
Amendment of Section 8 § of the
Articles of Association
The Annual General Meeting resolved that Section
8 § of the Articles of Association of the Company will
be amended to enable holding a general meeting
in addition to the Company’s domicile, entirely
without a physical meeting venue as a so-called
remote meeting.
Risks and uncertainties in the near
future
Purmo Group’s costs have been affected by high
inflation, but the company has been able to manage
profitability by focusing on strong and systematic
margin management actions. In addition, the
company has been successful in maintaining
Annual Report 2023 2424
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prices at a healthy level in a challenging market
environment. Fluctuations in the prices of raw
materials, consumables, energy, and freight rates as
well as potential challenges with the availability of
raw materials, supplies, labour and freight shipping
may have a negative impact on Purmo Group’s
profitability and operations.
The short-term demand for Purmo Group’s
products depends on fluctuations in demand in the
construction industry, which is cyclical in nature,
especially new building. Volumes and profitability
may vary as a result of economic conditions and the
amount of investments in real estate.
Purmo Group operates across several countries
in Europe. Due to the company’s size and local
presence, Purmo Group has a solid position in
the European markets. As a result, changes in one
European country may be compensated by a
development in another country. However, the strong
presence in Europe might enhance the impacts of
economic fluctuations within the area.
Uncertainty in the global economy and high
inflation can increase volatility in foreign exchange
rates as well as have an adverse effect on interest
rates and the availability of funding. Purmo Group
is exposed to currency risks. The Group’s financial
risk management approach is to hedge highly
probable exposure in foreign currencies (including,
but not limited to British pound, Swedish krona and
Polish zloty). Regardless of hedging activities, the
Group may encounter fluctuations in its financial
position due to volatility in foreign exchange rates.
Rising interest rates would have an adverse impact
on the cost of funding for Purmo Group. The Group
has financial derivatives to reduce and manage the
impact of interest rate fluctuations.
The accelerated energy transition and customers’
awareness of high energy prices create pressure for
cost control and energy efficiency in some product
groups of Purmo Group. However, the energy
transition is expected to increase the demand for
low-temperature systems and solutions which are
compatible with energy sources other than fossil
fuels. This creates an opportunity for the execution
of Purmo Group’s solution selling strategy. There are
differences between markets in how the transition
changes the demand for certain products, however,
Purmo Group is well-positioned to manage the
change and capture opportunities with the support
of its wide product portfolio.
In addition to the energy efficiency of products, the
expectations related to ESG are increasing. Purmo
Group has a sustainability strategy and a function.
Proactive, effective and successful measures may
mean that Purmo Group is able to create business
opportunities relating to the expectations and
requirements. There is an increased level of cyber
threat activity in Europe.
The company has a function responsible for the
Group’s cyber security. In order to respond to the
increased cyber threats, the company has developed
a well-functioning infrastructure setup and an active
employee training process, which has been running
since Q3 2021. The war in Ukraine continues to have
a significant negative impact on demand for Purmo
Group’s products in the country.
The war has caused negative economic
consequences also in other markets. There is a risk
that private and commercial investment decisions
will continue to be postponed or cancelled due to
high inflation, increased interest rates and/or general
economic uncertainty. Increased global geopolitical
risks and general high market uncertainty may
have an impact on demand, supply chains and raw
material prices in Purmo Group’s core markets.
Board of Director's proposal for the
distribution of profit
The parent company’s distributable equity on 31
December 2023 totalled EUR 461,707,064.23. The
Board of Directors of Purmo Group Plc proposes to
the Annual General Meeting planned to be held on
9 April 2024 that a return of capital of EUR [0.36] per
class C share be paid for the financial year 2023 and
that a return of capital for class F shares be paid in
accordance with the Articles of Association of the
Company for the financial year 2023 from the reserve
for invested unrestricted equity of the Company.
All the class C shares in the Company are entitled
to a return of capital except for treasury shares held
by the Company on the return of capital record date.
In accordance with the Articles of Association of the
Company and as a consequence of the first share
price hurdle for conversion of class F shares into
class C shares having been exceeded in September
2021, class F shares currently carry a right to asset
distribution equivalent to 0.69 per cent of the return
of capital proposed to be distributed to class C
shares, which corresponds to a return of capital of
EUR 0.07 per class F share.
According to the Company’s dividend policy, at
least 40% of annual net profit will be distributed as
dividend or return of capital.
The return of capital is proposed to be paid in four
instalments in Q2 2024, Q3 2024, Q4 2024 and in Q1
2025.
Return of capital (class C-share),
EUR
0.36 0.36 0.36
2021 2022 2023
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Key figures Information about the share
EUR million
2023 2022 2021
Net sales
743.2 904.1 843.6
EBITDA 46.6 78.5 33.6
EBITDA margin 6.3% 8.7% 4.0 %
Adjusted EBITDA 92.3 92.9 103.9
Adjusted EBITDA margin 12.4% 10.3% 12.3 %
EBITA 14.4 46.8 6.3
EBITA margin 1.9% 5.2% 0.8 %
Adjusted EBITA 66.3 64.6 76.6
Adjusted EBITA margin 8.9% 7.1% 9.1 %
EBIT 9.7 39.0 3.5
EBIT margin 1.3% 4.3% 0.4 %
Profit before tax -9.6 21.6 -5.1
Profit for the period -9.3 13.1 -18.8
Adjusted profit for the period³ 32.2 32.7 51.4
Earnings per share, basic, EUR -0.32 0.32 -0.65
Adjusted Earnings per share, basic, EUR 0.68 0.79 1.77
Cashflow from operating activities 40.4 31.1 35.4
Capex 20.3 24.0 14.8
Acquisitions - 14.6 4.5
Adjusted Operating Cash Flow for the last 12 months¹ 75.1 44.0 50.2¹
Cash conversion¹ 81.4% 47.4% 48.3%¹
Cash and cash equivalents 111.7 56.3 177.6
Net working capital 85.4 91.4 72.3
Operating capital employed 294.7 305.0 271.8
Return on operating capital employed² 2.9% 12.2% 1.3 %
Net debt 219.6 275.2 239.5
Net debt / Adjusted EBITDA 2.38 2.96 2.3
Equity / Asset ratio 43.7 % 41.0% 37.3 %
Return on Equity -2.2% 3.3% -4.0 %
EUR million
31 Dec 2023 31 Dec 2022 31 Dec 2021
Share capital, at the end of the year, EUR million
3.1 3.1 3.1
Class C shares outstanding at the end of the year 41,112,713 41,112,713 40,374,531
Class F shares outstanding at the end of the year 1,565,217 1,565,217 1,565,217
Weighted average adjusted number of shares, basic 41,406,191 41,244,426 29,124,487
Weighted average adjusted number of shares, diluted 41,406,191 41,244,426 29,124,487
Earnings per share, EUR -0.32 0.32 -0.65
Earnings per share, diluted, EUR -0.32 0.32 -0.65
Dividend payout per class C share and return of capital, EUR¹ 0.36 0.36 0.36
Dividend payout per class F share and return of capital, EUR¹ 0.07 0.07 0.07
Dividend and return of capital per earnings, class C share, % -158.4 % 112.7 % -83.0 %
Dividend and return on capital per earnings, class F share, % -1.2 % 0.3 % -8.3 %
Effective dividend yield, class C share, % 5.4 % 4.4 % 2.5 %
Equity per share, EUR 10.21 9.45 9.31
Market capitalisation, class C share, EUR million 275.5 337.9 413.6
Price to earnings ratio (P/E) -20.88 25.69 -21.85
Highest share price, EUR 9.04 15.65 -14.5
Lowest share price, EUR 5.92 8.12 -9.78
Volume-weighted average share price, EUR 7.31 10.45 11.40
Share price, 31 December, EUR 6.70 8.22 14.20
¹The amount for 2023 is based on the Board of Directors’ proposal to the AGM
¹ Change in net working capital includes assets held for sale. The 2022 comparison figure has been restated by EUR 9.6 million impairment
charges related to the business in Russia.
² The definition for Return on operating capital employed has been updated from 1 January 2023 and the comparative data has been restated.
³ The definition of adjusted profit for the period has been updated to include tax impact from comparability adjustments from Q4 2023 and the
comparative data has been restated.
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Stories Information for shareholdersFinancialsGovernanceSustainability
Calculation of key figures
Key figure Definition Reason for use
EBIT Profit before tax and net financial items
(Operating profit).
EBIT is used to measure profitability generated by
operating activities of the Group.
EBIT margin EBIT as per centage of net sales.
EBITDA Operating profit before depreciation, amortisation
and impairment.
EBITDA is an indicator to measure the operating
performance of the Group, before depreciation,
amortisation and impairment.
EBITDA margin EBITA as per centage of net sales.
EBITA Operating profit before the amortisation of
intangibles including trademarks.
EBITA is an indicator to measure the operating
performance of the Group, before amortisation of
intangibles including trademarks.
EBITA margin EBITA as per centage of net sales.
Gross profit Net sales less cost of sales.
Comparability
adjustments
Comparability adjustments comprise of direct
transaction and integration costs on M&A activities,
restructuring costs and costs incurred in connection
with performance improvement programmes, other
one-off costs such as legal claims or significant out-
of-period adjustments and exceptional gains and
losses on sale of fixed assets.
Comparability adjustments account for items that
have been adjusted due to specific events that
otherwise affect comparability between different
periods. Provides a better understanding to
management and investors of the comparable
operating activities.
Adjusted EBITDA, adjusted EBITDA margin,
Adjusted EBITA and Adjusted EBITA margin are
presented in addition to EBIT, EBITDA and EBITA
to reflect the underlying business performance
by adjusting for items that the Group considers
impacting comparability ('Comparability
adjustments').
Adjusted EBITDA EBITDA before comparability adjustments.
Adjusted EBITDA
margin
Adjusted EBITDA as per centage of net sales.
Adjusted EBITA EBITA before comparability adjustments.
Adjusted EBITA
margin
Adjusted EBITA as per centage of net sales.
Adjusted profit for
the period
Profit for the period before comparability adjustments
and their tax impact.
Capex Capex is a measure of capital expenditure for the
period which comprises the Group’s investments in
property plant and equipment and intangible assets
derived from the consolidated cash flow statement.
Capex is an indicator of the Group’s investments
in property plant and equipment and intangible
assets.
Acquisitions
(M&A)
Acquisitions of subsidiaries and investments in
associates derived from the consolidated cash flow
statement for the period.
Acquisition capex is an indicator for investments
in acquisition of businesses that are intended
to grow the Group’s product or service offering,
assets or technologies, productive capacity or
performance.
Key figure Definition Reason for use
Adjusted
operating cash
flow for the last 12
months
Adjusted EBITDA on a rolling twelve-month basis less
change in net working capital and capex on a rolling
twelve-months basis.
Adjusted operating cash flow provides information
on the Group’s operating cash flow on an
annualised basis, excluding adjusting items.
Cash conversion Adjusted operating cash flow divided by Adjusted
EBITDA based on a rolling twelve-month calculation.
Cash conversion is used to assess Purmo Group’s
efficiency to convert its operating results into cash.
The ratio indicates the Group’s capacity to pay
dividends and / or generate funds for acquisitions
or other transactions.
Net working
capital
Purmo Group’s inventories, operative receivables less
trade and other operative liabilities.
Net working capital is a useful measure to monitor
the level of direct net working capital tied to the
operations and changes therein.
Operating capital
employed
Net working capital, other intangible assets, property,
plant, equipment and right-of-use assets.
Capital employed presents the total investment in
the Group’s business operations.
Return on
operating capital
employed
EBIT based on a rolling twelve-month calculation
divided by operating capital employed.
Measures the return on the capital tied up in the
business.
Net debt Non-current and current borrowings (including
shareholder loan) and non-current and current lease
liabilities less cash and cash equivalents.
To show the net of interest-bearing assets and
interest-bearing liabilities.
Net debt/
Adjusted EBITDA
Net debt divided by Adjusted EBITDA based on a
rolling twelve-month calculation.
The ratio indicates how fast the Group can repay
its net debt using adjusted EBITDA (expressed in
years), and it is a useful measure to monitor the
level of the Group’s indebtedness.
Equity to Asset
ratio
Total equity attributed to the owners of the company
divided by total assets derived from the IFRS
consolidated financial statements.
The ratio is a useful indicator to measure how
much of the Group’s assets are funded by issuing
shares rather than through external borrowings.
Return on equity Group’s profit for the period attributable to the
owners of the Parent based on a rolling twelve-month
basis divided by the average total equity attributable
to owners of the company.
Shows owners the return on their invested capital.
From 1 January 2023 onwards Purmo Group has revised the Return of operating capital employed calculation from
end of period operating capital employed to quarterly end average operating capital employed. The key figure calculation has been revised to consider the
seasonality. The comparative figures have been restated accordingly.
From 1 January 2023 onwards Purmo Group has revised the Equity to Asset ratio and Return on Equity calculations to be calculated from total equity instead
of total equity attributable to owners of the company. The key figure calculations have been revised to include the hybrid bond presented in equity according
to IFRS. The comparative figures have not been restated since the hybrid bond was issued in February 2023.
In 2023 Purmo Group revised the definition of adjusted profit for the period to include tax impact from comparability adjustments. The definiton has been
revised due to significant tax impact from comparability adjustments in 2023. The comparative figures have been restated accordingly.
27Annual Report 2023
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Reconciliation of Alternative Performance Measures
EUR million unless otherwise indicated
2023 2022 2021
Comparability adjustments
IFRS 2 merger impact - - 52.3
M&A related transactions and integration costs 0.3 2.2 0.1
Restructuring costs and one-off costs related to efficiency programs 46.0 6,6¹ 8.9
Impairment and write-down 5.2 12.9 -
Other 1.3 0.2 0.0
Total comparability adjustments affecting in EBITDA and EBITA¹ 52.8 21.7 70.2
Taxes relating to comparability adjustments¹ -11.2 -2.2 -4.3
Total comparability adjustments¹ 41.6 19.6 65.9
Net sales 743.2 904.1 843.6
EBIT 9.7 39.0 3.5
EBIT margin 1.3 % 4.3 % 0.4 %
Amortisation and impairment 4.7 7.9 2.9
EBITA 14.4 46.8 6.3
EBITA margin 1.9 % 5.2 % 0.8 %
Depreciation and impairment 32.2 31.6 27.3
EBITDA 46.6 78.5 33.6
EBITDA margin 6.3 % 8.7 % 4.0 %
Adjusted EBITDA
EBIT 9.7 39.0 3.5
Depreciation, amortisation and impairment excluding comparability
adjustments
29.8 32.1 30.2
Total comparability adjustments affecting in EBITDA and EBITA¹ 52.8 21.7 65.9
Adjusted EBITDA¹ 92.3 92.9 99.6
Adjusted EBITDA margin¹ 12.4 % 10.3 % 11.8 %
¹ The definition of adjusted profit for the period to include tax impact from comparability adjustments has been updated from 2023 and the
comparative data has been restated.
² Change in net working capital includes assets held for sale. The 2022 comparison figure has been restated by EUR 9.6 million impairment
charges related to the business in Russia
EUR million unless otherwise indicated
2023 2022 2021
Adjusted EBITA
EBIT 9.7 39.0 3.5
Amortisation excluding comparability adjustments 3.8 3.9 2.9
Total comparability adjustments affecting in EBITDA and EBITA¹ 52.8 21.7 65.9
Adjusted EBITA¹ 66.3 64.6 72.3
Adjusted EBITA margin¹ 8.9 % 7.1 % 8.6 %
Adjusted profit/loss for the period
Profit/loss for the period -9.3 13.1 -18.8
Total comparability adjustments¹ 41.6 19.6 65.9
Adjusted profit/loss for the period 32.2 32.7 47.1
Adjusted Operating cash flow for the last 12 months
Adjusted EBITDA in the last 12 months 92.3 92.9 99.6
Change in net working capital compared to previous year same period² 3.2 -24.8 -38.8
Capex for last 12 months -20.3 -24.0 -14.8
Adjusted operating cash flow for the last 12 months 75.1 44.0 46.0
Cash conversion
Adjusted operating cash flow for the last 12 months² 75.1 44.0 50.2
Adjusted EBITDA 92.3 92.9 99.6
Cash conversion² 81.4 % 47.4 % 50.4 %
Net working capital
Inventories 143.7 174.1 157.4
Operative receivables³ 98.6 110.5 104.7
Operative liabilities⁴ 156.9 193.1 189.7
Net working capital 85.4 91.5 72.4
³ Non-current and current operative other receivables are in the balance sheet presented in non-current and current other receivables.
⁴ Non-current and current operative payables are presented in the balance sheet in non-current other payables and current trade and other
payables.
28Annual Report 2023
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EUR million unless otherwise indicated
2023 2022 2021
Operative capital employed
Net working capital 85.4 91.4 72.3
Other intangible assets 45.9 47.0 36.3
Property, plant and equipment 127.6 127.3 131.9
Right-of-use assets 35.8 39.3 31.3
Operative capital employed 294.7 305.0 271.8
Return on operating capital employed¹
Quarterly end average operating capital employed 331.9 318.5 273.0
EBIT for the last 12 months 9.7 39.0 3.5
Return on operating capital employed 2.9 % 12.2 % 1.3 %
Net debt
Loans and borrowings (non-current) 277.9 278.1 285.7
Loans and borrowings (non-current) 7.3 11.3 95.0
Loans and borrowings, assets held for sale 8.6 7.2 -
Lease liabilities (non-current) 31.7 34.3 30.7
Lease liabilities (current) 10.4 9.4 5.6
Lease liabilities, assets held for sale 0.0 0.4 -
Cash and cash equivalents -111.7 -56.3 -177.6
Cash and cash equivalents, assets held for sale -4.6 -9.1 -
Net debt 219.6 275.2 239.5
Net debt/Adjusted EBITDA
Net debt 219.6 275.2 239.5
Annualised adjusted EBITDA 92.3 92.9 103.9
Net debt/Adjusted EBITDA 2.38 2.96 2.31
¹ The definition for Return on operating capital employed has been updated from 1 January 2023 and the comparative data has been restated.
EUR million unless otherwise indicated
2023 2022 2021
Equity/Asset ratio
Equity attributable to owners of the Company 435.7 403.3 390.6
Total assets 997.8 983.7 1046.2
Equity/Asset ratio 43.7 % 41.0 % 37.3 %
Return on equity
The cumulative last 12 month profit attributable to owners of the company -9.3 13.1 -18.8
Equity attributable to owners of the company beginning of period 403.3 390.6 515.5
Equity attributable to owners of the company end of period 435.7 403.3 390.6
Equity attributable to owners of the company average 419.5 396.9 453.1
Return on equity -2.2 % 3.3 % -4.2 %
Basic earnings per share
Profit/loss attributable to shareholders of the parent company for class C
shares
-9.3 13.0 -18.7
Profit/loss attributable to shareholders of the parent company for class F
shares
-0.1 0.1 -0.1
Profit/loss attributable to the owners of the company -9.3 13.1 -18.8
Accumulated interest expenses on hybrid bond after taxes -3.9 - -
Profit/loss used in calculation of earnings per share -13.3 13.1 -18.8
Weighted average number of shares outstanding (pcs)¹ 41,406,191 41,244,426 29,124,487
Basic earnings per share, EUR -0.32 0.32 -0.65
Diluted earnings per share
Profit/loss attributable to shareholders of the parent company for class C
shares
-9.3 13.0 -18.7
Profit/loss attributable to shareholders of the parent company for class F
shares
-0.1 0.1 -0.1
Profit/loss attributable to the owners of the company -9.3 13.1 -18.8
Accumulated interest expenses on hybrid bond after taxes -3.9 - -
Profit/loss used in calculation of earnings per share -13.3 13.1 -18.8
Diluted weighted average number of shares outstanding (pcs)¹ 41,406,191 41,244,426 29,124,487
Diluted earnings per share, EUR -0.32 0.32 -0.65
¹ Including 293,478 class F shares convertible to class C shares at the start of the conversion period on 28 June 2024.
² The definition of adjusted profit for the period to include tax impact from comparability adjustments has been updated from 2023 and the
comparative data has been restated.
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EUR million unless otherwise indicated
2023 2022 2021
Adjusted basic earnings per share
Total comparability adjustments² 41.6 21.8 65.9
Adjusted profit/loss attributable to shareholders of the parent company for
class C shares
32.0 32.5 46.8
Adjusted profit/loss attributable to shareholders of the parent company for
class F shares
0.2 0.2 0.3
Adjusted profit/loss attributable to the owners of the company (EUR million) 32.2 32.7 47.1
Accumulated interest expenses on hybrid bond after taxes -3.9 - -
Adjusted profit/loss used in calculation of earnings per share² 28.3 32.7 47.1
Weighted average number of shares outstanding (pcs)¹ 41,406,191 41,244,426 29,124,487
Adjusted basic earnings per share² 0.68 0.79 1.62
Adjusted diluted earnings per share
Total comparability adjustments² 41.6 21.8 65.9
Adjusted profit/loss attributable to shareholders of the parent company for
class C shares
32.0 32.5 46.8
Adjusted profit/loss attributable to shareholders of the parent company for
class F shares
0.2 0.2 0.3
Adjusted profit/loss attributable to the owners of the company 32.2 32.7 47.1
Accumulated interest expenses on hybrid bond after taxes -3.9 - -
Adjusted profit/loss used in calculation of earnings per share² 28.3 32.7 47.1
Diluted weighted average number of shares outstanding (pcs)¹ 41,406,191 41,244,426 29,124,487
Adjusted diluted earnings per share² 0.68 0.79 1.62
¹ Including 293,478 class F shares convertible to class C shares at the start of the conversion period on 28 June 2024.
² The definition of adjusted profit for the period to include tax impact from comparability adjustments has been updated from 2023 and the
comparative data has been restated.
30Annual Report 2023
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CONSOLIDATED FINANCIAL
STATEMENTS 32
Consolidated statement of
profit and loss 32
Consolidated statement of
comprehensive income 32
Consolidated statement of
balance sheet 33
Consolidated statement of
cash flows 34
Consolidated statement of
changes in equity 35
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS 36
PROPOSAL OF THE
BOARD OF DIRECTORS 89
AUDITOR’S REPORT 90
Table of Contents
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS 36
1. Accounting principles for the consolidated
financial statement 36
1.1 General information 36
1.2 Basis of preparation 36
1.3 Management judgement and use
of estimates 37
1.4 New and amended IFRS standards and
IFRIC interpretations 37
2. Group performance 38
2.1 Segment information 38
2.2 Net sales 39
2.3 Other income and expenses 41
2.4 Employment benefit expenses 42
2.5 Share-based payments 43
3. Goodwill, intangible and tangible assets 45
3.1 Goodwill and other intangible assets 45
3.2 Impairment testing of goodwill 47
3.3 Property, plant and equipment 49
3.4 Right-of-use assets 50
3.5 Depreciation, amortisation and impairment 52
4. Operational assets and liabilities 52
4.1 Inventories 52
4.2 Trade and other receivables 53
4.3 Trade and other payables 53
4.4 Provisions 53
4.5 Post-employment obligations 55
5. Capital structure and financial instruments 57
5.1 Financial income and expenses 57
5.2 Financial risk management 57
5.3 Financial assets and liabilities 62
5.4 Cash and cash equivalents 64
5.5 Equity 64
5.6 Interest-bearing liabilities 67
5.7 Derivative financial instruments 68
5.8 Commitments and contingent assets
and liabilities 70
6. Group structure 70
6.1 Business combinations 70
6.2 Assets held for sale 72
6.3 Subsidiaries 73
6.4 Exchange rates 74
7. Other notes 75
7.1 Related party transactions 75
7.2 Taxes 76
7.3 Events after the balance sheet date 79
8. Parent company financial statements 80
Parent company income statement 80
Parent company balance sheet 80
Parent company cash flow statement 81
Notes to the Parent Company
Financial Statements 82
Annual Report 2023 31
Stories Information for shareholdersFinancialsGovernanceSustainability
Consolidated financial statements
Consolidated statement of profit and loss Consolidated statement of comprehensive income
EUR million
Note
2023
2022
Net sales
7 43.2
904. 1
Cost of sales
2.3
-551.2
-700 .8
Gross profit
192. 0
203.3
Sales and marketing expenses
2.3
-8 7. 6
-87 .9
Administrative expenses
2.3
-51. 1
-51.5
Research and development expenses
2.3
-5.3
-6.2
Other income
2.3
8.8
4.9
Other expenses
2.3
-47 . 1
-23.7
Operational expenses
-182.3
-164.3
EBIT
9. 7
3 9.0
Finance income
5.1
13.2
5.7
Finance expenses
5.1
-32.5
-23. 1
Net financial items
-19.3
-17 .4
Profit before tax
-9.6
21. 6
Income tax expense
7.2
0. 3
-8.4
Profit for the period
-9 .3
13. 1
Profit for the period attributable to:
Owners of the parent
-9 .3
13. 1
Earnings per share for profit attributable to the ordinary
equity holders of the parent company:
Earnings per share basic, EUR
5.5
-0 .32
0 .32
Earnings per share diluted, EUR
5.5
-0 .32
0 .32
EUR million
2023
2022
Profit for the period
-9 .3
13. 1
Other comprehensive income
Items that will never be reclassified to profit and loss
Remeasurement of defined benefit liability (asset)
-3.2
Related tax
0. 9
-0 .2
Total items that will not be reclassified to profit and loss
-2.3
1.9
Items that are or may be reclassified to profit and loss
Foreign operations – foreign currency translation differences
-1.8
0. 5
Reclassification of foreign currency translation differences through profit and
loss
0.0
0. 4
Cash flow hedges – effective portion of changes in fair value
4.5
3.4
Cash flow hedges – reclassified to profit and loss
-3.4
0. 7
Related tax
-0 .2
-0 .8
Total items that are or may be reclassified to profit and loss
-0 .9
4.2
Other comprehensive income, net of tax
-3.2
6.2
Total comprehensive income for the period
-12.5
19 .3
Total comprehensive income attributable to:
Owners of the parent
-12.5
19 .3
Annual Report 2023 32
Stories Information for shareholdersFinancialsGovernanceSustainability
Consolidated balance sheet
EUR million
Note
2023
2022
Assets
Non-current assets
Goodwill
3.1, 3.2
3 70.6
3 70.6
Other intangible assets
3.1
45.9
4 7. 0
Property, plant and equipment
3.3
127 .6
127 .3
Right-of-use assets
3.4
35.8
39 .3
Defined benefit assets
4.5
0.0
Derivative assets
5.7
1 .0
2.7
Other receivables
4.2
4.5
0. 7
Deferred tax assets
7.2
42.8
29 .2
Total non-current assets
628.2
618.9
Current assets
Inventories
4.1
143.7
17 4. 1
Trade receivables
4.2
75.2
8 9 .1
Derivative assets
5.7
4.7
2.7
Other receivables
4.2
24.2
25.6
Current tax asset
7.2
4.4
3 .1
Cash and cash equivalents
5.7
111.7
56.3
Total current assets
364. 0
350 .7
Assets held for sale
6.2
5.6
14.0
Total assets
997 .8
983.7
Equity and liabilities
Equity
Share capital
5.5
3 .1
3 .1
Reserve for invested unrestricted equity
5.5
365.9
380 .8
Other reserves
5.5
-5.9
-5. 0
Retained earnings
22.8
11.3
Profit for the period
-9 .3
13. 1
EUR million
Note
2023
2022
Equity attributable to owners of the company
37 6.4
403.3
Hybrid bond
59 .3
-
Total equity
435.7
403.3
Liabilities
Non-current liabilities
Loans and borrowings
5.6
277 .9
278. 1
Lease liabilities
3.4
31.7
34.3
Defined benefit liabilities
4.5
18. 0
18.7
Derivative liabilities
5.7
0. 3
-
Other payables
4.3
1.3
1.4
Provisions
4.4
8 .1
7. 8
Deferred tax liabilities
7.2
6.4
5.4
Total non-current liabilities
343.8
345.6
Current liabilities
Loans and borrowings
5.6
7. 3
11.3
Lease liabilities
3.4
10 .4
9. 4
Derivative liabilities
5.7
3 .0
1.5
Trade and other payables
4.3
160 .5
193.4
Provisions
4.4
24.8
0. 4
Current tax liabilities
7.2
1.7
8.8
Total current liabilities
207 .8
224.8
Total liabilities
551. 6
57 0 .5
Liabilities directly attributed to assets held for sale
6.2
10 .5
1 0.0
Total equity and liabilities
997 .8
983.7
Annual Report 2023 33
Stories Information for shareholdersFinancialsGovernanceSustainability
Consolidated statement of cash flows
EUR million
Note
2023
2022
Cash flow from operating activities
Profit for the period
-9 .3
13. 1
Adjustments
Depreciation, amortisation and impairment losses
29 .8
32. 1
Gain on sale of property plant and equipment and intangible assets
-0 .1
-
Gain and losses on sale of subsidiaries
0.0
-1.2
Finance income and expenses
19 .3
17 .4
Income tax expenses
-0 .3
8.4
Other non-cash items
3 9 .1
21
Cash flow before change in net working capital
78 .6
90.9
Changes in net working capital
Inventories, increase (-) / decrease (+)
4.1
32.8
-21.4
Trade and other receivables, increase (-) / decrease (+)
4.2
9.6
25.4
Trade and other payables, increase (+) / decrease (-)
4.3
-44.3
-31.5
Provisions and employee benefits, increase (+) / decrease (-)
4.4
-0.2
-4. 1
Changes in net working capital
-2 .1
-31.5
Net cash flow from operating activities before financial items and taxes
7 6.5
59 .4
Financial items, net
-15.9
-17 .4
Income tax paid, net
-2 0 .1
-10.9
Cash flow from operating activities
40 .4
31. 1
EUR million
Note
2023
2022
Cash flow from investing activities
Proceeds from sale of property, plant and equipment and intangible
assets
-
3 .1
Proceeds from sale of subsidiaries
-
2.7
Purchases of property, plant and equipment and intangible assets
-20. 3
-2 4 .0
Acquisitions of subsidiaries, net of cash acquired
-
-14.6
Long-term loan receivables granted
-
-0.2
Proceeds from long-term loan receivables
0 .1
0 .1
Cash flow from investing activities
-20.2
-32.9
Cash flow from financing activities
Increase of equity
-
0.7
Return of capital paid
-11. 1
-14.9
Proceeds from hybrid bond
6 0.0
-
Hybrid bond interest and expenses
-0 .7
-
Repayment of lease liabilities
-11.8
-11.6
Change in short-term borrowings
-3.8
-85. 0
Cash flow from financing activities
32. 6
-110 .8
Change in cash and cash equivalents, increase (+) / decrease (-)
52.8
-112.6
Cash and cash equivalents at beginning of the period
65.4
177 .6
Impact of change in exchange rates
-1.9
0. 3
Cash classified as assets held for sale
-4. 6
-9.1
Cash and cash equivalents at end of the period
111.7
56.3
Annual Report 2023 34
Stories Information for shareholdersFinancialsGovernanceSustainability
Consolidated statement of changes in equity
Attributable to owners of the parent company
Share Reserve for invested
EUR millioncapital
unrestricted equity
Translation reserve
Fair value reserve
Retained earnings
Total
Hybrid bond
Total equity
Balance as at 1 Jan 2023
3. 1
380 .8
-7 .8
2.7
24.4
403.3
-
403.3
Profit for the period
-9 .3
-9 .3
-9 .3
Other comprehensive income
-1.8
0. 9
-2.3
-3.2
-3.2
Total comprehensive income for the period
-
-
-1.8
0.9
-11. 6
-12.5
-
-12.5
Dividends and return of capital paid
-14.9
-14.9
-14.9
Share-based payments
0.6
0.6
0.6
Proceeds from hybrid bond
-
59 .3
59 .3
Balance as at 31 Dec 2023
3. 1
365.9
-9 .6
3.6
13.4
37 6.4
59 .3
435.7
Attributable to owners of the parent company
Share Reserve for invested
EUR millioncapital
unrestricted equity
Translation reserve
Fair value reserve
Retained earnings
Total
Hybrid bond
Total equity
Balance as at 1 Jan 2022
3 .1
385.9
-8.7
-0.6
10 .9
390. 6
-
390. 6
Profit for the period
13. 1
13. 1
13. 1
Other comprehensive income
0. 9
3.3
1.9
6.2
6.2
Total comprehensive income for the period
-
-
0. 9
3.3
15. 1
19 .3
-
19 .3
Dividends and return of capital paid
-14.9
-14.9
-14.9
Share issue
9. 7
9. 7
9. 7
Share-based payments
0. 2
0. 2
0.2
Other changes
-1.7
-1.7
-1.7
Balance as at 31 Dec 2022
3 .1
380 .8
-7. 8
2.7
24.4
403.3
-
403.3
Annual Report 2023 35
Stories Information for shareholdersFinancialsGovernanceSustainability
Notes to the consolidated
financial statements
1. Accounting principles for the consolidated
financial statement
How should Purmo Group’s accounting principles be read?
The accounting principles used for the financial statements of Purmo Group are described at the beginning
of each note to help understand each area of the financial statements. The following table summarises the
notes to each accounting principle and the relevant IFRS standard related to the note.
Accounting principle Note IFRS standard
Segment information 2.1 Segment information IFRS 8
Revenue recognition 2.2 Net sales IFRS 15
Employment benefit expenses 2.4 Employment benefit expenses IAS 19
Share-based payments 2.5 Share-based payments IFRS 2
Reverse recapitalization 2.3 Other income and expenses IFRS 3, IFRS 2
Other intangible assets
3.1 Goodwill and other intangible assets
3.2 Impairment testing of goodwill IAS 36, IAS 38
Property, plant and equipment 3.3 Property, plant and equipment IAS 16, IAS 36
Leases 3.4 Right-of-use assets IFRS 16
Inventory 4.1 Inventories IAS 2
Financial risk management 5.2 Financial risk management IAS 32, IFRS 7, IFRS 9, IFRS 13
Financial assets and liabilities 5.3 Financial assets and liabilities IAS 32, IFRS 7, IFRS 9, IFRS 13
Equity 5.5 Equity IAS 1
Business combinations 6.1 Business combinations IFRS 3, IFRS 10
Assets held for sale 6.2 Assets held for sale IFRS 5
Related party transactions 7.1 Related party transactions IAS 24
Income taxes 7.2 Taxes IAS 12
1.1 General information
Purmo Group Plc, 'Purmo Group' or the 'Company', business ID 2890898-5, is a public limited company
domiciled in Helsinki. The registered address of Purmo Group is Bulevardi 46, 00120 Helsinki, Finland. These
consolidated financial statements comprise the parent company Purmo Group Plc and its subsidiaries
(collectively the 'Group' and individually 'Group companies'). The Company’s class C shares are listed on
the NASDAQ OMX Helsinki. The copies of the consolidated financial statements are available at www.
purmogroup.com or the parent company’s head office, Bulevardi 46, 00120 Helsinki, Finland.
Purmo Group is at the centre of the global sustainability journey, offering full solutions and sustainable
ways of heating and cooling homes to mitigate global warming. Purmo Group provides complete heating
and cooling solutions to residential and non-residential buildings, including underfloor heating and cooling
systems, a broad range of radiators, heat pumps, flow control and hydronic distribution systems, as well
as smart products. The Company's mission is to be the global leader in sustainable indoor climate comfort
solutions. Purmo Group's approximately 3,170 employees operate in 24 countries, manufacturing and
distributing top-quality products and solutions to our customers in more than 100 countries.
1.2 Basis of preparation
The consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (IFRSs), using the IAS and IFRS standards and SIC and IFRIC interpretations, as applicable at
31 December 2023 and adopted by the European Union . The International Financial Reporting Standards
refer to the standards implemented in the EU by Regulation (EC 1606/2002) and the related interpretations.
The notes to the consolidated financial statements also comply with the Finnish accounting and corporate
legislation that supplements the IFRSs .
The Board of Directors of Purmo Group Plc has approved the financial statements for publication on 12
February 2024. Under the Finnish Limited Liability Companies Act, the shareholders may accept or reject the
financial statement in the Annual General Meeting of the shareholders held after the publication. The Annual
General Meeting is also entitled to amend the consolidated financial statements.
The consolidated financial statements have been prepared on the historical cost basis unless otherwise
specified in the significant accounting policies section below.
Items included in the financial statements of each of Group’s entities are measured using the currency
of the primary economic environment in which the entity operates ('the functional currency'). These
consolidated financial statements are presented in EUR, which is the Company’s functional currency. The
consolidated financial statements are presented in EUR millions. As result of rounding differences, the figures
presented in the tables may not add up to the total.
Annual Report 2023 36
Stories Information for shareholdersFinancialsGovernanceSustainability
1.3 Management judgement and use of estimates
The preparation of consolidated financial statements under IFRSs requires the use of judgements, estimates
and assumptions affecting the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Although these estimates are based on management’s best view of current
events and actions, the actual results may ultimately differ from these estimates. These estimates and
assumptions are reviewed on an ongoing basis.
Information about judgements, assumptions and estimates that have a significant risk of resulting in a
material change to reported results are described below.
Note Accounting estimates and management judgement
Note 2.2 Net sales
Note 2.5 Share-based payments
Note 3.2 Impairment testing of goodwill
Note 3.3 Property, plant and equipment
Note 3.4 Right-of-use assets
Note 4.1 Inventories
Note 4.4 Provisions
Note 4.5 Post-employment obligations
Note 7.2 Taxes
The Group’s management has assessed the balance sheet impact of Russia’s war in Ukraine and the decision
to divest the business in Russia. The management has considered indicators of impairment of goodwill and
intangible assets, the recoverable amount of property plant and equipment and right-of-use assets, the
valuation of inventories, trade receivables and redemption liability. Due to the significant uncertainties related
to the business in Russia, the Group recognised in 2022 impairment charges and write-downs of EUR 12.9
million on goodwill, intangible assets, property, plant and equipment, right-of-use assets, inventories, other
assets and redemption liability. During 2023, the Group increased the redemption liability with EUR 1.3 million
and recognised additional impairment charges of EUR 3.9 million on inventories and other assets. See further
information note 6.2 Assets held for sale.
Climate-related matters in the consolidated financial statements
The Group's management has assessed the impact of potential climate-related matters, such as increased
production costs as a result to reduce carbon emissions and site restoration provisions, that might have an
impact on the fair value measurement of the assets and liabilities in the consolidated financial statements.
The Group management also monitors changes in government legislation in climate-related matters. On 13
February 2023, Purmo Group announced that it has established a Green Finance Framework to integrate
the company’s sustainability ambitions into its funding. The Green Finance Framework is designed to support
financing or refinancing Eligible Assets and Expenditures, in part or in full, that enable energy efficiency
improvements, such as equipment for heating and cooling systems, and components enabling smart controlling
and monitoring of heating and cooling systems. See further information note 5.2 Financial risk management
and 5.5 Equity. When preparing these consolidated financial statements the impact of climate related matters
are not otherwise material to Purmo Group's condensed financial statements. The Group will adjust the key
assumptions used in value-in-use calculations in future financial statements should a change be required.
1.4 New and amended IFRS standards and IFRIC interpretations
Amendments and annual improvements to IFRS standards
The Group has applied the relevant amendments and annual improvements to IFRS standards published by
IASB effective for financial reporting periods commencing on 1 January 2023. The revised standards have not
had a material impact on the results, the financial position or the presentation of Purmo Group's financial
statements.
The Group has applied the amendments to IAS 12 Deferred Tax related to Assets and Liabilities Arising from
a Single Transaction that are effective for the first time for financial reporting periods commencing on 1 January
2023. Under the amendments, an entity does not apply the initial recognition exemption for transactions that
give rise to equal taxable and deductible temporary differences. The amendments apply to transactions
that occur on or after the beginning of the earliest comparative period presented. The application of the
amendments did not have a material net impact on the results or financial position or the presentation of
Purmo Group’s financial statements.
New and amended standards to be applied
The Group has not applied any standards, amendments or interpretations published by IASB that will be
effective for the financial reporting period commencing after 1 January 2023. Purmo Group does not expect
any material impact on the financial statements from any published, but not yet effective, IFRS standard, IFRIC
interpretation, IFRS annual improvement or change.
Annual Report 2023 37
Stories Information for shareholdersFinancialsGovernanceSustainability
2. Group performance
2.1 Segment information
ACCOUNTING POLICIES
Operating segments are reported in a manner consistent with Purmo Group’s internal reporting provided
to the chief operating decision maker. The chief operating decision maker has been identified as Purmo
Group’s Board of Directors, assisted by the CEO. The operating segments are defined based on the
information that the Board of Directors uses to make decisions about the resources to be allocated to the
divisions and to assess their performance.
The divisions’ financial performance is assessed internally based on net sales and adjusted
EBITDA. The adjusted EBITDA has been derived from the unadjusted EBITDA by removing material
and unexpected items outside the ordinary course of business and that are considered to impact
comparability of the underlying business operations and by excluding costs and income incurred in the
group functions as described above. Such items include direct M&A related transaction and integration
costs, restructuring costs and costs incurred in connection with performance improvement programs,
impairment charges connected to the Russian business, and losses relating to sale of fixed assets.
Group’s divisions
As of 1 January 2023, the reportable segments for Purmo Group are Climate Products & Systems and Climate
Solutions. The new segment reporting structure is aligned with the new organisational structure announced
5 October 2022. Purmo Group has restated the 2022 comparison figures according to the new segment
reporting.
The Climate Products & Systems division sells via wholesalers in both residential and non-residential
sector. Sales regions are Northern, Western, Southern and Eastern Europe, and the Rest of the world,
including Brazil, China, Japan and the United States. The main product categories within Climate Products &
Systems are panel radiators, tubular radiators, and electric radiators. In addition, radiant heating and cooling
(RHC), including underfloor heating, air heating and cooling, water distribution systems as well as system
components and controls belong to the main product categories within Climate Solutions & Systems.
The Climate Solutions division sells directly to installers from the company’s Emmeti business in South
Europe, Thermotech business in the Nordic region and Merriott business in the United Kingdom. The
division provides a comprehensive range of components or full systems to wholesalers, specifiers and
installers comprising of four product categories: radiant heating and cooling, air heating and cooling, water
distribution systems and system components and controls. Climate Solutions provides integrated solutions,
which include a comprehensive set of heating and cooling solutions for customers whose goal is to achieve
energy savings and reduce the emissions generated by energy consumption.
Other and unallocated items comprise corporate headquarter functions and other Group level costs
including Group Finance, Group Legal, Group Sustainability, Group Communications, Group Human
Resources, and M&A. The head office costs comprise mostly of salaries, rent and professional fees that are
operated for the benefit of the whole group and are not allocated to the divisions.
2023
EUR million
Climate
Products &
Systems
Climate
Solutions
Other and
unallocated Eliminations Group
Net sales 591.9 151.6 -0.0 -0.3 743.2
Adjusted EBITDA 78.5 23.7 -9.9 0.0 92.3
Adjusted EBITDA % of sales 13.3% 15.6% 12.4%
Comparability adjustments impacting EBITDA -45.6
Depreciation, amortisation and impairment -31.7 -5.1 -0.1 - -36.9
EBIT 9.7
Net financial items -19.3
Profit before tax -9.6
2022
EUR million
Climate
Products &
Systems
Climate
Solutions
Other and
unallocated Eliminations Group
Net sales 720.6 183.9 0.0 -0.4 904.1
Adjusted EBITDA 71.7 29.9 -8.7 -0.0 92.9
Adjusted EBITDA % of sales 9.9% 16.3% 10.3%
Comparability adjustments impacting EBITDA -14.4
Depreciation, amortisation and impairment -34.9 -4.5 -0.1 - -39.5
EBIT 39.0
Net financial items -17.4
Profit before tax 21.6
Annual Report 2023 38
Stories Information for shareholdersFinancialsGovernanceSustainability
2.2 Net sales
ACCOUNTING PRINCIPLES
Sales of goods are recognised when the control is transferred to the customer. This is when the goods
have been delivered to the customer, typically based on delivery terms. Delivery is deemed to have
taken place when the products have been delivered to the agreed location and the risk of obsolescence
and damage of products has been transferred to the customer. In addition, for certain contract terms, a
transportation service is considered to be a separate performance obligation when control to the goods
is transferred to the buyer before the goods are delivered. However, transportation service is typically
performed during the same day as control is transferred to the customer, and, therefore, the revenue
from goods and transportation service is recognised at the same time because the effect of the delay
on the Group’s net sales is deemed to be immaterial. A receivable is recognised when the goods are
delivered. This is the point in time that the consideration is unconditional because only the passage of
time is required before the payment is due.
Amounts disclosed as net sales are net of discounts, annual rebates, bonuses and sanctions as well
as other variable elements effecting revenue. The Group grants its customers different discounts, of
which some are granted on invoicing, like cash discounts and different volume-based and customer
related discounts. Goods are often sold with annual rebates based on aggregate sales. The level or
the percentage on annual discounts might also depend on the sales volume, in which case the amount
increases when the sales increases. A refund liability is recognised (included in trade and other payables
for the expected volume-based discounts payable to customers in relation to the sales made until the
end of the reporting period. Advance payments from customers, if any, are included in trade and other
payables.
The Group provides warranties for its products and typical warranty period is between 2 -10 years
depending on the product. Provision has been made for estimated warranty claims in respect of the
products sold, see Note 4.4 Provisions.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Recognition of sales may require judgement, and transfer of control is mainly assessed based on the
terms of delivery in accordance with IFRS 15. Revenue from sales is recognised based on the price
specified in the contract, net of the estimated volume-based discounts, and the estimates are updated
each reporting date. Accumulated experience is used to estimate and provide for the discounts, annual
rebates and other items effecting revenue, and revenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur.
Group’s main products include panel radiators, tubular and electric radiators, underfloor heating
and piping systems, system components and air conditioners. Purmo Group sells its products mainly to
wholesalers and national merchants.
Entity wide information
Net sales by market area
Net sales to external customers by market area is based on the location in which the net sales has originated.
EUR million 2023 2022
Northern Europe¹ 166.4 191.0
Western Europe 287.5 337.2
Central and Eastern Europe 135.4 174.5
Southern Europe 110.3 142.4
Rest of the world 43.5 58.9
Net sales 743.2 904.1
¹ Net sales in Finland (company’s country of domicile) totalled to EUR 14.6 million (17.8).
Annual Report 2023 39
Stories Information for shareholdersFinancialsGovernanceSustainability
Net sales by market area for divisions
The division sales divided into geographical areas is the primary aggregation criteria of sales that is
monitored by the company.
Non-current assets by country
Non-current assets by country excludes financial instruments and deferred tax assets. Goodwill has not been
allocated to geographical areas.
Assets and liabilities related to contracts with customers
The Group has no contract assets on the balance sheet. Contract liabilities include EUR 0.4 (0.8) million of
advance payments from customers and they are presented in Trade and other payables in the balance
sheet. Prepayments recognised as liabilities in the balance sheet are recognised as revenue during the
following financial year (please see also Note 4.3 Trade and other payables).
2023
EUR million
Climate Products &
Systems Climate Solutions Eliminations Group
Northern Europe 143.3 23.3 -0.2 166.4
Western Europe 278.2 9.3 287.5
Central and Eastern Europe 128.1 7.3 -0.0 135.4
Southern Europe 24.2 86.3 -0.2 110.3
Rest of the world 18.1 25.4 43.5
Net sales 591.9 151.6 -0.3 743.2
2022
EUR million
Climate Products &
Systems Climate Solutions Eliminations Group
Northern Europe 163.8 27.4 -0.1 191.0
Western Europe 329.5 7.9 -0.1 337.2
Central and Eastern Europe 164.9 9.7 -0.1 174.5
Southern Europe 27.7 114.8 -0.1 142.4
Rest of the world 34.7 24.2 - 58.9
Net sales 720.6 183.9 -0.4 904.1
EUR million 2023 2022
Poland 55.1 45.8
Finland 29.7 27.2
UK 21.2 24.7
Germany 24.1 24.4
Italy 27.1 24.2
China 12.3 14.1
Belgium 4.0 12.3
Rest of the world 40.4 43.7
Goodwill 370.6 370.6
Deferred tax assets 42.8 29.2
Total 627.3 616.2
Annual Report 2023 40
Stories Information for shareholdersFinancialsGovernanceSustainability
2.3 Other income and expenses
ACCOUNTING PRINCIPLES
Other income and expenses are such items that are not derived from other than Group’s actual
operations. Other income includes disposal gain of sold tangible and intangible assets, grants and rental
income.
Government grants relating to the purchase of property, plant and equipment or intangible assets are
recognised as deferred income. This deferred income is recognised in profit and loss on a systematic
basis over the estimated useful life of the underlying asset. Other government grants are recognised in
the profit and loss on a systematic basis over the period in which the entity recognises the related costs
that the grants are compensating.
Net foreign exchange gains and losses are presented in other income or other expenses unless they
relate to financing items or to qualifying cash flow hedges .
The Group has identified a number of items that are material due to the significance of their nature or
amount, which are listed below to provide a better understanding of the operating performance for the
Group.
Other income
Other expenses
Audit fees
The following table includes the fees paid to the Company’s statutory auditor KPMG:
EUR million 2023 2022
Audit 0.8 0.6
Audit related services 0.1 0.1
Tax advisory 0.5 0.2
Other services 0.0 0.0
Total 1.4 1.0
EUR million 2023 2022
Net foreign exchange gains
3.3 0.0
Gain on disposal of Group companies and business operations
0.0 1.2
Gain on disposal of intangible and tangible assets
0.2 0.8
Subsidies and grants
0.6 0.4
Compensation from insurance companies
0.8 0.1
Other income
4.0 2.4
Total
8.8 4.9
EUR million 2023 2022
Net foreign exchange losses 0.0 1.5
Loss on disposal of intangible assets and property, plant and equipment 0.0 0.5
Impairment of intangible assets and property, plant and equipment¹ 7.1 7.4
M&A related transaction and integration costs² 0.2 2.2
Restructuring costs and one-off costs related to efficiency programs³ 37.6 7.5
Other expenses 2.2 4.6
Total 47.1 23.7
¹ Impairment of the Russian entities classified as assets held for sale.
² M&A related transaction and integration costs consist mainly of professional fees for pre-deal support and M&A advisory.
³ Restructuring costs and one-off costs related to efficiency programs consists of project management expenses and redundancy costs for
Accelerate PG.
Annual Report 2023 41
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2.4 Employment benefit expenses
ACCOUNTING PRINCIPLES
Short-term employee benefits are expensed as the related service is provided. A liability is recognised
for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Under the defined contribution plans, the Group pays contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. Contributions to defined contribution plans
are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in future payments is available.
Defined benefit plans are pension plans that are not defined contribution plans. The Group’s net
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that
amount and deducting the fair value of any plan assets.
Defined benefit obligations are calculated annually by a qualified actuary using the projected unit
credit method. When the calculation results in a potential asset for the Group, the recognised asset is
limited to the present value of economic benefits available in the form of any future refunds from the
plan or reductions in future contributions to the plan. To calculate the present value of economic benefits,
consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the
return on plan assets (excluding interest) and the effect of the asset ceiling if any (excluding interest), are
recognised immediately in other comprehensive income. The Group determines the net interest expense
(income) for the net defined benefit liability (asset) for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then-net defined
benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during
the period as a result of contributions and benefit payments. Net interest expense relating to defined
benefit plans are recognised in profit or loss within finance income or expense.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit
that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The
Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. That benefit is
discounted to determine its present value. Remeasurements are recognised in profit or loss in the period
in which they arise.
Termination benefits are payable when employment is terminated by the Group before the normal
retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
Termination benefits are expensed at the earliest of when the Group can no longer withdraw the offer of
those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be
settled within 12 months of the end of the reporting period, then they are discounted.
Personnel expenses
Number of personnel
EUR million 2023 2022
Wages and salaries -124.4 -127.6
Social security contributions -28.7 -29.0
Pension expenses – defined contribution plans -6.0 -6.1
Pension expenses – defined benefit plans 1.0 -1.2
Share-based payments -0.6 -0.2
Total -158.7 -164.1
2023 2022
Average number of personnel 3,228 3,476
Annual Report 2023 42
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2.5 Share-based payments
ACCOUNTING PRINCIPLES
The Group has share-based incentive programs that are accounted for as equity-settled share-based
payment transactions. The Group’s share-based payment arrangements include different conditions,
i.e., non-vesting conditions, market and non-market performance conditions as well as service
conditions. The fair value of the equity-settled share-based payment is determined at the grant date
and not revalued after the grant date. Market conditions as well as non-vesting conditions are taken
into account when estimating the fair value of the equity instruments granted. Therefore, the expense is
recognised irrespectively of whether the conditions are satisfied. Non-market performance conditions
and the requirement to stay in service are not factored into the grant date fair value. If the non-marked
performance condition or the service condition is not met, the cumulative share-based payment cost will be
truedup accordingly. The total cost is determined by reference to the fair value at grant-date multiplied by
the estimated amount of equity instrument expected to be vested. At each balance sheet date, the Group
revises the cumulative share-based cost expected to be paid out based on the likelihood of achieving non-
market performance criteria and the service condition at the end of the performance period.
The expenses related to the equity settled share-based incentive programs are recognised in the
profit and loss statement as employee benefit expenses over the vesting period with a corresponding
adjustment to equity. For share-based incentive programs in which awards vest in stages, the expense is
calculated in award tranches and recognised over the various vesting periods .
ACCOUNTING ESTIMATES AND JUDGEMENTS
At each balance sheet date, management reviews its estimates for the number of shares that are
expected to vest. As part of this evaluation, Purmo Group takes into account changes in the forecasted
performance of the Group and its reporting segments, expected turnover of the personnel part of the
incentive plan, and other pertinent information impacting the number of shares to be vested .
Long-term incentive plan
On 20 June 2022, Purmo Group Plc's Board of Directors decided on the establishment of a share-based long-
term incentive scheme for the company's management and key personnel. The Long-Term Incentive Plan
2022 (LTIP 2022) consists of an initial investment, followed by a performance period, whereafter an outcome
determination period commences. The participants had the opportunity to receive reward shares depending
on the company's performance. The Board of Directors decided separately the performance criteria, persons
authorised to participate and the maximum amount invested into the plan per participant. The purpose of
the plan is to align the targets of shareholders and key employees in order to increase the long-term value of
the company, retain key employees and offer a competitive incentive plan that is based on company share
ownership and successful performance. The performance criteria of the plan is total shareholder return (TSR)
of the class C share. The minimum threshold for reward payout is a share price of EUR 16.00, and maximum
reward shares are earned at a share price of EUR 24.00. Paid dividend and return of capital during the
plan are added to the share price when calculating the TSR. The potential reward will be paid during the
years 2026–2027, depending on the achievement of the performance criteria and the service condition. Any
reward earned for the LTIP will be paid partly in company shares and partly in cash. The purpose of the cash
contribution is to cover taxes and tax-like payments incurred by the management and key personnel from the
remuneration.
On 27 September 2022, Purmo Group announced that the Board approved a total of 66,403 subscriptions
of new class C shares in the share issue for management and key employees. The subscription price of EUR
10.23 per share was based on the trade-volume weighted average price of the Company’s share on Nasdaq
Helsinki Ltd during 12 July–5 September 2022. The total subscription price of the new class C shares was EUR
679,302.69.
Purmo Group Plc has financed the subscriptions of the class C shares by offering interest-bearing loans
to the participants to a maximum amount of 50 per cent of the subscription value of the subscribed shares.
Participants have pledged the subscribed shares as a security for performing their obligations under the
concluded loan agreement .
Annual Report 2023 43
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Share-based plan information
Fair value determination
The fair value of share-based incentives has been determined at grant date and the fair value is expensed
until vesting. Market condition, in this case total shareholder return, has been taken into account when
determining the fair value at grant, and it will not be changed during the plan. The pricing of the share-based
incentives granted during the period was determined by the following inputs and had the following effect:
The effect of share-based incentive plans on profit and loss has been presented in Note 2.4 Employment
benefit expenses.
LTIP 2022
Grant date 22 Sep 2022
Maximum number of class C shares 1,500,000
Dividend adjustment Yes
Earning period start date 1/1/2022
Earning period end date 12/31/2025
Commitment period end 12/31/2027
Vesting conditions
Total Shareholder Return (TSR) of the Purmo Group class
C share, continued employment
Maximum contractual life 5.3 years
Remaining contractual life 4 years
Description of shares Gross share
Number of persons in the arrangement at the end of the period 33
Payment method Cash and equity
Changes in plan during the period
Outstanding in the beginning of the reporting period 1 Jan 2023 745,000
Changes during the period
Granted 126,980
Forfeited -
Exercised -
Outstanding at the end of the reporting period 31 Dec 2023 871,980
LTIP 2022
Share price at grant date, EUR¹ 6.74
Share price at the end of the reporting period, EUR 6.70
Expected volatility, %² 38.61%
Maturity years 4.34
Risk free rate 2.99%
Expected dividends, EUR 1.52
Valuation model Monte Carlo
Total grant date fair value, MEUR 3.2
¹ The share price at grant differs between the multiple grants allocated during the financial year. Therefore, a volume-weighted average price
has been calculated between the grant dates.
² Expected volatility was determined by calculating the historical volatility of the Group’s share using monthly observations over corresponding
maturity.
Annual Report 2023 44
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3. Goodwill, intangible and tangible assets
3.1 Goodwill and other intangible assets
ACCOUNTING PRINCIPLES
Goodwill and other intangible assets with an indefinite useful life
Goodwill represents the excess of acquisition cost over the fair values of identified acquired assets and
liabilities of acquired companies. Goodwill arises typically in connection with a major acquisition and
represents the value of the acquired market share, business knowledge and the synergies obtained
in connection with the acquisition. Goodwill is measured at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units and tested annually for impairment. The Group is not
considered to have other intangible assets with indefinite useful lives .
Other intangible assets
Other intangible assets include, among others, trademarks, patents and IT software that are acquired by
Purmo Group and have finite useful lives and are measured at cost less accumulated amortisation and
accumulated impairment losses. Other intangible assets acquired in connection with business acquisitions
are recognised in the balance sheet if they fulfil the definition of other intangible assets: the asset will
yield future economic benefit, they can be specified or are based on agreements or legal rights. Other
intangible assets recognised in connection with business acquisitions include brands and trademarks,
customer agreements and customer relationships.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognised in profit or loss as incurred .
Amortisation
Amortisation is calculated so as to write off the cost of intangible assets less their estimated residual
values applying the straight-line method over their estimated useful lives and is generally recognised in
profit or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods are as follows:
Trademarks 25 years
Capitalised development costs 5 years
Allocations from business acquisitions 10-20 years
Other intangible assets 5–10 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate. Amortisation of the trademarks are included in sales and marketing expenses.
Amortisation of patents and development costs is included in research and development costs .
Research and development costs
Research costs are recognised in profit or loss as incurred. Expenditure on development, in which
research findings or other knowledge is applied to produce new or improved products or processes, is
recognised as an asset in the balance sheet if the product or process is technically and commercially
feasible and the company has intention as well as sufficient resources to complete development and then
use or sell the intangible asset, the intangible asset will generate probable future economic benefits and
the company is able to measure reliably the expenditure attributable to the intangible asset. Capitalised
development costs are presented in the balance sheet and are carried at cost less accumulated
amortisation and any accumulated impairment losses. Amortisation is recognised from the time when the
asset is ready for use. Capitalised development costs for an asset that is not yet ready for use are tested
for impairment annually. The estimated useful lives of development costs are reviewed at each reporting
date and if these estimates differ significantly from previous estimates, the amortisation periods are
adjusted accordingly. The amortisation period for capitalised development costs is 5 years.
Development costs are capitalised when a development project is likely to generate economic benefits
for the company and the products are assessed to be technically feasible and commercially viable.
Development projects are related to new or essentially improved technology .
Annual Report 2023 45
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Intangible assets
Other intangible assets include other long-term capital expenditures and advance payments.
2023
EUR million Goodwill Trademarks
Development
costs
Other
intangible
assets
Assets under
construction Total
Acquisition cost
1 Jan 2023 370.6 59.3 2.1 14.3 - 446.3
Effects of exchange rates -0.0 0.1 0.0 0.0 - 0.1
Additions - 0.5 - 0.0 0.3 0.8
Disposals -0.0 - -0.0 -0.1 -0.1
Transfers - 0.0 - 1.9 - 1.9
31 Dec 2023 370.6 59.9 2.1 16.2 0.2 449.0
Accumulated amortisation and
impairment losses
1 Jan 2023 - -22.3 -1.9 -4.5 - -28.7
Effects of exchange rates 0.0 -0.1 -0.0 -0.0 - -0.1
Amortisation 0.0 -2.6 -0.1 -1.2 - -3.8
31 Dec 2023 0.0 -25.0 -2.0 -5.7 -32.6
Carrying amount at 31 Dec 2023 370.6 34.9 0.1 10.5 0.2 416.5
2022
EUR million Goodwill Trademarks
Development
costs
Other
intangible
assets
Assets under
construction Total
Acquisition cost
1 Jan 2022 369.2 56.8 1.9 3.9 - 431.8
Effects of exchange rates -0.1 -0.1 - - -0.2
Purchases of subsidiaries and business
acquisitions
5.5 2.6 - 10.1 18.2
Additions - 1.1 0.2 0.5 1.7
Disposals - -0.1 - -0.1 -0.2
Transfers - -1.1 - - -1.0
Impairment charges -4.0 - - - -4.0
31 Dec 2022 370.6 59.3 2.1 14.3 - 446.3
Accumulated amortisation and
impairment losses
1 Jan 2022 - -21.1 -1.9 -3.3 - -26.4
Effects of exchange rates - 0.1 - - 0.1
Amortisation - -2.5 - -1.3 -3.9
Transfers - 1.3 - - 1.3
31 Dec 2022 - -22.3 -1.9 -4.5 - -28.8
Carrying amount at 31 Dec 2022 370.6 37.0 0.2 9.8 - 417.5
Annual Report 2023 46
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3.2 Impairment testing of goodwill
ACCOUNTING PRINCIPLES
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than
inventories and deferred tax assets) to determine whether there is any indication of impairment. If any
such indication exists, then the recoverable amount of the asset is estimated.
For impairment testing purposes, Purmo Group’s goodwill is allocated to cash-generating units (‘CGU’),
which are also the divisions of the Group. The divisions represent the Group’s operating segments before
aggregation determined in accordance with IFRS 8 Operating Segments. Impairment is measured at the
level of cash generating units, which are the smallest groups of assets that independently generate cash
flows and whose cash flows can be distinguished from other cash flows.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its
fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 cash generating units.
An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its
recoverable amount.
Impairment losses are recognised in profit or loss and initially allocated to reduce the carrying amount
of any goodwill attributable to the cash generating unit, and then to reduce the carrying amounts of the
other assets in the cash generating unit on a pro rata basis.
At the end of each reporting period, the Group assesses whether there is any indication that an
impairment loss recognised in prior periods for an asset other than goodwill may no longer exist or
may have decreased. If any such indication exists, the Group estimates the recoverable amount of that
asset, and impairment losses in respect of goodwill are not reversed. For other assets, an impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The goodwill and other intangible assets not yet available for use are subject to impairment testing on
an annual basis, or more frequently, if events or changes in circumstances indicate that the assets might
need to be impaired. In addition, the Group reviews the carrying amounts of its non-financial assets at
each reporting date to determine whether there is any indication of impairment. If any such indications
exist, then the asset’s recoverable amount is estimated. In the Group’s goodwill impairment testing,
the recoverable amount of a cash generating unit (CGU) is determined based on fair value less costs
of disposal calculations which require the use of assumptions. Estimation and judgment are required
in determining the components of the recoverable amount calculation, including the discount rate, the
terminal growth rate and development of the net sales and EBITDA (which is for impairment testing
purposes defined as earnings before interest, taxes and depreciation and amortisation). The discount
rates reflect current assessments of the time value of money and relevant market risk premiums reflecting
risks and uncertainties for which the future cash flow estimates have not been adjusted. The calculations
use cash flow projections based on financial budgets approved by management covering a five-year
period. Cash flows beyond the five-year period are extrapolated using estimated growth rates. These
terminal growth rate assumptions are consistent with forecasts included in industry reports specific to the
industry in which each CGU operates.
Impairment testing
The amount of goodwill allocated to each CGU is presented in the following table. As at 1 January 2023, the
segments for the Company are Climate Products & Systems and Climate Solutions. The 2022 comparison
figures has been restated accordingly.
Carrying amount of goodwill allocated to cash generating unit:
Annual impairment test 2023
As at 31 December 2023, goodwill totalled EUR 370.6 million. Given that the recoverable amount of each CGU
significantly exceeded the carrying value of goodwill, no indication of impairment was found in 2023. The
EUR million 2023 2022
Climate Products & Systems 326.0 326.0
Climate Solutions 44.6 44.6
Total 370.6 370.6
Annual Report 2023 47
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value in use calculations were derived from estimates, forecasts and strategy figures reviewed by Purmo
Group’s management and approved by the Board of Directors.
The calculations are prepared using a fair value less costs of disposal model. In the impairment testing, the
cash flows for the cash generating units were forecast for five years, based on operative plans. The financial
plan is conducted annually and is approved by management. Cash flows beyond this forecast period were
extrapolated using a constant 2 per cent long-term growth rate, which reflects the sustainable long-term
level of the operations.
The forecasts in the financial plans for both CGU’s are based on management’s estimate of the sustainable
profit margins. The forecasts take into account anticipated changes in market demand, sales prices and costs
based on management’s past experience and are in line with available external market data and research.
The terminal growth rate after the forecast period reflects an estimate of long-term inflation.
Discount rates
Discount rates represent the current market assessment of the risks specific to each cash generating unit and
are determined using the weighted average cost of capital, based on industry peers. The components of the
discount rate are:
• Market-specific risk-free rate, based on a weighted average for the largest market
• Market risk premium, based on a weighted average for the largest markets
• Industry-specific risk, which is incorporated by applying asset beta factors that are annually derived from
publicly available market data for peer companies
• Required return of debt, based on market information
• Debt-to-equity ratio, based on industry peers
The discount rates determined are post-tax rates as the company is using a fair value model to estimate the
recoverable amounts. Below are presented the sales growth rate beyond the five-year period, the average
EBITDA level and the post-tax discount rate, by CGU.
Sensitivity analysis
A sensitivity analysis was carried out by Purmo Group management using downside scenarios. The scenarios
involved raising the applied discount rate and reducing the forecasted EBITDA margin level for the forecast
and terminal periods. A change in an assumption that would cause the recoverable amount to equal the
carrying amount is presented in the table below separately for each CGU.
Change
Climate Products & Systems
Forecasted EBITDA margin decrease more than 3.7 per centage points
WACC increase more than 2.8 per centage points
Residual growth decrease more than 2.5 per centage points
Climate Solutions
Forecasted EBITDA margin decrease more than 5.5 per centage points
WACC increase more than 4.6 per centage points
Residual growth decrease more than 6.0 per centage points
In management’s opinion, the changes in the basic assumptions shall not be seen as an indication that these
factors are likely to materialise. The sensitivity analyses are hypothetical and should therefore be treated with
caution.
2023
Long-term growth rate, % Post tax discount rate, % Average EBITDA level, %
Climate Products & Systems 2.0 % 8.9 % 11.7 %
Climate Solutions 2.0 % 8.9 % 13.5 %
Annual Report 2023 48
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3.3 Property, plant and equipment
ACCOUNTING PRINCIPLES
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
recognised as separate items (major components of property, plant and equipment).
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits
associated with the expenditure will flow to the Group.
Major repairs and renovations of property, plant and equipment are capitalised and depreciated over
the useful lives of the underlying asset. Ordinary expenses for repairs and maintenance are expensed as
incurred.
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values applying the straight-line method over their estimated useful lives and is
recognised in profit or loss. Land is not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are
as follows:
Buildings 10–40 years
Machinery and equipment 3–10 years
Large processing machines 15–25 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate .
ACCOUNTING ESTIMATES AND JUDGEMENTS
Assessing the probability of expected future economic benefits and useful lives of property, plant and
equipment require management judgement. The estimated useful lives and residual values are reviewed
at least at the end of each reporting period, and if they differ significantly from previous estimates, the
depreciation periods are adjusted accordingly. Also, assessing any indication of impairment requires
management judgement.
Property, plant and equipment
2023
EUR million
Land and
water Buildings
Machinery and
equipment
Other tangible
assets
Assets under
construction Total
Acquisition cost
1 Jan 2023 9.1 107.8 458.8 10.4 15.7 601.7
Effects of exchange rates 0.0 2.7 4.8 0.6 0.8 8.8
Additions 0.0 4.6 11.8 0.3 5.4 22.0
Disposals 0.0 -0.7 -12.2 -0.2 -0.6 -13.6
Transfers 0.0 - 0.8 - -3.1 -2.3
Impairment charges - - -72.5 - -0.2 -72.8
31 Dec 2023 9.1 114.3 391.5 11.1 18.0 543.9
Accumulated depreciation and
impairment losses
1 Jan 2023 -0.5 -74.4 -390.7 -8.7 0.0 -474.4
Effects of exchange rates 0.0 -1.4 -5.3 -0.6 0.0 -7.2
Depreciation 0.0 -3.0 -12.9 -0.5 - -16.4
Depreciation on disposals 0.0 0.6 11.4 0.0 - 12.0
Transfers 0.0 0.1 0.7 0.1 0.0 0.8
Impairment charges - - 68.9 - - 68.9
31 Dec 2023 -0.5 -78.2 -327.8 -9.7 0.0 -416.2
Carrying amount at 31 Dec 2023 8.6 36.1 63.7 1.3 18.0 127.7
Annual Report 2023 49
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3.4 Right-of-use assets
ACCOUNTING PRINCIPLES
In accordance with IFRS 16, the Group assesses at contract inception whether a contract is, or contains,
a lease. The Group leases production equipment, real estate, vehicles and other equipment used in its
operations. The Group recognises lease liabilities representing the obligation to make lease payments
and right-of-use assets representing the right to use the underlying asset. For leases with lease terms
of 12 months or less or leases of low-value assets, the Group uses the short-term and low-value lease
recognition exemptions.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets
are measured at cost, comprising the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any direct costs incurred and an estimate of cost to
dismantle the underlying asset, less any accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities.
Leased assets are depreciated over the shorter of the lease term and their useful lives, unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term. The lease term
varies between 1-70 years.
Lease liabilities
The Group recognises a lease liability measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments less any receivable lease incentives, amounts
expected to be paid under residual value guaranties, and variable lease payments dependent on a rate
or index. Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The present value is calculated by discounting the payments with the interest rate implicit in the lease.
If the interest rate implicit for the lease is not readily determinable, the incremental borrowing rate
applicable for the lease is used. Lease payments are allocated between the principal repayment and
finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period.
2022
EUR million
Land and
water Buildings
Machinery and
equipment
Other tangible
assets
Assets under
construction Total
Acquisition cost
1 Jan 2022 8.4 118.8 465.3 10.2 9.5 612.1
Effects of exchange rates - -1.3 -5.6 -0.2 -0.1 -7.2
Purchases of subsidiaries and
business acquisitions
- - 0.6 - 0.5 1.1
Additions - 0.6 15.4 0.4 7.2 23.7
Disposals -0.1 -10.4 -15.1 -0.1 - -25.8
Transfers 0.8 0.1 1.2 - -1.5 0.7
Impairment charges - - -3.0 - - -3.0
31 Dec 2022 9.1 107.8 458.8 10.4 15.7 601.7
Accumulated depreciation and
impairment losses
1 Jan 2022 0.3 -77.6 -394.8 -8.2 - -480.1
Effects of exchange rates - 0.7 4.6 0.1 - 5.4
Depreciation - -3.2 -15.2 -0.7 - -19.1
Depreciation on disposals - 5.7 14.7 - - 20.4
Transfers -0.9 - - - - -0.9
31 Dec 2022 -0.5 -74.4 -390.7 -8.7 - -474.4
Carrying amount at 31 Dec 2022 8.6 33.4 68.1 1.6 15.7 127.3
Annual Report 2023 50
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Lease liability is remeasured when there is a change in future lease payments arising from a change in
an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under
a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised in-substance fixed lease payment. When the lease
liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its leases that have a lease term of 12
months or less and the low-value assets recognition exemption to leases where the leased asset value
is below EUR 5 thousand. The lease payments on short-term leases and low-value asset leases are
recognised as expense on a straight-line basis over the lease term.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The management also applies judgement in determining the lease term. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated). The following factors are normally the most relevant:
• If there are significant penalty payments to terminate (or not extend), the group is typically reasonably
certain to extend (or not terminate).
• If any leasehold improvements are expected to have a significant remaining value, the group is
typically reasonably certain to extend (or not terminate).
Otherwise, the group considers other factors, including historical lease durations and the costs and
business disruption required to replace the leased asset .
Right-of-use assets
2023
EUR million
Land and
water Buildings
Machinery and
equipment Total
Acquisition cost
1 Jan 2023 0.9 50.9 18.6 70.4
Effects of exchange rates 0.1 -0.0 0.2 0.2
Additions 0.2 3.6 4.6 8.4
Disposals - -0.0 0.0 -0.0
Impairment charges - -2.4 - -2.4
31 Dec 2023 1.2 52.0 23.4 76.5
Accumulated depreciation and impairment losses
1 Jan 2023 -0.1 -19.4 -11.6 -31.1
Effects of exchange rates -0.0 0.1 -0.1 -0.0
Depreciation -0.0 -5.9 -3.6 -9.6
31 Dec 2023 -0.1 -25.3 -15.3 -40.7
Carrying amount at 31 Dec 2023 1.0 26.8 8.1 35.8
2022
EUR million
Land and
water Buildings
Machinery and
equipment Total
Acquisition cost
1 Jan 2022 1.1 37.4 15.2 53.7
Effects of exchange rates 0.0 -0.7 -0.2 -0.9
Purchases of subsidiaries and business acquisitions - 2.6 0.3 2.9
Classified as assets held for sale - - 0.0 0.0
Additions - 11.2 3.2 14.4
Disposals -0.2 - - -0.2
Impairment charges - 0.4 - 0.4
31 Dec 2022 0.9 50.9 18.6 70.4
Accumulated depreciation and impairment losses
1 Jan 2022 -0.1 -14.1 -8.2 -22.4
Effects of exchange rates - 0.3 0.2 0.5
Depreciation - -5.6 -3.6 -9.2
31 Dec 2022 -0.1 -19.4 -11.6 -31.1
Carrying amount at 31 Dec 2022 0.8 31.5 7.0 39.3
Annual Report 2023 51
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Lease liabilities
Amounts recognised in profit or loss
Amounts recognised in statement of cash flows
3.5 Depreciation, amortisation and impairment
Depreciation, amortisation and impairment
4. Operational assets and liabilities
4.1 Inventories
ACCOUNTING PRINCIPLES
Purmo Group’s inventories consist of raw materials and consumables, works-in-progress and finished
goods. Inventories are measured at the lower of cost and net realisable value. The cost of inventories is
based on the first-in first-out (FIFO) method or weighted average cost formula and includes expenditure
incurred in acquiring the inventory items and bringing them to their existing location and condition.
The cost of purchased inventory are determined after deducting rebates and discounts. In the case of
manufactured inventories and work in progress, cost includes direct materials, directs labour and an
appropriate share of production overheads based on normal operating capacity.
The Group recognises an allowance for obsolete inventory items at the end of the reporting period
based on the latest information. The allowance is based on a systematic and continuous monitoring of the
inventory. The nature, state, and age structure if the inventory is taken into consideration when estimating
the amount of allowance for the obsolescence.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Inventory valuation requires management to make estimates and judgments particularly relating to
obsolescence and expected selling prices in different market conditions. It also entails management’s
assessment of the general market trends in global markets .
Inventories
Write-downs of inventories to net realisable value amounted to EUR 10.6 (7.6) million. These were recognised
as an expense and included in cost of sales in the profit and loss.
EUR million 2023 2022
Non-current 31.7 34.3
Current 10.4 9.4
Total lease liabilities 42.2 43.7
EUR million 2023 2022
Depreciation of right-of-use assets -9.6 -9.2
Interest on lease liabilities -2.3 -2.2
Expense related to short-term leases -1.2 -1.2
Expense related to leases of low-value assets -0.4 -0.5
Total -13.5 -13.1
EUR million 2023 2022
Total cash outflow for leases -11.8 -11.6
EUR million 2023 2022
Intangible assets -3.8 -7.9
Tangible assets -21.1 -22.5
Right-of-use assets -12.0 -9.2
Total¹ -36.9 -39.5
¹ Depreciation, amortisation and impairment include impairment charges of EUR 0.9 million from assets held for sale.
EUR million 2023 2022
Raw materials and consumables 43.5 55.0
Work in progress 14.4 21.6
Finished goods 96.4 105.2
Inventory value – gross 154.3 181.7
Inventory write-down -10.6 -7.6
Total 143.7 174.1
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4.2 Trade and other receivables
ACCOUNTING PRINCIPLES
Trade and other receivables are recognised in the balance sheet at fair value which can be subsequently
written down due to impairment. The impairment is expensed under sales and marketing expenses.
Non-recourse factoring
Purmo Group has entered into factoring agreements to sell trade receivables. Sold trade receivables
are derecognised once significant related risks and rewards of ownership have been transferred to the
factoring counterparty. The Group does not have any material trade receivables on the balance sheet,
which will be subject to factoring. Please refer to Note 5.3 Financial Assets and Liabilities for further details.
Trade and other receivables
Credit risk and impairment losses
Information about the Group’s exposure to credit risks and impairment losses for trade and other receivables
is included in Note 5.2 Financial risk management.
4.3 Trade and other payables
ACCOUNTING PRINCIPLES
Accruals and deferred income consist mainly of personnel-related accruals, sales adjustments and other
accrued liabilities.
Trade and other payables
4.4 Provisions
ACCOUNTING PRINCIPLES
Recognition and measurement of provisions
A provision is recognised when a present legal or constructive obligation exists as a result of a past event
and it is probable that an outflow of resources will be required to settle the obligation and the amount
can be reliably estimated. Provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. Actual outflows can differ from estimates due to changes in law, regulations, technology,
prices and conditions. The carrying amounts of provisions are regularly reviewed and adjusted to take
into account any such changes. The unwinding of the discount is recognised as a finance cost.
EUR million 2023 2022
Trade receivables 75.2 89.1
Prepayments and accrued income 7.1 6.5
Other receivables 21.6 19.7
Total 103.9 115.3
Non-current 4.5 0.7
Current 99.4 114.6
Total 103.9 115.3
EUR million 2023 2022
Trade payables¹ 71.2 103.7
Accruals and deferred income 90.7 91.0
Total 161.9 194.8
Non-current 1.3 1.4
Current 160.5 193.4
Total 161.9 194.8
¹ Comparative figures have been restated due to change in presentation
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Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision
is calculated based on historical experience of levels of repairs and replacements. Provisions for
warranties cover the estimated costs to repair or replace products that are still under warranty on the
balance sheet date. Group provides warranties for its products, and a typical warranty period is between
2–10 years depending on the product.
Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal
restructuring plan, and the restructuring either has commenced or has been announced publicly. The
Group provides for the estimated cost to restructure when a detailed formal plan of restructuring has
been completed, approved by management, and announced. Restructuring costs consist primarily of
personnel restructuring charges. The other components are costs associated with costs of terminating
certain other contracts directly linked to the restructuring. The majority of the restructuring cash outflows
are expected to occur within 12 months.
Site restoration
Estimated future expenses for the site or area restoration are capitalised. Capitalised amounts comprise
estimated expenses, calculated at current value, which are simultaneously reported as provisions. Effects
of subsequent events that result in costs that exceed the provision are discounted, capitalised, and added
to the provisions, and then written off over the remaining life of the asset.
Other provisions
Other provisions consist mainly of legal provisions, agent leaving indemnity provisions and a tax liability
recorded in accordance with IFRIC 23 for an uncertain tax position arising from the Group’s global
operations. Provisions also include a regulatory Commercial agents indemnity risk provision in Italy. Other
provisions are expected to be realised during the next five years .
ACCOUNTING ESTIMATES AND JUDGEMENTS
Provisions for present obligations require management judgment. Estimation is required in determining
the value of the obligation as the amount recognised as a provision is based on the best estimate of
unavoidable costs required to settle the obligation at the end of the reporting period. When estimating
unavoidable costs, management may be required to consider a range of possible outcomes and their
associated probabilities, risks and uncertainties surrounding the events and circumstances as well as
making assumptions of the timing of payment. Estimation is also required in determining the rate used to
discount provisions to present value.
Provisions
The restructuring provisions are mainly related to the Accelerate PG programme. The increases in 2023
are mainly related to the closure of the panel radiation plant in Zonhoven, Belgium, as announced in 28
November 2023.
2023
EUR million
Warranties and
guarantees Restructuring Other provisions Total
Balance at 1 Jan 2023 1.8 0.5 6.0 8.3
Effects of exchange rates 0.0 0.0 0.0 0.1
Increase of provisions -0.1 23.5 2.0 25.4
Provisions utilised -0.1 -0.2 -0.3 -0.6
Balance at 31 Dec 2023 1.6 23.8 7.7 33.1
Non-current 1.4 0.0 6.7 8.1
Current 0.0 23.8 1.0 24.8
2022
EUR million
Warranties and
guarantees Restructuring Other provisions Total
Balance at 1 Jan 2022 1.5 4.8 6.2 12.5
Effects of exchange rates -0.0 0.0 0.0 0.0
Increase of provisions 0.3 0.0 0.2 0.5
Provisions utilised 0.0 -4.4 -0.4 -4.7
Balance at 31 Dec 2022 1.7 0.5 6.0 8.2
Non-current 1.6 0.2 6.0 7.8
Current 0.1 0.3 - 0.4
Annual Report 2023 54
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4.5 Post-employment obligations
ACCOUNTING PRINCIPLES
The Group has a number of pension plans covering its operations in various countries, all of which comply
with the relevant country’s rules and obligations. The Group operates defined contribution and defined
benefit pension plans. The major defined benefit plans are located in the United Kingdom, Austria and
Germany. Together these plans account for 90 per cent of the Group’s total defined benefit obligation and
98 per cent of the total plan assets.
The present value of pension obligations depends on a number of factors determined on an actuarial
basis by using a number of financial and demographic assumptions, and changes in these assumptions
impact the carrying amount of pension obligations. The key financial assumption used in determining
the net cost (income for pensions) is the discount rate. The appropriate discount rate is determined at the
end of each reporting period and is used in calculating the present value of estimated cash outflows to
settle the pension obligation. In determining the appropriate discount rate, the Group considers the yields
of high-quality corporate or government bonds, depending on the country, that are denominated in the
currency in which the benefits will be paid and that have terms to maturity approximating the terms of
the related pension obligation. Other key assumptions related to pension obligations include financial
assumptions such as estimated increases in salaries and pensions, and demographic assumptions such
as mortality rates.
ACCOUNTING ESTIMATES AND JUDGEMENTS
The defined benefit obligation is calculated by independent authorised actuaries. The discount rate
for actuarial calculations is determined by reference to market yields on high-quality corporate bonds
or government bonds taking into account the duration of the defined benefit obligation. The applied
discount rates are country-specific. Pension benefits are normally based on the number of years’ service
and salary. The Group is exposed to a number of risks through its defined benefit plans. A decrease in
bond yields would increase plan liabilities. Some of the Group’s pension obligations are linked to inflation,
an increase in which would lead to higher liabilities. The majority of the plans’ obligations are to provide
benefits over the lifetime of the plan member, which means that increases in life expectancy will increase
the plan liabilities .
Items recognised in the balance sheet
EUR million 2023 2022
Defined benefit asset 0.0 2.2
Total employee benefit asset 0.0 2.2
Defined benefit liability 15.6 15.9
Liability for long-service leave 2.4 2.6
Other employee benefits
0.1 0.2
Total employee benefits liabilities 18.0 18.7
Non-current 18.0 18.7
Current
- -
Total 18.0 18.7
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Movement in net defined benefit (asset) liability
Plan assets
The Group’s post-employment benefits plan assets mainly consist of equity and debt instruments. Plan
assets don’t include the Group’s own financial instruments or assets which are occupied by the Group.
Approximately 98 per cent of plan assets have a quoted market price.
Actuarial assumptions
The following were the principal actuarial assumptions at the reporting date (expressed as weighted
averages).
At 31 December 2023, the weighted-average duration of the defined benefit obligation was 10.6 (13.1) years.
In 2024, the Group expects to pay EUR 1.2 million to the defined benefit plans.
Sensitivity analysis
Reasonably probable changes at the reporting date to one of the relevant actuarial assumptions, all other
assumptions remaining unchanged, would have affected the defined benefit obligation by the amounts
shown below.
While the analysis does not take account of the full distribution of cash flows expected under the plan, it does
provide an approximation of the sensitivity of the assumptions shown .
Defined benefit
obligation
Fair value of plan
assets
Net defined
benefits liability
(asset)
EUR million 2023 2022 2023 2022 2023 2022
1 Jan 54.4 97.0 40.7 82.7 13.7 14.3
Included in profit or loss
Current service cost 1.0 1.2 - - 1.0 1.2
Past service cost -0.1 - - - -0.1 -
Interest income - - 2.0 1.4 -2.0 -1.4
Interest expense (income) 2.4 1.4 - - 2.4 1.4
Settlements -0.5 -9.1 - -12.8 -0.5 3.7
Included in other comprehensive income
Actuarial loss (gain) arising from change in demographic
assumptions
-0.5 -1.1 - - -0.5 -1.1
Actuarial loss (gain) arising from change in financial
assumptions
0.7 -26.8 - -26.5 0.7 -0.3
Actuarial loss (gain) arising from experience adjustments 3.7 -0.9 - - 3.7 -0.9
Return on Plan Assets - - 0.8 - -0.8 -
Translation differences 0.8 -2.4 0.8 -2.7 -0.0 0.3
Other
Disbursements from plan assets -2.7 - -3.7 - 0.9 -
Contributions paid by the employer 0.0 0.0 2.1 1.9 -2.1 -1.8
Benefits paid
-0.9 -5.0 - -3.2 -0.9 -1.7
31 Dec 58.3 54.4 42.7 40.7 15.6 13.7
2023 2022
Discount rate
4.26% 4.36%
Expected salary growth 3.75% 3.46%
Expected future pension growth 3.00% 2.58%
31 Dec 2023 31 Dec 2022
EUR million Increase Decrease Increase Decrease
Discount rate (0.5% movement)
-3.0 3.3 -6.2 6.2
Future salary growth (0.5% movement) 0.5 -0.5 1.0 -1.0
Future pension growth (0.5% movement) 2.0 -1.8 4.2 -4.2
Annual Report 2023 56
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5. Capital structure and financial instruments
5.1 Financial income and expenses
ACCOUNTING PRINCIPLES
Net financial items comprise interest income, interest expenses, net foreign exchange gains or losses and
other financial income and expenses mainly arising from interest-bearing assets and liabilities .
5.2 Financial risk management
Principles and process
The nature of Purmo Group’s global operations exposes the Group to a variety of business and financial risks.
Financial risks are managed centrally by the Group Treasury (Treasury) under annually reviewed Group Treasury
Policy approved by the Board of Directors. The objective of financial risk management is to mitigate potential
adverse effects of financial risks on Group’s financial performance. Treasury identifies, evaluates and hedges
financial risks in close co-operation with the subsidiaries. Treasury operates as counterparty to the subsidiaries,
manages centrally external funding and is responsible for the management of financial assets and appropriate
hedging measures. Treasury uses only hedging instruments whose market value can be reliably monitored
and are in line with the Group Treasury Policy. In addition, Treasury provides consultation and services to Group
companies in all financing related matters. The Group’s risk management policy is essentially risk averse.
Credit and counterparty risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations. Credit risk arises mainly from the Group’s receivables due from customers.
It also relates to cash and cash equivalents, derivative financial assets and other related party receivables.
The objective of the credit risk management is to mitigate the Group’s credit risk exposure.
Trade receivables
The Group’s exposure to credit risk stems mainly from the individual characteristics of each customer.
However, management also considers the factors that could influence the credit risk of its customer base,
including the default risk of the industry and country in which customers operate.
The Group has processes in place to mitigate credit risk under which each new customer is analysed
individually for creditworthiness before the Group’s standard payment and delivery terms and conditions
are offered to the customer. The Group’s review includes external ratings, when available, and in some cases
bank references. If the analysis results in that credit could not be granted to a customer, the Group may
request advance payments before shipment.
Most of the Group’s customers have been trading with the Group for years, and no major credit losses
have occurred with these customers. Credit risk is monitored by grouping customers according to their credit
characteristics, including whether they are individuals or legal entities and whether they are wholesale, retail
or end-user customers, as well as by geographic location, industry and the existence of previous financial
difficulties. The Group has one customer whose share of the Group's total net sales is more than 10 per cent.
EUR million 2023 2022
Interest income on items measured at amortised cost
2.1 1.0
Interest income on foreign exchange derivatives 5.7 3.8
Interest income on interest rate derivatives 3.4 -
Exchange gains related to financial items, net 2.1 -
Exchange gains from foreign exchange derivatives, net - 1.0
Financial income
13.2 5.7
Interest expense on items measured at amortised cost -16.4 -8.5
Interest expense, lease liabilities -2.3 -2.2
Interest expense on foreign exchange derivatives -4.5 -6.8
Interest expense on interest rate derivatives -2.3 -0.4
Exchange loss related to financial items, net - -2.3
Exchange loss from foreign exchange derivatives, net -1.8 -
Other finance expense -5.2 -2.8
Financial expenses
-32.5 -23.1
Net financial items recognised in profit or loss -19.3 -17.4
Annual Report 2023 57
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The Group applies the provision matrix to assess the expected credit losses for trade receivables. The
expected credit loss is based on historical and forward-looking information and is estimated at the end of
each reporting period. In the provision matrix, loss rates are determined separately for the aging categories
of the trade receivables, based on the experienced historical credit losses and management’s future
expectations.
The Group has also entered into several trade receivable factoring arrangements. These arrangements
transfer the significant risks and rewards of to the factoring counterparty fulfilling the criteria of derecognition
from balance sheet and further decreasing Group’s credit risk related to trade receivables.
At the reporting date, the ageing of trade receivables, including the loss allowance, were as follows:
Reconciliation of the loss allowance:
Counterparty risk related to financing items
Purmo Group is exposed to credit risk when using derivative instruments and depositing its cash and
equivalents. Financial credit risk is managed actively by limiting counterparties to a sufficient number of major
banks and financial institutions, and by monitoring the creditworthiness and the size of exposures continuously.
According to management assessment, no significant credit losses are anticipated on the liquidity reserves.
Derivatives are subject to netting agreements such as ISDA (Master agreement of International Swaps and
Derivatives Association). Netting agreement allows for settling on a net basis all outstanding items within the
scope of the agreement, such as in the event of default. As the Company does not meet IFRS right of set-off,
these amounts are presented gross on the balance sheet. At the reporting date, the remaining net settlement,
as allowed by the netting arrangements, was EUR 0.9 (0.0) million for the derivative liabilities and EUR 4.2
(3.8) million for derivative assets.
Liquidity and refinancing risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations associated with its
financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to settle its liabilities when these become due, under both normal and stressed conditions.
Treasury monitors bank account structures, cash balances and forecasts of the subsidiaries and manages the
utilisation of the consolidated cash resources.
On 31 December 2023, Group’s cash and cash equivalents amounted to EUR 111.7 (56.3) million of which
EUR 4.6 (9.1) million classified as assets held for sale.
On 23 February 2023, Purmo Group issued a green hybrid bond of EUR 60.0 million. The instrument bears
an annual interest of 9.5 per cent until 23 February 2026, after which the instrument will bear a quarterly
floating interest in arrears on each interest payment date. The proceeds of the issuance will be used in
accordance with Purmo Group's Green Finance Framework announced on 13 February 2023. The instrument
is treated as equity according to IFRS. Additional information about the hybrid bond is disclosed in Note 5.5
Equity.
During 2023, Purmo Group extended the maturity of its term loan of EUR 280.0 million and revolving credit
facility of EUR 80.0 million from 2024 to 2026 by exercising two one-year extension options.
The Group has the following credit lines to secure its liquidity:
• EUR 80.0 (80.0) million undrawn committed revolving credit facility
• EUR 100.0 (100.0) million unutilised Finnish commercial paper program
• EUR 20.5 (20.5) million undrawn overdraft facilities that are unsecured
• EUR 125.0 (125.0) million undrawn uncommitted M&A facility
Refinancing risk, or the risk that maturing debt is not refinanced in the markets, is mitigated by Purmo Group’s
target of maintaining an even maturity profile of outstanding debt with no more than 20 per cent of the
outstanding debt to mature within the following 12 months. Diversification of funding among different markets
31 Dec 2023 31 Dec 2022
Gross carrying
amount
Loss
allowance Loss rate
Gross carrying
amount
Loss
allowance Loss rate
Not overdue
70.0 80.2
Overdue 1–30 days 2.9 -0.0 1% 4.5 0.0 1%
Overdue 31–60 days 1.4 -0.2 14% 1.7 -0.2 12%
Overdue 61–90 days 0.8 -0.3 42% 1.2 -0.5 40%
Overdue 91–179 days 1.7 -1.2 60% 4.7 -2.6 50%
More than 180 days
0.8 -0.6 90% 0.1 -0.1 90%
Total trade receivables 77.6 -2.3 3.0% 92.4 -3.3 3.6%
EUR million 2023 2022
1 Jan 3,3 3,8
Increase in loss allowance recognised in profit or loss during the year -0,4 -0,7
Realised write-offs
-0,6 0,2
31 Dec 2,3 3,3
Annual Report 2023 58
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and an adequate number of financial institutions are used to safeguard the availability of liquidity at all
times.
The Group’s long term funding consists of hybrid bond of EUR 60.0 million and syndicated term loan facility
of EUR 280.0 million, which is due on 2026. The facility is subject to customary financial covenants related
to leverage and equity ratio. Purmo Group is and expects to be in compliance with all covenants and other
terms of its debt instruments.
The Group manages its liquidity also by having entered into several trade receivable factoring
arrangements that provide for the accelerated receipt of approximately EUR 33.0 (36.4) million of cash at the
financial year end on available trade accounts receivable. Under the factoring agreements, the Group sells
on a revolving and non-recourse basis certain of its trade receivable to a financial institution. These factored
trade receivables are derecognised from the balance sheet because the Group has transferred the significant
risks and rewards to the counterparty and the Group does not maintain any continuing involvement with the
sold receivables. The Group incurs commission and interest expenses for the transferred receivables balance
which are recognised as other finance expenses in the period in which they are incurred, to the extent the fee
exceeds the fair value loss related to the transferred trade receivables.
Exposure to liquidity risk
The following table shows the maturity analysis of the Group’s financial liabilities according to the contractual
cash flows of the liabilities. The maturity table for derivatives shows the net cash flow amounts for derivatives
because they are net cash-settled.
31 Dec 2023
EUR million
Carrying
amount Total
1-12
months 1-2 years 2-5 years
More than
5 years
Non-derivative financial liabilities
Loans from financial institutions 285.1 337.7 24.2 313.5 - -
Commercial papers - - - - - -
Lease liabilities 42.2 42.2 10.7 8.7 15.6 7.1
Trade payables
71.2 71.2 71.2 - - -
Total 398.5 451.0 106.1 322.1 15.6 7.1
Derivative financial liabilities
Foreign exchange derivatives 3.0 2.3 2.3 - - -
Interest rate derivatives
0.3 0.2 -0.2 0.3 - -
Total 3.3 2.5 2.1 0.3 - -
31 Dec 2022
EUR million
Carrying
amount Total
1-12
months 1-2 years 2-5 years
More than
5 years
Non-derivative financial liabilities
Loans from financial institutions 279.4 308.2 14.7 293.5 - -
Commercial papers 10.0 10.0 10.0 - - -
Lease liabilities 43.7 43.7 9.4 3.9 7.7 22.8
Trade payables¹
103.7 103.7 103.7 - - -
Total 436.8 465.6 137.8 297.4 7.7 22.8
Derivative financial liabilities
Foreign exchange derivatives
1.5 0.4 0.4 - - -
Total 1.5 0.4 0.4 - - -
¹ Comparative figures have been restated due to change in presentation
Annual Report 2023 59
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Foreign exchange risk
The Group operates globally and is exposed to foreign exchange risk arising from several different
currencies. Foreign exchange risk arises mainly of receivables and payable, intra-group transactions,
deposits and bank account balances. The currencies in which the transactions within the Group are primarily
denominated are euro, Polish zloty, Sterling pound and Swedish krona.
Transaction risk
Foreign exchange transaction risk arises when a Group company has commercial or financial transaction
and payments in other than its own functional currency and when related cash inflow and outflow amounts
are not equal or concurrent. In Purmo Group, these transaction risks arise mainly in Poland, the UK, Sweden
and in the parent company Purmo Group Plc due to centralised Group Treasury.
According to Group Treasury Policy, Group companies forecast their foreign currency net cash flows
quarterly. These foreign currency exposures denominated in other than the Group company’s functional
currency, are hedged with internal foreign exchange contracts with Group Treasury. Group Treasury hedges
on average 40 to 80 per cent of the net foreign currency exposure for the time period of up to 15 months. All
external hedging actions, foreign exchange forward contracts and foreign exchange options are executed by
Group Treasury. Due to the centralised risk management operated by Group Treasury, the parent company
is exposed to foreign exchange transaction risk in various currencies mainly related to financial assets and
liabilities. According to Group Treasury Policy, these net positions by currency pair are hedged 70 to 100 per
cent by using foreign exchange forwards contracts and options.
Translation risk
Foreign exchange translation exposure arises when the assets, liabilities and income of a subsidiary is
denominated in a currency other than the functional currency of the parent company, see Note 6.4 Exchange
rates for additional information. Translation risk is reduced by funding the assets with, whenever feasible, in
the same currency as the asset itself. According to Group Treasury Policy, translation risk will only be hedged
with approval from the Board of Directors. At reporting date, there was no translation risk hedging in place.
Exposure to foreign currency risk
Sensitivity to a -/+ 10 per cent change in the exchange rates is shown for the net currency position per
currency. The table below presents the exposures in main currencies translated to euro at foreign exchange
rates of the reporting date. The balance sheet exposures are presented in accordance with IFRS 7
requirements including internal and external transactions.
2023
EUR million GBP PLN SEK RON
Forecast transactions, net
29.9 -175.3 10.7 21.5
Balance sheet exposure, financing items 19.7 44.0 5.8 1.6
Hedging instruments under hedge accounting, nominal amount -20.0 118.2 -7.0 -13.9
Hedging instruments, no hedge accounting, nominal amount
-19.7 -44.0 -5.9 -1.6
Net balance sheet exposure -19.9 118.2 -7.1 -13.8
Sensitivity analysis (+/- 10%)
Profit before tax -/+ 0.0 -/+ 0.0 -/+ 0.0 -/+ 0.0
Equity (hedge reserve) -/+ 2.0 -/+ 11.8 -/+ 0.7 -/+ 1.4
Foreign currency risk
2022
EUR million GBP PLN SEK RON
Forecast transactions, net
14.0 -111.6 23.1 26.1
Balance sheet exposure, financing items 31.2 54.0 35.7 -3.8
Hedging instruments under hedge accounting, nominal amount -9.0 77.1 -15.4 -17.3
Hedging instruments, no hedge accounting, nominal amount
-31.1 -54.0 -35.7 3.8
Net balance sheet exposure -8.9 77.1 -15.4 -17.3
Sensitivity analysis (+/- 10%)
Profit before tax -/+ 0.0 -/+ 0.0 -/+ 0.0 -/+ 0.0
Equity (hedge reserve)¹ -/+ 0.9 -/+ 7.7 -/+ 1.5 -/+ 1.7
¹ Comparative figures have been restated due to change in presentation
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2023
Profit and loss Other comprehensive income
EUR million
1 percentage point
increase
1 percentage point
decrease
1 percentage point
increase
1 percentage point
decrease
Variable rate instruments
-3.0 3.0 - -
Interest rate derivatives
1.0 -1.0 1.8 -1.1
Cash flow sensitivity (net) -1.9 2.0 1.8 -1.1
2022
Profit and loss Other comprehensive income
EUR million
1 percentage point
increase
1 percentage point
decrease
1 percentage point
increase
1 percentage point
decrease
Variable rate instruments
-3.0 0.0 - -
Interest rate derivatives
0.3 -0.3 2.4 -2.4
Cash flow sensitivity (net) -2.7 -0.2 2.4 -2.4
Interest rate risk
The Group is exposed to an interest rate that is the risk of fluctuating interest rates affecting the interest
expense of the Group and value of its assets and liabilities. Purmo Group’s interest rate risk arises mainly from
its interest-bearing assets and liabilities, such as loans, financial instruments and lease liabilities. According
to Group Treasury Policy, Purmo Group may use interest-rate swaps, cross-currency swaps or options to
manage the interest-rate risk either by synthetically converting floating-rate loans into fixed-rate loans
through the use of derivatives or buying an option or options to set limits to interest rate fluctuation.
Group Treasury manages and controls interest risk by following average months to interest fixing and
ratio between fixed and floating rate loans. At the end of reporting period, average interest fixing was 14 (15)
months for all interest bearing assets and liabilities excluding cash and cash equivalents and financial lease
liabilities.
Cash flow sensitivity analysis for variable rate instruments
The basis for the interest sensitivity is a parallel shift of 1 percentage points up and down in interest rates on
all interest bearing (non-current and current) variable rate instruments excluding lease liabilities and cash
and cash equivalents during the reporting period with all other variables being constant. For all the variable
rate instruments the one percentage point change upwards or downwards would have had the following
impact in financial expenses and trough change in the fair market value of the interest rate derivatives in
hedge accounting in other comprehensive income.
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At fair value through profit or loss
Financial assets that do not meet the criteria for classification as subsequently measured at either amortised
cost or fair value through other comprehensive income are classified and subsequently measured at fair value
through
profit or loss. In Purmo Group derivative assets and such trade receivables which are subject to
non-recourse factoring arrangement but not yet derecognised on the balance sheet date are classified
within this category.
Impairment
The Group recognises a loss allowance for the expected credit losses for financial assets not classified as
fair value through profit or loss. The loss allowance is estimated as the full lifetime expected credit loss
if the credit risk of the instrument has increased significantly since initial recognition, otherwise, the loss
allowance is estimated as the 12 months expected credit loss at the reporting date. Possible increase in
credit risk for said assets is assessed at the end of each reporting period.
The loss allowance for trade receivables is estimated using the simplified method and measured
as life time expected credit losses. The expected credit loss is based on historical and forward-looking
information and is estimated at the end of each reporting period.
Financial liabilities – measurement
Financial liabilities are classified at fair value through profit or loss or amortised cost.
Financial liabilities measured at amortised cost are initially recognised at fair value less any directly
attributable transaction costs. After initial recognition, these liabilities are measured at amortised cost
using the effective interest method. Loans and trade and other payables are included in this category.
Only derivative liabilities are classified at fair value through profit and loss .
5.3 Financial assets and liabilities
ACCOUNTING PRINCIPLES
The Group classifies financial assets into the following categories: financial assets at fair value through
profit or loss and amortised cost. The classification of financial assets is based on the cash flow
characteristics and the business model the asset is managed in.
The Group classifies financial liabilities into the following categories: financial liabilities at fair value
through profit or loss and amortised cost.
Financial assets and financial liabilities – recognition and derecognition
The Group initially recognises financial assets and financial liabilities when the entity becomes a party to
the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor
retains substantially all of the risks and rewards of ownership and does not retain control over the
transferred asset. Any interest in such derecognised financial assets that is created or retained by the
Group is recognised as a separate asset or liability. The Group has entered into factoring arrangements,
whereby significant risks and rewards are transferred to the counterparty.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled
or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group has a legal right to offset the amounts and intends
either to settle them on a net basis or to realise the asset and settle the liability simultaneously .
Financial assets – measurement
At amortised cost
A financial asset is classified and subsequently measured at amortised cost if its cash flows consist solely
payments of principal and interest, in other words, meets the SPPI criterion, and is managed within a held
to collect business model. Trade and other receivables, which are not subject to factoring, and vendor
note receivable from the ultimate parent company are included in this category. Interest income on these
items is recognised using effective interest method and presented as finance income.
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Carrying amounts and fair values of financial instruments
The following table shows the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair-value hierarchy. It does not include fair value information for trade
receivables and payables or other current financial assets and financial liabilities, as their carrying amount
is a reasonable approximation of fair value.
Items where the carrying amount equates to the fair value are categorised to three levels:
• Level 1. Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2. Fair value determined by observable parameters
• Level 3. Fair value determined by non-observable parameters
The Group does not have any material trade receivables on the balance sheet, which will be subject to
factoring.
31 Dec 2023
Carrying amount
EUR million
Fair value
through OCI
Fair value through
profit or loss
Amortised
cost Total Fair value
Fair value
hierarchy
Financial assets
Foreign exchange derivatives 4.6 0.2 - 4.7 4.7 Level 2
Interest rate derivatives 1.0 - 1.0 1.0 Level 2
Loan receivables - - 0.5 0.5 0.5 Level 2
Trade receivables - - 75.2 75.2 75.2 Level 2
Cash and cash equivalents¹
- - 116.3 116.3 116.3
Total assets 5.5 0.2 192.0 197.7 197.7
Financial liabilities
Foreign exchange derivatives 0.8 2.2 - 3.0 3.0 Level 2
Interest rate derivatives 0.3 - - 0.3 0.3 Level 2
Loans from financial institutions - - 285.1 285.1 285.1 Level 2
Redemption liability² - - 8.6 8.6 8.6 Level 3
Trade payables
- - 71.2 71.2 71.2 Level 2
Total liabilities 1.1 2.2 364.9 368.3 368.3
¹ Cash and cash equivalents include EUR 4.6 million classified as assets held for sale and short term bank deposits by the amount of EUR 82.0
million.
² The redemption liability has been classified as liabilities related to assets held for sale.
31 Dec 2022
Carrying amount
EUR million
Fair value
through OCI
Fair value through
profit or loss
Amortised
cost Total Fair value
Fair value
hierarchy
Financial assets
Foreign exchange derivatives 2.0 0.7 - 2.7 2.7 Level 2
Interest rate derivatives 2.7 - - 2.7 2.7 Level 2
Loan receivables - - 0.5 0.5 0.5 Level 2
Trade receivables - - 89.1 89.1 89.1 Level 2
Cash and cash equivalents¹
- - 65.4 65.4 65.4
Total assets 4.7 0.7 155.0 160.3 160.3
Financial liabilities
Foreign exchange derivatives 1.4 0.1 - 1.5 1.5 Level 2
Loans from financial institutions - - 279.4 279.4 279.4 Level 2
Commercial papers - - 10.0 10.0 10.0 Level 2
Redemption liability² - - 7.6 7.6 7.6 Level 3
Trade payables
- - 103.7 103.7 103.7 Level 2
Total liabilities 1.4 0.1 400.7 402.2 402.2
¹ Cash and cash equivalents include EUR 9.1 million classified as assets held for sale.
² The redemption liability has been classified as liabilities related to assets held for sale.
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5.4 Cash and cash equivalents
ACCOUNTING PRINCIPLES
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other highly liquid
investments with original maturities of three months or less. These are readily convertible to a known
amount of cash and the risk of changes in value is low. Bank overdrafts in use, if any, are included in
current liabilities in the consolidated statement of financial position.
Cash and cash equivalents
On 31 December 2023, Group had cash and cash equivalents by the amount of EUR 4.6 (9.1) million classified
as assets held for sale that are not included in the amount presented in this note.
5.5 Equity
ACCOUNTING PRINCIPLES
The Group’s equity consists of share capital, reserve for invested unrestricted equity, translation
differences, fair value reserve, retained earnings, and hybrid bond.
Other reserves
The Company’s other reserves include fair value reserve, cumulative translation difference reserve
and share-based payments reserve. The fair value reserve includes fair value changes of derivative
instruments used for cash flow hedging. The translation difference reserve comprises all foreign exchange
differences arising from the translation of the financial statements of foreign operations. The share-based
payments reserve represents the portion of the grant date fair value of share-based incentive plans
granted to the key management personnel of the Group that has been recognised in accordance with the
accounting policy adopted for share-based payments.
Profit distribution
Profit distribution includes dividends and return of capital repayments. Dividends and return of capital
proposed by the Board of Directors are recognised in the consolidated financial statements when they
were approved by the shareholders at the General Meeting.
Hybrid bond
The hybrid bond is subordinated to the company’s other debt obligations and is treated as equity in the
Group’s consolidated financial statements prepared in accordance with IFRS. The hybrid bond does not
confer to its holders the rights of a shareholder and does not dilute the holdings of the shareholders.
The hybrid bond does not have a specified maturity date, and the Company is not under an obligation
to repay, repurchase or redeem the hybrid bond at any specified date. The hybrid bond is initially
recognised at fair value less transaction cost and, subsequently, the bond is measured at cost. Interest is
recorded into retained earnings adjusted with tax effect upon payment or accrued interest is recorded
into retained earnings adjusted with tax effect and as an accrued interest liability when the commitment
to payment arises.
EUR million 31 Dec 2023 31 Dec 2022
Cash and cash equivalents 111.7 56.3
Total 111.7 56.3
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Share capital and number of shares
The Company’s registered share capital on 31 December 2023 was EUR 3,080,000. The Company has two
share classes of which class C shares are listed and class F shares are held by Purmo Group Plc’s founding
shareholder, Virala Corporation. The shares have no nominal value. The Founder Shares are not publicly
traded. The company has no treasury shares.
The Company’s class F shares are subject to redemption and consent clauses in accordance with the
Articles of Association, which restrict the rights to transfer or acquire class F shares. The holder of class F
shares have right to demand conversion into class C shares subject to certain price hurdles calculated in
accordance with the Articles of Association. Further class F shares carry a right to asset distribution equivalent
to a certain proportion of asset distributed to class C shares in accordance with the Articles of Association.
Purmo Group Plc (former Virala Acquisition Company Plc) announced on 20 September 2021 that the
first share price hurdle as set out in the company’s Articles of Association had been exceeded, pursuant to
which 18.75 per cent of class F shares held by the company’s founding shareholder, Virala Corporation, have
become eligible for conversion into class C shares starting from 28 June 2024.
At the General Meeting of shareholders, one share of either class carries one vote. Class C shares carry
a preferential right to dividends and to other distributions of assets until an aggregate amount of EUR
60,000,000 has been distributed to class C shares, whereafter class C shares and class F shares carry equal
right to dividends and to other distributions of assets unless otherwise stipulated in the Articles of Association
of Purmo Group.
Changes in share capital
Authorisation of the Board of Directors to resolve on the issuance of shares as well as on the issuance of
special rights entitling to shares
On 12 April 2023, the Annual General Meeting decided that the Board of Directors is authorised to resolve on
the issuance of class C shares as well as the issuance of special rights entitling to class C shares referred to in
Chapter 10, Section 1 of the Finnish Companies Act in one or several tranches.
The number of class C shares to be issued based on this authorisation shall not exceed 8,000,000 shares
(including shares to be received based on special rights), which corresponds to approximately 19.46 per cent
of all of class C shares in Purmo Group. The authorisation may be used to improve Purmo Group’s capital
structure, to finance or carry out corporate acquisitions or other arrangements, for incentive arrangements
and remuneration schemes or for other purposes resolved by the Board of Directors. However, a maximum of
25 per cent of the authorisation, i.e., a maximum of 2,000,000 class C shares (including shares to be received
based on special rights) may be used for incentive arrangements and remuneration schemes. The Board of
Directors shall decide on all the conditions of the issuance of shares and of special rights entitling to shares.
The issuance of shares and of special rights entitling to shares may be carried out in deviation from the
shareholders' pre-emptive rights (directed issue).
The authorisation is effective until the end of the next Annual General Meeting, however, no longer than
until 30 June 2024. The authorisation revokes the previous authorisation granted by the Annual General
Meeting on 25 April 2022 to resolve on the issuance of shares as well as on the issuance of special rights
entitling to shares.
Authorisation to purchase own shares
On 12 April 2023, the Annual General Meeting decided that the Board of Directors is authorised to resolve on
the repurchase of the Company’s own class C shares as well as on the acceptance of them as pledge.
The number of class C shares to be repurchased or accepted as pledge by virtue of this authorisation shall
not exceed 4,000,000 own class C shares in the Company, which corresponds to approximately 9.73 per
cent of all of class C shares in Purmo Group, subject to the provisions of the Finnish Companies’ Act on the
maximum amount of own shares owned by or pledged to the company and its subsidiaries.
The shares may be repurchased or accepted as pledge in one or several instalments and either through
a tender offer made to all shareholders on equal terms or otherwise than in proportion to the shares held by
the shareholders (directed repurchase) in public trading at the prevailing market price or at a price otherwise
formed on the market. The shares would be repurchased with funds from the Company’s unrestricted
shareholders’ equity.
Number of outstanding shares (pcs)
Share capital
(EUR million)
Reserve for invested
unrestricted equity
(EUR million)
Class C share Class F share
1 Jan 2023 41,112,713 1,565,217 3.1 380.8
Return of capital -14.9
31 Dec 2023 41,112,713 1,565,217 3.1 365.9
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The shares will be repurchased to be used to improve Purmo Group’s capital structure, to finance or carry
out corporate acquisitions or other arrangements, for incentive arrangements and remuneration schemes or
to be retained by the Company as treasury shares, transferred, cancelled or for other purposes resolved by
the Board. The Board of Directors shall decide on all other terms and conditions regarding the repurchase of
the Company’s own shares and acceptance thereof as pledge.
The authorisation is effective until the end of the next Annual General Meeting, however, no longer than
until 30 June 2024. The authorisation revoked the previous authorisation granted by the Annual General
Meeting on 25 April 2022.
Dividends and return of capital
The Annual General Meeting decided on 12 April 2023 to pay EUR 0.36 per class C share and EUR 0.07 per
class F share as return of capital from the reserve for invested unrestricted equity as a return of capital for
the financial year 2022 totalling approx. EUR 14.9 million. The Company has paid the three first instalments
totalling approximately EUR 11.2 million. The fourth instalment of the return of capital of EUR 0.09 per share
class C share and EUR 0.01 per class F share will be paid 22 March 2024.
After the balance sheet date, the Board of Directors proposed a payment of funds from the reserve for
invested unrestricted equity as a return of capital of EUR 0.36 per class C share and EUR 0.07 per class F
share totalling approx. EUR 14.9 million and that no dividend will be paid for the financial year 2023.
Additional information on equity is presented in the notes to the parent company financial statements, in
Note 8.
Earnings per share
The basic earnings per share are calculated by dividing the profit attributable to the equity owners of the
parent company by the weighted average number of shares outstanding during the period. The diluted
earnings per share are calculated by adjusting the weighted average number of ordinary shares with
the dilutive effect of all the potential dilutive shares, such as shares from share-based payments. When
calculating earnings per share, the result is adjusted with hybrid bond interests regardless of payment date
and adjusted with tax effect.
Earnings per share, basic
Earnings per share, diluted
2023 2022
Profit/loss attributable to shareholders of the parent company for C shares, EUR million
-9.3 13.0
Profit/loss attributable to shareholders of the parent company for F shares, EUR million -0.1 0.1
Profit/loss attributable to the owners of the Company, EUR million -9.3 13.1
Accumulated interest expenses on hybrid bond after taxes -3.9 -
Profit/loss used in calculation of earnings per share -13.3 13.1
Weighted average number of shares outstanding, pcs¹
41,406,191 41,244,426
Basic earnings per share, EUR -0.32 0.32
2023 2022
Profit/loss attributable to shareholders of the parent company for C shares, EUR million
-9.3 13.0
Profit/loss attributable to shareholders of the parent company for F shares, EUR million -0.1 0.1
Profit/loss attributable to the owners of the Company, EUR million -9.3 13.1
Accumulated interest expenses on hybrid bond after taxes -3.9 -
Profit/loss used in calculation of earnings per share -13.3 13.1
Weighted average number of shares outstanding, pcs¹
41,406,191 41,244,426
Diluted earnings per share, EUR -0.32 0.32
¹ Including 293,478 class F shares convertible to class C shares at the start of the conversion period on 28 June 2024.
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5.6 Interest-bearing liabilities
ACCOUNTING PRINCIPLES
Long-term debt is initially recognised at fair value, net of transaction costs incurred and subsequently
measured at amortised cost using the effective interest method. The difference, between the debt
amount recognised and the redemption amount, is recognised in profit and loss as interest expense over
the period of the borrowings. The fair value changes in borrowings covered by fair value hedge are, in
respect of hedged risk, recognised through profit and loss. A portion of long-term debt is classified as
short-term debt, when the settlement of the liability is due within 12 months from the balance sheet date.
Borrowings are derecognised only, if the contractual obligation is discharged, cancelled or expired. Fees
paid on the establishment of loan facilities are recognised in profit and loss as other finance expenses
over the period of the facility, or, if withdrawal of the loan is probable, as part of the transaction cost. Fees
paid on the establishment of credit facilities are recognised in profit and loss as other finance expenses
over the period of the facility, or, if withdrawal of the loan is probable, as part of the transaction cost.
Non-current liabilities
Current liabilities
Changes in financial liabilities arising from cash flow from financing activities
EUR million 31 Dec 2023 31 Dec 2022
Loans from financial institutions
277.9 278.1
Lease liabilities
31.7 34.3
Total 309.6 312.4
EUR million 31 Dec 2023 31 Dec 2022
Loans from financial institutions
7.3 1.4
Commercial papers 0.0 10.0
Lease liabilities
10.4 9.4
Total 17.7 20.7
Total liabilities 327.3 333.1
EUR million
Loans from financial
institutions Lease liabilities Total
1 Jan 2023 289.4 43.7 333.1
Changes from financing cash flows
Purchases of subsidiaries and business acquisitions - - 0.0
Other non-cash movement - -0.9 -0.9
Divestments - - 0.0
Change in short-term borrowings -3.8 - -3.8
Repayment of lease liabilities
- -11.6 -11.6
Total -3.8 -12.5 -16.3
New leases - 8.3 8.3
Interest expense -0.2 2.3 2.1
Effects of exchange rates
-0.3 0.3 0.0
31 Dec 2023 285.1 42.2 327.3
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Changes in financial liabilities arising from cash flow from financing activities
Terms and repayment schedule
The terms and conditions of outstanding borrowings are as follows:
5.7 Derivative financial instruments
ACCOUNTING POLICIES
Derivative instruments, fair value and hedge accounting
Derivatives
Derivatives are initially recognised in the balance sheet at fair value and subsequently measured at
their value at each balance sheet date. Derivatives are designated at inception either as hedges of firm
commitments or forecasted transactions (cash flow hedges) or as derivatives at fair value through profit
and loss that do not meet the criteria of hedge accounting. Interest component of all foreign exchange
derivatives are included in financial items.
Derivatives are presented as assets when the fair value is positive and as liabilities when the fair value
is negative. The full fair value of a hedging derivative is classified as a non-current asset or liability when
the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or
liability when the remaining maturity of the hedged item is less than 12 months.
Fair value
The fair value of foreign exchange forward contracts is determined using forward exchange market rates
at the balance sheet date. The fair value of interest rate derivatives is calculated as the present value of
the estimated future interest cash flows.
Cash flow hedge
The Group applies cash flow hedging to interest rate swaps and certain foreign exchange forward contracts.
At inception of the hedge relationship, the group documents the economic relationship between
hedging instruments and hedged items, including whether changes in the cash flows of the hedging
instruments are expected to offset changes in the cash flows of hedged items. The group documents its
risk management objective and strategy for undertaking its hedge transactions.
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is recognised in the cash flow hedge reserve within equity. Amounts accumulated in
equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The
hedging results of foreign exchange forward contracts are recycled from other comprehensive income
and presented on a net basis either in other income or other expenses. The gain or loss related to the
EUR million
Loans from financial
institutions Lease liabilities Total
1 Jan 2022 372.7 36.4 409.1
Changes from financing cash flows
Purchases of subsidiaries and business acquisitions - 2.9 2.9
Classified as assets held for sale - -0.4 -0.4
Divestments - -0.2 -0.2
Change in short-term borrowings -83.6 - -83.6
Repayment of lease liabilities
- -7.7 -7.7
Total -83.6 -5.4 -89.0
New leases - 13.4 13.4
Interest expense 0.4 - 0.4
Effects of exchange rates
0.0 -0.7 -0.7
31 Dec 2022 289.4 43.7 333.1
31 Dec 2023 31 Dec 2022
EUR million Currency Year of maturity Carrying amount Year of maturity Carrying amount
Loans from financial institutions EUR
2026 277.9 2024 278.1
Commercial papers EUR 2024 - 2023 10.0
Loans from financial institutions CNY 2024 7.3 2023 1.4
Lease liabilities EUR
2024- 42.2 2023- 43.7
Total borrowings 327.3 333.1
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ineffective portion of hedging instruments is reported in other income or expenses, net or under financial
items when related to interest rate swaps.
Derivatives at fair value through profit and loss
Certain hedging instruments do not qualify for hedge accounting regardless the proving to be effective
in terms of risk management under Group Treasury Policy. The fair value change of these instruments is
recognised in profit and loss. For non-hedge accounting derivatives, hedging operative receivables or
payables, the changes in fair value is presented in other income or expenses, and when hedging financial
receivables or payables, in net financial items .
Derivatives and hedge accounting
The following table summarises the effects of the foreign-currency related hedging instruments, to which
hedge accounting is applied, on the Group’s financial position and performance, including amounts recycled
to profit or loss during the year.
The following table summarises the effects of the interest rate swaps, to which hedge accounting is applied,
on the Group’s financial position and performance. The fixed interest rate of the interest rate swaps varied
between 1.3 (1.3) and 3.0 (3.0) per cent as at 31 December 2023.
EUR million unless otherwise stated 31 Dec 2023 31 Dec 2022
Foreign currency forward contracts
Carrying amount, assets 4.6 2.0
Carrying amount, liabilities 0.8 1.4
Notional amount 202.3 160.8
Hedge ratio 1:1 1:1
Hedging results, recycled to other income (expenses) 3.9 -0.5
Weighted average hedged rates (FX rate)
GBP 0.88 0.90
PLN 4.63 4.96
SEK 11.45 10.79
RON 5.11 5.31
Maturity breakdown of notional amounts
Between 1 and 6 months 106.4 115.0
Between 6 and 12 months 96.0 101.3
Over 12 months
- -
Total 202.3 216.3
EUR million unless otherwise stated 31 Dec 2023 31 Dec 2022
Interest rate swaps
Carrying amount, assets 1.0 2.7
Carrying amount, liabilities 0.3 -
Notional amount 100.0 100.0
Hedge ratio 1:1 1:1
Hedging results, recycled to other income (expenses) 1.1 -0.4
Maturity breakdown of notional amounts
Under 12 months - -
Over 12 months
100.0 100.0
Total 100.0 100.0
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6. Group structure
6.1 Business combinations
ACCOUNTING PRINCIPLES
The Group accounts for business combinations using the acquisition method when control is transferred
to the Group. The consideration transferred in the acquisition is measured at fair value, as are the
identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a
bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred.
The consideration transferred does not include amounts relating to the settlement of pre-existing
relationships. Any contingent consideration is measured at fair value at the date of acquisition. If an
obligation to pay contingent consideration that meets the definition of a financial instrument is classified
as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent
changes in the fair value of the contingent consideration are recognised in profit or loss.
The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-
acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired
entity’s net identifiable assets.
5.8 Commitments and contingent assets and liabilities
ACCOUNTING PRINCIPLES
Purmo Group has guaranteed obligations arising in the ordinary course of business. Typically, guarantees
given to secure commercial contractual obligations, or received advance payments. The Group discloses
contingent liabilities and commitments as off-balance sheet liabilities in the notes to the consolidated
financial statements and recognises them also when the realisation of them is not probable.
Guarantees
Off-balance sheet leases include low-value leases in accordance with the exemption of IFRS 16, and leases
that have not yet commenced. The Group does not have material lease agreements not yet commenced as
at the balance sheet dates. Additional information on leases is disclosed in Note 3.4.
The accrued unrecognised interest on the hybrid bond amounted to EUR 4.9 (-) million as of 31 December
2023.
Disputes and legal proceedings
Purmo Group is involved in some minor legal actions, claims and proceedings. The final outcome of these
matters cannot be predicted. Considering all available information to date, the outcome is not expected to
have material impact on the financial position of the Group.
EUR million 2023 2022
Bank guarantees
5.4 8.3
Parent guarantees
19.9 15.7
Total 25.4 24.0
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2022
EUR million
Purchase price
Purchase price paid in cash 9.2
Purchase price paid in shares 7.4
Fair value of net identifiable assets acquired
Goodwill 0.2
Other intangible assets 13.3
Tangible assets 1.3
Right-of-use assets 2.8
Inventories 5.9
Other current assets 3.9
Cash and cash equivalents
0.2
Total assets 27.7
Interest-bearing liabilities 9.4
Deferred tax liabilities 3.3
Current liabilities
3.7
Total liabilities 16.5
Net assets acquired 11.2
Less goodwill on acquired balance sheet¹
-0.2
Net assets acquired excluding goodwill 11.0
Earn-out
0.3
Goodwill 5.9
Cash flow impact
Purchase price paid in cash -9.2
Cash and cash equivalents of the acquired company 0.2
Expenses related to the acquisition
-0.4
Impact on cash flow -9.4
¹ Goodwill on the acquired entities balance sheet is deducted as it is not an identifiable asset of Purmo Group according to IFRS.
Fair values of acquired assets and liabilities at time of acquisition:
6.1.1 Acquisitions
2023
There were no business acquisitions during the financial period 2023.
2022
TT Thermotech Intressenter AB
Purmo Group acquired the entire share capital of the Nordic heating system company TT Thermotech
Intressenter AB on 1 March 2022. The consideration paid was EUR 9.2 million in cash and EUR 7.4 million in
shares, and the amount of cash and cash equivalents obtained was EUR 0.2 million. The acquisition included
an earn-out of EUR 0.3 million payable in cash subject to achievement of certain objectives.
The preliminary identified other intangible assets relate to customer relationships, technology and
trademarks amounting to EUR 8.5 million. The EUR 5.9 million goodwill arising from the acquisition reflects
the synergies expected to be achieved in sales, purchasing, selections and operational efficiency. The
goodwill is not tax deductible. The Group's profit and loss included EUR 0.4 million in acquisition-related costs
under other operating expenses, presented as items affecting comparability.
TT Thermotech Intressenter AB had a EUR 21.4 million impact on net sales for March–December 2022, and
the impact on net profit was EUR 0.5 million. If the acquisition had taken place on 1 January 2022, according
to management estimates, the impact on Group net sales would have been EUR 25.7 million and on the net
profit EUR 0.7 million.
TT Thermotech Intressenter AB was merged into it's subsidiary TT Thermotech Scandinavia AB in
December 2022.
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EUR million 2023 2022
Assets held for sale¹
Tangible assets -0.0 0.0
Inventories 0.0 4.4
Other assets 1.0 0.6
Cash and cash equivalents
4.6 9.1
Total 5.6 14.0
Liabilities related to assets held for sale
Interest-bearing liabilities 8.6 7.6
Other liabilities
1.9 2.4
Total 10.5 10.0
¹ Amounts are presented net of internal balances with other Purmo Group subsidiaries.
6.2 Assets held for sale
ACCOUNTING PRINCIPLES
Non-current assets or disposal groups and liabilities are classified as held for sale if their carrying amounts
are expected to be recovered primarily through sale rather than through continuing use. Classification as
held for sale requires that the following criteria are met: the sale is highly probable, the asset is available for
immediate sale in its present condition subject to usual and customary terms, the management is committed
to the sale and the sale is expected to be completed within one year from the date of classification.
Prior to classification as held for sale, the assets or assets and liabilities related to a disposal are
measured according to the respective IFRS standards. From the date of classification, non-current assets
held for sale and liabilities are measured at the lower of the carrying amount and the fair value less costs
to sell, and the recognition of depreciation and amortisation is discontinued. Non-current assets held for
sale and liabilities are presented in the statement of financial position separately from other items.
At the end of March 2022, Purmo Group took the decision to exit its business in Russia. The Group will seek
to divest and complete an orderly transfer of the business to a new owner, in compliance with international
and local laws and considering the wellbeing of our employees in Russia. Upon completion of the divestment,
the Group will no longer have a manufacturing operation or sales in Russia. The Russian business has been
measured at fair value less costs to sell and classified as assets held for sale and continuing operations. The
Group’s management has assessed the balance sheet impact of the decision to divest the business in Russia.
The management has considered indicators of impairment of goodwill and intangible assets, the
recoverable amount of property plant and equipment and right-of-use assets, the valuation of inventories,
trade receivables and the redemption liability. Due to the significant uncertainties related to the business in
Russia, the Group recognised impairment charges of EUR 12.9 million in the financial period 2022 on goodwill,
intangible assets, property, plant and equipment, right-of-use assets, inventories, other assets and the
redemption liability. In 2023, the Group increased the redemption liability with EUR 1.3 million and recognised
additional impairment charges of EUR 3.9 million on inventories and other assets.
6.1.2 Disposals
2023
There were no disposals during the financial period 2023.
2022
In September 2022, Purmo Group divested the shares in Lampo Heating (Tianjin) Co., Ltd., to a third party.
The company owned a real-estate property and a land area in Tianjin, China. The impact of the divestment
on the profit for the financial period is approx. EUR 1.3 million.
EUR million 2023 2022
Assets
- 2.9
Liabilities
- 0.3
Net assets disposed - 2.6
Cash consideration received - 4.3
Impairment - -
Translation differences reclassified to profit and loss - -0.4
Net assets sold
- -2.6
Sales gain - 1.3
Cash flow impact
Purchase price received in cash - 4.3
Cash and cash equivalents of the disposed company - -1.5
Expenses related to the disposal
- -0.0
Impact on cash flow - 2.7
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6.3 Subsidiaries
ACCOUNTING PRINCIPLES
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.
When the Group loses control over a subsidiary, it de-recognises the assets and liabilities of the
subsidiary, and any non-controlling interests and other components of equity. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when
control is lost. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are
recognised as equity transactions.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of profit or loss, statement of comprehensive income, statement of changes in
equity and balance sheet respectively.
All intercompany transactions, receivables, liabilities, unrealised profits and distribution of profits within
the Group are eliminated in the consolidated financial statements.
Purmo Group’s subsidiaries as at 31 December 2023 are set out below. Unless otherwise stated, the portion of
ownership interest held equals the voting rights held by the Purmo Group.
Company Country of incorporation Activities % Equity interest
Purmo Group Oyj Finland Parent company
100
Purmo Group Finland Oy Ab Finland Sales 100
Purmo Group Latvia SIA Latvia Sales 100
Purmo Group Estonia AS Estonia Sales 100
ZAO EVRA Varme RUS Russia Sales 100
Purmo Group Denmark ApS Denmark Sales 100
PG Heating & Cooling Environment Equipment
(Jiangsu) Co., Ltd.
China Production and sales 100
Purmo Group Poland Sp. z o.o Poland Production and sales 100
Company Country of incorporation Activities % Equity interest
Purmo Group Sweden AB Sweden Production and sales
100
Emmeti S.p.A Italy Production and sales 100
Emmeti Iberica S.L. Spain Sales 100
Fabricca Italiana Valvole S.r.l Italy Production and sales 100
SFERA Comercial e Importadora Brazil Sales 100
Sigarth GmbH Germany Sales 100
Sigarth Sp. z o.o. Poland Production and sales 100
PG Austria GmbH Austria Production and sales 100
PG Hungary Kft Hungary Production and sales 100
PG Hrvatska d.o.o. Croatia Sales 100
PG Slovenija d.o.o. Slovenia Sales 100
PG Germany GmbH Germany Production and sales 100
Hewing GmbH Germany Production and sales 100
NORAL Beteiligungs GmbH & Co. KG Germany Services 100
Rettig Heating Group UK Ltd United Kingdom Dormant 100
Purmo Group Belgium NV Belgium Production and sales 100
Purmo Group Ireland Limited Ireland Dormant 100
PG Ceska s.r.o Czech Republic Sales 100
Purmo Group USA Inc United States Sales 100
Purmo Group Turkey Ticaret ve Sanayi A.S. Turkey Production and sales 100
Purmo Group Romania srl Romania Sales 100
Purmo Group France SAS France Production 100
Purmo Group (UK) Ltd United Kingdom Production and sales 100
Purmo Group UK Pension Trustee Limited United Kingdom Dormant 100
Euroradiators Holding B.V. Netherlands Holding 51
Evroradiators LLC Russia¹ Russia Production and sales 51
TT Thermotech Management Services AB Sweden Holding 100
TT Thermotech Scandinavia AB Sweden Production and sales 100
Thermotech Scandinavia Finland Oy Finland Sales 100
Purmo Group Finland Holding Oy Finland Holding 100
¹ 100% owned by Euroradiators Holding B.V
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6.4 Exchange rates
ACCOUNTING PRINCIPLES
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated
in foreign currencies that are measured at fair value are translated into the functional currency at
the exchange rate at the date when the fair value was determined. Foreign currency differences are
generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in
a foreign currency are not retranslated. Foreign exchange gains and losses, net that relate to operating
items, are presented in other income or expenses, depending of the net position. Foreign exchange gains
and losses, net, that relate to financing items are presented in finance income or expenses, depending of
the net position.
Foreign operations
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the functional currency).
The consolidated financial statements are presented in euro, which is the Company’s functional and
presentation currency. The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated into euro at the exchange rates at the reporting date.
The income and expenses of foreign operations are translated into euro at the exchange rates at the
dates of the transactions. Foreign currency differences arising from the translation of foreign entities are
recognised in other comprehensive income and accumulated in the translation reserve, except to the
extent that the translation difference is allocated to a non-controlling interest.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence
or joint control is lost, the cumulative amount in the translation reserve relating to that foreign operation
is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is
reattributed to non-controlling interests.
Average rates Closing rates
2023 2022 31 Dec 2023 31 Dec 2022
CNY Chinese yuan
7.6600 7.0789 7.8509 7.3582
GBP Pound sterling 0.86979 0.85276 0.86905 0.88693
HUF Hungarian forint 381.85 391.30 382.80 400.87
PLN Polish zloty 4.5420 4.6861 4.3395 4.6808
RON Romanian leu 4.9467 4.9313 4.9756 4.9495
RUB Russian rouble 91.6117 71.8749 98.5913 77.2993
SEK Swedish krona 11.4788 10.6294 11.0960 11.1218
USD US dollar 1.0813 1.0530 1.1050 1.0666
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7. Other notes
7.1 Related party transactions
Parties are considered to be related if one party has the ability to control or exercise significant influence
on the other party, or if the parties exercise joint control in making financial and operating decisions. Purmo
Group’s related parties include subsidiaries as well as the members of the Board of Directors and the CEO and
members of the Group management. In addition, the immediate parent company Rettig Ltd and the ultimate
controlling party Rettig Capital Ltd and their subsidiaries, associated companies and joint ventures are related
parties. All transactions and outstanding balances with these related parties are priced on an arm’s length
basis. Tomas von Rettig and Maria von Rettig have significant influence over Rettig Capital Ltd.
Rettig Ltd held 61.80 per cent of the Company's shares and voting rights on 31 December 2023 and 31
December 2022, respectively.
Parent and ultimate controlling party
Transactions with key management personnel
The information of the key management personnel compensation and remuneration is disclosed only for the
key management of Purmo Group. Purmo Group did not have any transactions with the key management
personnel of Rettig Ltd or Rettig Capital Ltd. The information presented in the tables below are on an accruals
basis.
Remuneration to the members of the Board of Directors
Compensation and remuneration to the CEO and the members of the Management team
Purmo Group has outstanding loan receivables from Group management of EUR 0.2 (0.2) million at the
financial year end.
In July 2022, Purmo Group announced that the Board of Director’s had decided to launch a new share-
based incentive plan directed for management and key employees. Based on the share-based incentive plan
the Company's CEO and management team subscribed a total of 10,752 new class C shares and tied 72,514
previously owned class C shares to the plan during 2022. In 2023 the management team tied additional
12,800 class C shares to the plan. For additional information about the share-based incentive plan, please
EUR million 2023 2022
Items in profit and loss
Interest income 0.0 0.0
Purchases -0.2 -0.1
Items in the balance sheet
Non-current receivables 0.2 0.2
Items recognised in equity
Dividend and repayment of capital -7.1 -9.8
EUR thousand 2023 2022
Fees 523.2 475.8
Total 523.2 475.8
2023
EUR thousand CEO
Members of the
Management team
Salaries and other short-term employee benefits
498.5 1067.9
Short term incentives 136.6 230.3
Post-employment benefits
61.0 83.5
Total 696.2 1,381.7
2022
EUR thousand CEO
Members of the
Management team
Salaries and other short-term employee benefits
486.3 1,119.1
Short term incentives 267.6 403.0
Post-employment benefits 62.3 112.1
Termination benefits
- 454.9
Total 816.2 2,076. 2
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see Note 2.5 Share-based payments. The company has provided the participants a possibility to finance 50
per cent of the subscription value through an interest-bearing loan from the company, which some of the
Group management has utilised. The loans were withdrawn in October 2022 and will be repaid in full on 30
May 2028, at the latest. The participants have pledged subscribed shares as a security for performing the
obligations under the concluded loan agreement. The Annual General Meeting has authorised the Board of
Director's to accept the Company's class C shares as a pledge, see Note 5.5 Equity. As a result, Purmo Group
had 5,376 class C shares as a pledge at the end of the reporting period. The loans are subject to 12-month
Euribor plus a margin of 1.00 per cent. The interest is due annually and interest payable by key management
personnel totals to EUR 0.0 (0.0) million at the financial year end.
Purmo Group has also granted loans to the Group management during 2018 and 2020 to make the initial
personal investment to subscribe the Company’s former class K shares in connection of participants becoming
eligible for the 2018 and 2020 incentive plans. The shares subscribed by the borrowers are pledged as security
for the repayment of loan balance. The Annual General Meeting has authorised the Board of Director's to
accept the Company's class C shares as a pledge, see Note 5.5 Equity. The loans are subject to 12-month
Euribor plus a margin of 1.00 per cent. The interest is due annually, and interest payable by key management
personnel totals to EUR 0.0 (0.0) million at the financial year end. The loans and any accrued interest thereon
are repayable on 30 June 2024 at the latest, or earlier if the borrower’s employment with the Group ends.
reflects uncertainty relating to income taxes, if any. It is measured using tax rates enacted or substantively
enacted at the reporting date. Current tax also includes any tax arising from dividends .
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised for unused tax losses, unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits will be available against which they can be
used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is
no longer probable that the related tax benefit will be realised; such reductions are reversed when the
probability of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become probable that future taxable profits will be
available against which they can be used. Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted
at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow
from the manner in which the Group expects, at the reporting date, to recover or settle the carrying
amount of its assets and liabilities. Deferred tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to
the same taxation authority.
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management judgement is required in assessing whether certain deferred tax assets and deferred
tax liabilities are recognised on the balance sheet. Deferred tax assets are recognised only where it is
considered probable that they will be recovered, which is dependent on the generation of sufficient future
taxable profits. Significant management judgment is required to determine the amount of deferred tax
assets that can be recognised for tax losses carried forward.
7.2 Taxes
ACCOUNTING PRINCIPLES
Income tax
The income tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit
or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to tax payable or receivable in respect of previous years. The amount of current
tax payable or receivable is the best estimate of the tax amount expected to be paid or received that
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Amounts recognised in profit and loss
Amounts recognised in other comprehensive income
Reconciliation of effective tax rate
The total income tax expense of the Group for 2023 was EUR 0.3 million. Reported effective tax rate for the
year 2023 was 2.7 per cent (39.1). The positive total tax is due to deferred tax assets recognised on temporary
differences. The tax expenses are impacted by the following non-deductible items: A trademark amortisation
and claw back of Group internal capital gain related to previous years company restructurings of total 5.7
million as well as a redemption liability and an additional impairment on inventory both relating to the
Russian business assets held for sale of total EUR 4.9 million. When excluding these effects, the effective tax
rate is -27.8 per cent (20.1).
OECD Pillar Two impact
Purmo Group as a part of the Rettig group is within the scope of the OECD Pillar Two model rules. Pillar Two
legislation was enacted 28 December 2023 in Finland, where Purmo Group Plc is resident, and came into
effect as from 1 January 2024. Since Pillar Two legislation was not effective at the reporting date, the Group
has no related current tax exposure.
The Group applies the exception to recognising and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes, as provided in the amendment to IAS 12 issued in May 2023.
Under the legislation, there is a liability to pay a top-up tax on the difference between the GloBE (Global
Anti-Base Erosion Model Rules) effective tax rate per jurisdiction and the 15 per cent minimum rate. Most
entities within the Group have an effective tax rate that exceeds 15 per cent.
Purmo Group has made an assessment of its exposure to the Pillar Two legislation for when it comes
into effect. This assessment indicates that Pillar 2 will have only minor effect on Purmo Group’s effective tax
rate. For the annual reporting period ending on 31 December 2023, the average effective tax rate of the
Group is 2.7 per cent. It is expected there will be a top-up tax of EUR 0.1 million from Hungary according to
Impact Analyses. The ultimate liability for Purmo Group Pillar Two taxation lies on Rettig Capital Ltd being the
intermediate parent company of Purmo Group.
The Group is currently engaged with tax specialists assisting it with applying the legislation.
EUR million 2023 2022
Income tax expense
For the financial period -12.6 -14.8
For previous financial periods 0.0 1.9
Change in deferred taxes
12.8 4.5
Total 0.3 -8.4
EUR million 2023 2022
Items that will never be reclassified to profit or loss
Tax related to post-employment defined benefit plans 0.9 -0.2
Items that are or may be reclassified to profit or loss
Cash flow hedges
-0.2 -0.8
Total 0.7 -1.1
EUR million 2023 2022
Profit before tax
-9.6 21.6
Tax using the Company’s domestic tax rate 1.9 -4.3
Effect of tax rates in foreign jurisdictions -1.5 -0.7
Non-deductible expenses -2.3 -5.9
Tax-exempt income 2.1 1.4
Current year losses for which no deferred tax asset was recognised 0.1 -0.2
Change in unrecognised temporary differences (tax losses) 0.1 0.4
Prior year taxes -0.2 1.9
Other 0.2 -0.9
Tax in profit and loss statement
0.3 -8.4
Effective tax rate 2.7 % 39.1 %
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Deferred tax assets
Deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
2023
EUR million 1 Jan¹
Recognised in
profit and loss
Exchange
differences
Recognised in
OCI
Acquisitions
and other 31 Dec
Property, plant and equipment
2.1 1.4 -0.0 - -0.6 2.9
Lease liabilities 4.9 0.4 0.0 5.3
Financial assets 0.9 0.8 -0.0 -0.2 0.0 1.5
Inventories 1.8 -0.1 0.0 - 0.7 2.5
Post-employment benefit obligations/assets 3.3 -0.4 -0.0 1.0 -0.7 3.2
Provisions 4.0 3.5 0.0 - -5.0 2.5
Tax losses carried forward 26.1 3.0 -0.1 - -2.4 26.6
Other temporary differences
2.6 4.3 0.2 - -1.5 5.6
Deferred tax assets, total 45.6 12.9 0.1 0.8 -9.4 50.1
Offset against deferred tax liabilities
-11.6 - -0.1 - 4.4 -7.3
Total deferred tax 34.1 12.9 0.0 0.8 -4.9 42.8
2023
EUR million 1 Jan¹
Recognised in
profit and loss
Exchange
differences
Recognised in
OCI
Acquisitions
and other 31 Dec
Intangible assets
3.7 0.3 0.0 - -1.0 3.0
Property, plant and equipment 7.2 -0.6 0.1 - -1.6 5.2
Right of use assets 4.9 0.1 - - - 5.0
Financial assets 1.7 0.3 0.1 - 0.1 2.2
Inventories -0.1 - -0.0 0.0 0.5 0.4
Post-employment benefit obligations/assets 0.6 0.0 0.0 -0.1 -0.1 0.3
Provisions 0.1 0.0 0.0 - - 0.1
Other temporary differences
3.8 -0.1 -0.0 - -6.3 -2.5
Deferred tax liabilities, total 21.8 0.1 0.2 -0.1 -8.4 13.6
Offset against deferred tax assets
-11.6 - -0.1 0.0 4.4 -7.3
Total deferred tax 10.3 0.1 0.1 -0.1 -3.9 6.4
¹ The deferred tax assets and liabilities for the comparison period have been restated due to the amendments to IAS 12. The impact on the
result was EUR 0.3 million. See accounting principles for more information.
2022
EUR million 1 Jan
Recognized in
profit and loss
Exchange
differences
Recognized in
OCI
Acquisitions
and other 31 Dec
Property, plant and equipment
1.7 0.4 0.0 - 0.0 2.1
Financial assets 0.6 0.4 0.0 -0.1 - 0.9
Inventories 2.4 -0.3 0.0 - -0.3 1.8
Post-employment benefit obligations/assets 3.5 0.1 0.0 -0.3 - 3.3
Provisions 4.4 -0.4 0.0 - 0.0 4.0
Tax losses carried forward 19.2 - 5.2 - 1.7 26.1
Other temporary differences
3.0 -0.1 0.0 - -0.2 2.6
Deferred tax assets, total 34.9 -0.1 5.2 -0.4 1.0 40.7
Offset against deferred tax liabilities
-8.4 - - - -3.2 -11.6
Total deferred tax 31.12 26.5 -0.1 5.2 -0.4 -2.1 29.2
2022
EUR million 1 Jan
Recognized in
profit and loss
Exchange
differences
Recognized in
OCI
Acquisitions
and other 31 Dec
Intangible assets
0.8 -0.3 0.5 - 2.6 3.7
Property, plant and equipment 6.5 -0.3 0.5 - 0.4 7.1
Financial assets 0.4 -0.5 1.0 0.7 - 1.7
Inventories 0.0 0.2 -0.3 - 0.1 -0.1
Post-employment benefit obligations/assets -0.1 0.1 0.3 0.0 0.4 0.6
Provisions 0.1 0.0 0.0 - - 0.1
Other temporary differences
3.3 0.0 0.0 - 0.5 3.8
Deferred tax liabilities, total 11.0 -0.9 2.0 0.7 4.0 16.9
Offset against deferred tax assets
-8.4 - - - -3.2 -11.6
Total deferred tax 2.6 -0.9 2.0 0.7 0.9 5.4
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Deferred tax assets have been booked on the losses to the extent that it is probable that taxable profits will be
available against which to utilise the benefits.
On 31 December 2023, Purmo Group had EUR 9.3 (10.0) million of tax losses carried forward (excluding tax
losses for assets held for sale) for which no deferred tax assets were recognised because it is not probable
that future taxable profits will be available against which to utilise the benefits. For these tax losses, EUR 0.0
(0.0) million will expire during the next five years and EUR 9.3 (10.0) million have no expiry date or will expire
after five years.
The Group does not provide for deferred taxes on the distributable earnings to the extent that such
earnings are intended to be permanently reinvested in those operations and repatriation would give rise to
tax expenses.
7.3 Events after the balance sheet date
There were no significant events after the balance sheet date.
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8. Parent company financial statements
Parent company income statement
Parent company balance sheet
EUR thousand Note 2023 2022
Other operating income 8.2 14,450 22,068
Employee benefit expenses 8.3 -2,829 -2,222
Depreciations and amortisations 8.4 -3,763 -3,712
Other operating expenses 8.5 -14,492 -32,968
Operating profit/loss -6,633 -16,834
Financial income and expenses 8.6 73,510 48,503
Profit/loss before appropriations and taxes 66,876 31,669
Appropriations 8.7 1,067 630
Income tax expense 8.8 1,637 2,011
Profit/loss for the period 69,580 34,310
EUR thousand Note 2023 2022
Assets
Non-current assets
Intangible assets 8.9 47,760 25,682
Tangible assets 8.10 49 3
Investments 8.11 639,228 559,148
Total non-current assets 687,038 584,833
Current assets
Long-term receivables 8.12 50,196 65,144
Short-term receivables 8.13 124,045 143,368
Cash and cash equivalents 103,428 46,189
Total current assets 277,669 254,701
Total assets 964,707 839,534
Equity and liabilities
Equity
Share capital 8.14 3,080 3,080
Reserve for invested unrestricted equity 8.14 365,869 380,779
Retained earnings 8.14 26,258 -8,052
Profit/loss for the fiscal period 69,580 34,310
Total equity 464,787 410,117
Liabilities
Long-term liabilities 8.15 337,886 278,052
Short-term liabilities 8.16 162,033 151,365
Total liabilities 499,920 429,417
Total equity and liabilities 964,707 839,534
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Parent company cash flow statement
EUR thousand 2023 2022
Cash flows from operating activities
Profit before appropriations and taxes 66,876 31,669
Depreciations 3,763 3,712
Finance income and expenses -73,510 -48,503
Gain and losses sale of subsidiaries 3,064 -
Other adjustments - 9,523
Operating profit before change in working capital 193 -3,599
Change in working capital
Increase (-) / decrease (+) of current receivables -2,752 -4,104
Increase (+) / decrease (-) of current non-interest bearing liabilities 29,128 21,624
Cash flows from operating activities before financial items and taxes 26,569 13,920
Interests paid and other finance costs -56,515 -14,379
Interests received 55,186 7,962
Dividends received 54,217 53,689
Direct income taxes paid -136 -265
Net cash from operating activities 79,322 60,927
Cash flows from investing activities
Purchases of property, plant, equipment and intangible assets -25,487 -460
Acquisition of subsidiaries and other capital contributions -12,757 -2,339
Proceeds from sale of subsidiaries and other return of capital 647 4,226
Change in long-term loan receivables 65 -115
Net cash from investing activities -37,532 1,312
EUR thousand 2023 2022
Cash flows from financing activities
Capital returns paid -11,194 -14,886
Proceeds from share issues - 679
Change in long-term loans 60,000 -
Change in short-term loans -9,960 -85,000
Change in subsidiary long-term loans -9,200 -35,139
Change in subsidiary short-term loans -14,827 -45,008
Group contributions received 630 -
Net cash from financing activities 15,449 -179,354
Change in cash and cash equivalents 57,239 -117,115
Cash and cash equivalents at the beginning of the period 46,189 163,304
Cash and cash equivalents at the end of the period 103,428 46,189
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Notes to the Parent Company Financial
Statements
8.1 Accounting principles
The financial statements of the parent company, Purmo Group, have been prepared in accordance with the
Finnish Generally Accepted Accounting Principles. The financial statements are presented in thousand euros.
Foreign currency translations and derivatives
Transactions in foreign currencies are recorded in euro at the exchange rate prevailing at the date of the
transaction. At the end of the accounting period, monetary items are valued at the exchange rate prevailing
at the end of period.
Company uses derivatives to hedge its foreign exchange and interest rate risk. The fair value of derivative
instruments is presented as off-balance sheet liability in note 8.18 Derivative contracts.
Tangible and intangible assets
Tangible and intangible assets are valued at historical cost, less accumulated depreciation according to plan.
Depreciation and amortisation is calculated on a straight-line basis over the expected useful lives of the
assets as follows:
Trademarks 5–10 years
Computer software 3–5 years
Other intangible assets 5-20 years
Machinery and equipment 3–5 years
Receivables
Receivables are valued to acquisition cost or to a lower probable value.
Provisions
Provisions represent future expenses to the payment of which the parent company is committed and which
are not likely to generate corresponding income, or future losses the realisation of which must be considered
evident. Changes in provisions are recognised in the income statement.
Loan arrangement fee
The loan arrangement fee is recognised at amortised cost using the effective interest method.
Leases
Lease payments are treated as rentals.
Income taxes
Income tax expense includes taxes calculated for the financial year, adjustments to prior year taxes, and
changes in the deferred taxes. Deferred tax assets and liabilities have been recognized in the financial
statements.
Dividends and return of capital
Dividends and return of capital proposed by the Board of Directors are not recorded in the financial
statements until they have been approved by the Annual General Meeting.
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8.5 Other operating expenses
Auditors' fees
8.2 Other operating income
8.4 Depreciations and amortisations
8.3 Employee benefit expenses
EUR thousand 2023 2022
Service income 14,450 22,068
Total 14,450 22,068
EUR thousand 2023 2022
Salaries and fees -2,437 -1,912
Social security costs -49 -44
Pension costs -343 -267
Total -2,829 -2,222
Salaries and fees to the management
Chief Executive Officer - -
Board of Directors -523 -496
Personnel on average 19 14
EUR thousand 2023 2022
Loss on sale of subsidiary shares -501 -1,744
Write-down of subsidiary shares -2,563 -7,754
Other expenses -11,428 -23,469
Total -14,492 -32,968
EUR thousand 2023 2022
Authorised Public Accountants KPMG
Audit -132 -112
Audit related services -24 -45
Tax consultation -314 -52
Other services -25 -20
Total -495 -229
EUR thousand 2023 2022
Intangible assets -3,746 -3,707
Tangible assets -16 -4
Total -3,763 -3,712
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8.8 Income taxes
8.7 Appropriations8.6 Financial income and expenses
EUR thousand 2023 2022
Dividend income
From Group companies 83,892 53,689
Interest income
From Group companies 14,234 10,396
From others 10,171 2,710
Other financial income
From Group companies 10,337 8,981
From others 18,608 25,005
Total 137,243 100,781
Interest expenses
To Group companies -8,083 -2,221
To others -27,450 -14,042
Other financial expenses
To Group companies -11,315 -12,331
To others -16,885 -23,684
Total -63,733 -52,278
Financial income and expenses total 73,510 48,503
EUR thousand 2023 2022
Group contributions received 1,067 630
Total 1,067 630
EUR thousand 2023 2022
Income tax for the financial year -107 -
Income tax for prior financial years - -265
Change in deferred taxes 1,744 2,276
Total 1,637 2,011
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8.10 Tangible assets
8.11 Investments
EUR thousand 2023 2022
Intangible assets
Acquisition cost 1 Jan 36,833 36,377
Additions - 456
Transfers -456 -
Acquisition cost 31 Dec 36,377 36,833
Accumulated amortisation 1 Jan -11,151 -7,443
Amortisations for the financial year -3,707 -3,707
Accumulated amortisation 31 Dec -14,858 -11,151
Book value 31 Dec 21,518 25,682
Other capitalised expenditures
Acquisition cost 1 Jan - -
Transfers 2,324 -
Acquisition cost 31 Dec 2,324 -
Accumulated amortisation 1 Jan - -
Amortisations for the financial year -39 -
Accumulated amortisation 31 Dec -39 -
Book value 31 Dec 2,285 -
Advance payments and assets under construction
Acquisition cost 1 Jan - -
Additions 26,281 -
Transfers -2,324 -
Acquisition cost 31 Dec 23,957 -
Book value 31 Dec 23,957 -
Total intangible assets 47,760 25,682
EUR thousand 2023 2022
Machinery and equipment
Acquisition cost 1 Jan 50 46
Additions 62 4
Acquisition cost 31 Dec 112 50
Accumulated depreciation 1 Jan -47 -43
Depreciations for the financial year -16 -4
Accumulated amortisation 31 Dec -63 -47
Book value 31 Dec 49 3
Total tangible assets 49 3
EUR thousand 2023 2022
Investments in Group companies
Acquisition cost 1 Jan 559,148 559,634
Increases 92,129 13,239
Decreases -12,048 -13,724
Acquisition cost 31 Dec 639,229 559,148
8.9 Intangible assets
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8.13 Short-term receivables
Receivables from Group companies
Receivables from others
8.12 Long-term receivables
Receivables from Group companies
Receivables from others
Deferred tax assets
EUR thousand 2023 2022
Loan receivables 44,011 60,687
Total 44,011 60,687
EUR thousand 2023 2022
Loan receivables 464 529
Other receivables 20 -
Total 484 529
EUR thousand 2023 2022
Deferred tax assets 1 Jan 3,929 2,012
From result for the financial year 1,768 1,916
Deferred tax assets 31 Dec 5,697 3,928
Long-term receivables total 50,191 65,144
EUR thousand 2023 2022
Group contribution receivables 1,067 630
Loan receivables 104,482 125,296
Interest receivables 1,952 3,957
Trade receivables 1,640 1,253
Other receivables 11,219 9,198
Total 120,361 140,334
EUR thousand 2023 2022
Interest receivables 172 6
Income tax receivables 566 490
Value added tax receivables 290 127
Other receivables 758 598
Prepayments and accrued income 1,897 1,813
Total 3,684 3,034
Short-term receivables total 124,045 143,368
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8.16 Short-term liabilities
Liabilities to Group companies
Liabilities to others
8.15 Long-term liabilities
Liabilities to others
8.14 Equity
Distributable equity
EUR thousand Share capital
Reserve for
invested
unrestricted
equity
Retained
earnings Equity total
Equity 1 Jan 2023 3,080 380,779 26,258 410,117
Capital return -14,910 -14,910
Result for the financial year 69,580 69,580
Equity 31 Dec 2023 3,080 365,869 95,838 464,787
Equity 1 Jan 2022 3,080 385,917 -8,052 380,945
Capital return -14,886 -14,886
Share issue 9,748 9,748
Result for the financial year 34,310 34,310
Equity 31 Dec 2022 3,080 380,779 26,258 410,117
EUR thousand 2023 2022
Reserve for invested unrestricted equity 365,869 380,779
Retained earnings 26,258 -8,052
Result for the financial year 69,580 34,310
Total 461,707 407,037
EUR thousand 2023 2022
Loans from financial institutions 277,886 278,052
Hybrid bond 60,000 -
Total 337,886 278,052
Long-term liabilities total 337,886 278,052
EUR thousand 2023 2022
Loan payables 31,518 3,816
Interest payables 34 4
Trade payables 29,652 2,006
Cash pool payables 85,862 131,153
Other accruals and deferred income 741 302
Total 147,807 137,282
EUR thousand 2023 2022
Commercial papers - 9,960
Interest payables 5,080 137
Trade payables 826 1,155
Accruals and deferred income 8,320 2,832
Employee benefit expenses 615 463
Income tax payables 145 105
Other accruals and deferred income 7,560 2,264
Total 14,226 14,083
Short-term liabilities total 162,033 151,365
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8.17 Collaterals
Commitments and contingencies
Lease commitments
8.18 Derivative contracts
EUR thousand 2023 2022
Guaranties given on behalf of group companies 32,199 28,079
Total 32,199 28,079
EUR thousand 2023 2022
Payments in the following year 100 139
Payments later 44 23
Total 144 162
EUR thousand 2023 2022
Foreign exchange derivatives
Foreign exchange forward contracts, nominal value 524,452 365,821
Interest rate derivatives
Interest rate swaps, nominal value 100,000 100,000
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Proposal of the Board of Directors
On 31 December 2023, the distributable funds of the parent company amounted to EUR 461,707,064.23 of
which net profit for the financial year that ended on 31 December 2023 was EUR 69,580,479.41. The Board of
Directors proposes to the Annual General Meeting that a return of capital of EUR 0.36 per class C share and,
in accordance, with Articles of Association EUR 0.07 per class F share be paid for the financial year 2023.
The proposed return of capital corresponds to an aggregate amount of approximately EUR 14.9 million
based on the current number of shares carrying a right to asset distribution. The return of capital will be paid
from the reserve for invested unrestricted equity of the Company.
The return of capital would be paid in four instalments as follows:
The first instalment would be EUR 0.09 per Class C share and EUR 0.02 per class F share, and they would
be paid on 26 April 2024 to a shareholder who is registered in the shareholders’ register maintained by
Euroclear Finland Oy on the record date of the return of capital, i.e., 19 April 2024.
The second instalment would be EUR 0.09 per Class C share and EUR 0.02 per Class F share, and they
would be paid on 26 July 2024 to a shareholder who is registered in the shareholders’ register maintained by
Euroclear Finland Oy on the record date of the return of capital, i.e., 19 July 2024.
The third instalment would be EUR 0.09 per Class C share and EUR 0.02 per Class F shares, and they would
be paid on 25 October 2024 to a shareholder who is registered in the shareholders’ register maintained by
Euroclear Finland Oy on the record date of the return of capital, i.e., 18 October 2024.
The fourth instalment would be EUR 0.09 per Class C share and EUR 0.01 per Class F shares, and they
would be paid on 24 January 2025 to a shareholder who is registered in the shareholders’ register maintained
by Euroclear Finland Oy on the record date of the return of capital, i.e., 17 January 2025.
The Board of Directors also proposes that the Annual General Meeting would authorize the Board of
Directors to resolve, if necessary, on a new record date and date of payment for the second, third and fourth
instalment should, e.g., the rules of Euroclear Finland Oy or statues applicable to the Finnish book-entry
system or other matters so require.
No material changes have taken place in the Company’s financial position after the close of the financial
year. The Company’s liquidity is good and, in the opinion of the Board of Directors, the proposed return of
capital will not put the company’s solvency at risk.
Helsinki, 12 February 2024
Tomas von Rettig Alexander Ehrnrooth
Chair of the Board
Carina Edblad Carlo Grossi
Jyri Luomakoski Catharina Stackelberg-Hammarén
Matts Rosenberg John Peter Leesi
CEO
Auditor's note
Our auditor’s report has been issued today.
Helsinki, 12 February 2024
KPMG Oy Ab
Authorized Public Accountant Firm
Kim Järvi
APA
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Auditor’s report
To the Annual General Meeting of Purmo Group Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Purmo Group Oyj (business identity code 2890898-5) for the
year ended 31 December 2023. The financial statements comprise the consolidated balance sheet, statement
of comprehensive income, statement of changes in equity, statement of cash flows and notes, including
material accounting policy information, as well as the parent company’s balance sheet, income statement,
statement of cash flows and notes.
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial position, financial
performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU
• the financial statements give a true and fair view of the parent company’s financial performance and
financial position in accordance with the laws and regulations governing the preparation of financial
statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under
good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical
requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent
company and group companies are in compliance with laws and regulations applicable in Finland regarding
these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of
regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 2.3 to
the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality is determined
based on our professional judgement and is used to determine the nature, timing and extent of our audit
procedures and to evaluate the effect of identified misstatements on the financial statements as a whole. The
level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or
in aggregate, could reasonably be expected to have influence on the economic decisions of the users of the
financial statements. We have also taken into account misstatements and/or possible misstatements that in
our opinion are material for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. The significant risks of material misstatement referred to in the EU Regulation No
537/2014 point (c) of Article 10(2) are included in the description of key audit matters below.
We have also addressed the risk of management override of internal controls. This includes consideration of
whether there was evidence of management bias that represented a risk of material misstatement due to
fraud.
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This document is an English translation of the Finnish auditor’s
report. Only the Finnish version of the report is legally binding.
The key audit matter How the matter was addressed in the audit
Valuation of goodwill (refer to notes 3.1 and 3.2 of the consolidated financial statements)
• At the end of the financial year, the group had EUR 371
million of goodwill. The goodwill amounts to 98 % of the
group equity (excluding Hybrid bond) and 37 % of the
group’s total assets on 31 December 2023.
• Goodwill is tested for impairment when indicators
of impairment exist, or at least annually. Goodwill
impairment testing is conducted by comparing the
carrying value with the recoverable amount using a
discounted cash flow model.
• Determining the key assumptions used in the cash flow
forecasts requires management judgement and estimates
especially relating to long term growth, profitability, and
discount rates.
• Valuation of goodwill is considered a key audit matter
due to the significant carrying value and high level of
management judgement involved.
• We assessed the impairment tests prepared by the
Company. Our detailed audit work included testing the
integrity of the calculations and the technical model.
• We assessed the assumptions used by management in
respect of forecasted growth rates and profitability as well
as the appropriateness of the discount rates used. We also
validated the assumptions used in relation to market and
industry information.
• We also compared the cash flows used in the testing to the
group’s business plans to our views.
• Furthermore, we have considered the adequacy of the
group’s disclosures in respect of the impairment testing.
Revenue recognition (refer to note 2.2 of the consolidated financial statements)
• Revenue is mainly generated through the sale of
manufactured goods. The revenue is generated by
subsidiaries in different countries. The revenue earned
from the sale of goods is recognised when the control
associated with ownership is transferred to the buyer in
accordance with the terms of delivery.
• In general, revenue recognition within the group is not
complex but the large volumes of transactions and the
fact that the revenue is generated through subsidiaries
in different countries makes revenue recognition an area
of focus in the audit and is therefore determined as a key
audit matter.
• Auditors of subsidiaries have performed testing of controls
related to revenue recognition and performed substantive
procedures such as testing of sales agreements and year-
end transactions.
• On group level we have assessed the revenue recognition
principles and based on the work performed by the
auditors in the subsidiaries evaluated compliance with
group revenue recognition principles.
The key audit matter How the matter was addressed in the audit
Valuation of Inventories (refer to note 4.1 of the consolidated financial statements)
• The value of inventories amounted to EUR 174 million
at the end of the financial year. It is essential from an
accounting perspective that the internal control related
to inventory accounting and valuation is appropriately
organized.
• The valuation of inventories is based on management
estimates in respect of slow moving and obsolescence
assessment.
• Due to the significant carrying amount and management
judgement involved, valuation of inventories is determined
as a key audit matter that our audit is focused on.
• In our audit the key focus has been on the pricing and
valuation of inventories. Our component auditors carried
out controls testing and substantive testing in relation to
inventory costing and obsolescence provisions including
monitoring of inventory levels.
• On group level we have assessed the work performed by
the auditors in the subsidiaries and on group level made
an overall assessment of the valuation of inventories.
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Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated
financial statements that give a true and fair view in accordance with IFRS Accounting Standards as
adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws
and regulations governing the preparation of financial statements in Finland and comply with statutory
requirements. The Board of Directors and the Managing Director are also responsible for such internal
control as they determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible
for assessing the parent company’s and the group’s ability to continue as going concern, disclosing, as
applicable, matters relating to going concern and using the going concern basis of accounting. The financial
statements are prepared using the going concern basis of accounting unless there is an intention to liquidate
the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of Financial Statements
Our objectives are to obtain reasonable assurance on 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 good auditing practice will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and 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 financial
statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify 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.
• 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 parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the parent company’s or the
group’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 parent
company or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events so that
the financial statements give a true and fair view.
• 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.
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.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
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Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting for the financial period ended 31.12.2018.
Purmo Group Oyj (formerly Virala Acquisition Company Oyj) has become a public interest entity on 29.6.2021.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The other
information comprises the report of the Board of Directors and the information included in the Annual Report,
but does not include the financial statements or our auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made
available to us after that date. Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
With respect to the report of the Board of Directors, our responsibility also includes considering whether the
report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in
the financial statements and the report of the Board of Directors has been prepared in accordance with the
applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, 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.
Helsinki, 12 February 2024
KPMG Oy Ab
Kim Järvi
Authorised Public Accountant, KHT
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Independent Auditor’s Reasonable Assurance Report on Purmo Group Plc’s
ESEF Financial Statements
To the Board of Directors of Purmo Group Plc
We have undertaken a reasonable assurance engagement in respect of whether the consolidated
financial statements for the year ended 31 December, 2023 included in the digital financial statements
743700JHE9365SIHRE72-2023-12-31-en.zip of Purmo Group Plc (Business ID 2890898-5) have been marked
up with iXBRL markups in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815
(ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of
Directors and financial statements (ESEF financial statements) that comply with the requirements of ESEF RTS.
This responsibility includes:
• preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF RTS
• marking up the primary statements and the notes to the consolidated financial statements, and the
company identification data included in the ESEF financial statements with iXBRL tags in accordance with
Article 4 of the ESEF RTS; and
• ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem
necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethical requirements applicable in Finland,
which apply to the engagement we have performed, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The auditor applies International Standard on Quality Management ISQM 1, which requires the firm to
design, implement and operate a system of quality management including policies or procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulations
requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the
marking up of the consolidated financial statements included in the ESEF financial statements comply in all
material respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in
accordance with International Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
• the primary statements of the consolidated financial statements included in the ESEF financial statements
are, in all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and;
• whether the notes to the consolidated financial statements and the company identification data included
in the ESEF financial statements data, have been marked up, in all material respects, with iXBRL tags in
accordance with Article 4 of the ESEF RTS; and
• whether the ESEF financial statements and the audited financial statements are consistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes
the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due
to fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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Opinion
In our opinion, the primary statements of the consolidated financial statements, the notes to the consolidated
financial statements and the company identification data included in the ESEF financial statements of Purmo
Group Plc identified as 743700JHE9365SIHRE72-2023-12-31-en.zip for the year ended 31 December, 2023 are,
in all material respects, marked up in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion on the audit of the consolidated financial statements of Purmo Group Plc for the year
ended 31 December, 2023 is set out in our Auditor’s Report dated 12 February, 2024. In this report, we do not
express any audit opinion or other assurance conclusion on the consolidated financial statements.
Helsinki 18 March, 2024
KPMG OY AB
Kim Järvi
Authorised Public Accountant, KHT
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