Purmo Oyj : Corporate governance statement 2023

Corporate Governance Statement

2023

CORPORATE GOVERNANCE STATEMENTS 2023

Corporate Governance Statement 2023

This Corporate Governance Statement of Purmo Group Plc ('Purmo Group' or the 'Company', and together with its subsidiaries, the 'Group') is issued for the financial year 2023. The duties and responsibilities of Purmo Group's governing bodies are determined by Finnish law as well as Purmo Group's Articles of Association approved by the General Meeting of Shareholders and Purmo Group's Corporate Governance Principles approved by Purmo Group's Board of Directors.

Otherwise, Purmo Group complied with all recommendations of the Governance Code in 2023.

The Governance Code is available on the Securities Market Association's website at www.cgfinland.fi/ en/.

1 Governing Bodies

The General Meeting of Shareholders, the Board of Directors and the Chief Executive Officer (the 'CEO') are responsible for the supervision and operations of the Company, and their duties are primarily determined in accordance with the Finnish

year. An Extraordinary Meeting of Shareholders may be convened if the Board of Directors deems it necessary, or if one is legally required. The Annual General Meeting of Shareholders decides on the distribution of profits, adopts the financial statements and discharges the members of the Board of Directors and the CEO from liability. It elects the members of the Board of Directors,

as well as decides on their remuneration. The Annual General Meeting also elects the auditor of the Company and decides on its remuneration. The General Meeting of Shareholders adopts the Company's remuneration policy and remuneration report in accordance with the provisions of the

Purmo Group's shares are listed on the Official List of Nasdaq Helsinki Ltd. The Company is the parent company of the Group and registered in Helsinki, Finland as a public limited liability company operating under Finnish law. Purmo Group's corporate headquarters is located in Helsinki, Finland.

This Corporate Governance Statement has been prepared in accordance with the Finnish Corporate Governance Code 2020 (the 'Governance Code'). This statement is presented as a separate report from the Board of Directors' Report. The Audit Committee of Purmo Group's Board of Directors has reviewed this Corporate Governance Statement.

Purmo Group departed from the Governance Code recommendation 15 - Appointment of Members to a Committee. The Audit Committee had temporarily only two members when one Audit Committee member was acting as interim CFO and was not part of the Audit Committee. The Board of Directors decided on 25 November 2022 to assign an Audit Committee member to the Company's interim CFO role starting from 1 January 2023 until the new CFO would start working for the Company. Further, the Board of Directors decided to keep this same arrangement in its constitutive meeting on 12 April 2023, right after the Annual General Meeting. The new CFO started on 22 June 2023, whereafter the recommendation was again fully complied with.

Companies Act. The management and governance of the Company are based on decisions made by the General Meeting of Shareholders and the Board of Directors.

1.1 General Meeting of Shareholders

The General Meeting of Shareholders is the ultimate decision-making authority of the Company where shareholders exercise their decision-making power. The matters to be dealt with in the General Meeting of Shareholders are defined in the Finnish Companies Act and Purmo Group's Articles of Association. The Annual General Meeting is convened by the Board of Directors annually within six months from the end of the previous financial

Finnish Companies Act. Decisions to amend the Articles of Association are also taken by the General Meeting of Shareholders.

1.2 The Board of Directors

The Board of Directors is responsible for the administration of the Company and the appropriate organisation of its operations. The Board of Directors is also responsible for the appropriate arrangement of the supervision of the Company's accounts

and finances. The Board of Directors decides on Company and Group-wide significant matters of principal importance. The Board of Directors appoints and dismisses the CEO, supervises their actions, and decides on their remuneration

Corporate Governance Statement 2023

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and other terms and conditions of service. The Board of Directors also makes decisions on the significant matters related to strategy, investments, organisation and financial affairs of the Company.

The Board of Directors deals with all matters pertaining to its area of responsibility in accordance with Finnish law, the Articles of Association, the Corporate Governance Code, the rules of Nasdaq Helsinki, as amended from time to time, as well as other rules and regulations applicable to publicly listed companies in Finland. The Board of Directors also ensures that good corporate governance is complied with throughout the Group. The Board of Directors has approved the Corporate Governance Principles of the Group.

According to the Company's Articles of Association, the Board of Directors comprises a minimum of three and a maximum of ten ordinary members. The Annual General Meeting elects the members of the Board of Directors, including the Chair and the Vice Chair. The term of the members of the Board of Directors expires at the closing of the Annual General Meeting following the election. The Shareholders' Nomination Board prepares

a proposal on the composition of the Board of Directors to the General Meeting for its decision.

Corporate Governance Statement 2023

The Board of Directors convenes in accordance with a schedule agreed in advance and as otherwise required. The Board of Directors also receives

in its meetings current information about the operations, finances and risks of the Group. Board meetings are attended by the CEO, the CFO, and the person acting as secretary to the Board. Other representatives of the Company attend Board meetings at the invitation of the Chair of the Board of Directors. Minutes are kept of all meetings. An evaluation of the Board of Directors' performance and working methods shall be conducted annually. The Charter of the Board of Directors and its committees are available on the Company's website.

The Annual General Meeting of the Company held on 12 April 2023 elected the following seven members to the Board of Directors of Purmo Group, who were on the Board on 31 December 2023:

• Tomas von Rettig, Chair of the Board,
• 1. 1980, BBA, CEFA
• Matts Rosenberg, Vice Chair of the Board,
• 1. 1977, Ph.D. (Econ.)
• Alexander Ehrnrooth, member of the Board,
• 1. 1974, M.Sc. (Econ.) and MBA, Kellogg Executive Scholar
• Carina Edblad, member of the Board,
• 1. 1963, M.Sc. (Eng.)
• Carlo Grossi, member of the Board, b. 1956, Master in Engineering, Advanced Management Programme INSEAD

• Jyri Luomakoski, member of the Board, b. 1967, MBA
• Catharina Stackelberg-Hammarén, member of the Board, b. 1970, M.Sc. (Econ.)

The Board of Directors has assessed the independence of the Board members and concluded that all members of the Board of Directors are independent of the Company. Carina Edblad, Carlo Grossi, Jyri Luomakoski and Catharina Stackelberg-Hammarén are also independent of the significant shareholders of the Company. Alexander Ehrnrooth is not independent of a significant shareholder of the Company, Virala Corporation and Tomas von Rettig and Matts Rosenberg are not independent of a significant shareholder of the Company, Rettig Ltd.

Number of Board meetings and attendance rates in 2023

	Number of	% of
	meetings	meetings
Alexander Ehrnrooth	16/16	100
Tomas von Rettig	16/16	100
Matts Rosenberg	16/16	100
Carina Edblad	15/16	94
Carlo Grossi	16/16	100
Jyri Luomakoski	16/16	100
Catharina Stackelberg-Hammarén	16/16	100

1.3 Diversity of the Board of Directors

In Purmo Group, the election and composition of the Board of Directors is guided by the principle of diversity to ensure that the Company has a skilled, competent, experienced and effective Board.

Diversity is an essential quality of a well-functioning Board of Directors. The Board of Directors must at all times be able to react to the requirements of the Company's business and strategic objectives and support and challenge management in a proactive and constructive manner. A diverse composition of the Board of Directors supports and caters to the current and future needs in the successful development of the Company. A diverse composition of the Board of Directors includes complimentary education, competence, personal networks and experience of its members in different professional fields and management of business in different development phases as well as the personal qualities of each Board member, all of which add to the diversity of the Board of Directors. Diversity is also supported by relevant experience in fields and markets that are strategically significant for the Company, now and in the future, by strong and relevant acumen in international environments and businesses, and by a diverse age, term of office and gender distribution.

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Both genders shall be represented on the Board of Directors, and the aim of the Company is to maintain a balanced gender distribution. As a means to maintain a balanced gender distribution in the Board of Directors, the Shareholders' Nomination Board seeks to include representatives of both genders in the Board candidates search and evaluation process. The status of diversity and progress in achieving the aforesaid objectives will be monitored by the Shareholders' Nomination Board in its assessment discussions.

The members of the Board of Directors have international work experience in different managerial positions or have worked or are working in the Boards of Directors or the management of listed or unlisted companies. In terms of gender distribution, the Board of Directors consists of two women and five men and in terms of age, the members of the Board of Directors are between 43 and 68 years of age. The members of the Board represent three different nationalities. All members of the Board hold a university-level degree and one member holds a doctoral degree.

1.4 Board Committees

The Board of Directors of Purmo Group has the following three Committees: the Audit Committee, the Remuneration Committee and the Mergers and Acquisition Committee. The Board committees do

Corporate Governance Statement 2023

not have independent decision-making authority in matters within the authority of the Board of Directors, but they assist the Board of Directors by preparing such matters. The Board committees shall regularly report on their work to the Board of Directors. Minutes are kept of all Committee meetings. The Board of Directors has approved the charters of the Board committees. In its constitutive meeting, the Board of Directors appoints annually, from among its members, the members and the chair of the Audit Committee, the Remuneration Committee and the Mergers and Acquisitions Committee.

In addition to the above mentioned committees, the Board of Directors may appoint ad hoc committees for the preparation of specific matters. Such ad hoc committees do not normally have Board-approved charters and the Board of Directors does not release information on their term, composition, the number of meetings or the members' attendance rates.

1.4.1 Audit Committee

The Audit Committee shall have a minimum of three members. The majority of the Committee members must be independent of the Company, and at least one must be independent of the Company's significant shareholders. The Audit Committee as

a whole must have the expertise and experience required for the performance of the duties and responsibilities of the Committee.

The primary duties of the Audit Committee are to assist the Board of Directors in fulfilling its oversight responsibilities of the Company's financial reporting process and in monitoring the statutory audit of the Company, as well as to assist the Board of Directors in its oversight of matters pertaining to financial reporting, internal control, internal audit, risk management and related party transactions, and by making proposals on such matters to

the Board of Directors. The Audit Committee's duties include monitoring the financial affairs and financial reporting of the Company, monitoring the quality and integrity of and reviewing the interim and half-year reports and the financial statements, presenting them to the Board of Directors for approval, and monitoring and reviewing the financial reporting processes. The Audit Committee also assists the Board of Directors by monitoring and evaluating the nature of related party transactions and how agreements and other transactions between the Company and its related parties meet the requirements of ordinary course of business and customary terms. In addition, the duties of the Audit Committee include preparation of the decision on electing the auditor, the evaluation of the independence of the auditor, particularly the provision of non-audit services to the Company, and carrying out other tasks assigned to it by the Board of Directors. The Audit Committee also monitors the efficiency of internal control, internal audit and risk management, and evaluates the auditor's work.

On 31 December 2023, the members of the Audit Committee were Jyri Luomakoski (Chair of the Audit Committee), Matts Rosenberg and Alexander Ehrnrooth.

Number of Audit Committee meetings in 2023

	Number of Audit
	Committee meetings	% of meetings
Jyri Luomakoski	9/9	100
Matts Rosenberg1	4/4	100
Alexander Ehrnrooth	9/9	100

1 See the explanation for departure from Corporate Governance Code, recommendation 15, on page 2.

1.4.2 Remuneration Committee

The Remuneration Committee shall have a minimum of three members. The majority of the Committee members must be independent of the Company. The Company's CEO or any other executive director may not be a member of the Committee. The Committee members shall have the expertise and experience required for the performance of the duties and responsibilities of the Committee.

The Remuneration Committee assists the Board of Directors by preparing the remuneration policy and remuneration report of the Company's governing bodies and by preparing the matters pertaining to the remuneration of the CEO and other members of the Management Team, appointment of the CEO

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as well as the remuneration principles observed by the Company. The Remuneration Committee's main duties also include monitoring and evaluating the remuneration of the CEO and other members of the Management Team and ensuring that the remuneration schemes are appropriate; monitoring the application of the Company's remuneration policy as well as the current remuneration structures and levels in the Company; assisting the Board in connection with major management reorganisations based on preparation and proposals by the CEO; and monitoring the Company's remuneration policies, schemes and plans. The Remuneration Committee shall also review the procedures and strategies for senior- level positions and succession plans for the CEO and other members of the Management Team and reports to the Board of Directors on such matters.

On 31 December 2023, the members of the Remuneration Committee were Tomas von Rettig (Chair of the Remuneration Committee), Catharina Stackelberg-Hammarén and Carina Edblad.

Number of Remuneration Committee meetings in 2023

	Number of
	Remuneration	% of
	Committee meetings	meetings
Tomas von Rettig	3/3	100
Catharina Stackelberg-	3/3	100
Hammarén
Carina Edblad	3/3	100

1.4.3 Mergers and Acquisitions Committee The Mergers and Acquisitions Committee shall have a minimum of three members. The Committee members shall have the expertise and experience required for the performance of the Committee's duties and responsibilities.

Pursuant to its charter, the Mergers and Acquisitions Committee reviews with management and the Board of Directors the role of M&A within the Company's growth strategy, provides advice to management regarding the Company's various strategic alternatives and funding structures

for relevant acquisitions, and reviews material mergers, acquisitions, dispositions or other potential transactions ('Strategic Transactions').

The duties of the Mergers and Acquisitions Committee also include maintaining familiarity with the status of the Company's acquisition pipeline as a whole; providing support and guidance to management with respect to the

presentation of Strategic Transactions to the Board of Directors; assisting management and the Board of Directors with identification of acquisition, strategic investment and divestiture opportunities; ensuring management accountability for Strategic Transactions, and from time to time, as appropriate, reviewing with management whether the investment thesis for a specific Strategic Transaction was successfully achieved; and overseeing the management and the Board of Directors' due diligence process with respect to proposed Strategic Transactions. The Mergers and Acquisitions Committee is able to use the expertise of the employees of the Company to carry out

its responsibilities. The committee's activities are reported to the Board of Directors on a regular basis.

On 31 December 2023, the members of the Mergers and Acquisitions Committee were Matts Rosenberg (Chair of the Mergers and Acquisitions Committee), Alexander Ehrnrooth and Carlo Grossi.

Number of Mergers and Acquisitions

Committee meetings in 2023

	Number of Mergers
	and Acquisitions	% of
	Committee meetings	meetings
Matts Rosenberg	4/4	100
Alexander Ehrnrooth	4/4	100
Carlo Grossi	4/4	100

1.5 Shareholders' Nomination Board The Shareholders' Nomination Board (the 'Nomination Board') prepares, annually and otherwise, when appropriate, proposals concerning the composition, election and remuneration of the members of the Board of Directors to the following Annual General Meeting. The Nomination Board shall operate until abolished by the decision of the General Meeting of Shareholders of the Company.

Pursuant to the charter of the Nomination Board, the Nomination Board consists of three members. The members shall represent the Company's three largest shareholders, who represent the largest number of votes out of all shares in the Company on 30 May each year, as determined based on the shareholder register of the Company, maintained by Euroclear Finland Ltd.

The Chair of the Board of Directors acts as an expert member of the Nomination Board (the Chair of the Board of Directors is not an official member of the Nomination Board and does not have any voting right, but he/she has the right to attend the meetings of the Nomination Board and receive the relevant material for such meetings).

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The term of the members of the Nomination Board shall end upon the appointment of the following Nomination Board. The members of the Nomination Board shall not be entitled to remuneration from the Company on the basis of their membership unless otherwise decided by the General Meeting

of Shareholders.

The main purpose of the Nomination Board is to ensure that the Board of Directors and its members represent a sufficient level of expertise, knowledge and competence for the needs of the Company and have the possibility to devote a sufficient amount of time to attending to their duties as members of the Board of Directors. The Nomination Board shall pay attention to achieving a good and balanced gender distribution and diversity balance on the Board, considering the competence of the Board as a whole. The Nomination Board shall in its work consider the diversity principles of the Company.

The Nomination Board has the power and authority to prepare and to present a proposal to the General Meeting of Shareholders concerning the number of members and composition of the Board of Directors; and the remuneration of the members of the Board of Directors and the Board committees, as well as seek prospective successor candidates for the members of the Board of Directors.

The Nomination Board shall submit its proposals to the Board of Directors at the latest on 31 January each year. The Proposals of the Nomination Board will be published through a stock exchange release by the Company and included in the notice to the General Meeting of Shareholders.

The Company's three largest shareholders have been Rettig Ltd, Virala Corporation and Ahlström Invest B.V. on 30 May 2023 and each has nominated one member to the Nomination Board.

On 31 December 2023, the members of the Shareholders' Nomination Board were Matts Rosenberg (Chair of the Nomination Board) nominated by Rettig Ltd, Alexander Ehrnrooth nominated by Virala Corporation and Sebastian Burmeister nominated by Ahlström Invest B.V.1

Number of Shareholders' Nomination
Board meetings in 2023	Number of
	Shareholders
	Nomination Board	% of
	meetings	meetings
Matts Rosenberg	3/3	100
Alexander Ehrnrooth	3/3	100
Sebastian Burmeister	2/2	100
Peter Seligson1	1/1	100

1 Peter Seligson was a member nominated by Ahlström Invest B.V. until 30.5.2023.

1.6 Chief Executive Officer

The Board of Directors of Purmo Group appoints and dismisses the CEO and decides on the financial benefits within the framework of the valid Remuneration Policy presented to the General Meeting of the Shareholders. Board approved terms and conditions of the CEO's position are specified in a written service contract. The CEO of the Company is responsible for managing, supervising and controlling the business operations of the Company.

The CEO is responsible for the day-to-day executive management of the Company, in accordance with the instructions and orders given by the Board of Directors. In addition, the CEO ensures that the accounting practices of the Company comply with Finnish law and that its financial affairs have been arranged in a reliable manner. The duties

of the CEO are governed primarily by the Finnish Companies Act. The CEO shall provide the Board of Directors and its members with the information necessary for the performance of the duties of the Board of Directors.

The CEO prepares matters for decision by the Board of Directors, develops the Company in line with the targets approved by the Board of Directors and ensures the proper implementation of the decisions of the Board of Directors. The CEO is also responsible for ensuring that the Company is

managed in compliance with applicable laws and regulations. The CEO is not a member of the Board of Directors but attends the meetings of the Board of Directors and has the right to speak at the meetings.

On 31 December 2023, John Peter Leesi, b. 1961, BBA (with advanced studies in international finance) served as the CEO of Purmo Group.

1.7 Group Management Team

The Company's Board appoints the members of the Management Team. The Management Team comprises the CEO and the CFO as well as other members appointed by the Board.

The Management Team meets regularly to address matters concerning the entire Group. The Management Team is not a decision-making body of the Company, but it assists the CEO in the implementation of the Group's strategy and operational management. The Management Team is responsible for managing the Company's core business operations as a whole, which requires planning various development processes, Group principles and Group practices, as well as monitoring the development of financial matters and the Group's business plans. Board members are free to join the meetings of the Management Team in order to ensure smooth cooperation between the Board of Directors and the Management Team. The Management Team convenes regularly at a

Corporate Governance Statement 2023

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schedule agreed in advance and also as required and minutes are kept of all meetings.

On 31 December 2023, the Management Team of Purmo Group comprised the following members:

• John Peter Leesi, CEO, b. 1961, BBA (with advanced studies in international finance)
• Jan-ElofCavander, Chief Financial Officer, b. 1985, M.Sc. (Ind. Eng.)1
• Erik Hedin, Chief Operational Officer, b. 1977, M.Sc. (Ind. Eng.), B.Sc. (Econ.)
• Mike Conlon, President, Climate Solutions Division, b. 1966, BA (Hons)
• Barry Lynch, President, Climate Products & Systems Division, b. 1975, MBA, Post Graduate Diploma (Business Administration), BA Hons (Business Studies)
• Linda Currie, Chief People Officer, b. 1973, BA (Hons) Business & Human Resource Management, CIPD

1 Matts Rosenberg acted as interim CFO until 21 June 2023 and Jan-Elof Cavander started as CFO on 22 June 2023.

1.8 Shareholdings of the Board of Directors and Management Team

The shareholdings of the members of the Board of Directors, the CEO, and the members of the Management Team, as well as their controlled entities as of 31 December 2023 are presented in the following tables.

Corporate Governance Statement 2023

Board of Directors' shareholdings on 31 December 2023

	Class C	Class F
Board of Directors' shareholdings	shares	shares
Tomas von Rettig1	0	0
Matts Rosenberg1	4,932	0
Alexander Ehrnrooth2	7,766	0
Carina Edblad	3,990	0
Carlo Grossi	3,990	0
Jyri Luomakoski	4,406	0
Catharina Stackelberg-Hammarén	4,682	0
Total	29,766	0
Out of total shares outstanding	0.07%	0.00%

1. Influence in Rettig Ltd which held 26,373,971 class C shares in Purmo Group on 31 December 2023.
2. 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

	Class C	Class F
Management Team's shareholdings	shares	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%

The CEO and Management Team have future share-based rights in Purmo Group through participation in a long-term incentive plan launched in 2023. More information is available in the Remuneration Report 2023 and on the Company's website.

2 Control

2.1 Internal Audit

Purmo Group's internal audit assists the Company in accomplishing its objectives by bringing a systematic and disciplined approach to evaluaing and improving the effectiveness of the organisation's governance, risk management and internal control. Internal Audit also assists the Board of Directors and senior management of the Company in creating an effective and reliable control environment.

The Chief Audit Executive (or otherwise titled highest level practising Internal Auditor) will report functionally to the Audit Committee and administratively (i.e. day-to-day operations) to the COO. The internal audit report may include management's response and corrective actions taken or to be taken regarding the specific findings and recommendations. The internal audit is responsible for appropriate follow-up on engagement findings and recommendations.

The scope of internal auditing encompasses, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the organisation's governance, risk management, and internal controls as well as the quality of performance in carrying out assigned responsibilities to achieve the organisation's stated goals and objectives. The internal audit plan will be developed based on

a prioritisation of the audit universe using a risk- based methodology, including input from senior management and the Audit Committee. The audit plan of the internal audit is adopted by the Audit Committee.

2.2 External Audit

Pursuant to the Articles of Association, the Company has one auditor, which shall be an Authorised Public Accountant company. The auditor is elected annually by the Annual General Meeting for a term that expires at the end of the next Annual General Meeting following the election. The

task of the auditor is to audit the consolidated financial statements, the financial statements of the parent company, the accounting of the Group and the parent company and the administration of the parent company. The Company's auditor submits the auditors' report to the shareholders in connection with the annual financial statements, as required by law, and submits regular reports on its findings to the Audit Committee of the Board of Directors.

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3 Related Party Transactions

The Board of Directors has defined the principles for monitoring and evaluating related party transactions.

The Company evaluates and monitors transactions concluded between the Company and its related parties and ensures that any conflicts of interest are taken into account appropriately in the decision- making process of the Company. The Company keeps a list of parties that are related to the Company.

Purmo Group can conduct with its related parties business transactions that constitute part of Purmo Group's ordinary course of business and are implemented on arm's length terms and abiding Purmo Group's internal decision-making guidelines. The Board of Directors decides, taking into consideration the conflict of interest rules, on transactions with related parties that are not part of Purmo Group's ordinary course of business or that are not implemented under arm's length terms.

Purmo Group's Finance organisation monitors related party transactions through accounting, Board documentation and other available sources, and regularly conducts inquiries about related party transactions to managers and key management

Corporate Governance Statement 2023

persons. In connection with quarterly reporting, the financial process ensures that related party transactions are properly reported to the related party transaction watch list compiled for financial reporting purposes. The watch list is regularly submitted to the Audit Committee for information.

In principle, all related party transactions must be reported in the notes to the financial statements and material related party transactions also in the interim reports. In addition, the Company publishes such related party transactions to the extent required pursuant to the applicable legislation and the rules of Nasdaq Helsinki.

4 Internal control procedures and main features of risk management systems

4.1 Internal Control

Internal control ensures that the Company's business objectives can be achieved. Through efficient control, deviations from objectives can be prevented or detected as early as possible, so that corrective measures can be taken. The purpose of internal control is to ensure the profitability, efficiency, continuity and freedom from disruptions of operations and that the Group's financial and operating reporting is reliable and compliant, both externally and internally, and that internal principles, policies and guidelines are followed. Further,

internal control ensures compliance with laws and regulations. Internal control measures cover all Group levels and functions. Information systems are of vital importance for effective internal control.

The planning of the control measures begins with the definition of business objectives and the identification and assessment of the risks that threaten the objectives. Control measures are targeted based on risks, and control measures are selected as appropriate to keep the risks under control.

The Board of Directors and the CEO are responsible for organising internal control. The CEO sets the ground for the internal control environment ('tone at the top') by providing leadership and direction to the executive management, and by reviewing the way they manage and control the business. The CEO is responsible for managing the business and administration in accordance with the applicable laws and regulations, and the direction of the Board of Directors.

The CEO is accountable for establishing sufficient internal control processes in the organisation. The CEO is assisted by the CFO and Purmo Group operative management in these duties. The business functions and the Group finance organisation are responsible for the financial reporting processes. The Audit Committee and the Board of Directors

assess the financial reporting processes and monitor the financial situation of the Group. The Audit Committee and the Board review the interim and half-year reports and financial statements before their approval and publication.

4.2 Risk Management

The primary objective of risk management in Purmo Group is to support the Company's strategy execution, continuity of operations and realisation of business objectives by anticipating any risks involved in the Company's operations and managing them in a proactive manner. Enterprise risk management emphasises the role of corporate culture and is

an integrated part of operations, planning, and decision-making in Purmo Group. Risk is defined as an uncertain event, caused by external or internal factors, which may be either a threat or an opportunity. The Board of Directors has approved the Enterprise Risk Management Policy, which defines the framework, processes, governance and responsibilities of risk management in Purmo Group.

The Board of Directors and the Audit Committee monitor and are responsible for ensuring that Purmo Group's risk management process functions are comprehensive. The Board defines the risk appetite and tolerance, according to the current conditions.

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The Company's operative management is responsible for achieving the set objectives and controlling, managing and mitigating risks that threaten them. The operative management is also responsible for the risk management work, and for ensuring the performance of the risk management process and the availability of sufficient resources. The COO is responsible for instructions and advice to the operations and functions concerning enterprise risk management, and for monitoring the practical implementation of the process. Risk management assessments are coordinated by the COO together with the Head of Enterprise Risk Management, who supports the management, operative business functions and other supportive functions in the risk management work. The Head of Enterprise Risk Management reports key risks to the Board of Directors on an annual basis. The Board discusses Purmo Group's most significant risks and uncertainties and reports them to the market annually in the Board's Report. In addition, the Company describes the material short-term risks and uncertainties in interim reports and half- year reports. In Purmo Group, the business functions are responsible for risks related to their operations and their identification, assessment and mitigation means. The Company's internal audit is responsible for developing a risk-based audit plan and conducting the audit procedures based on the plan and reports, as an independent function, directly to the Board and Audit Committee.

5 Insider Administration

In its insider administration, the Company follows the Market Abuse Regulation (EU No 596/2014) and the rules of Nasdaq Helsinki complemented by the Company's own Insider Policy. The Company maintains its own insider registers. The Company does not have permanent insiders.

Persons in managerial positions are prohibited from carrying out transactions (on their own account or for the account of a third party), directly or indirectly, in the financial instruments of the Company during a closed period of 30 calendar days before the announcement of each of the interim reports, half-year reports or the year-end report (financial statement release). The Company applies the closed period of 30 calendar days immediately preceding the announcement of the interim report, half-year report or financial statement release, as the case may be, including the date of publication of such report (the 'Closed Window'). The prohibition is in force during the Closed Window regardless

of whether or not such a person holds any inside information at that time. A project-specific insider list is maintained when required by law or regulations. Project-specific insiders are prohibited from trading in the Company's financial instruments until the termination of the project.

Persons in managerial positions (and their closely associated persons) are obligated to report transactions with the Company's financial instruments in line with applicable EU and domestic laws and regulations. The members of the Board and the Management team are the managers of the Company with an obligation to disclose their transactions.

6 External Audit in 2023

KPMG Oy Ab is Purmo Group's auditor. In 2023 Kim Järvi, Authorised Public Accountant, acted as the auditor with principal responsibility.

The audit fees paid to the auditor in 2023 totalled EUR 825 thousand. In addition, EUR 557 thousand was paid to KPMG for non-audit services.

Auditor's fees and services,

EUR million

		0.8
0.7	0.6
		0.6
	0.3	0.4
2021	2022	2023

Audit fee

Other services

Corporate Governance Statement 2023

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BOARD OF DIRECTORS

Tomas von Rettig

• Chair of the Board of Directors,

Chair of the Remuneration Committee.

• • Born 1980. BBA, CEFA.
• Independent of the Company. Dependent of
• 
  its significant shareholder Rettig Ltd.

Current positions of trust:

eQ, Member of the Board (2019-)

Relevant prior positions of trust:

Rettig Ltd, Chair of the Board (2019-2022);

Terveystalo, Vice Chair of the Board (2018-2022);

Purmo Group Ltd, Chair of the Board of Directors (2016-2021);

Nordkalk Corporation, Chair of the Board (2016-2018);

Bore, Chair of the Board (2016)

More information on the Board of Directors is available at investors.purmogroup.com.

Matts Rosenberg

• Vice Chair of the Board,

Chair of the M&A Committee, Member of the Audit Committee

and Chair of the Shareholders' Nomination Board.

• • Born 1977. Ph.D. (Econ.)
• Independent of the Company and dependent of its significant
  shareholder Rettig Ltd, where he is the CEO.

Current positions of trust:

Terveystalo Oyj, Vice Chair of the Board and member of the Audit Committee (2022-)

Relevant prior positions of trust:

Purmo Group Ltd, Member of the Board (2016-2021);

Nordkalk Corporation, Chair of the Board (2018-2021) and

Member of the Board (2016-2018);

Alandia Försäkring, Chair of the Board (2020-2021)

Alexander Ehrnrooth

• • Member of the Board of Directors,
    Member of the Audit and M&A Committees.
• Born 1974. M.Sc. (Econ.) and MBA, Kellogg Executive Scholar.
• Independent of the Company and dependent of its significant shareholder Virala Oy Ab, where he is the President and CEO.

Current positions of trust:

Ahlstrom Oyj, Member of the Board (2014-); Family G.J. Ehrnrooth Foundation sr, Member of the Board (2019-); Louise and Göran Ehrnrooth Foundation, Member of the Board (2014-); Ahlstrom Holding 1 Oy, Member of the Board (2020-); Ahlstrom Holding 2 Oy, Member of the Board (2020-); Ahlstrom Holding 3 Oy,

Member of the Board (2020-); Virala Oy Ab, CEO and Member of

the Board (1995-); Belgrano; Inversiones Oy, CEO (2013-),

Member of the Board (1996-)

Relevant prior positions of trust:

YIT Corporation, Member of the Board (2019-2021); Wärtsilä

Corporation, Member of the Board (2010-2015); Fiskars Corporation,

Member of the Board (2005-2018)

Corporate Governance Statement 2023

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