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    PURMO   FI4000507488

PURMO GROUP OYJ

(PURMO)
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Delayed Nasdaq Helsinki  -  05/23 11:29:42 am EDT
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The Finnish Financial Supervisory Authority has approved the merger and listing prospectus prepared for the merger of Virala Acquisition Company and Purmo Group

11/30/2021 | 02:36am EDT

VIRALA ACQUISITION COMPANY PLC STOCK EXCHANGE RELEASE 30 NOVEMBER 2021 at 9.35am (EET)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND, SINGAPORE, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. FOR FURTHER INFORMATION, PLEASE SEE THE “IMPORTANT INFORMATION” BELOW.

Virala Acquisition Company Plc (“VAC”) and Purmo Group Ltd (“Purmo Group”) announced on 8 September 2021 the merger of VAC’s and Purmo Group’s business operations through a statutory absorption merger of Purmo Group into VAC (the “Combined Company”). As a result of the merger, all assets and liabilities of Purmo Group will be transferred without a liquidation procedure to VAC, and Purmo Group will be dissolved (the "Merger"). The shareholders of Purmo Group shall receive as merger consideration new class C shares in VAC in proportion to their existing shareholding of each class of shares in Purmo Group (the “Merger Consideration Shares”). The Board of Directors of VAC has on 29 October 2021 proposed that the Extraordinary General Meeting of VAC, convened to be held on 13 December 2021, would resolve upon the Merger as set forth in the merger plan (the “Merger Plan”). The shareholders of Purmo Group are also expected to resolve upon the Merger on 13 December 2021. The completion of the Merger is subject to, inter alia, approval by the shareholders of VAC and Purmo Group, and fulfilment of other conditions to completion set forth in the merger agreement, signed by VAC and Purmo Group on 8 September 2021, and the Merger Plan or waiver of such conditions.

The Finnish Financial Supervisory Authority has today, 30 November 2021, approved the Finnish merger and listing prospectus concerning the Merger and the listing of the company’s shares on the official list of Nasdaq Helsinki (the “Prospectus”). The Prospectus and its English translation will be available on or about 30 November 2021 on VAC’s website at www.virala.fi/en/de-spac/, at VAC’s registered office at Unioninkatu 7 B 15, FI-00130 Helsinki, Finland, and at Purmo Group’s registered office at Bulevardi 46, FI-00121 Helsinki, Finland. In addition, the Prospectus will be available at Nasdaq Helsinki at Fabianinkatu 14, 00100 Helsinki, Finland on or about 30 November 2021.

The Prospectus contains the following previously unpublished information in relation to the Merger (any capitalized terms not defined shall have the meanings assigned to them in the Prospectus):

Financial Targets and Dividend Policy

Purmo Group has set the following financial targets and dividend policy that will apply to the Combined Company as of completion of the Merger:

Growth

  • Purmo Group targets organic net sales growth in excess of market growth. In addition, Purmo Group aims for notable inorganic growth through acquisitions.

Profitability

  • Purmo Group targets an Adjusted EBITDA margin above 15% in the medium- to long-term.

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

Dividend

  • Purmo Group’s aim is to distribute at least 40% of annual net profit as dividends or return of capital, intended to be paid out bi-annually after considering earnings trends for the group, its financial position and future growth potential

The statements set forth in this section include forward-looking statements and are not guarantees of the Combined Company’s financial performance. The Combined Company’s actual results of operations and financial position could differ materially from the results of operations or financial position presented in or implied by such forward-looking statements as a result of many factors. These forward-looking statements should be treated with caution.

Strategy

As of the completion of the Merger, the Combined Company will apply the strategy approved by the board of directors of Purmo Group. Purmo Group’s strategy is built on three pillars to realise its mission of becoming the global leader in sustainable indoor climate comfort solutions. These are:

  • Solution-selling – increase specification sales to sell whole solutions in the most mature core markets
  • Smart products – launch new smart products (intelligent/sustainable/aesthetic) to deliver higher customer value and promote sustainability
  • Growth markets – capture biggest opportunities beyond current core markets

Purmo Group will also be supportive of growth through M&A opportunities that support consolidation, expansion and diversification.

The strategy is supported by a strong foundation of operational improvement in:

  • Operational excellence – pivoting to the next level of efficiency in operational, commercial and business support
  • People and culture – focusing on employee engagement, values, leadership, skills and competence development

Key strengths

  • Purmo Group is at the centre of the global sustainability journey
  • Broadest offering of sustainable heating and cooling solutions
  • Brand portfolio recognised for product quality and innovation
  • Longstanding relationships with wholesalers and installers mainly across Europe, China and Russia
  • Clear and well-defined strategy supported by key growth drivers
  • Strong historical financial track record
  • Experienced management team with a clear focus on value creation and growth

Further information on the key strengths is presented in the Prospectus.

Pro forma financial information

The Prospectus contains pro forma combined financial information (the “Pro Forma Information”) which is presented for illustrative purposes only to give effect to the Merger of VAC and Purmo Group to VAC’s financial information as if the Merger had been completed at an earlier date. The Pro Forma Information is unaudited. The hypothetical financial position and results included in the Pro Forma Information may differ from the Combined Company’s actual financial position and results and the Pro Forma Information is not intended to give an indication of the financial position or result of the Combined Company in the future. The complete Pro Forma Information included in the Prospectus are included as appendix 1 in this release.

The Pro Forma Information has been compiled in accordance with Annex 20 to the Commission Delegated Regulation (EU) 2019/980, and on a basis consistent with the accounting principles to be applied by VAC in its consolidated financial statements prepared in accordance with IFRS following the Merger.

The unaudited pro forma income statements for the nine months ended 30 September 2021 and for the year ended 31 December 2020 give effect to the Merger as if it had occurred on 1 January 2020. The unaudited pro forma balance sheet as at 30 September 2021 gives effect to the Merger as if it had occurred on that date.

As VAC does not meet the definition of a business, the Merger will not be accounted for as a business combination but as a reverse recapitalization, in which no goodwill will be recognised and Purmo Group will obtain a public company status. The difference of the fair value of the equity instruments issued by VAC and the fair value of VAC’s net assets will be accounted for as a share-based payment in accordance with IFRS 2 Share-Based Payments and recorded as an expense through the income statement and is considered to represent a service for listing of Purmo Group’s shares. For further information on the Merger accounting treatment see note 2 of the Pro Forma Information.

The Pro Forma Information reflects adjustments to the historical financial information to give pro forma effect to events that are directly attributable to the Merger and are factually supportable. The pro forma adjustments include certain assumptions related to accounting for the Merger, financing arrangements and other events directly related to the Merger that the management believes are reasonable under the circumstances. Considering that the final accounting measures of the Merger can only be determined at the Effective Date, the pro forma adjustments presented herein are preliminary and based on information available at this time. There can be no assurance that the assumptions used in the preparation of the Pro Forma Information will prove to be correct. The assumptions used and management estimates applied in the preparation of the Pro Forma Information have been described, as applicable, in the accompanying notes. The actual results of the Merger may differ materially from the assumptions used and the pro forma adjustments reflected in the Pro Forma Information.

There can be no assurance that the assumptions used in the preparation of the Pro Forma Information will prove to be correct. The actual results of the Merger may materially differ from the assumptions used and the pro forma adjustments reflected in the Pro Forma Information.

The following table sets forth a summary of key figures relating to Pro Forma Information as at the dates and for the periods indicated:


As at and for the nine months ended 30 September 2021For the year ended 31 December 2020
In EUR thousand, unless otherwise indicatedVACPurmo GroupMergerCombined Company pro formaVACPurmo GroupMergerCombined Company pro forma
Net sales-620,981-620,981-671,178 1)-671,178
Gross profit-150,709-150,709-172,804 1)-172,804
EBIT-2,51945,3443,38646,211-1 1)42,028 1)-37,1594,868
Adjusted EBITDA-21081,296-81,085-185,120-85,119
Profit for the period-2,51927,85620825,546-1 1)25,276 1)-35,541-10,265
Earnings per share basic class C shares, EUR


0.63


-0.25
Earnings per share basic class F shares, EUR


0.61


-0.24
Total assets101,515948,433-84,578965,370



Total equity100,588539,722-261,901378,409



Net debt-4,004112,623161,709270,984



___________________________
1) Audited

VIRALA ACQUISITION COMPANY PLC

Additional information:

CEO Johannes Schulman, tel. +358 50 321 7447

CFO Mia Alholm

Distribution:

Nasdaq Helsinki

Principal media

www.virala.fi

About Purmo Group - Purmo Group is a leader in sustainable indoor climate comfort solutions in Europe. Purmo Group’s comprehensive product offering includes radiators, towel warmers, underfloor heating, convectors, valves and controls. The company’s 3,500 employees operate through 46 locations in 21 countries, manufacturing and distributing top quality products and solutions to customers in more than 100 countries globally. www.purmogroup.com

About VAC - Virala Acquisition Company Plc (VAC) is a Finnish acquisition company, tailored to the Finnish capital markets. The goal of VAC is to identify and execute one or more acquisitions that aim to create significant value for both the shareholders and the target company, as well as complement the Finnish capital markets. VAC seeks one or more companies and/or businesses with an estimated enterprise value ranging from approximately EUR 50 to EUR 500 million. The founding shareholder of VAC is the industrial enterprise Virala which has committed to act as a long-term anchor owner and developer of the companies to be acquired. www.virala.fi/en

Important information

The distribution of this release may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. The information contained herein is not for publication or distribution, in whole or in part, directly or indirectly, in or into United States, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa or any other jurisdiction where such publication or distribution would violate applicable laws or rules or would require additional documents to be completed or registered or require any measure to be undertaken in addition to the requirements under Finnish law. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This release is not directed to, and is not intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

This release is not an offer of merger consideration shares in the United States and it is not intended for distribution in or into the United States or in any other jurisdiction in which such distribution would be prohibited by applicable law. The merger consideration shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered, sold or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the Securities Act.

This release is for information purposes only and does not constitute an offer of or an invitation by or on behalf of, VAC, Rettig Group or Purmo Group, or any other person, to purchase any securities.

This release does not constitute a notice to an EGM or a prospectus. Any decision with respect to the proposed statutory absorption merger of Purmo Group into VAC should be made solely on the basis of information to be contained in the actual notice to the EGM of VAC, and the prospectus related to the merger as well as on an independent analysis of the information contained therein. You should consult the prospectus for more complete information about VAC, Purmo Group, their respective subsidiaries, their respective securities and the merger. No part of this release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information contained in this release has not been independently verified, does not purport to be full or complete and may be subject to change. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither VAC, Rettig Group or Purmo Group, nor any of their respective affiliates, advisors or representatives or any other person, shall have any liability whatsoever (in negligence or otherwise) for any loss however arising from any use of this release or its contents or otherwise arising in connection with this release. Each person must rely on their own examination and analysis of VAC, Purmo Group, their respective securities and the merger, including the merits and risks involved. The transaction may have tax consequences for Purmo Group shareholders, who should seek their own tax advice.

This release includes “forward-looking statements” that are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations and assumptions, which, even though they seem to be reasonable at present, may turn out to be incorrect. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of the combined company to differ materially from those expressed or implied in the forward-looking statements. Neither VAC nor Purmo Group, nor any of their respective affiliates, advisors or representatives or any other person undertakes any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release. Further, there can be no certainty that the merger will be completed in the manner and timeframe described in this release, or at all.

This release contains financial information regarding the businesses and assets of VAC and Purmo Group and their consolidated subsidiaries. Such financial information may not have been audited, reviewed or verified by any independent accounting firm. Certain financial data included in this release consists of “alternative performance measures.” These alternative performance measures, as defined by VAC and Purmo Group, may not be comparable to similarly titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or other indicators of VAC’s and Purmo Group’s cash flows based on IFRS. Even though the alternative performance measures are used by the management of VAC and Purmo Group to assess the financial position, financial results and liquidity and these types of measures are commonly used by investors, they have important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of VAC’s and Purmo Group’s financial position or results of operations as reported under IFRS.

Nordea and SEB are acting as financial advisers to VAC on certain matters outside of the United States and no one else in connection with the matters referred to herein, and will not be responsible to anyone other than VAC for providing the protections afforded to clients of Nordea and SEB, or for giving advice in connection with the transaction or any matter or arrangement referred to in this release.

APPENDIX 1 – UNAUDITED PRO FORMA FINANCIAL INFORMATION
Basis of Compilation

General

The following pro forma combined financial information (the “Pro Forma Information”) is presented for illustrative purposes only to give effect to the Merger of VAC and Purmo Group to VAC’s financial information as if the Merger had been completed at an earlier date. The Pro Forma Information is unaudited. The hypothetical financial position and results included in the Pro Forma Information may differ from the Combined Company’s actual financial position and results and the Pro Forma Information is not intended to give an indication of the financial position or result of the Combined Company in the future.

The Pro Forma Information has been compiled in accordance with Annex 20 to the Commission Delegated Regulation (EU) 2019/980, and on a basis consistent with the accounting principles to be applied by VAC in its consolidated financial statements prepared in accordance with IFRS following the Merger.

Basis of presentation

The pro forma income statements for the nine months ended 30 September 2021 and for the year ended 31 December 2020 give effect to the Merger as if it had occurred on 1 January 2020. The pro forma balance sheet as at 30 September 2021 gives effect to the Merger as if it had occurred on that date.

The Pro Forma Information reflects adjustments to the historical financial information to give pro forma effect to events that are directly attributable to the Merger and are factually supportable. The pro forma adjustments include certain assumptions described below related to accounting for the Merger, financing arrangements and other events directly related to the Merger that the management believes are reasonable under the circumstances. Considering that the final accounting measures of the Merger can only be determined at the Effective Date, the pro forma adjustments presented herein are preliminary and based on information available at this time. There can be no assurance that the assumptions used in the preparation of the Pro Forma Information will prove to be correct. The assumptions used and Management estimates applied in the preparation of the Pro Forma Information have been described, as applicable, in the accompanying notes. The actual results of the Merger may differ materially from the assumptions used and the pro forma adjustments reflected in the Pro Forma Information.

Combination of VAC and Purmo Group through the Merger

VAC and Purmo Group announced on 8 September 2021 that they had signed a Merger Agreement to combine the two companies through a statutory absorption merger of Purmo Group into VAC pursuant to the Finnish Companies Act and adopted a Merger Plan to implement the combination of the companies in accordance with the Merger Agreement. The General Meeting of VAC, convened to be held on 13 December 2021, would resolve upon the Merger as set forth in the Merger Plan. The Board of Directors of Purmo Group has respectively on 29 November 2021 proposed that the shareholders of Purmo Group would, on 13 December 2021, resolve upon the Merger as set forth in the Merger Plan. The completion of the Merger is subject to, inter alia, approval by the shareholders of VAC and Purmo Group and fulfilment of other conditions to completion set forth in the Merger Agreement and the Merger Plan or waiver of such conditions. For information on all of the conditions precedent for the Merger contained in the Merger Agreement and the Merger Plan, see sections “Merger of VAC and Purmo Group – Merger Agreement”, “Merger of VAC and Purmo Group – Merger Plan – Conditions for the Merger” in the Prospectus, and the Merger Plan, which is attached to the Prospectus as Annex D. The planned Effective Date for the Merger is 31 December 2021.

The shareholders of Purmo Group shall receive as Merger Consideration 2.600334506 new class C shares in VAC for each class K share, 2.600334506 new class C shares in VAC for each class K1 share and 4089.270894510 new class C shares in VAC for each class P share they hold in Purmo Group. This implies that, after the completion of the Merger, shareholders of Purmo Group would own 73.3 per cent of the class C shares and 70.6 per cent of all shares of the Combined Company and shareholders of VAC would own 26.7 per cent of class C shares and 29.4 per cent of all shares of the Combined Company. The allocation of the Merger Consideration will be based on the shareholding in Purmo Group at the end of the last business day preceding the Effective Date.

In accordance with the Merger plan Purmo Group may pay an extra dividend or distribution of assets, or a combination thereof, in an amount not exceeding EUR 251 million in the aggregate, to the shareholders of Purmo Group prior to the Effective Date.

Purmo Group has on 8 September 2021 secured committed debt financing to the Combined Company for the completion of the Merger and expected cash flow requirements in the near term from Nordea and SEB to replace the current financing from Rettig Group. The merger financing arrangements comprise a EUR 280 million committed term loan facility, a EUR 80 million committed revolving credit facility, an uncommitted term loan facility of up to EUR 125 million for M&A purposes and a EUR 95 million committed bridge loan facility. The New Financing may be used to refinance Purmo Group’s existing indebtedness in connection with the Merger, to finance or refinance potential cash redemptions of VAC’s class C Shares, to finance Purmo Group’s Pre-Completion Distribution and to finance general corporate purposes. For further information, see section “Information on the Combined Company — New Financing” in the Prospectus.

Merger accounting

As VAC doesn’t meet the definition of a business, the Merger will not be accounted for as a business combination but as a reverse recapitalization, in which no goodwill will be recognised and Purmo Group will obtain a public company status. The difference of the fair value of the equity instruments issued by VAC and the fair value of VAC’s net assets will be accounted for as a share-based payment in accordance with IFRS 2 Share-Based Payments and recorded as an expense through the income statement and is considered to represent a service for listing of Purmo Group’s shares. For further information on the Merger accounting treatment see note 2 of the Pro Forma Information.

As a result of the application to IFRS 3 reverse acquisition guidance by analogy to the Merger, Purmo Group’s operating history and financial performance forms the basis for the comparative consolidated financial information for the Combined Company.

Historical financial information

The Pro Forma Information has been derived from the following historical financial information, which are included in the Prospectus (Annex F or incorporated by reference):

  • VAC’s audited financial statements as at and for the year ended 31 December 2020;
  • VAC’s unaudited financial review as at and for the nine months ended 30 September 2021;
  • Purmo Group’s audited consolidated financial statements as at and for the year ended 31 December 2020; and
  • Purmo Group’s unaudited condensed consolidated interim financial information as at and for the nine months ended 30 September 2021.

Other considerations

All figures in the Pro Forma Information are presented in thousand euros unless otherwise indicated and are rounded. Accordingly, in certain instances, the sum of the figures in a column or a row in tables may not conform exactly to the total figure given for that column or row.

Independent auditor’s assurance report on the compilation of the Pro Forma Information included in the Prospectus is attached to the Prospectus as Annex C.

Unaudited Pro Forma Balance Sheet as at 30 September 2021


As at 30 September 2021
In EUR thousandVACPurmo GroupMergerCombined Company pro forma



(Note 1)
ASSETS



Goodwill-369,194-369,194
Other intangible assets-36,232-36,232
Property, plant and equipment-127,400-127,400
Right-of-use assets-31,689-31,689
Other receivables103983-415671
Deferred tax assets-20,190-20,190
Defined benefit asset-6,598-6,598
Non-current assets103592,285-415591,973





Inventories-143,560-143,560
Trade receivables-142,598-142,598
Related party vendor note and other receivables97,40730,590-102,49226,505
Derivative assets-463-463
Current tax asset-6,770-6,770
Cash and cash equivalents4,00432,16717,32953,501
Non-current assets101,412356,148-84,163373,397
TOTAL ASSETS101,515948,433-84,578965,370





Equity



Equity attributable to owners of the Company100,588537,961-260,140378,409
Non-controlling interests-1,761-1,761-
Total equity100,588539,722-261,901378,409





Liabilities



Loans and borrowings-7,791277,695285,486
Lease liabilities-34,782-34,782
Defined benefit liabilities-23,156-23,156
Other payables-1,175-1,175
Provisions-6,709-6,709
Deferred tax liabilities-5,4825936,075
Total non-current liabilities-79,096278,288357,383





Loans and borrowings-100,138-98,0002,138
Lease liabilities-2,079-2,079
Trade and other payables927212,856-2,965210,819
Derivative liabilities-1,213-1,213
Provisions-6,264-6,264
Current tax liabilities-7,066-7,066
Total current liabilities927329,616-100,965229,578
Total liabilities927408,712177,323586,961
TOTAL EQUITY AND LIABILITIES101,515948,433-84,578965,370

Unaudited Pro Forma Income Statement for the nine months ended 30 September 2021


1 January to 30 September 2021
In EUR thousand, unless otherwise statedVACPurmo GroupMergerCombined Company pro forma



(Note 1)
Net sales-620,981-620,981
Cost of goods sold--470,272--470,272
Gross profit-150,709-150,709
Sales and marketing expenses-379-56,065--56,444
Administrative expenses-2,139-33,3191,130-34,328
Research and development expenses--4,423--4,423
Other income-1,505-1,505
Other expenses--13,0642,256-10,808
EBIT-2,51945,3443,38646,211
Finance income-842-85757
Finance expenses--6,696-3,041-9,738
Net financial items--5,855-3,126-8,981





Profit before taxes-2,51939,48926037,231
Income taxes expense--11,633-52-11,685
Profit for the period-2,51927,85620825,546










Profit for the period attributable to:



Owners of the Company-2,51927,40066425,546
Non-controlling interests-456-456-





Earnings per share for profit attributable to the ordinary equity holders of the parent company:



Earnings per share basic, EUR -0.682.48

Earnings per share diluted, EUR -0.682,46

Earnings per share basic C shares, EUR


0.63
Earnings per share basic F shares, EUR


0.61

Unaudited Pro Forma Income Statement for the year ended 31 December 2020


1 January to 31 December 2020
In EUR thousand, unless otherwise statedVACPurmo GroupMergerCombined Company pro forma



(Note 1)
Net sales-671,178-671,178
Cost of goods sold--498,374--498,374
Gross profit-172,804-172,804
Sales and marketing expenses--75,169--75,169
Administrative expenses-1-38,767-806-39,573
Research and development expenses--5,238--5,238
Other income-1,618-1,618
Other expenses--13,220-36,353-49,573
EBIT-142,028-37,1594,868
Finance income-2,555-3802,175
Finance expenses--12,661200-12,461
Net financial items--10,107-180-10,286





Profit before taxes-131,921-37,340-5,418
Income taxes expense--6,6451,799-4,846
Profit for the period-125,276-35,541-10,265





Profit for the period attributable to:



Owners of the Company-124,854-35,119-10,265
Non-controlling interests-422-422-





Earnings per share for profit attributable to the ordinary equity holders of the parent company:



Earnings per share basic, EUR 0.002.25

Earnings per share diluted, EUR 0.002.23

Earnings per share basic C shares, EUR


-0.25
Earnings per share basic F shares, EUR


-0.24

Notes to the Pro Forma Information

The following unaudited pro forma adjustments will have a continuing impact on the Combined Company’s results or financial position, unless otherwise indicated. The pro forma notes are unaudited.

Note 1–Merger

Unaudited pro forma balance sheet adjustments as at 30 September 2021

In EUR thousandNew FinancingGermany non-controlling interestPre-Comple-tion DistributionRedemp-tion rightShare-holder Loan repaymentTransaction and other costsMerger

(Note 1a)(Note 1b)(Note 1f)(Note 1g)(Note 1c)(Note 1d&e)
Goodwill-------
Other intangible assets-------
Property, plant and equipment-------
Right-of-use assets-------
Other receivables------415-415
Deferred tax assets-------
Defined benefit asset-------
Non-current assets------415-415








Inventories-------
Trade receivables-------
Related party vendor note and other receivables--4,476--96,750--266-101,492
Derivative assets-------
Current tax asset-------
Cash and cash equivalents276,887--251,00096,750-98,000-7,30817,329
Non-current assets276,887-4,476-251,000--98,000-7,574-84,163
TOTAL ASSETS276,887-4,476-251,000--98,000-7,989-84,578








Equity attributable to owners of the Company-808-2,715-251,000---5,617-260,140
Non-controlling interests--1,761-----1,761
Total equity-808-4,476-251,000---5,617-261,901








Loans and borrowings277,695-----277,695
Lease liabilities-------
Defined benefit liabilities-------
Other payables-------
Provisions-------
Deferred tax liabilities-----593593
Total non-current liabilities277,695----593278,288








Loans and borrowings-----98,000--98,000
Lease liabilities-------
Trade and other payables------2,965-2,965
Derivative liabilities-------
Provisions-------
Current tax liabilities-------
Total current liabilities-----98,000-2,965-100,965
Total liabilities277,695----98,000-2,372177,323
TOTAL EQUITY AND LIABILITIES276,887-4,476-251,000--98,000-7,989-84,578

Unaudited pro forma income statement adjustments for the nine months ended 30 September 2021


1 January to 30 September 2021
In EUR thousandNew FinancingGermany non-controlling interestShareholder Loan repaymentTransaction and other costsMerger

(Note 1a)(Note 1b)(Note 1c)(Note 1d, 1e)
Net sales-----
Cost of goods sold-----
Gross profit-----
Sales and marketing expenses-----
Administrative expenses---1,1301,130
Research and development expenses-----
Other income-----
Other expenses---2,2562,256
EBIT---3,3863,386
Finance income--80--5-85
Finance expenses-4,734-1,693--3,041
Net financial items-4,734-801,693-5-3,126






Profit before taxes-4,734-801,6933,381260
Income tax expense94716-339-676-52
Profit for the period-3,787-641,3542,705208






Profit for the period attributable to:




Owners of the Company-3,7873921,3542,705664
Non-controlling interests--456---456

Unaudited pro forma income statement adjustments for the year ended 31 December 2020


1 January to 31 December 2020
In EUR thousandNew FinancingGermany non-controlling interestShareholder Loan repaymentIFRS 2 expenseTransaction and other costsMerger

(Note 1a)(Note 1b)(Note 1c)(Note 1i)(Note 1d, 1e)

Net sales------
Cost of goods sold------
Gross profit------
Sales and marketing expenses------
Administrative expenses-----806-806
Research and development expenses------
Other income------
Other expenses----28,346-8,007-36,353
EBIT----28,346-8,813-37,159
Finance income--114-266---380
Finance expenses-6,500-6,699--200
Net financial items-6,500-1146,433---180







Profit before taxes-6,500-1146,433-28,346-8,813-37,340
Income tax expense1,30023-1,287-1,7631,799
Profit for the period-5,200-915,147-28,346-7,050-35,541








Profit for the period attributable to:






Owners of the Company-5,2003315,147-28,346-7,050-35,119
Non-controlling interests--422----422

Note 1 a – New Financing

The New Financing for the Merger includes financing agreements entered into with Nordea and SEB on 8 September 2021 to replace the existing financing from Rettig Group. The financing arrangements for the Merger consist of EUR 280 million committed term loan facility, EUR 80 million committed revolving credit facility, EUR 125 million uncommitted term loan facility for M&A purposes and EUR 95 million committed bridge loan facility, all originally for Purmo Group and as amended from time to time, which Nordea and SEB as coordinating bookrunners and mandated lead arrangers have arranged (and with respect to the EUR 280 million committed term facility and the EUR 80 million committed revolving facility, underwritten as joint underwriters) in full. The New Financing may be used for the purposes of refinancing existing indebtedness of Purmo Group in connection with the Merger, to finance or refinance potential cash redemptions of VACs class C Shares, to finance Purmo Group’s Pre-Completion Distribution and for general corporate purposes.

The Pro Forma Information has been prepared under the assumption that the EUR 280 million term loan will be drawn in full, the EUR 95 million committed bridge loan facility will be drawn to repay the Shareholder Loan and will be repaid immediately with cash released from VAC’s blocked bank account and that the revolving credit facility will not be used in the Merger and thus has not been presented as drawn for the Pro forma periods.

The EUR 280 million term loan matures in three years after the drawdown date and includes two one-year extension options. The drawdown of the term loan increases long-term loans in the pro forma balance sheet by EUR 277,695 thousand, net of transaction costs, with a corresponding amount of cash and cash equivalents. Interest expenses of EUR 4,251 thousand have been recognized on the term loan for the nine-month period ended 30 September 2021 and EUR 5,668 thousand for the financial year ended 31 December 2020 using the effective interest method.

A total of EUR 483 thousand financial expenses related to the EUR 95 million bridge loan facility and the EUR 80 million revolving credit facility have been expensed for the nine-month period ended 30 September 2021 and a total of EUR 831 thousand for the financial year ended 31 December 2020. The revolving credit facility matures within three years and includes two one-year extension options with a commitment fee which will be paid from the undrawn nominal. The cash flow impact for these arrangements of EUR 808 thousand has been deducted from cash and cash equivalents and retained earnings in the pro forma balance sheet.

In total, the above-mentioned pro forma adjustments increase financial expenses by EUR 4,374 thousand in the pro forma income statement for the nine-month period ended 30 September 2021 and by EUR 6,500 thousand in the pro forma income statement for the financial year ended 31 December 2020. The combined effect on the pro forma balance sheet increases cash and cash equivalents by EUR 276,887 thousand and long-term loans by EUR 277,695 thousand and decreases retained earnings by EUR 808 thousand.

The tax impact from the adjustment has been calculated using the Finnish corporate income tax rate of 20 percent.

Note 1 b – Germany non-controlling interest

In 2018 Purmo Group sold a 10 per cent non-controlling interest in PG Germany GmbH to Rettig Capital Ltd for EUR 4,190 thousand, which is recorded as a related party vendor note receivable on the balance sheet. The Combined Company will, after the registration of the execution of the Merger, purchase the 10 % non-controlling interest from Rettig Capital Ltd against the existing related party vendor note and interest accrued thereon.

The vendor note receivable included in the pro forma balance sheet of EUR 4,190 thousand and accrued interest of EUR 286 thousand have been derecognized through equity as an acquisition of the non-controlling interest and the interest income of EUR 80 thousand in the pro forma income statement for the nine-month period ended 30 September 2021 and EUR 114 thousand in the pro forma income statement for the financial year ended 31 December 2020 have been eliminated. In addition, the attribution of the net profit for the period to the non-controlling interest has been eliminated. The acquisition of the German non-controlling interest will not have a continuing impact on the results of the Combined Company.

Note 1 c – Shareholder Loan repayment

Purmo Group’s current loans and borrowings include a EUR 98,000 thousand shareholder loan from Rettig Group as at 30 September 2021, which is presented as repaid in the Pro Forma Information through a reduction of current liabilities and cash and cash equivalents. The repayment is assumed to be initially financed with the bridge credit facility which will be repaid with the funds released from VAC’s blocked bank account. The financial expenses related to the Shareholder Loan recorded in Purmo Group’s historical income statements and interest income on cash deposits made with Rettig Group during these periods totalling EUR 1,693 thousand (net) for the nine-month period ended 30 September 2021 and totalling EUR 6,433 thousand (net) for the financial year ended 31 December 2020 have been eliminated as pro forma adjustments. Purmo Group did not have cash deposits with Rettig Group as at 30 September 2021.

Note 1 d – Transaction and other costs

The total transaction costs of EUR 8,007 thousand estimated to be incurred by VAC and Purmo Group in connection with the Merger primarily comprise expenses relating to financial reporting, legal matters and advisory services.

The estimated transaction costs of EUR 8,007 thousand have been recorded in other expenses in the pro forma income statement for the year ended 31 December 2020. The transaction costs of EUR 2,983 thousand already incurred as an expense for the nine-month period ended 30 September 2021 have been eliminated from Other and administrative expenses in the pro forma income statement for that period.

Of the estimated total costs of the Merger, EUR 2,983 thousand have been incurred by 30 September 2021 and EUR 5,024 thousand are estimated to be incurred by the Effective Date. These estimated transaction costs of EUR 5,024 thousand have been deducted from cash and cash equivalents in the pro forma balance sheet and recognised as an expense against retained earnings. The transaction costs accrued for in the balance sheets of VAC and Purmo Group as at 30 September 2021 have been eliminated from trade and other payables and presented by deducting cash and cash equivalents as they would have been paid as at 30 September 2021.

Management loans from Purmo Group, which have been offered to participants in the management incentive plan established in 2018 will be repaid upon termination of the incentive plan prior to the consummation of the Merger. In the pro forma balance sheet, the carrying amount of loan receivables has been adjusted against cash and cash equivalents.

The tax impact on the transaction cost adjustment has been calculated using the Finnish corporate income tax rate of 20 percent.

The transaction cost adjustment will not have a continuing impact on the Combined Company’s results or financial position.

Note 1 e – Accelerated vesting

Purmo Group's long-term share-based arrangements include an exit condition. As management has estimated that it is highly probable that the Merger will take place after the signing of the Merger Agreement and the receipt of irrevocable commitments from 80.7% of VAC’s shareholders, management has accelerated the vesting period of the long-term share-based payment arrangements, by expensing the remaining costs associated with the incentive plans on an accelerated basis until the estimated Effective Date of the Merger.

The adjustments made to the Pro Forma Information reduce the share-based payment expenses recognized in the income statements for the nine-month period ended 30 September 2021 by EUR 403 thousand and correspondingly increase the expenses by EUR 806 thousand in the financial year ended 31 December 2020.

The cost related to the accelerated vesting of the share-based payments does not have a continuing impact on the results or financial position of the Combined Company and the adjustment does not affect the cash and cash equivalents of the Combined Company.

Note 1 f – Pre-Completion Distribution

In accordance with the Merger Plan, Purmo Group may pay an extra dividend or distribution of assets or a combination thereof, in an amount not exceeding EUR 251 million in the aggregate, to the shareholders of Purmo Group prior to the Effective Date. The Pro Forma Information assumes that a Pre-Completion Distribution of EUR 251 million will be declared which has been adjusted in the pro forma balance sheet as if the distribution had taken place on 30 September 2021 from Purmo Group’s equity and paid from cash and cash equivalents. The Pre-Completion Distribution pro forma adjustment will not have a continuing impact on the financial position of the Combined Company.

Note 1 g –Redemption right

VAC raised gross proceeds of EUR 107,500 thousand before deducting the costs related to its initial public offering in June 2021, of which EUR 96,750 thousand has been deposited on blocked bank accounts. According to the rules of Nasdaq Helsinki, the shareholders of a SPAC entity must have the right to demand redemption of their shares if certain conditions are met. According to VAC’s Articles of Association, shareholders who voted against the Business Combination at the General Meeting have the right, under certain conditions, to demand the redemption of their C shares in cash equal to the pro rata share of that shareholder’s total assets in blocked bank accounts. Only those class C Shares, for which the shareholder requesting redemption has been registered as the holder in VAC’s shareholders’ register maintained by Euroclear Finland no later than by the record date of a General Meeting convened to approve the Business Combination, can be redeemed. The redemption right is subject to the Business Combination being approved be VAC’s General Meeting and thereafter being completed in accordance with applicable rules. The shareholders’ right to have their C Shares redeemed shall, however, be limited to shares representing in aggregate no more than ten (10) per cent of the total number of issued and outstanding C Shares of VAC at the record date, referred to in Chapter 5, Section 6 a of the Finnish Companies Act, of a General Meeting convened to approve the Business Combination. In accordance with the rules of Nasdaq Helsinki, the notice to the General Meeting must mention the shareholder’s right to request redemption.

The funds in the blocked accounts are released when a majority of the members of VAC’s Board of Directors independent from VAC and a majority of the votes cast in a General Meeting of VAC have approved the Merger and Nasdaq Helsinki has confirmed that VAC meets the listing requirements according to the rules of Nasdaq Helsinki. The funds are subject to any redemption of the C Shares, thus the amount released to VAC in connection of the Merger may be less than the amount held in the blocked account.

The Pro Forma Information assumes that none of the shareholders will demand redemption of their C Shares and that the funds in the blocked bank accounts will be released in full to the cash and cash equivalents of the Combined Company. The maximum amount of the redemption right is EUR 9,675 thousand, which is presented in equity in the pro forma balance sheet.

Note 1 i –Accounting treatment of the Merger, recognition of the IFRS 2 expense and equity structure

The following table sets forth the reconciliation of pro forma total equity attributable to the owners of the company and illustrates adjustments to reflect the impacts of the Merger to the total equity attributable to the owners of the parent of the Combined Company.

In EUR thousandAs at 30 September 2021

VACPurmo GroupNew FinancingGermany non-controlling interestPre-Completion DistributionMerger accounting and equity eliminationTransaction and other costsEquity adjust-ments totalCombined Company pro forma






Equity eliminationMerger accounting





(Note 1a)(Note 1b)(Note 1 f)(Note 1 i)(Note 1 d)

Share capital803----803,077 1)-2,9973,080
Reserve for invested unrestricted equity103,028482,850---251,000-103,028125,857--228,171357,708
Reserves --4,566---0----4,566
Retained earnings-232,274-808-2,715-2
-593-4,11528,157
Net profit for the period -2,51927,400---2,519 -28,346-5,024-30,852-5,970
Equity attributable to owners of the Company100,588537,962-808-2,715-251,000

-100,588
100,588-5,617-260,140378,409
________________________________
1) VAC’s share capital is EUR 80 thousand. VAC’s share capital is increased by EUR 3 000 thousand in connection with the registration of the completion of the Merger, after which the share capital of the Combined Company will be EUR 3 080 thousand.

Merger accounting and recognition of IFRS 2 expense

As VAC doesn’t meet the definition of a business, the Merger will not be accounted for as a business combination but as a reverse recapitalization, in which no goodwill will be recognised and Purmo Group will become a public company. The difference in the value in accordance with IFRS 2 of VAC’s listed C shares and unlisted F shares over the fair value of identifiable net assets of VAC represents a service of listing of Purmo Group’s shares and is accounted for as a share-based payment in accordance with IFRS 2 and recorded as an expense through the income statement. The IFRS 2 expense will be based on the quoted VAC price on the date of the General Meeting, as the shareholders of VAC will at that date finally resolve on the Merger. For Pro Forma Information purposes, the value in accordance with IFRS 2 of VAC’s listed C shares and unlisted F shares has been determined using the closing price of VAC shares on 22 November 2021 of EUR 11.70. The right to convert an F share into a C share depends on the development of the C share price. In case the price of C shares does not rise above the thresholds defined in the the Articles of Association, certain F shares may not necessarily have any value. In accordance with IFRS 2, an expense totalling EUR 28,346 thousand is recognized against retained earnings in the pro forma income statement for the financial year ended 31 December 2020.

Accounting treatment of the MergerNumber of sharesEUR thousand
Listed C shares and unlisted F shares value based on the 22 November 2021 closing price12,345,217128,934
VAC net assets fair value 30 September 2021
100,587
Value of IFRS 2 listing service
28,346

The fair value of VAC’s listed C shares and unlisted F shares used in the Pro Forma Information will be determined based on the closing price on the date of the General Meeting, in which case the IFRS 2 share-based payment expense presented in the Pro Forma Information will likely differ from the expense calculated based on the share price as at the date of the General Meeting. A 10% change in VAC’s share price would increase or decrease the IFRS 2 share-based payment expense by approximately EUR 13 million, which would be reflected in the amounts recognised in the income statement in accordance with IFRS 2 and as the offsetting entry in equity.

This expense will not have a cash flow effect, an impact on the Combined Company’s total equity, nor a continuing effect on the result of the Combined Company.

Note 2 – Unaudited pro forma earnings per share

Basic earnings per share has been calculated by dividing the pro forma profit for the period attributable to shareholders of the parent company by the weighted average number of VAC’s shares outstanding, adjusted by the number of pro forma Merger Consideration Shares.

The following table shows basic earnings per share for the periods indicated:

In EUR thousand, unless otherwise indicated1 January to 30 September 20211 January to 31 December 2020
Pro forma earnings per share for profit attributable to the ordinary equity holders
of the parent company C shares
25,367-10,193
Pro forma earnings per share for profit attributable to the ordinary equity holders
of the parent company C shares
179-72
Pro forma earnings per share for profit attributable to the ordinary equity holders of the parent company25,546-10,265



Weighted average number of ordinary shares (in thousands)

C shares40,37540,375
F shares, which are entitled to dividend293293
Weighted average number of ordinary shares40,66840,668



Basic pro forma Earnings per share, EUR

C shares0.63-0.25
F shares0.61-0.24

Note 3 – Unaudited additional Pro Forma Information

The Pro Forma Information includes certain performance measures of the Combined Company’s pro forma financial performance and pro forma financial position, which, in accordance with the “Alternative Performance Measures” guidance issued by ESMA, are not accounting measures defined or specified in IFRS, and therefore are considered as alternative performance measures. These alternative performance measures are EBIT, Adjusted EBITDA, net debt and equity to assets ratio and they are presented as additional information to the financial measures presented in the pro forma income statement and pro forma balance sheet prepared in accordance with IFRS. For reasons for the use of alternative performance measures, see “Selected Financial Information – Selected Consolidated Financial Information of Purmo Group”.

Alternative performance measures should not be viewed in isolation or as a substitute to the IFRS financial measures. All companies do not calculate alternative performance measures in a uniform way, and therefore, the alternative performance measures presented in the Prospectus may not necessarily be comparable with similarly named measures presented by other companies.

Unaudited Pro Forma Key Figures

In EUR thousand, unless otherwise indicated1 January to 30 September 20211 January to 31 December 2020As at 30 September 2021
Net sales620,981671,178
EBIT 1)46,2114,868
Adjusted EBITDA 2)81,08585,119
Net deb 3)

270,984
Equity to assets ratio 4)

39.2 %
________________________________
1) Pro forma - Profit before tax and net financial items (Operating profit).
2) Pro forma - EBIT before depreciation, amortisation and impairment and comparability adjustments.
3) Pro forma - Non-current and current borrowings and non-current and current lease liabilities less cash and cash equivalents.
4) Pro forma - Total shareholders’ equity attributed to owners of the company divided by total assets derived from the pro forma balance sheet.

Pro forma -Adjusted EBITDA reconciliation


1 January to 30 September 20211 January to 31 December 2020
In EUR thousandVACPurmo GroupMergerCombined Company pro formaVACPurmo GroupMergerCombined Company pro forma
EBIT-2,51945,3443,38646,211-142,028-37,1594,868
Depreciation, amortisation and impairments-23,437-23,437-29,910-29,910
EBITDA-2,51968,7813,38669,648-171,938-37,15934,778
M&A related transaction and integration costs72722-72722-3828,0078,389
Restructuring costs and one-off costs related to efficiency programmes-8,609-8,609-7,813-7,813
Formation of Purmo Group and standalone preparations-2,868-2,256612-1,978-1,978
Management fee to owners and legacy Rettig Group incentive plans-1,365-403962-2,8738063,679
Merger accounting (IFRS 2)------28,34628,346
VAC’s IPO related transaction costs1,582--1,582----
Other--350--350-136-136
Total adjustments2,30912,514-3,38611,437013,18237,15950,341
Adjusted EBITDA-21081,295-81,085-185,120-85,119

Pro forma Net debt reconciliation


As at 30 September 2021
In EUR thousandVACPurmo GroupMergerCombined
Company
pro forma





Loans and borrowings (non-current)-7,791277,695285,486
Loans and borrowings (current)-34,782-34,782
Lease liabilities (non-current)-100,138-98,0002,138
Lease liabilities (current)-2,079-2,079
Cash and cash equivalents4,00432,16717,32953,501
Net debt-4,004112,623161,709270,984

Pro forma Equity to asset ratio reconciliation


As at 30 September 2021
In EUR thousand, unless otherwise indicatedVACPurmo GroupMergerCombined
Company
pro forma





Equity attributable to owners of the company100,588537,962-260,140378,409
Total assets101,515948,433-84,578965,370
Equity to asset ratio99.1 %56.7 %
39.2 %

© Modular Finance, source Nordic Press Releases

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Financials
Sales 2022 924 M 987 M 987 M
Net income 2022 37,8 M 40,4 M 40,4 M
Net Debt 2022 217 M 232 M 232 M
P/E ratio 2022 11,7x
Yield 2022 4,07%
Capitalization 456 M 487 M 487 M
EV / Sales 2022 0,73x
EV / Sales 2023 0,72x
Nbr of Employees 3 468
Free-Float 15,7%
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Average target price 13,20 €
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Managers and Directors
John-Peter Leesi Chief Executive Officer
Erik Hedin Chief Financial Officer
Tomas von Rettig Chairman
Eva Carina Edblad Independent Director
Carlo Grossi Independent Director
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