Registration number:
for the
Year Ended 31 December 2021
Purmo Group (UK) Limited
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Profit and Loss Account |
|
Statement of Comprehensive Income |
|
Balance Sheet |
|
Statement of Changes in Equity |
|
Notes to the Financial Statements |
Purmo Group (UK) Limited
Company Information
Directors |
L Currie M Conlon B Lynch |
Company secretary |
T Hails |
Registered office |
|
Auditor |
|
Purmo Group (UK) Limited
Strategic Report for the Year Ended 31 December 2021
The directors present their report for the year ended 31 December 2021.
Business model
Business is conducted from the Company’s two manufacturing operations in Hull and Gateshead and two distribution centres located in Birtley and Burford. Route to market is via an established network of national and provincial wholesalers, mostly in the UK and Republic of Ireland.
Maintaining a strong focus on customer relationship management and the Company’s market leading position as a supplier of heating solutions are key differentiators and critical success factors.
Fair review of the business
Purmo Group (UK) Limited (PG UK) is a leading manufacturer of steel panel, electric and decorative radiators. It also manufactures fan convectors as well as being a distributor of other Purmo Group company products including valves and controls, towel rails and underfloor heating systems.
The Company continues to strictly control other costs and operating expenses.
Impact of Brexit related risks
Leaving the EU impacted the business slightly more than anticipated, with the vague HMRC guidance not making things easy. PG UK preferred route to Ireland is via Northern Ireland so this involved TSS declarations. Things settled down throughout 2021 and the changes became normal business activity.
Impact from the risks related to the Covid-19 pandemic
Within PG UK, the health, safety and well-being of our employees is always number one priority and throughout the coronavirus pandemic, we have taken practical steps, and implemented robust measures, to ensure the welfare of our employees, agency workers, sub-contractors and partners.
During the lockdown in early 2021 PG UK advice has remained constant, if you could work from home and were happy to do so then you should. Some office-based staff preferred to be working in the office due to challenges working from home, and this was granted as appropriate measures are in place. Following the lifting of restrictions in summer 2021 PG UK encouraged staff to start returning to the office. This approach now varies between departments, as some functions are actively more productive working from home
The company's key financial and other performance indicators during the year were as follows:
Financial KPIs |
Unit |
2021 |
2020 |
Turnover (£000) |
£ |
89,527 |
71,155 |
Profit/(Loss) for the year (£000) |
£ |
(501) |
(4,880) |
Gross profit margin |
% |
21 |
18 |
Net assets excluding pension asset/liability (£000) |
£ |
8,500 |
10,703 |
Net assets including pension asset/liability (£000) |
£ |
11,327 |
6,685 |
Cash at bank and in hand (£000) |
£ |
585 |
277 |
The directors monitor the performance of the business on a regular basis through various key performance indicators (KPIs). Two of the most important measures of Return on Capital Employed (ROCE) and Complete of Time Delivery (COTD), the latter of which is monitored on a daily basis and is consistently at a level which the directors believe to be the best in the industry. Each of these measures is relevant to the key company objectives of shareholder and customer satisfaction.
Purmo Group (UK) Limited
Strategic Report for the Year Ended 31 December 2021 (continued)
Section 172(1) statement
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing this, Section 172 requires a director to have regard, amongst other matters, to:
• The likely consequences of any decision in the long term; the interests of the company's employees; the need to foster the company's business relationships with suppliers, customers and others;
• The impact of the company's operations on the community and the environment;
• The desirability of the company maintaining a reputation for high standards of business conduct; and the need to act fairly as between members of the company.
These factors underpin the way in which the directors discharge their duties. The stakeholders considered include the people who work for us, trade with us, own us, regulate us, and live in the societies we serve and the planet we all inhabit. The Board recognises that building strong relationships with our stakeholders will help us to deliver our strategy in line with our long-term values and operate the business in a sustainable way.
The Directors are supported in the discharge of their duties by:
• Management processes which ensure that proposals presented to Board and Committee meetings for decision include information relevant to determine the action that would most likely promote the success of the company and engagement with stakeholders where relevant to support appropriate decision making; and
• Agenda planning for Board and Committee meetings to provide sufficient time for the consideration and discussion of key matters.
Engagement with employees
The PG UK Limited Leadership Team are actively involved in the engagement of employees through leadership calls and site visits to keep the workforce up-to date on business developments and answer questions. The Board receives regular updates from the UK HR Manager on employee matters, including feedback received through Town Halls and site visits.
Purmo Group (UK) Limited
Strategic Report for the Year Ended 31 December 2021 (continued)
Engagement with suppliers, customers and other relationships
The Board understands the importance of effective engagement with all of its stakeholders. Depending on the nature of the issue in question, the relevance of each stakeholder group may differ and not every decision the Board makes will necessarily result in a positive outcome for all stakeholders.
The Board receives reports from management on issues concerning customers, the environment, communities, suppliers, employees, regulators, governments and investors, which it takes into account in its discussions and in its decision-making process.
In addition to this, the Board seeks to understand the interests and views of the Group’s stakeholders by engaging with them directly as appropriate. Some of the ways in which the Board has engaged with stakeholders over the year is shown below:
• Customers – in addition to the Board receiving updates from senior management on the Group’s interaction with customers, individual members of the Board have met with customers, which included by way of an example, direct engagement with a key customer to understand its approach to sustainability.
• Employees – in addition to the Board receiving updates from senior management on various metrics and feedback tools in relation to employees, members of the Board engage with the Group’s employees in a variety of ways including attending exchange sessions with employees, visiting sites and meeting with employees in those countries that directors visit individually.
• Regulators/Governments – members of the Board receive updates from senior management, who meet with regulators both in the UK and Europe.
• Suppliers - during the year, the Board received an update on the company’s performance against its statutory reporting obligations in respect of the payment of third-party suppliers. This also provided an insight into the impact of its procurement processes and procedures on suppliers.
Purmo Group (UK) Limited
Strategic Report for the Year Ended 31 December 2021 (continued)
Principal risks and uncertainties
The directors continually seek to identify and manage risk in all areas of the business.
Health & Safety matters are reviewed monthly in senior leadership team meetings which also includes a status report on a risk assessment programme that is being conducted on an on-going basis aided by the Company’s insurers. The Company prides itself on its Health and Safety record, which remained exceptionally good with no major incidents reported.
The Company’s products are predominantly made from steel or brass, which leads to uncertainty caused by sudden fluctuations in commodity prices. The pandemic compounded the uncertainty across raw materials with global shortages of some materials and this shows no sign of changing in the short term. During 2021 there were 3 selling price increases to mitigate the rising costs and pass on the customer.
The markets the Company operates in have been highly competitive in recent years as manufacturers and importers strive to utilise surplus capacity.
The Company imports and exports and services in foreign currencies. The risk of short to medium term movements in foreign exchange rate is hedged on a rolling basis with the parent company’s group treasury function.
Credit management continues to take high priority, and whilst the Company will continue to increase business by broadening its customer base, the directors are managing the potential risks in doing so extremely diligently.
As panel radiators are relatively homogeneous products, they need to be competitively priced, the main differentiator being customer service and marketing the products as a total heating solution. It is pleasing to report another strong COTD performance and high praise from key customers recognising high levels of customer satisfaction.
The Company is conscious of its environmental responsibilities and continues to drive to become more energy efficient in its manufacturing processes, as well as developing energy efficient products that offer saving opportunities to the end customer.
Approved by the Board on 26 September 2022 and signed on its behalf by:
......................................... |
Purmo Group (UK) Limited
Directors' Report for the Year Ended 31 December 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
Principal activity
The principal activity of the company is manufacture and marketing of heating appliances
Directors of the company
The directors, who held office during the year, were as follows:
Proposed distributions
The directors do not recommend the payment of a dividend in respect of the current year (2020 - £nil).
Financial instruments
The company's financial instruments comprise cash, share capital and various items that arise from trading (such as trade debtors, trade creditors etc.). The main purpose of these financial instruments is financing the company's trading operations.
Political donations
The company made no political donations or incurred and political expenditure during the year.
Employment of disabled persons
The company gives every consideration to applications for employment from disabled persons where the requirement of the job may be adequately fulfilled by a handicapped or disabled person. Where existing employees become disabled, it is company policy, wherever practicable, to provide continuing employment under normal terms and conditions and to provide training and career development and promotion whenever appropriate.
Employee involvement
During the year, the company maintained arrangements which recognised the importance of keeping employees informed of the progress of the business and involving them in the company's performance. Employees were provided with information regarding the financial and economic factors affecting them as employees.
Purmo Group (UK) Limited
Directors' Report for the Year Ended 31 December 2021 (continued)
Environmental report
Emissions and energy consumption
During the year ended 31 December 2021, Purmo Group (UK) Limited has gathered data regarding scope one, two and three carbon emissions (as defined by the GHG Protocol) from its UK operations as defined by the requirement of the Streamlined Energy and Carbon Reporting (SECR) legislation.
Energy (kWh) |
2021 |
2020 |
Scope 1 (emissions from gas and fuel for fleet vehicles) |
1,057,366 |
953,765 |
Scope 2 (emissions from electricity and gas) |
26,947,390 |
23,851,585 |
Scope 3 (emissions from business travel in employee cars) |
32,089 |
51,240 |
Total energy |
28,036,845 |
24,856,590 |
Emissions (tCO2e) |
||
Scope 1 (emissions from gas and fuel for fleet vehicles) |
2,783 |
2,503 |
Scope 2 (emissions from electricity and gas) |
2,767 |
2,659 |
Scope 3 (emissions from business travel in employee cars) |
8 |
13 |
Total SECR emissions |
5,558 |
5,175 |
Specific Carbon Consumption |
||
SCC (tCO2e / £000 revenue) |
0.062 |
0.073 |
The combined Scope 1, Scope 2 and Scope 3 carbon emissions for the period was recorded at 5,558 TCo2e (2020 - 5,174). The energy consumed in the period is 28,036,845 kWh (2020 - 24,856,590). The Specific Carbon Consumption (SCC) for the period is calculated at 0.062 TC2e/£000 revenue (2020 - 0.073).
During the period of reporting a number of practical actions to reduce energy consumption have been completed, including approval of a new powder application system for Gateshead to be installed in 2022, continuing replacement of lighting with LED equivalents, the installation of meters to monitor energy usage and the installation of new compressors to better meet air demand and remove reliance on diesel units.
Future developments
The current economic outlook with high inflation and rising costs make the future slightly more uncertain, although we are not seeing a drop off in demand. Supply chain planning becomes more crucial with longer lead times for key components.
Purmo Group (UK) Limited
Directors' Report for the Year Ended 31 December 2021 (continued)
Going concern
The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The directors have prepared forecasts for a period of 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides which account for severe but plausible downside scenarios, the company will have sufficient funds, through funding from its intermediate parent company, Purmo Group Limited, to meet its liabilities as they fall due for that period.
Those forecasts are dependent on Purmo Group Limited continuing to honour the intra-group facility agreement, providing access to this facility as required. Purmo Group Limited has indicated its intention to continue to make available such funds as are needed by the company. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Consequently, the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Reappointment of auditor
KPMG LLP resigned as auditor during the year and the directors appointed MHA Tait Walker to fill the vacancy arising.
Azets Audit Services Limited, trading as Azets Audit Services, were appointed auditor to the company following their acquisition of the trade of Tait Walker LLP, trading as MHA Tait Walker, on 1 May 2022.
The auditor Azets Audit Services will be deemed to be reappointed under section 487 (2) of the Companies Act 2006.
Approved by the Board on
......................................... |
Purmo Group (UK) Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 101 'Reduced Disclosure Framework' ('FRS 101'). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• |
select suitable accounting policies and apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether FRS 101 has been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Purmo Group (UK) Limited
Independent Auditor's Report to the Members of Purmo Group (UK) Limited
Opinion
We have audited the financial statements of Purmo Group (UK) Limited (the 'company') for the year ended 31 December 2021, which comprise the Statement of Comprehensive Income, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion the financial statements:
• |
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its loss for the year then ended; |
• |
have been properly prepared in accordance with UK Accounting Standards, including FRS 101 Reduced Disclosure; and |
• |
have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Purmo Group (UK) Limited
Independent Auditor's Report to the Members of Purmo Group (UK) Limited (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• |
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• |
the financial statements are not in agreement with the accounting records and returns; or |
• |
certain disclosures of directors’ remuneration specified by law are not made; or |
• |
we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities (set out on page 9), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Purmo Group (UK) Limited
Independent Auditor's Report to the Members of Purmo Group (UK) Limited (continued)
• |
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations and fraud; |
• |
Assessment of matters recorded on the Company’s Plant Safety register; |
• |
Reading correspondence with regulators including the Health and Safety Executive; |
• |
Reviewing board minutes; |
• |
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to stock provisions; and |
• |
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness. |
Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive); anti-bribery and corruption; and compliance with the UK Companies Act and taxation.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
......................................
For and on behalf of
Chartered Accountants
Statutory Auditor
Bulman House
Regent Centre
Newcastle upon Tyne
NE3 3LS
Azets Audit Services is a trading name of Azets Audit Services Limited.
Purmo Group (UK) Limited
Profit and Loss Account for the Year Ended 31 December 2021
Note |
2021 |
2020 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Distribution costs |
( |
( |
|
Administrative expenses |
( |
( |
|
Other operating income |
|
|
|
Operating loss |
( |
( |
|
Interest receivable and similar income |
|
|
|
Interest payable and similar expenses |
( |
( |
|
Loss before tax |
( |
( |
|
Tax on loss |
|
|
|
Loss for the year |
( |
( |
The above results were derived from continuing operations.
Purmo Group (UK) Limited
Statement of Comprehensive Income for the Year Ended 31 December 2021
2021 |
2020 |
|
Loss for the year |
( |
( |
Items that will not be reclassified subsequently to profit or loss |
||
Actuarial gain or loss on defined benefit pension schemes |
6,349 |
(2,693) |
Income tax effect |
(1,207) |
- |
|
( |
|
Total comprehensive income for the year |
|
( |
Purmo Group (UK) Limited
(Registration number: 00653648)
Balance Sheet as at 31 December 2021
Note |
2021 |
2020 |
|
Fixed assets |
|||
Intangible assets |
|
|
|
Tangible assets |
|
|
|
Investments |
3,003 |
2,998 |
|
Right of use assets |
8,174 |
8,826 |
|
|
|
||
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current liabilities |
( |
( |
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
( |
|
Net assets excluding pension asset/(liability) |
8,499 |
10,703 |
|
Net pension asset/(liability) |
|
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Capital contribution reserve |
|
|
|
Other reserves |
|
|
|
Profit and loss account |
( |
( |
|
Shareholders' funds |
|
|
Approved by the
......................................... |
Purmo Group (UK) Limited
Statement of Changes in Equity for the Year Ended 31 December 2021
Share capital |
Share premium |
Other reserve |
Capital contribution reserve |
Profit and loss account |
Total |
|
At 1 January 2020 |
|
|
|
|
( |
|
Loss for the year |
- |
- |
- |
- |
( |
( |
Other comprehensive income |
- |
- |
- |
- |
( |
( |
Total comprehensive income |
- |
- |
- |
- |
( |
( |
At 31 December 2020 |
8,307 |
4,189 |
3,000 |
12,519 |
(21,330) |
6,685 |
Share capital |
Share premium |
Other reserve |
Capital contribution reserve |
Profit and loss account |
Total |
|
At 1 January 2021 |
|
|
|
|
( |
|
Loss for the year |
- |
- |
- |
- |
( |
( |
Other comprehensive income |
- |
- |
- |
- |
|
|
Total comprehensive income |
- |
- |
- |
- |
|
|
At 31 December 2021 |
|
|
|
|
( |
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
General information |
The company is a private company limited by share capital, incorporated and domiciled in England and Wales.
The address of its registered office is
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework.
In preparing these financial statements, the company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
The financial statements are prepared on the historical cost basis.
Summary of disclosure exemptions
In these financial statements, the company has taken advantage of the disclosure exemptions available under FRS 101 in relation to share-based payment, business combinations, non-current assets held for sale, financial instruments, fair value measurements, capital management, revenue from contracts with customers, presentation of comparative period reconciliations for share capital, tangible fixed assets, intangible assets and investment property, presentation of a cash-flow statement, the effects of new standards not yet effective, impairment of assets and disclosures in respect of the compensation of key management personnel and of transactions with a management entity that provides key management personnel services to the company.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Going concern
The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The directors have prepared forecasts for a period of 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides which account for severe but plausible downside scenarios, the company will have sufficient funds, through funding from its intermediate parent company, Purmo Group Oyj, to meet its liabilities as they fall due for that period.
Those forecasts are dependent on Purmo Group Oyj continuing to honour the intra-group facility agreement, providing access to this facility as required. Purmo Group Oyj has indicated its intention to continue to make available such funds as are needed by the company. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Consequently, the directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
Exemption from preparing group accounts
The company is exempt by virtue of s400 of the Companies Act 2006 from the requirement to prepare group financial statements. These financial statements present information about the company as an individual undertaking and not about its group.
The company's parent undertaking, Rettig Group Oy Ab Finland, includes the company in its consolidated financial statements. The consolidated financial statements of Rettig Group Oy Ab Finland are prepared in accordance with International Financial Reporting Standards and are available to the public and may be obtained from Bulevardi 46, PO Box 115, Fi-00121, Helsinki, Finland.
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 January 2021 have had a material effect on the financial statements.
Revenue recognition
The company earns revenue from the sale of goods to customers in the ordinary course of business.. Revenue is measured at the fair value of the right to consideration net of sales related rebates, discounts and value added tax. The company recognises revenue once the risks and rewards of ownership have transferred, which is at the point of dispatch of goods, in line with company incoterms.
Government grants
Grants from the government are recognised at their fair value in profit or loss where there is a reasonable assurance that the grant will be received and the company has complied with all attached conditions. Grants received where the company has yet to comply with all attached conditions are recognised as a liability (and included in deferred income within trade and other payables) and released to income when all attached conditions have been complied with.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Asset class |
Depreciation method and rate |
Long leasehold land and buildings |
40 - 50 years straight line |
Plant and machinery |
3 - 10 years straight line |
Intangible assets
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting period date.
Separately acquired trademarks and licences are shown at historical cost.
Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.
Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.
Amortisation
Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their expected useful economic life as follows:
Asset class |
Amortisation method and rate |
Licences |
5 years straight line |
Patents & trademarks |
10 years straight line |
Investments
Investments in securities are classified on initial recognition as available-for-sale and are carried at fair value, except where their fair value cannot be measured reliably, in which case they are carried at cost, less any impairment.
Unrealised holding gains and losses other than impairments are recognised in other comprehensive income. On maturity or disposal, net gains and losses previously deferred in accumulated other comprehensive income are recognised in income.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Trade debtors
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Stock
Stocks are stated at the lower of cost and net realisable value. Cost is based on the weighted average principle and includes expenditure incurred in acquiring the stocks, production or conversion costs and other costs in bringing them to their existing location and condition. In the case of manufactured stocks and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.
Trade creditors
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Borrowings
All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Leases
Definition
A lease is a contract, or a part of a contract, that conveys the right to use an asset or a physically distinct part of an asset (“the underlying asset”) for a period of time in exchange for consideration. Further, the contract must convey the right to the company to control the asset or a physically distinct portion thereof. A contract is deemed to convey the right to control the underlying asset if, throughout the period of use, the company has the right to:
· Obtain substantially all the economic benefits from the use of the underlying asset, and;
· Direct the use of the underlying asset (e.g. direct how and for what purpose the asset is used)
Where contracts contain a lease coupled with an agreement to purchase or sell other goods or services (i.e., non-lease components), the non-lease components are identified and accounted for separately from the lease component. The consideration in the contract is allocated to the lease and non-lease components on a relative standalone price basis using the principles in IFRS15.
Initial recognition and measurement
The company initially recognises a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term.
The lease liability is measured at the present value of the lease payments to be made over the lease term. The lease payments include fixed payments, purchase options at exercise price (where payment is reasonably certain), expected amount of residual value guarantees, termination option penalties (where payment is considered reasonably certain) and variable lease payments that depend on an index or rate.
The right-of-use asset is initially measured at the amount of the lease liability, adjusted for lease prepayments, lease incentives received, the company’s initial direct costs (e.g., commissions) and an estimate of restoration, removal and dismantling costs.
Subsequent measurement
After the commencement date, the company measures the lease liability by:
(a) Increasing the carrying amount to reflect interest on the lease liability;
(b) Reducing the carrying amount to reflect the lease payments made; and
(c) Re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in substance fixed lease payments or on the occurrence of other specific events.
Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. Interest charges are presented separately as non-operating /included in finance cost in the income statement, unless the costs are included in the carrying amount of another asset applying other applicable standards. Variable lease payments not included in the measurement of the lease liability, are included in operating expenses in the period in which the event or condition that triggers them arises.
The related right-of-use asset is accounted for using the Cost model in IAS 16 and depreciated and charged in accordance with the depreciation requirements of IAS 16 Property, Plant and Equipment as disclosed in the accounting policy for Property, Plant and Equipment. Adjustments are made to the carrying value of the right of use asset where the lease liability is re-measured in accordance with the above. Right of use assets are tested for impairment in accordance with IAS 36 Impairment of assets as disclosed in the accounting policy in impairment.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Lease modifications
If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease. If a lease continues to exist, the lease modification will result in either a separate lease or a change in the accounting for the existing lease.
The modification is accounted for as a separate lease if both:
(a) The modification increases the scope of the lease by adding the right to use one or more underlying assets; and
(b) The consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.
If both of these conditions are met, the lease modification results in two separate leases, the unmodified original lease and a separate lease. The company then accounts for these in line with the accounting policy for new leases.
If either of the conditions are not met, the modified lease is not accounted for as a separate lease and the consideration is allocated to the contract and the lease liability is re-measured using the lease term of the modified lease and the discount rate as determined at the effective date of the modification.
For a modification that fully or partially decreases the scope of the lease (e.g., reduces the square footage of leased space), IFRS 16 requires a lessee to decrease the carrying amount of the right-of-use asset to reflect partial or full termination of the lease. Any difference between those adjustments is recognised in profit or loss at the effective date of the modification.
For all other lease modifications which are not accounted for as a separate lease, IFRS 16 requires the lessee to recognise the amount of the re-measurement of the lease liability as an adjustment to the corresponding right-of-use asset without affecting profit or loss.
Short term and low value leases
The company has made an accounting policy election, by class of underlying asset, not to recognise lease assets and lease liabilities for leases with a lease term of 12 months or less (i.e., short-term leases).
The company has made an accounting policy election on a lease-by-lease basis, not to recognise lease assets on leases for which the underlying asset is of low value.
Lease payments on short term and low value leases are accounted for on a straight line bases over the term of the lease or other systematic basis if considered more appropriate. Short term and low value lease payments are included in operating expenses in the income statements.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
For defined contribution plans contributions are paid publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset.
Defined benefit pension obligation
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets (at bid price) are deducted. The Company determines the net interest on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset).
The discount rate is the yield at the reporting date on bonds that have a credit rating of at least AA that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the currency in which the benefits are expected to be paid.
Remeasurements arising from defined benefit plans comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest). The Company recognises them immediately in other comprehensive income and all other expenses related to defined benefit plans in employee benefit expenses in profit or loss.
When the benefits of a plan are changed, or when a plan is curtailed, the portion of the changed benefit related to past service by employees, or the gain or loss on curtailment, is recognised immediately in profit or loss when the plan amendment or curtailment occurs.
The calculation of the defined benefit obligations is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognised asset is limited to the present value of benefits available in the form of any future refunds from the plan or reductions in future contributions and takes into account the adverse effect of any minimum funding requirements.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Financial instruments
Initial recognition
Financial assets and financial liabilities comprise all assets and liabilities reflected in the balance sheet, except; property, plant and equipment, investment properties, intangible assets, deferred tax assets, prepayments, deferred tax liabilities and employee benefits plan.
The company recognises financial assets and financial liabilities in the statement of financial position when, and only when, the company becomes party to the contractual provisions of the financial instrument.
Financial assets are initially recognised at fair value. Financial liabilities are initially recognised at fair value, representing the proceeds received net of premiums, discounts and transaction costs that are directly attributable to the financial liability.
Classification and measurement
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, or finance income, except for impairment of trade debtors which is presented within administrative expenses.
Trade and other debtors are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial.
Financial liabilities are measured subsequently at amortised cost using the effective interest method, less any impairment losses.
The company derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire.
Impairment of financial assets
A loss allowance is recognised on initial recognition of financial assets held at amortised cost, based on expected credit losses, and is remeasured annually with changes appearing in the profit and loss account. Where there has been a significant increase in credit risk of the financial instrument since initial recognition, the loss allowance is measured based on lifetime expected losses. In all other cases the loss allowance is measured based on 12-month expected losses. For assets with a maturity of 12 months or less, including trade receivables, the 12-month expected loss allowance is equal to the lifetime expected loss allowance.
Accounting estimates and assumptions
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of certain financial assets, liabilities, income and expenses.
The use of estimates and assumptions is principally limited to the determination of provisions for impairment and the valuation of financial instruments as detailed below.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
2 |
Accounting policies (continued) |
Provisions for impairment
In determining impairment of financial assets, judgement is required in the estimation of the amount and timing of future cash flows as well as an assessment of whether the credit risk on the financial asset has increased significantly since initial recognition and incorporation of forward-looking information in the measurement of ECL.
Fair value of financial assets and liabilities
Where the fair value of financial assets and liabilities cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is derived from observable markets where available, but where this is not feasible, a degree of judgement is required in determining assumptions used in the models. Changes in assumptions used in the models could affect the reported fair value of financial assets and liabilities.
Critical accounting judgements and key sources of estimation uncertainty |
In the preparation of the financial statements, it is necessary for the management of the company to make estimates and certain presumptions that can affect the valuation of the assets and liabilities and the outcome of the income statement. The actual outcome may differ from these estimates and presumptions. The most significant estimates made in these accounts relate to
Deferred tax asset
Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits.
Defined benefit pension liability
The cost of defined benefit pensions plans are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty. Management engage independent, qualified actuaries to assist in this process and in turn assess the appropriateness of key actuarial assumptions. For example, in determining the appropriate discount rate, the interest rates of relevant corporate bonds with extrapolated maturities corresponding to the expected duration of the defined benefit obligation are considered. The mortality rate is based on publicly available mortality tables for the specific country. Future pension increases are based on expected future inflation rates for the respective country. See note 24 for further details.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Turnover |
The analysis of the company's turnover for the year from continuing operations is as follows:
2021 |
2020 |
|
Sale of goods |
|
|
The analysis of the company's turnover for the year by market is as follows:
2021 |
2020 |
|
UK |
|
|
Europe |
|
|
Rest of world |
|
|
|
|
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2021 |
2020 |
|
Government grants |
|
|
CJRS receivable |
|
|
Miscellaneous other operating income |
|
- |
Research and development tax credit |
61 |
- |
Group recharges |
888 |
- |
|
|
Other gains and losses |
The analysis of the company's other gains and losses for the year is as follows:
2021 |
2020 |
|
Gain (loss) on disposal of tangible assets |
( |
( |
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Operating loss |
Arrived at after charging/(crediting)
2021 |
2020 |
|
Depreciation expense |
|
|
Amortisation expense |
|
|
Foreign exchange gains/(losses) |
|
( |
Operating lease expense - short term/low value |
|
|
Loss on disposal of property, plant and equipment |
|
|
Research and development tax credit |
( |
- |
Interest receivable and similar income |
2021 |
2020 |
|
Interest income on bank deposits |
|
- |
Income from group undertakings |
4 |
5 |
|
|
Interest payable and similar expenses |
2021 |
2020 |
|
Other charges |
|
|
Interest on lease liabilities |
|
|
Interest paid to group undertakings |
134 |
291 |
Net interest expense on net defined benefit obligations |
|
|
|
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2021 |
2020 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
Redundancy costs |
|
|
Other employee expense |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2021 |
2020 |
|
Production |
|
|
Sales, marketing and distribution |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2021 |
2020 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
|
|
During the year the number of directors who were receiving benefits and share incentives was as follows:
2021 |
2020 |
|
Accruing benefits under money purchase pension scheme |
|
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
11 |
Directors' remuneration (continued) |
In respect of the highest paid director:
2021 |
2020 |
|
Remuneration |
|
|
Company contributions to money purchase pension schemes |
|
|
Auditor's remuneration |
2021 |
2020 |
|
Audit of the financial statements |
|
|
Other fees to auditors |
||
Taxation compliance services |
- |
|
All other non-audit services |
- |
|
- |
|
Income tax |
Tax charged/(credited) in the profit and loss account
2021 |
2020 |
|
Current taxation |
||
UK corporation tax adjustment to prior periods |
( |
- |
Deferred taxation |
||
Arising from origination and reversal of temporary differences |
( |
( |
Arising from changes in tax rates and laws |
( |
- |
Arising from adjustments relating to the previous period |
(401) |
161 |
Total deferred taxation |
( |
( |
Tax credit in the profit and loss account |
( |
( |
Amounts recognised in other comprehensive income
2021 |
|||
Before tax |
Tax (expense) benefit |
Net of tax |
|
Remeasurements of post employment benefit obligations |
6,349 |
(1,207) |
5,142 |
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
13 |
Income tax (continued) |
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2020 - the same as the standard rate of corporation tax in the UK) of 19% (2020 - 19%).
The differences are reconciled below:
2021 |
2020 |
|
Loss before tax |
( |
( |
Corporation tax at standard rate |
( |
( |
Decrease in current tax from adjustment for prior periods |
( |
- |
Increase from effect of capital allowances depreciation |
|
- |
Increase from effect of expenses not deductible in determining taxable profit (tax loss) |
|
|
Decrease from tax losses for which no deferred tax asset was recognised |
- |
|
Deferred tax (credit)/expense from unrecognised temporary difference from a prior period |
( |
|
Deferred tax credit relating to changes in tax rates or laws |
( |
- |
Decrease from effect of adjustment in research development tax credit |
( |
- |
Total tax credit |
( |
( |
In the 3 March 2021 Budget, it was announced that the UK tax rate will increase to 25% from 1 April 2023. As the proposal to increase the rate to 25% had been substantively enacted at the balance sheet date, its effects are included in these financial statements.
In the 23 September 2022 "Mini-Budget" it was announced that the UK tax rate will not increase as proposed and will instead remain at 19%. The effects of this are not included in these financial statements but will be reflected in future years, once substantively enacted.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
13 |
Income tax (continued) |
Deferred tax
Deferred tax assets and liabilities
2021 |
Asset |
Liability |
Net deferred tax |
Accelerated tax depreciation |
- |
( |
( |
Short term trading differences |
- |
( |
( |
Capital gains/(losses) |
- |
( |
( |
Tax losses carry-forwards |
|
- |
|
Other items |
|
- |
|
|
( |
|
2020 |
Asset |
Liability |
Net deferred tax |
Accelerated tax depreciation |
- |
( |
( |
Short term trading differences |
|
- |
|
Capital gains/(losses) |
- |
( |
( |
Tax losses carry-forwards |
|
- |
|
Other items |
- |
- |
- |
|
( |
|
Deferred tax movement during the year:
At 1 January 2021 |
Recognised in income |
Recognised in other comprehensive income |
Transfers |
At 31 December 2021 |
|
Accelerated tax depreciation |
( |
|
- |
- |
( |
Short term trading differences |
|
( |
( |
- |
( |
Capital gains/(losses) |
( |
( |
- |
- |
( |
Tax losses carry-forwards |
|
|
- |
- |
|
Other items |
- |
- |
- |
|
|
Net tax assets/(liabilities) |
|
|
( |
|
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Intangible assets |
Goodwill |
Patents/ trademarks |
Licences |
Total |
|
Cost or valuation |
||||
At 1 January 2021 |
|
|
|
|
At 31 December 2021 |
|
|
|
|
Amortisation |
||||
At 1 January 2021 |
|
|
|
|
Amortisation charge |
- |
|
|
|
At 31 December 2021 |
|
|
|
|
Carrying amount |
||||
At 31 December 2021 |
- |
|
- |
|
At 31 December 2020 |
- |
|
|
|
The goodwill was fully amortised over 5 years prior to the adoption of FRS 101.
Tangible assets |
Land and buildings |
Other property, plant and equipment |
Total |
|
Cost or valuation |
|||
At 1 January 2021 |
|
|
|
Additions |
|
|
|
Disposals |
- |
( |
( |
At 31 December 2021 |
|
|
|
Depreciation |
|||
At 1 January 2021 |
|
|
|
Charge for the year |
|
|
|
Eliminated on disposal |
- |
( |
( |
At 31 December 2021 |
|
|
|
Carrying amount |
|||
At 31 December 2021 |
|
|
|
At 31 December 2020 |
|
|
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Right of use assets |
Plant and machinery, tooling and vehicles |
Long leasehold land and buildings |
Total |
|
Cost or valuation |
|||
At 1 January 2021 |
|
|
|
Additions |
|
- |
|
Disposals |
( |
- |
( |
At 31 December 2021 |
|
|
|
Depreciation |
|||
At 1 January 2021 |
|
|
|
Charge for the year |
|
|
|
Eliminated on disposal |
( |
- |
( |
At 31 December 2021 |
|
|
|
Carrying amount |
|||
At 31 December 2021 |
|
|
|
At 31 December 2020 |
|
|
|
Investments |
Subsidiaries |
£ 000 |
Cost or valuation |
|
At 1 January 2021 |
|
At 31 December 2021 |
|
Provision |
|
At 1 January 2021 |
|
Provision |
( |
At 31 December 2021 |
|
Carrying amount |
|
At 31 December 2021 |
|
At 31 December 2020 |
|
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
17 |
Investments (continued) |
Details of the subsidiaries as at 31 December 2021 are as follows:
Name of subsidiary |
Principal activity |
Registered office |
Holding |
Proportion of ownership interest and voting rights held |
2020 |
|
In liquidation |
England and Wales |
|
|
|
|
In liquidation |
England and Wales |
|
|
|
Stock |
2021 |
2020 |
|
Raw materials and consumables |
|
|
Work in progress |
|
|
Finished goods and goods for resale |
|
|
|
|
The cost of stock recognised as an expense in the year amounted to £
The amount of write-down of stock recognised as an expense in the year is £
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Trade and other debtors |
2021 |
2020 |
|
Current |
||
Trade debtors |
8,741 |
3,303 |
Provision for impairment of trade debtors |
(347) |
(167) |
Receivables from related parties |
1,835 |
3,714 |
Other prepayments |
617 |
387 |
Income tax asset |
69 |
63 |
|
|
|
Non-current |
||
Deferred tax assets |
1,449 |
1,669 |
12,364 |
8,969 |
Trade and other creditors |
Note |
2021 |
2020 |
|
Due within one year |
|||
Trade creditors |
|
|
|
Amounts due to related parties |
|
|
|
Social security and other taxes |
|
|
|
Accrued expenses |
|
|
|
Outstanding defined contribution pension costs |
|
|
|
Loans and borrowings |
|
|
|
|
|
||
Due after one year |
|||
Loans and borrowings |
|
|
|
Deferred income |
- |
|
|
9,348 |
9,713 |
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Loans and borrowings |
2021 |
2020 |
|
Current loans and borrowings |
||
Lease liabilities |
|
|
2021 |
2020 |
|
Non-current loans and borrowings |
||
Lease liabilities |
|
|
Share capital |
Allotted, called up and fully paid shares
2021 |
2020 |
|||
No. 000 |
£ 000 |
No. 000 |
£ 000 |
|
|
|
8,307 |
|
8,307 |
Leases |
Terms and debt repayment schedule
Currency |
Nominal interest rate |
Year of maturity |
2021 |
2020 |
|
Lease liabilities |
GBP |
6.6% |
2021 |
- |
22 |
Lease liabilities |
GBP |
6.6% |
2022 |
142 |
340 |
Lease liabilities |
GBP |
6.6% |
2023 |
233 |
393 |
Lease liabilities |
GBP |
6.6% |
2049 |
882 |
894 |
Lease liabilities |
GBP |
8.0% |
2068 |
8,187 |
8,201 |
Lease liabilities |
GBP |
6.6% |
2024 |
219 |
243 |
Lease liabilities |
GBP |
6.6% |
2025 |
- |
50 |
Lease liabilities |
GBP |
6.6% |
2026 |
69 |
- |
Total lease liabilities (discounted) |
9,732 |
10,143 |
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
23 |
Leases (continued) |
Lease liabilities maturity analysis
A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:
2021 |
2020 |
|
Less than one year |
|
|
Between one year and five years |
|
|
More than five years |
|
|
Total lease liabilities (undiscounted) |
|
|
The finance lease liabilities are secured against the asset to which they relate.
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £766,803 (2020 -
£705,972).
Contributions totalling
£
Defined benefit pension schemes
The company operates a defined benefit pension scheme, the Purmo Group UK Pension Scheme ('the Scheme'). The scheme is funded with the assets being held by trustess separately from the assets of the company. The scheme was closed from 30 June 2005, at which time members ceased to accrue benefits on a defined benefit basis.
The scheme operates under the Pensions Act 2004.
Trustees have responsibility for the governance of the plan.
There have been no plan amendments, curtailments or settlements over the accounting period.
Contributions are payable in line with the latest Schedule of Contributions, agreed by the Company and Trustees in respect of the 31 March 2019 triennial valuation.
Contributions payable to the pension scheme at the end of the year are £nil (2020 - £nil).
The scheme was most recently valued on
Reconciliation of scheme assets and liabilities to assets and liabilities recognised
The amounts recognised in the statement of financial position are as follows:
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
24 |
Pension and other schemes (continued) |
2021 |
2020 |
|
Fair value of scheme assets |
|
|
Present value of scheme liabilities |
( |
( |
Defined benefit pension scheme surplus/(deficit) |
|
( |
Scheme assets
Changes in the fair value of scheme assets are as follows:
2021 |
2020 |
|
Fair value at start of year |
|
|
Interest income |
|
|
Actuarial gains and losses arising from changes in financial assumptions |
3,472 |
6,275 |
Employer contributions |
|
|
Benefits paid |
( |
( |
Fair value at end of year |
|
|
Analysis of assets
The major categories of scheme assets are as follows:
2021 |
2020 |
|
Cash and cash equivalents |
|
|
Debt instruments |
|
|
Derivatives |
|
|
Investment funds |
|
|
|
|
The pension scheme has not invested in any of the company's own financial instruments or in properties or other assets used by the company.
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
24 |
Pension and other schemes (continued) |
Scheme liabilities
Changes in the present value of scheme liabilities are as follows:
2021 |
2020 |
|
Present value at start of year |
|
|
Current service cost |
|
|
Past service cost |
- |
|
Actuarial gains and losses arising from changes in demographic assumptions |
|
|
Actuarial gains and losses arising from changes in financial assumptions |
( |
|
Actuarial gains and losses arising from experience adjustments |
- |
|
Interest cost |
|
|
Benefits paid |
( |
( |
Present value at end of year |
|
|
Principal actuarial assumptions
The significant actuarial assumptions used to determine the present value of the defined benefit obligation at the statement of financial position date are as follows:
2021 |
2020 |
|
Discount rate |
|
|
Future pension increases - RPI |
|
|
Future pension increases - CPI |
2.30 |
2.10 |
Inflation - RPI |
|
|
Inflation - CPI |
2.80 |
2.40 |
Post retirement mortality assumptions
2021 |
2020 |
|
Current UK pensioners at retirement age - male |
20.50 |
20.50 |
Current UK pensioners at retirement age - female |
22.60 |
22.50 |
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
24 |
Pension and other schemes (continued) |
Amounts recognised in the income statement
2021 |
2020 |
|
Amounts recognised in operating profit |
||
Current service cost |
|
|
Past service cost |
- |
|
Recognised in arriving at operating profit |
|
|
Amounts recognised in finance income or costs |
||
Net interest |
49 |
32 |
Total recognised in the income statement |
|
|
Amounts taken to the Statement of Comprehensive Income
2021 |
2020 |
|
Actuarial gains and losses arising from changes in demographic assumptions |
(662) |
(373) |
Actuarial gains and losses arising from changes in financial assumptions |
3,539 |
(8,115) |
Actuarial gains and losses arising from experience adjustments |
- |
(480) |
Return on plan assets, excluding amounts included in interest income/(expense) |
3,472 |
6,275 |
Amounts recognised in the Statement of Comprehensive Income |
|
( |
Sensitivity analysis
A sensitivity analysis for the principal assumptions used to measure scheme liabilities is set out below:
2021 |
2020 |
|
£ 000 |
£ 000 |
|
Increase in discount rate by 0.5% |
(4,503) |
(4,922) |
Increase in pension increase assumptions by 0.5% |
3,185 |
3,574 |
Increase of 1 year on the life expectancy |
2,636 |
2,695 |
Commitments |
Capital commitments
The total amount contracted for but not provided in the financial statements was £
Purmo Group (UK) Limited
Notes to the Financial Statements for the Year Ended 31 December 2021 (continued)
Parent and ultimate parent undertaking |
At the start of the year the Company was a subsidiary of Purmo Group Finland Oy Ab (Purmo Group), which was the immediate controlling party. The Company’s ultimate parent company was Rettig Capital Oy Ab, a holding company incorporated in Finland.
On 8 September 2021, Purmo Group and Virala Acquisition Company Plc (“VAC”) agreed to combine Purmo Group with VAC and to list the new combined company on the official list of Nasdaq Helsinki upon completion of the merger. The merger completed on 31 December 2021 and the company listed on 2 January 2022. This new entity, Purmo Group Plc, became the Company’s immediate controlling party at this point.
The majority shareholder and therefore ultimate parent from 31 December 2021 is Rettig Capital Limited.
The results of the Company are consolidated in the financial statements of Purmo Group plc, incorporated in Finland. The consolidated accounts of this group are available to the public and may be obtained online at investors.purmogroup.com.