Business development

The business performance of Norma Group SE essentially corresponds to that of the Group and is described in detail in the chapter ECONOMIC REPORT.

The result of NORMA Group SE determined in accordance with the German Commercial Code (HGB) is mainly influenced by the business development and the results of the affiliated companies. These are mainly reflected in the income from dividends and profit transfers as well as currency effects, allocations from license management and the interest result.

Key financial control parameters with regard to the individual company NORMA Group SE are earnings before taxes and retained earnings to ensure the ability to pay dividends on an ongoing basis. For this reason, NORMA Group monitors and optimizes the ability of its subsidiaries to pay dividends. This is of particular relevance as the adjusted consolidated net income is the decisive factor for the amount of the dividend distribution to the shareholders. NORMA Group aims for a payout ratio of approx. 30% to 35% of the adjusted consolidated net income.

Earnings before taxes amounted to EUR 31,376 thousand in the reporting year (2023: EUR 9,488 thousand). Earnings before taxes developed much more strongly than forecast despite the loss absorption of EUR -19,252 thousand (2023: EUR -8,510 thousand)by NORMA Group Holding GmbH. This is due to much higher dividend income from the subsidiary NORMA Pennsylvania Inc. in the amount of EUR 69,726 thousand (2023: EUR 34,681 thousand).

Taking into account the profit carried forward of EUR 12,962 thousand (2023: EUR 19,244thousand) and the net profit for the fiscal year 2024 in the amount of EUR 31,443 thousand (2023: EUR 8,056 thousand) this results in retained earnings of EUR 44,405 thousand as at December 31, 2024 (2023: EUR 27,300 thousand).

 

Earnings position

At EUR 5,413 thousand, the Company generated EUR 392 thousand lower sales from license fees for the NORMA Group brand (2023: EUR 5,805 thousand).

Other operating income fell to EUR 14,090 thousand in 2024 (2023: EUR 16,136 thousand). in particular due to the decline in income from currency translation (EUR 17 thousand; 2023: EUR 1,193 thousand) and the lower prior-period income in the amount of EUR 138 thousand (2023: EUR 225 thousand). The latter mainly result from the reversal of provisions. The item also included income in the amount of EUR 13,340 thousand (2023: EUR 14,560 thousand) for licenses used by subsidiaries but held by other Group companies. In this case, the Company assumed the distribution of the license income.

Compared to the previous year, employee benefits expenses increased by EUR 691 thousand from EUR -6,151 thousand to EUR 6,842 thousand. The change was mainly due to additional staff. The average number of employees in the reporting year was 31 (2023: 25 employees). In addition, reference is made to the separate disclosure of Management Board remuneration in the GROUP’S REMUNERATION REPORT

Other operating expenses in the amount of EUR -23,380 thousand (2023: EUR -25,836 thousand) included in particular expenses for license fees in the amount of EUR -13,340 thousand (2023: EUR -14,560 thousand), which are distributed by the Company to the subsidiaries as license holders. The decrease in expenses was mainly due to lower consulting expenses (M&A consulting, services of NORMA Group Holding GmbH, legal advice) in the amount of EUR -1,837 thousand (2023: EUR -2,068 thousand). In addition, expenses from currency translation fell to EUR 56 thousand compared to the previous year (2023: EUR -1,292 thousand).

In the reporting year income from investments resulting from a dividend distribution of NORMA Pennsylvania, Inc. amounted to USD 75,000 thousand (EUR 69,726 thousand; 2023: USD 38,000 thousand or EUR 34,681 thousand).

In the reporting year income from investments resulting from a dividend distribution of NORMA Pennsylvania, Inc.amounted to USD 75,000 thousand (EUR 69,726 thousand; 2023: USD 38,000 thousand or EUR 34,681 thousand).

Due to the existing profit and loss transfer agreement with the subsidiary NORMA Group Holding GmbH, a loss from profit and loss transfer in the amount of EUR 19,252 thousand (2023: EUR 8,510 thousand) were offset. This was due, in particular, to significantly higher write-downs on financial assets of NORMA Group Holding GmbH in the amount of EUR -25,847 thousand (2023: EUR -7,995 thousand). Further information can be found in the presentation of sales and earnings performance in the EMEA segment of the combined Group management report. SEGMENT DEVELOPMENT EMEA

In the 2024 reporting year, there was no income from loans of financial assets (2023: EUR 191 thousand), as the loans had been repaid. Other interest and similar income fell by EUR 12 thousand to EUR 1,275 thousand (2023: EUR 1,287 thousand) mainly due to lower interest receivables from NORMA Group Holding GmbH. Interest and similar expenses increased by EUR -1,543 thousand from EUR -8,059 thousand to EUR 9,602 thousand, in particular, due to the new promissory note loan issued in 2023.

Earnings before taxes increased by EUR 21,888 thousand to EUR 31,376 thousand (2023: EUR 9,488 thousand). Income taxes for NORMA Group SE amounted to EUR 67 thousand (2023: EUR -1,432 thousand) and mainly relate to tax income from previous years, in particular, due to transfer price adjustments within the Group. Earnings after taxes amounted to EUR 31,443 thousand in the reporting year (2023: EUR 8,056 thousand).

The Annual Financial Statements as of December 31, 2024, show net profit of EUR 44,405 thousand (2023: EUR 27,300 thousand). It will be proposed to the Annual General Meeting on May 13, 2025 that a total of EUR 12,745 thousand be distributed as a dividend for the 2024 fiscal year and that EUR 31,660 thousand be carried forward to new account. Subject to the approval of the 2025 Annual General Meeting, this will result in a cash dividend of EUR 0.40 per share.

 

Asset and financial positions

The asset and capital structure of NORMA Group SE is strongly influenced by the holding function of the Company within the Group.

Total assets increased by EUR 8,024 thousand compared to the previous year to EUR 562,276 thousand (2023: EUR 554,252 thousand).

The assets side of the balance sheet amounted to EUR 425,449 thousand as at the balance sheet date (2023: EUR 427,449 thousand) from financial assets. Shares in affiliated companies remained unchanged from the previous year at EUR 427,449 thousand. Loans to affiliated companies decreased by EUR 2,000 thousand to EUR 0 thousand compared to the previous year. This is due to repayments from NORMA Group Holding GmbH in the amount of EUR 2,000 thousand.

In addition, at EUR 134,265 thousand as at December 31, 2024, receivables from affiliated companies were EUR 9,329 thousand higher than in the previous year (2023: EUR 124,936 thousand). The share of total assets rose accordingly from 22.5% in the previous year to 23.9% in the reporting year. This included, in particular, higher receivables from NORMA Group Holding GmbH in the amount of EUR 127,135 thousand (2023: EUR 115,247 thousand) from the cash pool agreement. Trade receivables had the opposite effect: These decreased from EUR 9,524 thousand in the previous year to EUR 6,971 thousand.

In addition to cash and cash equivalents in the amount of EUR 372 thousand (2023: EUR 524 thousand), NORMA Group SE held the above-mentioned credit balances from the cash pool with the subsidiary NORMA Group Holding GmbH in the amount of EUR 127,135 thousand (2023: EUR 115,247 thousand).

Equity increased from EUR 320,763 thousand to EUR 337,868 thousand in the reporting year. The increase of EUR 17,105 thousand resulted from the net profit of EUR 31,443 thousand generated in the 2024 fiscal year and, conversely, from the dividend distribution of EUR -14,338 thousand. At 60.1%, the equity ratio was slightly above the previous year’s level (2023: 57.9%). Retained earnings remained unchanged from the previous year at EUR 45,000 thousand.

Pension provisions decreased to EUR 3,561 thousand (2023: EUR 3,643 thousand), mainly due to the updated actuarial assumptions.

The 2018 G reference tables by Prof. Dr. Klaus Heubeck were used as the basis for calculation. In the year under review, the average market interest rate of the past ten years of 1.90% p. a. (2023: 1.82% p. a.) set by the Deutsche Bundesbank was used as a basis. In accordance with Section 253 (2) Sentence 2 German Commercial Code (HGB), a residual term of 15 years was assumed. The salary and pension trend amounted to 0.0% and 2.0% respectively(2023: 0.0% and 2.2% respectively) and no fluctuation was assumed.

At EUR 3,482 thousand, other provisions were EUR 30 thousand higher than in the previous year (2023: EUR 3,452 thousand).

On the liabilities side, liabilities to banks decreased by EUR -18,092 thousand to EUR 191,712 thousand (2023: EUR 209,804 thousand), in particular, due to the repayment of promissory note loans in the amount of EUR 18,000 thousand.

Liabilities to affiliated companies increased by EUR 9,834 thousand to EUR 22,743 thousand in the reporting year (2023: EUR 12,909 thousand), mainly due to the higher liability from profit transfer to NORMA Group Holding GmbH in the amount of EUR 19,252 thousand (2023: EUR 8,510 thousand).

 

Financial position

Due to its function as the ultimate holding company of NORMA Group, the financial position of NORMA Group SE is significantly dependent on the financial position of its direct and indirect subsidiaries. In this context, the NORMA Group SE financial requirements for the performance of its Group-wide functions and the maintenance of its ability to pay dividends are mainly covered by the funds received in the course of the IPO, the promissory note loans raised, revolving credit lines and commercial papers, ongoing profit transfers and distributions as well as royalties from its subsidiaries. There is a profit and loss transfer agreement with NORMA Group Holding GmbH, which also has cash inflows from its subsidiaries.

The external financing of NORMA Group as well as the intra-Group financing of the Group companies were also carried out via external banks as well as NORMA Group Holding GmbH and other foreign Group companies.

In the reporting year, the Company repaid promissory note loans in the amount of EUR 18,000 thousand as scheduled (2023: EUR 56,032 thousand). To refinance this and for general corporate financing, the Company placed a new promissory note loan in the amount of EUR 120,000 thousand in the previous year.

In addition, NORMA Group SE together with NORMA Group Holding GmbH has a Senior Facilities Agreement with a bank consortium including comprehensive credit lines. The loan agreement has an initial total volume of EUR 300,000 thousand. This includes a revolving facility of EUR 50,000 thousand and a flexible accordion facility.

The primary objective of NORMA Group SE’s financial management is to ensure liquidity for ongoing business operations at all times. Cash and cash equivalents amounted to EUR 372 thousand at the end of 2024 (2023: EUR 524 thousand). In addition, NORMA Group SE has assets from the cash pool with the subsidiary NORMA Group Holding GmbH in the amount of EUR 127,135 thousand (2023: EUR 115,247 thousand).

As of the 2024 balance sheet date, NORMA Group has met all key figures contained in the loan agreements (financial covenants: net debt in relation to adjusted Group EBITDA). Due to the solid financial position of NORMA Group SE and its direct and indirect subsidiaries, the Company was able to meet its due obligations at all times during the fiscal year.

 

Overall statement of the Management Board

In the reporting year, NORMA Group SE generated, taking into account the net profit for the year of EUR 31,443 thousand (2023: EUR 8,056 thousand) retained earnings of EUR 44,405 thousand (2023: EUR 27,300 thousand). As expected, it was thus possible to ensure the ability to distribute the profit.

NORMA Group SE remains committed to a sustainable dividend policy with a payout ratio of approximately 30% to 35% of the adjusted consolidated net income (adjusted for expenses and income related to acquisitions), provided that the economic situation permits this.

 

Opportunities and risks

NORMA Group SE acts as the holding company that manages NORMA Group. Its development as well as its risks and opportunities therefore mainly depend on the business development of the companies affiliated with the Group. NORMA Group SE is integrated into the Group-wide opportunity and risk management system. For detailed information, please refer to the chapter Group Opportunity and Risk Management. The description of the internal control system for NORMA Group required under Section 289 (4) of the German Commercial Code (HGB) is also provided there.

NORMA Group SE generates its income mainly from license, profit and loss transfer and investment income of its direct and indirect subsidiaries. Due to its holding function, NORMA Group SE is therefore exposed to the risk of receiving lower investment income as a result of declining profits of the subsidiaries or lower royalty income as a result of lower sales of the NORMA Group companies. In case of increasing profits or higher sales revenues of the subsidiaries, NORMA Group SE will receive higher investment income or higher license income.

In the coming fiscal year as well, geopolitical conflicts and wars as well as economic sanction measures could continue to have a negative impact on the global economy and – directly or indirectly – on NORMA Group’s business activities. This could have a major impact on global supply chains, which could lead to a reduction in sales in the affected markets and to increased energy and raw material prices.

Due to the solid financial position of the NORMA Group companies and the possibility to control distributions of the subsidiaries, the opportunities and risks in connection with investment and license income are assessed as “possible” with a positive effect on earnings.

 

Forecast and outlook

For fiscal year 2025, NORMA Group SE expects a slight increase in license income for the subsidiaries’ brands and the NORMA Group brand compared to 2024. The expenses from licenses for the Group subsidiaries as license holders were also expected to be slightly higher accordingly. The Management Board of NORMA Group assumes that employee benefits expenses and other cost factors will also increase slightly compared to previous years.

However, this forecast is made under the assumption that no significant negative effects will arise in connection with geopolitical conflicts and wars as well as economic sanctions in the course of 2025 that could lead to a severe weakening of the global economy and significant pressure on NORMA Group’s business development. The potential influencing factors in connection with external risk factors from armed conflicts or climate change are discussed in the FORECAST REPORT of the Group.

Taking into account an expected profit and loss transfer from NORMA Group Holding GmbH at the previous year's level, similar expected dividend income from the subsidiaries as in 2024 and a slightly positive interest result for 2025, a slightly higher profit before taxes is expected compared to 2024.

The Annual Financial Statements as of December 31, 2024, show net profit of EUR 44,405 thousand. A proposal will be made to the Annual General Meeting on May 13, 2025 to distribute EUR 12,745 thousand of this as a dividend for the 2024 fiscal year and to carry forward EUR 31,660 thousand to new account. In this context, it is assumed that the retained earnings and the Company’s ability to pay dividends will continue to be secured.