Investor Presentation May, 2017 Ari Lehtoranta, President and CEO Martti Ala-Härkönen, CFO Milena Hæggström, Head of IR
Contents 1. Business and strategy 2. Market overview 3. Financials 4. Appendix 2
Business and strategy
Caverion in brief Caverion designs, builds, operates and maintains userfriendly and energy-efficient solutions for buildings, infrastructure and industrial plants. Revenue by division 2016 Germany 21% Sweden 20% Denmark-Norway 19% Industrial Solutions 16% Finland 14% Austria 6% Eastern Europe 3% Personnel by countries (16,913 employees) 12/2016 Germany 15% Sweden 21% Norway 15% Denmark 6% Finland 27% Austria 5% Russia 7% Other countries 4% 4
Business units: Services and Projects Technical Maintenance (35%) Small and mid size maintenance agreements Single or multiple technologies E.g. ServiFlex and ServiFlex+ agreements Some 25,000 agreements Technical Installation (33%) Small and mid size projects Single or multiple technologies Some 3,000 projects Number of competitors Services (48% of Group revenue in 2016) Managed Services (13%) At its widest form Managed Life Cycle Solutions Executed by Caverion or our subcontractors Some 100 agreements Projects (52% of Group revenue in 2016) Large Projects (19%) Contract size > EUR 5m Integrated solutions with customisation Life Cycle focus Some 50 projects of this type Barriers of entry, complexity, margin potential, risk level 5
Megatrends support the future demand of our business Increasing technology Technology in built environments currently accounts for 40 60% of total initial investment costs Built environments require expertise in integration of technologies Conditions of built environments are based on preventive measures as well as on actual needs Improving energy efficiency Tightening legislation relating to energy efficiency Diversified energy production, growth of renewable energy sources and need for energy balancing Increasing demand for energy-efficient solutions Growing digitalisation Built environment data is managed during the whole lifecycle All built environments will have an IP address. Availability of real time data in built environment Continuing urbanisation Urban centers currently occupy less than 5% of the world s landmass, consume over two-thirds of the energy, and are responsible for over 70% of CO 2 emissions. Needs for necessary infrastructure (water, sanitation, energy, information, transportation, tunnels) Smart cities require innovative solutions 6
Our strategy 7
Elements of growth towards Life Cycle Solutions Technical Installations Renovations and new buildings, may include one or several disciplines Technical design is done by the client, or his representative Responsibility for Project Execution Technical Maintenance Fixed price preventive maintenance contract Add-on corrective maintenance ( ad-hoc ) Small improvement projects ( service projects ) Projects Services Large Projects Proactively sold Large Projects with Total Technical Solutions to secure optimal outcome of integrated disciplines. Typically include Advisory Services, Design & Engineering, Project Management and Project Execution. Responsibility for project fulfilment Managed Services Medium-term contracts to optimally manage the disciplines, systems and processes in commercial, industrial and residential buildings or uptime for industrial production lines. Including both hard services and sometimes some contracted soft services sourced from a third party Life Cycle Solutions Includes design, installation of building systems, operation, maintenance as well as renovation throughout the contract period. Maintenance period of up to 20-25 years against a fixed monthly fee in PPP projects. Investment phase typically run in a consortia. 8
We have thousands of clients representing all sizes of businesses and organisations Low customer concentration supporting business stability Caverion is not dependent on individual clients: in 2016, the three largest clients represented less than 7% of our revenue and the ten largest less than 14%. Client concentration in 2016 (% of revenue) Revenue breakdown by client segments in 2016 Five main client segments Dependency on economic cycles is reduced through various client groups in the private and public sectors and geographically extensive presence in 12 countries. Customers 1-10: less than 14% Others: over 86% Public 13% Industry 33% Real estate investors and developers 13% Real estate users 27% General contractors 16% 9
Reaching our strategic targets 1. Megatrends drive our strategy. 2. Our business mix is being developed to drive profitable growth. 3. Streamline organisational model and closer cooperation with our clients. 10
Market overview
Caverion s market position Company revenues of Caverion s main competitors EUR million, 2016 SPIE 5,145 TOP 3 TOP 2 Apleona* 2,909 TOP 3 Caverion 2,364 TOP 5 Bravida 1,564 TOP 5 Strabag Property and Facility Services* Coor 798 1,116 TOP 2 Assemblin* 750 Source: Company information, Caverion. *) 2015 figure 12
Competitive environment in Countries Finland Sweden Germany Norway Company Revenue meur Company Revenue meur Company Revenue meur Company Revenue meur 1. Caverion 1. Bravida 1. Apleona 1. Bravida+Oras 2. Are 2. Caverion 2. Strabag PFS 2. GK 3. Consti 3. Assemblin 3. Wisag 3. Caverion 4. Bravida 4. Midroc Electro AB 4. SPIE 4. Coor 5. Quatro Mikenti 5. Eitech 5. Caverion 5. OneCo Austria Denmark Baltics/EE Company 1. Ortner 2. Caverion 3. Engie 4. EQOS Energie 5. G. Klampfer Revenue meur Company 1. Kemp & Lauritzen 2. Bravida 3. Kirkebjerk 4. Lindpro 5. Caverion Revenue meur Company 1. ISS 2. Apleona 3. City Service 4. Caverion 5. Revenue meur Revenue Less than 50mEUR 50-200 meur 200-500mEUR More than 500mEUR 13
Lead indicators for Caverion countries suggest a favourable market environment going forward ECONOMIC SENTIMENT INDICATOR (1/2007 3/2017) CONSTRUCTION CONFIDENCE INDICATOR (1/2007 3/2017) 130 180 Economic Sentiment Indicator (Jan 2007 - Mar 2017) 120 110 100 90 80 70 Longterm average Finland Germany Austria Sweden Denmark Construction Confidence Indicator (Jan 2007 - Mar 2017) 170 160 150 140 130 120 110 100 90 80 70 60 Longterm average Finland Germany Austria Sweden Denmark 60 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 50 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Note: Mean-adjusted figures Source: European Commission, April 2017 14
GDP and Constr. growth estimates for the Nordics (CAGR 2017-18) Strong new building growth expected in DK, renovation to outgrow new building in Finland FINLAND SWEDEN NORWAY DENMARK CAGR 17-18 CAGR 17-18 CAGR 17-18 CAGR 17-18 7.0% 7.0% 7.0% 7.0% 6.0% 6.0% 6.0% 6.0% 6.5% 5.0% 5.0% 5.0% 5.0% 5.4% 4.0% 4.0% 4.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1.7% 1.5% 1.2% 3.0% 2.0% 1.0% 0.0% 3.3% 1.5% 1.7% 2.4% 3.0% 2.0% 1.0% 0.0% 3.0% 2.0% 1.0% 0.0% 2.0% 2.2% 2.7% 1.6% -1.0% New Renovation New 1.9% Renovation 2.4% Construction 1.1% GDP 3.5% 1.5% -1.0% -1.0% -1.0% New Renovation New Renovation Construction GDP New Renovation New Renovation Construction GDP New Renovation New Renovation Construction GDP RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL Source: Euroconstruct, December 2017 (construction) and World Economic Outlook, January 2017 (GDP). Total Construction = Residential, Non-residential and Civil Engineering in total (New and Renovation). 15
GDP and Construction growth est. for Central and Eastern Europe Modest non-residential outlook for Germany going forward, Russia to recover GERMANY AUSTRIA BALTIC COUNTRIES RUSSIA CAGR 17-18 CAGR 17-18 CAGR 17-18 CAGR 17-18 9.0% 9.0% 9.0% 9.0% 9.5% 7.0% 7.0% 7.0% 7.0% 7.5% 5.0% 5.0% 5.0% 5.0% 3.0% 1.0% 4.7% 1.4% 3.0% 1.0% 1.6% 1.5% 1.8% 3.0% 1.0% 3.0% 3.5% 1.1% -1.0% New Renovation New Renovation 1.1% Construction 1.5% GDP 1.2% 3.0% 1.0% -1.0% New Renovation New Renovation 1.4% Construction 2.7% GDP 3.1% 3.0% 3.3% 3.1% -1.0% -1.0% New Renovation New Renovation Construction GDP New Renovation New Renovation Construction GDP RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL RES.. NON- RES.. TOTAL Source: Euroconstruct, December 2017 (construction) and World Economic Outlook, January 2017 (GDP). Total Construction = Residential, Non-residential and Civil Engineering in total (New and Renovation). 16
Purchasing Managers' Index PMI The Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The purpose of the PMI is to provide information about current business conditions. The rate of eurozone economic expansion accelerated to its highest in the year to date during November. This was highlighted by the Markit Eurozone PMI Index posting 53.9, the best reading since December 2015. Growth of manufacturing production slowed slightly since October, but nonetheless expanded at a slightly faster pace than service sector business activity. Services output rose at the quickest rate in 11 months. Improved demand exerted pressure on capacity, leading to the fastest accumulation of backlogs of work since May 2011. This in turn encouraged further job creation, with employment rising for the twenty-fifth consecutive month. Price pressures continued to intensify during November. Input costs rose to the greatest extent since May 2015, reflecting a strong acceleration at manufacturers (to a 56-month record) and also a mild pick-up at service providers (four-month high). 17
Positive short-term demand prospects Demand prospects positive particularly in the Service businesses Sources: Caverion annual report 2016, based on Euroconstruct data and management estimates 18
Market outlook for Caverion s business in 2017 Services Projects The underlying demand for Technical Maintenance and Managed Services is expected to remain strong. The need for new services and the demand for Life Cycle Solutions are expected to increase. There are opportunities for Caverion in outsourced operations and maintenance especially within public authorities, industries and utilities. The Technical Installation and Large Projects markets are expected to remain good and stable but price competition tight in Technical Installation projects. In the Large Projects market, new tenders for buildings and industry are expected to remain on a good level and even to somewhat increase. The demand for Design & Build of Total Technical Solutions is expected to develop favourably in large and technically demanding projects. Good demand from both the public and private sector is expected to continue. 19
Financials
Guidance for 2017 and strategic financial targets 2016 (actual) Revenue growth: -3.2% EBITDA margin (excl. restructuring costs): 0.7% Working capital: EUR -2.6m Guidance for 2017* Revenue: will remain at the previous year's level in 2017 (2016: EUR 2,364 million) EBITDA excl. restructuring costs: will more than double in 2017 (2016: EUR 15.6 million) Strategic financial targets Revenue growth: > 10% average annual growth EBITDA margin: > 6% Working capital: negative New timeline for the reaching the targets will be given later. Key actions supporting achievement of strategic financial targets Revenue Focus on Managed Services with a higher growth profile and Large Projects with Total Technical Solutions and a higher design content M&A part of the longer-term growth strategy *Given February 7, 2017 Profitability Profitability improvement from restructuring and fixed cost reduction Stricter project tendering process Increased tender margin requirement and focus towards higher margin potential Increasing procurement and administrative efficiency Working capital Focus on efficient invoicing and working capital management Provides flexibility to manage the other two financial targets 21
Summary of Q1/2017 Stabilisation of operations progressing, earlier identified risks burden performance Order backlog Order backlog increased by 9.6 % from the end of 2016 and amounted to EUR 1,543.5 (1,408) million. A stricter project tendering process was implemented since Q2/2016. EBITDA EBITDA was EUR 6.8 (11.5) million. Affected by project write-downs of EUR 5.7 million. Revenue Revenue increased by 3.9% from the previous year to EUR 582.3 (560.6) million. Strong growth in Industrial Solutions, Finland and Denmark- Norway and positive development in Austria and Eastern Europe Working capital and free cash flow Working capital was EUR 17.3 (15.6) million. Free cash flow was EUR -18.5 (-28.8) million. Earnings per share Earnings per share amounted to -0.02 (0.03) EUR per share. 22
Order backlog development Order backlog increased by 9.6% from the end of last year, but decreased by 2.9% from Q1/2016. Completion of the restructuring actions and focus on higher project margins affected the order backlog in H2/2016. Order backlog EUR million Q1 Q2 Q3 Q4 1,589 1,544 1,408 A stricter project tendering process was implemented since Q2/2016. 12 13 14 15 16 17 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16 Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013). 23
Revenue development Group revenue EUR million 2015: 2,443 2016: 2,364 668 638 616 563 574 561 582 606 582 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Revenue breakdown by division EUR million (14%) (-5%) (-11%) 125 124 125 109 118 111 Denmark-Norway Sweden Germany Industrial Solutions (16%) (15%) 95 82 83 72 1-3/2016 1-3/2017 (6%) 32 34 17 (8%) 18 Finland Austria Eastern Europe Revenue was EUR 582.3 (560.6) million in Q1/2017, growth of 3.9%. Services business revenue grew by 11.5%, while in Projects revenue declined by 2.8% (y-o-y). Revenue growth strong in Industrial Solutions, Finland and Denmark-Norway Positive development also in Austria and Eastern Europe Project write-downs still affecting revenue in Germany 24
Operating environment 1-3/2017 Share of Service business over 50% Services (Technical Maintenance and Managed Services) Demand remained strong. Interest in PPP s and other Life Cycle Solutions was good in the Nordic countries while these kinds of commercial models still represent only a marginal part in other markets. Revenue breakdown 1 3/2017 Projects (Technical Installation and Large Projects) The market was positive. The price competition remained tight in Technical Installation projects. In the market for Large Projects, tendering activity increased, especially in the public, infrastructure and industrial sectors. The demand for Design & Build of Total Technical Solutions developed favourably within large and technically demanding projects. Technical Installation 30% Large Projects 19% Technical Maintenance 36% Managed Services 14% 25
EBITDA turning positive Still affected by project write-downs EBITDA EUR 6.8 million for Q1/2017 (Q1/2016: 11.5) EBITDA margin 1.2 (2.0)% EBITDA, EUR million EBITDA margin, % 1 12/15: 91.5 (3.7%) 1 12/16: -11.4 (-0.5%) Project write-downs totalled EUR 5.7 (0.0) million Related to the project portfolio mainly in divisions Industrial Solutions and Germany Negative forecast changes and write-downs to earlier identified risk projects 14.2 2.5 22.0 21.3 3.4 3.7 34.0 5.1 11.5 2.0-2.3 13.8 2.4 6.8 1.2 No restructuring costs in Q1/2017-14.4-3.7-22.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 26
Total cost base EUR 2,377m in 2016 Costs by type 2016, EUR million (%) of revenue Cost breakdown in 2016 (%) of total cost base Procurement expenses amounted to EUR 1.4bn in 2016 (58% of total cost base). 989 (42%) Personnel expenses 648 (27%) 451 (19%) 289 (12%) Materials and supplies External services Other operating expenses Personnel expenses 42% Materials and supplies 27% External services 19% Other operating expenses 12% Personnel expenses accounted for 42% of total cost base in 2016. 27
Actions continued to improve project business Actions completed in Q1/2017 New Projects business unit on Group level Improved analysis of risk projects and enhanced project portfolio analysis Strengthened bidding and steering Decision authorisation model improved and tender margin requirements increased New monthly steering model introduced to all organisation levels Further improvement actions in Q2/2017 Mandatory project manager trainings to be rolled out Improved steering and performance management Focus on up-to-date project business KPIs and forecasting Improved steering and risk management Early warning mechanisms Roll-out of updated Project Management Guidelines Common PM-tool selection 28
Headcount development by division Total reduction of 985 employees from the end of June 2016 17,664 16,679 6/2016 Sweden -443 HC Dk-Nor -264 HC Industrial Solutions -238 HC Finland -43 HC Group Services -38 HC Eastern Europe 23 HC Austria -6 HC Germany 24 HC 3/2017 29
16,679 employees at the end of March Developing competitiveness through people Activities to match business demand and supply of right resources continued in all divisions Special attention paid to project management capabilities Strengthening of managerial capabilities Group-wide efforts to develop a Caverion way of working Work safety, well-being and code of conduct as a constant priority. Developing further service and performance excellence culture. Number of employees (end of period) 17,664 17,399 17,499 17,281 16,913 16,679 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Employees by division 3/2017 Denmark-Norway 20% Sweden 18% Germany 15% Industrial Solutions 16% Finland 15% Austria 5% Eastern Europe 11% Group Services 1% 30
Cost savings in Q1 Personnel expenses, EUR million Other operating expenses, EUR million 260 80 240 243.9-3% 245.4 8.0 60 64.8-2% 64.9 1.5 220 237.3 40 20 63.4 200 Q1/2016 Q1/2017 Personnel expenses Revenue growth impact, EUR 8m (variable only) 0 Q1/2016 Q1/2017 Other operating expenses Revenue growth impact, EUR 1.5m (variable only) Personnel cost savings as planned EUR 6.6m (about -3%), adjusting for volume growth Discretionary cost savings as planned EUR 1.4m (about -2%), adjusting for volume growth 31
Status update on key risk areas for 2017 Remaining project performance risks still about EUR 20 million After write-downs of EUR 5.7m in Q1/2017, the total project performance risks for the full year may be over EUR 5 million higher than earlier anticipated. Risks related to overdue trade receivables up to EUR 10m No write-downs in overdue trade receivables in Q1/2017 Full-year maximum risk slightly lower than earlier anticipated Utilisation risk up to EUR 10m No restructuring costs in Q1/2017, but some restructuring possible later in the year. Full-year risk remains, but should not exceed the earlier estimate. 32
Financial target: negative working capital Working capital was EUR 17.3 (15.6) million at the end of March. POC receivables amounted to EUR 291.0 million (3/2016: 284.0) at the end of March. Trade receivables increased by EUR 8.6 million from Q1/2016, impacted by revenue growth, and amounted to EUR 313.4 million (3/2016: 304.8) at the end of March. Working capital still tied in a few challenging risk projects Working capital, EUR million Working capital to sales, % (LTM) 2013 2014 2015 2016 2017 120 100 4% 5% 44 63 47 48 2% 2% 2% 2% 6 0% -21-15 -1% -1% 34 1% -15-1% 56 2% 16 15 1% 1% 17 0% 1% -3 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 33
Cash flow and investments Free cash flow was negative although improving by EUR 10.3 million from the corresponding period last year. Free cash flow EUR -18.5 m (-28.8) in Q1/2017. Free cash flow was partly improved by the lower level of investments compared to last year. Capital expenditure (incl. acquisitions) totalled EUR 5.0 m (7.1) in Q1/2017. IT investments: EUR 4.2 m (5.1) Other investments, incl. acquisitions: EUR 0.8 m (2.0). Operating cash flow before financial and tax items, EUR million -11.1 4.1 20.5 Free cash flow, EUR million Capex, EUR million 10.8 3.1 5.2 4.3 87.6 7.3 5.5 5.0 14.4 100.0 9.8 1.8 0.8-8.9 83.1 9.0 7.1 73.6-18.8-12.3-26.6 17.3 35.2 7.6 6.1 5.0 28.0-12.1 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/15 Q4/16 Q1/17-15.8-7.1-6.3-14.2-28.8-32.6-38.8-18.5 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/15 Q4/16 Q1/17 Free cash flow = Operating cash flow before financial and tax items Taxes paid Net cash used in investing activities (net, including acquisitions and disposals) 34
Liquidity and leverage (March 31, 2017) 104 1.5x Net debt (EURm) Net debt/ebitda (12m) 143 132 2.4x 2.3x 50 50 0.7x 0.7x 85 102 30 0.9x 1.1x 0.3x 59 131 0.7x 2.1x Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16* Q2/16* Q3/16* Q4/16** Q1/17** * The Net Debt/EBITDA for Q1-Q3/16 calculated excluding restructuring costs ** In connection with the financing arrangement agreed on December 22, 2016, Caverion and its lending parties confirmed the EBITDA calculation principles related to the Group s financial covenant (Net Debt/EBITDA). The Net Debt/EBITDA for Q4/16 and Q1/17 has been calculated accordingly. Gross debt to net debt (EURm) 124 65 25 170 2.8x 146 2.8x 165 165 3.7x 6.0x 5.0x 4.0x 3.0x 2.0x 1.0x 0.0x Financial covenant (Net Debt/EBITDA): Net debt/ebitda in Q1/2017: 3.7 according to confirmed calculation principles The agreed covenant maximum level 5.0 for Q1/2017 Liquidity reserve EUR 144 million at the end of March 2017 Liquidity reserve at the end of March 2017, EUR million 119 Unused credit facilities Cash and cash equivalents Long-term borrowings Short-term borrowings Cash and cash equivalents Net debt 25 35
Debt Structure Debt maturity, EUR million 70 60 50 40 30 20 10 0 62 60 31 27 10 2017 2018 2019 2020 2021+ Loan portfolio Banks 68% Commercial papers 19% Insurance companies 11% Others 2% Interest rate type (after hedges)* * Interest rates are hedged against interest rate rise. Fixed interest rate 13% Floating interest rate 87% Loan portfolio total EUR 189.6 million and net interest-bearing debt EUR 164.9 (145.5) million at end of March 2017. Average interest rate after hedges 2.1% at the end of March (12/2016: 1.9%). Net financing expenses for Q1 EUR -1.2 (-0.6) million. 36
Reiterated guidance for 2017 Revenue Caverion estimates that the Group s revenue will remain at the previous year's level in 2017 (2016: EUR 2,364 million). EBITDA excluding restructuring costs Caverion estimates that the Group s EBITDA excluding restructuring costs will more than double in 2017 (2016: EUR 15.6 million). 37
Dividends Dividend policy Dividend pay-out at least 50 per cent of the net profit for the period. Dividends paid Dividend per share, EUR Dividend pay-out ratio, % 75% 100% 78% 0.28 0.22 0.22 0.00 0% 2013 2014 2015 2016 Dividends AGM held on March 17, 2017 decided that no dividend be paid for 2016. 38
Summary - Caverion Equity story Key investment proposals A leading European service company offering integrated and sustainable technical solutions Among top 5 in key operating countries Intelligent and integrated solutions covering all technical disciplines throughout the life cycle of properties and plants Strong technical competence Presence in 12 countries Extensive client base Own R&D Client benefits: Optimal conditions Usability Cost-efficiency Sustainability We are a company for the future Energy efficiency incorporated in all solutions Our unified market offering helps clients to focus on their core business Provider of Life Cycle Solutions Megatrends: Increasing technology Energy efficiency Digitalisation Urbanisation Life Cycle Solutions for buildings and industries Business model built on market growth drivers Driving profitable growth Client need for integrated solutions and outsourcing partners supporting demand Fragmented market offering growth opportunities also through M&A Asset-light, cash flow business Savings from restructuring, admin and procurement efficiency Next steps: closer cooperation with clients Business units: Services Projects Seeking profitable growth by offering advanced and integrated solutions Financial targets: EBITDA margin >6% Revenue growth > 10% p.a. Negative working capital Dividend policy: at least 50% of the net profit 39 Caverion
Welcome to Caverion s CMD in Helsinki on Nov. 7, 2017! www.caverion.com/investors E-mail address: IR@caverion.com
Appendix
Key figures EUR million Q1/17 Q1/16 Change 2016 Order backlog 1,543.5 1,589.4-2.9% 1,408.1 Revenue 582.3 560.6 3.9% 2,364.1 EBITDA excluding restructuring costs 6.8-15.6 EBITDA margin excluding restructuring costs, % 1.2-0.7 EBITDA 6.8 11.5-41.0% -11.4 EBITDA margin, % 1.2 2.0-0.5 Operating profit -0.8 4.8-40.8 Operating profit margin, % -0.1 0.9-1.7 Earnings per share, basic, EUR -0.02 0.03-0.25 Working capital 17.3 15.6 10.8% -2.6 Free cash flow -18.5-28.8 35.6% -72.1 Interest-bearing net debt 164,9 59.2 178.4% 145.5 Gearing, % 90.1 26.7 78.7 Personnel, end of period 16,679 17,499 16,913 42
Acquisitions have contributed to revenue growth Group revenue EUR million 1,680 1,797 1,892 2,140 2,396 2,125 2,353 2,876 2,803 2,544 2,407 2,443 2,364 678 1,021 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Calor AB ABB Building Systems MCE AG caverion GmbH Esco Arneg Kühlmöbel, Norway Sähkötaso Esitystekniikka Acquisition period Integration and development Acquisition period Integration and development 2002-2009 figures based on official segment reporting, i.e. sum of building systems and industrial services related revenue figures of YIT, including also internal sales. 2010-2012 figures are external revenue figures based on Caverion s carve-out segment reporting. 2013 figures: 1-6/2013 carve-out + 7-12/2013 actual. 43
Some examples of our clients (1/2) Managed Services Karolinska Karolinksa University Hospital hospital Solna, Sweden Managed Services Metsä Fibre, Pulp Mills Finland Technical Maintenance Seabrokers Stavanger, Norway Technical Maintenance TOTAL Refinery Leuna, Germany Design & Engineering, Project Management & Execution Henninger Turm, apartment building Frankfurt a. M., Germany Managed Operations AstraZeneca, Sweden Technical Maintenance "Marine Façade, passenger port of St. Petersburg Russia Managed Life Cycle National courthouse Viborg, Denmark 44
Some examples of our clients (2/2) Managed Operations Valio, Vantaa, Finland Project Execution Palais Quartier Frankfurt a. M., Germany Design & Engineering, Project Management & Execution Knowledge Centre, St. Olav s Hospital Trondheim, Norway Industrial Installations Outokumpu Tornio, Finland Technical Maintenance B&B Tools Sweden Energy Performance Contracting Söderhamn municipality, Sweden Managed Life Cycle Huhtasuo school and day-care center Jyväskylä, Finland Project Execution DC Tower Vienna, Austria 45
Board of Directors as of March 17, 2017 Michael Rosenlew, Chairman Born 1959, M.Sc. (Econ.). Professional board member. Finnish citizen. Joachim Hallengren Born 1964, M.Sc. (Civil Engineering). CEO of Bonava AB. Swedish citizen. Anna Hyvönen Born 1968, Lic.Tech. Managing Director, Vianor Holding Oy. Member of the Nokian Tyres Management team. Finnish citizen. Jussi Aho Born 1968, M.Sc. (Civil Engineering). CEO of Fira Group Oy and Fira Oy. Finnish citizen. Antti Herlin Born 1956, D.Sc. (Econ.) h.c., D.Arts h.c., D.Sc. (Tech) h.c. Chairman of the Board, KONE Corporation. Finnish citizen. Eva Lindqvist Born 1958, M.Sc. (Eng.), MBA. Professional board member. Swedish citizen. Markus Ehrnrooth, Deputy Chairman Born 1985, M.Sc. (Tech.), B.Sc. Pol. Sc. (Econ.). Co- Founder of Knomi Oy. Finnish and Swedish citizen. Thomas Hinnerskov Born 1971, M.Sc. (Fin. and Accounting). Executive VP, KONE Central and North Europe and member of the Executive Board, KONE Corporation. Danish citizen. 46
Management Board Ari Lehtoranta President and CEO Divisions Manfred Simmet Austria Werner Kühn Germany Martti Ala-Härkönen Finance Sakari Toikkanen Strategy & IT & Communications Knut Gaaserud Denmark-Norway Erkki Huusko Industrial Solutions Merja Eskola HR & People Minna Schrey-Hyppänen as of 26/6/2017 Anne Viitala Legal & Governance Niclas Sacklén Eastern Europe Klas Tocklin Sweden Jarno Hacklin Projects Matti Malmberg Services Thomas Hietto as of 1/7/2017 Ville Tamminen Finland 47
Working at a safe environment Our active safety work and attention towards safety issues has produced results. During the last year, there were no fatal accidents. The sick leave rate (hours of absence/hours worked) remained on same level as in 2015 (4.1 %). We aim to increase the reporting of safety observations, as the observations are clearly linked to the number of accidents: The higher the number of reported safety observations is, the fewer accidents occur. Overall we have had a very good development in proactive safety measures. We aim to increase the share of occupational health and safety-certified operations in our business. In 2016, 92% of our revenue came from OHSAS 18001-certified operations (2015: 71) 48
Caverion s guidance terminology Positive change Lower limit Upper limit % % At last year s level -5% 5% Grows 5% 15% Grows clearly 15% 30% Grows significantly 30% 100% Doubles 100% Negative change Lower limit Upper limit % % Decreases -15% -5% Decreases clearly -30% -15% Decreases significantly -30% 49
Shareholders on March 31, 2017 Largest shareholders Shares, % of share pcs Capital Change after Dec. 2016, pcs Change after Dec. 2016, % 1 Structor S.A. 17,565,000 13.99 0 0.00 2 Herlin Antti 17,040,180 13.57 1,665,000 10.83 3 Solero Luxco S.A.R.L 9,716,223 7.74 N/A N/A 4 Ilmarinen Mutual Pension Insurance Company 5,488,946 4.37 475,000 9.47 5 Varma Mutual Pension Insurance Company 4,155,706 3.31 2,291,313 122.90 6 Fondita funds 3,465,000 2.76 0 0.00 7 Mandatum companies 3,090,747 2.46 75,510 2.50 8 Nordea funds 2,440,325 1.94-704,502-22.40 9 The State Pension Fund 1,850,000 1.47 0 0.00 10 Elo Pension Company 1,611,089 1.28 0 0.00 11 Aktia funds 1,518,860 1.21-290,000-16.03 12 Säästöpankki funds 1,054,658 0.84-47,876-4.34 13 Brotherus Ilkka 1,048,265 0.83 0 0.00 14 Odin funds 891,797 0.71-53,000-5.61 15 OP funds 856,862 0.68-867,536-50.31 16 Evli funds 747,213 0.59 27,988 3.89 17 Alandia companies 550,730 0.44-161,000-22.62 18 Funds held by Ari Lehtoranta* 553,323 0.44 0 0.00 19 Caverion Oyj 512,328 0.41 0 0.00 20 Foundation of Brita Maria Renlunds minne 412,000 0.33 0 0.00 20 largest, total 74,569,252 59.37 All shares 125,596,092 100 Sector distribution (3/2017) 29,778 owners Nominee reg. and non- Finnish 34.7% (Dec. 31: 35.1%) Households 19.5% (19.7%) General government 11.3% (9.3%) Financial and insurance corporations 10.6% (12.3%) Non-profit institutions 4.7% (5.2%) Non-financial corporations and housing corporations 19.2% (18.3%) *) incl. Voluntas Investment Oy, directly held shares and shares held by closely associated persons. 50