credit investor presentation - caverion group · company presentation february 2017 . 2016 figures...
TRANSCRIPT
Credit Investor Presentation
June, 2017
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Credit Investor Presentation June 2017 2
Credit Investor Presentation June 2017 3
Company representatives
Martti Ala-Härkönen CFO
Ari Lehtoranta President and CEO
Paula Vesanto Group Treasurer
Credit Investor Presentation June 2017 4
Contents
1. Business overview
2. Strategy and key credit highlights
3. Financials overview
4. Financing and capital structure
5. Hybrid transaction
6. Appendix
Business overview
We are a leading European service company
6
17,000 employees
EUR 2.4 billion revenue
Headquartered in Helsinki, Finland 12 countries
30,000 spaces in service
6.3 Work safety,
LTIFR
Listed on Nasdaq Helsinki
93 % ISO 14001
Services 48% Project
52%
Germany 22%
Sweden 20%
Denmark-Norway
19%
Industrial Solutions
16%
Finland 14%
Austria 6%
Eastern Europe
3 %
Revenue by division
Revenue by business
unit
Company presentation February 2017
2016 figures
Disciplines Caverion designs, builds, operates and maintains user-friendly and energy-efficient solutions for buildings, infrastructure and industrial plants
EUR 15.6 million EBITDA1
2.8x Net debt / EBITDA2
1 excl. restructuring costs
2 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 2016 has been calculated accordingly.
Technical Maintenance ° Small and mid size maintenance
agreements ° Single or multiple technologies ° E.g. ServiFlex and ServiFlex+
agreements ° Some 25,000 agreements
Managed Services ° At its widest form Managed Life Cycle
Solutions ° Executed by Caverion or our
subcontractors ° Some 100 agreements
Credit Investor Presentation June 2017 7
Business units: Services and Projects
Technical Installation ° ≤ EUR 5 million small and mid
size projects ° Single or multiple technologies ° Some 3,000 projects
Large Projects ° Contract size > EUR 5m ° Integrated solutions with customisation ° Life Cycle focus ° Some 50 projects of this type
Number of competitors Barriers of entry, complexity, margin potential, risk level
13%
35%
33%
19%
Revenue split in 2016
Serv
ices
Pr
ojec
ts
Elements of growth towards Services and Life Cycle Solutions
Credit Investor Presentation June 2017 8
Life Cycle Solutions ° Covers the whole life cycle
° 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 consortium
Technical Maintenance ° Fixed price preventive maintenance contract ° Add-on corrective maintenance
(“ad-hoc”) ° Small improvement projects
(“service projects”)
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
Projects
Services
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
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
Credit Investor Presentation June 2017 9
Some examples of our clients Broad and diversified client base
AstraZeneca, Sweden
Metsä Fibre, Pulp Mills Finland
National courthouse Viborg, Denmark
TOTAL Refinery Leuna, Germany
Karolinska University Hospital Solna, Sweden
"Marine Façade”, passenger port of St. Petersburg Russia
Managed Services Technical maintenance
Managed Operations
Valio, Vantaa, Finland Palais Quartier Frankfurt a. M., Germany
DC Tower Vienna, Austria
Project Execution
Outokumpu Tornio, Finland
Industrial Installations Managed Life Cycle
Söderhamn municipality, Sweden
Energy Performance contracting
Design & Engineering, Project Management & Execution
Knowledge Centre, St. Olav’s Hospital Trondheim, Norway
Strategy and key credit highlights
Our strategy
11 Credit Investor Presentation June 2017
We are a leading European
provider of advanced and sustainable life cycle solutions for buildings and industries.
Profitability (EBITDA) over 6% of
revenue
Average annual revenue growth > 10%
Negative working capital
Increasing profits
Profitable growth
Innovative and advanced solutions
We design, build, operate and maintain user-friendly and energy-efficient solutions for buildings, infrastructure and industrial plants.
Step ahead + Cooperation + Responsibility + High performance
Vision
Financial targets
Strategic focus areas
Mission
Values
Operational excellence
Strong company image
Excellent leadership
1. Megatrends drive our strategy
3. Closer cooperation with clients
2. Developed business mix to drive profitable growth
Reaching our strategic targets
Megatrends support the future demand of our business
Positive market sentiment and short-term demand prospects in key markets
Strong market position in Central and Northern Europe
Diversified client base provides hedge from economic cycles
Growing service business performing well Actions implemented to improve project business profitability
Credit Investor Presentation June 2017 12
Key credit highlights
1.
2.
3.
4.
5.
6.
Megatrends support the future demand of our business
Credit Investor Presentation June 2017 13
◦ Built environment data is managed over the whole lifecycle ◦ All built environments will have an IP address ◦ Availability of real time data in built environments
◦ 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
◦ 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
◦ 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 CO2 emissions.
◦ Needs for necessary infrastructure (water, sanitation, energy, information, transportation, tunnels) ◦ Smart cities require innovative solutions
Growing digitalisation
Improving energy efficiency
Increasing technology
Continuing urbanisation
1.
40
60
80
100
120
140
160
180
Finland SwedenGermany DenmarkAustria
60
70
80
90
100
110
120
130
Finland SwedenGermany DenmarkAustria
Lead indicators for Caverion countries Economic indicators suggest favourable market environment going forward
14
ECONOMIC SENTIMENT INDICATOR (1/2007 – 3/2017) CONSTRUCTION CONFIDENCE INDICATOR (1/2007 – 3/2017)
Long-term
average
Long-term
average
Note: Mean-adjusted figures
Credit Investor Presentation June 2017 Source: European Commission, April 2017
2.
Short-term demand prospects Demand prospects positive, particularly in the Service businesses
Credit Investor Presentation June 2017 15 Sources: Caverion annual report 2016, based on Euroconstruct data and management estimates
2.
Strong market position in Central and Northern Europe Caverion well-positioned in growing markets
16
*) 2015 figure
Source: Company information, Caverion
750
798
1,116
1,564
2,364
2,909
5,145
Assemblin*
Coor
Strabag Property and Facility Services*
Bravida
Caverion
Apleona*
SPIE
Total revenue of Caverion’s main competitors EUR million, 2016
#5
#5
#1 #3
#2
#2
Credit Investor Presentation June 2017
3.
Diversified client base provides hedge from economic cycles
Low customer concentration supporting business stability ° Caverion is not
dependent on individual clients
° In 2016, the three largest clients represented <7% of our revenue and the ten largest <14%
Credit Investor Presentation June 2017 17
13%
33%
13%
27%
16%
Public
Industry
Real estate investors anddevelopersReal estate users
General contractors
Revenue breakdown by client segments in 2016
14%
86%
Top 10 largest clientsOthers
Client concentration in 2016 (% of revenue)
Five main client segments ° Dependency on
economic cycles is reduced through various client groups in the private and public sectors
° Geographically extensive presence in 12 countries
Thousands of clients representing all sizes of businesses and organisations
4.
Growing service business performing well
Credit Investor Presentation June 2017 18
10,000 Employees in
Services
EUR 1.1 billion revenue
in 2016
1,000,000 Service orders
annually
30,000 spaces in service
28% Managed Services of
total Services
250 Service locations
5,500 Service cars
5,000 Mobile tools in
use
263 281 267 320 293
Q1 Q2 Q3 Q4 Q1
Services revenue EUR million 2016: 1,131
° Demand for Technical Maintenance and Managed Services is expected to remain strong. As technology in buildings increases, the need for new services and the demand for Life Cycle Solutions are expected to increase
° Services business revenue grew organically by 11.5% in Q1/2017, while in Projects revenue declined by 2.8% (y-o-y)
° Share of service business over 50% of total revenue in Q1/2017
° Services business continues to perform well
5.
2017
Actions implemented to improve project business profitability
Actions completed in Q1/2017
19
Further improvement actions in Q2/2017
Credit Investor Presentation June 2017
6.
° 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
° 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
Financials
563 638
574
668
561 616 582 606 582
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Revenue development
Credit Investor Presentation June 2017 21
° 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)
° Share of service business over 50% of total revenue
° Revenue growth strong in Industrial Solutions, Finland and Denmark-Norway
° Project write-downs still affecting revenue in Germany
° Order backlog increased by 9.6% from the end of last year, but decreased by 2.9% from Q1/2016
° A stricter project tendering process implemented since Q2/2016
2015: 2,443 2016: 2,364 2017
Growth of 3.9% in Q1/2017 – Services business +11.5%
1,392 1,393
1,477 1,461
1,589 1,554
1,451 1,408
1,544
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Group revenue EUR million
Order backlog EUR million
2017 2016 2015
° EBITDA EUR 6.8 million for Q1/2017 (Q1/2016: 11.5) ° EBITDA margin 1.2 (2.0)% ° Revenue-adjusted cost savings from personnel and
other operating expenses totalled EUR 8.0m (Q1/2016 vs. Q1/2017)
° Q1 EBITDA affected by project write-downs totalling 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
° No restructuring costs in Q1/2017
Credit Investor Presentation June 2017 22
EBITDA turning positive − Still affected by project write-downs
14.2
22.0 21.3
34.0
11.5
-14.4
13.8
-22.2
6.8 2.5 %
3.4 % 3.7 % 5.1 %
2.0 %
-2.3 %
2.4 %
-3.7 %
1.2 %
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
EBITDA, EUR millionEBITDA margin, %
1−12/2015: 91.5 (3.7%) 1−12/2016: -11.4 (-0.5%) 2017
-15.8 -7.1
14.4
87.6
0.8
-6.3 -14.2
73.6
-28.8 -32.6 -38.8
28.0
-18.5
3.1 5.2 4.3 10.8 7.3 5.5 5.0 9.0 7.1
17.3 7.6 6.1 5.0
Cash flow and investments
Credit Investor Presentation June 2017 23
° Cash flow seasonally strong particularly in Q4 ° Service business volume and invoicing
higher in the fourth quarter
° Completion of projects towards year end
° Free cash flow negative but improving by EUR 10.3m year-on-year ° Free cash flow EUR -18.5m (-28.8) in
Q1/2017
° Free cash flow partly improved by the lower level of investments
° Capital expenditure (incl. acquisitions) totalled EUR 5.0m (7.1) in Q1/2017 ° IT investments: EUR 4.2m (5.1) ° Other investments, incl. acquisitions: EUR
0.8m (2.0)
-11.1
4.1 20.5
100.0
9.8 1.8
-8.9
83.1
-18.8 -12.3 -26.6
35.2
-12.1
Operating cash flow before financial and tax items, EUR million
Capex, EUR million Free cash flow, EUR million
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
Free cash flow = Operating cash flow before financial and tax items – Taxes paid – Net cash used in investing activities (net, including acquisitions and disposals)
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
° Working capital was EUR 17.3 (3/2016: 15.6) million at the end of March 2017
° POC receivables amounted to EUR 291.0 million (3/2016: 284.0) at the end of March 2017
° 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 2017
° Working capital still tied in a few challenging risk projects
Credit Investor Presentation June 2017 24
Financial target: Negative working capital
100
120
44
63
47 48
-21 -15
6
34
-15
16 15
56
-3
17
4% 5%
2% 2%
2% 2%
-1% -1% 0%
1%
-1%
1% 1%
2%
0% 1%
Working capital, EUR millionWorking capital to sales, % (LTM)
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2013 2014 2015 2016 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
Full-year utilisation risk up to EUR 10m ° Risk for the full year should not exceed the level above. ° No restructuring costs in Q1/2017. However, Caverion announced
performance and utilisation improvement actions in Sweden on May 29 ° Expected restructuring costs of approx. EUR 6.3 million and estimated total
savings impact of approx. EUR 2.7 million in 2017 and EUR 5.5 million in 2018
Company Presentation May 2017 25
Status update on key operational risk areas for 2017
Guidance for 2017 and strategic financial targets
Credit Investor Presentation June 2017 26
2016 (actual) ° Revenue growth: -3.2% ° EBITDA margin (excl. restructuring
costs): 0.7% ° Working capital: EUR -2.6m
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.
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)
Revenue ° Focus on Services with a higher growth
profile and stable earnings contribution ° Selectivity in Projects, actions from
tendering to execution to secure profitability improvement
° Focus on Life Cycle Solutions
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
*Given February 7, 2017
Key actions supporting achievement of strategic financial targets
Financing and capital structure overview
Liquidity and leverage (March 31, 2017)
Credit Investor Presentation June 2017 28
25
119
Unused creditfacilitiesCash and cashequivalents
Liquidity reserve EUR 144 million at the end of March 2017, EUR million
104
143 132
50 50 85
102
30 59
131 170
146 165
1.5x
2.4x 2.3x
0.7x 0.7x 0.9x 1.1x
0.3x 0.7x
2.1x 2.8x 2.8x
3.7x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
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**
Net debt (EURm) Net debt/EBITDA (12m)
124 165
65 25
Long-term borrowings Short-term borrowings Cash and cashequivalents
Net debt
Gross debt to net debt (EURm)
* 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.
Financial covenant (Net Debt/EBITDA): ° Net debt/EBITDA in Q1/2017: 3.7x according to
confirmed calculation principles
° The agreed covenant maximum level 5.0x for Q1/2017
° In connection with the hybrid transaction, Caverion has agreed with the lending parties the covenant maximum level of 5.0x for Q2/2017 and Q3/2017
° Covenant shall remain below 3.5x from Q4/2017 onwards
Unused credit facilities comprise of undrawn revolving credit facility amounting to EUR 100.0 million and undrawn overdraft facilities amounting to EUR 19.0 million. The committed revolving credit facility matures on May 2020.
20 20 20 10
60 5 9 7
35
2
2
010203040506070
2017 2018 2019 2020 2021+Banks Insurance companies Commercial papers Others
62
31 27
10
60
Debt maturity profile, 31 March 2017, EUR million
Debt Structure and impact of EUR 100m hybrid transaction
29 Credit Investor Presentation June 2017
° 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 2017 (12/2016: 1.9%)
° Floating-rate loans accounted for approx. 87% and fixed-rate loans approx. 13 % of the Group’s borrowings
° Issuer shall use the proceeds of the hybrid transaction for refinancing its existing debt and to strengthen its capital structure
° EUR 40 million from hybrid proceeds used to repay term loans maturing in 2021
° Post-transaction, existing bank loan facilities (EUR 90 million remaining on 31 March 2017) combined into one common agreement with final maturity in May 2020
20 20 20 30 5 9 7
35
2
2
010203040506070
2017 2018 2019 2020 2021+Banks Insurance companies Commercial papers Others
62
31 27 30
Pro forma debt maturity profile after EUR 100m hybrid capital, EUR million
Note: Loan portfolio based on end of March 2017 situation.
Key credit ratios after EUR 100m hybrid transaction Transaction provides a platform to further develop the business
30 Credit Investor Presentation June 2017
11.7 % 78.7 % 90.1 %
23.4 %
2015 2016 Q1/2017 Pro forma*Q1/2017
Gearing, %
26.4 % 18.7 % 19.2 %
26.8 %
2015 2016 Q1/2017 Pro forma*Q1/2017
30
146 165
66
0.3x
2.8x 3.7x
1.5x 0.01.02.03.04.05.0
2015 2016 Q1/2017 Pro forma*Q1/2017
Interest bearing net debt, EURmNet Debt/EBITDA (12m)
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. * Pro forma is based on the assumption that Hybrid Bond would have been issued at 31 March 2017. Transaction costs assumed to amount to approximately 1% of the hybrid bond amount.
Equity ratio, %
Q1/2017
183.0
35.0 20.7
129.6
Pro forma* Q1/2017
183.0
99.0 4.3 35.0
20.7 89.6
° Post the EUR 100m hybrid transaction (pro forma comparison to actual Q1/2017 figures): ° Equity ratio improves to 26.8%
(19.2%) ° Gearing improves to 23.4% (90.1%) ° Net debt reduces to EUR 66m (165m) ° Net debt to EBITDA improves to 1.5x
(3.7x) ° According to agreed principles in
force on 31 March 2017 ° The transaction provides Caverion a
platform to further develop its business
Capital structure
Equity
Hybrid
Other
Commercial papers
Insurance
Banks
4.3
Hybrid transaction
EUR 100m 4.625% Hybrid Capital Securities – Term Sheet
Credit Investor Presentation June 2017 32
Issuer Caverion Corporation
Size / currency EUR 100 million
Issuer rating Unrated
Status / ranking Hybrid (capital security) NC3. Deeply subordinated, lowest ranking subordinated obligations of the Issuer
Accounting treatment Equity classification under IFRS
Trade Date 9 June 2017
Settlement Date 16 June 2017
Maturity Perpetual
Interest rate 4.625%, Fixed rate for the first 3 years. Payable annually in arrears. Basis is ACT/ACT. Thereafter reset every 3 years at the relevant 3-year swap rate + initial credit spread + step-up of 500 bps. Unpaid interest accumulates. Deferrable at issuer's discretion
Interest deferral Optional, cash cumulative and compounding 12 months look-back pusher event. In the event a minority dividend is declared when deferred interest is outstanding, this triggers a step-up of 500 bps
Optional redemption due to special events
Tax Event (101% / par), Accounting Event (101% / par), Corporate Restructuring Event (101% / par), Withholding Tax Event (par), Replacing Capital Event (103%). Change of Control (par; 500 bps step-up if not called, investment grade rating carve-out)
Governing law Finnish law
Listing No listing
Form of securities Dematerialised securities issued in book-entry form in the book-entry system maintained by Euroclear Finland
Clearing system Euroclear Finland
Denomination EUR 100,000 / EUR 20,000
Joint lead managers Nordea, OP, and SEB
Rationale for hybrid bond transaction: ° Diversifying financing
sources to capital markets ° Balance sheet support
and creating an equity buffer for the short-term turnaround phase in the company
Use of proceeds ° EUR 40 million is utilised
towards the repayment of existing loan facilities
° Remainder is retained as cash for general corporate purposes or utilised towards the repayment of commercial papers
Appendix
Key figures
Credit Investor Presentation June 2017 34
EUR million Q1/17 Q1/16 Change 2016 2015
Order backlog 1,543.5 1,589.4 -2.9% 1,408.1 1,461.4
Revenue 582.3 560.6 3.9% 2,364.1 2,443.0
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 91.5
EBITDA margin, % 1.2 2.0 -0.5 3.7
Operating profit -0.8 4.8 -40.8 65
Operating profit margin, % -0.1 0.9 -1.7 2.7
Earnings per share, basic, EUR -0.02 0.03 -0.25 0.37
Working capital 17.3 15.6 10.8% -2.6 -15.4
Free cash flow -18.5 -28.8 35.6% -72.1 53.9
Interest-bearing net debt 164,9 59.2 178.4% 145.5 29.8
Gearing, % 90.1 26.7 78.7 11.7
Personnel, end of period 16,679 17,499 16,913 17,399
Credit Investor Presentation June 2017 35
EUR million 2016 2015 Revenue 2 364.1 2 443.0
Other operating income 1.9 3.3 Materials and supplies -648.2 -663.8 External services -450.8 -426.9 Employee benefit expenses -989.1 -978.2 Other operating expenses -289.2 -286.0 Share of results in associated companies -0.1 0.0 Depreciation, amortisation and impairment -29.5 -26.5
Operating profit -40.8 65.0
Financial income 1.2 0.8 Exchange rate differences (net) 0.2 0.0 Financial expenses -4.1 -4.6
Financial income and expenses -2.6 -3.7
Profit before taxes -43.5 61.3 Income taxes 11.8 -14.7
Net profit for the financial year -31.7 46.6
Attributable to: Owners of the parent -31.7 46.6 Non-controlling interests 0.0 0.0
Income statement
Credit Investor Presentation June 2017 36
Balance sheet EUR million 2016 2015
Equity attributable to owners of the parent
Share capital 1.0 1.0 Treasury shares -3.2 -3.2 Translation differences -5.5 -6.5 Fair value reserve -0.7 -0.7 Retained earnings 193.1 262.9*)
184.6 253.4*) Non-controlling interests 0.4 0.4 Total equity 185.0 253.7
Non-current liabilities Deferred tax liabilities 51.1 58.3 Pension obligations 45.4 42.5*) Provisions 7.1 9.0 Interest-bearing debts 127.6 75.2 Other liabilities 0.6 0.4 Total non-current liabilities 231.7 185.5
Current liabilities Trade payables 214.1 232.2 Advances received 192.5 195.3 Other payables 258.7 242.6 Income tax liabilities 6.5 8.1 Provisions 30.1 17.7 Interest-bearing debts 65.7 22.7 Total current liabilities 767.6 718.5
Total liabilities 999.3 904.0
TOTAL EQUITY AND LIABILITIES 1 184.3 1 157.7
*) Items in Consolidated Statement of financial position have been corrected to reflect prior period adjustments made in 2016.
EUR million 2016 2015
Non-current assets
Property, plant and equipment 28.3 27.4 Goodwill 339.8 335.7 Other intangible assets 53.0 47.5 Investments in associated companies 0.1 0.2 Available-for-sale financial assets 1.2 1.4 Receivables 3.3 2.6 Deferred tax assets 10.6 1.8*) Total non-current assets 436.4 416.6
Current assets Inventories 30.7 25.4 Trade receivables 378.2 351.7 POC receivables 244.4 254.0*) Other receivables 40.4 41.3 Income tax receivables 6.4 0.6 Cash and cash equivalents 47.7 68.1 Total current assets 747.9 741.2
TOTAL ASSETS 1 184.3 1 157.7
Credit Investor Presentation June 2017 37
Cash flow statement EUR million 2016 2015
Net profit for the financial year -31.7 46.6
Depreciation, amortisation and impairment 29.5 26.5
Reversal of accrual-based items 12.1 0.0
Financial Income and expenses 2.6 3.7
Gains on the sale of tangible and intangible assets 0.3 -0.1
Taxes -11.8 14.7
Total adjustments 32.8 44.8 Change in trade and other receivables -12.5 -52.2 Change in inventories -2.9 -5.1 Change in trade and other payables -8.2 51.7 Total change in working capital -23.5 -5.6
Operating cash flow before financial and tax items -22.4 85.8 Interest paid -3.9 -4.5 Taxes -12.4 -9.9
Other financial items 1.6 0.1
Net cash generated from operating activities -37.0 71.6
Acquisition of subsidiaries -4.2 0.8
Purchases of property, plant and equipment -10.3 -8.8
Purchases of intangible assets -23.5 -15.5
Other items 0.6 1.4
Net cash used in investing activities -37.4 -22.1
Proceeds from borrowings 80.0 100.0
Repayment of borrowings -24.9 -150.5
Change in current liabilities 34.6 -0.7
Dividends -35.1 -27.6
Other items -0.9 -0.9
Net cash used in financing activities 53.8 -79.6
Net change in cash and cash equivalents -20.6 -30.0
Cash and cash equivalents at the end of the financial period 47.7 68.1
Credit Investor Presentation June 2017 38
Strong and stable shareholder base As per May 31, 2017
Largest shareholders*
Shares, pcs
% of share Capital
Change after Mar. 2017, pcs
Change after Mar. 2017, %
1 Herlin Antti 17,690,180 14.09 650,000 3.81
2 Structor S.A. (Ehrnrooth family) 17,565,000 13.99 0 0.00
3 Ilmarinen Mutual Pension Insurance Company 5,488,946 4.37 0 0.00
4 Varma Mutual Pension Insurance Company 4,155,706 3.31 0 0.00
5 Fondita funds 3,465,000 2.76 0 0.00
6 Mandatum companies 3,107,618 2.47 16,871 0.55
7 The State Pension Fund 1,850,000 1.47 0 0.00
8 Elo Pension Company 1,611,089 1.28 0 0.00
9 Aktia funds 1,518,860 1.21 0 0.00
10 Nordea funds 1,492,122 1.19 -948,203 -38.86 10 largest, total 57,944,521 46.14
All shares 125,596,092 100
*) Directly registered shareholders as of May 31, 2017. Solero Luxco S.A.R.L (Triton) holding nominee registered since April 2017. Their latest directly registered holding as of March 31, 2017 was 9,716,223 shares (7.74%).
Nominee reg. and non-Finnish 35.7%
Households19.4%
General government11.3%
Financial and insurancecorporations 9.4%
Non-profit institutions4.6%
Non-financial corporationsand housing corporations19.6%
Sector distribution
29,352 owners
Board of Directors as of March 17, 2017
Michael Rosenlew, Chairman Born 1959, M.Sc. (Econ.). Professional board member. Finnish 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.
Anna Hyvönen Born 1968, Lic.Tech. Managing Director, Vianor Holding Oy. Member of the Nokian Tyres’ Management team. Finnish citizen.
Eva Lindqvist Born 1958, M.Sc. (Eng.), MBA. Professional board member. Swedish citizen.
Jussi Aho Born 1968, M.Sc. (Civil Engineering). CEO of Fira Group Oy and Fira Oy. Finnish citizen.
Markus Ehrnrooth, Deputy Chairman Born 1985, M.Sc. (Tech.), B.Sc. Pol. Sc. (Econ.). Co-Founder of Knomi Oy. Finnish and Swedish citizen.
Joachim Hallengren Born 1964, M.Sc. (Civil Engineering). CEO of Bonava AB. Swedish 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.
Credit Investor Presentation June 2017 39
Management Board
Credit Investor Presentation June 2017 40
Divisions
Knut Gaaserud Denmark-Norway
Werner Kühn Germany
Manfred Simmet Austria
Erkki Huusko Industrial Solutions
Niclas Sacklén Eastern Europe
Ville Tamminen Finland
Klas Tocklin Sweden
Matti Malmberg Services Thomas Hietto as of 1/7/2017
Martti Ala-Härkönen Finance
Merja Eskola HR & People Minna Schrey-Hyppänen as of 26/6/2017
Ari Lehtoranta President and CEO
Jarno Hacklin Projects
Anne Viitala Legal & Governance
Sakari Toikkanen Strategy & IT & Communications
6.5%
2.0%
5.4%
2.2%
2.7%
1.6%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
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
41
FINLAND
Total Construction = Residential, Non-residential and Civil Engineering in total (New and Renovation).
SWEDEN NORWAY DENMARK 1.
7%
1.5%
1.2%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
3.3%
1.5%
1.7%
2.4%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
1.9%
2.4%
1.1%
3.5%
1.5%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
Credit Investor Presentation June 2017 Source: Euroconstruct, December 2017 (construction) and World Economic Outlook, January 2017 (GDP).
3.0%
9.5%
3.5%
7.5%
1.1%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
4.7%
1.4%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
GDP and Construction growth est. for Central and Eastern Europe Modest non-residential outlook for Germany going forward, Russia to recover
42
GERMANY AUSTRIA BALTIC COUNTRIES RUSSIA
Total Construction = Residential, Non-residential and Civil Engineering in total (New and Renovation).
1.6%
1.5%
1.8%
1.1%
1.5%
1.2%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
1.4%
2.7%
3.1%
3.0%
3.3%
3.1%
-1.0%
1.0%
3.0%
5.0%
7.0%
9.0%
New
Ren
ovat
ion
New
Ren
ovat
ion
Con
stru
ctio
n
GD
P
RES. . NON-RES.
. TOTAL
CAGR 17-18
Credit Investor Presentation June 2017 Source: Euroconstruct, December 2017 (construction) and World Economic Outlook, January 2017 (GDP).
Headcount development by division Total reduction of 985 employees from the end of June 2016
Credit Investor Presentation June 2017 43
17,664
16,679
6/2016 Sweden-443 HC
Dk-Nor-264 HC
IndustrialSolutions-238 HC
Finland-43 HC
GroupServices-38 HC
EasternEurope23 HC
Austria-6 HC
Germany24 HC
3/2017
16,679 employees at the end of March
Credit Investor Presentation June 2017 44
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.
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
Denmark-Norway 20%Sweden 18%Germany 15%Industrial Solutions 16%Finland 15%Austria 5%Eastern Europe 11%Group Services 1%
Employees by division 3/2017
17,399 17,499
17,664
17,281
16,913
16,679
Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17
Number of employees (end of period)