President and CEO’s review at the Annual General Meeting
Fredrik Strand, President and CEO
March 21, 2016
Contents o Strategic milestones o Overview of year 2015 o Market outlook and guidance for 2016 Strategic milestones Strategic milestones to reach profitable growth
04 Reach
• Operational 03 Create excellence • Strong • Innovative 02 Build growth and • Operational • Innovative 01 Fix advanced excellence and solutions • Increasing • Excellent advanced • Strong profits leadership solutions company image
Caverion 4 AGM Presentation March 21, 2016 New business areas
Technical Installation Large Projects Managed Services & Maintenance
º Small and mid size º Contract volume > EUR º At its widest form projects and maintenance 5m delivered as Managed agreements º Integrated solutions Life Cycle Solutions º Single and multiple º Customisation º Services can be executed technologies º Life Cycle focus either by Caverion or third º Over 30,000 contracts in º Caverion is running some parties. this area 50 projects of this type. º In total some 100 contracts in this area
Number of competitors Barriers of entry, complexity, margin potential, risk level
Pie charts: Estimated share of Group revenue in 2015.
Caverion 5 AGM Presentation March 21, 2016 Overview of year 2015 2015: Year of building ”One Caverion”
Good development with new clients and contracts o Order backlog grew by 10%. o Revenue increased by 4% at previous year’s exchange rates.
Business mix Unified operational Common market developed into new model, systems and offering business areas: processes Commercialised and o Technical Installation o Increases cooperation o and Maintenance between divisions and fully industrialised market offering o Large Projects business areas o Managed Services o Positive outcome already visible
Caverion 7 AGM Presentation March 21, 2016 2015: Year of building ”One Caverion”
Space Saga Excellent leadership marketing campaign o Talent, succession planning and leadership development First common market o Unified operational campaign supports our o model and new growth competence areas Continues until the end o development of 2016
Good development 2016: Focus on in work safety profitable growth o Accident frequency rate* was 8.3 (2014: 10.1) o Strong financial position and there were 40% o We continue to develop fewer incidents our company according Harmonised reporting o to our strategic * number of accidents per one million roadmap. working hours
Caverion 8 AGM Presentation March 21, 2016 Caverion in brief
Revenue by country in 2015 Key figures in 2015 Caverion designs, Revenue builds, operates and maintains Sweden 25% 2,443 Finland 22% user-friendly and EUR million energy-efficient Norway 16% solutions for buildings, Germany 22% Order backlog infrastructure and Denmark 6% 1,461 Austria 6% industrial plants. EUR million Other countries 3% EBITDA
Personnel by country in 2015 91.5 EBIT EUR million (3.7% of revenue) Sweden 22% 61 Finland 26% Operating cash flow before EUR million Norway 17% financial and tax items Germany 14% 85.8 Denmark 6% EUR million
2.2% Austria 4% of revenue Other countries 11% 17,399 employees at the end of 2015 Revenue based on the Group company location
Caverion 9 AGM Presentation March 21, 2016 Positive development in employee engagement survey
Line Management Teams Caverion Group Managers of Caverion Group (N=12 829) (N=681) and Divisions Key Engagement Drivers (N=111) Percent Favorable 2015 Our vision of being a leading European provider of advanced and sustainable life cycle solutions for 60% 75% 85% buildings and industries inspires me to work for (2014 56%) (2014 74%) (2014 82%) Caverion.
I believe Caverion has an promising future. 67% 80% 85% (2014 58%) (2014 76%) (2014 84%) 80% I feel there is a promising future for me at Caverion. 61% 73% (2014 56%) (2014 72%) (2014 73%)
I have confidence in the senior management of Caverion Group to make the right decisions for 61% 70% 82% Caverion. (2014 56%) (2014 74%) (2014 74%)
Caverion attracts talented people. 51% 62% 81% (2014 45%) (2014 54%) (2014 59%)
Caverion 10 AGM Presentation March 21, 2016 Target: annual revenue growth of > 10% by the end of 2016
Group revenue ° Revenue was EUR EUR million 1−12/14: 2,407 1−12/15: 2,443 2,443 million in 2015, 660 668 an increase of 4% at 638 591 588 567 563 574 previous year’s exchange rates.
° 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 In Norway, Technical Installation and Maintenance is Revenue breakdown by country impacted by the EUR million general economic
(1%) (5%) (6%) (-13%) environment. 597 604 547 526 521 496 458 401 ° Revenue -6% with (8%) (10%) (11%) comparable exchange 136147 139 127 71 78 rates during 2015 ° Exit of one large Sweden Finland Germany Norway Austria Denmark Other countries services contract now 1−12/14 1−12/15 fully visible
Caverion 11 AGM Presentation March 21, 2016 Positive order backlog development in each quarter in 2015
° Order backlog grew by Order backlog 10% compared to the EUR million previous year (by 11% at Q1 Q2 Q3 Q4 comparable exchange +7% +10% rates). +4% +3% 1,477 1,461 1,392 1,393 ° The order backlog continued to increase reflecting the growth targets in Large Projects and Managed Services.
Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013).
Caverion 12 AGM Presentation March 21, 2016 Several large orders received in 2015
Metsä Fibre, Äänekoski, Finland Metsä Fibre
Caverion will deliver five pulp towers to the new bioproduct plant. The plant under construction is the largest investment in the history of wood-processing industry in Finland.
° Service areas: Design, Project Management ° Contract value: not disclosed ° Lifespan: The design and prefabrication will begin in 2015, installation will take place in 2016.
Metsä Fibre
Caverion 13 AGM Presentation March 21, 2016 Several large orders received in 2015
Congress Center Hamburg, CCH Immobilien GmbH & Co. KG., Germany
One of the largest projects after the establishment of Caverion. Top priority is to guarantee good indoor climate in all conditions. In order to achieve this, Caverion will install 10,000 data points to log air conditions and an intelligent air conditioning system.
° Service areas: Design & Engineering, Project Execution ° Contract value: over EUR 43 million ° Technical disciplines: Total technical solutions ° Lifespan: Center is scheduled to reopen in 2019. ° Size: 36,000 m2
agn leusmann GmbH/ Tim Hupe Architekten
Caverion 14 AGM Presentation March 21, 2016 Several large orders received in 2015
Söderhamn ° Service areas: Managed municipality, Sweden Services
The largest Energy ° Contract value: over EUR Performance Contracting 29 million (EPC) project ° Lifespan: Maintenance of implemented by Caverion the buildings and their
in the Nordic countries. Söderhamn configuration management until 2019 For the client, EPC and guaranteed energy service guarantees savings for 10 years energy savings by ° Client: Söderhamn optimising the buildings municipality and housing and their performance company Faxeholmen AB over time. ° Size: 430,000 m²
Söderhamn
Caverion 15 AGM Presentation March 21, 2016 Several large orders received in 2015
Moss municipal property Railway Farriseidet- company, Norway Porsgrunn, Southern Norway Aim: reduction of energy consumption by 45% Electricity solutions for a through modernising and new, about 23-kilometer optimising the building railway route, including systems. seven tunnels.
° Service areas: Managed Trine Bratlie Evensen / Jernbaneverket ° Service areas: Project Life Cycle services in the Execution, Project form of EPC Management ° Contract value: not ° Contract value: over disclosed EUR 35 million ° Technical disciplines: ° Technical disciplines: Heating, Ventilation and Electricity air conditioning, ° Lifespan: final design in Automation autumn 2015, installation ° Lifespan: The first of phase Jan 2016 – June
three phases started in Jarle Foss/Jernbaneverket 2018 June 2015 ° Size: 91,000 m² Caverion 16 AGM Presentation March 21, 2016 Profitability on track to reach financial target
EBITDA, EUR million EBITDA margin, % o EBITDA grew significantly by 1−12/14: 67.5 (2.8%) 1−12/15: 91.5 (3.7%) 36% from the previous year and amounted to EUR 91.5 34.3 34.0 million in January−December.
21.5 5.2 22.0 21.3 5.1 o EBITDA negatively 3.8 14.2 3.4 3.7 9.6 affected by certain 2.1 project losses in Norway 2.5 1.6 0.4 and Germany, 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15 restructuring expenses in Finland and legal expenses in Germany.
o Investments in common EBITDA, EUR million (rolling 12m) processes also reflected in operational expenses 92.0 91.8 91.5
71.1 67.5 72.1 60.3 58.4 o EBITDA for Q4 was in line with the previous year and amounted to EUR 34.0 million.
1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15
Caverion 17 AGM Presentation March 21, 2016 Financial target: negative working capital
Working capital Working capital, EUR million Working capital has Working capital to been stabilised on sales, % (LTM) negative level
120 Continued focus on 100 invoicing process 5% 4% 64
46 3% 49 49 36 2% 2% 2% 8 1%
0% -13 -14 -19 -1% -1% -1%
6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15
Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013).
Caverion 18 AGM Presentation March 21, 2016 Cash flow in line with EBITDA
Operating cash flow before financial and tax items o Continuous EUR million development and investment in Rolling 12 months 134.4 132.2 technologies, 108.5 114.8 113.5 processes and 105.4 102.8 competences 101.3 100.0 90.1 85.8 83.1 o Capex investments (including acquisitions) of EUR 26.9 million in
2015, mainly relating to IT and the development 20.5 of common business 9.8 4.1 1.8 processes.
-11.1 -8.9
10−12/13 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15 7−9/15 10−12/15
Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013).
Caverion 19 AGM Presentation March 21, 2016 Liquidity reserve of EUR 187 million
Net debt, EUR million Net debt/EBITDA, Rolling 12 Months o Net debt remains in Q4 194 190 2014 level
143 132 104 102 o Strong cash position 86 85 enabled voluntary 50 50 30 repayment of gross debt 0.3x by EUR 20 million
Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15
Gross debt to net debt Liquidity reserve EUR million EUR 187 million
Unused 23 credit 68 119 facilities 75 30 Cash and cash Long-term Short-term Cash and cash Net debt equivalents borrowings borrowings equivalents 68
Caverion 20 AGM Presentation March 21, 2016 Guidance for 2016
Revenue
Caverion estimates that the Group’s revenue for 2016 will grow from the previous year (2015: EUR 2,443 million).
EBITDA
Caverion estimates that the Group’s EBITDA for 2016 will grow significantly from the previous year (2015: EUR 91.5 million).
Caverion 21 AGM Presentation March 21, 2016
Dividend proposal
Dividend pay-out The Board of at least 50% Directors proposes of the net profit a dividend of for the period. EUR 0.28 per share, representing 75% of the Group’s net profit for 2015.
Dividend per share, EUR Earnings per share Dividend pay-out ratio, %
° Earnings per share 100% 75% increased significantly 78% by 69% and amounted 0.28 to 0.37 euros per share 0.22 0.22 in January−December.
2013 2014 2015
Caverion 23 AGM Presentation March 21, 2016