Road Show Presentation February, 2015
Antti Heinola, CFO Milena Hæggström, Head of Investor Relations
° Business and strategy
° Market overview
° Financials
° Appendix
Contents
Business and strategy
Caverion
Caverion in brief
4
Key figures in 2014
Revenue
2,407 EUR million
EBITDA 67.5 EUR million
(2.8% of revenue)
EBIT 44.2 EUR million (1.8% of revenue)
Personnel 17,074 at year’s end
EBIT
61 EUR million
2.2% of revenue
Sweden 25%
Finland 22%
Norway 19%
Germany 21%
Austria 6%
Denmark 5%
Other countries 3%
Revenue by country
Revenue based on the Group company location
EBIT
61 EUR million
2.2% of revenue
Caverion designs, builds, operates and maintains user-friendly and energy-efficient solutions for buildings, infrastructure and industrial plants.
Sweden 23%
Finland 28%
Norway 16%
Germany 14%
Austria 4%
Denmark 6%
Other countries 9%
Personnel by country
Company Presentation February 2015
Caverion
Megatrends in the market support our long-term strategy
5
Increasing technology Technology in buildings currently account for 40−60% of building costs Integrated technologies require multi-discipline expertise Maintenance is increasingly based on preventive measures as well as on actual needs and conditions.
Improving energy efficiency Tightening legislation relating to energy efficiency In 2020, all new buildings are required to be on a passive house level (almost self-sufficient energy-wise) Increasing demand for energy-efficient solutions also for existing buildings
Fragmented market A lot of small companies in the market
Extensive services a competitive advantage especially in large projects
Growth potential especially in German-speaking areas
Growing digitalisation
All technologies in buildings have an IP address.
Demand for remote monitoring is increasing.
10,000 buildings currently under Caverion’s remote control.
Caverion
Life cycle view is included in everything we do
6
° We understand the
complexity of building technologies and industrial processes.
° We have technical and management skills in all disciplines throughout the life cycle.
° We manage the life cycle - from individual technologies to advanced total solutions - and decrease the costs related to the property.
EnergyMaintenanceInvestment
Client benefits o Functionality and safety o Sustainability o Energy and cost efficiency o Process efficiency
Advisory Services
Design & Engineering
Project Management
Project Execution
Technical Maintenance
Managed Operations
Managed Life Cycle
Company Presentation February 2015
The life cycle model decreases the costs related to the property and related processes
Caverion
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
Strong 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 2016
Strategic focus areas
Mission
Values
Operational excellence
Strong company image
Excellent leadership
Caverion
Clear implementation plan to reach 2016 targets
8
Market Offer Enables profitable growth
Strong company image
Operational excellence
° Advisory Services ° Design & Engineering Services ° Project Management ° Project Execution ° Managed Life Cycle ° Managed Operations ° Technical Maintenance
Excellent Leadership
Company Presentation February 2015
Caverion
Delivering on growth and profitability
9
Fix Increasing profits – Demerger and restructuring
01
Build Operational excellence – Developing internal processes and harmonization Excellent leadership – Lean organization and winning team
02
Create Innovative and advanced solutions – Developing business mix Strong growth – Back on track
03
Reach Operational excellence – Most efficient service company Innovative and advanced solutions – Strong own concepts and capabilities in both projects and services Strong company image
04
Company Presentation February 2015
Caverion
Our integrated offering for life cycle solutions
10 Company Presentation February 2015
Advisory Services
Design & Engineering
Services
Project Manage-
ment
Project Execution
Technical Maintenance
Managed Operations
Managed Life Cycle
Public
Industry
Real estate owners and developers
Real estate users
General contractors
Value proposition for each client
segment
Commercial view for
each service
area
Disciplines
Caverion
Delivering on growth and profitability improvement
11
1. Megatrends in the market support our long-term strategy
2. Our competitive edge is built on life cycle solutions
3. Clear implementation plan to reach 2016 targets
Company Presentation February 2015
Market overview
Caverion
Caverion has strong growth potential in fragmented European markets
13
836
955
1,211
2,489
2,407
4,563
4,945
6,309
9,248
14,700
Alpiq Intec
Strabag Property andFacility Services
Bravida
MITIE
Caverion****
SPIE
Royal Imtech
Bilfinger SE***
Vinci Energies **
GDF Suez EnergyServices*
Company revenues in 2013 (EUR million)
*) 51% of 2013 revenue comes from France **) 59% of 2013 revenue comes from France ***) Includes Industrial and Building & Facility segments ****) 2014 figure
Size of the European building systems market in Caverion’s operating countries (EUR billion) 5.2
5.9
8.9 28.7
3.8 2.0 (Baltics)
5.5
38.4 8.5
Source: Company information, Caverion.
3.6
8.8
Source: Market size calculations based on Euroconstruct (June, 2014) market volumes.
Caverion
Market outlook for Caverion’s business in 2015
14 Company Presentation February 2015
Large projects
o Large tenders for buildings and industry expected to increase during the year.
o Low interest rates and availability of financing are expected to support investments.
o Demand for design & build of total technical solutions is expected to develop favourably.
Technical installation and maintenance
o Expected to be stable. o Requirements for increased
energy efficiency and better indoor conditions and tightening environmental legislation support positive market development.
Managed services
o Need for new services and the demand for life cycle solutions are expected to increase.
o Customers’ focus on their core operations opens opportunities in outsourced operation and maintenance mainly for public authorities, industries and utilities.
Overall changes in the operating environment due to growing uncertainty over the general macroeconomic development and mounting geopolitical tensions may lead to some expected cautiousness in project start-ups and service demand.
Financials
Caverion
Targeting average annual growth in revenue of > 10% by the end of 2016
16
1-6/12: X,XXX 673 718
665 748
608 653
595 688
591 588 567 660
Group revenue (reported) EUR million 1–12/12: 2,803 1−12/13: 2,544
666 547
458 516
148 140 68
597 521 496 458
136 127 71
Sweden Finland Germany Norway Austria Denmark Othercountries
1−12/13 1−12/14
Service and maintenance 54% (1−12/2013: 55%)
Projects46% (45%)
Revenue breakdown by country (reported) EUR million
° Group’s revenue with comparable
exchange rates was in line with the previous year.
° Changes in foreign exchange rates decreased Group revenue by EUR 68.8 million in January−December mainly caused by changes in SEK and NOK.
Revenue by business area 1−12/2014
(-10%) (-5%) (8%) (-11%)
(-8%) (-9%)
Company Presentation February 2015
(4%)
1−12/14: 2,407
Caverion
Positive order backlog development in each quarter in 2014
17
° Order backlog increased by 7% from the end of December 2013.
° Changes in foreign exchange rates decreased the order backlog at the end of December by EUR 31.6 million compared to the end of December 2013
1,335 1,350 1,380 1,324
3/12 3/13 3/14 6/12 6/13 6/14 9/12 9/13 9/14 12/12 12/13 12/14
Order backlog EUR million
Company Presentation February 2015
Q1 Q2 Q3 Q4
+6% +7% +2% +6%
Caverion
Profitability in Q4 on track to reach financial target
18
23.6 25.6 26.3
9.8 9.4 12.9
23.3 25.3
9.6
21.5
34.3
3.5% 3.6% 4.0%
1.3% 1.5%
2.0%
3.9% 3.7%
1.6%
3.8%
5.2%
EBITDA, EUR million (reported)EBITDA margin, % (reported)
1−12/12: 85.3 (3.0%) 1−12/13: 70.9 (2.8%)
o EBITDA margin excl. non-
recurring items was 6.0% in Q4
o EBITDA excluding non-recurring items for 2014 amounted to EUR 80.7 (81.7) million, in line with the previous year.
o The turnaround of the project operations progressed well during the second half of the year.
o The effect of non-recurring items impacting EBITDA was EUR 13.2 million in 2014.
0.4%
Company Presentation February 2015
1−12/14: 67.5 (2.8%)
2.1
Caverion
New guidance for 2015
19
Revenue Caverion estimates that the Group’s revenue will remain at the previous year's level.
EBITDA Caverion estimates that the Group’s EBITDA margin for 2015 will grow significantly.
Company Presentation February 2015
Caverion
Working capital supporting our 2016 targets
20
100
120
46
64
48 49
-19
4%
5%
2%
3%
2% 2%
-1%
Working capital,EUR million
Working capital to sales,% (LTM)
Working capital
o More than EUR 100 million of
working capital released in the past 18 months through:
° Increased focus on managing working capital
° Cultural change ° Improved processes and
tools for invoicing
° Decrease by EUR 65 million compared to 12/2013 and by EUR 119 million compared to 6/2013.
° Efficient working capital management enables us to develop our strategic business mix.
Company Presentation February 2015
4−6/13 7−9/13 10−12/13 1−3/14 4−6/14 7−9/14 10−12/14
Caverion
Strong rolling 12-month cash flow
21
7.2
-11.2
11.1
101.3
-11.1
4.1
20.5
100.0
108.5
90.1 105.4
114.8 113.5
1−3/13 4−6/13 7−9/13 10−12/13 1−3/14 4−6/14 7−9/14 10−12/14
Rolling 12 months
o Strong rolling 12-month cash
flow supported by efficient management of working capital
o Target to reduce seasonality
Company Presentation February 2015
Operating cash flow before financial and tax items EUR million
Caverion
Low level of capital expenditure
*) Capital expenditures consist of investments in tangible (property, plant and equipment) and intangible assets, excluding acquisitions.
22 Company Presentation February 2015
Continuous development and investment in technologies, processes and competences Capex in 2014 ° Capex investments in
2014 totalled EUR 23.4 million, mainly relating to IT and the development of common business processes.
1.5
6.1 6.6
27.8 23.4
0.06% 0.21% 0.24%
1.09%
0.97%
2010 2011 2012 2013 2014
Capital expenditure (EUR million)* % of sales
Caverion
Debt structure
23
o Loan portfolio total:
EUR 149.0 million
o Average interest rate after hedges: 2.1%
Loan portfolio
Interest rate type (after hedges)
Debt maturity EUR million
Interim Report 1-6/2014
Banks 93%
Insurancecompanies 5%
Others 2%
Fixedinterest21%
Floatinginterest79%
53
92
2 2
2015 2016 2017 2018
Caverion
Net debt reduced to EUR 50 million
24
Gross debt to net debt EUR million
Liquidity reserve EUR 178 million EUR million
Development of net debt EUR million
Interim Report 1-6/2014
96
53 99
50
Long-term borrowings Short-termborrowings
Cash and cashequivalents
Net debt99
79
Unused creditfacilities
Cash and cashequivalents
194 190
87 104
143 132
50
6/13 9/13 12/13 3/14 6/14 9/14 12/14
o Gross debt decreased by
EUR 71 million in 2014
o Dividend of EUR 27.6 million was paid in April 2014.
Caverion
Dividend policy intact
Dividend pay-out at least 50 per cent of the net profit for the period.
25
o The Board of Directors proposes a dividend of EUR 0.22 per share.
Company Presentation February 2015
Appendix
Caverion
Key figures
EUR million 10−12/14 10−12/13 Change 1−12/14 1−12/13 Change
Order backlog, end of period 1,323.6 1,240.7 7% 1,323.6 1,240.7 7%
Revenue 660.2 688.1 -4% 2,406.6 2,543.6 -5%
EBITDA excluding non-recurring items 39.3 26.7 47% 80.7 81.7 -1%
EBITDA margin excluding non-recurring items, % 6.0 3.9 3.4 3.2
EBITDA 34.3 25.3 36% 67.5 70.9 -5%
EBITDA margin, % 5.2 3.7 2.8 2.8
Earnings per share, basic, EUR 0.16 0.14 17% 0.22 0.28 -22%
Working capital -19.3 46.0 -19.3 46.0 Operating cash flow before financial and tax items 100.0 101.3 -1% 113.5 108.5 5%
Interest-bearing net debt, end of period 50.2 86.5 -42% 50.2 86.5 -42%
Personnel, average 17,161 17,753 -3% 17,300 18,071 -4%
27
Comparative figures for 2013 are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013).
Company Presentation February 2015
Caverion
Several large orders received in October−December
Deutsche Rentenversicherung Bund (DRV), Berlin, Germany Renovation of building systems and related project management for German statutory pension insurance scheme’s administrative building. The delivery will include a vast range of fire protection systems and sustainable technology such as cooling ceilings, heat recovery systems and rainwater recycling, among others. ° Service areas: Project
Management, Project Execution ° Disciplines: Heating &
Sanitation, Ventilation, Cooling, Security & Safety
° Contract value: ~EUR 15.6 million
° Lifespan: Q4/2014−early 2016
28
DRV
Financial Statements Bulletin 2014
Baxter, Krems, Austria Delivery of building systems, including cleanroom technology, for the industry client Baxter’s production plant. The building will be supplied with energy-efficient heating, cooling and compressed air systems, and it will be connected to remote management for optimised energy use. ° Service areas: Project
Management, Project Execution ° Disciplines: Heating &
Sanitation, Ventilation & Air Conditioning, Security & Safety
° Contract value: Consortium with Molin, Caverion part: EUR 6 million
° Size: 15,000 m² ° Lifespan:Q4/2014–6/2015
Caverion
Several large orders received in October−December
29
Fingrid, Finland Caverion provides technical maintenance for Fingrid’s electricity substations in Lapland. The technical maintenance agreement covers the basic maintenance of substations such as equipment service and substation inspections. ° Service areas: Technical
Maintenance ° Disciplines: Electricity ° Contract value: not disclosed ° Size: All Fingrid’s substation’s in
Lapland ° Lifespan: 2015–2017
DRV
Financial Statements Bulletin 2014
Sør-Trøndelag College, Norway A total delivery of building systems for the new Technology Building. The building is being constructed as a passive house and includes energy-efficient technology such as heat recovery systems and Caverion’s own ClimaCeil solution. ° Service areas: Design &
Engineering, Project Management, Project Execution
° Disciplines: Heating & Sanitation, Ventilation & Air Conditioning, Electricity, Security & Safety, Automation
° Contract value: EUR 9 million ° Size: 16,000 m2 ° Lifespan: Q4/2014-end of 2016
Sør-Trøndelag College
Slyngstad Aamlid Arkitekter
Caverion
Several large orders received in October−December
Huddinge hospital, Sweden Caverion provides building systems and related project management and advisory services to the new medical education center, which will be used by the Royal Institute of Technology, Karolinska Institute and the Red Cross. The project utilises 3D modelling for virtual design and construction. ° Service areas: Advisory
Services, Project Management, Project Execution
° Disciplines: Heating & Sanitation, Ventilation & Air Conditioning, Electricity
° Contract value: EUR 6.8 million ° Size: ~20,000 m² ° Lifespan: Q4/2014-Q2/2016
30
Holstebro police station, Denmark The life cycle project realised with a public-private partnership model includes the total delivery of all building systems for the new property, followed by responsibility for operation, service and maintenance for 25 years. The property will be connected to remote management, which ensures agreed conditions and optimal energy use in the building. ° Service areas: Advisory
Services, Design & Engineering, Project Management, Project Execution, Technical Maintenance, Managed Operations and Managed Life Cycle
° Disciplines: Heating & Sanitation, Ventilation & Air Conditioning, Electricity, Security & Safety, Automation
° Contract value: EUR 18.8 million
° Size: 12,000 m2 ° Lifespan: 2014−2041
HOLSTEBRO
Financial Statements Bulletin 2014
Caverion
Acquisitions have contributed to revenue growth through the cycle
31
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.
Revenue, EUR million
678 1,021
1,680 1,797 1,892 2,140
2,396 2,125
2,353
2,876 2,803 2,544 2,407
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Calor AB ABB Building Systems MCE AG
caverion GmbH
Acquisition period
Integration and development
Integration and development
Acquisition period
Group revenue EUR million
Company Presentation February 2015
Caverion 32
M&A as a growth driver 50% of revenue growth over cycle from acquisitions
M&A criteria o Good strategic fit
• Geographical coverage
• Business portfolio
• Customer sectors
o Complementary skills & resources
o Business culture
o Value creation potential
o Profitability turn-around
o Strong local market position
Valuation criteria o Internal valuation always
prepared
o Key multiples analysed:
o EV/Sales
o EV/EBITDA
o EV/EBIT
o P/E
o Payback time
o Multiple levels vary depending on the target as well as market situation
Company Presentation February 2015
Caverion
17,074 employees at the end of December
33
Employees by country at the end of December 2014
° In 2014, we continued to develop a lean organisation and a winning team:
° Talent management ° Organisational development ° Heads of divisions Sweden,
Germany and Eastern Europe and Group CIO hired
° Over 1,200 trainees and apprentices
° In November 2014, the employee
engagement survey results with a high response rate and improving engagement were communicated group wide as a basis for further development.
° Continuous improvement for occupational health and safety of employees as a key target
° The accident frequency rate (number of accidents per one million work hours) was on the stable level 10.1 in 2014 (2013: 9.2).
Company Presentation February 2015
Finland 28%
Sweden 23%
Norway 16%
Germany 14%
Austria 4%
Denmark 6%
Other countries 9%
Caverion
Nominee registered and non-Finnishholders 33.8% (Dec 31, 2014: 33.0%)
Households20.4% (20.7%)
General government9.2% (10.1%)
Financial and insurance corporations14.3% (13.7%)
Non-profit institutions5.9% (5.9%)
Non-financial corporations and housingcorporations16.5% (16.6%)
32,508 shareholders on January 30, 2015
34
Owners by category by shares owned
A total of shareholders
32,508 (Dec 31,2014:
32,837)
Company Presentation February 2015
Major shareholders on June 28,2013
Largest shareholders
Shares, pcs
% of share
Capital
Change after December,
pcs
Change after December,
%
1. Structor S.A. 17,840,000 14.20 0 0.00
2. Funds held by Antti Herlin, incl. directly held shares 13,150,180 10.47 0 0.00
3. Fondita funds 3,820,000 3.04 -30,000 -0.78
4. Ilmarinen Mutual Pension Insurance Company 3,648,591 2.91 -1,060,853 -22.53
5. Nordea funds 3,162,892 2.52 -101,678 -3.11
6. OP funds 2,978,616 2.37 10,000 0.34
7. Varma Mutual Pension Insurance Company 2,864,393 2.28 0 0.00
8. Aktia funds 2,378,887 1.89 0 0.00
9. The State Pension Fund 1,850,000 1.47 0 0.00
10. Elo Pension Company 1,344,468 1.07 0 0.00
11. Danske Invest funds 1,347,685 1.07 473,000 54.08
12. Brotherus Ilkka 1,304,740 1.04 0 0.00
13. Evli funds 1,143,705 0.91 40,000 3.62
14. SEB Investment funds 1,080,600 0.86 143,000 15.25
15. Etera Mutual Pension Insurance Company 757,446 0.60 0 0.00
16. Säästöpankki funds 586,052 0.47 0 0.00
17. Odin funds 537,068 0.43 0 0.00
18. Caverion Oyj 509,257 0.41 0 0.00
19. FIM funds 459,511 0.37 21,000 4.79
20. Föreningen Konstsamfundet rf 423,002 0.34 0 0
20 largest, total 61,187,093 48.72 All shares 125,596,092 100
Caverion
Caverion’s Board of Directors Re-elected by the AGM on March 17, 2014
Henrik Ehrnrooth (b. 1954) M.Sc. (Forest economics), B.Sc. (Econ.) Chairman of the Board Share ownership: 17,840,000* Independent of company: Yes Independent of owners: No
Michael Rosenlew (b. 1959) M.Sc. (Econ.) Managing Director of Mikaros AB Share ownership: 0 Independent of company: Yes Independent of owners: Yes
Ari Lehtoranta (b. 1963) M.Sc. (Eng.) Vice Chairman of the Board President and Chief Executive Officer of Nokian Tyres plc Share ownership: 0 Independent of company: Yes Independent of owners: Yes
Eva Lindqvist (b. 1958) M.Sc. (Eng.), MBA Professional board member Share ownership: 1,500 Independent of company: Yes Independent of owners: Yes
Anna Hyvönen (b. 1968) Lic. Tech. Executive Vice President, Finland & Baltics, Ramirent Plc Share ownership: 0 Independent of company: Yes Independent of owners: Yes
*) Henrik Ehrnrooth holds indirectly with his brothers Georg Ehrnrooth and Carl-Gustaf Ehrnrooth a controlling interest in Structor S.A., the largest shareholder of Caverion Corporation.
35 Company Presentation February 2015
Caverion
Caverion Group Management
36
Matti Malmberg Service efficiency
Antti Heinola CFO
Karl-Walter Schuster Project excellence
Sakari Toikkanen Group Development & Support
Merja Eskola Human Resources
Fredrik Strand President and CEO
Jarno Hacklin Finland
Erkki Huusko Industrial Services
Thomas Lundin Sweden
Peter Rafn Denmark
Knut Gaaserud Norway
Manfred Simmet Austria
Päivi Alakuijala Marketing & Communications
Group key executives
Business area executives Division executives
Juhani Pitkäkoski Mergers & Acquisitions
Werner Kühn Germany
Company Presentation February 2015
Juhani Pitkäkoski (acting Head of Division Eastern Europe) Eastern Europe