interim report january june 2015 - building and … service and maintenance: activity level remained...

Interim Report January–June 2015

Fredrik Strand, President and CEO

Antti Heinola, CFO July 23, 2015

Contents

o Group development

o Cash flow and working capital

o Financing

o Market outlook and guidance

for 2015

Caverion

Summary of Q2/2015

3

EBITDA

° EBITDA for Q2 amounted to EUR 22.0 million, up from the previous year.

° The improved performance in the second quarter compared to last year, is largely explained by the write downs connected to the project portfolio reviews done in 2014.

Revenue

° Revenue was EUR 638.1 million in Q2, an increase of 8 percent compared to the previous year.

° The improved performance in the second quarter compared to last year, is largely explained by the write downs connected to the project portfolio reviews done in 2014.

Order backlog

° Order backlog grew by 3% compared to the previous year and remained on a par with the previous quarter.

Working capital and operating cash flow

° Working capital amounted to EUR 7.7 million (Q2/2014: 48.6).

° Operating cash flow before financial and tax items was EUR 1.8 million (Q2/2014: 4.1).

Interim Report 1-6/2015

Caverion

Key figures

EUR million 4−6/15 4−6/14 Change 1−6/15 1−6/14 Change 1−12/14

Order backlog 1,393.1 1,350.3 1,393.1 1,350.3 1,323.6

Revenue 638.1 588.4 1,201.5 1,179.7 2,406.6

EBITDA 22.0 2.1 36.2 11.7 67.5

EBITDA margin, % 3.4 0.4 3.0 1.0 2.8

Earnings per share, basic, EUR 0.08 -0.03 0.13 -0.02 0.22

Working capital 7.7 48.6 7.7 48.6 -19.3

Operating cash flow before

financial and tax items 1.8 4.1 11.7 -7.0 113.5

Interest-bearing net debt 84.9 142.5 84.9 142.5 50.2

Personnel, average for the period 17,032 17,333 17,018 17,354 17,300

4 Interim Report 1-6/2015

Caverion

Group revenue up from the previous year

5

292 257 230 245

64 60 32

307 258 242 217

72 70 36

Sweden Finland Germany Norway Austria Denmark Othercountries

1−6/14 1−6/15

Service and maintenance 54% (1−6/2014: 54%)

Projects46% (46%)

Revenue breakdown by country EUR million

° Revenue was EUR 1,201.5 million in January−June, an increase of 2 percent compared to the previous year.

° Revenue increased in all countries apart from Norway.

° In Norway the full effect of the exit of one large technical installation and maintenance and IT services contract is now fully visible.

Revenue by business area 1−6/2015

(5%) (1%) (5%) (-11%)

(11%) (16%)


(15%)

1-6/12: X,XXX

608 653

595

688

591 588 567

660

563

638

Group revenue EUR million 1−12/13: 2,544 1−12/14: 2,407

Caverion

Service and maintenance: activity level remained stable


o The technical installation and

maintenance market was

stable overall.

o Successful in Industrial

Solutions in executing

seasonal shutdowns.

o General interest in managed

services and life cycle

solutions continued to

increase.

340 363

320

386

323 319 305

350

311 340

56% 56% 54% 56% 55% 54% 54% 53% 55% 53%

Service andmaintenancerevenue, EUR million

% of total Grouprevenue

Service and maintenance revenue

1−12/13:

1,409 (55%)

1−12/14:

1,297 (54%)

Caverion

Several multi-million projects announced in Q2

7

° Finland: Project market is improving slowly and Caverion has been active and able to secure some large new deals, especially in Industrial solutions.

° Norway: Lower activity related to the oil industry.

° Germany, Austria and Sweden: Demand remained favourable in a stable market environment.

° Denmark and Eastern Europe: Good development with new clients.


268 290

274 302

268 270 262

310

253

298

44% 44% 46% 44% 45% 46% 46% 47% 45% 47%

Project businessrevenue,EUR million

% of total Grouprevenue

Project business revenue

1−12/13:

1,134 (45%)

1−12/14:

1,110 (46%)

Caverion

Profitability on track to reach financial target

8

9.4 12.9

23.3 25.3

9.6

2.1

21.5

34.3

14.2

22.0

1.5 2.0

3.9 3.7

1.6 0.4

3.8

5.2

2.5

3.4

EBITDA, EUR million EBITDA margin, %

1−12/13: 70.9 (2.8%)

o EBITDA for Q2 amounted to EUR 22.0 million, up from the previous year.

o The improved performance in the second quarter compared to last year, is largely explained by the write downs connected to the project portfolio reviews done in 2014.

o The performance during the rest of the year is considered to be more in line with last year.


1−12/14: 67.5 (2.8%)

70.9 71.1 60.3 58.5

67.5 72.1

92.0

10−12/13 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15

EBITDA, EUR million (rolling 12m)

Caverion

Stable order backlog development in Q2

9

° Order backlog grew by 3% compared to the previous year and remained on a par with the previous quarter.

1,335 1,392

1,350 1,393

3/12 3/13 3/14 3/15 6/12 6/13 6/14 6/15 9/12 9/13 9/14 12/1212/1312/14

Order backlog EUR million


Q1 Q2 Q3 Q4

+4% +3%

Caverion

Examples of orders received in April−June

Dixi, Vantaa, Finland

Caverion continues cooperation with YIT in Dixi’s second phase by providing total technical solutions for the Office and Commercial Centre. Caverion was also responsible for delivering the building systems of the first phase which was completed and came into use in January 2015.

° Service areas: Design, Project Execution

° Technical disciplines: All building systems of the property

° Contract value: ~EUR 7.6 million

° Lifespan: Second phase is set to be completed in 2017

° Size: 4,000 m2 of commercial premises and 8,000 m2 of office space


Deutsche Telekom, Hamburg, Germany

Caverion provides building solutions to a new Deutsche Telekom office complex in Hamburg. Caverion is responsible for project execution and covers the technical disciplines of heating and sanitation, cooling and electricity.

° Service areas: Project Execution

° Technical disciplines: Heating and sanitation, Cooling, Electricity

° Contract value: EUR 14.3 million

° Lifespan: 6/2015−6/2016

° Size: 34,000 m²

Deutsche Telekom

Caverion


Metsä Fibre, Äänekoski, Finland Caverion will deliver a total of five pulp towers to Metsä Fibre’s new bioproduct plant. Two of these towers are among the largest in the world with a volume of 15,000 m3. The contract covers project management, design, materials purchase, prefabrication and installation. The bioproduct 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

Metsä Fibre

Caverion


Frankfurt School of Finance and Management, Frankfurt am Main, Germany Caverion implements a large project with total technical solutions to the new campus of Frankfurt School of Finance and Management. Caverion is responsible for design and engineering and project execution. Campus will be equipped by Krantz Multifunctional AVACS sails. ° Service areas: Design &

Engineering, Project Execution ° Technical disciplines: Heating

and sanitation, Ventilation and air conditioning, Cooling, Electricity, Automation, Security and safety

° Contract value: not disclosed ° Lifespan: completed in June

2017 ° Size: 32,500 m²


Moss municipal property company, Norway Caverion delivers Managed Life cycle services for Moss municipal property in the form of Energy Performance Contracting (EPC). The aim is to reduce the energy consumption of these properties by 45% through upgrading, modernising and optimising the building systems.

° Service areas: Managed Life Cycle (Design & Engineering, Project Execution, Project Management, Managed Operations)

° Technical disciplines: Heating, Ventilation and air conditioning, Automation

° Contract value: not disclosed ° Lifespan: The first of three

phases starts in June 2015 ° Size: 91,000 m²

Frankfurt School of Finance

and Management

Caverion


The Royal College of Music, Stockholm, Sweden

Caverion provides building systems on the new campus of The Royal College of Music in Stockholm and installs heating and sanitation, cooling and electricity systems to the property.

° Service areas: Project Execution, Project Management

° Technical disciplines: Heating and Sanitation, Cooling, Electricity

° Contract value: ~EUR 4.3 million

° Lifespan: work on site underway and will be completed in 2016

° Size: 21,000 m2


Uppsala University, Uppsala, Sweden

Caverion helps to turn one of Sweden’s oldest universities into a modern office building by delivering building solutions.

Caverion delivers ventilation & air conditioning, electricity solutions as well as information and communications to Uppsala University’s new office building, Segerstedthuset.

° Service areas: Project Execution, Project Management

° Technical disciplines: Ventilation and air conditioning, Electricity, Information and communication

° Contract value: EUR 5.4 million

° Lifespan: completed during spring 2017

° Size: 22,100 m²

Uppsala University

Caverion

17,113 employees at the end of June

14

Employees by country at the end of June 2015


Finland 28%

Sweden 22%

Norway 15%

Germany 14%

Denmark 6%

Austria 4%

Other countries 10%

Continuous improvement

for occupational health and safety

Safety and well-being of employees as a key target

During the period we continued to develop a winning team: ° Organisational management

° Talent management

° Leadership development

° International teams strengthened with key professionals and local trainees.

Cash flow and working capital

Caverion

Firm grip on managing working capital

16

100

120

46

64

49 49

-19 -13

8

4%

5%

2%

3%

2% 2%

-1% -1% 0%

Working capital,EUR million

Working capital to sales,% (LTM)

Working capital

o More than EUR 110 million of working capital released since 9/2013:

° Advances received stable at a level of EUR 176.9 million (7-9/2013: EUR 160.9 million)

° Improvement from more efficient invoicing process

° Efficient working capital management enables us to develop our strategic business mix.

° Successful in Industrial Solutions in executing seasonal shutdowns.

° As the invoicing is done at the end of the project the working capital is reflected accordingly.


4−6/13 7−9/13 10−12/13 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15

Caverion

Rolling 12-month cash flow up to EUR 132 million

17

7.2

-11.2

11.1

101.3

-11.1

4.1

20.5

100.0

9.8 1.8

108.5

90.1

105.4 114.8 113.5

134.4 132.2

1−3/13 4−6/13 7−9/13 10−12/13 1−3/14 4−6/14 7−9/14 10−12/14 1−3/15 4−6/15

Rolling 12 months

o Strong rolling 12-month cash flow supported by efficient management of working capital

Development and investment

o Continuous development and investment in technologies, processes and competences

o Capex investments of EUR 5.5 million in Q2, mainly relating to IT and the development of common business processes.


Operating cash flow before financial and tax items EUR million

Financing

Caverion

Balanced debt structure

19

o Loan portfolio total: EUR 127.3 million

o Average interest rate after hedges: 1.41%

Loan portfolio

Interest rate type (after hedges)

Debt maturity EUR million


Banks 93%

Insurancecompanies 5%

Others 2%

Fixedinterest86%

Floatinginterest14%

New financing arrangement

totalling EUR 200 million agreed

in May 2015

o Strengthened debt

maturity structure

o Five-year syndicated

unsecured revolving credit

facility of EUR 100 million

o Five-year bilateral

unsecured term loans in

total of EUR 100 million

14

40

22 22 20

10

2015 2016 2017 2018 2019 2020

Caverion

Strong balance sheet and liquidity

20

Gross debt to net debt EUR million

Liquidity reserve EUR 161 million EUR million

Development of net debt EUR million


86

41 42

85

Long-term borrowings Short-termborrowings

Cash and cashequivalents

Net debt 42

119

Unused creditfacilities

Cash and cashequivalents

o Net debt remains in Q4 2014 level

o Strong cash position enabled voluntary repayment of gross debt by EUR 20 million

194 190

86 104

143 132

50 50

85

6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15

Market outlook and guidance

Caverion

Market outlook for Caverion’s business in 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.

Caverion

Guidance for 2015 reiterated

23

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.


Caverion

Dividend policy

Dividend pay-out at least 50 per cent of the net profit for the period.

24

o A dividend of EUR 0.22 per

share was paid on April 2,

2015.


Additional slides

Caverion

30,744 shareholders on June 30, 2015

27

Major shareholders on June 28,2013

Largest shareholders

Shares,

pcs

% of share

Capital

Change after

March 2015,

pcs

Change after

March 2015,

%

1. Structor S.A. 17,840,000 14.20 0 0.00%

2. Herlin Antti and companies controlled by him 13,370,180 10.65 140,000 1.06%

3. Ilmarinen Mutual Pension Insurance Company 4,195,551 3.34 646,960 18.23%

4. Fondita funds 3,542,000 2.82 -30,000 -0.84%

5. Varma Mutual Pension Insurance Company 2,864,393 2.28 0 0.00%

6. Nordea funds 2,821,323 2.25 -287,507 -9.25%

7. OP funds 2,310,518 1.84 -690,839 -23.02%

8. Aktia funds 2,155,512 1.72 55,000 2.62%

9. The State Pension Fund 1,850,000 1.47 0 0.00%

10. Danske Invest funds 1,748,568 1.39 106,700 6.50%

11. Elo Pension Company 1,344,468 1.07 0 0.00%

12. SEB Investment Funds 1,304,605 1.04 51,355 4.10%

13. Evli funds 1,162,018 0.93 -81,687 -6.57%

14. Brotherus Ilkka 1,048,265 0.83 -137,475 -11.59%

15. Etera Mutual Pension Insurance Company 757,446 0.60 0 0.00%

16. Säästöpankki funds 731,052 0.58 145,000 24.74%

17. Odin funds 526,311 0.42 0 0.00%

18. Caverion Oyj 510,987 0.41 237 0.05%

19. Danske Invest Finland Opportunities 430,000 0.34 80,000 22.86%

20. Föreningen Konstsamfundet rf 423,002 0.34 0 0.00%

20 largest, total 60,936,199 48.52

All shares 125,596,092 100.00

Nominee registered and non-Finnishholders 35.6% (Mar 31, 2015: 34.7%)

Households19.1% (19.5%)

General government9.8% (9.3%)

Financial and insurance corporations13.8% (14.3%)

Non-profit institutions5.5% (5.8%)

Non-financial corporations and housingcorporations16.3% (16.3%)

Owners by category by

shares owned

30,744

owners

(Mar 31, 2015:

31,489)

interim report january june 2015 - building and … service and maintenance: activity level remained...

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