Review by the President and CEO

Interim Report 1-6/2014  (July 22, 2014)

“The work to move from the old YIT financial holding model into a competitive coherent service and project corporation with common processes and tools is progressing well with full speed.

During April–June we have reviewed our overall project portfolio more closely in all the divisions and revised the cost estimates and provisions relating to some low-performing projects. The review has negatively impacted the reported EBITDA and the EBITDA full year guidance due to cost estimate adjustments to projects in the completion phase, provisions made for low-performing active projects and provisions made for old, completed projects. The latter has been considered as non-recurring items as defined in the financial tables under note 5. Caverion is conservative in defining non-recurring items, which are excluded from our EBITDA guidance.

Our Q2 results should be seen as an integrated part of our overall performance and part of completing the demerger and restructuring of the operations within Caverion and not an individual quarter as projects typically stretch over 12-24 months.

We are still in progress in increasing our profitability. This is the foundation we need in order to achieve growth in line with our vision: to become a leading European provider of advanced and sustainable life cycle solutions for buildings and industries.

We also strive to have more efficient and harmonised processes in all our countries. Having the best people is not enough, if the processes and tools supporting their work are not sufficient. We have therefore initiated process development and it is our firm goal to have all the redefined processes in place as by the end of the year.

In addition, we are investing in tools and templates to shorten the invoicing process. Our improved working capital management is already bearing fruit, which can be seen in our improved cash flow from operations for April–June."

Fredrik Strand