Review by the Interim President and CEO

Interim Report January-September 2016:

“In the third quarter of 2016, Caverion Corporation continued the restructuring of its operations and the review of its project portfolio. As a result of the review, several projects were still identified with challenges in project management and execution. The identified challenges mainly relate to divisions Sweden, Denmark-Norway, Germany and Industrial Solutions. Based on the review, Caverion has completed and will complete more conservative cost estimate adjustments and provisions related to its project portfolio. The adjustments have an impact in the Group’s third and fourth quarter results in 2016.

Our focus at the end of the year is on the successful completion of the restructuring programme. We now estimate that the total personnel reductions will affect approximately 1,000 employees, i.e. more than initially estimated (700 employees). The total cost estimate of the restructuring actions is currently EUR 20-24 million (previously approximately EUR 22-26 million) in 2016. In addition, we continued to cut back on discretionary fixed costs relating to development, consultants and travelling.

Caverion has also implemented a stricter project tendering process in the Group since the second quarter. Completion of the restructuring and focus on higher project margins has affected the order backlog in the third quarter. As a result Caverion’s order backlog has slightly decreased in the third quarter compared to the previous year. A newly established Projects Group function is now also supporting the project management offices (PMOs) in the divisions.

Despite the increased focus on restructuring, we managed to deliver an EBITDA excluding restructuring costs of EUR 19.5 million (7-9/2015: 21.3) in the third quarter. Our cash flow was still unsatisfactory in the third quarter. In order to address this, we started an intensified focus on invoicing and receivables management with the aim to improve our working capital management and cash flow throughout the Group.

Our market environment remains favourable. Particularly in Finland, Sweden and Germany there are a lot of tenders ongoing. Caverion has an advanced service offering covering the whole life cycle of buildings and industries.

The Board of Directors appointed on September 27, 2016 Ari Lehtoranta as the new President and CEO of Caverion Corporation. Ari is thoroughly familiar with the company, its strategy and operations. Ari will start in his position on January 1, 2017.”

Sakari Toikkanen