Review by the President and CEO

Half-year Financial Report for January 1 – June 30, 2018 (published July 25, 2018)

“The implementation of the “Fit” phase of our strategy continued to show results in the second quarter of 2018. Our adjusted EBITDA continued to clearly improve, although being periodically impacted by certain project write-downs from older projects as well as one-off legal and strategy-related costs. For the second quarter of 2018, our adjusted EBITDA improved to EUR 12.9 (4.5) million. Both business units improved their margins and our Projects business made a break-even result. For the first half of 2018, our adjusted EBITDA improved to EUR 23.9 (12.3) million. I am pleased that we managed to settle some of our largest old project claims during the quarter, one of them relating to a large Industrial Solutions project. As a consequence, our risk position related to old project risks was reduced.

Operating cash flow before financial and tax items was EUR -15.0 (-25.9) million in the second quarter, impacted by seasonality. Our net debt/EBITDA ratio improved to 0.2, following the calculation principles confirmed with our lending parties.

We continued the strengthening of our Services business and the selective approach in our Projects business. Revenue for the second quarter was EUR 564.8 (563.3) million, up by 0.3 percent or 2.1 percent in local currencies. Revenue for the Services business increased by 4.2 percent or 6.4 percent in local currencies. Revenue for the Projects business declined by 4.0 percent or 2.5 percent in local currencies. I am happy that while maintaining selectivity in our Projects business we were able to stop our revenue decline thanks to the good performance of our Services business.

There was positive development in profitability and cash flow in most divisions in the second quarter. Sweden and Industrial Solutions materially improved their result compared to last year. Finland, Norway and Austria continued to deliver good results.

An important event for the quarter was that Caverion managed to settle for its part with the Bundeskartellamt (German Federal Cartel Office) the cartel case investigated by the authority since 2014. Caverion Deutschland GmbH was imposed an anti-trust fine of EUR 40.8 million. The fine was booked as an expense in the second quarter and will be paid in the third quarter. I am satisfied that this particular matter is now behind us and we can move forward. In the quarter we also successfully strengthened our financial position through a directed share issue totalling EUR 60 million. The proceeds of the issue strengthen our strategic flexibility and enable us to smoothly continue the execution of our strategy going forward. This includes investments in digitalisation and possible bolt-on acquisitions in key areas in Services.

The foundation of our strategy is in providing superior customer value through an excellent customer experience. At the same time, we rigorously continue the further implementation of our “Top performance at every level” Must-Win, which is at the core of our operational development. We are planning to continue the streamlining of our operations in certain divisions during the second half of 2018, which is part of our ”Fit” program and strategic transformation. Our strengthened balance sheet enables a gradual shift towards the Growth phase. With a reduced risk exposure, we are on a more stable path towards improving our profitability going forward.”

Ari Lehtoranta