Interim Report January–September 2016 Sakari Toikkanen, Interim President and CEO Martti Ala-Härkönen, CFO October 27, 2016

Contents Group development Cash flow and working capital Financing Market outlook and guidance for 2016

Summary of Q3/2016 Order backlog o

Order backlog has slightly decreased from the previous year and amounted to EUR 1,450.9 million.

EBITDA °

°

°

Revenue o o

3

Revenue was EUR 582.0 million. The revenue growth was largest in Finland and Industrial Solutions compared to the previous year.

Interim Report 1-9/2016

EBITDA excl. restructuring costs was EUR 19.5 million. Affected by restructuring costs of EUR 5.7 million in Q3. EBITDA was EUR 13.8 million.

Working capital and free cash flow °

°

Working capital amounted to EUR 57.9 million. Free cash flow was EUR -38.8 million.

Key figures EUR million

7−9/16

7−9/15

Change

1−9/16

1−9/15

Change

1−12/15

Order backlog

1,450.9

1,477.2

-2%

1,450.9

1,477.2

-2%

1,461.4

582.0

573.7

1%

1,758.1

1,775.3

-1%

2,443.0

Revenue EBITDA excluding restructuring costs EBITDA margin excluding restructuring costs, % EBITDA

26.1

3.3

1.5

13.8

21.3

EBITDA margin, %

2.4

3.7

Operating profit

5.0

14.7

Operating profit margin, %

0.9

2.6

Earnings per share, basic, EUR

0.02

0.08

Working capital

57.9

36.1

Free cash flow

-38.8

-14.2

Interest-bearing net debt

169.7

101.9

80.4

43.4

17,375

17,369

Gearing, % Personnel, average for the period 4

19.5

Interim Report 1-9/2016

-35%

-

10.9

57.5

0.6

3.2

3.7

-11.6

38.1

65.0

-0.7

2.1

2.7

-70%

-0.08

0.21

0.37

60%

57.9

36.1

-100.1

-19.8

169.7

101.9

80.4

43.4

17,486

17,286

-66%

67%

0%

-81%

91.5

60%

-13.6 53.9

67%

29.8 11.6

1%

17,321

Immediate actions to improve profitability °

Cost reduction through: °

°

°

Restructuring actions: temporary layoffs and personnel reductions estimated to affect approximately 1,000 employees. ° Main focus in divisions Sweden, Denmark-Norway and Germany as well as Group Services. ° By the end 9/2016 717 employees were permanently laid off and 80 people on temporary leave. ° The total cost estimate of the restructuring actions is currently EUR 2024 million (previously approximately EUR 22-26 million) in 2016. Fixed cost reduction relating to development, consultants and travel.

Changes in organisation: °

Projects Group function now supports the project management offices (PMOs) in the divisions.

°

Closing and merging units, sale of three units.

Personnel Reduction FY2016E: 1,000

283 717 1-9/2016

Restructuring costs FY2016E: EUR 20-24m 4.88.8 15,2 1-9/2016

5

Interim Report 1-9/2016

Est. Q4

Est. Q4

Changes in the Group organisation °

New appointments: ° ° °

°

New Projects and Services Group functions established. ° °

°

Implementation, audit and follow up Support to divisions

Fixed costs will be reduced ° °

6

President and CEO CFO Executive Vice President & CEO, Division Sweden

Prioritisation of internal development programmes Less Group employees

Interim Report 1-9/2016

Order backlog decreased slightly from the previous year °

Order backlog decreased by 2% compared to the previous year (also at comparable rates.

Order backlog EUR million

Q1

Q2

Q4

Q3

1 451

°

Completion of the restructuring and focus on higher project margins has affected the order backlog in Q3.

°

A stricter project tendering process applied since Q2.

Comparative figures are carve-out figures for the periods before the effective date of the partial demerger (June 30, 2013)., 7

Interim Report 1-9/2016

Some examples of our recent contracts (July-September 2016) Managed Services

Technical Installation (Tunnel technology) Strabag Infrastructure & Safety Solutions Austria Value: ~EUR 4.8 million

8

Technical Maintenance

Large Project

Elgiganten (40 stores, nationwide contract) Denmark Value: Not disclosed

Novo Nordisk (New insulin production facility) Denmark Value: EUR 5.4 million

Revenue development Group revenue EUR million

o 1−12/15: 2,443 668

638

1−3/15

616

574

563

4−6/15

7−9/15

561

10−12/15

1−3/16

4−6/16

582

o

7−9/16

o

Revenue breakdown by division EUR million (3%) 377

390

(-9%) 386

353

(-11%) 375

334

(5%) 266 278

(14%) 207

236

(1%) 109 111

Germany

Sweden

Denmark-Norway

1−9/15

9

Interim Report 1-9/2016

Industrial Solutions

Finland

1−9/16

Austria

(3%) 55

57

Eastern Europe

o

Revenue was EUR 1,758 (1,775) million in January−September 2016. The revenue growth was largest in Finland and Industrial Solutions compared to the previous year. In Denmark-Norway, the revenue is impacted by the general economic environment in Norway. In Sweden Caverion has not been able to capitalise on the current market environment.

Operating environment by business area (1-9/2016) Technical Installation and Maintenance o o o

o

10

1–9/2016

The market was stable. The price competition was tight in Technical Installations projects. In Norway, the business was still impacted by slowdown in the oil industry despite the recent stabilisation.

Large Projects o

Revenue by business area

Positive signs in tendering activity, especially in the public and industrial sectors. Recent uncertainty in economical situation has affected new projects resulting in price pressure and further project postponements or cancellations.

Interim Report 1-9/2016

Technical Installation and Maintenance (66%) Large Projects (21%) Managed Services (13%)

Managed Services o o

Demand remained strong. Interest in PPP’s and other Life Cycle Solutions increasing in the Nordic countries while they still represent only a marginal part of the entire market

Profitability affected by restructuring actions as well as cost estimate adjustments and provisions in the project portfolio o

o

11

EBITDA excl. restructuring costs was: o

EUR 19.5 million for Q3/2016 (Q3/2015 EBITDA: 21.3)

o

EUR 26.1 million for 1-9/2016 (1-9/2015 EBITDA: 57.5)

EBITDA, EUR million EBITDA margin, % 1−12/15: 91,5 (3,7 %)

Restructuring costs were: o

EUR 5.7 million for Q3/2016

o

EUR 15.2 million for 1-9/2016

o

Not included in restructuring costs: o

Project portfolio review in Sweden resulting in revised cost estimates and provisions with a negative impact of EUR 15 million for April–June.

o

Adjustment reflecting risks in some projects in division Germany and Denmark-Norway, with a negative impact of EUR 4.1 million for July– September.

Interim Report 1-9/2016

34,0

14,2

22,0

21,3

3,4

3,7

5,1 13,8

11,5

2,5

2,4

2,0

-2,3 -14,4 1–3/15

4–6/15

7−9/15

10–12/15

1−3/16

4–6/16

7−9/16

17,281 employees at the end of September Adjusting overcapacity and developing competitiveness: ° The planned personnel layoffs are estimated to affect up to 1,000 employees during 2016. ° The main focus in divisions Sweden, Denmark-Norway and Germany and in Group Services. Group-wide efforts to develop a Caverion way of working: °

°

°

12

Work safety and well-being of all employees as a constant priority. Code of conduct to guide behaviours of all employees in every day collaboration. Strengthening project management and leadership capabilities.

Interim Report 1-9/2016

Employees by division 9/2016

Denmark-Norway 20% Sweden 19% Industrial Solutions 16% Germany 14% Finland 14% Eastern Europe 11% Austria 5% Group Services 1%

Cash flow and working capital

Financial target: negative working capital °

Working capital was EUR 57.9 million at the end of September (6/2016: EUR 17.1 million).

°

Trade and POC receivables have increased by EUR 49 million from the beginning of the year, due to growth in unbilled POC receivables particularly in Germany and Industrial Solutions.

°

14

Caverion has started an intensified focus on invoicing and receivables management with the aim to improve working capital management and cash flow throughout the Group.

Interim Report 1-9/2016

Working capital, EUR million Working capital to sales, % (LTM)

120 100 4%

5%

64 58

46

3% 49 49 2% 2% 2%

36 8

17 17

2%

1% 1%

1%

0% -19 -13 -1% -1% 6/13 9/13 12/13 3/14

6/14

9/14 12/14 3/15

-14 -1% 6/15 9/15 12/15 3/16 6/16

9/16

Cash flow and investments °

°

Cash flow has deteriorated in 2016 due to low profitability and an increase in working capital. Free cash flow was also impacted by a higher level of investments. Capex investments (incl. acquisitions) totalled EUR 32.0 (17.9) million in JanuarySeptember. ° °

IT investments: EUR 20.0 million. Other investments, incl. acquisitions: EUR 12.0 million.

Operating cash flow before financial and tax items, 100,0 4,1

20,5

9,8

15

Free cash flow = Operating cash flow before financial and tax items – Taxes paid – Net cash used in investing activities (net, including acquisitions and disposals).

Interim Report 1-9/2016

1,8 -8,9

4−6/14

7−9/14

10−12/14

1−3/15

4−6/15

7−9/15

10−12/15

-18,8

-12,3

1−3/16

4−6/16

Free cash flow, EUR million Capex, EUR million 3,1

5,2

4,3

10,8

-15,8

-7,1

1−3/14

4−6/14

7,3

5,5

7−9/15

5,0

9,0

7,6

7,1

73,6 0,8 -6,3

7−9/14

-26,6

17,3

87,6 14,4

°

83,1

-11,1 1−3/14

EUR million

10−12/14

1−3/15

4−6/15

-14,2 7−9/15

10−12/15

-28,8

-32,6

-38,8

1−3/16

4−6/16

7−9/15

Financing

Debt Structure Debt maturity EUR million 120 100 80 60 40 20 0

112

29

30

27 10

2016

2017

2018

2019

2020+

Interest rate type (after hedges)*

Loan portfolio

°

Loan portfolio total: EUR 206.8 million

°

Average interest rate after hedges: 0.87%

Banks 39% Commercial papers 48% Insurance companies 12%

Fixed interest rate 13% Floating interest rate 87%

Others 1% * Interest rates are hedged against interest rate rise.

17

Interim Report 1-9/2016

Liquidity (September 30, 2016) Net debt (EURm) 143 104

2,4x

Q2/14

170 131

132 85

2,3x

1,5x

Q1/14

Net debt/EBITDA (12m)

Q3/14

50

50

0,7x

0,7x Q1/15

Q4/14

2,8x

102 30

0,9x

1,1x

Q2/15

Q3/15

0,3x Q4/15

59

2,1x

0,7x Q1/16*

Q2/16*

Q3/16*

* EBITDA excl. restructuring costs in 2016.

Gross debt to net debt (EURm)

Liquidity reserve EUR 156 million

37

EUR million

129 170 78 Long-term borrowings

18

Interim Report 1-9/2016

119 Short-term borrowings

Cash and cash equivalents

Net debt

37

Unused credit facilities Cash and cash equivalents

Market outlook and guidance

Market outlook for Caverion’s business in 2016 Technical Installation and Maintenance °

Market is expected to remain stable and price competition tight in Technical Installation.

°

Requirements for increased energy efficiency, better indoor conditions and tightening environmental legislation support market development.

°

20

In Norway general economy impacted by slowdown in the oil industry despite recent stabilisation.

Interim Report 1-9/2016

Large Projects

Managed Services

°

New tenders for buildings and industry are expected to increase during the year.

°

Need for new services and the demand for life cycle solutions are expected to increase.

°

Demand for design & build of Total Technical Solutions expected to develop favourably.

°

°

Uncertainty in economical situation has affected new projects resulting in price pressure and further project postponements or cancellations.

Clients’ focus on their core operations opens opportunities in outsourced operation and maintenance mainly for public authorities, industries and utilities.

Guidance for 2016 (revised on October 19) Revenue Caverion estimates that the Group’s revenue for 2016 will remain at the previous year's level (2015: EUR 2,443 million).

21

Interim Report 1-9/2016

EBITDA excluding restructuring costs Caverion estimates that the Group’s EBITDA excluding restructuring costs for 2016 will be in the range EUR 4050 million (2015: EUR 91.5 million).

www.caverion.com/investors

E-mail address: [email protected]

Additional slides

Shareholders on September 30, 2016 Largest shareholders

Shares, % of share Change after Change after pcs Capital June 2016, pcs June 2016, %

1 Structor S.A. 17,840,000 2 Herlin Antti 15,495,180 3 Ilmarinen Mutual Pension Insurance Company 5,013,946 4 Fondita funds 3,465,000 5 OP funds 2,803,892 6 Nordea funds 2,585,255 7 Aktia funds 1,888,970 8 Varma Mutual Pension Insurance Company 1,864,393 9 The State Pension Fund 1,850,000 10 Elo Pension Company 1,611,089 11 Säästöpankki funds 1,378,746 12 SEB Investment Funds 1,058,523 13 Brotherus Ilkka 1,048,265 14 Odin funds 969,797 15 Evli funds 713,571 16 Caverion Oyj 512,328 17 Försäkringsaktiebolaget Pensions-Alandia 420,739 18 Foundation of Brita Maria Renlunds minne 412,000 19 OP Life Assurance Company Ltd 325,181 20 Barry Staines Linoleum Oy 310,000 20 largest, total 61,566,875 All shares 125,596,092 24

Interim Report 1-9/2016

14.20 12.34 3.99 2.76 2.23 2.06 1.50 1.48 1.47 1.28 1.10 0.84 0.83 0.77 0.57 0.41 0.33 0.33 0.26 0.25 49.02 100

0 0 0 -87,000 127,132 -2,149,560 0 0 0 0 20,000 -217,785 0 0 22,704 0 0 0 -7,682 0

0 0 0 -2.45 4.75 -45.40 0 0 0 0 1.47 -17.06 0 0 3.29 0 0 0 -2.31 0

Sector distribution (9/2016) Nominee reg. and nonFinnish 35.3% (June 30: 31.4%) Households 20.3% (20.7%)

31,979 owners

General government 9.5% (9.3%) Financial and insurance corporations 11.3% (13.7%) Non-profit institutions 5.3% (6.2%)