roadshow stockholm, june 13, 2013 · ° selectiveness in tendering: keep minimum project margins °...
TRANSCRIPT
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Roadshow Stockholm, June 13, 2013
Juhani Pitkäkoski, CEOMilena Hæggström, Investor Relations Manager
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Caverion
Contents
2 Roadshow 6 June 2013
Rationale for demergerNew Board and ManagementBusiness operationsMarket overviewStrategy and key strengthsFinancialsSummaryAppendix
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Rationale for demerger
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Caverion
Better management focus in separate companies
° Stable Building Systems (Caverion, a company to be formed in the partial demerger) growing in developed Northern and Central Europe
° Capital intensive Construction Services (remaining YIT) seeking growth from Russia, Baltic countries and Central Eastern Europe and from Finland
° As a result, we have better management focus in separate companies
° Stable cash generation potential in Building Systems (Caverion)
° Successful business model development in Construction Services (remaining YIT)
° Both companies are potentially more attractive individually than the current combination
Independent strategies and different investment profiles
Potentially more attractive investment opportunities individually
Good financing possibilities for both companies
Key rationale of the partial demergerIndependent strategies and different investment profiles leading to better management focus
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Caverion
° Service and maintenance of building systems and industrial processes
° Technical building systems installations
° Project deliveries to industry
° Finland, Sweden, Norway, Denmark,
° Russia, Estonia, Latvia, Lithuania,
° Germany, Austria, Poland, the Czech Republic and Romania
° Revenue 2012: EUR 2,803 million
° EBIT 2012: EUR 61 million (2.2% of revenue)
° Operative invested capital 12/2012: EUR 441 million
° Personnel 3/2013: 18,256
Main activities
Caverion to be formed in the partial demerger
Market areas
Key figures*
*) Carve-out figures**) Country split of revenues is based on the location of the customer
25%
21%
20%
19%
6%5% 2% 2%
Revenue by country **
Sweden Finland Norway Germany
Austria Denmark RuBa Other
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New Board and Management
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Caverion
Caverion’s Board of DirectorsBoard of Directors to be elected and approved by the EGM on 17 June 2013, prior the listing
Henrik Ehrnrooth (b. 1954) M.Sc. (Forest economics)Chairman of the BoardDirectors of Pöyry PlcShare ownership: 15,430,000*Independent of company: YesIndependent of owners: No
Michael Rosenlew (b. 1959) M.Sc. (Econ.)Vice Chairman of the BoardManaging Director of Mikaros ABShare ownership: 0Independent of company: YesIndependent of owners: Yes
Ari Lehtoranta (b. 1963) M.Sc. (electrical eng.)Member of the BoardExecutive Vice President of KONE Corporation, Central and North Europe, and Customer Experience. Member of the Executive Board.Share ownership: 0Independent of company: YesIndependent of owners: Yes
Eva Lindqvist (b. 1958) M.Sc. (Eng.), MBAMember of the BoardProfessional Board memberShare ownership: 0Independent of company: YesIndependent of owners: Yes
Anna Hyvönen (b. 1968) Lic. Tech.Member of the BoardSenior Vice President and Managing Director of RamirentFinland OyShare ownership: 0Independent of company: YesIndependent of owners: Yes
*) Henrik Ehrnrooth holds indirectly with his brothers Georg Ehrnrooth and Carl-Gustaf Ehrnrooth a controlling interest in Structor S.A., which will be the largest shareholder of Caverion Corporation.The evaluation is based on the assumption that there will be no changes in issues affecting the evaluation of independency prior to the registration of Caverion Corporation.
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Caverion
Caverion’s Key Management
Matti Malmberg (b. 1960) M.Sc. (Eng.)
Head of Building Services Northern Europe segment and Service efficiency
Antti Heinola (b. 1973) M.Sc. (Econ.)
CFO
Karl-Walter Schuster (b. 1950) M.Sc. (Eng.)
Head of Building Services Central Europe segment and Project excellence
Sakari Toikkanen (b. 1967) Lic. Tech.
Senior Vice President,Business Development Secretary to the Management Board
Juhani Pitkäkoski (b. 1958) LL.M.
President and CEO
Corporate functionsSegments and Business areas
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Business operations
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Caverion
Caverion’s fields of businessOffering that covers all building technologiesService and maintenance related business accounted for 55% of revenues in 2012
Description of main
activities
Share of revenues
2012
Service and maintenance Project deliveries Industrial service and maintenance Industrial project deliveries
Service and maintenance of building systems
Services can be divided:
1. Facility Management (FM) and fixed maintenance contracts
2. AD-HOC services
Service contracts are typically:
1. 2-3 year contracts based on fixed pricing
2. 1 year contracts based on official price lists of Caverion
Technical building systems installations
Design and installation of Building systems, e.g.:• Heating• Plumbing• Cooling• Electrification• Automation• Safety systems• Networks technology systems• All other supply systems
Tender-based as well as more comprehensive Design & Build projects
Service and maintenance to Finnish industry
Comprehensive maintenance partnerships
Field services include • Mechanical maintenance• Electrification and automation• Power plant maintenance
Industrial project deliveries
Comprehensive project deliveries including design, procurement, prefabrication, installation and project management
Ad-hoc project deliveries to other countries
~ 49% ~ 41%
~ 6% ~ 4%
Building services Industrial services in Finland and Sweden
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Caverion
Our services cover all building systems related services for the entire life cycle of the property and industrial facility
11
From the design and installation of building systems to their service and maintenance and property management
Air-conditioning
Heat ElectricityWater Tele
Energy-efficiency
Prefabrication for industry
Fire-safety Property management
Security
Automation and remote monitoring
ICT
Energy certificates of buildings
Cooling
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Caverion
Building servicesGoal is to increase the relative share of service and maintenance business in the sales mixDesign & Build projects are also one key focus area
Service and maintenance
Project deliveries
° Maintenance frequency is based on existing knowledge and estimates and planned by Caverion
° Often part of facility management contract, fixed price task or time period based pricing
° Remote monitoring of building systems and control rooms have been available in Finland already one decade° Over 1,000 buildings are under Caverion’s 24/7 remote monitoring
° Often based on frame agreements with customers, but sold also separately
FM and fixed maintenance contracts
AD-HOC services
° Caverion participating to planning process at very early stage ° Possibility to effect to decisions in final solutions and design° Long-lasting and demanding process do not attract smaller competitors° Provides significantly better margins° Often based on frame agreements with customers, but sold also separately° Able to assume responsibility for maintenance throughout property life cycle
° One- or multi-discipline (TTS) projects tendered based on buyer’s call for bids° Buyer often provides complete drawings and sometimes even material lists° Low profit: relatively easy and low-risk also for smaller and one-discipline
entrepreneurs° Buyer can split different disciplines and/or materials and labour
Design & Build
Tender-based
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Caverion
Industrial services in Finland and SwedenCaverion serves all fields of industry
Industrial service and maintenance
Industrial project deliveries
° Services provided in Finland and Sweden
° One of the leading service providers in Finland
° Maintenance services for different fields of industry
° E.g. mechanical maintenance, electrification and automation and power plant maintenance
° Different service concepts
° Projecting and design as well as outsourcing services
° Special competence and capacity in forest industry maintenance and engineering
° Joint venture Botnia Mill Service
° #1 in high pressure piping systems in Northern Europe
° Mainly high-pressure piping systems for production plants and power plants
° Also tanks, gas holders, heat accumulators, reactors, mass towers, boilers, electricity and automation projects and industrial ventilation
° Comprehensive project deliveries
° Including design, procurement, prefabrication, installation and project management
° Project deliveries are based on special expertise in design and extensive industrial prefabrication in own workshops specialized in manufacturing piping prefabricates, pipe modules, tanks and boiler components
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Caverion
Caverion reporting segmentsBuilding Services Northern Europe segment accounted for 75% of revenues in 2012
Building systems° Technical building systems° Service and maintenance of
building systems
Industrial services and projects(mainly Finland and Sweden)° Project deliveries of technical systems
and processes to industry° Industrial maintenance
Energy efficiency services for properties and industry
Building systems° Technical building systems° Service and maintenance of building systems
Energy efficiency services for properties and industry
Building Services Northern Europe (BSNE) Building Services Central Europe (BSCE)
Offering
Key figures*
in 2012
Operating areas
° Revenue: EUR 2,089.2 million° EBITDA: EUR 59.5 million (2.8% of revenue)° EBIT: EUR 41.1 million (2.0% of revenue)° Personnel at the end of March 2013: 14,870
° Revenue: EUR 714.2 million° EBITDA: EUR 33.2 million (4.6% of revenue)° EBIT: EUR 27.4 million (3.8% of revenue)° Personnel at the end of March 2013: 3,311
° Finland
° Sweden
° Norway
° Denmark
° Russia
° Estonia, Latvia, Lithuania
° Germany° Austria° Poland, Czech Republic, Romania
*) Carve-out figures**) Based on reported segment level country split in annual report 2012
14
64%
Service andmaintenance
(% of revenue 2012)
31%
Service andmaintenance
(% of revenue 2012)
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Caverion
Building Services Northern Europe in briefLargest reporting segment with revenue of EUR 2,089 million and 15,159 employees in 2012
° Finland, Sweden, Norway, Denmark, Russia and the Baltic countries
° Service that covers the entire life cycle of buildings
° Technical building systems projects:° All building technology: heating,
ventilation, piping, cooling, electrification, security, automation and fire fighting systems etc.
° Design and installation
° Service and maintenance of building systems:° Including modernization and facility
management (FM)
° Industrial services: Project deliveries and service and maintenance
Focus area:° Services and maintenance
business (64 % of the segment’s revenue in 2012)
° Increase Design & Build projects
Key figures*
2,0892,0981,804
0
500
1,000
1,500
2,000
2,500
0
2
4
6
8
3.8%
2010
4.9%
EUR million
2012
2.0%
2011
%
RevenueEBIT-%
Geographical presence
7%
Russia andthe Baltic countries
3%
Denmark
Norway 28%
Finland
29%
Sweden34%
Revenue split 2012**
*) Carve-out segment figures, excl. Group services costs allocated to Caverion**) Based on reported segment level country split in annual report 2012
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Caverion
Building Services Central Europe in briefRevenues of EUR 714 million and 3,380 employees in 2012
° Germany, Austria, Poland, the Czech Republic and Romania
° All building systems solutions and service and maintenance
° Project deliveries - accounted for approx. 69% of the segment’s revenue in 2012
° Services and maintenance business accounted for approx. 31% of the segment’s revenue in 2012
Key figures*
Geographical presence
Poland, the Czech Republicand other countries
2%Austria22%
Germany76%
Revenue split 2012**
*) Carve-out segment figures, excl. Group services costs allocated to Caverion**) Based on reported segment level country split in annual report 2012
714779
550
0
200
400
600
800
0
2
4
6
8
2012
3.8%
2011
4.3%
2010
3.0%
EUR million %
RevenueEBIT-%
Focus area:° Aim is to increase the share of
service and maintenance business as well as focus on more profitable Design & Build projects
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Caverion
Potential to improve profitability in both Building Services Northern Europe and Central Europe
The impact of cost savings will be seen during the rest of the year° Selectiveness in tendering: keep minimum project margins° Improvement in project management° Focus in more profitable Design and Build projects° Cost adjustments° Personnel reduction negotiation of approx. 600 persons in 2013 on-going
° 200 reduced
Normal business seasonality
Suspended service orders since Q4/12 cannot be postponed indefinitely
Building ServicesNorthern Europe
Building ServicesCentral Europe
Targeting to increase share of service and maintenance in Central Europe
Improving market situation in Germany° Order backlog increased in Q1
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Caverion
Value chain and customersLow customer concentration supports stability of the business
Illustrative value chain in Building Systems
Customer types:° Developers and
construction companies
° Property investors and owners
° Property service companies and building managers
° Public institutions
° Industry
Subcontractors° Special workforce,
e.g. electricity, piping systems, air conditioning etc.
Suppliers° Wholesalers° Manufacturers
Content
Caverion customer concentration 2012 (% of revenue)
86%
14%OthersCustomers 1-10
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Market overview
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Caverion
Competitive environment in Building Systems in EuropeCaverion has strong growth potential in fragmented markets
Total BS market size above EUR 70 billion in Europe in 2012
484
500
699
714
749
989
Caverion BSCE
Coor (SWE)*
TBI Techniek (NL)
Bravida (SWE)* 1,192
ISS PropertyServices (DK) 2,026
Caverion BSNE 2,089
Caverion 2,803
SPIE Europe (FRA) 3,642
Imtech (NL) 5,114
Bilfinger SE,Industrial, Power,
Facility & Service (GER)5,837
Vinci EnergiesService & Industry (FRA) 5,861
Revenue in 2012 (EURm)
Alpine Energie*
Ortner (AUT)**
HochtiefServices Europe (GER)
Largest Building Systems companies in Europe in 2012
*) 2011 figure**) Estimate from web page***) Caverion management’s estimates
9.5St. Petersburg and Moscow
6.12.3
9.03.8
6.2
3.65.5
30.1
3.6
6.7
Building Systems
Industrial Services
Caverion’s market positions***Finland Sweden1# with 8% market share 2# with 6% market shareNorway Denmark1# with 9% market share 3# with 3% market shareGermany Austria2# with 2% market share 3# with 3% market share
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Caverion
Building Systems indicators in Northern EuropeModest growth expected in the near future
New non-residential construction volumes in NE, index Non-residential service and renovation volumes in NE, index
2006 indexed to 100 2006 indexed to 100
50
60
70
80
90
100
110
120
130
140
150
2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015EFinland Sweden
Norway Denmark
The Baltic countries
50
60
70
80
90
100
110
120
130
140
150
2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Finland Sweden Norway Denmark
New non-residential investments forecasted to remain stable in Northern Europe
in 2012–2015
Stable demand estimated for service and maintenance in Northern Europe
during 2012–2015
Source: Euroconstruct, December 2012
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Caverion
60
70
80
90
100
110
120
130
140
150
2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Germany Austria Poland the Czech Republic
50
60
70
80
90
100
110
120
130
140
150
2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Germany Austria Poland the Czech Republic
2006 indexed to 100 2006 indexed to 100
Building Systems indicators in Central EuropeModest growth expected in the near future
New non-residential construction volumes in CE, index Non-residential service and renovation volumes in CE, index
New non-residential investments forecasted to increase in Central Europe in 2012–2015
Stable demand in service and maintenance continues in 2012–2015
Source: Euroconstruct, December 2012
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Caverion
Market outlook 2013 for Building SystemsLow customer concentration supports stability of the business
Building Services Northern Europe
Building Services Central Europe
Service and maintenance market expected to grow slightly
° Opportunities in all countries in service and maintenance
° Project market is expected to decrease in Sweden, Finland and Denmark
° High energy prices and tightening legislation support the demand for energy saving solutions
Building systems markets in Central Europe are forecasted to remain stable
° Service and maintenance market expected to grow at moderate rate
° Positive signals in the project market
Energy efficiency and energy management services are expected to grow
° Tightening legislation and increasing importance of energy certificates support the demand in Germany and in Austria
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Caverion
Market drivers in Building Systems
° Share of technology of building cost increasing (40-60% of building total cost) due to automation and energy efficiency
° Building automation as the master key to the building
° New investments slowly improving
° Efficiency targets
° Potential through increasing demand for outsourcings
° Tightening legislation
° Growing energy consumption, cost savings required° Agreements requiring no initial investment
(service pays for itself through cost-savings) becoming more common
° Need for modernization and investments in energy sector
° Growing importance of environmental values
° Environmental certification of buildings increases value (e.g. LEED and BREEAM)
° Geothermal, solar and wind power is steadily growing
° Will require new technology and more complex installations and services
° Automation is the heart of energy saving technologies
° The integrator of different technologies needed on the market
° Large, very fragmented market° Economies of scale for large players° Demand for providers of all building
technologies in the future
° Wider service portfolio° Growth potential, especially in the German-
speaking areas
Demand for technical service and maintenance
Evolving renewable energy sources
Increasing need for energy efficiency services
Market consolidation
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Caverion
Further opportunities for industry players
Increasing need for energy efficiency
Energy efficiency services – overview of key market drivers
Favourable political framework
Demand for specializedservices providersRising energy costs
° The European Union has agreed to cut of at least 20% in greenhouse gas emissions from all primary energy sources by 2020 (compared to 1990 levels)° Kyoto Protocol aimed at achieving a 30% cut
by all developed nations by 2020
° Significant economic incentives have been set° e.g. Government of Germany subsidies and
grants loans for energy efficiency projects through the state-owned bank KfW
° Governments in the Nordic countries have also set up ambitious energy saving targets
° General concerns related to significant energy price increases over the last few years
° As energy costs are increasing, governments and companies are eager at considering investments in energy efficiency solutions
° Energy efficiency is a strong and cost-effective tool to reduce the need for investment in energy infrastructure and cut energy bills
° Increasing demand for specialized services providers should be sustained by:
° High technical expertise required by energy management related services
° Stronger need to refocus capital resources on core business
0
100
200
300
400
500
600
European Energy Exchange (EEX) Base Load Phelix Electricity Spot PriceSep 2000 – YTD: 14 Sep 2000 rebased at 100
Source: Bloomberg
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Caverion
GDP forecasts for operating countriesGrowth expected in all markets in 2013
1.7% -1.2% 0.3% 1.6%11 12 13E 14E
8.3% 3.2% 3.2% 3.8%11 12 13E 14E
5.5% 5.6% 3.7% 4.4%11 12 13E 14E
5.9% 3.6% 4.0% 4.2%11 12 13E 14E
14E
2.5%
13E
2.6%
12
3.5%
11
2.5%
14E
2.6%
13E
1.3%
12
0.8%
11
3.7%14E
2.2%
13E
0.5%
12
-0.2%
11
2.8%
14E
3.6%
13E
3.5%
12
3.4%
11
4.4%
14E
2.8%
13E
1.8%
12
2.0%
11
4.3%
14E
2.0%
13E
1.6%
12
0.3%
11
2.5%
14E
2.1%
13E
0.7%
12
0.9%
11
3.1%
1.5%0.5%
-0.6%
1.1%
14E
0.8%
13E
1.6%
12
0.8%
11
2.7%
Source: Nordea March 2013; Austria, the Czech Republic and Romania: IMF April 2013
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Strategy and key strengths
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Caverion
Up in the value chain by improving business mix and developing new services
Strong growthand stable profitability in Central Europe
Back on high profitability track in Northern Europe
Strategic target is to achieve a leading position withinbuilding systems services market in EuropeCaverion wants to design, build and maintain the most user friendly and energy efficient building technology
° Total technical systems projects with Design & Build and guaranteed maintenance cost
° Total technical FM based on customer demand with guaranteed maintenance cost
° Long-term service agreements
° Technical arrowhead competences, e.g. clean room, cooling
° Energy efficiency
° Acquisitionsin Central Europe
° Organic growth
° Increase the share of service and maintenance business as well as focus on more profitable Design & Build projects
Restructuring cost base° Continue right-sizing of the
organisation in all countries° Close and merge low-performing
units° Reduce fixed and other variable
costs
° Margin improvement° Selectiveness in tendering: keep
minimum project margins° Margin slippages reduction and
improvement of project management
Long-term strategic priorities
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Caverion
Previously announced measures for EUR 40 million cost savings have been finalizedPersonnel-related cost-saving measures have been implemented and the expected savings achieved° Reduction of 800 persons was
finalized by the end of 2012
However, the cost-saving measures have proven inadequate due to weaker than expected market development and decrease in revenue° Consequently, cost adjustments
will continue in Building Services Northern Europe segment during 2013
° Personnel reduction negotiation of approx. 600 persons in 2013 on-going° 200 already reduced in Q1
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Caverion
Right-sizing of the organizationEUR 40 million cost savings have been finalized and some more savings in pipeline
30
° Personnel amount decreased from 9/2011 to 3/2013 in
° BS NE ~1400 employees° BS CE ~250 employees
° Still 400 personnel reduction in pipeline in BS NE in 2013
° Personnel expenses decreased from Q1/2012 to Q1/2013 by 18,7 EUR million
290.2
271.5
260
265
270
275
280
285
290
295
Q1/2012 Q1/2013
Personnel expenses EUR million
16,273 15,900 15,640 15,736 15,538 15,159 14,870
3,569 3,506 3,505 3,465 3,441 3,386 3,311
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
9/2011 12/2011 3/2012 6/2012 9/2012 12/2012 3/2013
BSNE
BSCE
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Caverion
Caverion key strenghts
5 Energy efficiency as part of all services
° Comprehensive energy efficiency services provide competitive advantage to Caverion as customers put more and more weight on these services when selecting a building systems service provider
1 Comprehensive services and strong market position in selected geographical regions
° Comprehensive service portfolio gives competitive advantage over most of the other service providers
° Strong market positions in key geographical markets*:° Northern Europe: #1 in Finland and Norway; #2
and #3 in Sweden and Denmark respectively° Central Europe: #2 and #3 in Germany and
Austria respectively
4 Technological forerunner with own innovative solutions° Technological all-around competences separates from smaller service providers° Unique technological competences e.g. in the fields of energy efficiency, cooling,
clean room technologies as well as technologies of other demanding spaces (laboratories, hospitals, etc.), industrial high pressure piping systems and traffic and tunnel telematics
° In addition, demanding building automation and comprehensive remote monitoring services of building systems
3 Low capital employed, extensive customer base and significant share of service business provide the preconditions for strong and stable cash flow
° Business is not capital intensive and, apart from acquisitions, requires only small amounts of capital investments
° Significant share (55% in 2012) of revenue from service and maintenance business that is less sensitive to economical cycles
° Especially low customer concentration and long-term customer relationships support strong and stable cash generation
2 Solid experience in acquisitions supports growth opportunities in a fragmented market
° Long and successful track record of acquisitions° The profitability of the acquired businesses has successfully
been improved° Fragmented market provides further acquisition opportunities° Target is to grow through acquisitions especially in CE
*) Caverion management’s estimates
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Financials
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Caverion
Key events that have affected the top-line and profitabilityRevenue growth through the economic cycles
Key acquisitions:
° 2001: Acquisition of Calor AB
° 2003: Acquisition of BS operations of ABB Ltd
° 2008: Acquisition of MCE AG
° 2010: Acquisition of caverion GmbH
Key events affecting top-line and EBIT of the Company:° 2008: Acquisition of MCE and its low
initial profitability° 2009: Weakening non-residential
market, execution of projects received in good market situation, fixed cost cuts 2009
° 2010: Weak non-residential market, weak project demand. Acquisition of Caverion with low initial profitability: diluting profitability
° 2011: Tight price competition in projects. Relatively low volume in new investments in building systems. Weak profitability in Industrial Services in Finland. Right-sizing of the organization started.
° 2012: Tight price competition in projects. Cost overruns in projects. Restructuring actions accelerated. Low profitability in Poland and the Czech Republic.
Revenue development (EUR million)
EBIT development (EUR million)
2,1252,396
2,1401,8921,7971,680
1,021678
+15%
2012
2,803
2011
2,876
2010
2,353
20092008200720062005200420032002
BS Northern EuropeBS Central EuropeBuilding Systems
0
119
162153
10696
62
27
4.0%
2011
112
3.9%
2010
105
4.5%
2009
5.6%
2008
6.8%
2012
69
2.4%
2003
0.0%
2002 2007
7.2%
2006
5.6%
2005
5.3%
2004
3.7%
EBIT-%
BS Northern EuropeBS Central EuropeBuilding Systems
Note: Segment level figures, i.e. sum of BS related segment figures in YIT financial reporting; Building Systems divided into Northern Europe and Central Europe in 2010; 2010-2012 official carve-out figures; 2010-2012 EBIT figures exclude EBIT from other operations of EUR -6.1m, -7.1m and -7.4m respectively;In order to present the development of Caverion Group, 2002-2009 revenue include YIT Group internal sales
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Caverion
EBITDA development (EUR million)
34
135
177173
116
71
106
3.3%
2011
132
4.6%
2010
123
5.2%
2009
6.4%
2008
7.4%
2007
8.1%
2006
6.2%
2005
5.9%
2004
4.2%
2012
93
EBITDA-%BS Northern EuropeBS Central EuropeBuilding Systems
Note: Segment level figures, i.e. sum of BS related segment figures in YIT financial reporting; Building Systems divided into Northern Europe and Central Europe in 2010; 2010-2012 official carve-out figures; 2010-2012 EBITDA figures exclude EBITDA from other operations of EUR -6.1m, -7.1m and -7.4m respectively;In order to present the development of Caverion Group, 2004-2009 revenue, of which the EBITDA-% is being calculated, includes YIT Group internal sales
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Caverion
Pro forma financial position as of 31 March 2013
35
Net debt:EUR 161.0 million
Equity ratio*:19.9%
Net debt/Equity:73.2%
*) Equity ratio = Total equity / (Total assets – received advance payments)
Q1/2013EUR million
Total equity
Q1/2013
220
161175
Short-term borrowings
52
Cash and cash
equivalentsNet debtLong-term
borrowings
66
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Caverion
Operating profit and margin development in Building Services Northern Europe segment
-3.8
2.2
15.615.314.6
23.019.918.817.1
23.520.2
25.119.9
32.2
22.325.625.9
43.742.941.0
31.5
63.4
34.831.4
23.8
Q1/13
0.5%
Q4/12
-0.7%
Q3/12
3.2%
Q2/12
2.8%
Q1/12
2.9%
Q4/11
3.8%
Q3/11
3.9%
Q2/11
3.7%
Q1/11
3.6%
Q4/10
4.5%
Q3/10
4.8%
Q2/10
5.4%
Q1/10
4.9%
Q4/09
6.8%
Q3/09
5.7%
Q2/09
5.8%
Q1/09
5.7%
Q4/08
7.4%
Q3/08
8.1%
Q2/08
7.0%
Q1/08
6.2%
Q4/07
10.4%
Q3/07
6.8%
Q2/07
5.8%
Q1/07
5.0%
EBIT-%
EBIT (EURm)
° Good non-residential market supported project demand
° Industrial investments at high level
° Sales of Network Services to Relacom
° Weakening non-residential market, execution of projects received in good market situation
° Fixed cost cuts 2009
° Tight price competition in projects
° Relatively low volume in new investments in building systems
° Weak profitability in Industrial Services in Finland
° Right-sizing of the organisation started in H2
° Good non-residential market supported project demand
° Weak non-residential market, weak project demand
° Industrial investments in Finland started to increase slightly from low level in 2010
° Tight price competition in projects
° Cost overruns in projects
° Restructuring actions accelerated
° Profitability at satisfactory level in Service and maintenance
EBIT in Q2/11 was affected (decreased) by EUR 3.0m due to a reservation related to a single customer project. EBIT margin in Q2/11, excluding the reservation, would have been 4.3%.
EBIT in Q2/12 was affected (decreased) by EUR 2.8m due to a final settlement of a single customer project. EBIT margin in Q2/12, excluding the settlement, would have been 3.4%.
EBIT in Q4/12 was affected (decreased) by EUR 3.0m due to restructuring costs. EBIT margin in Q4/12, excluding the restructuring costs, would have been -0.1%.
EBIT in Q1/13 was affected (decreased) by EUR 2.8m due to restructuring costs. EBIT margin in Q1/13, excluding restructuring costs would have been 1.1%
2007EUR 153.4 million
(7.4%)
2008EUR 159.1 million
(7.2%)
2009EUR 106.1 million
(6.0%)
2010EUR 88.7 million
(4.9%)
2011EUR 78.8 million
(3.9%)
2012EUR 41.7 million
(2.0%)
36
Note: Q1/2013 is including the revised IAS 19 Employee Benefits standard; Periods prior this according to the old reporting standards
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Caverion
Operating profit and margin development in Building Services Central Europe segment
3.4
10.4
4.8
6.6
5.2
9.3
7.9
12.1
4.0
8.9
2.73.1
1.7
5.3
2.72.62.62.30.5
0.00.0
Q4/12
2.5%
Q1/13Q2/12
5.3%
Q3/12Q1/12
2.6%3.7%3.3%
Q4/11
4.6%
Q3/11
3.7%
Q2/11
6.3%
Q1/11
2.3%
Q4/10
3.4%
Q3/10
2.0%
Q2/10
3.6%
Q1/10
2.4%
Q4/09
5.3%
Q3/09
3.0%
Q2/09
3.0%
Q1/09
3.0%
Q4/08
1.9%
Q3/08
0.9%
Q2/08Q1/08
EBIT-%
EBIT (EURm)
° Development and profitability improvement according to our plans
° Execution of order backlog with lower initial profitability
° Fixed cost cuts
° Good demand for projects° Development and
profitability improvement according to plans
° Fixed cost cuts° Sale of Hungarian
operations in Q2
° Acquisition of MCE ° Low initial profitability° 100 days integration
program
° Acquisition of caverionwith low initial profitability: diluting segment’s profitability
° 100 days integration program
° Weakening large project market in Germany
° The profitability was at a good level in the fourth quarter, in Germany and Austria in particular
° Low profitability in Poland and the Czech Republic
° Restructuring on-going
EBIT in Building Services Central Europe in Q2/11 includes EUR 5.0m sales gain related to the divestment of Hungarian operations. EBIT margin in Q2/11 excluding the sales gain would have been 3.7%.
2008EUR 2.9 million
(1.6%)
2009EUR 13.2 million
(3.6%)
2010EUR 16.4 million
(3.0%)
2011EUR 33.3 million
(4.3%)
2012EUR 26.9 million
(3.8%)
37
Note: Q1/2013 is including the revised IAS 19 Employee Benefits standard; Periods prior this according to the old reporting standards
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Caverion
24
673
EBIT
DA
Oth
erite
ms*
(net
)
64
Mat
eria
ls &
supp
lies
193(30%)
Exte
rnal
serv
ices
103(16%)
Pers
onne
lex
pens
es
290(45%)
Oth
er o
p.in
com
e
1
Rev
enue
Personnel expenses account for a major share of the cost baseRight-sizing the organisation in all countries is key for margin improvement
Revenue to EBITDA waterfall 2012 (EURm)Revenue to EBITDA waterfall Q1/’13 (EURm)Revenue to EBITDA waterfall Q1/’12 (EURm)
(% of cost base before EBITDA) (% of cost base before EBITDA) (% of cost base before EBITDA)
*) Includes: Other operating expenses, change in inventories of finished goods and work in progress and production for own use**) At the end of the period; Based on segment reporting in the YIT annual reports
3,505(18%)
15,640(82%)
Personnel by segment**Total 19,145
Total cost base of EUR 650 million
38
9
608
EBIT
DA
Oth
erite
ms*
(net
)
69
Mat
eria
ls &
supp
lies
162(27%)
Exte
rnal
serv
ices
98(16%)
Pers
onne
lex
pens
es
272(45%)
Oth
er o
p.in
com
e
1
Rev
enue
Total cost base of EUR 600 million
85
2,803
EBIT
DA
Oth
erite
ms*
(net
)
334
Mat
eria
ls &
supp
lies
800(29%)
Exte
rnal
serv
ices
469(17%)
Pers
onne
lex
pens
es
1,127(41%)
Oth
er o
p.in
com
e
12
Rev
enue
Total cost base of EUR 2,730 million
BSCE
BSNE 3,311(18%)
14,870(82%)
Personnel by segment**Total 18,181
3,380(18%)
15,159(82%)
Personnel by segment**Total 18,539
BSCE
BSNE
BSCE
BSNE
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Caverion
Acquisitions over the cycleThe profitability of the acquired businesses has successfully been improved
Caverion’s M&A criteria° Return on investment > 20 %
° Good strategic fit (geographical coverage, business portfolio, customer sectors)
° Complementary skills & resources
° Business culture
° Value creation potential ° Profitability turn-around
° Strong local market position which works as add-on to Caverion’s existing market presence
Largest acquisitions (purchase price)
° 2001: Calor Sweden (EUR 57 million)
° 2003: ABB (EUR 203 million)
° 2008: MCE (EUR 55 million)
° 2010: caverion GmbH (EUR 73 million)
Cash flow effect of Caverion’s acquisitions 2000-2012*
109
45
8
39
141157
4552
15
201220102009 2011200820072006200520042003
212
200220012000
Significant acquisitions (EURm)
*Note: Cash flow impact of the purchase price for the year presented
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Caverion
Order backlog has remained strongImproved order intake in seasonally slow quarter
Despite the fact that Q1 is a seasonally slow quarter, order backlog strengthened clearly in Building Services Central Europe during Q1/2013
° Market situation improving in Germany and in the Nordic countries
Order backlog development* (EUR million)
850
1,050
1,315
845
471
2012
1,199
819
380
Q3/’12
1,341
905
436
Q2/’12
1,428
955
473
Q1/’12
1,470
969
501
2011
1,363
913
450
Q3/’11
1,410
886
524
Q2/’11
1,434
880
554
Q1/’11
1,378
805
573
2010
1,264
757
507
Q3/’10
+10%
743
589
Q2/’10
1,026
749
277
1,332
964
698
266
20092008 Q1/2013Q1/’10
BS Northern EuropeBS Central EuropeBuilding Systems
*) Segment level figures as at the end of the period
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Caverion
New credit facility secures financing
New EUR 267 million credit facility with a Nordic bank groupto be transferred to Caverion Corporation 52%
23%
25%
New EUR 267 million credit facility
Amortizing term loan facilityRevolving credit facilityBridge loan facility
Consisting of:° EUR 140 million amortizing term
loan facility due June 2016
° EUR 60 million revolving credit facility due June 2016
° EUR 67 million bridge loan facility due June 2014 to refinance current loan° Out of the EUR 67 million bridge financing, EUR
22 million assumed to be used for refinancing of Nordic Investment Bank loans (which thus assumed to total EUR 45 million)*
41
*) The undrawn part of the bridge financing agreement will not remain available for Caverion but expire
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Caverion
Caverion Group key figures and ratiosQ1/2013 pro forma net debt of EUR 161m corresponding to an equity ratio of 19.9%
Key figures Carve-outPF adj. I PF adj. II
Pro forma
EUR million 2010 2011 2012 2012
Revenue 2,352.8 2,875.7 2,803.2 2,803.2
EBITDA 117.0 125.3 85.3 -3.0 82.3
% of revenue 5.0% 4.4% 3.0% 2.9%
Operating profit (EBIT) 99.0 105.0 61.1 -3.0 58.1
% of revenue 4.2% 3.7% 2.2% 2.1%
Net cash generated from operating activities 0.2 -14.8 49.3
Net debt
Net debt / Equity
Equity ratio*
Earnings per share** 0.27
Carve-out PF adj. I PF adj. II
Pro forma
Q1/’13 Q1/’13
607.9 607.9
9.4 9.4
1.5% 1.5%
4.3 4.3
0.7% 0.7%
-1.0
21 140 161
73.2%
19.9%
0.02
° As Caverion Corporation is a new entity to be formed in the partial demerger, Caverion has no group financial history
° Pro forma financials are unaudited and they are used only for illustrative purposes. Unaudited pro forma information addresses ahypothetical situation and therefore does not represent Caverion's actual financial position or results.
° Pro forma financials are based on the carve-out financials and adjusted for demerger related items:° Pro forma adj. I: Refinancing° Pro forma adj. II: Costs related to the Demerger° Pro forma adj. III: Presentation of the Equity
° 2012-2010 carve-out financial statements are audited, Q1/2013 carve-out financial information has been reviewed by an auditor, 2012 carve-out financial information has been restated to reflect the amended IAS 19 standard adopted 1 January 2013
*) Equity ratio = Total equity / (Total assets – received advance payments)**) Calculated by using the number of outstanding YIT shares on the date of this Registration Document, 125,598,591 pcs
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Caverion
Future outlook and financial targetsEstimates of future business and basis for the estimates
Guidance on H2/2013 for Caverion Corporation° Caverion Group profitability guidance for H2/2013 will be based on the following key
measures:° Revenue is expected to be above EUR 1,300 million° EBITDA is expected to be above EUR 50 million
The assumptions or conditions underlying the outlook provided° Non-recurring expenses related to the demerger are not taken into account° Excl. the effects of any potential M&A transactions° Are sensitive to general macro economical development
Short-term outlook and underlying assumptions
Management estimates
Estimates for H2/2013
Additional sales will support profitability towards the end of the year° Normal business seasonality° Suspended service orders since Q4/12 cannot be postponed indefinitely in BSNE° Recovery of project business in Germany° Implemented cost savings will be seen during the rest of the year in BSNE
° Cost adjustments ° Personnel reduction negotiation of approximately 600 persons in 2013 on-going
(200 reduced in Q1)
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Caverion
Long-term financial targets during strategic period up to 2016
44
Annual revenue growth more than 10% on average
EBITDA margin> 6% of revenue
Strong operating cash flow to enable organic growth, repayment of
loans and distribution of dividend
Dividend pay-out at least 50% of net profit for the
period
*) Based on carve-out figures
2,8032,8762,353
+9%
Revenue(EUR million)
201220112010
85
125117
2012
3.0%
2011
4.4%
2010
5.0%
EBITDA-%
EBITDA*
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Caverion
Low level of invested capital in Building Systems businessBuilding system services business requires low level of investments, apart from possible acquisitions
Caverion’s investments in tangible and intangible assets totalled to EUR 14.2 million in 2010–2012
° The total amount of capital expenditures corresponded to only approximately 4% of the combined EBITDA for the years in question
Capital expenditures (EUR million
14.2
6.66.1
1.5
Sum2010-2012
0.21%
0.17%
201220112010
0.24%
0.06%
Capital expenditures (EUR million)*% of sales
*) Capital expenditures consist of investments in tangible (property, plant and equipment) and intangible assets, excluding acquisitions.
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Caverion
Caverion Group’s non-current assets mainly comprise of goodwill formed in connection to the past acquisitions
Non-currents assets amounted to EUR 415.5 million on 31 March 2013 and to EUR 419.9 million on 31 December 2012° The amount of goodwill was EUR 335.7 million on 31 March and on 31
December 2012
Goodwill is subjected to an annual impairment test° Goodwill is allocated to cash-generating units
° Goodwill is measured at the original acquisition cost less impairment.
The amount of impairments has been assessed in proportion to different time periods and the sensitivity has been analyzed in the changes of the discount rate, profitability and in the increase of the residual value° In 2012, the goodwill testing caused an impairment amounting EUR 0.9
million regarding the goodwill of Poland. Otherwise these analyses and estimations have not given an indication for impairment
As at 31 December 2012, 2011 and 2010 the goodwill of CaverionGroup amounted to EUR 335.7 million, EUR 336.6 million and EUR 340.0 million, respectively.
Non-current assets on 31.3.2013 (EURm)
336(81%)Goodwill
Othernon-current
assets80
Non-current assets
416
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Summary
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Caverion
Concluding remarks
Caverion offers all building systems related services and seeks growth from developed Northern and Central Europe
Focus in service and maintenance business as well as in profitable Design & Build projects
Strong growth potential in a fragmented market
Strategic target is to achieve a leading position withinbuilding systems services market in Europe
Caverion key strengths
1. Comprehensive services and strong market position in selected geographical regions
2. Solid experience in acquisitions supports growth opportunities in a fragmented market
3. Low capital employed, extensive customer base and significant share of service business provide the preconditions for strong and stable cash flow
4. Technological forerunner with own innovative solutions5. Energy efficiency as part of all services
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Appendix
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Caverion
OwnersYIT shareholders will remain as shareholders in YIT andreceive Caverion shares as demerger consideration in proportion to their shareholdings in YIT (1:1)
50
Major shareholders as of 31 May 2013 Ownership by category as of 31 May 2013
Shareholder No. of shares % of shares
1 Structor S.A. 15,430,000 12.13
2 Varma Mutual Pension Insurance Company 7,732,100 6.08
3 Herlin Antti 4,580,180 3.60
4 Mandatum Life Insurance Company Limited 4,370,951 3.44
5 Ilmarinen Mutual Pension Insurance Company 2,322,115 1.83
6 LocalTapiola Mutual Pension Insurance Company 1,980,541 1.56
7 Nordea funds 1,856,163 1.46
8 OP funds 1,832,834 1.44
9 Odin funds 1,799,576 1.41
10 Svenska Litteratursällskapet i Finland r.f. 1,680,400 1.32
11 YIT Corporation* 1,624,831* 1.28*
12 Danske Invest funds 1,413,678 1.11
13 The State Pension Fund 1,370,000 1.08
14 Brotherus Ilkka 1,304,740 1.03
15 Fondita funds 1,034,000 0.81
16 Keva 966,452 0.76
17 Kaleva Mutual Insurance Company 923,197 0.73
18 Aktia funds 671,000 0.53
19 SEB Gyllenberg funds 657,750 0.52
20 Etera Mutual Pension Insurance Company 640,114 0.50
20 largest shareholders 54,190,622 42.59
Total number of shares 127,223,422
Shares to be listed (approx.) 125,598,591
No demerger considerationto YIT’s treasury shares
35%
22%
13%
12%
7%
11% 0%
Nominee registered and non-Finnish holders
Households
General government
Financial and insurance corporations
Non-profit institutions
Non-financial corporations and housing corporations
On common and special accounts
*) YIT Corporation’s shareholding as of 4 June 2013
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Caverion
Revenue development by country*
51
25%
23%
20%
17%
4%6% 2% 3%
2010Total revenue of EUR 2,352.8 million
Sweden Finland Norway Germany
Austria Denmark RuBa Other
25%
21%
18%
22%
4%6% 2% 2%
2011Total revenue of EUR 2,875.7 million
Sweden Finland Norway Germany
Austria Denmark RuBa Other
25%
21%
20%
19%
6%5% 2% 2%
2012Total revenue of EUR 2,803.2 million
Sweden Finland Norway Germany
Austria Denmark RuBa Other
*) Country split of revenues is based on the location of the customer, Caverion GmbH, acquired in 2010, and its subsidiaries are included in the figures for the last four months of the year.
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Caverion
Caverion Group pro forma income statement 2012
Income statement, EUR million Carve-out 1-12/2012
PF adj. I
PF adj. II
Pro forma 1-12/2012
(Restated,unaudited) (Unaudited)
Revenue 2,803.2 2,803.2
Other operating income 12.3 12.3Change in inventories of finished goods and in work in progress -0.6 -0.6
Production for own use 0.3 0.3Materials and supplies -799.8 -799.8External services -468.8 -468.8Personnel expenses -1,127.4 -1,127.4Other operating expenses -333.9 -3.0 -336.9Share of results in associated companies 0.0 0.0Depreciation, amortisation and impairment -24.2 -24.2
Operating profit 61.1 -3.0 58.1
Financial income 1.9 1.9Exchange rate differences -0.3 -0.3Financial expenses -5.2 -4.9 -0.5 -10.6
Financial income and expenses -3.6 -4.9 -0.5 -9.0
Profit before taxes 57.5 -4.9 -3.5 49.1
Income taxes -16.7 1.2 0.9 -14.6
Profit for the period 40.8 -3.7 -2.6 34.5
Attributable to:Equity holders of Caverion Group 40.7 -3.7 -2.6 34.4Non-controlling interests 0.1 0.1
Comments° Pro forma income statement assumes that the
demerger would have taken place on 1 January 2012
° No audit performed on pro forma figures, but auditors statement of opinion that the pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the issuer
° Pro forma financials are based on the restated (unaudited) carve-out financials and adjusted for demerger related items:° Pro forma adj. I: Refinancing° Pro forma adj. II: Costs related to the
Demerger
Pro forma EBITDA: EUR 82.3 million• EBITDA-margin: 2.9%
Pro forma EBIT: EUR 58.1 million• EBITDA-margin: 2.1%
Pro forma key figures
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Caverion
Caverion Group pro forma income statement Q1/2013
Comments
Pro forma key figures
° Pro forma income statement assumes that the demerger would have taken place on 1 January 2012
° No audit performed on pro forma figures, but auditors statement of opinion that the pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the issuer
° Pro forma financials are based on the carve-out (unaudited) financials and adjusted for demerger related items:° Pro forma adj. I: Refinancing° Pro forma adj. II: Costs related to the
Demerger
Pro forma EBITDA: EUR 9.4 million• EBITDA-margin: 1.5%
Pro forma EBIT: EUR 4.3 million° EBITDA-margin: 0.7%
Income statement, EUR million Carve-out 1-3/2013
PF adj. I
PF adj. II
Pro forma 1-3/2013
(Unaudited) (Unaudited)
Revenue 607.9 607.9
Other operating income 1.4 1.4Change in inventories of finished goods and in work in progress 5.8 5.8
Production for own use 0.2 0.2Materials and supplies -162.0 -162.0External services -97.8 -97.8Personnel expenses -271.5 -271.5Other operating expenses -74.6 -74.6Share of results in associated companies 0.0 0.0Depreciation, amortisation and impairment -5.1 -5.1
Operating profit 4.3 4.3
Financial income 1.0 1.0Exchange rate differences -0.5 -0.5Financial expenses -0.8 -0.8 -1.6
Financial income and expenses -0.3 -0.8 -1.1
Profit before taxes 4.0 -0.8 3.2
Income taxes -1.2 0.2 -1.0
Profit for the period 2.8 -0.6 2.2
Attributable to:Equity holders of Caverion Group 2.8 -0.6 2.2Non-controlling interests 0.0 0.0
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Caverion
Caverion Group pro forma balance sheet at the end of Q1/2013
Comments
Pro forma key figures
° Pro forma balance sheet assumes that the demerger would have taken place on 31 March 2013
° No audit performed on pro forma figures, but auditors statement of opinion that the pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the issuer
° Pro forma financials are based on the carve-out (unaudited) financials and adjusted for demerger related items:° Pro forma adj. I: Refinancing° Pro forma adj. II: Costs related to the
Demerger° Pro forma adj. III: Presentation of the
Equity
Pro forma Net debt: EUR 161.0 million
Pro forma Equity ratio: 19.9%
Pro forma Net debt/Equity: 73.2%
Balance sheet, EUR million Carve-out 31.3.2013
PF adj. I
PF adj. II
PF adj. III
Pro forma 31.3.2013
(Unaudited) (Unaudited)Tangible assets 30.5 30.5Goodwill 335.7 335.7Other intangible assets 35.9 35.9Investments in associated companies 0.1 0.1Available-for-sale financial assets 2.5 2.5Receivables 4.1 4.1Deferred tax assets 6.6 6.6
Total non-current assets 415.5 415.5
Inventories 42.3 42.3Trade and other receivables 726.0 726.0Income tax receivables 13.0 1.2 14.2Cash and cash equivalents 66.4 -0.8 65.6
Total current assets 847.6 -0.8 1.2 848.1
Assets held for saleTotal assets 1,263.1 -0.8 1.2 1,263.6
Equity attrib. to equity holders of Caverion Group 362.8 -139.7 -3.9 219.2Non-controlling interests 0.6 0.6Total Equity 363.4 -139.7 -3.9 219.8
Deferred tax liabilities 71.2 71.2Pension obligations 44.6 44.6Provisions 6.8 6.8Borrowings 71.8 102.9 174.7Other liabilities 0.3 0.3
Total non-current liabilities 194.7 102.9 297.6
Trade and other liabilities 660.7 5.1 665.8Income tax liabilities 7.6 7.6Provisions 21.0 21.0Borrowings 15.8 36.0 51.8
Total current liabilities 705.0 36.0 5.1 746.1
Liabilities related to assets held for saleTotal liabilities 899.7 138.9 5.1 1,043.7
Total equity and liabilities 1,263.1 -0.8 1.2 1,263.6
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Caverion
Caverion Group carve-out income statementIncome statement, EUR million 1-3/2013 1-3/2012 1-12/2012 1-12/2011 1-12/2010
(Unaudited) (Restated, Unaudited)
(Restated*, Unaudited) (Audited) (Audited)
Revenue 607.9 672.5 2,803.2 2,875.7 2,352,8
Other operating income 1.4 1.4 12.3 6.3 4.1Change in inventories of finished goods and in work in progress 5.8 7.8 -0.6 1.7 -0.7Production for own use 0.2 0.1 0.3 0.2 0.6Materials and supplies -162.0 -192.7 -799.8 -920.8 -720.9External services -97.8 -103.3 -468.8 -459.5 -332.3Personnel expenses -271.5 -290.2 -1,127.4 -1,091.2 -949.0Other operating expenses -74.6 -72.0 -339.9 -287.0 -237.6Share of results in associated companies 0.0 0.0 0.0 0.0 0.0Depreciation, amortisation and impairment -5.1 -5.8 -24.2 -20.3 -18.0
Operating profit 4.3 17.8 61.1 105.0 99.0
Financial income 1.0 0.3 1.9 1.6 1.1Exchange rate differences -0.5 -0.1 -0.3 -0.1 -0.2Financial expenses -0.8 -1.2 -5.2 -4.5 -4.5
Financial income and expenses -0.3 -1.0 -3.6 -3.0 -3.6
Profit before taxes 4.0 16.8 57.5 102.0 95.4
Income taxes -1.2 -5.1 -16.7 -29.0 -29.5
Profit for the period 2.8 11.7 40.8 73.0 65.9
Attributable to:Equity holders of Caverion Group 2.8 11.7 40.7 72.9 65.9Non-controlling interests 0.0 0.0 0.1 0.1 0.0
*) The revised IAS 19 standard has had the following effects in the combined income statement and statement of comprehensive income during the financial year ended 31.12.2012: Personnel expenses increased by EUR 0.1 million and correspondingly operating profit, the profit before tax and the profit for the year decreased by EUR 0.1 million. In other items of the comprehensive income, the fair value of defined pension benefits after tax increased by EUR 11.1 million, and total comprehensive income increased by EUR 10.9 million. These restated financials are unaudited. Other data shown are audited.
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Caverion
Caverion Group carve-out balance sheetBalance sheet, EUR million 31.3.2013 31.3.2012 31.12.2012 31.12.2011 31.12.2010
(Unaudited) (Restated, Unaudited)
(Restated*, Unaudited) (Audited) (Audited)
Tangible assets 30.5 34.3 31.8 34.7 38.5Goodwill 335.7 336.6 335.7 336.6 340.0Other intangible assets 35.9 38.7 39.0 32.8 32.0Investments in associated companies 0.1 0.1 0.1 0.1 0.1Available-for-sale financial assets 2.5 3.0 2.5 2.9 2.4Receivables 4.1 7.1 5.3 18.2 15.3Deferred tax assets 6.6 9.6 5.5 8.7 6.6
Total non-current assets 415.5 429.4 419.9 434.0 434.9
Inventories 42.3 47.3 39.0 37.5 37.7Trade and other receivables 726.0 744.2 774.7 794.2 683.2Income tax receivables 13.0 5.8 4.7 2.8 3.7Cash and cash equivalents 66.4 144.2 100.8 155.4 106.2
Total current assets 847.6 941.5 919.2 989.8 830.8Assets held for sale 19.8
Total assets 1,263.1 1,370.9 1,339.0 1,423.8 1,285.5
Invested equity attrib. to the equity holders of the Company 362.8 415.8 386.8 449.5 305.3Non-controlling interests 0.6 0.5 0.6 0.5 0.4
Total equity 363.4 416.3 387.4 450.0 305.7
Deferred tax liabilities 71.2 59.0 68.7 70.0 59.8Pension obligations 44.6 62.9 51.8 26.2 26.6Provisions 6.8 9.1 6.9 9.9 13.0Borrowings 71.8 87.0 75.6 90.3 88.0Other liabilities 0.3 5.9 4.6 6.1 5.8
Total non-current liabilities 194.7 223.9 207.6 202.5 193.2
Trade and other liabilities 660.7 677.4 697.8 715.6 709.9Income tax liabilities 7.6 9.6 7.4 13.4 11.6Provisions 21.0 28.4 23.3 25.8 27.8Borrowings 15.8 15.3 15.4 16.5 20.1
Total current liabilities 705.0 730.7 743.9 771.3 769.4
Liabilities related to assets held for sale 17.2Total liabilities 899.7 954.6 951.5 973.8 979.8
Total equity and liabilities 1,263.1 1,370.9 1,339.0 1,423.8 1,285.5
*) The revised IAS 19 standard has had the following effects on the combined balance sheet of December 31, 2012: non-current receivables decreased by EUR 10.3 million, non-current pension obligations increased by EUR 25.1 million, deferred tax liabilities decreased by EUR 9.3 million and invested equity decreased by EUR 26.2 million. The restated figures have not been audited. The other information presented has been audited.
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Caverion
Caverion Group carve-out cash flow statement:Operating cash flow after investments
Cash flow statement, EUR million 1-3/2013 1-3/2012 1-12/2012 1-12/2011 1-12/2010(Unaudited) (Restated,
Unaudited)(Restated*, Unaudited) (Audited) (Audited)
Cash flow from operating activitiesProfit for the period 2.8 11.7 40.8 73.0 65.9Adjustments for:
Depreciation, amortization and impairment 5.1 5.8 24.2 20.3 18.0Reversal of accrual-based items -10.1 0.5 -12.3 -5.3 -1.2Financial income and expenses 0.3 1.0 3.6 3.0 3.6Gains on the sale of tangible and intangible assets -0.1 -0.1 -2.5 -5.5 0.0Taxes 1.2 5.1 16.7 29.0 29.5
Total adjustments -3.6 12.3 29.7 41.5 49.9
Change in working capital:Change in trade and other receivables 52.2 62.7 44.2 -103.1 -65.3Change in inventories -3.1 -8.8 0.4 0.4 -3.2Change in trade and other payables -40.9 -53.5 -40.9 -1.7 -23.0
Total change in working capital 8.1 0.4 3.7 -104.4 -91.5
Interest paid -0.8 -1.2 -5.0 -5.0 -5.4Other financial items, net cash flow -1.0 -1.8 -3.3 -0.9 -0.3Interest received 1.0 0.4 1.3 0.9 0.6Dividends received - - 0.0 0.1 0.1Taxes paid -7.4 -10.8 -17.9 -20.0 -19.1Net cash generated from operating activities -1.0 11.0 49.3 -14.8 0.2
Cash flow from investing activitiesAcquisition of subsidiaries. net of cash -0.8 -5.0 -7.3 -8.9 -35.2Purchases of property, plant and equipment -0.8 -1.6 -5.7 -5.3 -1.2Purchases of intangible assets -0.1 -0.1 -0.9 -0.8 -0.3Disposals of subsidiaries and operations, net of cash - - - 5.9 -Proceeds from sale of tangible and intangible assets 0.4 0.9 4.4 0.5 4.0Proceeds from sale of available-for-sale financial assets - - 0.7 2.7 0.1Net cash used in investing activities -1.2 -5.8 -8.8 -5.9 -32.6
Operating cash flow after investments -2.2 5.1 40.5 -20.7 -32.4
*) The revised IAS 19 standard has had the following effects in the combined statement of cash flows during the financial year ended 31.12.2012: profit for the year decreased by EUR 0.1 million and trade receivables and other receivables increased by EUR 0.1 million. The correction has not affected the net cash flow. Restated financials are unaudited. Other data shown are audited.
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Caverion
Caverion Group carve-out cash flow statement:Cash and cash equivalents at the end of the financial period
Cash flow statement, EUR million 1-3/2013 1-3/2012 1-12/2012 1-12/2011 1-12/2010
(Unaudited) (Restated, Unaudited)
(Restated*, Unaudited) (Audited) (Audited)
Operating cash flow after investments -2.2 5.1 40.5 -20.7 -32.4
Cash flow from financing activitiesProceeds from borrowings - - - 35.0 -Repayment of borrowings -3.5 -3.5 -15.0 -36.2 -19.4Change in current liabilities, net - - - -1.4 -28.6Payments of financial leasing debts -0.1 -0.0 -0.5 -0.9 -0.1Equity financing from/to YIT Group -28.7 -13.2 -81.9 70.0 47.3Net cash used in financing activities -32.3 -16.7 -97.4 66.5 -0.8
Change in cash and cash equivalents -34.5 -11.6 -56.9 45.8 -33.2
Cash and cash equivalents at the beginning of the financial period 100.8 154.5 154.5 106.2 136.1Foreign exchange rate effect on cash and cash equivalents 0.1 1.4 3.1 2.5 3.3
Cash and cash equivalents at the end of the financial period 66.4 144.2 100.8 154.5 106.2
*) The revised IAS 19 standard has had the following effects in the combined statement of cash flows during the financial year ended 31.12.2012: profit for the year decreased by EUR 0.1 million and the change in trade and other receivables increased by EUR 0.1 million. The correction has not affected the net cash flow. Restated financials are unaudited. Other data shown are audited.
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Caverion
Pro forma financialsContent, drafting principles, use and extent of auditing
Pro forma financials:° are unaudited and they are used only for illustrative purposes, thus illustrating a hypothetic situation, which takes into
account some demerger related items and, therefore, do not represent Caverion’s actual financial position or results° are separately included in the registration document° are based on the official carve-out financials° are adjusted for demerger related items, e.g. demerger costs and re-financing of the debt (see next two pages for further
details on pro forma adjustments)
Pro forma income statement assumes that the demerger would have taken place on 1 January 2012
Pro forma balance sheet assumes that the demerger would have taken place on 31 March 2013
Pro forma financials are presented to illustrate:° The effects of the Caverion’s re-arranged financing package that will be in effect after the demerger° Caverion’s capital structure that will form after the demerger° The effects of the demerger related costs to Caverion’s earnings and financial position on the pro forma dates
No audit performed on pro forma figures, but auditors statement of opinion that the pro forma financial information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the issuer
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Caverion
Description of pro forma adjustment I
In February 2013 new financing arrangements have been agreed with Nordic financial institutions to Caverion, these comprise a EUR 140 million long-term loan facility, a EUR 60 million long-term credit facility and up to EUR 67 million bridge financing. The pro forma financials are adjusted to present the effects of the reorganization of financing. New loans are recognized in the pro forma balance sheet of 31.3.2013 initially at fair value less transaction costs.° EUR 140 million long-term loan facility drawn° Out of the EUR 67 million bridge financing, EUR 22 million assumed to be used for refinancing of Nordic Investment Bank
loans (which thus assumed to total EUR 45 million)° EUR 60 million long-term credit facility assumed to be undrawn
As a result of the pro forma adjustments, in the pro forma balance sheet, long-term borrowings increase by EUR 102.9 million and short-term borrowings increase by EUR 36 million. The total increase in the borrowings is EUR 138.9 million.° Nordic Investment Bank loans (EUR 67 million) included already in carve-out, of which EUR 22 million assumed to be
replaced by bridge financing in pro-forma (no impact on total loan amount)
Adjustments to the pro forma financial expenses consists mainly of new financial expenses relating to new financing/loans. Interest expenses are calculated using the effective interest rate method, using the six-month EURIBOR interest rate as a base rate. Interest rate calculation takes into account the planned re-financing at the demerger date, so that the re-financing is assumed to have taken place on 31 Dec 2011. For the pro forma balance sheet at the end of Q1/2013, the re-financing is assumed to have taken place on 31 Mar 2013.° Caverion Group pro forma 2012 and Q1/2013 income statements have been adjusted for EUR 4.9 million and EUR 0.8
million increase in the financial costs, respectively, to describe the financial effects of the refinancing
In addition, the pro forma cash and cash equivalents have been adjusted by EUR -0.8 million to reflect the change in allocated cash amount to Caverion Corporation due to payments of certain internal profit distribution.
Pro forma adjustment I: Refinancing
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Caverion
Description of pro forma adjustments II and III
Pro forma adjustment II: Costs related to the Demerger Pro forma adjustment III: Presentation of the Equity
Pro forma adjustment takes into account the demerger costs related to the listing and establishment of the new companyThese costs include e.g. advisory fees related to the demerger, which can be determined as non-recurring itemsThe following adjustments have been made to the Caverion Group 2012 income statement:° EUR 3.0 million increase in other operating expenses° EUR 0.5 million increase in financial expenses° EUR 0.9 million decrease in income taxesThese above mentioned adjustments have been taken into account in the equity of the pro forma balance sheet (31 March 2013)In addition, the following adjustments have been made to the Caverion Group balance sheet on 31 March 2013:° Equity has been adjusted for estimated total listing
costs of EUR 1.6 million deducted with income taxes of EUR 0.3 million
° The estimated total direct demerger related costs of EUR 5.1 million are recorded in the pro forma balance sheet as accrued liabilities and the related tax effect to tax assets
Pro forma Equity 31 March 2013(Unaudited)
EURmillion
Carve out 31 Mar 2013
ProForma
adj. I
ProFormaadj. II
ProFormaadj. III
Pro forma31 Mar 2013
Equity
Invested equity attributable to the equity holders of Caverion Group
362.8 -139.7 -3.9 -219.2 0.0
Share capital 1.0 1.0
Other equity 218.2 218.2
Attributable to:
Equity holders of CaverionGroup 362.8 -139.7 -3.9 219.2
Non-controlling interests 0.6 0.6
Total Equity 363.4 -139.7 -3.9 219.8
In the pro forma balance sheet (31 March 2013), the components of the equity are presented in accordance with the demerger plan
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Caverion
FinlandNon-residential construction is expected to remain weak
62
New non-residential construction by key sector Non-residential renovation and service
Construction of commercial and office buildings in Finland Construction of industrial and warehouse buildings in Finland
0200400600800
1000120014001600180020002200
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildingsNew Industrial buildings
0
1000
2000
3000
4000
5000
6000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
Building permitsStart-upsCompletions
Building permitsStart-upsCompletions
Source: Non-residential construction, Non-residential renovation and service: Euroconstruct December 2012, Other data: RT April 2013
EUR million EUR million
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Caverion
0
1000
2000
3000
4000
5000
6000
7000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
SwedenNon-residential market is relatively stable
63
New non-residential construction by key sector Non-residential renovation and service
Prime office yields in Nordic countries Prime office rents in Nordic countries
Source: Euroconstruct December 2012 and Newsec Property Outlook Spring 2013, March 2013
EUR million EUR million
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildings New Industrial buildings
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Caverion
NorwayMarket is forecasted to remain relatively stable
64
New non-residential construction by key sector Non-residential renovation and service
Prime retail yields in Nordic countries Prime retail rents in Nordic countries
Source: Euroconstruct December 2012 and Newsec Property Outlook Spring 2013, March 2013
EUR million EUR million
0
500
1000
1500
2000
2500
3000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildingsNew Industrial buildings
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
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Caverion
DenmarkNon-residential market remains at low level
65
New non-residential construction by key sector Non-residential renovation and service
Logistics yields in Nordic countries Logistics rents in Nordic countries
Source: Euroconstruct December 2012 and Newsec Property Outlook Spring 2013, March 2013
EUR million EUR million
0
200
400
600
800
1000
1200
1400
1600
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildingsNew Industrial buildings
0
1000
2000
3000
4000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
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Caverion
The Baltic CountriesNon-residential construction forecasted to pick up slightly
66
New non-residential and renovation & service in Estonia
New non-residential and renovation & service in Latvia New non-residential and renovation & service in Lithuania
Source: Euroconstruct December 2012
EUR million
0
1000
2000
3000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014 2015
New non-residential and renovation&service
0
1000
2000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New non-residential and renovation&service
0
1000
2000
3000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New non-residential and renovation&service
EUR million EUR million
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Caverion
The Baltic countriesKey business premises indicators
67
Prime office yields in Baltic countries Prime office rents in Baltic countries
Prime retail yields in Baltic countries Prime retail rents in Baltic countries
Source: Newsec Property Outlook Spring 2013, March 2013
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Caverion
GermanyStable demand in key sectors
68
New non-residential construction by key sector Non-residential renovation and service
IFO Business climate in Germany ZEW index in Germany
Source: Euroconstruct December 2012, IFO institute April 24, 2013, ZEW April 18, 2013
0
1000
2000
3000
4000
5000
6000
7000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildingsNew Industrial buildings
0
10000
20000
30000
40000
50000
60000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
EUR million EUR million
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Caverion
AustriaMarkets are recovering slowly
69
New non-residential construction by key sector Non-residential renovation and service
New non-residential construction by sector Total construction output
Source: Euroconstruct December 2012
EUR million EUR million
0
1000
2000
3000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Renovation and service
0
1000
2000
3000
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
New Office buildings New Commercial buildingsNew Industrial buildings
0
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E
Construction output
EUR billion
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Caverion
DisclaimerThis presentation, which includes all information and data on the slides following this page, any oral statements made when presenting these slides or during any possible subsequent Q&A session, and any other materials distributed or statements made at, or in connection with, such presentation (the “Presentation”) has been prepared for information purposes only for use at the Presentation in connection with preliminary discussions relating to YIT Corporation (“YIT”) and Caverion Oyj (“Caverion”), the company to be demerged from YIT (and together with YIT, the “Companies”), including their subsidiaries, their shareholders, their affiliates, their respective directors, officers, employees or agents, advisors or representatives as described herein, and may not be used in making any investment decision. You are advised to read this carefully before attending, reading or making any other use of the Presentation. By attending, reading or making any other use of the Presentation, you are deemed to have agreed to all of the following restrictions.
No responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) is or will be accepted in relation to the Presentation by the Companies or any of their shareholders, their affiliates, their respective directors, officers, employees or agents, advisors or representatives. Any and all liability which may be based on the Presentation and any errors therein or omissions therefrom or any loss arising from the use of or otherwise in connection with the Presentation is expressly disclaimed by the Companies. Nordea is acting as financial advisors to the Companies only and will not regard any other person (whether a recipient of the Presentation or not) as a client in relation to any transaction regarding the Companies and will not be responsible to anyone other than the Companies for providing the protections afforded to their clients, nor for providing advice to any such other person.
The Presentation was prepared based solely on information obtained from the Companies and public sources on or prior to the date hereof and has not been independently verified. The Presentation contains only summary information and no representation or warranty, express or implied, is or will be made in relation to, and no reliance should be placed on, the fairness, accuracy, correctness or completeness of the information or opinions contained herein. Moreover, the Presentation may include statements and illustrations concerning risks, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Such statements and illustrations involve risks and uncertainties and neither the Companies nor any of their affiliates, shareholders or any of their advisors or representatives make any warranties or representations about accuracy, sequence, timeliness or completeness of the content of the Presentation or the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. The Presentation includes market share and industry data obtained by the Companies from industry publications and surveys and internal surveys. The Companies may not have access to the facts and assumptions underlying the numerical data, market data and other information extracted from publicly available sources. As a result, neither the Companies nor any of their affiliates, shareholders or any of their advisors or representatives are able to verify such numerical data, market data and other information and assume no responsibility for the correctness of any market share or industry data or other information included in the Presentation. Furthermore, and without prejudice to liability for fraud, the Companies do not accept or will accept any liability, responsibility or obligation (whether in contract, tort or otherwise) in relation to these matters. Any investor and prospective investor should make its own investigation of the Companies and all information provided and is advised to seek professional advice on legal, financial, tax and other matters relating to the Companies and any transaction contemplated herein.
The Presentation includes forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this communication, including, without limitation, those regarding the demerger plan and its execution. By their nature, forward looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Such statements are based on numerous assumptions and may differ materially from (and be significantly more negative than) those made in, or suggested by, the forward-looking statements contained in this Presentation.
Any information and views contained herein do not purport to be comprehensive and are based on financial, economic, market and other conditions prevailing as of the date of the Presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained in the Presentation.
The Presentation does not constitute nor is intended to form part of any offer, or the solicitation of any offer, to buy, subscribe for or sell any shares in the Companies or any other securities. Nor shall the Presentation or any part hereof form the basis of, or be relied on in connection with, any contract, commitment or investment decision, nor do it constitute any form of financial opinion or recommendation regarding shares or other securities of the Companies on the part of any member of the Nordea Group.
Without prejudice to liability for fraud, the Companies disclaim any liability which may be based on the Presentation or any other written or oral information provided in connection therewith and any errors therein and/or omissions therefrom. The distribution of the Presentation in certain jurisdictions may be restricted by law and, accordingly, recipients of the Presentation represent that they are able to receive the Presentation without contravention of any unfulfilled registration requirements or other legal restrictions in the jurisdiction in which they reside or conduct business.
The terms and conditions, under which the Presentation is provided, are governed by Finnish law without regard to the choice of law principles. The Presentation is not being made available to US persons (as defined in Regulation S under the US Securities Act of 1933, as amended) or to persons who are not persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), high net worth entities falling within article 49(2)(a) to (d) of the Order; or persons who are an elective professional client or a per se professional client under Chapter 3 of the FCA Conduct of Business Sourcebook; provided that the Presentation is prepared and distributed, or approved, by a person authorised under the Financial Services and Markets Act 2000.
The Presentation is not for distribution into the United States. The Presentation does not constitute an offer or solicitation to purchase or subscribe for securities in the United States. The securities to which the Presentation relates have not been registered, and will not be registered, under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States unless they are registered under the U.S. Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. There will be no public offering of securities in the United States.
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