Caverion Oyj - Other information disclosed according to the rules of the Exchange

Caverion launches Fit for Growth strategy and sets new financial targets until 2020

Caverion Corporation Stock exchange release November 6, 2017 at 9.00 a.m. EET
Caverion launches Fit for Growth strategy and sets new financial targets until
2020

Caverion launches its new strategy and sets new financial targets ahead of the
Capital Markets Day, which will be held tomorrow on November 7, 2017 in
Helsinki, Finland.

The new strategy until 2020 is built around the digitalisation of the industry.
According to its updated vision, Caverion wants to be the “First choice in
digitalising environments” for its customers, employees and partners in its
industry.

“I strongly believe that digitalisation will revolutionise our industry. This
favours companies like Caverion. We are already now forerunners in
digitalisation and technology is at the core of our offering and competitive
edge. Our unique service offering covers the entire life cycle: from Design and
Build and further to Technical Maintenance and Managed Services. The market is
doing well and the outlook is favourable. By co-creating with our customers and
partners we will together define and combine the technologies and best solutions
for the long-term benefit of our customers. The new strategy builds on
Caverion’s mission: with “Smart solutions and happy customers” we can make
profitable business and also grow in the future,” says Ari Lehtoranta, President
and CEO of Caverion Corporation.

Clear implementation plan through Must-Wins to reach the financial targets

Before investing heavily in digital growth, however, Caverion has to first
improve its current performance. Therefore the new strategy is divided into two
phases: “Fit” and “Growth”. With these two phases combined, the new strategy is
called a “Fit for Growth” strategy.

Caverion has selected four Must-Win areas, which are crucial to success in
strategy implementation. During the first “Fit” phase over 2018-2019, Caverion
will concentrate on materially improving its financial performance. In this
phase “Top Performance at Every Level” is a pivotal Must-Win to boost the
Group’s cash conversion, improve productivity, clean the project portfolio and
continue the selective approach towards Projects. This Must-Win focuses on
performance management in the business units Services and Projects while driving
also savings in procurement, material logistics and fixed costs through detailed
actions. There is also a clear target to boost growth in the Services part of
the business.

The Must-Win area “Excellent customer experience” focuses on a creation of a
service culture where customer demand and experience are key starting points.
Running parallel with this area throughout the whole strategy period is the
“Winning team” Must-Win, which focuses on creating excellent customer experience
through capable leaders and engaged professionals and having the right people in
the right places through enhanced resource planning.

Towards the end of the “Fit” phase the focus will shift more on the fourth Must
-Win area “Best solutions”. In this area Caverion will drive growth based on its
existing and new capabilities in high value-adding technologies as well as by co
-creating wholly new digital services with its customers.

After successful implementation of the “Fit” phase, Caverion will move to the
“Growth” phase of its strategy during 2019-2020. The main target of this phase
is to further accelerate growth in Services. Caverion has set a specific
business mix target for its revenue; the long-term target reaching beyond 2020
is to generate over two-thirds of Group revenue from the Services business. At
the same time, Caverion will continue its selective approach in Projects
throughout the strategy period. However, Projects will still remain important as
they act as a gateway to Services and contribute to maintaining the company’s
technical forerunner position.

Furthermore, Caverion has also defined areas which always need to be in focus
and under constant improvement. These are safety, quality and sustainability and
they have been defined as “must-haves” in the new strategy.

New financial targets

“Caverion wants to prioritise on cash flow generation and profitability
improvement in its new strategy. We have hence set cash conversion and EBITDA as
our most important financial targets, supported by a moderate debt leverage
level. Except for constantly targeting to beat market growth in our Services
business, we have not defined a general revenue growth target for the “Fit”
phase of our strategy. It will be given by the end of 2019 before the start of
the “Growth” phase,” says Martti Ala-Härkönen, CFO of Caverion Corporation.

The main updates to the financial targets are the following:

+--------------------+--------------------------------------------+
|Previous targets    |Updated targets (until the end of 2020)     |
+--------------------+--------------------------------------------+
|Profitability:      |Cash conversion = Operating cash flow before|
|EBITDA over 6% of   |financial and tax items / EBITDA > 100%     |
|revenue             |                                            |
+--------------------+--------------------------------------------+
|Revenue growth:     |Profitability: EBITDA over 6% of revenue (no|
|Average annual      |change)                                     |
|revenue             |                                            |
|growth >10%         |                                            |
+--------------------+--------------------------------------------+
|Working capital:    |Debt leverage: Net debt/EBITDA < 2.5x       |
|negative            |                                            |
+--------------------+--------------------------------------------+
|                    |Growth:                                     |
|                    |- Revenue growth target will be given by the|
|                    |end of 2019.                                |
|                    |- Services growth > market growth.          |
|                    |- Long-term target beyond 2020: Services    |
|                    |generate over two-thirds of Group revenue.  |
+--------------------+--------------------------------------------+
|Dividend policy:    |Dividend policy: distribute at least 50% of |
|distribute at least |the result for the year after taxes,        |
|50%                 |however,                                    |
|of the result for   |taking profitability and leverage level into|
|the year after      |account.                                    |
|taxes,              |                                            |
|excluding changes in|                                            |
|fair value.         |                                            |
+--------------------+--------------------------------------------+

Capital allocation policy

Caverion’s capital allocation principles in the order of importance are:
1.      Investments in organic growth including digitalisation. However,
Caverion’s targeted operational capex level (excluding acquisitions) should not
exceed 1 percent of revenue;
2.      Reduction in leverage;
3.      Dividend policy of distributing at least 50% of net profit remains in
place, taking into account profitability and leverage level;
4.      Mergers and acquisitions in areas where adding complementing
capabilities or assets to existing footprint especially in Services. However,
acquisitions are only allowed for divisions performing well.

Overview of the CMD programme

More detailed information on the new strategy, the Must-Wins and how Caverion
will reach the new financial targets will be provided at the Capital Markets
Day, to be held in Helsinki tomorrow on November 7, 2017 at 9.00 a.m. EET
(Finnish time).

The day will start with management presentations. In addition to President and
CEO Ari Lehtoranta, the speakers include Martti Ala-Härkönen (Chief Financial
Officer), Thomas Hietto (Head of business unit Services), Jarno Hacklin (Head of
business unit Projects) and Knut Gaaserud (Executive Vice President & CEO,
Division Denmark-Norway).

After the management presentations the guests will visit a life cycle project at
the Lintuvaara school in Espoo where Caverion has installed building systems in
connection with the renovation and expansion of the buildings and is responsible
for a 25-year life cycle service contract. In addition, guests will visit
Caverion’s remote management centre and 24-hour Helpdesk operations in Vantaa.

All presentations will be made available at www.caverion.com/investors on the
Capital Markets Day. The event and all the materials will be in English. It is
also possible to follow the presentations through a live webcast at the same
address at approximately 9.00 a.m.-12.30 p.m. EET. A recording of the webcast
will be available after the Capital Markets Day. The presentation given by Ari
Lehtoranta can also be followed through a conference call at 9.00−10.00 a.m.
(EET) by calling the assigned number +44 (0)330 336 9105 at 8:55 a.m. (Finnish
time, EET) at the latest. Participant code for the conference call is
“5896055/Caverion”.

CAVERION CORPORATION

Distribution: Nasdaq Helsinki, principal media, www.caverion.com
Contacts:

Martti Ala-Härkönen, Chief Financial Officer, tel. +358 40 737 6633, martti.ala
-harkonen@caverion.com

Milena Hæggström, Head of Investor Relations, tel. +358 40 5581 328,
milena.haeggstrom@caverion.com
Caverion designs, builds, operates and maintains user-friendly and energy
-efficient technical solutions for buildings, industries and infrastructure. Our
services and solutions are used in commercial and residential buildings and on
industrial and public sector properties, as well as in processes, ensuring
business continuity, safety, healthy and pleasant surroundings, optimal
performance and cost management. Our vision is to be a leading European provider
of advanced and sustainable life cycle solutions for buildings and industries.
Our strengths include technological expertise and comprehensive services,
covering all technical disciplines throughout the entire life cycles of
properties and industrial plants. Our revenue in 2016 was approximately EUR 2.4
billion. Caverion has about 17,000 employees in 12 countries in Northern,
Central and Eastern Europe. Caverion’s shares are listed on Nasdaq
Helsinki. www.caverion.com (http://www.caverion.fi/), Twitter: @CaverionGroup

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