Consti Yhtiöt Oyj - Half Year financial report

Consti Group Plc Half-Year Financial Report for January - June 2016

CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 17 AUGUST 2016, at 9.00 a.m.

Consti Group Plc Half-Year Financial Report for January - June 2016

Order backlog reached a record high

4-6/2016 highlights (comparison figures in parenthesis 4-6/2015):
·       Net sales EUR 64.8 (63.4) million; growth 2.3%
·       EBITDA EUR 3.1 (2.8) million and EBITDA margin 4.7% (4.5%)
·       Adjusted EBITDA EUR 3.1 (2.9) million and adjusted EBITDA margin 4.7%
(4.5%)
·       Operating profit (EBIT) EUR 2.6 (2.3) million and operating profit
(EBIT) margin 4.0% (3.7%)
·       Adjusted EBIT EUR 2.6 (2.4) million and adjusted EBIT margin 4.0% (3.7%)
·       Order backlog EUR 212.6 (199.8) million
·       Free cash flow EUR 0.4 (4.9) million
·       Earnings per share EUR 0.25 (0.18)

1-6/2016 highlights (comparison figures in parenthesis 1-6/2015):
·       Net sales EUR 116.2 (110.9) million; growth 4.8%
·       EBITDA EUR 3.7 (3.4) million and EBITDA margin 3.2% (3.1%)
·       Adjusted EBITDA EUR 3.7 (3.8) million and adjusted EBITDA margin 3.2%
(3.4%)
·       Operating profit (EBIT) EUR 2.8 (2.4) million and operating profit
(EBIT) margin 2.4% (2.2%)
·       Adjusted EBIT EUR 2.8 (2.7) million and adjusted EBIT margin 2.4% (2.5%)
·       Free cash flow EUR 3.7 (7.1) million
·       Earnings per share EUR 0.24 (-0.04)

Consti specifies its guidance on the Group outlook for 2016:
The company estimates that its total annual net sales for 2016 will grow
approximately 5-10 percent compared to 2015. Consti's previous guidance was:
"The company estimates that its total annual sales for 2016 will grow compared
to 2015."

+---------------+------+-------+--------+-------+--------+--------+----------+
|KEY FIGURES    | 4-6/ | 4-6/  |Change %| 1-6/  |  1-6/  |Change %|  1-12/   |
|(EUR 1,000)    | 2016 | 2015  |        | 2016  |  2015  |        |   2015   |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Net sales      |64,813| 63,357|   2.3 %|116,181| 110,851|   4.8 %|   256,151|
+---------------+------+-------+--------+-------+--------+--------+----------+
|Adjusted       | 3,069|  2,870|   6.9 %|  3,729|   3,751|  -0.6 %|    12,613|
|EBITDA*        |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Adjusted EBITDA| 4.7 %|  4.5 %|        |  3.2 %|   3.4 %|        |     4.9 %|
|margin, %      |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|EBITDA         | 3,069|  2,830|   8.4 %|  3,706|   3,416|   8.5 %|    10,507|
+---------------+------+-------+--------+-------+--------+--------+----------+
|EBITDA margin, | 4.7 %|  4.5 %|        |  3.2 %|   3.1 %|        |     4.1 %|
|%              |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Adjusted EBIT* | 2,614|  2,364|  10.6 %|  2,829|   2,730|   3.6 %|    10,520|
+---------------+------+-------+--------+-------+--------+--------+----------+
|Adjusted EBIT  | 4.0 %|  3.7 %|        |  2.4 %|   2.5 %|        |     4.1 %|
|margin, %      |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Operating      | 2,614|  2,324|  12.5 %|  2,806|   2,395|  17.1 %|     8,414|
|profit (EBIT)  |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Operating      |      |       |        |       |        |        |          |
|profit (EBIT)  | 4.0 %|  3.7 %|        |  2.4 %|   2.2 %|        |     3.3 %|
|margin, %      |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Profit for the | 1,878|    846| 121.9 %|  1,801|    -190|1049.9 %|     3,260|
|period         |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Order backlog  |      |       |        |212,590| 199,833|   6.4 %|   181,301|
+---------------+------+-------+--------+-------+--------+--------+----------+
|Free cash flow |   353|  4,886| -92.8 %|  3,747|   7,070| -47.0 %|     8,910|
+---------------+------+-------+--------+-------+--------+--------+----------+
|Cash           |11.5 %|172.7 %|        |101.1 %| 207.0 %|        |    84.8 %|
|conversion, %  |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Net interest-  |      |       |        | 17,780|  38,514| -53.8 %|    17,407|
|bearing debt   |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Gearing, %     |      |       |        | 76.1 %|2811.2 %|        |    70.9 %|
+---------------+------+-------+--------+-------+--------+--------+----------+
|Number of      |      |       |        |       |        |        |          |
|personnel at   |      |       |        |    990|     981|   0.9 %|       890|
|period end     |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
|Earnings per   |      |       |        |       |        |        |          |
|share, undil.  |  0.25|   0.18|  35.6 %|   0.24|   -0.04| 643.6 %|      0.61|
|(EUR)          |      |       |        |       |        |        |          |
+---------------+------+-------+--------+-------+--------+--------+----------+
 * New ESMA (European Securities and Markets Authority) guidelines on
 Alternative Performance Measures (APMs) are effective for the financial year
 2016. Consti presents APMs to reflect the underlying business performance
 and to enhance comparability between financial periods. APMs should not be
 considered as a substitute for measures of performance in accordance with
 the IFRS. As of Q1 2016, Consti relabels the previously referenced "before
 non-recurring items" with "before items affecting comparability" (IAC). For
 a more detailed description of items affecting comparability, see section
 "Sales, result and order backlog".



CEO Marko Holopainen's comment

Order backlog reached a record high

"Growth in demand of renovation construction and technical building services
continued good during the second quarter of the year. Overall we achieved the
best Q2 in our company's history. Despite the strong comparison period, we were
able to increase order intake and our order backlog reached a record high. Our
order backlog in euros at the end of the reporting period was at 212.6 (199.8)
million euro, which provides a good foundation for our business during the rest
of the year. Our net sales for the second quarter of the year grew 2.3 percent
and was 64.8 million euro. Net sales growth was good in Technical Building
Services and Renovation Contracting. In Building Facades net sales decreased
from the comparison period, but we believe that the strong order inflow of the
beginning of the year will be positively seen in Building Façade's sales for the
rest of the year. Our profitability also developed positively during the
quarter. Our adjusted EBIT was 2.6 million euro, which is 4.0 percent of the net
sales, while corresponding figures from the second quarter of 2015 were 2.4
million euro and 3.7 percent of the net sales.

The good market situation continued

The market situation during the first half of the year in general was good. The
number of tender requests developed positively during the first half of the year
and order intake increased towards the end of the reporting period. We received
several significant orders during the spring. The largest ventures are the
extensive renovation of Espoonlahti church, renovations at Lahti's future
courthouse, technical building services at Hämeenlinna swimming hall and a
comprehensive façade renovation venture in Ruoholahti, Helsinki. During the
spring Consti also made several significant deals on housing association
pipeline and façade renovations.

Strategy implementation progressing

Our strategic ventures are progressing as planned. At the acquisitions front we
have continued active mapping and held negotiations with several interesting
companies. In our internal development ventures, we have invested in for example
personnel training and in developing our IT-strategy. Our strategic goal is to
continue profitable growth by strengthening our position in Finland's growth
centres.

Outlook for the rest of the year

Based on our current market and business outlook, we believe that the demand for
renovation construction and technical building services will remain at a good
level during the rest of the year as well. Consequently, we are specifying our
guidance on the Group outlook on net sales growth. We estimate that net sales
for 2016 will grow by approximately 5-10 percent compared to 2015."

Operating environment

The relative portion of renovations in the Finnish building market has grown
during the past decade, and it is now already larger than the new building
market. The Confederation of Finnish Construction Industries RT (CFCI) estimates
that renovation amounted to approximately 54 percent of the building market's
total value in 2015. The general economic situation has a significantly smaller
impact on renovation construction and technical building services than it does
on the new building market.

The ageing building stock particularly increases the demand for renovation
construction. As buildings age, they require more technical renovations such as
pipeline and façade renovations. At the moment mainly buildings from the 1960s
and an increasing number of buildings from the considerably larger building
stock of the 1970s are being renovated in Finland. In renovation construction
the largest growth during the next decade is expected to come from residential
buildings in large cities. In housing association renovations approximately one
third of the renovations are pipelines, one third façades and the rest other
structures.

In addition to ageing, buildings require more renovation, technical building
services and building technology maintenance services due to heightened energy
efficiency requirements, urbanisation, modification of the use of buildings, the
development of housing automatisation and the ageing populations' need for
barrier-free buildings.

There are currently a great number of buildings in Finland which would benefit
from renovations modifying their use to match current needs. Such renovations
would improve both the buildings' usability and profitability. Typical
modifications of buildings include the altering of old office buildings and
industrial buildings in growth centres into hotels, apartments and assisted
living facilities. Modifications of the use of buildings are a central part of
Consti's services.

Renovation construction markets are concentrating on growth areas, akin to new
building. Necessary technical repairs in declining suburbs and less populated
areas are often economically unviable.

The European construction business research institute Euroconstruct estimated in
its June 2016 forecast that total building in 2016 will increase approximately
6.5 percent from the previous year. Renovation construction is estimated to grow
1.5 percent and new building will see an increase of 12.2 percent from the
previous year. In renovation construction demand growth is estimated to continue
progressing steadily during upcoming years and the growth is estimated to be
faster than new building growth on average.

The boost in new building should have a positive impact on Consti's competitive
environment and create new growth opportunities for Technical Building Services.
New building growth has a delayed impact on technical building services. The
Finnish Association of HPAC Technical Contractors estimated in their June review
that business conditions have improved compared to March. HPAC projects are
expected to materialise more notably during the autumn when building technology
work will begin in ongoing construction projects.

The renovation market is very fragmented in Finland. Large construction
companies focus on new building and the field of renovation has typically
consisted of several small companies that usually focus on only one segment of
renovation.

Measured in net sales, Consti is one of Finland's leading companies in
renovation and technical building services.

Outlook for 2016

Renovation construction is expected to continue steady growth in 2016. The
European construction business research group Euroconstruct estimated in its
June 2016 forecast that total building in 2016 will increase approximately 6.5
percent from the previous year, renovation construction will grow about 1.5
percent, and new building 12.2 percent from 2015. In renovation construction
demand growth is estimated to continue progressing steadily during upcoming
years and the growth is estimated to be faster than new building growth on
average.

The boost in new building should have a positive impact on Consti's competitive
environment and create new growth opportunities for Technical Building Services.
New building growth has a delayed impact on technical building services. The
Finnish Association of HPAC Technical Contractors estimated in their June review
that business conditions have improved compared to March. HPAC projects are
expected to materialise more notably during the autumn when building technology
work will begin in ongoing construction projects.

The general economic conditions have a considerably smaller impact on renovation
construction and technical building services than on new building.

Consti has specified its guidance on the Group outlook for 2016. The company
estimates that its total annual net sales for 2016 will grow approximately 5-10
percent compared to 2015. Consti's previous guidance was: "The company estimates
that its total annual sales for 2016 will grow compared to 2015."

Press conference

A press conference for analysts, portfolio managers and media will be arranged
on Wednesday August 17th 2016 at 10:00 at Scandic Hotel Simonkenttä's Tapiola-
cabinet at Simonkatu 9, Helsinki. The conference is hosted by CEO Marko
Holopainen and CFO Esa Korkeela.

Financial communication in 2016

Consti Group Plc shall publish one more interim report during 2016:

  * Interim report 1-9/2016 published 10 November 2016


CONSTI GROUP PLC

Further information:

Marko Holopainen, CEO, Consti Group Plc, Tel. +358 400 458 158
Esa Korkeela, CFO, Consti Group Plc, Tel. +358 40 730 8568

Distribution:

Nasdaq Helsinki Ltd.
Major media
www.consti.fi

Consti  is a leading  Finnish company concentrating  on renovation and technical
services.  Consti offers comprehensive building technology, pipeline renovation,
renovation  contracting, façade renovation and  other demanding construction and
maintenance  services for residential and  commercial buildings. In 2015, Consti
Group's   net  sales  amounted  to  256 million  euro.  It  employs  about  900
professionals in renovation construction and building technology.

Consti  Group Plc  is listed  on Nasdaq  Helsinki. The  trading code  is CONSTI.
www.consti.fi


[HUG#2035527]

Attachments:

Consti Half-Year Financial Report 1-6 2016.pdf