CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY 30 JUNE 2019 - PowerPoint PPT Presentation

CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 1 JANUARY – 30 JUNE 2019 CEO Esa Korkeela CFO Joni Sorsanen

CONTENTS 1. Highlights and Group performance 2. Cash flow and financial position 3. Market outlook, guidance and summary 4. Appendix 1 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Highlights of the second quarter of 2019 Net sales grew, EBIT turned positive EUR EUR EUR +3.5m -1.5m +0.5m y-o-y y-o-y y-o-y NET SALES: EBIT: FREE CASH FLOW: EUR +0.1m EUR +2.7m EUR 81.2m EUR EUR No. +3.6m -59.4m -56 y-o-y y-o-y y-o-y NET DEBT: ORD. BACKLOG: PERSONNEL: EUR 22.0m EUR 226.8m 1,097 2 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Quarterly performance overview Net sales grew by 4.4%, order intake and order backlog declined year-on-year QUARTERLY NET SALES (EUR m) QUARTERLY ORDER INTAKE (EUR m) QUARTERLY ORDER BACKLOG (EUR m) FY’17 NET SALES: FY’18 NET SALES: FY’17 ORD. INTAKE: FY’18 ORD. INTAKE: EUR 300.2m EUR 315.8m EUR 278.1m EUR 228.5m 286,2 270,1 104,9 250,2 96,8 237,8 227,9 226,8 225,7 225,1 88,7 86,3 212,9 83,0 81,2 198,8 78,8 78,9 77,8 77,8 73,5 73,5 72,7 62,3 59,5 57,3 57,4 39,3 30,7 27,9 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 3 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Quarterly net sales development Q2 net sales EUR 81.2m, growth of 4.4% year-on-year Quarterly net sales development Q1/2017 – Q2/2019 (EUR m) Comments ■ Q2/2019 net sales EUR 81.2m (77.8m) 115 – Year-on-year growth 4.4% 96,8 – Housing Companies net sales EUR 27.7m (25.1m) 95 86,3 Quarterly Net sales (EUR million) 20,4 81,2  growth was strong particularly in facade 78,9 77,8 78,8 77,8 73,5 renovations in the Greater Helsinki area 7,2 18,8 75 16,8 20,1 – Corporations net sales EUR 31.7m (33.1m)  net 16,4 62,3 57,3 4,0 8,3 sales generated from non-residential renovation 3,8 5,3 17,9 55 grew strongly but net sales from residential 42,0 renovation declined due to reorganisation of 3,0 33,2 31,7 27,6 33,1 Housing repair unit initiated in late 2018 35 26,0 – Public Sector net sales EUR 8.3m (3.8m)  growth in line with expectations in relation to low 32,4 15 28,9 28,3 27,7 25,1 comparison period 17,9 – Building Technology net sales EUR 18.8m (20.1m) -2,5 -4,5 -4,0 -4,1 -5,1 -5,2 -5  decline in line with expectations as a result of Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 new operating models and more disciplined bidding processes adopted earlier Housing Companies Corporations Public Sector Building Technology Eliminations 4 26 July 2019 Consti Group Plc / H1 Financial Report 2019

EBIT development Q2 2019 EBIT turned positive Quarterly EBIT development Q1/2017 – Q2/2019 (EUR m) Comments 8 8% ■ Q2/19 EBIT amounted to EUR 0.1 (1.7) million, or - FY 2017 EBIT: FY 2018 EBIT: 0.1% (2.1%) of net sales EUR -0.4m EUR -2.1m Quarterly EBIT (EUR million, bar graph) 6 6% – EBIT improved from previous quarter and turned Quarterly EBIT margin (line graph) positive 4 4% 3,4 % – During the period, profitability development was mostly positive 2,1 % 2 2% – However, the operating result was still materially 2,7 0,5 % affected by execution of the remaining performance 1,7 0,1 % -0,8 obligations of a building purpose modification 0,3 0 0,1 0% -0,4 project related to a high-value property -1,4 -2,2 -0,2 -2,6 -0,5 % – Excluding the negative impact of the project in -1,0 % -2 -2% -1,8 % question, April-June EBIT would have improved -0,3 % -2,2 % significantly year-on-year -3,0 % -4 -4% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 ■ H1/19 EBIT amounted to EUR -0.3 (1.5) million, or - 0.2% (1.0%) of net sales EBIT (left axis) EBIT margin (right axis) 5 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Actions to improve profitability ongoing The main focus in 2019 is on implementing the new organisation structure 1 • Group level • Reorganization of • Chief Legal changes in Technical Building Officer Service and Targeted Services business area appointed HR mgmt reorganisations & new organisation • New customer-oriented organization structure effective as of 18 February 2019 structure • Reorganization of • Cost savings expected to materialize in 2019, and to take effect fully from the Housing repair unit beginning of 2020 onwards 2 • Improvements in pipeline renovation business sales and tendering process • Improvements in technical installations business sales and tendering process Disciplined tendering process • Internal project tendering process and risk management developed, internal project approval limits lowered • Cut out building purpose modification projects which do not meet Consti’s risk / profit targets 3 • Continued implementation of harmonized project management processes Implementation of strategic • Implementation of performance management principles on all organisational levels initiatives (esp. Profitable and • Enhanced implementation of strategic initiatives in the new organizational structure competitive operations) • Implementation of new project management system throughout the Group H2 H1 H2 H1 H2 2017 2018 2019 6 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Implementation of new organisation structure progressing Targeted annual cost savings of EUR 2 million expected to fully materialize in 2020 CONSTI’S NEW ORGANISATION AND TARGETED BENEFITS UPDATE ON THE PROGRESS IN IMPLEMENTATION ■ Implementation work progressing according to CONSTI plan GROUP PLC COMMON SUPPORT – New business areas have developed their FUNCTIONS operations in line with expectations New operating CONSTI segments RENOVATION • Organisation gradually moving closer to the work sites • Risk management and agility of the HOUSING CORPORA- PUBLIC BUILDING COMPANIES TIONS SECTOR TECHNOLOGY organisation improving Technical – As a total, Consti has already been able to Service install. realise year-on-year fixed cost benefits during TARGETED BENEFITS OF THE NEW ORGANISATION AND CHANGE PROGRAM: H1 2019 1 Enhanced strategy implementation throughout the Group ■ In H2 2019, for instance development of 2 New organisation drives customer-centric, effective and efficient operations internal support functions as well as changes in 3 Enables centralisation of expertise and flexibility in resourcing legal structure to be continued 4 Improves risk management and agility of the organisation 5 Targeted annual cost savings of EUR ~2m, fully effective as of 2020 7 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Quarterly development in number of personnel Total number of personnel at the end of Q2 2019 decreased by 56 year-on-year Quarterly development in number of personnel Q1/2017 – Q2/2019 Comments 1400 ■ Number of personnel at the end of Q2/2019 1,097 1 153 1 125 1 108 1 110 (1,153), reduction of 56 1 099 1 075 1 072 1 061 1200 1 028 ■ Average number of personnel during Q2/2019 1,072 993 Quarterly number of personnel (1,110), reduction of 38 1000 ■ Average number of personnel during H1/2019 1,050 800 (1,085), reduction of 35, or 3.2% year-on-year 1 165 1 153 1 117 600 1 104 1 097 1 079 1 053 1 046 1 029 1 016 400 200 0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Personnel at quarter-end Average personnel during the quarter 8 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Quarterly order intake development Total Q2/2019 order intake EUR 57.4 million (88.7m) Quarterly order intake development Q1/2017 – Q2/2019 (EUR m) Comments ■ Q2/2019 order intake EUR 57.4m (88.7m) 104,9 – Year-on-year change -35.2% 100 – Order intake impacted by Group-wide disciplined Quarterly order intake (EUR million) 88,7 tendering process adopted during 2018 as well as 80 83,0 the fact that large on-going comprehensive renovation projects have tied up resources in 2019 73,5 72,7 – Examples of new orders received in Q2: 60 59,5 • 57,4 KOy Uudenmaankatu 16-20 office renovation through alliance contract in Helsinki (Corporations & Building Technology) 40 39,3 • As Oy 3. linja 5 pipeline renovation in Helsinki (Housing Companies) 30,7 27,9 • HUS Siltasairaala, contract for heating and cooling works 20 in Helsinki (Building Technology) ■ H1/2019 order intake EUR 131.0m (161.4m) 0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 9 26 July 2019 Consti Group Plc / H1 Financial Report 2019

Quarterly order backlog development Q2/2019 order backlog at EUR 226.8 million (286.2m), down by 20.8% y-o-y Quarterly order backlog development Q1/2017 – Q2/2019 (EUR m) Comments 350 ■ Q2/2019 order backlog at EUR 226.8m (286.2m) – Year-on-year change -20.8% 300 – The quality of the order backlog has gradually Quarterly Order backlog (EUR million) improved during H1 2019 as the share of loss- 250 making projects has decreased significantly from the beginning of the year 200 150 286,2 270,1 250,2 237,8 227,9 225,7 225,1 226,8 212,9 100 198,8 50 0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 10 26 July 2019 Consti Group Plc / H1 Financial Report 2019