Annual Review
2020
0
Otsikko
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Caverion Annual Review 2020
Table of contents
AUDITED
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Caverion Annual Review 2020
Caverion – Building Performance
By making built environments smart and sustainable, Caverion
enables performance and people’s wellbeing. Customers can
trust our expert guidance during the entire life cycle of their
buildings, infrastructure or industrial sites and processes: from
advisory services to design & build, projects, technical and
industrial maintenance as well as facility management.
Our customers are supported by over 15,000 professionals in 11
countries in Northern, Central and Eastern Europe. Our revenue in
2020 was approximately EUR 2.2 billion. Caverion’s shares are
listed on Nasdaq Helsinki. Caverion’s head office is located in
Vantaa, Finland.
Ambitious sustainability targets
Caverion published its first sustainability targets in 2020. Our
target is to create sustainable impact through our solutions, with
a positive carbon handprint 10 times greater than our own
carbon footprint by 2030. Going forward, we are actively striving
to make the sustainability impacts visible and measurable to our
customers throughout our offering.
Caverion has a strong market position and is ranked among the
top 5 players in the building solutions market measured by
revenue in most of its operating countries. In future, we see good
growth prospects especially in smart and sustainable technology
areas, including Building Automation, Refrigeration, and Security
and Safety.
Our business units: Services and Projects
Services
Caverion is a partner for its customers within built environment
services, from technical maintenance and property management
services to solutions based on smart technologies and advisory
services. Being a forerunner in sustainability, digitalisation and
technology, supported by a wide local service network, we are
able to offer our customers sustainable, flexible and high-quality
services. Our focus is on delivering impactful outcomes for our
customers: carbon footprint decrease, energy savings, improved
end-user satisfaction and optimal building conditions.
Our goal is to be a leading service company and customers’
trusted partner, and to profitably grow faster than the market.
Projects
Caverion delivers building technology and infrastructure projects
for new building investments and modernisations. As a lifecycle
partner with design&build expertise, we install all building
technologies. We enable our customers’ building performance
with smart and energy efficient solutions, always focusing on
connectivity and human-centric design. Our customers count on
us for future-proof installations and technical solutions that
meet regulations, safety and sustainability requirements of the
future.
As a selective master of projects, our goal is to set the optimal
foundation for a long-term customer relationship which we
further grow with our service capabilities throughout the entire
lifecycle.
Services and Projects for industry
Caverion is improving efficiency and minimising losses and
emissions from production processes by measuring, monitoring,
maintaining, operating and modernising production. When
customers’ production facilities operate as planned, production
disruptions, uncontrolled emissions and waste are eliminated.
4
Caverion Annual Review 2020
FROM THE CEO
5
Caverion Annual Review 2020
From the CEO
Our target remains to come out of the corona crisis as a stronger company than entering it. In
2020, we continued our Fit for Growth strategy implementation and streamlined and adjusted
our operations proactively as the pandemic effected the market environment. At the same
time, we continued to invest in sustainable solutions for Smart Cities. A major share of EU and
governmental economic stimulus investments is directed to make cities more sustainable.
Caverion is well positioned to support its customers’ sustainability efforts.
The best way to fight a crisis is to focus
on helping customers through it
Throughout 2020, we focused hard on employee, customer and
end-user safety and on ensuring that our teams take all
necessary precautions in their daily work against the virus.
Staying close to customers and walking through the challenges
posed by Covid-19 together with them is the best recipe for
staying safe and looking forward. Many of the services we
provide helped to keep critical services and infrastructure up
and running.
Sustainable solutions for smart cities –
delivering outcome
Customers increasingly trust us for delivering complete
outcomes. We make their buildings and industries better for the
planet and better for people. We progressed very well
throughout the year in long-term and large agreements, with
e.g. several large city administrations. I am humbled and
encouraged by this development. It tells me to accelerate our
efforts.
Climate change continues to be the biggest threat our earth is facing.
In November we launched our sustainability targets. We commit to
making a difference in sustainability together with our customers and
in line with our strategy and purpose: enabling performance and
people’s wellbeing in smart and sustainable built environments. I am
proud of these targets. They require us to continuously improve and
to expand our smart technology and digital solution offering to
increase customer value and handprint. By 2030 we want to reach a
ten times higher positive impact from our activities with customers
than our own carbon footprint.
In the other two key sustainability target areas, we commit to caring
for our employees and enabling their continuous success and we
committing to ensure efficient and high-quality implementation of
sustainability.
FROM THE CEO
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Caverion Annual Review 2020
Strong development in Services, Smart technology and digital
solutions
Caverion is transforming in a fast-changing market environment. Cities are responsible for over 70%
of global CO2 emissions. Industrial sites, transport, and buildings are amongst the largest
contributors. Our customers who own, run or use these urban facilities and sites feel the pressure –
they are facing immense challenges. They need a partner who can support them on their way to a
sustainable future, which means that their properties reduce emissions, fulfil governmental
regulations, are safe, user-friendly and attractive. All of this is based on how well they can utilise
modern smart technology and apply data analytics. They need to stay competitive. Their building
partner needs to be on top of developments, learning and adapting in order to be able to guide
them; there is no time for wrong attempts – they want a commitment, a partner who promises
outcomes and delivers them in high quality.
Caverion is ideally equipped to be that partner. We deliver this kind of sustainable building
performance no matter at what stage they are at in the lifecycle of their building or industry. We
commit to outcomes. We advise them on their journey. For our unique Caverion way of delivering
these promises, digitalisation is at the core: we install and connect technology that becomes the
digital backbone of any property, utilise the data gathered in the operational phase of a building to
maintain and to continuously improve its performance for it to remain a high-value asset.
Defence victory
Despite all the difficulties that came with coronavirus, we managed to close the year with what I call
a “defence victory”. The economic environment had an impact on our order backlog, revenue and
profitability. The order backlog at the end of December decreased by 3.7 percent compared to the
previous year. In the second half of the year, the impacts of corona were more visible in the Projects
order backlog. The Services business order backlog was less affected by corona during the year.
Adjusted EBITA for January–December amounted to EUR 60.6 (67.2) million, or 2.8 (3.2) percent of
revenue. In Services, although the demand environment remained rather stable towards the end of
the year, our ad hoc works were impacted by corona. In the Industry division, the last quarter saw a
positive impact from earlier postponed shutdown services. In Projects, the pandemic continued to
impact our productivity to a certain extent. Productivity was also lowered by restructuring costs
related to FIT actions we carried out in both Services and Projects. Our cash flow was again strong
as a result of our performance management program.
Resetting our setup for growth
The impacts of the pandemic have required us to continue to improve productivity in order to stay
competitive. Rather than purely cutting costs, we redesigned our operations in such a way that we
built a solid foundation for growth and we are more resilient to any upcoming economic impacts of
corona and other market fluctuations in general. We made our organisation leaner, and we brought
everyone closer to customers. This also makes communication faster and easier. When growth
picks up, we are fit and well positioned to meet new customer demand.
During the year, we integrated the activities of the Maintpartner acquisition into our reshaped
Industry division. We also finalised the integration of the Huurre acquisition. I am pleased with
customer retention in both cases – within the boundaries set by competition authorities.
Committed people in a safe work environment
We continued our long-term work to ensure a safe work environment. The accident frequency rate
was 4.2 (5.3). This is a very encouraging development. Even though we are among the highest
performers in our field in terms of work safety, we are not satisfied yet with where we are today.
We continue to challenge all Caverion people to proactively carry responsibility for safety and we put
more and more emphasis on preventive and proactive measures.
I am grateful for the engagement of our people. It showed on a daily basis throughout the safety
and economic challenges of the year. Our people focused on customers and on moving forward with
them. I am grateful for that and I take it as a sign of trust from our employees in our purpose, and in
the sustainable growth opportunities we have with our customers.
Ari Lehtoranta
Ari Lehtoranta was the President and CEO of Caverion Corporation until 28 February 2021.
STRATEGY
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Caverion Annual Review 2020
We give expert guidance along the
lifecycle of built environments:
STRATEGY
8
Caverion Annual Review 2020
Our strategy: Fit for Growth
Caverion is well positioned to enable a sustainable, digital future
for its customers. Our strategy builds on our purpose to enable
performance and people’s wellbeing in smart and sustainable
built environments.
The coronavirus pandemic in 2020 slowed the implementation of our Fit for Growth strategy.
However, the crisis also showed that a large part of Caverion’s services is vital in keeping critical
services and infrastructure up-and-running. This includes ensuring the continued functioning of
energy and transportation infrastructure, health facilities, pharmaceutical and food industries, retail
and logistics as well as facilities and services used by public authorities. Throughout 2020, we
focused hard on employee, customer and end-user safety and on ensuring that our teams take all
necessary precautions in their daily work against the virus.
Our Fit for growth strategy is divided into two phases. In 2018–2019, as part of the first phase (Fit),
we improved our financial performance. Due to the lengthened corona crisis in 2020 and the
resulting downturn, Caverion continued Fit actions and planned further personnel reductions,
reorganisation and operating model development for most of its divisions. By making our
organisation leaner, we bring everyone closer to customers. This also makes communication faster
and easier. With these changes, we have improved Caverion’s competitiveness in the market: we
are more resilient to any upcoming economic impacts of corona and other market fluctuations in
general. When growth picks up, we are fit and well positioned to meet new customer demand.
In 2020, we also continued initiatives preparing Caverion for the Growth phase of our strategy and
invested in smart technology, sustainability offerings and brand – and related human capital.
In the Growth phase, our target is to further accelerate profitable growth in the Services business
and exceed market growth. In Projects, we continue our selective approach and the development of
our operating model to improve our overall performance. Projects remain important as we focus on
growing with long-term customer partnerships and over the life cycle of buildings and industries.
We continue to focus our growth efforts into advisory services, delivering complete outcomes,
Smart Technology and digital solutions.
Our organic growth will be supported by bolt-on acquisitions in selected growth areas and in
complementary capabilities. In 2020, we finished the Maintpartner and Huurre integrations.
Read more about our strategy and financial targets in Board of Directors’ report pages 13-14.
Sources of our future growth
STRATEGY
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Caverion Annual Review 2020
Fit for Growth strategy
STRATEGY
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Caverion Annual Review 2020
Read more about our new
sustainability targets in Board of
Directors’ report pages 25-26.
Caverion drives sustainable impact
We deliver sustainable outcomes for our
customers
Our sustainability targets are in line with our
strategy and purpose – Enabling
performance and people’s well-being in
smart and sustainable built environments
We have set clear actions and KPIs to reach
these targets
STRATEGY
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Caverion Annual Review 2020
Delivering sustainable outcomes
and value in a smart city
Cities are key in the battle against climate
change.
Therefore, urban renewal - the
modernisation of existing built
environments - is by far the most effective
means of combating climate change.
Smart Cities are created with the goal to
provide their inhabitants with a healthier,
safer and more comfortable life
environment. Smart Buildings, smart
factories, infrastructure and transportation
are the scalable key elements of a smart
city. They must comply with the same
design principles as the whole smart city:
be user-driven and ecologically friendly.
Caverion wants to shape this urban
renewal, combining experience and
expertise with new technological,
commercial and customer tailor-made
services.
Build your own smart city:
12
Caverion Annual Review 2020
Board of Directors’ Report January 1 –December 31, 2020
Operating environment in 2020
The outbreak of the corona pandemic had a major impact on the operating environment in 2020. The
overall
market
and
demand
situation
started
to
weaken
in
mid
-
March.
Thereafter
Caverion
experienced more workforce absences as well as more work site delays and closures especially in
April-May. Most of Caverion’s operating countries were also locked down in the early part of the
second quarter, after which government restrictions and the impacts on Caverion’s business started
to clearly ease up in June. At the beginning of the third quarter, the corona pandemic was well
contained in most Caverion countries, after which the second wave of corona became more visible at
the end of the third quarter, again increasing the risk exposure. In the fourth quarter the situation was
more stable compared to the second quarter, but the corona pandemic impacted operations more
than in the third quarter. This was visible particularly in the Projects business, whereas the Services
business remained more stable. On a positive note, Caverion did not experience any major constraints
in the supply chain during the year.
In order to minimise the negative financial impacts from the pandemic on its operations, Caverion
implemented cost saving actions and adapted its resources. In most of the operating countries, the
key flexibility measures were the use of temporary lay-offs and the reduction of subcontracting.
Furthermore, due to the lengthened corona crisis and the resulting downturn, Caverion carried out
proactive streamlining and adjustments of its operations during the fourth quarter. These actions
included
personnel
reductions,
reorganisation
and
operating
model
development.
Due
to
the
increased uncertainty around the market outlook as a result of the corona pandemic, the President
and CEO and the top management of Caverion also decided to voluntarily lower their compensation
for 2020 in the spring of 2020.
More information on the operating environment of the business units has been presented in the
financial statements release published on 11 February 2021.
Market position
Caverion has a strong market position and is ranked among the top-5 players in the building solutions
market measured by revenue in most of its operating countries. The market is overall still very
fragmented in Caverion countries. Caverion holds a leading market position in Finland. Caverion is
among the two or three largest companies in Austria and Norway and the fourth largest company in
Sweden. In Germany and Denmark, Caverion is among the top-10 players in the market. Additionally,
the Company is the leading industrial solutions company in Finland. The largest industrial client
segments are the forest industry and the energy sector.
(
Source of market sizes: the company’s estimate based on public information from third parties and
management calculation
).
Caverion’s year 2020
Caverion’s year 2020 started according to expectations, while towards the end of the first quarter,
the general business environment radically changed with the outbreak of the coronavirus pandemic.
Caverion’s performance in the first quarter showed that Caverion was not at the frontline taking the
immediate hits from the corona crisis, as a large part of its services is vital in keeping critical services
and infrastructure up-and-running. Caverion had an all-time high order backlog in the first quarter
and its strong cash flow and liquidity supported in tackling the first wave of the corona crisis.
The impacts of the corona crisis were more visible to Caverion’s business in the second quarter.
The coronavirus pandemic had an impact on both revenue and profitability in the second quarter, but
there was still improvement year-on-year. In Services, the ad-hoc orders were lower in April-May,
followed by a recovery in June. In Projects, the corona pandemic impacted Caverion’s productivity
during the first half of the year. The Projects business profitability was also affected by completion of
the last few old projects, ramping down the large projects business in Denmark and the inflexibility to
adjust personnel costs with temporary lay-offs in Central Europe. The integration of the most recent
acquisitions progressed according to plan.
As the year progressed, Caverion’s profitability improved in the third quarter compared to the
challenging second quarter. The new order intake was positive especially in Services, whereas in
Projects there was a negative impact from the corona related downturn. Caverion also closed the
divestment of certain parts of the industrial operations in Finland. More information about the
divestment can be read under Group’s 2020 financial statement note 4.1 “Acquisitions and disposals”.
Towards the end of the year the business Caverion’s adjusted EBITA improved in the fourth
quarter compared to the previous quarters of the year, but the quarter was still impacted by the
second wave of the corona pandemic. Due to this, Caverion carried out proactive streamlining and
adjust
ments
of
its
operations
during
the
fourth
quarter.
The
se
fit
actions
include
d
personnel
reductions, reorganisation and operating model development. The restructuring costs amounted to
EUR 7.7 million in the fourth quarter of 2020. The resulting savings will be at least EUR 25 million for
2021. A part of the savings will be invested in growing particularly Caverion’s digital and smart
technology businesses across the divisions.
Furthermore, Caverion also made an overall critical assessment of its Projects business risks
when closing the year due to the potential negative effects of the downturn on project forecasts.
Measured by the start year of the project, the margin slippages in the Projects business have clearly
decreased each year in recent years. Caverion’s risk exposure related to projects is smaller going
forward due to various efforts Caverion has made in project management, execution and financial
steering. Caverion made write-downs on the last remaining major risk project in Germany totalling
EUR 7.7 million in the fourth quarter. Compared to earlier estimate being the end of 2020, the project
13
Caverion Annual Review 2020
is now expected to be completed by the end of the first half of 2021. The execution has been delayed
due to corona and other reasons beyond Caverion’s control.
Caverion published its guidance for 2020 on 7 February 2020, according to which the Group’s
revenue (2019: EUR 2,123.2 million) and adjusted EBITA (2019: EUR 67.2 million) were estimated to
grow in 2020 compared to 2019. Caverion announced on 14 April 2020 that it withdraws its guidance
for 2020 due to the increased uncertainty around the market outlook as a result of the corona
pandemic. Due to the continued corona pandemic and economic uncertainty experienced at the end
of the third quarter, Caverion decided not to give any guidance for the remainder of 2020.
For the full year, Caverion’s revenue increased by 1.5 percent to EUR 2,154.9 (2,123.2) million.
The Group’s Services business revenue increased by 7.1 percent and amounted to EUR 1,364.9
(1,274.9) million and its relative share of the Group’s total revenue increased to 63.3 (60.0) percent of
revenue. The Projects business revenue decreased to EUR 790.0 (848.3) million. The Group’s adjusted
EBITA amounted to EUR 60.6 (67.2) million, or 2.8 percent of revenue. In 2020, Caverion reported one
old major risk project from Germany in adjusted EBITA. The write-downs, expenses and/or income
from this risk project amounted to EUR 12.8 million in 2020. Information on project and other risks is
given under “Short-term risks and uncertainties”.
Caverion’s cash flow was again strong and the highlight of the year. Operating cash flow before
financial and tax items amounted to EUR 157.6 (143.7) million in 2020. The Group’s working capital
at the end of 2020 was EUR -160.4 (-100.9) million. Caverion’s liquidity position was strong and
Caverion had a high amount of undrawn credit facilities at the end of the year. The Group’s gearing
was 60.4 (73.6) percent and the equity ratio 18.9 (21.5) percent at the end of December. Net debt
amounted to EUR 118.6 (168.4) million at the end of December and the net debt/EBITDA ratio was
-0.2x (1.4x). Caverion raised a 5-year TyEL pension loan of EUR 15 million and a EUR 35 million hybrid
bond in the second quarter. The previously outstanding EUR 66.06 million 2017 Hybrid Capital
Securities were redeemed in full on 16 June 2020.
Group strategy and financial targets
Caverion’s Fit for Growth strategy and the financial targets launched on 4 November 2019 remain
valid.
Climate change continues to be the biggest threat our earth is facing. Caverion is contributing to
a
carbon
-
neutral
society
through
its
energy
-
efficient
and
sustainable
solutions.
Going
forward,
digitalisation and sustainability are key themes driving Caverion’s growth. Caverion commits to
making a difference in sustainability together with its customers in line with its strategy and purpose:
enabling performance and people’s wellbeing in smart and sustainable built environments. This year,
Caverion also published its sustainability targets, KPIs and actions. These are described in more detail
under “Disclosure regarding non-financial information”. Over the longer term, Caverion’s target by
2030 is to create sustainable impact through its solutions, with a positive carbon handprint 10 times
greater than its own carbon footprint (Scope 1-2).
Caverion plans to utilise numerous sources of growth in the Growth phase of its strategy. The
strong customer base is the first foundation for growth. There is furthermore a need for faster
digitalisation in several customer segments, such as Real estate investors, Forest, Energy, Pharma
and
Retail.
These
segments,
as
examples,
provide
great
opportunities
to
win
new
customers.
Caverion’s refined offering focuses on selected Smart Technologies requiring regular maintenance
and providing sustainable value for the customers over the life cycle. Examples of these include
Building Automation, Security, Safety and Cooling. Digital solutions such as Caverion SmartView,
Remote Services, IoT solutions and Analytics differentiate Caverion from its competitors already
today. Caverion seeks growth both organically and inorganically through acquisitions.
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Caverion Annual Review 2020
Financial targets
Caverion continues to prioritise cash flow generation. In the Services business, the target is to boost
profitable growth. In the Projects business, the selectivity approach continues and the improving
performance gradually opens profitable growth opportunities. Organic growth will be supported by
bolt-on acquisitions in selected growth areas and complementary capabilities. Sustainably strong
cash conversion, adjusted EBITA as well as organic revenue growth are the most important financial
targets going forward, supported by a moderate debt leverage level.
The following table presents the Group’s financial targets and the progress in them during 2020.
Financial targets (mid-term)
Progress in 2020
Cash conversion
= Operating cash flow before financial
and tax items / EBITDA > 100%
- Cash conversion 158.5 (139.5)% in 2020
- Operating cash flow improved to EUR 157.6 (143.7)
million in 2020*
Profitability
: Adjusted EBITA*
> 5.5% of revenue
- Adjusted EBITA margin amounted to 2.8 (3.2)% in
2020
Debt leverage
: Net debt/EBITDA** < 2.5x
- At the level of -0.2x (1.4x) as per 12/2020
Growth
:
- Organic revenue growth > 4% p.a. over the cycle.
Supported by bolt-on acquisitions in selected growth
areas and complementary capabilities.
- Services revenue growth > market growth
- Services revenue > 2/3 of Group revenue
- Services business revenue growth 7.1% in 2020
- The share of Services continued to grow to 63.3
(60.0) percent of revenue in 2020
Dividend policy
: distribute at least 50% of the result for
the year after taxes, however, taking profitability and
leverage level into account.
Dividend distribution
:
The Board of Directors proposes
to the Annual General Meeting to be held on 24 March
2021 that a dividend of EUR 0.10 per share and an
extraordinary dividend of EUR 0.10 per share, in total
EUR 0.20 per share will be paid for the year 2020.
The Board of Directors has decided that no dividend will
be paid for the year 2019.
* EBITA is defined as Operating profit + amortisation and impairment on intangible assets. Adjustments according to defined Items
affecting comparability (IAC).
** Based on calculation principles confirmed with the lending parties.
Group financial development 2020
The key figures have been presented in more detail in the Consolidated Financial Statements. Unless
otherwise noted, the figures in brackets refer to the corresponding period in the previous year.
Order backlog
Order backlog at the end of December decreased by 3.7 percent to EUR 1,609.1 million from the end
of December in the previous year (EUR 1,670.5 million). At comparable exchange rates the order
backlog decreased by 3.5 percent.
Order backlog increased by 0.7 percent in Services compared to the previous year, while it
decreased by 8.8 percent in Projects. In the second half of the year, the impacts of corona were more
visible in the Projects order backlog. Services business order backlog was less affected by corona
during the year.
Revenue
Revenue
for
January
–
December
was
EUR
2,154.9
(2,123.2)
million,
an
increase
of
1.5
percent
compared to the previous year. At the previous year’s exchange rates, revenue was EUR 2.181,9
million and increased by 2.8 percent compared to the previous year. Changes in Swedish crona had a
positive effect of EUR 4.0 million and changes in Norwegian krone and Russian rouble a negative
effect of EUR 28.3 million and EUR 2.3 million, respectively.
Organic growth was -4.1 percent, impacted by the corona crisis and the downturn. Revenue was
also
impacted
by
fluctuations
in
currency
exchange
rates
and
the
Maintpartner
and
Huurre
acquisitions as of December 2019.
Revenue increased in Finland, Germany and Industry, while it decreased in other divisions.
The revenue of the Services business unit increased and was EUR 1,364.9 (1,274.9) million in
January–December, an increase of 7.1 percent, or 8.7 percent in local currencies. The revenue of the
Projects business unit was EUR 790.0 (848.3) million in January–December, a decrease of 6.9 percent,
or 6.2 percent in local currencies. Project business revenue was affected by the continuous selectivity
approach in projects and the closure of the large projects business in Denmark.
The Services business unit accounted for 63.3 (60.0) percent of Group revenue, and the Projects
business unit for 36.7 (40.0) percent of Group revenue in January–December.
15
Caverion Annual Review 2020
Distribution of revenue by Division and Business Unit
Revenue, EUR million
1-12/2020
%
1-12/2019
%
Change
Sweden
420.6
19.5
435.4
20.5
-3.4%
Finland
416.0
19.3
384.3
18.1
8.2%
Norway
318.9
14.8
359.6
16.9
-11.3%
Germany
368.8
17.1
355.5
16.7
3.7%
Austria
191.4
8.9
200.1
9.4
-4.4%
Industry
275.9
12.8
205.3
9.7
34.4%
Denmark
93.6
4.3
109.5
5.2
-14.5%
Other countries*
69.7
3.2
73.6
3.5
-5.2%
Group, total
2,154.9
100
2,123.2
100
1.5%
Services
1,364.9
63.3
1,274.9
60.0
7.1%
Projects
790.0
36.7
848.3
40.0
-6.9%
* Other countries include the Baltic countries, Poland (until 28 February 2019) and Russia.
Organic growth
Revenue change
Change
Change in local
currencies
Organic
growth *
Currency
impact
Acquisitions and
divestments
impact
Services
7.1%
8.7%
-2.2%
-1.7%
10.9%
Projects
-6.9%
-6.2%
-6.9%
-0.7%
0.7%
Group, total
1.5%
2.8%
-4.1%
-1.3%
6.8%
* Revenue change in local currencies, excluding acquisitions and divestments
Profitability
EBITA and operating profit
Adjusted EBITA for January–December amounted to EUR 60.6 (67.2) million, or 2.8 (3.2) percent of
revenue and EBITA to EUR 42.4 (49.8) million, or 2.0 (2.3) percent of revenue.
In the adjusted EBITA calculation, the capital gains from divestments and the transaction costs
related to divestments and acquisitions totalled EUR -6.0 million. The write-downs, expenses and/or
income from separately identified major risk projects amounted to EUR 12.8 million. The Group’s
restructuring costs amounted to EUR 10.7 million, the majority of which related to Germany, Sweden,
Norway and Denmark. Other items totalled EUR 0.6 million.
The operating profit (EBIT) for January–December decreased to EUR 27.2 (35.3) million, or 1.3
(1.7) percent of revenue.
Costs related to materials and supplies increased to EUR 529.0 (524.2) million and external
services decreased to EUR 410.1 (411.3) million in January–December. Personnel expenses increased
by 3.9 percent from the previous year and amounted to a total of EUR 902.6 (868.9) million for
January–December, explained mainly by the completed acquisitions in 2019. Personnel expenses
decreased from the previous year excluding the effect of the acquisitions. Division Sweden received
a grant from the government in 2020 for short-term layoffs and sick-leave compensation amounting
to about EUR 3.6 million. This has been presented in income statement as a reduction of personnel
costs. Other operating expenses decreased to EUR 225.3 (229.8) million. Other operating income was
EUR 11.5 (14.0) million. The capital gain from the sale of a subsidiary in Russia is reported under other
operating income for the period and it amounted to EUR 7.3 million, mainly consisting of cumulative
translation differences. The transaction had no cash flow impact. The figures for 2019 only include
the costs of the companies acquired in late 2019 as of the date of closing.
Depreciation, amortisation and impairment amounted to EUR 72.2 (67.6) million in January–
December affected by acquisitions completed. Of these EUR 57.0 (53.2) million were depreciations
on
tan
gible
assets
and
EUR
15.2
(14.5)
million
amortisations
on
intangible
assets.
Of
the
depreciations, the majority related to right-of-use assets in accordance with IFRS 16 amounting to
EUR 51.0 (47.9) million. The amortisations related to allocated intangibles on acquisitions and IT.
EBITA is defined as Operating profit + amortisation and impairment on intangible assets. Adjusted
EBITA = EBITA before items affecting comparability (IAC). Items affecting comparability (IAC) in 2020
are material items or transactions, which are relevant for understanding the financial performance of
Caverion when comparing the profit of the current period with that of the previous periods. These
items can include (1) capital gains and/or losses and transaction costs related to divestments and
acquisitions; (2) write-downs, expenses and/or income from separately identified major risk projects;
(3) restructuring expenses and (4) other items that according to Caverion management’s assessment
are not related to normal business operations. In 2019 and 2020, major risk projects only include one
risk project in Germany reported under category (2). In 2019, legal and other costs related to the
German anti-trust fine and a compensation from the previous owners of a German subsidiary related
to the cartel case were reported under category (4). In 2020, costs related to a subsidiary in Russia
sold during the second quarter have been reported under category (4).
16
Caverion Annual Review 2020
Adjusted EBITA and items affecting comparability (IAC)
EUR million
1–12/20
1–12/19
EBITA
42.4
49.8
EBITA margin, %
2.0
2.3
Items affecting comparability (IAC)
-
Capital gains and/or losses and transaction costs related to
divestments and acquisitions
-6.0
4.8
-
Write-downs, expenses and income from major risk projects*
12.8
17.1
-
Restructuring costs
10.7
4.6
-
Other items**
0.6
-9.0
Adjusted EBITA
60.6
67.2
Adjusted EBITA margin, %
2.8
3.2
* Major risk projects include only one risk project in Germany in 2019 and 2020.
** In 2019, including legal and other costs related to the German anti-trust fine and a compensation from the previous owners of
a German subsidiary related to the cartel case. In 2020, including legal and other costs related to the German anti-trust fine and
costs related to a subsidiary in Russia sold during the second quarter.I
Adjusted EBITDA is affected by the same adjustments as adjusted EBITA, except for restructuring
costs, which do not include depreciation and impairment relating to restructurings. These amounted
to EUR 1.1 million in January–December. In 2019, the EBITA adjustments did not include depreciation
and impairment.
Result before taxes, result for the period and earnings per share
Result before taxes amounted to EUR 16.0 (27.0) million, result for the period to EUR 8.6 (22.6)
million, and earnings per share to EUR 0.05 (0.14) in January–December. Net financing expenses in
January–December were EUR 11.2 (8.4) million. This includes an interest cost on lease liabilities
amounting to EUR 4.5 (5.2) million and an exchange rate loss from an internal loan denominated in
euros in Russia amounting to EUR 1.0 million.
The restructuring and project write-downs completed in two divisions caused negative results for
these divisions in 2020, for which no deferred tax asset was recorded due to the prudence principle
applied
for
the
deferred
tax
asset
valuation.
The
economic
uncertainties
caused
by
the
corona
pandemic were also considered in the assessment. Therefore, the Group's effective tax rate was
exceptionally high, 46.0 (16.2) percent in January-December 2020.
Capital expenditure, acquisitions and disposals
Gross
capital
expenditure
on
non
-
current
assets
totalled
EUR
16.7
(73.4)
million
in
January
–
December, representing 0.8 (3.5) percent of revenue. Investments in information technology totalled
EUR
9.7
(9.4)
million.
IT
investments
continued
to
be
focused
on
building
a
harmonised
IT
infrastructure and common platforms as well as datacenter consolidation. IT systems and mobile
tools were also developed to improve the Group’s internal processes and efficiency going forward.
Other investments, including acquisitions and investments in joint ventures, amounted to EUR 7.0
(64.0) million.
Information on acquisitions and disposals during 2020 is presented in the Group’s 2020 financial
statement note 4.1 “Acquisitions and disposals”.
Research and development
The Group’s expenditure related to research and development activities related to product and service
development amounted to approximately EUR 1.3 (0.8) million in 2020, representing 0.1 (0.0) percent
of revenue. Of the total amount EUR 0.9 (0.8) million was recognised as an expense in the income
statement and EUR 0.4 (0.0) million of the development expenses was capitalised.
Investments in research and development amounted to EUR 0.9 million in 2018, representing 0.0
percent of revenue. This was recognised as an expense in the income statement.
Cash flow, working capital and financing
The Group’s operating cash flow before financial and tax items improved to EUR 157.6 (143.7) million
in January-December and cash conversion (LTM) was 158.5 (139.5) percent. The Group’s free cash
flow improved to EUR 137.3 (74.0) million. Cash flow after investments was EUR 127.8 (64.5) million.
Cash flow was negatively impacted by previously postponed authority payments due to corona
totalling EUR 6.8 million paid in the fourth quarter. The final postponed authority payments totalling
EUR 3.3 million will be paid in in the first half of 2021. The Group’s free cash flow was EUR 76.9 (24.4)
million. Cash flow after investments was EUR 74.2 (21.4) million.
The Group’s working capital improved to EUR -160.4 (-100.9) million at the end of December.
There were improvements in all divisions except for Industry compared to the previous year. The
amount of trade and POC receivables decreased to EUR 506.5 (527.2) million and other current
receivables to EUR 30.2 (32.6) million. On the liabilities side, advances received increased to EUR
252.2 (216.2) million and other current liabilities to EUR 273.3 (269.2) million, while trade and POC
payables decreased to EUR 188.0 (194.1) million.
Caverion’s liquidity position was strong and Caverion had a high amount of undrawn credit
facilities on 31 December 2020. Caverion’s cash and cash equivalents amounted to EUR 149.3 (93.6)
million at the end of December. In addition, Caverion had undrawn revolving credit facilities amounting
to EUR 100.0 million and undrawn overdraft facilities amounting to EUR 19.0 million.
The Group’s gross interest-bearing loans and borrowings excluding lease liabilities amounted to
EUR 138.7 (125.0) million at the end of December, and the average interest rate was 2.7 (3.0) percent.
Approximately 46 percent of the loans have been raised from banks and other financial institutions
and approximately 54 percent from capital markets. Lease liabilities amounted to EUR 129.2 (136.9)
million at the end of December 2020, resulting to total gross interest-bearing liabilities of EUR 267.9
(261.9) million.
The Group’s interest-bearing net debt excluding lease liabilities amounted to EUR -10.6 (31.5)
million at the end of December and including lease liabilities to EUR 118.6 (168.4) million. At the end
of December, the Group’s gearing was 60.4 (73.6) percent and the equity ratio 18.9 (21.5) percent.
17
Caverion Annual Review 2020
Excluding the effect of IFRS 16, the gearing would have amounted to -5.4 (13.7) percent and the
equity ratio to 21.5 (24.6) percent.
Caverion raised a 5-year TyEL pension loan of EUR 15 million on 29 April 2020.
On 15 May 2020 Caverion issued a EUR 35 million hybrid bond, an instrument subordinated to
the company's other debt obligations and treated as equity in the IFRS financial statements. The
hybrid bond does not confer to its holders the rights of a shareholder and does not dilute the holdings
of the current shareholders. The coupon of the hybrid bond is 6.75 per cent per annum until 15 May
2023. The hybrid bond does not have a maturity date but the issuer is entitled to redeem the hybrid
for the first time on 15 May 2023, and subsequently, on each coupon interest payment date. If the
hybrid bond is not redeemed on 15 May 2023, the coupon will be changed to 3-month EURIBOR
added with a Re-offer Spread (706.8 bps) and a step-up of 500bps.
The previously outstanding EUR 66.06 million 2017 Hybrid Capital Securities were redeemed in
full on 16 June 2020 in accordance with their terms and conditions.
In June a one-year extension option to move the maturity of RCF (100M€) and term loan (50M€)
from 2022 to February 2023 was utilised.
Caverion’s external loans are subject to a financial covenant based on the ratio of the Group’s net
debt to EBITDA. The financial covenant shall not exceed 3.5:1. At the end of December, the Group’s
Net debt to EBITDA was -0.2x according to the confirmed calculation principles. The confirmed
calculation
principles
exclude
the
effects
of
the
IFRS
16
standard
and
contain
certain
other
adjustments.
Board of Directors, Auditors, President and CEO
Board of Directors
The Annual General Meeting was held on 25 May 2020. The Annual General Meeting elected a
Chairman, a Vice Chairman and five ordinary members to the Board of Directors. Mats Paulsson was
elected as the Chairman of the Board of Directors, Markus Ehrnrooth as the Vice Chairman and Jussi
Aho, Joachim Hallengren, Thomas Hinnerskov, Kristina Jahn and Jasmin Soravia as members of the
Board of Directors for a term of office expiring at the end of the Annual General Meeting 2021.
At the beginning of 2020 until the closing of the Annual General Meeting, the previous Board of
Directors consisted of Chairman Mats Paulsson, Vice Chairman Markus Ehrnrooth as well as Jussi
Aho, Joachim Hallengren, Antti Herlin, Thomas Hinnerskov and Anna Hyvönen as members of the
Board of Directors.
More detailed information of Caverion’s board members and their remuneration as well as board
committees can be found in Corporate Governance Statement and Remuneration Report, which are
published separately on Caverion’s website www.caverion.com/Investors – Corporate Governance.
Auditors
The Annual General Meeting elected Authorised Public Accountants Ernst & Young Oy, auditing firm,
to audit the company’s governance and accounts in 2020. The auditor with the main responsibility is
Antti Suominen, Authorised Public Accountant.
President and CEO
Caverion's Board of Directors nominates the President and CEO and decides on his/her remuneration
and other terms of employment. Caverion Corporation's President and CEO is Mr. Ari Lehtoranta as
of January 1, 2017.
Personnel
Personnel by division,
end of period
12/20
12/19
Change
Sweden
2,601
2,961
-12%
Finland
2,876
2,795
3%
Norway
2,366
2,431
-3%
Germany
2,260
2,253
0%
Industry
2,464
2,929
-16%
Other countries
1,050
1,223
-14%
Austria
852
828
3%
Denmark
565
734
-23%
Group Services
129
119
8%
Group, total
15,163
16,273
-7%
Caverion Group employed 15,773 (14,763) people on average in January–December 2020. At the end
of
December,
the
Group
employed
15,163
(16,273)
people.
Personnel
expenses
for
January
–
December amounted to EUR 902.6 (868.9) million.
Employee safety continued to be a high focus area in year 2020. Due to the corona situation, many
extra actions have been taken to protect the employees, to organise the work in a way that it is safe
to complete and to establish different supportive trainings, tools and communication methods. The
Group’s accident frequency rate at the end of December was 4.2 (5.3).
Changes in Caverion’s Group Management
Elina Engman, M.Sc. (Tech.) (born 1970), was appointed as Head of Division Industrial Solutions and a
member of the Group Management Board of Caverion Corporation as of 1 January 2020. She has
previously worked as Vice President at ÅF Consult responsible for ÅF’s renewables and energy
18
Caverion Annual Review 2020
business consulting, as President and CEO of Voimaosakeyhtiö SF, as Vice President, Energy at
Kemira Corporation as well as in energy business related roles at Areva and Siemens.
Other disclosure related to Group management
Caverion announced on 29 October 2020 that it has come to its attention that the public prosecutor
has decided to press charges in a matter concerning suspected disclosure offence in a Nokian Tyres
plc related matter against several persons including Ari Lehtoranta, the President and CEO of Caverion
Corporation. The matter does not in any manner relate to Lehtoranta's position as the President and
CEO of Caverion Corporation and he enjoys full trust of the Board of Directors. More information can
be found in the stock exchange release issued on 29 October 2020.
Short-term risks and uncertainties
There have been no material changes in Caverion’s significant short-term risks and uncertainties
compared to those reported in the Interim Report Q3/2020. Those risks and uncertainties are still
valid.
The impacts of the corona pandemic and the consequent economic downturn on Caverion, and
the actions taken by the company are summarised separately after this section and described earlier
in
the
report
in
the
“
M
arket
outlook
for
Caverion’s
services
and
solutions”
and
“Operating
environment in 2020” sections.
Caverion
is
exposed
to
different
types
of
strategic,
operational,
political,
market,
customer,
financial and other risks. Caverion estimates that the trade, health and political risks are increasing
globally
and
have
partly
already
materialised
during
the
corona
pandemic
and
the
consequent
economic downturn.
Caverion's typical operational risks relate to its Services and Projects business. These include risks
related
to
tendering
(e.g.
calculation
and
pricing),
contractual
terms
and
conditions,
partnering,
subcontracting, procurement and price of materials, availability of qualified personnel and project
management. To manage these risks, risk assessment and review processes for both the sales and
execution phase are in place, and appropriate risk reservations are being made. The Group Projects
Business Unit is dedicated to the overall improvement of project risk management, to steering the
project portfolio and to improving project management capabilities. Despite all the actions taken,
there
is
a
risk
that
some
project
risks
will
materialise,
which
could
have
a
negative
impact
on
Caverion’s financial performance and position.
Despite clearly defined project controls, it is possible that some risks may materialise, which could
lead to project write-downs, provisions, disputes or litigations. Caverion has made a large amount of
project write-downs during the last few years. Systematic performance management continues to
be part of the core project management processes in all divisions. In 2019 and 2020, Caverion
reported only one old major risk project from Germany in adjusted EBITA, the completion of which
has been delayed approximately into the second quarter of 2021. It is possible that further risks may
emerge in this old project or other projects.
According to Group policy, write-offs or provisions are booked on receivables when it is probable
that no payment can be expected. Caverion Group follows a policy in valuing trade receivables and the
bookings include estimates and critical judgements. The estimates are based on experience with
write
-
offs
realised
in
previous
years,
empirical
knowledge
of
debt
collection,
customer
-
specific
collaterals and analyses as well as the general economic situation of the review period. Caverion
carries out risk assessments related to POC and trade receivables in its project portfolio on an ongoing
basis. There are certain individual larger receivables where the company continues its actions to
negotiate and collect the receivables. There is remaining risk in the identified receivables, and it cannot
be ruled out that there is also risk associated with other receivables. The corona crisis has increased
the general risk level related to the financial standing of customers and the collection of receivables.
Given the nature of Caverion’s Projects business, Group companies are involved in disputes and
legal proceedings in several projects. These disputes and legal proceedings typically concern claims
made against Caverion for allegedly defective or delayed delivery. In some cases, the collection of
receivables by Caverion may result in disputes and legal proceedings. There is a risk that the client
presents counter claims in these proceedings. The outcome of claims, disputes and legal proceedings
is difficult to predict. Write-downs and provisions are booked following the applicable accounting
rules.
In June 2018, Caverion reached a settlement for its part with the German Federal Office (FCO) in
a cartel case that had been investigated by the authority since 2014. The investigation concerned
several companies providing technical building services in Germany. Caverion Deutschland GmbH (and
its predecessors) was found to have participated in anti-competitive practices between 2005 and
2013. According to the FCO’s final decision issued on 3 July 2018, Caverion Deutschland GmbH was
imposed a fine of EUR 40.8 million. In the end of March 2020, the FCO issued its final decision on the
cartel case against the other building technology companies involved in the matter. There is a risk that
civil claims may be presented against the involved companies, including Caverion Deutschland GmbH.
It is not possible to evaluate the magnitude of the risk for Caverion at this time. Caverion will disclose
any relevant information on the potential civil law claims as required under the applicable regulations.
As part of Caverion’s co-operation with the authorities in the cartel matter, the company identified
activities between 2009 and 2011 that were likely to fulfil the criteria of corruption or other criminal
commitment in some of its client projects executed in that time. Caverion brought its findings to the
attention of the authorities and supported them in investigating the case. In the end of June 2020, the
public prosecutor' s office in Munich informed Caverion that no further investigative measures are
intended and that no formal fine proceedings against Caverion will be initiated related to those cases.
There is a risk that civil claims may be presented against Caverion Deutschland GmbH. It is not
possible to evaluate the magnitude of the risk for Caverion at this time. Caverion will disclose any
relevant information on the potential civil law claims as required under the applicable regulations.
Caverion has made significant efforts to promote compliance in order to avoid any infringements
in the future. As part of the compliance programme all employees must complete an annual e-
learning module and further training is given across the organisation. All new employees have to
familiarise themselves with Caverion’s Code of Conduct and to take the e-learning. All employees are
19
Caverion Annual Review 2020
required to comply with Caverion’s Code of Conduct, which has a policy of zero tolerance on anti-
competitive practices, corruption, bribery or any unlawful action.
Goodwill recognised on Caverion’s balance sheet is not amortised, but it is tested annually for any
impairment. The amount by which the carrying amount of goodwill exceeds the recoverable amount
is
recognised
as
an
impairment
loss
through
profit
and
loss.
If
negative
changes
take
place
in
Caverion’s result and growth development, this may lead to an impairment of goodwill, which may
have an unfavourable effect on Caverion’s result of operations and shareholders' equity.
Caverion’s external loans are subject to a financial covenant based on the ratio of the Group’s net
debt to EBITDA. Breaching this covenant would give the lending parties the right to declare the loans
to be immediately due and payable. It is possible that Caverion may need amendments to its financial
covenant
in
the
future.
The
level
of
the
financial
covenant
ratio
is
continuously
monitored
and
evaluated against actual and forecasted EBITDA and net debt figures. The outbreak of the coronavirus
pandemic has increased the general risk level related to the availability of financing as well as foreign
exchange related risks.
Caverion’s
business
typically
involves
granting
financial
guarantees
to
customers
or
other
stakeholders,
especially
in
large
projects,
e.g.
for
the
security
of
advance
payments
received,
performance of contractual obligations, and defects during the warranty period. Such guarantees are
typically granted by financial intermediaries on behalf of Caverion. There is no assurance that the
company would have continuous access to sufficient guarantees from financial intermediaries at
competitive terms or at all, and the absence of such guarantees could have an adverse effect on
Caverion’s business and financial situation. To manage this risk, Caverion’s target is to maintain
several guarantee facilities in the countries where it operates. The outbreak of the coronavirus
pandemic has increased the general risk level related to the availability of guarantee facilities.
Reliability of the key IT systems and partnership is essential for Caverion's continuous operations.
Prolonged disruption in the key systems could limit Caverion’s ability to conduct operations in a
profitable and efficient manner. In addition, increasing sophistication of and frequency of cyber
threats pose a risk to Caverion's information assets. Data privacy related breaches may have a
negative impact on Caverion's reputation. Over time Caverion has made significant investments in its
IT
systems,
and
there
is
a
risk
that
the
expected
pay
-
back
of
these
investments
is
not
fully
materialised.
Financial risks have been described in more detail in the 2020 Financial Statements under Note
5.5 “Financial risk management”.
Caverion’s risk management principles and the description of Caverions’ key risks is available on
the Company’s website
Impact of corona pandemic and consequent economic
downturn on Caverion
The first wave of the corona pandemic and the consequent economic downturn negatively impacted
Caverion’s business in 2020. After major impacts in the second quarter, the impact reduced and was
more limited during the third quarter, with somewhat increased impacts again in the fourth quarter.
The second wave of corona was visible in the fourth quarter of 2020, again increasing the risk
exposure. The second wave of corona led to renewed lockdown measures also in Caverion countries
and somewhat increased the negative business impacts.
Caverion’s
business
is
exposed
to
various
risks
associated
with
corona
and
the
economic
downturn. These include, for example, suspension or cancellation of existing contracts by customers,
lack of demand for new services, absenteeism of employees and subcontractor staff, closures of work
sites and other work premises by customers or authorities and defaults in customer payments.
Apart
from
its
immediate
effects,
the
corona
pandemic
has
also
led
to
a
global
economic
downturn,
which
in
many
areas
can
negatively
impact
the
general
demand
and
the
pricing
environment also for Caverion. However, a material part of Caverion’s offering is of such nature that
customers will need these services also during a downturn.
It is still unclear how long the corona pandemic will last, how deep and long the consequent
downturn will be and what will be the speed of the economic recovery. The business volume and the
amount of new order intake are important determinants to Caverion’s performance in 2021. Large-
scale vaccination against the corona virus is expected to improve the overall risk situation going
forward. Caverion estimates that the first half of 2021 will still be negatively impacted by the corona
pandemic, after which the operating environment is expected to improve.
Authorisations
Repurchase and/or acceptance as pledge of own shares of the company
The Annual General Meeting of Caverion Corporation, held on 25 May 2020, authorised the Board of
Directors to decide on the repurchase and/or on the acceptance as pledge of the Company’s own
shares in accordance with the proposal by the Board of Directors. The number of own shares to be
repurchased and/or accepted as pledge shall not exceed 13,500,000 shares, which corresponds to
approximately 9.7% of all the shares in the Company. The Company may use only unrestricted equity
to repurchase own shares on the basis of the authorisation. Purchase of own shares may be made at
a price formed in public trading on the date of the repurchase or otherwise at a price formed on the
market. The Board of Directors resolves the manner in which own shares be repurchased and/or
accepted as pledge. Repurchase of own shares may be made using, inter alia, derivatives. Repurchase
and/or acceptance as pledge of own shares may be made otherwise than in proportion to the share
ownership of the shareholders (directed repurchase or acceptance as pledge).
The authorisation cancels the authorisation given by the General Meeting on 25 March 2019 to
decide on the repurchase and/or on the acceptance as pledge of the Company’s own shares. The
authorisation is valid until 23 September 2021. The Board of Directors has not used the authorisation
to decide on the repurchase of the Company’s own shares during the period.
As part of the implementation of the Matching Share Plan announced on 7 February 2018, the
company has accepted as a pledge the shares acquired by those key employees who took a loan from
the company. As a result, Caverion had 689,056 Caverion Corporation shares as a pledge at the end
of the reporting period on 31 December 2020.
20
Caverion Annual Review 2020
Share issues
The Annual General Meeting of Caverion Corporation, held on 25 May 2020, authorised the Board of
Directors to decide on share issues in accordance with the proposal by the Board of Directors. The
number
of
shares
to
be
issued
may
not
exceed
13,500,000
shares,
which
corresponds
to
approximately 9.7% of all the shares in the Company. The Board of Directors decides on all the
conditions of the issuance of shares. The authorisation concerns both the issuance of new shares as
well as the transfer of treasury shares. The issuance of shares may be carried out in deviation from
the shareholders’ pre-emptive rights (directed issue). The authorisation can be used e.g. in order to
develop the Company's capital structure, to broaden the Company's ownership base, to be used as
payment in corporate acquisitions or when the Company acquires assets relating to its business and
as part of the Company's incentive programs. The authorisation is valid until the closing of the next
annual general meeting, however no later than 24 May 2021.
The Board of Directors of Caverion Corporation decided on two directed share issues without
payment for the payment of the reward instalments from Caverion’s share plans during the period. In
these
directed
share
issues
without
payment,
39,127
Caverion
Corporation
shares
held
by
the
company were conveyed to 16 key employees according to the terms and conditions of Caverion’s
Restricted Share Plan 2017–2019 on 27 February 2020, and 6,673 Caverion Corporation shares held
by the company were conveyed to a key employee according to the terms and conditions of Caverion’s
Restricted Share Plan 2016–2018 on 26 June 2020. More information about the conveyance of the
shares and the said share plans has been given in stock exchange releases published on the respective
dates above. The first directed share issue was based on the authorisation given by the Annual
General Meeting on 25 March 2019 and the latter on the authorisation given by the Annual General
Meeting on 25 May 2020.
Information about shares in Caverion Corporation
Updated lists of Caverion’s largest shareholders and ownership structure by sector as per December
31, 2020 are available on Caverion’s website at www.caverion.com/investors. The total combined
holdings of the members of the Board of Directors, President and CEO and other members of the
Group Management Board as per December 31, 2020 are presented in the notes to the financial
statements.
Shares and share capital
Caverion Corporation has a single series of shares, and each share entitles its holder to one vote at
the general meeting of the company and to an equal dividend. The company’s shares have no nominal
value. Caverion’s articles of association neither have any redemption or consent clauses nor any
provisions regarding the procedure of changing the articles.
The number of shares was 138,920,092 and the share capital was EUR 1,000,000 on 1 January
2020. Caverion held 2,849,360 treasury shares on 1 January 2020. At the end of the reporting period,
the total number of shares in Caverion was 138,920,092. Caverion held 2,807,991 treasury shares
on 31 December 2020, representing 2.02 percent of the total number of shares and voting rights. The
number of shares outstanding was 136,112,101 at the end of December 2020.
Caverion's Board of Directors approved in December 2020 the commencement of a new plan
period 2021-2023 in the share-based long-term incentive scheme. The scheme is based on rolling a
performance
share
plan
(PSP)
structure
targeted
to
Caverion’s
management
and
selected
key
employees. The Board approved at the same time the commencement of a new plan period 2021-
2023 in the Restricted Share Plan (RSP) structure, which is a complementary share-based incentive
structure for specific situations. More information on the plans have been published in a stock
exchange release on 9 December 2020. Any potential share rewards based on PSP 2021-2023 and
RSP 2021-2023 will be delivered in the spring 2024. PSP 2021-2023 may include a maximum of
approximately 90 key employees of Caverion Group. The performance targets, based on which the
potential share rewards under PSP 2021-2023 will be paid, are the relative total shareholder return
and earnings per share. If maximum criteria of both targets will be achieved, the share rewards based
on PSP 2021-2023 will comprise a maximum of approximately 1.6 million Caverion shares (gross
before the deduction of applicable taxes). The maximum number of Caverion shares that may be
allocated and delivered within the RSP 2021-2023 totals approximately 165,000 shares (gross
before the deduction of applicable taxes).
More information on the incentive plans is presented in the Consolidated Financial Statements
for 2020 under Note 6.2 “Share-based payments”.
Caverion Corporation does not have any stock option programmes in place.
Trading in shares
The opening price of Caverion's share was EUR 7.24 at the beginning of 2020. The closing rate on the
last trading day of the review period on 30 December was EUR 5.81. The share price decreased by 20
percent during January–December. The highest price of the share during the review period January–
21
Caverion Annual Review 2020
December was EUR 8.25, the lowest was EUR 3.79 and the average price was EUR 5.73. Share
turnover on Nasdaq Helsinki in January–December amounted to 65.2 million shares. The value of
share turnover was EUR 373.4 million (source: Nasdaq Helsinki). Caverion's shares are also traded in
other market places, such as Aquis, Cboe, POSIT Auction and Turquoise.
The market capitalisation of the Caverion Corporation at the end of the review period was EUR
790.8 million. Market capitalisation has been calculated excluding the 2,807,991 shares held by the
company as per 31 December 2020.
Outlook for 2021
Guidance for 2021
Caverion will provide a guidance for 2021 as soon as the level of uncertainty caused by the pandemic
on Caverion’s operating environment and operations has diminished.
Market outlook for Caverion’s services and solutions
Caverion
expects
the
economic
environment
particularly
in
the
first
quarter
of
2021
still
to
be
challenging and to negatively impact general demand and pricing, while market demand is expected
to gradually pick up as of the second half of the year. This base case scenario assumes a successful
implementation of the ongoing corona vaccination programmes and no material unforeseen negative
surprises in 2021.
Various economic scenarios exist on how deep and long the economic downturn will be and what
the speed of the economic recovery will be. The business volume and the amount of new order intake
are important determinants of Caverion’s performance in 2021. A negative scenario whereby the
corona pandemic continues longer than currently anticipated cannot be ruled out. Nevertheless, a
large part of Caverion’s services is vital in keeping critical services and infrastructure up-and-running.
This includes ensuring the continued functioning of energy and transportation infrastructure, health
facilities, pharmaceutical and food industries, retail and logistics as well as facilities and services used
by public authorities. An important share of these services needs to be performed even during a
downturn.
The monetary and fiscal policies currently in place are clearly supporting an economic recovery in
2021. As an example, the economic stimulus packages provided by national governments and the EU
are expected to increase infrastructure, health care and different types of sustainable investments in
Caverion’s operating area. The main themes in the EU stimulus packages are green growth and
digitalisation. The EU member states must prepare and present their own national plans during spring
2021. Caverion expects these national and EU programmes to increase demand also in Caverion’s
areas of operation as of the second half of 2021.
The digitalisation and sustainability megatrends are in many ways favourable to Caverion and
believed to increase demand for Caverion’s offerings going forward. The increase of technology in
built
environments,
increased
energy
efficiency
requirements,
increasing
digitalisation
and
automation
as
well
as
urbanisation
remain
strong
and
are
expected
to
promote
demand
for
Caverion’s
services
and
solutions
over
the
coming
years.
Especially
the
sustainabi
lity
trend
is
expected to continue strong. Increasing awareness of sustainability is supported by both EU-driven
regulations and national legislation setting higher targets and actions for energy efficiency and
carbon-neutrality. Caverion has put a large effort to develop its offering and solutions to meet this
demand.
The Energy Performance of Buildings Directive (EPBD) passed by the EU requires all buildings
from 2021 to be nearly zero-energy buildings (NZEB). Furthermore, EU Member States shall lay down
requirements to ensure that, where technically and economically feasible, non-residential buildings
with an effective rated output for heating systems or systems for combined space heating and
ventilation of over 290 kW are equipped with building automation and control systems by 2025. The
building automation and control systems shall be capable of (a) continuously monitoring, logging,
analysing and allowing for adjusting energy use; (b) benchmarking the building’s energy efficiency,
detecting losses in efficiency of technical building systems, and informing the person responsible for
the
facilities
or
tech
nical
building
management
about
opportunities
for
energy
efficiency
improvement; and (c) allowing communication with connected technical building systems and other
appliances inside the building.
The nearly zero or very low amount of energy required should be covered to a very significant
extent from renewable sources. As concrete numeric thresholds or ranges are not defined in the
EPBD, these requirements leave room for interpretation and thus allow EU Member States to define
their nearly zero-energy buildings in a flexible way, taking into account their country-specific climate
conditions, primary energy factors, ambition levels, calculation methodologies and building traditions.
Several
Caverion
countries
have
already
passed
the
national
legislation
based
on
the
EPBD
framework, for example Finland and Germany in the fourth quarter of 2020.
Services
While
the
corona
crisis
and
the
economic
downturn
have
negatively
impacted
the
demand
environment in Services, especially in ad-hoc works and small service projects, an economic recovery
is expected to turn the Services business back to growth. Caverion’s Services business is overall by
nature
more
stable
and
resilient
through
business
cycles
than
the
Projects
business.
Stimulus
packages are also expected to positively impact general demand in the Services business.
There is an increased interest for services supporting sustainability, such as energy management.
Caverion has had a special focus for several years both in so-called Smart Technologies within
building technologies as well as in digital solutions development, both of which are believed to grow
faster
than
more
basic
services
on
average
and
enable
data
-
driven
operations
with
recurring
maintenance. In Cooling, as an example, there is a technical change ongoing from environmentally
harmful
F
-
gases
into
CO2
-
based
refrigeration,
providing
increased
need
for
upgrades
and
modernisations.
The
sustainability
trend
is
also
increasing
the
demand
for
building
automation
upgrades.
As technology in buildings increases, the need for new services and digital solutions is expected
to increase. Customer focus on core operations also continues to open outsourcing and maintenance
as well as various facility management opportunities for Caverion.
22
Caverion Annual Review 2020
Projects
The corona crisis and the economic downturn are in general impacting the demand environment
negatively
in
Projects.
In
the
short
term,
new
builds
are
still
expected
to
decrease
while
modernisations
are
expected
to
grow
more
modestly
in
larger
cities.
Commercial
and
office
construction will still suffer from uncertainty. Due to the late-cyclical nature of the Projects business,
even after the economic environment recovers, it typically takes some time before the Projects
business turns back to growth. However, the stimulus packages are expected to positively impact the
general demand also in the Projects business.
From the trends perspective, the digitalisation and sustainability megatrends are supporting
demand also in Projects, as Caverion’s target is to offer long-term solutions binding both Projects and
Services
together.
The
requirements
for
increased
energy
efficiency,
better
indoor
climate
and
tightening environmental legislation continue to drive demand over the coming years.
23
Caverion Annual Review 2020
Disclosure regarding non-financial information
Caverion drives sustainable impact
Caverion started the work during 2020 to define the net impacts of all our operations. We have
identified multiple services and products that we will be tracking going forward. Due to the reason
that our business being focused on services rather than physical products our climate impact of our
own operations is moderate. Respectively considerable part our business and offering creates well-
being and emission mitigating results for the society and our customers. Our environmental handprint
is meaningful.
Caverion also has a major positive impact on the society through the jobs created and taxes paid.
In addition, Caverion contributes to societal infrastructure by being involved in essential building
projects. Positive impact on health is identified due to the construction and maintenance services
provided for institutional buildings such as hospitals.
Everything
Caverion
delivers
to
its
customers
and
society
is
produced
by
its
highly
skilled
employees. Enabling this human capital to serve its customers is at the core of Caverion’s value
creation. Caverion is a reliable and trustworthy partner for customers, employees and labour unions,
governmental officials and business partners.
As Caverion designs and builds solutions for buildings, industry, infrastructure and the society,
these solutions are in the core of Caverion’s business. Once completed, they require service for the
entire lifecycle and thus create long-term recurring business opportunities for Caverion. Caverion’s
financial capital consists of a balanced portfolio of equity and hybrid capital treated as equity under
IFRS and interest-bearing loans. Secured financing enables Caverion’s long-term development and
related investments.
A significant amount of the corona-related economic stimulus packages is also directed towards
sustainable investments enabling smart buildings and cities and promoting a sustainable recovery.
We are very well positioned for sustainable, profitable growth.
To support our overall sustainability ledership, in 2020, Caverion decided to commit to the UN
Global Compact and its ten principles concerning human rights, labour rights, environment and anti-
corruption to support our efforts to provide sustainable impact.
Success through our people
We create Caverion’s business success together with our approximately 15,000 service and project
professionals. We currently operate in eleven countries across Europe. Caverion is continuing its
journey towards a leading service company and a selective master of projects covering the whole
lifecycle of buildings, industries and infrastructure. We also continue to build our capability to become
a
forerunner
especially
on
smart
technologies,
providing
excellent
customer
and
employee
experience.
Our
customers
appreciate
Caverion’s
service
mindset,
ability
to
respond
quickly
and
solve
the
challenges of our customers in efficient way. Our people are the interface to our customers in
everything we do, and hence it is important to offer such a working environment for our employees
that they can perform at their highest potential at every level and provide an excellent service
experience to our customers. To enforce this, we have key principles on people management as well
as guidance on safety, reward, leadership and many other important people practices. In November
2020 we took into use a common people management system that will support our employees in all
people processes and practices, ensuring transparency and common ways of working.
All of Caverion’s activities are compliant and guided by ethical principles. The personnel’s rights
and responsibilities include the right to a safe and healthy working environment, wellbeing as well as
the prohibition of any kind of discrimination. We value diverse workforce and want to enable same
opportunities for all. We have announced our sustainability targets this year, and one concrete target
there is to develop our ways of working and our working environment also to increase the number of
female employees across Caverion.
24
Caverion Annual Review 2020
Our approach to health & safety is guided by our commitment to prevent any harm on our people's
health and safety. The management approach comprises safeguarding people and the environment
through design, ongoing reviews of technical and non-technical barriers, proactive maintenance work,
periodical risk assessments and emergency preparedness training as well as through collaboration
with
our
partners
and
contractors.
To
improve
our
results,
we
regularly
evaluate
monitoring
indicators,
review
and
learn
from
incidents,
conduct
verification
activities,
and
implement
improvement initiatives as needed. We have put these measures in place to ensure continuous
improvement and help us in achieving our target of zero harm to people and the environment.
Despite of all difficulties that the corona pandemic created in 2020, Caverion has had a positive
development
in
health
and
safety
area.
One
of
the
most
important
concepts
that
Caverion
management team exercised in 2020 was to increase the ‘maturity’ of the organisation’s safety
culture.
This
includes
safety
training
for
top
management
for
them
to
be
able
to
facilitate
our
managers better in order to eliminate the safety risks in our daily work.
We are enhancing common Caverion culture and good foundation for the best workplace in many
ways. We started Caverion cultural journey already during 2019 by listening to our employees and
customers. We continued the journey in 2020 and analysed and clustered the gathered feedback with
the leaders.
The business environment continues to evolve. The megatrends, world economy and increasing
focus on sustainability have a big impact on our business and working conditions. We have continued
to work on the same strategic focus areas:
>
Top performance at every level
>
Inspiring leadership
>
Right people in right places
>
Professional growth
Respecting human rights
In accordance with Caverion’s Code of Conduct, Caverion does not allow any kind of discrimination
related to age, gender, nationality, social status, religion, physical or mental disability, political or other
opinions, sexual orientation, or any other factor. Caverion’s Code of Conduct also guides actively
towards improved equality and promotes gender equality and diversity. Human rights arising out of
international treaties are respected. Caverion applies a zero-tolerance approach to discrimination,
harassment, or any unlawful action. Code of Conduct training is also part of Caverion employee
onboarding during the first week of employment.
Caverion utilises a separate Supplier Code of Conduct with its collaboration partners. The Supplier
Code of Conduct was revised in September 2018 and continued to be used during 2020 with good
results. Suppliers, subcontractors, and other business partners shall:
﴿
Respect human rights by following international treaties, in particular the United Nations’
Universal Declaration of Human Rights;
﴿
Comply with fundamental conventions as defined by the International Labour Organization;
﴿
Ascertain that their own suppliers comply with requirements that meet or exceed the
requirements laid down in Caverion’s Supplier Code of Conduct.
Caverion
operates
primarily
in
developed,
transparent
markets.
Potential
risks
relate
to
the
uncertainty or unawareness of how subcontractors conduct their daily business. The risks of breach
in the area of human rights are predominantly located further away in Caverion’s supply chain.
Caverion has a web-based reporting channel through which its employees can confidentially report
their observations of suspected misconduct. In addition, reports can be submitted via email that is
read by the Chief Compliance Officer.
Working against corruption and bribery
Caverion has several standard control processes aimed at preventing corruption and bribery from
happening. These processes are part of both the sales and delivery phases. They include checks and
controls
(for
example
monitoring,
reviews,
due
diligence
measures
and
approvals)
in
tender
preparation and procurement activities as well as in delivery and execution of our services and
projects. Risks of corruption and bribery are treated as inherent risks of our sector due to its global
nature and involvement in wide networks including various suppliers.
Caverion has a Compliance Programme that includes clear milestones in order to ensure that all
Caverion’s business is conducted legally, ethically and in a compliant manner. Caverion furthermore
has a Group-level Compliance unit headed by the Compliance Officer and consists of a compliance
network. The role of the compliance network is to enhance a culture of integrity and responsibility
and build leadership capabilities by rolling out the Caverion Compliance Programme to local teams
and
their
operations.
This
includes
a
focus
on
raising
awareness
through
compliance
training.
Furthermore, Caverion operates a Group Ethics & Compliance Committee consisting of the President
and CEO, Group General Counsel, Head of HR and Safety and the Compliance Officer. The committee
reviews the annual compliance plan and progress of it, and the reported or otherwise identified
compliance cases and other group level ethics and compliance matters.
Caverion has compiled its Group level policies, instructions and guidelines in a structured manner
into Caverion Guidelines. Caverion’s Code of Conduct is the corner stone of Caverion’s policies. To
ensure awareness and understanding of the requirements of the Code of Conduct, an annual e-
Learning module is mandatory for all employees. The completion rate of the 2019 e-Learning was
96%. The 2020 e-Learning is ongoing at the time of this report and the completion rate is not yet
available. The e-Learning is also part of Caverion’s employee orientation during the first week of
employment.
The Code of Conduct clearly sets forth Caverion’s policy on corruption and bribery: Caverion
applies a zero-tolerance approach to corruption, bribery, anti-competitive practices, discrimination,
harassment or any unlawful action. The following principles guide Caverion’s relationship with its
suppliers, subcontractors and other business partners:
>
Caverion does not tolerate any form of bribery or other illegal payments in relationships
with its suppliers, subcontractors and other business partners;
25
Caverion Annual Review 2020
>
Caverion does everything in its power to reject bribery, corruption and white-collar
crimes.
Caverion supports open and fair competition in all its markets. In addition, Caverion complies with the
applicable legislation regarding competition in every activity and avoids situations where there is a
risk that regulations concerning competition could be violated.
One of Caverion’s means to monitor compliance is to investigate all reports made through its
ethical reporting channel. The channel is a web-based online reporting tool and it is available to all
Caverion personnel. The anonymous reporting line has been in use since 2013, and all reports and
allegations are investigated by the Group’s compliance organisation. In addition, reports can be
submitted by email. The right and obligation to report any misconduct is supported by the non-
retaliation policy set forth in the Code of Conduct. The CEO has made a clear statement that no actions
will be tolerated against persons making bona fide reports through the ethical reporting channel.
Net positive operations guiding our environmental work
There is a universal demand for actions to mitigate climate change, increase energy efficiency and
promote
a
circular
economy.
Caverion’s
capabilities
in
developing,
delivering,
operating
and
maintaining solutions that respond to this demand is the key for our success.
By 2025 Caverion is committing to the target that its positive carbon handprint will be 5 times
greater than its carbon footprint. This is what is in sight now, but Caverion is also thinking beyond
this. Over the longer term, Caverion’s target by 2030 is to create sustainable impact through its
solutions, with a positive carbon handprint 10 times greater than its own carbon footprint (Scope 1-
2). We focus on minimising our footprint and expand our positive handprint.
Main parts of our
handprint
refrigeration capabilities, electricity and energy projects and consulting. From the identified services
and products, we have during 2020 calculated the annual customer CO2 savings from our Building
management systems (BMS), remote centers and Energy Performance Contracting (EPC). These
services create one part of the huge CO2 saving potential we provide for our customers and society.
BMS, Remote Center and EPC CO2 savings for customers alone are more than own Scope 1-2 CO2
emissions. For example, in 2020 EPC savings for customers was 65 000 MW/h which corresponds to
the average annual consumption of 27,000 3-room flats in an apartment building.
Our
footprint
moderate, due to the business being focused on services rather than physical products. In Caverion’s
own operations, the fuel consumption of its car fleet leaves the most significant environmental
footprint. Caverion’s service fleet in 2020 consisted of 4,600 vehicles. Caverion’s target is to use
logistical solutions and modern vehicles to reduce greenhouse gas emissions. Caverion mostly uses
fuel-efficient diesel cars in its service and business car fleet. In 2020, 95% of the fuel consumption of
Caverion’s fleet was diesel fuel and using bio-diesel options is being promoted. The CO2 emissions of
Caverion’s service fleet continued to decrease to a level of 15,200 tCO2 (2019: 16,200 tCO2). This
indicates fuel efficiency improvements of our operations. Scope 2 emissions are mainly from our low
energy consuming office buildings and we aim to expand the used amount of renewable energy as
we already do at our headquarters. The waste generated and chemicals used in Caverion’s operations
are recycled and disposed of according to regulatory requirements. Caverion continuously follows
legislation changes in the Eurozone and other operating countries.
Caverion
has
defined
three
focus
areas
until
2025
which
support
in
reaching
the sustainability targets:
>
Our business makes sustainable impact
>
We care for our employees and enable their continuous success
>
We ensure efficient and high-quality implementation of sustainability
Some of the KPIs have been reported as part of Caverion’s non-financial disclosure and sustainability
reporting. For example, Caverion reports on its emissions annually to the Carbon Disclosure Project
(CDP) and its sustainability impacts according to the Global Reporting Initiative (GRI). Other KPIs, such
as customers’ handprint, are under development and more defined calculation principles will be
further
introduced
during
2021.
The
company
has
also
taken
into
account
the
EU
taxonomy
requirements applicable to listed companies as of the beginning of 2022. The next goal is to align
reporting and targets with the EU taxonomy and the recommendations of The Financial Stability
Board Task Force on Climate-related Financial Disclosures (TCFD).
Our overall sustainability performance is presented in the KPIs and targets table, linked with the
relevant
UN
Sustainable
Development
Goals
(SGs).
We
are
well
on
track
to
achieve
ou
r
2025
sustainability targets.
26
Caverion Annual Review 2020
Caverion sustainability performance with new KPIs and targets 2020
Focus area
KPI
Actions
2019
2020
Target 2025
SDGs
Our business makes
sustainable impact
Carbon handprint / footprint (Scope
1-2)
Caverion drives sustainable
impact and positive handprint
through its offering
>1x
>1x
5x
We ensure efficient and high-
quality implementation of
sustainability
Decreasing footprint:
CO2 Emissions of service
vehicle fleet (tCO2 / revenue
mEUR)
More efficient logistics
planning and decreased
number of pick-ups.
7.6
7.0
Decreasing
We care for our employees
and enable their continuous
success
LTIFR
Active analysing of accidents
and near misses.
Continue training employees
with special focus on
managers.
5.3
4.2
< 2
We care for our employees
and enable their continuous
success
Share of female employees %
Supporting and enhancing
gender equality at Caverion.
11
11
15
We ensure efficient and high-
quality implementation of
sustainability
Code of Conduct completion
rate (%)
Annual deployment of revised
CoC. Trainings and
E-learnings throughout the
organisation.
96
96
100
We ensure efficient and high-
quality implementation of
sustainability
Suppier Code of Conduct sign
off rate (%)
Implementation of revised
SCoC continued.
Mandatory appendix for new
and updated
agreements.
55
63
90
27
Caverion Annual Review 2020
Key figures
28
Caverion Annual Review 2020
Calculation of key figures
EBITDA =
Operating profit (EBIT) + depreciation, amortisation and impairment
Adjusted EBITDA =
EBITDA before items affecting comparability (IAC)
1)
EBITA =
Operating profit (EBIT) + amortisation and impairment
Adjusted EBITA =
EBITA before items affecting comparability (IAC)
1)
Working capital =
Inventories + trade and POC receivables + other current
receivables - trade and POC payables - other current payables -
advances received - current provisions
Interest-bearing net debt =
Interest-bearing liabilities - cash and cash equivalents
Equity ratio (%) =
Equity + non-controlling interest x 100
Total assets - advances received
Gearing ratio (%) =
Interest-bearing liabilities - cash and cash equivalents x 100
Shareholder’s equity + non-controlling interest
Return on equity, % =
Result for the period x100
Total equity (average of the figures for the accounting period)
Average number of
employees =
The average number of employees at the end of previous financial
year and of each calendar month during the accounting period
Earnings / share, basic =
Result for the financial year (attributable for equity holders) – hybrid
capital expenses and accrued unrecognised interests after tax
Weighted average number of shares outstanding during the period
Earnings / share, diluted =
Result for the financial year (attributable for equity holders) – hybrid
capital expenses and accrued unrecognised interests after tax
Weighted average number of shares, dilution adjusted
Equity per share =
Shareholders’ equity
Number of outstanding shares at the end of the period
Dividend per share =
Dividend per share for the period
Adjustment ratios of share issues during the period and afterwards
Dividend per earnings (%) =
Dividend per share x 100
Earnings per share
Effective dividend yield (%) =
Dividend per share x 100
Share price on December 31
Price/earnings ratio (P/E
ratio) =
Share price on December 31
Earnings per share
Average price =
Total EUR value of all shares traded
Average number of all shares traded during the accounting period
Market capitalisation =
(Number of shares – treasury shares) x share price on the closing
date
Share turnover =
Number of shares traded during the accounting period
Share turnover (%) =
Number of shares traded x 100
Average number of outstanding shares
Organic growth =
Defined as the change in revenue in local currencies excluding the
impacts of (i) currencies; and (ii) acquisitions and divestments. The
currency impact shows the impact of changes in exchange rates of
subsidiaries with a currency other than the euro (Group’s reporting
currency). The acquisitions and divestments impact shows how
acquisitions and divestments completed during the current or previous
year affect the revenue reported.
1)
Items affecting comparability (IAC) are material items or transactions, which are relevant for understanding the financial performance of
Caverion when comparing the profit of the current period with that of the previous periods. These items can include (1) capital gains
and/or losses and transaction costs related to divestments and acquisitions; (2) write-downs, expenses and/or income from separately
identified major risk projects; (3) restructuring expenses and (4) other items that according to Caverion management’s assessment are
not related to normal business operations.
Adjusted EBITDA is affected by the same adjustments as adjusted EBITA, except for restructuring costs, which do not include depreciation
and impairment relating to restructurings.
29
Caverion Annual Review 2020
Shareholders
At the end of December 2020, the number of registered shareholders in Caverion was 26,747 (2019:
25,390). At the end of December 2020, a total of 31.0 percent of the shares were owned by nominee-
registered and non-Finnish investors (2019: 33.1%).
Updated lists of Caverion’s largest shareholders, the holdings of public insiders and ownership
structure
by
sector
as
per
December
31,
2020,
are
available
on
Caverion’s
website
at
www.caverion.com/investors.
No
sharehold
er,
member
or
other
person
is
controlling
Caverion
as
meant
in
the
Securities
Markets Act section 2 paragraph 4. Caverion is not subject to any arrangements which separate the
possession of the securities and the economic rights vested in them. The Board of Directors is not
aware
of
any
shareholder
agreements
or
other
similar
type
of
arrangements
having
effect
on
Caverion shareholders or that might have a significant impact on share price.
Caverion Corporation’s essential financing agreements include a change of control clause which
is applicable in case more than 50 percent of company’s shares are acquired by a single entity or
parties controlled by it.
Ownership structure by sector on December 31, 2020
Sector
Share-
holders
% of
owners
Shares
% of all
shares
Nominee registered and non-Finnish holders
125
0.5
43,007,713
31.0
Households
25,134
94.0
24,528,144
17.7
General government
16
0.1
18,884,063
13.6
Financial and insurance corporations
71
0.3
14,254,229
10.3
Non-profit institutions
272
1.0
4,458,196
3.2
Non-financial corporations and housing corporations
1,129
4.2
33,787,747
24.3
Total
26,747
100.0
138,920,092
100.0
Largest shareholders on December 31, 2020
Shareholder
Shares,
% of all
shares
1. Funds held by Antti Herlin, including directly held shares
20,504,392
14.8
2. Fennogens Investments SA
14,169,850
10.2
3. Varma Mutual Pension Insurance Company
9,728,407
7.0
4. Mandatum companies
5,673,347
4.1
5. Ilmarinen Mutual Pension Insurance Company
3,780,000
2.7
6. Säästöpankki funds
3,502,367
2.5
7. Elo Mutual Pension Insurance Company
3,081,001
2.2
8. Caverion Oyj
2,807,991
2.0
9. The State Pension Fund
2,050,000
1.5
10. Nordea funds
1,453,838
1.0
11. Fondita funds
1,430,000
1.0
12. Brotherus Ilkka
1,403,765
1.0
13. Aktia funds
1,370,000
1.0
14. Evli funds
1,253,000
0.9
15. Kaleva Mutual Insurance Company
969,025
0.7
16. Funds held by Ari Lehtoranta, including directly held shares
917,051
0.7
17. Sinituote Oy
672,400
0.5
18. OP funds
453,204
0.3
19. Kirkon Eläkerahasto
357,000
0.3
20. Foundation for Economic Education
300,000
0.2
20 largest, total
75,876,638
54.6
Other shareholders
34,825,930
25.1
Nominee registered total
28,217,524
20.3
All shares
138,920,092
100.0
30
Caverion Annual Review 2020
Public insider ownership of Caverion Group on December 31, 2020
Board of Directors
Direct
holdings
Holdings of
controlled
companies
Total
Aho Jussi
Member
27,275
-
27,275
Ehrnrooth Markus
Vice Chairman of the Board
9,327
-
9,327
Hallengren Joachim
Member
13,275
11,000
24,275
Hinnerskov Thomas
Member
47,275
-
47,275
Jahn Kristina
Member
3,063
-
3,063
Paulsson Mats
Chairman of the Board
12,312
107,200
119,512
Soravia Jasmin
Member
3,063
-
3,063
Total
115,590
118,200
233,790
Group Management Board
Direct
holdings
Holdings of
controlled
companies
Total
Ala-Härkönen Martti
Chief Financial Officer (CFO), Head of
Finance, Strategy and IT
144,447
-
144,447
Engman Elina
Head of Division Industry
-
-
-
Gaaserud Knut
Head of Division Norway
91,884
-
91,884
Hietto Thomas
Deputy DEO. Head of Business Unit
Services and Sales Development &
Marketing
129,356
-
129,356
Kaiser Michael
Head of Business Unit Projects
132,555
-
132,555
Krause Frank
Head of Division Germany
-
-
-
Lehtoranta Ari
President and CEO
367,051
550,000
917,051
Mennander Juha
Head of Division Sweden
67,442
-
67,442
Schrey-Hyppänen Minna
Head of Human Resources
74,679
-
74,679
Simmet Manfred
Head of Division Austria
69,629
-
69,629
Sundbäck Kari
Head of Transformation and Supply
Operations
58,321
-
58,321
Sørensen Carsten
Head of Division Denmark
61,918
-
61,918
Tamminen Ville
Head of Division Finland
84,922
-
84,922
Viitala Anne
Head of Legal & Compliance
67,418
-
67,418
Total
1,349,622
550,000
1,899,622
Subsidiaries
Company name
Domicile
Holding of
Caverion Group, %
Holding of
Caverion
Corporation, %
Caverion Suomi Oy
Helsinki
100.00
100.00
Caverion GmbH
München
100.00
100.00
Caverion Industria Oy
Vantaa
100.00
100.00
Caverion Sverige AB
Solna
100.00
100.00
Caverion Norge AS
Oslo
100.00
100.00
Caverion Danmark A/S
Fredericia
100.00
100.00
Caverion Österreich GmbH
Wien
100.00
100.00
Caverion Emerging Markets Oy
Helsinki
100.00
100.00
Caverion Internal Services AB
Solna
100.00
100.00
Huurre Technologies Oy
Kuopio
100.00
100.00
Caverion Eesti AS
Tallinna
100.00
Caverion Latvija SIA
Riika
100.00
UAB Caverion Lietuva
Vilna
100.00
Caverion Huber Invest Oy
Helsinki
100.00
Caverion Deutschland GmbH
München
100.00
Duatec GmbH
München
100.00
MISAB Sprinkler & VVS AB
Solna
100.00
ZAO Caverion St. Petersburg
Pietari
100.00
Teollisuus Invest Oy
Helsinki
100.00
OOO Peter Industry Service
Pietari
100.00
Huurre Finland Oy
Vantaa
100.00
Huurre Sweden Ab
Västerås
100.00
Maintpartner ASI S.A.
Zabrze
100.00
Maintpartner RO S.p.z.oo
Gdynia
100.00
Maintpartner OÜ
Tallinna
100.00
Oy Botnia Mill Service Ab
1)
Kemi
49.83
Kiinteistö Oy Leppävirran Teollisuustalotie 1
Leppävirta
60.00
1)
Oy Botnia Mill Service Ab is fully consolidated due to Caverion Group’s controlling interest based on the shareholder’s agreement.
Caverion does not have subsidiaries with material non-controlling interests based on the Group's view.
31
Caverion Annual Review 2020
Consolidated income statement
EUR million
Note
1.1.-31.12.2020
%
1.1.-31.12.2019
%
Revenue
2.1
Other operating income
2.2
Materials and supplies
-529.0
-524.2
External services
-410.1
-411.3
Employee benefit expenses
2.2
-902.6
-868.9
Other operating expenses
2.2
-225.3
-229.8
Share of results in associated companies
5.7
Depreciation, amortisation and impairment
2.3
-72.2
-67.6
Operating profit
1.3
1.7
Financial income
Exchange rate differences (net)
-0.9
Financial expenses
-11.2
-11.1
Financial income and expenses
2.4
-11.2
-8.4
Result before taxes
0.7
1.3
Income taxes
2.5
-7.3
-4.4
Result for the financial year
0.4
1.1
Attributable to:
Owners of the parent
Non-controlling interests
Earnings per share for profit attributable
to owners of the parent:
Earnings per share, basic, EUR
2.6
Earnings per share, diluted, EUR
Consolidated statement of comprehensive
income
EUR million
Note
1.1.-31.12.2020
1.1.-31.12.2019
Result for the period
Other comprehensive income
Items that will not be reclassified to profit or loss:
Change in the fair value of defined benefit pension
-0.7
-5.7
-Deferred tax
Items that may be reclassified subsequently to profit or
loss:
Cash flow hedging
5.5
- Deferred tax
Change in fair value of investments
5.4
- Deferred tax
Translation differences
-9.3
Other comprehensive income, total
-9.5
-3.3
Total comprehensive income
-0.9
Attributable to:
Owners of the parent
-0.9
Non-controlling interests
The notes are an integral part of the consolidated financial statements.
Konsernitilinpäätös
32
Caverion Annual Review 2020
Consolidated statement of financial position
EUR million
Note
Dec 31, 2020
Dec 31, 2019
ASSETS
Non-current assets
Property, plant and equipment
4.3
Right-of-use assets
5.9
Goodwill
4.2
Other intangible assets
4.3
Investments in associated companies and joint ventures
5.7
Investments
5.4
Receivables
3.2
Deferred tax assets
3.5
Total non-current assets
Current assets
Inventories
3.1
Trade receivables
3.2
POC receivables
3.2
Other receivables
3.2
Income tax receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
The notes are an integral part of the consolidated financial statements.
EUR million
Note
Dec 31, 2020
Dec 31, 2019
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
5.2
Share capital
Treasury shares
-2.8
-3.1
Translation differences
-14.1
-4.8
Fair value reserve
-0.1
-0.1
Hybrid capital
Unrestricted equity reserve
Retained earnings
Total equity attributable of owners of the parent
Non-controlling interests
Total equity
Non-current liabilities
Deferred tax liabilities
3.5
Pension obligations
5.8
Provisions
3.4
Lease liabilities
5.9
Other interest-bearing debts
5.4
Other liabilities
3.3
Total non-current liabilities
Current liabilities
Trade payables
3.3
Advances received
3.3
Other payables
3.3
Income tax liabilities
Provisions
3.4
Lease liabilities
5.9
Other interest-bearing debts
5.4
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
33
Caverion Annual Review 2020
Consolidated statement of cash flows
EUR million
Note
1.1.-
31.12.2020
1.1.-
31.12.2019
Cash flow from operating activities
Result for the financial year
Adjustments for:
Depreciation, amortisation and impairment
Reversal of accrual-based items
Financial income and expenses
Gains on the sale of tangible and intangible
assets
-7.6
Taxes
Total adjustments
Change in working capital:
Total change in working capital
Operating cash flow before financial and tax items
Interest paid
-10.6
-9.7
Other financial items, net
-0.6
Interest received
Dividends received
Taxes paid
-8.5
-4.7
Net cash generated from operating activities
Cash flow from investing activities
Acquisition of subsidiaries and businesses,
net of cash
4.1
-2.1
-48.6
Disposals of subsidiaries and businesses,
net of cash
4.1
Investments in joint ventures
5.7
-1.6
Purchases of property, plant and equipment
4.3
-5.1
-7.9
Purchases of intangible assets
4.3
-9.1
-8.8
Proceeds from sale of tangible and intangible assets
Proceeds from sale of investments
Net cash used in investing activities
-11.8
-65.0
EUR million
Note
1.1.-
31.12.2020
1.1.-
31.12.2019
Cash flow from financing activities
Change in loan receivables
-0.3
Proceeds from borrowings
5.3
Repayments of borrowings
5.3
-1.5
-56.7
Repayments of lease liabilities
5.4
-48.2
-45.5
Change in current liabilities, net
5.3
Hybrid capital repayment
5.2
-66.1
-33.9
Proceeds from hybrid capital
5.2
Hybrid capital expenses and interests
-3.0
-4.7
Dividends paid
-6.8
Other distribution of equity
-0.1
Net cash used in financing activities
-68.5
-23.0
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Foreign exchange rate effect on cash and cash equivalents
-3.5
Cash and cash equivalents at the end of the financial year
The notes are an integral part of the consolidated financial statements.
STATEMENT OF CHANGES IN EQUITY
34
Caverion Annual Review 2020
Consolidated statement of changes in equity
Attributable to owners of the parent
Share
Retained
Translation
Fair value
Treasury
Unrestricted equity
Hybrid
Non-controlling
Total
EUR million
Note
capital
earnings
differences
reserve
shares
reserve
capital
Total
interests
equity
Equity January 1, 2020
-4.8
-0.1
-3.1
Comprehensive income 1-12/2020
Result for the period
Other comprehensive income:
Change in fair value of defined benefit pension
-0.7
-0.7
-0.7
- Deferred tax
Change in fair value of other investments
5.4
-Deferred tax
Translation differences
-9.3
-9.3
-9.3
Comprehensive income 1-12/2020, total
-9.3
-0.9
-0.9
Dividend distribution
5.2
Share-based payments
6.2
Transfer of own shares
5.2
-0.3
Hybrid capital repayment
5.2
-66.1
-66.1
-66.1
Hybrid capital issue
5.2
Hybrid capital interests and costs after taxes
5.2
-2.4
-2.4
-2.4
Other distribution of equity
-0.1
-0.1
Other change
-0.2
-0.2
-0.2
Equity on December 31, 2020
-14.1
-0.1
-2.8
STATEMENT OF CHANGES IN EQUITY
35
Caverion Annual Review 2020
Attributable to owners of the parent
Share
Retained
Translation
Fair value
Treasury
Unrestricted equity
Hybrid
Non-controlling
Total
EUR million
Note
capital
earnings
differences
reserve
shares
reserve
capital
Total
interests
equity
Equity December 31, 2018
-5.5
-0.2
-3.2
Change in accounting principle, IFRS 16
Equity January 1, 2019
-5.5
-0.2
-3.2
Comprehensive income 1-12/2019
Result for the period
Other comprehensive income:
Change in fair value of defined benefit pension
-5.7
-5.7
-5.7
- Deferred tax
Cash flow hedges
5.5
Change in fair value of investments
5.4
-Deferred tax
Translation differences
Comprehensive income 1-12/2019, total
Dividend distribution
5.2
-6.8
-6.8
-6.8
Share-based payments
6.2
Transfer of own shares
5.2
-0.1
Hybrid capital repayment
5.2
-33.9
-33.9
-33.9
Hybrid capital interests and costs after taxes
5.2
-3.8
-3.8
-3.8
Disposal of subsidiaries
-0.2
-0.2
-0.2
Equity on December 31, 2019
-4.8
-0.1
-3.1
The notes are an integral part of the consolidated financial
statements.
BASIS OF PREPARATION
36
Caverion Annual Review 2020
1
Basis of
preparation
The consolidated financial statements of Caverion
Corporation have been prepared in accordance with
the International Financial Reporting Standards (IFRS)
as adopted by the European Union.
Accounting principles
can be found next to the relevant notes
in sections 2–6.
BASIS OF PREPARATION
37
Caverion Annual Review 2020
General Information
Caverion
Corporation
(the
“Parent
company”
or
the
“Company”)
with
its
subsidiaries
(together,
“Caverion”
or
“Caverion
Group”)
is
a
Finnish
service
company
in
building
systems,
construction
services and services for the industry. Caverion designs, builds, operates and maintains user-friendly
and energy-efficient technical solutions for buildings and industries throughout the life cycle of the
property. Caverion’s services are used in offices and retail properties, housing, public premises,
industrial plants and infrastructure, among other places.
Caverion Corporation is domiciled in Helsinki, Finland and its registered address is Torpantie 2,
01650 Vantaa, Finland. The company’s shares are listed on the NASDAQ OMX Helsinki Ltd as of July
1, 2013. The copies of the consolidated financial statements are available at www.caverion.com or at
the parent company’s head office, Torpantie 2, 01650 Vantaa, Finland.
On June 30, 2013, the partial demerger of Building Systems business (the “demerger”) of YIT
Corporation became effective. At this date, all of the assets and liabilities directly related to Building
Systems business were transferred to Caverion Corporation, a new company established in the partial
demerger.
These consolidated financial statements were authorised for issue by the Board of Directors in
their meeting on 10 February 2021 after which, in accordance with Finnish Company Law, the
financial statements are either approved, amended or rejected in the Annual General Meeting.
The
consolidated
financial
statements
have
been
prepared
in
accordance
with
the
basis
of
preparation and accounting policies set out below.
The consolidated financial statements of Caverion Corporation have been prepared in accordance
with
the
International
Financial
Reporting
Standards
(IFRS)
as
adopted
by
the
European
Union
observing the standards and interpretations effective on December 31, 2020. The notes to the
consolidated financial statements also comply with the requirements of Finnish accounting and
corporate legislation complementing the IFRS regulation.
The figures in these consolidated financial statements are presented in million euros, unless
stated otherwise. Rounding differences may occur.
Caverion Group’s consolidated financial statements for the financial year ended 2020 have been
prepared under the historical cost convention, except for investments, financial assets and liabilities
at fair value through profit and loss and derivative instruments at fair value. Equity-settled share-
based payments are measured at fair value at the grant date.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
applying
the
Group’s
accounting
policies.
The
areas
involving
a
higher
degree
of
judgement
or
complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed under “Critical accounting estimates and judgements” below.
Consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than 50% of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases.
The
Group
applies
the
acquisition
method
to
account
for
business
combinations.
The
total
consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred,
the liabilities incurred and the equity interests issued by Caverion Group. The total consideration
includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Acquisition
-
related
costs
are
expensed
as
incurred.
Identifiable
assets
acquired,
liabilities
and
contingent liabilities assumed in a business combination are measured initially at their fair value at
the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s assets.
Inter-company transactions, balances and unrealised gains and losses on transactions between
Group companies are eliminated.
Disposal of subsidiaries
When the Group ceases to have control, any remaining interest in the entity is re-measured to its fair
value at the date when control is lost, with the change in the carrying amount recognised through
profit and loss. In addition, any amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if realised and recognised in the income statement. If the
interest is reduced but control is retained, only a proportionate share of the amounts previously
recognised in other comprehensive income are booked to non-controlling interest in equity.
Transactions with non-controlling interests
The Group accounts transactions with non-controlling interests that do not result in loss of control
as equity transactions. The difference between the fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposals to non-controlling interests are also recorded in equity.
BASIS OF PREPARATION
38
Caverion Annual Review 2020
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make
estimates
and
exercise
judgement
in
the
ap
plication
of
the
accounting
policies.
Estimates
and
judgements are continually evaluated and are based on historical experience and expectations of
future events that are believed to be reasonable under the circumstances. The resulting accounting
estimates may deviate from the related actual results. The estimates and assumptions that have a
significant risk of causing material adjustment to the carrying amounts of assets and liabilities within
the next financial year are addressed below. Accounting estimates and judgements are commented
in more detail in connection with each item.
>
Goodwill
>
Revenue from contracts with customers
>
Income taxes
>
Provisions
>
Employee benefit obligations
>
Trade receivables
Foreign currency translation and transactions
Items included in the consolidated financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates (the functional
currency). These consolidated financial statements are presented in euros, which is the Group’s
presentation currency.
The income statements of foreign Group companies are translated into euro using the average
exchange rate for the reporting period. The balance sheets are translated at the closing rate at the
date of that balance sheet. Translating the result for the period using different exchange rates in the
income statement and balance sheet results in a translation difference, which is recognised in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences
arising are recognised in other comprehensive income. When a foreign subsidiary is disposed of or
sold, exchange differences that were recorded in equity are recognised in the income statement as
part of the gain or loss on sale.
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing on the date of transaction or valuation, where items are re-measured. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation at year-
end
exchange
rates
of
monetary
assets
and
liabilities
denominated
in
foreign
currencies
are
recognised in the income statement. Foreign exchange gains and losses that relate to borrowings and
cash and cash equivalents are presented in the income statement within “Finance income and
expenses”. All other foreign exchange gains and losses are presented in the income statement above
operating profit. Non-monetary items are mainly measured at the exchange rates prevailing on the
date of the transaction date.
Caverion
Group
applies
exchange
rates
published
by
the
European
Central
Bank
in
the
consolidated financial statements. Exchange rates used:
Income statement
January-December
2020
Income statement
January-December
2019
Statement of
financial position
Dec 31, 2020
Statement of
financial position
Dec 31, 2019
1 EUR = CZK
-
25.6693
-
25.4080
DKK
7.4543
7.4661
7.4409
7.4715
NOK
10.7261
9.8505
10.4703
9.8638
PLN
4.4436
4.2974
4.5597
4.2568
RUB
82.6883
72.4484
91.4671
69.9563
SEK
10.4875
10.5871
10.0343
10.4468
Operating segments
The profitability of Caverion Group has been presented as one operating segment from 1 January
2014 onwards. The chief operating decision-maker of Caverion is the Board of Directors. Due to the
management structure of Caverion, nature of its operations and its business areas, Group is the
relevant reportable operating segment.
New standards and amendments adopted
Evaluation of the future impact of new standards and interpretations
A number of new standards and amendments to standards and interpretations are effective for
annual
periods
beginning
after
1
January
20
20
,
and
have
not
been
applied
in
preparing
these
consolidated financial statements. The Group is not expecting a significant impact of those to the
consolidated financial statements.
39
Caverion Annual Review 2020
2
Financial performance
Revenue, EUR million
2,154.9
EBITDA, EUR million
99.4
EBITA, EUR million
42.4
In this section
This section comprises the following notes
describing Caverions’s financial performance in
2020:
FINANCIAL PERFORMANCE
40
Caverion Annual Review 2020
2.1
Revenue from contracts with customers
The disaggregation of revenue is set out below by Business Units and by division. The reportable
segment of Caverion is the Group and thus, no reconciliation between segments and revenue from
contracts with customers is presented.
Disaggregated revenue information
EUR million
2020
%
2019
%
Business units
Services
1,364.9
63%
1,274.9
60%
Projects
790.0
37%
848.3
40%
Total revenue from contracts with customers
2,154.9
100%
2,123.2
100%
Revenue by division
Sweden
420.6
20%
435.4
21%
Finland
416.0
19%
384.3
18%
Norway
318.9
15%
359.6
17%
Germany
368.8
17%
355.5
17%
Industry
275.9
13%
205.3
10%
Austria
191.4
9%
200.1
9%
Denmark
93.6
4%
109.5
5%
Other countries
69.7
3%
73.6
3%
Total revenue from contracts with customers
2,154.9
100%
2,123.2
100%
Revenue from contracts with customers is recognised mainly over time.
The corona crisis had a negative impact on the Group’s revenue in 2020, both in the Services and
Projects businesses. In the Services business, corona crisis had an effect on ad-hoc orders and in the
Industry division, corona crisis delayed industrial shutdown services. In the Projects business, the
corona pandemic impacted productivity to a certain extent due to the need for increased social
distancing and work site planning as well as challenges in the usage of foreign subcontracting. Due to
the
corona
crisis,
Group
management
critically
assessed
the
cost
-
to
-
complete
estimates
of
particularly the Group’s remaining risk projects at year-end closing. Project writedowns and forecast
changes were made where necessary.
Contract balances
EUR million
31.12.2020
31.12.2019
Contract assets
POC receivables
190.0
197.6
Work in progress
1.9
1.7
Contract liabilities
Advances received
1)
252.2
216.2
Accrued expenses from long-term contracts
24.4
20.4
1)
Advances received consist of advances received in cash and advances relating to percentage of completion method.
Amounts included in the contract liabilities at the beginning of the year are mainly recognised as
revenue during the financial year. Revenue recognised from performance obligations satisfied in the
previous years was not material in 2020 or 2019.
Performance obligations
A performance obligation is a distinct good or service within a contract that customer can benefit on
stand-alone basis.
In Projects and Services business, performance obligation is satisfied by transferring control of a
work delivered to a customer. At Caverion, control is transferred mainly over time and payment is
generally due within 14-45 days.
In most of the contracts that Caverion has with its customers only one performance obligation is
identified. Many contracts include different building systems (e.g. heating, sanitation, ventilation, air
conditioning and electricity) that the customer has ordered from Caverion. All the different building
systems (i.e. disciplines) could be distinct, because the customer could benefit from those on their
own or together with other resources that are readily available. However, those are not concluded to
be distinct in the context of the contract while based on the management’s view, the customer has
wanted to get all the building systems as a whole and the customer has requested for all technical
solutions / services as one package. In addition, Caverion provides also project management services
and is responsible for managing the project. This integrates the different goods and services as one
total deliverable / combined output to the customer, which has been agreed in the contract and from
the commercial point there are no separable risks related to the different parts of the project, as the
project has one total price for the full delivery and possible sanctions are defined at the contract level.
Services business consists of Technical Maintenance, Advisory Services and Managed Services. In
Services business performance obligations are maintenance agreements and separate repair orders
which are distinct.
FINANCIAL PERFORMANCE
41
Caverion Annual Review 2020
Remaining performance obligations
The transaction price allocated to the remaining performance obligations (unsatisfied or partially
unsatisfied) as at 31 December is as follows:
EUR million
2020
2019
Within one year
842.1
889.4
More than one year
767.0
781.1
Accounting principles
Income from the sale of products and services is recognised as revenue at fair value net of indirect
taxes and discounts.
Revenue from sales of goods is recorded when the significant risks and rewards and control
associated with the ownership of the goods have been transferred to the buyer. Revenue for sales of
short
-
term
services
is
recognised
in
the
accounting
period
in
which
the
services
are
rendered.
Revenue is recognised when, or as, the customer obtains control of the goods or services in an
amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services.
Contracts under percentage of completion method are recognized as revenue on the stage of
completion basis when the outcome of the project can be estimated reliably. The stage of completion
of these contracts are measured by reference to the contract costs incurred up to the end of the
reporting period as a percentage of total estimated costs for the contract or evaluated based on
physical stage of completion. Invoicing which exceeds the revenue recognized based on the stage of
completion is recognized in advances received. Invoicing which is less than the revenue recognized on
the percentage of completion basis is deferred and presented as related accrued income. Costs in
excess of the stage of completion are capitalised as work in progress and costs below the stage of
completion are recorded as accrued expenses from long-term contracts.
Due to estimates included in the revenue recognition of contracts under percentage of completion
method,
revenue
and
profit
presented
by
financial
period
only
rarely
correspond
to
the
equal
distribution of the total profit over the duration of the project. When revenue recognition is based on
the percentage of completion method, the outcome of the projects and contracts is regularly and
reliably estimated. Calculation of the total income of projects involves estimates on the total costs
required to complete the project as well as on the development of billable work. If the estimates
regarding the outcome of a contract change, the revenue and result recognised are adjusted in the
reporting period when the change first becomes known and can be estimated. If it is probable that
the total costs required to complete a contract will exceed the total contract revenue, the expected
loss is recognised as an expense immediately.
Revenue is recognised from any variable consideration at its estimated amount, if it is highly
probable that no significant reversal of revenue will occur.
Caverion’s customer contracts do not usually include any significant financing components.
The Group can also carry out a pre-agreed single project or a long-term service agreement
through a construction consortium. The construction consortium is not a separate legal entity. The
participating
companies
usually
have
a
joint
responsibility.
Projects
and
service
agreements
performed by the consortium are included in the reporting of the Group company and revenue is
recognised
on
the
stage
of
completion
basis
according
to
the
Group
company’s
share
in
the
consortium.
2.2
Costs and expenses
Employee benefit expenses
EUR million
2020
2019
Wages and salaries
1)
726.6
694.8
Pension costs
66.5
64.3
Share-based compensations
2.8
3.4
Other indirect employee costs
106.8
106.4
Total
902.6
868.9
Average number of personnel
15,773
14,763
1)
Division Sweden received a grant from the government during 2020 relating to the corona pandemic for short-term layoffs and sick-
leave compensation amounting to about EUR 3.6 million. This has been presented in income statement as a reduction of personnel
costs. Usually government grants are recognised as other operating income unless they compensate a specific cost item in the income
statement.
Information on the management’s salaries and fees and other employee benefits is presented in
note 6.1 Key management compensation.
FINANCIAL PERFORMANCE
42
Caverion Annual Review 2020
Other operating income and expenses
EUR million
2020
2019
Loss on disposal of tangible and intangible assets
-0.1
1.2
Expenses for office facilities
4.2
5.7
Other expenses for leases
23.1
23.3
Voluntary indirect personnel expenses
10.1
10.4
Other variable expenses
66.4
65.9
Travel expenses
34.8
39.0
IT expenses
40.3
40.3
Premises expenses
10.1
9.0
Other fixed expenses
1)
36.3
35.1
Total of other operating expenses
225.3
229.8
Other operating income
2)
11.5
14.0
Total of other operating items
213.8
215.8
1)
Other fixed expenses include consulting, legal, administrative, marketing and other fixed costs.
2)
Other operating income includes e.g. gains on the sale of tangible and intangible assets and rental income. In 2019 other operating
income include additionally a compensation from the previous owners of a German subsidiary related to the cartel case.
The Group's research and development expenses amounted to EUR 0.9 (0.8) million in 2020. Research expenditure is expensed in the
income statement as incurred.
Audit fee
The Annual General Meeting, held on 25 May 2020, re-elected Authorised Public Accountants Ernst
& Young Oy as the company's auditor until the end of the next Annual General Meeting. The auditor’s
remuneration will be paid according to invoice approved by Caverion.
EUR million
2020
2019
Ernst & Young
Audit fee
0.9
0.7
Statement
0.0
0.0
Tax services
0.0
0.1
Other services
0.0
0.0
Others
0.1
0.0
Total
1.0
0.8
Expenses for non-audit services Ernst & Young Oy has provided to Caverion Group entities in Finland
amounted to EUR 0.0 (0.1) million during the financial year 2020. The services included auditors’
statements (EUR 0.0 million), tax services (EUR 0.0 million) and other services (EUR 0.0 million).
Restructuring costs
EUR million
2020
2019
Personnel related costs
9.0
4.0
Rents
1.5
0.6
Other restructuring costs
0.2
0.1
Total
10.7
4.6
Restructuring costs amounted to EUR 10.7 (4.6.) million in 2020.
Due to the lengthened corona crisis and the resulting downturn, Caverion announced in November
that it plans to proactively streamline and adjust its operations. Planned actions included personnel
reductions, reorganisation and operating model development. The actions impacted all Caverion
countries with a minor impact on the best-performing countries Finland and Austria.
2.3
Depreciation, amortisation and impairment
EUR million
2020
2019
Depreciation and amortisation by asset category
Intangible assets
3.8
3.3
11.4
11.1
Tangible assets
1)
57.0
53.2
Total
72.2
67.6
1)
Depreciations on right-of-use assets in accordance with IFRS 16 have been presented in note 5.9 Lease agreements.
Accounting principles
The depreciation and amortisation are recorded on a straight-line basis over the economic useful
lives of the assets:
Intangible assets
Tangible assets
Allocations from business combinations
3–10 years
Buildings
40 years
Other intangible assets
2–5 years
Machinery and equipment
3-7 years
Other tangible assets
3-15 years
FINANCIAL PERFORMANCE
43
Caverion Annual Review 2020
2.4
Financial income and expenses
EUR million
2020
2019
Financial income
Dividend income on investments
0.0
0.0
Interest income on loans and other receivables
0.7
0.8
Other financial income on loans and other receivables
0.1
0.1
Financial income, total
0.8
0.9
Financial expenses
Interest expenses on liabilities at amortised cost
-4.9
-4.5
Other financial expenses on liabilities at amortised cost
-1.8
-1.5
Interest expenses on leases
-4.5
-5.2
Changes in fair values on financial instruments at fair value through
profit and loss account
0.0
0.0
Financial expenses, total
-11.2
-11.1
Exchange rate gains
1)
26.7
16.5
Exchange rate losses
1)
-27.6
-14.6
Exchange rate differences, net
-0.9
1.9
Financial expenses, net
-11.2
-8.4
1)
In connection with the process of closing an old project company in Russia, translation loss of EUR 1.0 million was booked in 2020
(EUR 1.2 million translation gain was booked in 2019). The bookings had no cash flow effect.
Accounting principles
Interest
income
and
expenses
are
recognised
using
the
effective
interest
method
and
dividend
income when the right to receive payment is established. More detailed information about financial
assets and interest-bearing liabilities can be found in note 5.4.
2.5
Income taxes
Income taxes in the income statement
EUR million
2020
2019
Tax expense for current year
9.0
16.5
Tax expense for previous years
-1.3
-0.2
Change in deferred tax assets and liabilities
-0.3
-12.0
Total income taxes
7.3
4.4
The reconciliation between income taxes in the consolidated income statement and income taxes at
the statutory tax rate in Finland 20.0% is as follows:
EUR million
2020
2019
Result before taxes
16.0
27.0
Income taxes at the tax rate in Finland (20.0%)
3.2
5.4
Effect of different tax rates outside Finland
-1.6
-1.8
Tax exempt income and non-deductible expenses
-1.0
3.0
Impact of the changes in the tax rates on deferred taxes
1)
0.1
0.1
Impact of losses for which deferred taxes is not recognised
7.2
Unrecognized losses from previous years
-0.6
Reassessment of deferred taxes
0.8
-1.6
Taxes for previous years
-1.3
-0.2
Income taxes in the income statement
7.3
4.4
1)
In 2020, the effect of the change of tax rate mainly in Sweden from 21.4% to 20.6% in 2021.
The restructuring and project write-downs completed in two divisions caused negative results for
these divisions in 2020, for which no deferred tax asset was recorded due to the prudence principle
applied
for
the
deferred
tax
asset
valuation.
The
economic
uncertainties
caused
by
the
corona
pandemic were also considered in the assessment. Therefore, the Group's effective tax rate was
exceptionally high, 46.0 (16.2) percent in January-December 2020.
Accounting principles
Tax expenses in the income statement comprise current and deferred taxes. Taxes are recognised in
the
income
statement
except
when
they
are
associated
with
items
recognised
in
other
comprehensive income or directly in shareholders' equity. Current taxes are calculated on the taxable
income on the basis of the tax rate stipulated for each country by the balance sheet date. Taxes are
adjusted for the taxes of previous financial periods, if applicable. Management evaluates positions
taken
in
tax
returns
with
respect
to
situations
in
which
applicable
tax
regulation
is
subject
to
interpretation.
The
tax
provisions
recognised
in
such
situations
are
based
on
evaluati
ons
by
management. Evaluating the total amount of income taxes at the Group level requires significant
judgement, so the amount of total tax includes uncertainty.
FINANCIAL PERFORMANCE
44
Caverion Annual Review 2020
2.6
Earnings per share
2020
2019
Result for the financial year, EUR million
8.6
22.6
Hybrid capital expenses and accrued interest after tax, EUR million
-2.3
-3.1
Adjusted result for the financial year, EUR million
6.3
19.5
Weighted average number of shares (1,000 shares)
136,105
135,866
Earnings per share, basic, EUR
0.05
0.14
Accounting principles
Earnings per share is calculated by dividing the result for the financial year attributable to the owners
of the parent company (adjusted with the paid hybrid capital expenses and interests and accrued
unrecognised interest after tax) by the weighted average number of shares outstanding during the
period.
Diluted
earnings
per
share
is
calculated
by
adjusting
the
number
of
shares
to
assume
conversion of all diluting potential shares. There were no diluting effects in 2020 and 2019.
45
Caverion Annual Review 2020
3
Working capital and
deferred taxes
Working capital,
EUR million
-160.4
EUR milion
2020
2019
Inventories
16.3
18.8
Trade and POC receivables
506.5
527.2
Other current receivables
30.2
32.6
Trade and POC payables
-188.0
-194.1
Other current liabilities
-273.3
-269.2
Advances received
-252.2
-216.2
Working capital
-160.4
-100.9
In this section
This section comprises the following notes describingCaverion’s working
capital and deferred taxes for 2020:
....................................................................
WORKING CAPITAL AND DEFERRED TAXES
46
Caverion Annual Review 2020
3.1
Inventories
EUR million
2020
2019
Raw materials and consumables
13.3
16.1
Work in progress
1.9
1.7
Advance payments
1.0
1.1
Total
16.3
18.8
The Group did not make any material write-downs in inventories in 2020 or 2019.
Accounting principles
Inventories
are
stated
at
the
lower
of
cost
and
net
realisable
value.
The
acquisition
cost
of
materials and supplies is determined using the weighted average cost formula. The acquisition
cost of work in progress comprises the value of materials, direct costs of labour, other direct costs
and a systematic allocation of the variable manufacturing overheads and fixed overhead. The net
realisable value is the estimated selling price in the course of ordinary business less the estimated
cost of completion and the estimated cost to make the sale.
3.2
Trade and other receivables
EUR million
2020
Carrying value
2019
Carrying value
Trade receivables
316.5
329.6
POC receivables
190.0
197.6
Prepayments and other accrued income
18.2
23.2
Other receivables
12.7
10.5
Total
537.5
560.9
The average amount of trade receivables was EUR 272.6 (268.1) million in 2020.
Non-current receivables amounted to EUR 8.1 (7.3) million in 2020, out of which EUR 4.3 (4.5)
million were loan receivables, EUR 2.4 (2.3) million defined benefit pension plan assets and EUR
1.4 (0.4) million other receivables.
Aging profile of trade receivables
Age analysis of trade receivables December 31, 2020
EUR million
Carrying amount
Impaired
Gross
Not past due
1)
255.3
-0.9
256.2
1 to 90 days
25.4
-0.2
25.6
91 to 180 days
2.9
-0.4
3.3
181 to 360 days
5.3
-1.1
6.3
Over 360 days
27.6
-5.3
32.9
Total
316.5
-7.9
324.4
Age analysis of trade receivables December 31, 2019
EUR million
Carrying amount
Impaired
Gross
Not past due
1)
254.7
-0.8
255.5
1 to 90 days
40.8
-0.1
40.9
91 to 180 days
7.9
-0.5
8.4
181 to 360 days
6.7
-1.2
7.9
Over 360 days
19.5
-3.2
22.7
Total
329.6
-5.8
335.5
1)
Not past due trade receivables include IFRS 9 credit risk allowance.
Operational credit risk of receivables
Caverion’s operational credit risk arises from outstanding receivable balances and long-term
agreements with customers. Customer base and the nature of commercial contracts are different
in each country, and local teams are responsible for ongoing monitoring of customer-specific credit
risk. The exposure to credit risk is monitored on an ongoing basis.
The Group manages credit risk relating to operating items, for instance, by advance payments,
upfront payment programs in projects, payment guarantees and careful assessment of the credit
quality of the customer. Majority of Caverion Group’s operating activities are based on established,
reliable customer relationships and generally adopted contractual terms. The payment terms of
the invoices are mainly from 14 to 45 days. Credit background of new customers is assessed
comprehensively and when necessary, guarantees are required and client’s paying behavior is
monitored actively. Caverion Group does not have any significant concentrations of credit risk as
the clientele is widespread and geographically spread into the countries in which the Group
operates.
Due to the corona crisis and its potential effects, Group management critically assessed the
structure of the Group’s trade receivables and particularly its overdue trade receivables at year-
end closing. The level of the overdue receivables in total was generally lower as in the previous
WORKING CAPITAL AND DEFERRED TAXES
47
Caverion Annual Review 2020
year. The Group’s largest overdue trade receivables relate to legal cases of old projects, for which
there exists separate legal opinions justifying the validity of the receivables. Caverion Group did
not experience any major unexpected credit losses in 2020. Group management also critically
assessed the level of the expected credit loss accrual in accordance with IFRS 9 at year-end closing
and it was assessed to be sufficient. Overall, Group management assessed the Group’s credit risk
position to be at about previous year’s level.
Credit losses and impairment of receivables amounted to EUR 3.0 (1.6) million. The Group’s
maximum exposure to credit risk at the balance sheet date (December 31, 2020) is the carrying
amount of the financial assets. There are EUR 32.9 (26.2) million overdue receivables that are more
than 180 days old. The majority of these receivables is related to disputed contracts. Receivables
and the related risk are monitored on a regular basis and risk assessments are updated always
when there are changes in circumstances. The receivable is impaired if payment is considered
unlikely.
Current receivables include operative risks which are described in more detail in the Board of
Directors’ Report.
Accounting principles
Trade receivables are amounts due from customers for merchandise sold or services performed in
the ordinary course of business. If collection is expected in 12 months or less, they are classified
as current. If not, they are presented as non-current.
The Group recognises an impairment loss on receivables when there is objective evidence that
payment is not expected to occur. Recognised impairment loss includes estimates and critical
judgements.
The
estimates
are
based
on
historical
credit
losses,
past
practice
of
credit
management, client specific analysis and economic conditions at the assessment date. In addition
to impairment losses recognized based on the evidence that the receivable cannot be collected in
full, IFRS 9 establishes a new model for recognition and measurement of impairments in loans and
receivables - the so-called expected credit losses model. Caverion has chosen to apply a simplified
credit loss matrix for trade receivables as the trade receivables do not contain significant financing
components. The provision matrix is based on an entity’s historical default rates over the expected
life of the trade receivables and is adjusted for forward-looking estimates. The lifetime expected
credit loss provision is calculated by multiplying the gross carrying amount of outstanding trade
receivables by an expected default rate. Changes in expected credit losses are recognized in other
operating expenses in the consolidated income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through the income statement.
Due to the application of the percentage of completion method, part of reliably estimated
impairment losses are included in the cost estimate of a project and considered as weakened
margin forecast. Therefore impairment losses of trade receivables in onerous projects are included
in the loss reserve.
3.3
Trade and other payables
EUR million
2020
Carrying value
2019
Carrying value
Non-current liabilities
Liabilities of derivative instruments
0.0
0.0
Other liabilities
5.7
2.1
Total non-current payables
5.7
2.1
Current liabilities
Trade payables
163.6
173.7
Accrued expenses
144.1
144.4
Accrued expenses from long-term contracts
24.4
20.4
Advances received
1)
252.2
216.2
Other payables
94.6
93.9
Total current payables
678.9
648.7
1)
Advances received consist of advances received and invoiced advances.
Accounting principles
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade payables are classified as current liabilities if payment is
due within 12 months or less. If not, they are presented as non-current liabilities.
WORKING CAPITAL AND DEFERRED TAXES
48
Caverion Annual Review 2020
3.4
Provisions
EUR million
Warranty provision
Provisions for loss making projects
Restructuring provisions
Legal provisions
Other provisions
Total
January 1, 2020
21.9
8.5
2.9
4.5
4.7
42.6
Translation differences
0.0
-0.1
0.1
0.0
0.0
-0.1
Provision additions
4.7
6.2
6.1
0.8
3.5
21.4
Released during the period
-2.3
-6.9
-3.8
-1.0
-0.1
-14.2
Reversals of unused provisions
-0.1
0.0
-0.1
-0.6
-0.9
-1.6
Acquisitions through business combinations
Business disposals
December 31, 2020
24.1
7.8
5.2
3.7
7.2
48.0
Non-current provisions
8.5
0.6
1.6
10.8
Current provisions
15.7
7.8
4.6
3.7
5.5
37.3
Total
24.2
7.8
5.2
3.7
7.2
48.0
EUR million
Warranty provision
Provisions for loss making projects
Restructuring provisions
Legal provisions
Other provisions
Total
January 1, 2019
16.4
3.5
3.6
3.7
4.1
31.4
Translation differences
0.0
0.0
0.0
0.0
0.0
Provision additions
8.7
6.4
3.4
2.4
1.1
22.0
Released during the period
-3.3
-1.4
-3.5
-1.2
-0.4
-9.8
Reversals of unused provisions
0.0
0.0
-0.6
-0.3
-0.1
-1.0
Acquisitions through business combinations
0.2
0.2
Business disposals
-0.2
-0.1
-0.2
December 31, 2019
21.9
8.5
2.9
4.5
4.7
42.6
Non-current provisions
7.3
0.1
2.0
9.4
Current provisions
14.6
8.5
2.8
4.5
2.7
33.1
Total
21.9
8.5
2.9
4.5
4.7
42.6
The recognition of provisions involves estimates concerning probability and quantity. As of December 31, 2020 the provisions amounted to EUR 48.0 (42.6) million.
Accounting principles
Provisions are recorded when the Group has a legal or constructive obligation on the basis of a past
event, the realisation of the payment obligation is probable and the amount of the obligation can be
reliably estimated. Provisions are measured at the present value of the expenditure required to settle
the obligation. If reimbursement for some or all of the obligations can be received from a third party,
the reimbursement is recorded as a separate asset, but only when it is practically certain
that said reimbursement will be received. Provisions are recognised for onerous contracts when the
unavoidable costs required to meet obligations exceed the benefits expected to be received under the
contract. The amount of the warranty provision is set on the basis of experience of the realisation of
these commitments.
Provisions for restructuring are recognised when the Group has made a detailed restructuring
plan and initiated the implementation of the plan, or has communicated of it.
WORKING CAPITAL AND DEFERRED TAXES
49
Caverion Annual Review 2020
3.5
Deferred tax assets and liabilities
EUR million
2020
2019
Deferred tax asset
19.6
19.3
Deferred tax liability
-31.6
-32.6
Deferred tax liability, net
-12.0
-13.4
Changes in deferred tax assets and liabilities:
Deferred tax liability, net January 1
-13.4
-23.2
Translation difference
0.5
-0.2
Changes recognised in income statement
0.3
12.0
Changes recognised in comprehensive income
0.5
1.6
Changes recognised in equity
0.6
0.9
Acquisitions and allocations
-0.5
-4.2
Disposals
-0.3
Deferred tax liability, net December 31
-12.0
-13.4
WORKING CAPITAL AND DEFERRED TAXES
50
Caverion Annual Review 2020
Changes in deferred tax assets and liabilities before the offset
2020
EUR million
January 1
Translation
difference
Recognised in the
income statement
Recognised in
comprehensive income
Recognised in
equity
Acquisitions and
allocations
Disposals
December 31
Deferred tax assets:
Provisions
4.8
0.0
1.7
6.5
Tax losses carried forward
26.2
0.1
-3.3
23.1
Pension obligations
9.1
-0.1
0.2
0.6
9.7
Percentage of completion method
0.5
0.0
0.3
0.7
Right-of-use assets (IFRS 16)
0.5
0.4
0.9
Other items
2.7
-0.1
1.1
0.1
3.8
Total deferred tax assets
43.9
-0.1
0.4
0.6
0.1
44.8
Deferred tax liabilities:
Allocation of intangible assets
1)
39.2
-0.7
-0.1
0.0
0.4
38.7
Accumulated depreciation differences
2.5
0.0
-0.2
2.4
Pension obligations
0.5
0.3
0.1
0.8
Percentage of completion method
14.0
0.1
-0.4
13.6
Other items
1.1
0.0
0.5
-0.5
0.1
1.3
Total deferred tax liabilities
57.3
-0.6
0.1
0.1
-0.5
0.5
56.8
2019
EUR million
January 1
Translation
difference
Recognised in the
income statement
Recognised in
comprehensive income
Recognised in
equity
Acquisitions and
allocations
Disposals
December 31
Deferred tax assets:
Provisions
4.2
0.0
0.6
0.3
-0.3
4.8
Tax losses carried forward
38.9
-0.1
-12.7
0.2
-0.1
26.2
Pension obligations
7.5
0.0
-0.1
1.6
9.1
Percentage of completion method
0.3
0.0
0.2
0.5
Right-of-use assets (IFRS 16)
0.0
0.0
0.5
0.5
Other items
1.6
0.0
1.1
0.1
2.7
Total deferred tax assets
52.4
0.0
-10.4
1.6
0.6
-0.3
43.9
Deferred tax liabilities:
Allocation of intangible assets
1)
32.9
0.1
1.5
4.6
39.2
Accumulated depreciation differences
2.8
0.0
-0.4
0.1
2.5
Pension obligations
0.5
0.0
0.0
0.5
Percentage of completion method
38.2
0.0
-24.3
14.0
Other items
1.1
0.0
0.8
-0.9
0.1
0.0
1.1
Total deferred tax liabilities
75.6
0.2
-22.4
-0.9
4.8
0.0
57.3
1)
Capitalisation of intangible assets include, besides capitalisation of intangible assets, the deductible amount of the deferred taxes of
goodwill from the separate entities.
The Group's unused tax losses carried forward amounted to EUR 29.6 million, for which corresponding deferred
tax assets of EUR 8.1 million have not been recorded as of 31 December 2020 since the realisation of the related
tax benefit through future taxable profits was considered not probable. These tax losses carried forward do not
have an expiration date.
WORKING CAPITAL AND DEFERRED TAXES
51
Caverion Annual Review 2020
Accounting principles
Deferred taxes are calculated on all temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. No deferred taxes are calculated on
goodwill impairment that is not deductible in taxation and no deferred taxes are recognised on the
undistributed profits of subsidiaries to the extent that the difference is unlikely to be reverse in the
foreseeable future. Deferred taxes have been calculated using the statutory tax rates or the tax rates
substantively enacted by the balance sheet date. Deferred tax assets are only recognised to the
extent that it is probable that future taxable profit will be available against which the temporary
difference can be utilized.
The
most
significant
temporary
differences
arise
from
differences
between
the
recognised
revenue from long-term contracts using the percentage of completion method and taxable income,
measurement at fair value in connection with business combinations and unused tax losses.
Deferred tax assets on taxable losses are booked to the extent the benefit is expected to be possible
to deduct from the taxable profit in the future. Deferred tax liability on undistributed earnings of
subsidiaries, where the tax will be paid on the distribution of earnings, has not been recognized in the
statement of financial position, because distribution of the earnings is in the control of the Group and
it is not probable in the foreseeable future. Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets against current tax liabilities and when the
deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
52
Caverion Annual Review 2020
4
Business
combinations and
capital expenditure
In 2020, Caverion sold parts of its Industry
operations in Finland and acquired Gunderlund A/S
in Denmark.
In this section
This section comprises the following notes, which describe Caverion’s
business combinations and capital expenditure in 2020:
..................................................................
BUSINESS COMBINATIONS AND CAPEX
53
Caverion Annual Review 2020
4.1
Acquisitions and disposals
Acquisitions
Assets and liabilities of the acquired businesses (including fair value adjustments)
EUR million
2020
2019
Intangible assets
26.9
Right-of-use assets
2)
0.5
7.9
Tangible assets
2.7
2.0
Inventories
0.1
3.8
Investments
0.4
Trade and other receivables
2)
0.1
29.6
Deferred tax assets
0.3
Cash and cash equivalents
0.2
9.9
Total assets
3.6
80.6
Interest-bearing debts
3.8
Trade payables
0.0
10.7
Advances received
3.4
Pension liabilities
2)
1.6
Provisions
1.3
Lease liabilities
2)
0.5
8.1
Deferred tax liabilities
0.5
4.5
Other liabilities
0.3
27.6
Total liabilities
1.4
61.0
Net assets
2.2
19.6
Acquisition cost paid in cash
1)
2.1
54.2
Contingent consideration
2)
0.3
0.2
Goodwill
2)
0.2
34.8
1)
In addition to the paid acquisition cost, EUR 3.7 million of the acquired subsidiary's loans were paid back to external financing parties
in relation to acquisitions made during fiscal year 2019. In the 2019 cash flow statement, these were shown as a part of investments
in subsidiary acquisitions.
2)
The acquisition cost of the businesses acquired during 2019 increased by EUR 0.2 million in 2020 which led to a similar increase in
the goodwill generated by the acquisitions. The pension liabilities associated with the acquired businesses also increased by EUR 1.6
million from the previously reported figures which was inline with the increase in the associated non-current receivables. Additionally,
the acquired right-of-use assets and lease liabilities both increased by EUR 0.2 million from the previously reported figures.
Year 2020
Caverion acquired the share capital of the Danish Gunderlund A/S on 6 March 2020. Gunderlund
specializes in power grid expansions and renovations and employed approx. 10 people at the time
of the acquisition. The full 12-month revenue of the acquired company amounted to EUR 3.2
million and EBITDA to EUR 0.3 million during the fiscal year ending in September 2019 according
to the company's local accounting standards. Gunderlund A/S was merged into Caverion Danmark
A/S in March 2020.
The goodwill arising from the acquisition is mainly attributable to personnel know-how and
expected synergies. The goodwill is not tax deductible. A value of EUR 1.8 million was allocated to
tangible assets identified in the fair value measurement of the acquisition. The transaction costs
amounted to EUR 0.1 million and were expensed during the financial year.
In December 2020, Caverion also signed an agreement to acquire the business of Electro
Berchtold GmbH in Austria. Electro Berchtold is a provider of maintenance services for ski lift and
snow systems and has 13 employees. The transaction was closed in the beginning of 2021 and
doesn't have an effect on Caverion Group's 2020 figures.
Year 2019
In 2019, Caverion acquired the Finnish, Estonian and Polish operations of the industrial operation
and maintenance service provider Maintpartner, the refrigeration solutions business of Huurre
Group Oy as well as the share capitals of Finnish Pelsu Pelastussuunnitelma Oy and the Norwegian
Gascom AS.
In the fair value measurement of the 2019 acquisitions, customer relationships, technology,
trademarks and order backlog were identified as intangible assets. A total fair value of EUR 20.1
million was allocated to customer relationships, EUR 1.8 million to technology, EUR 1.4 million to
trademarks and EUR 0.4 million to order backlog.
Maintpartner
In March 2019, Caverion signed an agreement with Maintpartner Holding Oy to acquire all of the
shares in Maintpartner Group Oy including its subsidiaries in Finland, Poland and Estonia. The
acquisition excluded Maintpartner Group Oy’s subsidiary in Sweden. Maintpartner Holding Oy was
owned by the funds managed by the Finnish private equity company CapMan Buyout. Once the
required approvals were obtained from the competition authorities, the acquisition was completed
on 29 November 2019 at an enterprise value of EUR 34 million. As part of the transaction
execution, Caverion seeked to find a buyer in 2020 for approximately 6.5 percent of the post-
transaction revenue (approximately EUR 300 million in 2018) of the Industry division in Finland.
The acquired businesses were consolidated into Caverion’s financial figures as of 30 November
2019.
Maintpartner is an industrial operation and maintenance service provider operating in sectors
such
a
s
energy,
chemicals,
metal,
food
and
manufacturing
industries.
The
acquisition
complemented Caverion’s knowledge in industrial operation and maintenance services as well as
BUSINESS COMBINATIONS AND CAPEX
54
Caverion Annual Review 2020
in the development of digital solutions. It also supplemented Caverion’s geographical coverage and
customer base in various industrial segments. The acquired business employed 1 414 people at
the end of 2019.
The full year 2019 revenue of the acquired business amounted to EUR 130.1 million and
EBITDA to EUR 6.7 million according to the Finnish accounting standards (FAS). IFRS revenue after
the acquisition date amounted to EUR 12.5 million and EBITDA to EUR 1.4 million. The goodwill
arising
from
the
acquisition
w
as
mainly
attributable
to
workforce,
expected
synergies
and
geographical
coverage.
EUR
2.2
million
of
the
goodwill
was
considered
tax
deductible.
The
transaction costs amounted to EUR 1.9 million and were expensed during the financial year 2019.
Maintpartner's Finnish subsidiaries were merged into Caverion Industria Oy on 31 May 2020.
Huurre
Caverion signed an agreement to acquire the Refrigeration Solutions business of Huurre Group Oy
on 29 October 2019. The acquisition was finalized on 29 November 2019 and included the share
capitals of Huurre Finland Oy and Huurre Sweden AB. The acquired business is a leading supplier
of
energy
-
efficient
CO2
based
refrigeration
systems
and
related
refrigeration
automation
solutions with operations in Finland and Sweden. Huurre Refrigeration Solutions comprised three
business
units:
Services,
Refrigeration
Projects
and
related
Automation.
The
purchased
Refrigeration Solutions business employed 130 people in Sweden and 141 in Finland at the end of
2019. The product development and production are centralised in Finland. The acquired businesses
were consolidated into Caverion’s financial figures as of 30 November 2019.
The full year 2019 revenue of the acquired business amounted to EUR 50.6 million and EBITDA
to EUR 1.3 million according to the acquired companies' local accounting standards. IFRS revenue
after the acquisition date amounted to EUR 3.3 million and EBITDA to EUR -0.3 million. The
goodwill arising from the acquisition was mainly attributable to workforce, expected synergies and
geographical
coverage.
The
goodwill
was
not
tax
deductible.
The
transaction
price
was
not
disclosed, and the transaction costs amounted to EUR 1.1 million and were expensed during the
financial year 2019.
Other acquisitions
Caverion acquired the entire share capital of the Finnish company, Pelsu Pelastussuunnitelma Oy
in October 2019 and the transaction was completed on 31 October 2019. The sellers were the
main owners of the company: Fast Monkeys Oy, Sontek Ventures Oy, Eetu Kirsi, Okko Kouvalainen
and
several
private
shareholders.
Pelsu
Pelastussuunnitelma
specialises
in
property
security
consulting services and easy-to-use digital web and mobile services. The transaction included the
electronic software and platform for emergency plans, called pelastussuunnitelma.fi. This service
manages emergency plans for over 30,000 properties in Finland. The company is the market leader
in its field in Finland. The acquired company was consolidated into Caverion’s financial figures as
of 31 October 2019.
The full year 2019 revenue of the acquired company amounted to EUR 1.9 million and EBITDA
to EUR 1.1 million according to the Finnish accounting standards (FAS). IFRS Revenue after the
acquisition date amounted to EUR 0.3 million and EBITDA to EUR 0.2 million. The goodwill arising
from the acquisition was mainly attributable to personnel know-how and expected synergies. The
goodwill was not tax deductible. The transaction price was not disclosed, and the transaction costs
amounted to EUR 0.2 million and were expensed during the financial year 2019. The company was
merged into Caverion Suomi Oy on 30 April 2020.
Caverion acquired the share capital of the Norwegian Gascom AS on 1 January 2019. Gascom
specialises in the assembly and maintenance of gas plants and the company's revenue totaled EUR
1.6 million and EBITDA EUR 0.1 million for the whole of 2019. The company permanently employed
5 people. Gascom AS was merged into Caverion Norge AS on 1 November 2019. No goodwill arose
as a result of the acquisition and the transaction price was not disclosed.
Accounting principles
The consolidation of the acquired business in accordance with IFRS 3 is still provisional as of 31
December 2020. Therefore, the fair value measurement of the acquired assets and liabilities is
preliminary and subject to adjustments during the 12-month period during which the acquisition
calculations will be finalized.
BUSINESS COMBINATIONS AND CAPEX
55
Caverion Annual Review 2020
Disposals
Assets and liabilities of the disposed businesses
EUR million
2020
2019
Goodwill
1.9
2.4
Right-of-use assets
0.4
0.6
Other intangible assets
0.9
0.0
Tangible assets
0.0
0.0
Inventories
0.1
0.0
Trade and other receivables
2.7
Deferred tax assets
0.3
Cash and cash equivalents
0.0
1.3
Total assets
3.4
7.3
Trade payables
1.7
Advances received
0.0
Provisions
0.1
Lease liabilities
0.4
0.6
Deferred tax liabilities
0.0
Other liabilities
1.3
1.1
Total liabilities
1.7
3.5
Net assets
1.7
3.8
Consideration paid in cash
1.8
3.6
Translation differences
7.3
-0.9
Gain/loss on sales
7.3
-1.1
Year 2020
During
the
year
2020,
Caverion
sold
parts
of
its
Industry
operations
in
Finland,
its
Russian
subsidiary LLC Duatec Rus and a small project business unit in Norway.
Sale of parts of the Industry operations to Elcoline Oy
In June 2020, Caverion signed an agreement to sell certain Finnish operations of Caverion Industria
Oy to Elcoline Oy based on the conditions imposed on the 2019 Maintpartner transaction by the
Finnish Competition and Consumer Authority (the "FCCA"). The transaction became effective on 30
September
2020.
The
buyer
is
a
Finnish,
internationally
operating
provider
of
industrial
maintenance services that had approximately 300 employees before the transaction. As a part of
the sale, approx. 200 employees were transferred to Elcoline.
According to a stock exchange release published by Caverion on 22 November 2019, the
approval of the FCCA on the Maintpartner transaction included certain conditions based on which
Caverion was to divest approximately 6.5 percent of the post-transaction revenue of the Industry
division in Finland. The fulfillment of the conditions set out in the approval still requires final
confirmation
from
the
FCCA.
The
b
usiness
transfer
covers
total
outsourcing
agreements
in
industrial services mainly with customers in the chemical and energy industries. Furthermore, the
sale includes Caverion’s marine industry unit and industrial maintenance service centers acquired
as part of the Maintpartner transaction in Turku, Pori, Rauma and Oulu in Finland.
The full year 2019 IFRS revenue of the disposed business amounted to EUR 18.6 million while
EBITDA excluding IFRS 16 adjustments amounted to EUR 1.0 million. January-September 2020
revenue
predating
the
sale
amounted
to
EUR
13.0
million
whi
le
EBITDA
excluding
IFRS
16
adjustments amounted to EUR 0.4 million. The transaction price was not disclosed. The transaction
costs amounted to EUR 0.7 million and were expensed during the financial year 2020.
Other disposals
Caverion sold its Russian subsidiary LLC Duatec Rus in June 2020. The company has not engaged
in operating activities during financial year 2020. The capital gain from the divestment amounted
to EUR 7.3 million and is reported under other operating income, consisting mainly of cumulative
translation differences. The transaction did not have any cash flow impact. The transaction costs
were expensed during the financial year and were not material in value.
In the beginning of November 2020, Caverion also sold a small project unit in Norway. The sale
did not have a material effect of the Group's revenue or profitability.
Year 2019
Caverion announced the sale of its small subsidiaries in Poland and Czech Republic in the end of
December 2018. The entire share capital of Caverion's Polish subsidiary Caverion Polska Sp. Z o.o.
was sold to STRABAG PFS Austria GmbH, part of the construction and technology group Strabag
SE. The sale was completed on 28 February 2019. The revenue of Caverion Polska Sp. Z o.o. was
EUR 13 million and total assets amounted to EUR 4 million in 2018. The number of employees
totaled
177
people.
The
subsidiary
in
C
zech
Republic
was
sold
to
KART,
spol.
s
r.o.,
part
of
conglomerate CEZ Group. The revenue of Caverion Česká republika s.r.o. was EUR 2.8 million and
total assets amounted to EUR 0.7 million in 2018. The number of employees was 39 people. The
sale of the subsidiary in the Czech Republic was completed on 2 January 2019.
Divesting the subsidiaries in Poland and Czech Republic was a part of Caverion's strategy
implementation to improve the Group's financial performance and to focus on the Group's core
business in its main market areas. The divestments did not have a material impact on the financial
position and performance of Caverion Group during the financial year 2019. The transaction prices
were not disclosed.
BUSINESS COMBINATIONS AND CAPEX
56
Caverion Annual Review 2020
4.2
Goodwill
Goodwill is allocated to the cash generating units (CGU) as follows:
EUR million
2020
2019
Finland
80.8
80.8
Sweden
46.8
46.8
Norway
69.7
69.7
Denmark
7.8
7.6
Industry
64.0
65.7
Germany
77.7
77.7
Austria
18.3
18.3
Total goodwill
365.0
366.5
Caverion acquired Gunderlund A/S, a Danish company specialising in power grid expansions and
renovations in 2020. Goodwill related to Gunderlund A/S acquisition amounted to EUR 0.2 million.
Goodwill allocated to the sold Finnish operations of Industry division in 2020 amounted to EUR 1.9
million. In addition, the acquisition cost of the businesses acquired during 2019 increased by EUR
0.2 million during 2020 which led to a similar increase in the goodwill generated by the acquisitions.
During 2019, Caverion acquired the Finnish, Estonian and Polish operations of the industrial
operation and maintenance service provider Maintpartner, the refrigeration solutions business
from Huurre Group Oy including the share capitals of Huurre Finland Oy and Huurre Sweden AB as
well as the share capitals of Finnish Pelsu Pelastussuunnitelma Oy and the Norwegian Gascom AS.
Goodwill recorded in Industrial Solutions related to Maintpartner acquisition amounted to EUR
24.0 million. Goodwill related to Huurre acquisition amounted to EUR 5.0 million in Sweden and
EUR 1.4 million in Finland. Goodwill related to Pelsu Pelastussuunnitelma acquisition amounted to
EUR 4.2 million in Finland. Goodwill allocated to the sold Polish subsidiary amounted to EUR 2.4
million.
Goodwill is reviewed for potential impairment whenever there is an indication that the current
value may be impaired, or at least annually. Impairment testing of goodwill is carried out by
allocating goodwill to the lowest cash generating unit level (CGU) which generates independent
cash flows. The recoverable amounts of the cash generating units (CGU) are determined on the
basis of value-in-use calculations. The future cash flow projections are based on the budget
approved by the top management and the Board of Directors and other long-term financial plans.
There is there after a critical assessment of the cash flows related to the goodwill impairment
testing. Cash flow projections cover three years, the terminal value is defined by extrapolating it
on the basis of average development during the forecasted planning horizon. Cash flows beyond
the forecast period are projected by using 1 percent long-term growth rate that is based on a
prudent estimate about the long-term growth rate and inflation. Future growth estimates are
based on the former experience and information available by external market research institutions
on market development.
The discount rate used in the impairment testing is the weighted average pre-tax cost of
capital (WACC). The discount rate reflects the total cost of equity and debt and the market risks
related to the segment. The country-specific WACC components are: the risk-free interest rate,
the market risk premium and the credit spread. The common components for all tested CGUs are;
the comparable peer industry beta, the Group capital structure and the size premium based on
Caverion Group's size.
Estimating the future cash flows of CGUs has been challenging in 2020 due to the corona
pandemic and there-related increased uncertainty in the economic environment. The corona crisis
has led to a global downturn, but it is unclear how deep and how long the downturn will be and
what will be the speed of the economic recovery. As part of the goodwill impairment testing,
management cautiously assessed the future cash flows of the CGUs while taking into account the
current economic environment. Management considered the fact that the Group’s cash flows have
been strong in the past two years while the pre-corona profitability of most of the CGUs was on
an
improving
track.
Management
also
took
into
account
that
Caverion
Group
announced
restructuring and streamlining measures in the beginning of November 2020, which was assessed
to decrease the Group’s cost by at least EUR 25 million in 2021. The restructuring measures will
affect all CGUs while less the best-performing ones. In addition, management critically assessed
the Group’s Projects business risks in year-end closing, and the risks are believed to be smaller
going forward. Taking all this into account, the potential effects of COVID-19 were still assessed.
BUSINESS COMBINATIONS AND CAPEX
57
Caverion Annual Review 2020
Assumptions used in goodwill impairment testing 2020
CGU 1 =
Finland
CGU 2 =
Sweden
CGU 3 =
Norway
CGU 4 =
Denmark
CGU 5 =
Industry
CGU 6 =
Germany
CGU 7 =
Austria
Pre-tax WACC
8.79%
8.67%
9.56%
8.33%
8.78%
9.02%
9.14%
Recoverable amount exceeds balance sheet value
>50%
>50%
>50%
>50%
>50%
0-20%
>50%
Recoverable amount in different sensitivity analysis scenarios in
relation to balance sheet value
Revenue -10% and operating profit -1%
>50%
20-50%
>50%
Impairment
Impairment
Impairment
>50%
WACC +2%-points
>50%
>50%
>50%
20-50%
0-20%
Impairment
>50%
Long-term growth rate -0,5%-points
>50%
>50%
>50%
>50%
20-50%
0-20%
>50%
All the above
>50%
Impairment
>50%
Impairment
Impairment
Impairment
20-50%
The goodwill test results are evaluated by comparing the recoverable amount (E) with the carrying
value of the CGU assets (T), as follows:
Ratio
Estimate
E
<
T
Impairment
E
0 - 20%
>
T
Slightly above
E
20 - 50%
>
T
Clearly above
E
50% -
>
T
Substantially above
As a result of the impairment tests performed, no impairment loss has been recognised in 2020 or in
2019. In the 2020 testing the recoverable amount exceeded the balance sheet value in Germany
slightly and in other CGUs substantially. In the 2019 testing the recoverable amount exceeded the
balance sheet value in Germany clearly and in other CGUs substantially.
Values for sensitivity analysis in separate
scenarios (1, 2, 3), with which recoverable amount
= balance sheet value, Germany
Basic assumption
Change in value
Revenue in the forecast period (scenario 1)
2.0% average growth (CAGR)
-2.3% p.p.
Average EBITDA percentage in the forecast period
(scenario 1)
5.9%
-0.4% p.p.
Pre-tax WACC (scenario 2)
9.0%
+1.2% p.p.
Terminal growth assumption (scenario 3)
1.0%
-0.9% p.p.
Accounting principles
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration
transferred over the Group’s interest in the net fair value of the net identifiable assets of the acquiree
and the fair value of the non-controlling interest in the acquiree on the date of acquisition. The net
identifiable assets include the assets acquired and the liabilities assumed as well as the contingent
liabilities. The consideration transferred is measured at fair value.
Impairment testing
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in
circumstances indicate a potential impairment. For the purpose of impairment testing, goodwill is
allocated
to
cash
-
generating
units.
Goodwill
is
measured
at
the
original
acquisition
cost
less
impairment. Impairment is expensed immediately in the income statement and is not subsequently
reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity disposed of.
Goodwill is tested for any impairment annually in accordance with the accounting policy. The
r
ecoverable
amounts
of
cash
-
generating
units
have
been
determined
based
on
value
-
in
-
use
calculations. The cash flows in the value-in-use calculations are based on the management's best
estimate of market development for the subsequent years. The discount rate may be increased with
a branch specific risk factor.
The recoverable amounts have been assessed in relation to different time periods and the
sensitivity has been analysed for the changes of the discount rate, profitability and the terminal
growth rate.
BUSINESS COMBINATIONS AND CAPEX
58
Caverion Annual Review 2020
4.3
Tangible and intangible assets
Property, plant and equipment
2020
EUR million
Land and
water
areas
Buildings
and
structures
Machinery
and
equipment
Other
tangible
assets
1)
Advance
payments
Total
Historical cost on Jan 1, 2020
0.6
6.2
44.4
21.9
0.1
73.3
Translation differences
0.0
0.0
-0.4
-0.1
-0.6
Increases
0.0
2.6
1.8
0.8
5.2
Acquisitions
7.4
7.4
Decreases
-0.1
-3.7
-2.9
-6.7
Business disposals
-0.1
0.0
-0.1
Reclassifications between
classes
0.0
0.1
0.5
-0.7
-0.1
Historical cost on Dec 31, 2020
0.6
6.1
50.4
21.2
0.2
78.5
Accumulated depreciation and
impairment on Jan 1, 2020
-3.4
-35.1
-15.5
-54.0
Translation differences
0.0
0.4
0.1
0.5
Depreciation
-0.3
-4.1
-1.6
-6.0
Accumulated depreciation of
increases and acquisitions
-4.7
-4.7
Accumulated depreciation of
decreases and business disposals
0.1
3.6
1.0
4.7
Reclassification between classes
-0.1
0.0
-0.1
Accumulated depreciation and
impairment on Dec 31, 2020
-3.6
-39.9
-16.1
-59.6
Carrying value on January 1, 2020
0.6
2.8
9.3
6.5
0.1
19.3
Carrying value on Dec 31, 2020
0.6
2.5
10.4
5.1
0.2
18.9
1)
Other tangible assets include, among other things, capitalized leasehold improvement costs.
2019
EUR million
Land and
water
areas
Buildings
and
structures
Machinery
and
equipment
Other
tangible
assets
1)
Advance
payments
Total
Historical cost on Jan 1, 2019
0.5
12.8
58.5
17.9
0.1
89.9
Translation differences
0.0
0.2
0.0
0.2
Increases
0.0
4.1
3.9
0.2
8.2
Acquisitions
0.1
0.9
10.4
0.4
11.8
Decreases
2)
0.0
-7.2
-23.6
-1.6
-32.5
Business disposals
0.0
0.4
0.4
Reclassifications between
classes
-0.2
-5.2
0.9
-0.2
-4.7
Historical cost on Dec 31, 2019
0.6
6.2
44.4
21.9
0.1
73.3
Accumulated depreciation and
impairment on Jan 1, 2019
-10.1
-49.3
-14.6
-73.9
Translation differences
-0.2
0.0
-0.2
Depreciation
-0.3
-3.6
-1.3
-5.2
Accumulated depreciation of
increases and acquisitions
-0.3
-9.7
-0.4
-10.3
Accumulated depreciation of
decreases and business disposals
2)
7.2
23.5
1.2
31.9
Reclassification between classes
4.3
-0.4
3.8
Accumulated depreciation and
impairment on Dec 31, 2019
-3.4
-35.1
-15.5
-54.0
Carrying value on Jan 1, 2019
0.5
2.7
9.2
3.4
0.1
15.9
Carrying value on Dec 31, 2019
0.6
2.8
9.3
6.5
0.1
19.3
2)
The decreases in buildings and structures as well as in machinery and equipment during financial year 2019 are, for the most part,
related to old fully depreciated assets which are no longer in use in the Industrial Solutions division.
Accounting principles
Property, plant and equipment are stated at historical cost less accumulated depreciation and
impairment. Land is not depreciated. Depreciation on other assets is calculated using the straight-
line method to allocate the cost over their estimated useful lives.
The residual values and useful lives of assets are reviewed at the end of each reporting period.
If necessary, they are adjusted to reflect the changes in expected economic benefits. Capital gains
or losses on the disposal of property, plant and equipment are included in other operating income
or expenses.
BUSINESS COMBINATIONS AND CAPEX
59
Caverion Annual Review 2020
Intangible assets
2020
EUR million
Goodwill
Allocations
from business
combinations
Other
intangible
assets
1)
Total other
intangible
assets
Historical cost on January 1, 2020
366.5
78.5
114.8
193.3
Increases
9.1
9.1
Acquisitions
0.4
0.0
Decreases
-1.1
-1.1
Business disposals
-1.9
0.0
0.0
Reclassifications between classes
0.3
0.3
Translation differences
0.8
0.2
1.0
Historical cost on December 31, 2020
365.0
79.3
123.3
202.6
Accumulated amortisation and
impairment on January 1, 2020
-50.9
-86.5
-137.4
Amortisation and impairment
-4.8
-11.4
-16.1
Translation differences
-0.8
-0.2
-1.1
Accumulated amortisation of increases
and acquisitions
0.0
Accumulated amortisation of decreases
and reclassifications
1.0
1.0
Accumulated amortisation of business
disposals
0.0
0.0
Accumulated amortisation and
impairment on December 31, 2020
-56.5
-97.1
-153.6
Carrying value on January 1, 2020
366.5
27.6
28.3
56.0
Carrying value on December 31, 2020
365.0
22.9
26.2
49.1
2019
EUR million
Goodwill
Allocations
from business
combinations
Other
intangible
assets
1)
Total other
intangible
assets
Historical cost on January 1, 2019
335.3
63.5
97.0
160.5
Increases
8.7
8.7
Acquisitions
34.6
23.6
16.0
39.6
Decreases
-8.0
-6.1
-14.1
Business disposals
-3.3
-0.4
-0.4
Reclassifications between classes
-0.2
-0.5
-0.7
Translation differences
-0.4
0.0
-0.4
Historical cost on December 31, 2019
366.5
78.5
114.8
193.3
Accumulated amortisation and
impairment on January 1, 2019
-0.9
-56.1
-69.8
-126.0
Amortisation and impairment
-3.3
-11.1
-14.5
Translation differences
0.4
0.0
0.4
Accumulated amortisation of increases
and acquisitions
-12.2
-12.2
Accumulated amortisation of decreases
and reclassifications
8.2
6.3
14.5
Accumulated amortisation of business
disposals
0.9
0.3
0.3
Accumulated amortisation and
impairment on December 31, 2019
-50.9
-86.5
-137.4
Carrying value on January 1, 2019
334.4
7.4
27.2
34.5
Carrying value on December 31, 2019
366.5
27.6
28.3
56.0
1)
Other intangible assets consist mainly of IT infrastructure, systems and solutions.
BUSINESS COMBINATIONS AND CAPEX
60
Caverion Annual Review 2020
Allocations from business combinations:
EUR million
2020
2019
Customer relations and contract bases
19.3
23.3
Unpatented technology
1.4
1.7
Trademarks
1.2
1.3
Patents
0.9
1.0
Order backlog
0.1
0.2
Prohibition of competition clause
0.0
Total
22.9
27.6
Accounting principles
An
intangible
asset
is
initially
recognised
in
the
balance
sheet
at
acquisition
cost
when
the
acquisition cost can be reliably determined and the economic benefits are expected to flow from
the asset to the Group. Intangible assets with a known or estimated limited useful life are expensed
in the income statement on a straight-line basis over their useful life.
Other
intangible
assets
acquired
in
connection
with
business
acquisiti
ons
are
recognised
separately from goodwill if they meet the definition of an intangible asset: they are separable or
are based on contractual or other legal rights. Intangible assets recognised in connection with
business acquisitions include e.g. the value of customer agreements and associated customer
relationships,
prohibition
of
competition
agreements,
the
value
of
acquired
technology
and
industry related process competences. The value of customer agreements and their associated
customer relationships and industry related process competence is determined using the cash
flows estimated according to the durability and duration of the assumed customer relations.
Impairment of tangible and intangible assets
At each closing date, the Group evaluates whether there is an indication that an asset may be
impaired. If any such indication exists, the recoverable amount of said asset is estimated. In
addition, the recoverable amount is assessed annually for each of the following assets regardless
of whether there is any indication of impairment: goodwill, intangible assets with an indefinite
useful life and intangible assets not yet available for use. The need for impairment is assessed at
the level of cash-generating units.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and the
value in use. The value in use is determined based on the discounted future net cash flows
estimated to be recoverable from the assets in question or cash-generating units. The discount
rate used is a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the asset. An impairment loss is recognised if the carrying amount of the
asset is higher than its recoverable amount. The impairment loss is recognised immediately in the
income statement and is initially allocated to the goodwill allocated to the cash-generating unit
and thereafter to other assets pro rata on the basis of their carrying amounts. An impairment loss
is reversed when the circumstances change and the amount recoverable from the asset has
changed since the date when the impairment loss was recorded. However, impairment losses are
not reversed beyond the carrying amount of the asset that would have been determined had no
impairment loss been recognised in prior years. Impairment losses on goodwill are never reversed.
61
Caverion Annual Review 2020
5
Capital structure
Net debt, EUR million
118.6
Equity ratio, %
18.9
Net debt/EBITDA ratio
-0.2
In this section
This section comprises the following
notes describing Caverion’s capital structure for
2020:
CAPITAL STRUCTURE
62
Caverion Annual Review 2020
5.1
Capital management
The objective of capital management in Caverion Group is to maintain an optimal capital structure,
maximise the return on the respective capital employed and to minimise the cost of capital within
the limits and principles stated in the Treasury Policy. The capital structure is modified primarily by
directing investments and working capital employed.
Caverion raised a 5-year TyEL pension loan of EUR 15 million on 29 April 2020. On 15 May
2020 Caverion issued a EUR 35 million hybrid bond, an instrument subordinated to the company’s
other debt obligations and treated as equity in the IFRS financial statements. The hybrid bond does
not have a maturity date but the issuer is entitled to redeem the hybrid for the first time on 15 May
2023, and subsequently, on each coupon interest payment date. The previously outstanding EUR
66.06 million Hybrid Capital Securities were redeemed in full on 16 June 2020 in accordance with
their terms and conditions. Furthermore, in June a one-year extension option to move the maturity
of RCF (EUR 100 million) and term loan (EUR 50 million) from 2022 to February 2023 was utilized.
Caverion's business model is asset light and typically requires little investments. Caverion’s
targeted operational capex level (excluding acquisitions) should not exceed 1 percent of revenue.
Acquisitions
are
only
allowed
for
divisions
performing
well
and
in
areas
where
adding
complementing capabilities or assets to existing footprint especially in Services. Caverion aims at
100 per cent cash conversion (operating cash flow before financial and tax items/EBITDA) in order
to ensure a healthy cash flow.
Caverion’s management evaluates and continuously monitors the amount of funding required
in the Group’s business activities to ensure it has adequate liquid funds to finance its operations,
repay
its
loans
at
maturity
and
pay
annual
dividends.
The
funding
requirements
have
been
evaluated based on an annual budget, monthly financial forecasts and short-term, timely cash
planning. Caverion’s Group Treasury is responsible for maintaining sufficient funding, availability
of different funding sources and a controlled maturity profile for the external loans. Caverion
targets a net debt to EBITDA ratio of less than 2.5 times.
Cash
manageme
nt
and
funding
is
centralised
in
Group
Treasury.
With
a
centralised
cash
management, the use of liquid funds can be optimised between different units of the Group.
Caverion’s aim is to distribute at least 50% of the result for the year after taxes, however, taking
profitability and leverage level into account.
Capital
EUR million
2020
2019
Share capital
1.0
1.0
Hybrid capital
35.0
66.1
Unrestricted equity reserve
66.0
66.0
Other equity
94.3
95.5
Equity attributable to owners of the parent company
196.3
228.5
Non-controlling interest
0.3
0.4
Total equity
196.6
228.9
Non-current borrowings
223.2
218.3
Current borrowings
44.7
43.6
Total interest-bearing debt
267.9
261.9
Total capital
464.5
490.8
Total interest-bearing debt
267.9
261.9
Cash and cash equivalents
149.3
93.6
Net debt
118.6
168.4
Net debt to EBITDA
1)
-0.2
1.4
Gearing ratio, %
60.4
73.6
Equity ratio, %
18.9
21.5
1)
The Net Debt to EBITDA has been calculated according to confirmed calculation principles with lending parties
5.2
Shareholders’ equity
Share capital and treasury shares
Number of
outstanding shares
Share capital
EUR million
Treasury shares
EUR million
Jan 1, 2020
136,070,732
1.0
-3.1
Transfer of treasury shares
45,800
0.3
Return of treasury shares
4,431
0.0
Dec 31, 2020
136,112,101
1.0
-2.8
Jan 1, 2019
135,655,641
1.0
-3.2
Transfer of treasury shares
415,091
0.1
Dec 31, 2019
136,070,732
1.0
-3.1
CAPITAL STRUCTURE
63
Caverion Annual Review 2020
The total number of Caverion Corporation's shares was 138,920,092 (138,920,092) and the share
capital amounted to EUR 1.0 (1.0) million on December 31, 2020.
All the issued and subscribed shares have been fully paid to the company. Shares do not have
a nominal value.
Treasury shares
Caverion held 2,807,991 (2,849,360) treasury shares on December 31, 2020.
The consideration paid for the treasury shares amounted to EUR 2.8 million on December 31,
2020 and is disclosed as a separate fund in equity. The consideration paid on treasury shares
decreases the distributable equity of Caverion Corporation. Caverion Corporation holds the own
shares as treasury shares and has the right to return them to the market in the future.
Translation differences
Translation differences include the exchange rate differences recognised in Group consolidation.
In addition, the portion of the gains and losses of effective hedges on the net investment in foreign
subsidiaries, which are hedged with currency forwards, is recognised in equity. There were no
hedges of a net investment in a foreign operation in 2020 or 2019.
Fair value reserve
Fair value reserve includes movements in the fair value of the investments that are not held for
trading, and the derivative instruments used for cash flow hedging.
Hybrid capital
On 15 May 2020 Caverion issued a EUR 35 million hybrid bond, an instrument subordinated to the
company's other debt obligations and treated as equity in the IFRS financial statements. The hybrid
bond does not confer to its holders the rights of a shareholder and does not dilute the holdings of
the current shareholders. The coupon of the hybrid bond is 6.75 per cent per annum until 15 May
2023. The hybrid bond does not have a maturity date but the issuer is entitled to redeem the hybrid
for the first time on 15 May 2023, and subsequently, on each coupon interest payment date. If the
hybrid bond is not redeemed on 15 May 2023, the coupon will be changed to 3-month EURIBOR
added with a Re-offer Spread (706.8 bps) and a step-up of 500bps. The accrued unrecognized
interest on the bond was EUR 1.5 (1.7) million at 31 December 2020.
The previously outstanding EUR 66.06 million 2017 Hybrid Capital Securities were redeemed
in full on 16 June 2020 in accordance with their terms and conditions.
The interest from the hybrid bond must be paid to the investors if Caverion Corporation pays
dividends. If dividends are not paid, a separate decision regarding interest payment on the hybrid
bond will be made. The hybrid bond is initially recognised at fair value less transaction costs and
subsequently the bond is measured at cost. If interest is paid to the hybrid bond, it is debited
directly to equity, net of any related income tax benefit. Related to the redeemed hybrid notes, EUR
3.1 million interest was paid, of which EUR 2.7 was debited to equity. Hybrid bond is considered as
loan after the announcement of redemption and therefore EUR 0.3 million interest was booked
through profit and loss.
According to IAS 33, interest accrued in local books has been taken into account as an expense
in earnings per share calculation as described in calculation of key figures.
Unrestricted equity reserve
Caverion announced in a stock exchange release on 7 February 2018 the establishment of a new
share-based incentive plan directed at the key employees of the Group (“Matching Share Plan
2019-2022”). In connection with the technical execution of the plan a total of 3,800,000 new
shares were subscribed for in Caverion Corporation’s share issue directed to the company itself
without payment, and were entered into the Trade Register on 19 February 2018. The total capital
raised amounted to EUR 6.67 million and was recorded in entirety into the unrestricted equity
reserve.
Caverion executed a directed share issue of new shares in June 2018 in order to maintain a
strong balance sheet and to retain strategic flexibility after the payment of the German anti-trust
fine. On 15 June 2019, the Company announced that it had directed a share issue of 9,524,000
new shares in the Company to institutional investors, corresponding to approximately 7.36 percent
of all the shares and votes in the Company immediately prior to the share issue raising gross
proceeds
of
EUR
60.0
million.
The
subscription
price
was
recorded
in
its
entirety
into
the
unrestricted equity reserve of the company.
Dividends
The Annual General Meeting held on 25 May 2020 decided that no dividends will be distributed
based on the balance sheet to be adopted for 2019 by a resolution of the Annual General Meeting,
but that the Board of Directors be authorized to decide at their discretion on the distribution of
dividends of a maximum amount of EUR 0.08 per share from the Company’s retained earnings.
The Board of Directors proposes to the Annual General Meeting to be held on 24 March 2021
that a dividend of EUR 0.10 per share and an extraordinary dividend of EUR 0.10 per share, in total
EUR 0.20 per share will be paid for the year 2020. The Board of Directors has also decided that no
dividend will be paid for the year 2019.
CAPITAL STRUCTURE
64
Caverion Annual Review 2020
5.3
Change in net debt
Net debt is defined as the total of interest-bearing liabilities less cash and cash equivalents.
Liabilities from financing activities
EUR million
Non-current
borrowings including
repayments
Lease
liabilities
Current
loans
Cash
and cash
equivalents
Net
debt
Net debt as at 1 January 2020
125.0
136.9
0.0
93.6
168.4
Change in net debt, cash:
Proceeds from non-current borrowings
10.5
Repayment of non-current borrowings
-48.7
Change in current liabilities
3.0
Change in cash and cash equivalents
59.2
Change in net debt, non-cash:
Additions
46.6
Acquisitions
0.7
Disposals and business divestitures
-4.6
Foreign exchange adjustments
1)
-1.6
-3.5
Other non-cash changes
0.2
Net debt as at 31 December 2020
135.7
129.2
3.0
149.3
118.6
Liabilities from financing activities
EUR million
Non-current
borrowings including
repayments
Lease
liabilities
Current
loans
Cash
and cash
equivalents
Net
debt
Net debt as at 31 December 2018
57.1
0.9
0.0
51.2
6.9
Recognised on adoption of IFRS 16
140.5
Net debt as at 1 January 2019
57.1
141.5
0.0
51.2
147.4
Change in net debt, cash:
Proceeds from non-current borrowings
125.0
Repayment of non-current borrowings
-56.7
-45.5
Change in current liabilities
Change in cash and cash equivalents
41.5
Change in net debt, non-cash:
Additions
36.5
Acquisitions
7.7
Disposals and business divestitures
-3.1
Foreign exchange adjustments
1)
0.0
0.9
Other non-cash changes
-0.4
Net debt as at 31 December 2019
125.0
136.9
0.0
93.6
168.4
1)
The cash flow statements of foreign subsidiaries are translated into euro using the financial year’s average foreign currency
exchange rates, and the cash and cash equivalents are translated using the exchange rates quoted on the balance sheet date.
CAPITAL STRUCTURE
65
Caverion Annual Review 2020
5.4
Financial assets and liabilities by category
IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income
(FVTOCI) and fair value through profit and loss (FVTPL). The standard has been applied as of 1 January 2018.
2020
EUR million
Valuation
Fair value
through profit
and loss
Fair value through
other comprehensive
income
Amortised
cost
value
Non-current financial assets
Investments
0.6
0.7
1.3
Trade receivables and other receivables
5.7
5.7
Current financial assets
Trade receivables and other receivables
518.5
518.5
Derivatives (hedge accounting not
applied)
0.6
0.6
Cash and cash equivalents
149.3
149.3
Total
1,2
0,7
673,5
675,4
Non-current financial liabilities
Loans from financial institutions
49.9
49.9
Bonds
74.7
74.7
Pension loans
10.5
10.5
Other loans
0.5
0.5
Lease liabilities
87.5
87.5
Total non-current interest-bearing
liabilities
223.2
223.2
Trade payables and other liabilities
0.5
0.5
Derivatives (hedge accounting not
applied)
Current financial liabilities
Loans from financial institutions
Pension loans
3.0
3.0
Other loans
Lease liabilities
41.7
41.7
Total current interest-bearing liabilities
44.7
44.7
Trade payables and other liabilities
510.4
510.4
Derivatives (hedge accounting not
applied)
0.2
0.2
Total
0.2
778.8
779.0
jjj
2019
EUR million
Valuation
Fair value
through profit
and loss
Fair value through
other comprehensive
income
Amortised
cost
value
Non-current financial assets
Investments
0.6
0.7
1.3
Trade receivables and other receivables
5.0
5.0
Current financial assets
Trade receivables and other receivables
536.7
536.7
Derivatives (hedge accounting not
applied)
0.9
0.9
Cash and cash equivalents
93.6
93.6
Total
1.5
0.7
635.2
637.4
Non-current financial liabilities
Loans from financial institutions
49.9
49.9
Bonds
74.6
74.6
Other loans
0.5
0.5
Lease liabilities
93.3
93.3
Total non-current interest-bearing
liabilities
218.3
218.3
Trade payables and other liabilities
0.3
0.3
Derivatives (hedge accounting not
applied)
Current financial liabilities
Loans from financial institutions
Pension loans
Other loans
Lease liabilities
43.6
43.6
Total current interest-bearing
liabilities
43.6
43.6
Trade payables and other liabilities
483.9
483.9
Derivatives (hedge accounting not
applied)
0.2
0.2
Total
0.2
746.1
746.3
CAPITAL STRUCTURE
66
Caverion Annual Review 2020
The carrying amount of financial assets and liabilities except for non-current loans approximate their
fair value. The fair value of non-current loans amounted to EUR 141.4 (129.2) million at the end of
2020. The fair values of non-current loans are based on discounted cash flows and are categorised
within level 2 of the fair value hierarchy. Discount rate is defined to be the rate that the Group was to
pay for an equivalent external loan at year end. It consists of a risk-free market rate and a company
and maturity related risk premium of 2.00% - 3.00% p.a (2.00% - 2.50% in 2019).
Investments consist of as follows:
2020
2019
Quoted shares (level 1 in fair value hierarchy)
0.6
0.6
Unquoted shares (level 3 in fair value hierarchy)
0.7
0.7
Total
1.3
1.3
The fair value of financial instruments traded in active markets is based on quoted market prices at
the balance sheet date. A market is regarded as active if quoted prices are readily and regularly
available
from
an
exchange
and
those
prices
represent
actual
and
regularly
occurring
market
transactions on an arm’s length basis. The quoted market price used for financial assets held by the
Group is the current bid price. These instruments are included in Level 1. Instruments included in Level
1 comprise primarily funds and OMXH equity investments. Investments categorised in Level 3 are
non-listed equity instruments and they are measured at acquisition cost less any impairment or
prices obtained from a broker as their fair value cannot be measured reliably.
Accounting principles
Financial assets
Classification and measurement
Financial assets are classified at initial recognition into the following categories according to IFRS 9:
at fair value through profit or loss, at fair value through other comprehensive income and at amortised
cost. The classification depends on the objective of the business model and the characteristics of
contractual cash flows of the item.
Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss are financial assets or derivatives that do not
meet the criteria for hedge accounting. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives and other financial assets at fair
value through profit and loss are initially measured at fair value and transaction costs are expensed
in the income statement. Subsequent to initial recognition, they are measured at fair value. Realised
and unrealised gains and losses arising from changes in fair value are recognised in the income
statement in the period in which they arise. Assets in this category are classified as
non-current assets (Receivables) if expected to be settled after 12 months and as current assets
(Trade and other receivables) if expected to be settled within 12 months.
Amortised cost
The Group’s non-derivative financial assets and cash and cash equivalents are classified to amortised
cost
category.
This
category
comprises
loans
receivables,
trade
receivables,
cash
and
cash
equivalents and other receivables. These are included in current assets, except for maturities greater
than 12 months after the reporting period, which are classified as non-current. These assets are
initially
recognised
at
fair
value
and
transaction
costs
are
expensed
in
the
income
statement.
Subsequent to initial recognition, they are carried at amortised cost using the effective interest rate
method less any impairment. Due to the nature of short-term receivables and other receivables, their
book value is expected to equal to the fair value.
Cash and cash equivalents include cash at hand, bank deposits withdrawable on demand and
liquid short-term investments with original maturities of three months or less.
Financial assets at fair value through other comprehensive income
Equity investments in non-listed investments that are not held for trading, are classified as equity
instruments designated at fair value through other comprehensive income.
These assets are initially recognised at fair value, plus any transaction costs. Subsequent to initial
recognition,
they
are
carried
at
fair
va
lue.
Changes
in
the
fair
value
are
recognised
in
other
comprehensive income and are presented in the fair value reserves under shareholders' equity, net
of tax. When investments are sold or impaired, the accumulated fair value adjustments recognised in
equity are never recycled to income statement.
These assets are non-current financial assets when the Group intends not to dispose them within
the next 12 months.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on the trade-date which is the date on
which Caverion Group commits to purchase or sell the asset. Financial assets are derecognised when
the rights to receive cash flows from the investment have expired or have been transferred and the
Group has transferred substantially all risk and rewards of ownership.
Gains or losses arising from changes in the fair value of the financial assets at fair value through
profit or loss category are presented in the income statement within finance income and expenses in
the period in which they arise. Interest income from items at amortised cost are presented in the
income statement within finance income in the period in which they arise. Dividend income from
financial assets is recognised in the income statement as part of financial income when the Group’s
right to receive payments is established.
CAPITAL STRUCTURE
67
Caverion Annual Review 2020
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when
there is a legally enforceable right to offset the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability simultaneously.
Impairment of financial assets
Assets carried at amortised costs
Caverion Group assesses at the end of each reporting period whether there is objective evidence that
a financial asset or group of financial assets is impaired as a result of one or more events that occurred
after the initial recognition of the asset (“a loss event”). That loss event must impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Objective evidence that financial assets are impaired includes: default or delinquency in interest
or principal payments, significant financial difficulty, restructuring of an amount due to the Group,
indications that a debtor will enter bankruptcy or other financial reorganisation, observable data
indicating that there is measurable decrease in expected cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
For loans and receivables, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the
asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount
of the loss is recognised in the consolidated income statement within other operating expenses.
Caverion Group considers evidence of impairment at both an individual asset and a collective level. All
individually significant assets are individually assessed for impairment. Collective assessment is
carried out by grouping together assets with similar risk characteristics.
Risks related to trade and other operative receivables are described in note 3.2.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related
objectively
to
an
event
occurring
after
the
impairment
was
recogni
sed,
the
previously
recognised impairment loss is reversed through the income statement.
Financial liabilities
Borrowings are recorded on the settlement date and initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost and any difference between the
proceeds and the redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method. Other borrowing costs are expensed in the period
during which they are incurred. Fees paid on the establishment of loan facilities are recognised as
expenses over the period of the facility to which it relates. Borrowings are derecognised when its
contractual obligations are discharged or cancelled, or expire.
Borrowings are classified as current liabilities if payment is due within 12 months or less. If not,
they are presented as non-current.
5.5
Financial risk management
Caverion Group is exposed in its business operations to liquidity risk, credit risk, foreign exchange risk
and interest rate risk. The objective of Caverion’s financial risk management is to minimise the
uncertainty which the changes in financial markets cause to its financial performance. The outbreak
of the coronavirus pandemic has increased the general risk level related to the availability of financing,
the availability of guarantee facilities as well as foreign exchange related risks.
Risk management is carried out by Caverion Group Treasury in co-operation with divisions under
policies approved by the Board of Directors. Financing activities are carried out by finance personnel
and management in the divisions and subsidiaries. Responsibilities in between the Group Treasury
and divisions are defined in the Group’s Treasury Policy. Divisions are responsible for providing the
Group Treasury timely and accurate information on their financial position, cash flows and foreign
exchange position in order to ensure the Group’s efficient cash and liquidity management, funding
and risk management. In addition, the Group’s Treasury Policy defines main principles and methods
for
financial
risk
management,
cash
management
and
specific
financing
-
related
are
as
e.g.
commercial guarantees, relationships with financiers and customer financing.
Interest rate risk
Caverion has interest-bearing receivables in its cash and cash equivalents but otherwise its revenues
and cash flows from operating activities are mostly independent of changes in market interest rates.
Caverion’s exposure to cash flow interest rate risk arises mainly from current and non-current
loans. Borrowing issued at floating interest rates expose Caverion to cash flow interest rate risk. To
manage the interest rate risk, the Board of Directors of Caverion Group has defined an average
interest rate fixing term target for the Group’s net debt (excluding cash). At the reporting date the
average interest rate fixing term of net debt (excluding cash) was 22.1 (33.5) months. At the end of
December 2020 Caverion has not used interest rate derivatives to hedge interest rate risk.
The weighted average effective interest rate of the whole loan portfolio excluding IFRS 16 effects
was 2.66% (2.96%) at the end of December 2020. Fixed-rate loans accounted for approximately 64
(60) percent of the Group’s borrowings.
In
addition
to
the
targeted
average
interest
rate
fixing
term
of
net
debt,
Caverion
Group’s
management monitors regularly the effect of the possible change in interest rate level on the Group’s
financial result. The monitored number is the effect of one percentage point rise in interest rate level
on yearly net interest expenses.
Interest rate risk sensitivity
EUR million
2020
Result before
taxes
2019
Interest rate of net debt 1 percentage point higher
1.0
0.2
CAPITAL STRUCTURE
68
Caverion Annual Review 2020
Net
debt
includes
interest
-
bearing
liabilities
and
cash
and
cash
equivalents.
Sensitivities
are
calculated based on the situation at the balance sheet date.
Financial counterparty risk
The financial instruments the Group has agreed with its banks and financial institutions contain a risk
of the counterparty being unable to meet its obligations. The Group Treasury is responsible for the
counterparty risk of derivative instruments and financial investment products.
Counterparties to the financial instruments are chosen based on Caverion Group management’s
estimate on their reliability. The Board of Directors of Caverion Group accepts the main banks used
by the Group and counterparties to derivative instruments. CFO accepts conterparties to short-term
investments.
Short
-
term
investments
related
to
liquidity
management
are
made
according
to
Caverion’s
Treasury
Policy.
No
impairment
has
been
recognised
on
derivative
instruments
or
investment products in the reporting period. Caverion Group’s management does not expect any
credit
losses
from
non
-
performance
by
counterparties
to
investment
products
or
derivative
instruments.
As a result of the partial demerger of YIT Corporation registered on 30 June 2013, a secondary
liability
has
been
generated
to
Caverion
Corporation,
a
new
company
established
in
the
partial
demerger, for those liabilities that have been generated before the registration of the demerger and
remain
with
YIT
Corporation
after
the
demerger.
Caverion
Corporation
has
a
secondary
liability
relating
to
the
Group
guarantees
that
remain
with
YIT
Corporation
after
the
deme
rger,
if
YIT
Corporation falls into default. These Group guarantees amounted to EUR 19.7 (30.9) million at the
end of December 2020.
Refinancing and liquidity risk
Refinancing risk is defined as a risk that funds are not available or the costs of refinancing maturing
debt is high at the time a debt needs to be refinanced. The objective of liquidity risk management is
to maintain a sufficient liquidity reserve in all situations. Liquidity and refinancing risk is managed by
diversifying
the
maturities
of
external
loans
and
monitoring
the
proportion
of
short
-
term
debt
(maturing in less than one year’s time) and the long-term liquidity forecast for the Group. The Group
shall always have liquidity reserve available to meet the need for debt repayments falling due during
the calendar year and to cover the potential funding need over the planning period of business
operations
including
planned
capital
expenditure.
Adequate
liquidity
is
maintained
by
keeping
sufficient amount of unused committed credit facilities as a reserve.
Caverion mitigated coronavirus pandemic related funding and liquidity risks by raising new loans
and maintained higher liquidity buffer throughout the year. On 29 April 2020 Caverion raised a 5-year
TyEL pension loan of EUR 15 million. On 15 May 2020 Caverion issued a EUR 35 million hybrid bond,
an instrument subordinated to the company’s other debt obligations and treated as equity in the IFRS
financial statements. The hybrid bond does not have a maturity date but the issuer is entitled to
redeem the hybrid for the first time on 15 May 2023, and subsequently, on each coupon interest
payment date. The previously outstanding EUR 66.06 million Hybrid Capital Securities were redeemed
in full on 16 June 2020 in accordance with their terms and conditions. Furthermore, in June a one-
year extension option to move the maturity of RCF (EUR 100 million) and term loan (EUR 50 million)
from 2022 to February 2023 was utilized.
Caverion Group’s interest-bearing loans and borrowings amounted to 138.7 (125.0) million at the
end of December. Approximately 46 percent of the loans have been raised from financial institutions
and 54 percent from bond investors. The Group’s net debt amounted to EUR -10.6 (31.5) million at
the end of December excluding IFRS 16 effects and EUR 118.6 including IFRS 16 effects. At the end
of December, the Group’s gearing was 60.4 (73.6) percent and its equity ratio 18.9 (21.5) percent
including IFRS 16 effects. Hybrid bond in amount of EUR 35.0 million is subordinated to the company's
other debt obligations and treated as equity in the IFRS financial statements. Related to the redeemed
hybrid notes, EUR 3.1 million interest was paid in June 2020.
Caverion’s external loans are subject to a financial covenant based on the ratio of the Group’s net
debt to EBITDA. The financial covenant shall not exceed 3.5:1. At the end of December, the Group’s
Net debt to EBITDA was -0.2x according to the confirmed calculation principles. The confirmed
calculation principles exclude the effects of the IFRS 16 standard.
To manage liquidity risk, Caverion uses cash and cash equivalents, Group accounts with overdraft
facilities, credit facilities and commercial papers. Caverion’s cash and cash equivalents amounted to
EUR 149.3 (93.6) million at the end of December 2020. In addition, Caverion has undrawn overdraft
facilities
amounting
to
EUR
19
(19)
million
and
undrawn
committed
revolving
credit
facilities
amounting to EUR 100 (100) million. The committed revolving credit facilities are valid until February
2023.
The following table describes the contractual maturities of financial liabilities. The amounts are
undiscounted. Interest cash flows of floating rate loans and derivative instruments are based on the
interest rates prevailing on December 31, 2020 (December 31, 2019). Cash flows of foreign currency
denominated loans are translated into euro at the reporting date. Cash flows of foreign currency
forward contracts are translated into euro at forward rates.
Contractual maturity analysis of financial liabilities
and interest payments at December 31, 2020
EUR million
2021
2022
2023
2024
2025
2026-
Total
Loans from financial institutions
3.3
3.2
127.6
134.1
Pension loans
3.3
3.2
3.2
3.1
1.5
14.3
Lease liabilities
43.4
33.2
22.3
13.6
7.0
19.1
138.6
Other financial liabilities
0.5
0.5
Trade and other payables
510.4
510.4
Foreign currency derivatives
0.2
0.2
CAPITAL STRUCTURE
69
Caverion Annual Review 2020
Contractual maturity analysis of financial liabilities
and interest payments at December 31, 2019
EUR million
2020
2021
2022
2023
2024
2025-
Total
Loans from financial institutions
3.7
3.7
52.7
77.4
137.6
Lease liabilities
40.4
38.0
23.7
16.6
9.9
18.3
146.9
Other financial liabilities
0.5
0.5
Trade and other payables
483.9
483.9
Foreign currency derivatives
0.2
0.2
Foreign exchange risk
Caverion Group operates internationally and is exposed to foreign exchange risks arising from the
currencies of the countries in which it operates. Risk arises mainly from the recognised assets and
liabilities
and
net
investments
in
foreign
operations.
In
addition
,
commercial
contracts
in
the
subsidiaries cause foreign exchange risk, but the contracts are mainly denominated in the entity’s
own functional currencies.
The objective of foreign exchange risk management is to reduce uncertainty caused by foreign
exchange
rate
movements
on
income
statement
through
measurement
of
cash
flows
and
commercial receivables and payables. By the decision of the Board of Directors of Caverion Group, the
investments in foreign operations are not hedged for foreign exchange translation risk.
Foreign currency denominated net investments at the balance sheet date
Milj. e
2020
Net
investment
2020
EUR stregthens
by 10%, effect
on equity
2020
EUR weakens
by 10%, effect
on equity
2019
Net
investment
2019
EUR stregthens
by 10%, effect
on equity
2019
EUR weakens
by 10%, effect
on equity
SEK
-7.0
-0.7
0.7
-7.9
-0.8
0.8
NOK
7.2
0.7
-0.7
9.2
0.9
-0.9
DKK
3.1
0.3
-0.3
5.4
0.5
-0.5
Other currencies
3.7
0.4
-0.4
-4.9
-0.5
0.5
Here net investment comprises equity invested in foreign subsidiaries and internal loans that qualify
for net investment classification deducted by possible goodwill in the subsidiaries balance sheet.
According to Caverion Group’s Treasury policy, all Group companies are responsible for identifying and
hedging the foreign exchange risk related to the foreign currency denominated cash flows. All firm
commitments
of
over
EUR
0.2
million
must
be
hedged
by
intra
-
group
transactions
with
Group
Treasury. Group Treasury hedges the net position with external counterparties but does not apply
hedge accounting to derivatives hedging foreign exchange risk. Accordingly, the fair value changes of
derivative instruments are recognized in the consolidated income statement. There were only minor
foreign exchange hedges, which relate to commercial contracts on the reporting date.
Excluding the foreign exchange differences due to translation risk related to the investments in
foreign operations, the strengthening or weakening of the Euro does not have a significant impact on
the Group’s result. The foreign exchange derivate contracts made for hedging internal and external
loans and receivables offset the effect of changes in foreign exchange rates.
5.6
Derivative instruments
All derivatives are hedges according to Caverion Group’s Treasury Policy, but hedge accounting as
defined in IFRS 9 is not applied for valid derivative contracts. Foreign exchange forward contracts are
mainly
designated
as
hedges
of
financial
items
and
have
been
charged
to
P/L
in
finance
income/expenses. Foreign exchange forward contracts mature in 2021. There were no outstanding
interest rate swaps in December 2020.
The
Group’s
derivative
instruments
are
subject
to
offsetting,
enforceable
master
netting
arrangements or similar agreements. In certain circumstances – e.g. when a credit event such as a
default occurs, all outstanding transactions under the agreement are terminated, the termination
value is assessed and only a single net amount is payable in settlement of all transactions. Master
netting agreements do not meet the criteria for offsetting in the statement of financial position and
amounts are presented on a gross basis. Other financial assets or liabilities, for example trade
receivables or trade payables, do not include any amounts subject to netting agreements.
The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) is determined by using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2. The fair values for the derivative instruments categorised in Level 2
have
been
defined
as
follows:
the
fair
values
of
foreign
exchange
forward
and
forward
rate
agreements have been defined by using the market prices at the closing day. The fair values of
interest rate swaps are based on discounted cash flows.
Nominal values
EUR million
2020
2019
Foreign exchange forward contracts, hedge accounting not applied
70.2
66.7
CAPITAL STRUCTURE
70
Caverion Annual Review 2020
Fair values
EUR million
2020
Positive
fair value
(carrying
value)
2020
Negative
fair value
(carrying
value)
2020
Net
value
2019
Positive
fair value
(carrying
value)
2019
Negative
fair value
(carrying
value)
2019
Net
value
Foreign exchange forward
contracts
Hedge accounting not
applied
0.6
-0.2
0.4
0.9
-0.2
0.7
Total
0.6
-0.2
0.4
0.9
-0.2
0.7
Netting fair values of
derivative financial
instruments subject to
netting agreements
-0.1
0.1
-0.1
0.1
Net total
0.5
-0.1
0.4
0.8
-0.1
0.7
Accounting principles
Derivatives are initially recognised at fair value on the date Caverion Group becomes party to an
agreement and are subsequently re-measured at their fair value. Directly attributable transaction
costs are recognised in the income statement. The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. Currency forward contracts are used for hedging against the currency exposure
of exchange rates and resulting changes in fair value are included in operating profit or financial
income and expenses based on their nature in the financial period in which they were incurred.
Interest rate swaps are used to hedge against changes in market interest rates. Changes in the fair
value of interest rate swaps that do not meet the hedge accounting criteria under IFRS 9, are entered
in financing income or expenses in the financial period in which they were incurred. Derivatives are
classified as non-current liabilities when their contractual maturity is more than 12 months (Other
liabilities) and current liabilities when maturity is less than 12 months (Trade and other payables).
Derivative instruments used in hedge accounting which meet the hedge accounting criteria under
IFRS 9 are entered in the balance sheet at fair value on the day that Caverion Group becomes
counterpart to the agreement. The Group has applied hedge accounting to hedge the benchmark rate
of floating rate loans (cash flow hedging). The Group documents at inception of the transaction the
relationship between the hedged item and the hedging instruments and assesses both at hedge
inception and on an ongoing basis, of whether the derivatives are effective in offsetting changes in
cash flows of hedged items. The effectiveness is assessed at each balance sheet date at minimum.
The effective portion of changes in the fair value of derivative instruments that qualify for cash flow
hedges is recognised in other comprehensive income and accumulate in the fair value reserve. The
gain or loss relating to the ineffective portion is recognised immediately in the income statement
within financial income and expenses. Gains and losses accumulated in shareholders' equity are
reclassified to income statement within financial income or expenses in the periods when the hedged
item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer
meets the criteria of hedge accounting, any cumulative gain or loss existing in equity at that time
remains in equity and is recognised when the forecast transaction occurs. Nevertheless, if the hedged
forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement within financial income or expense.
5.7
Investments in associated companies and joint ventures
2020
2019
EUR million
Associated
companies
Joint
ventures
Total
Associated
companies
Joint
ventures
Total
Historical costs on Jan 1
0.1
1.6
1.7
0.1
0.1
Share of the profit
0.0
0.0
0.0
0.0
0.0
0.0
Additions
1.6
1.6
Historical costs on Dec 31
0.1
1.6
1.7
0.1
1.6
1.7
The carrying amounts of the shares in associated companies do not include goodwill.
2020
EUR million
Domicile
Assets
Liabilities
Revenue
Profit/
loss
Ownership
Joint ventures
CG FH St. Pölten GmbH
Wien
25.6
22.4
0.0
0.0
50%
Associated companies
Arandur Oy
Vantaa
4.8
4.4
4.6
0.1
33%
Total
30.4
26.9
4.6
0.1
2019
EUR million
Domicile
Assets
Liabilities
Revenue
Profit/
loss
Ownership
Joint ventures
CG FH St. Pölten GmbH
Wien
7.5
4.3
0.0
0.0
50%
Associated companies
Arandur Oy
Vantaa
4.6
4.3
5.0
0.0
33%
Total
12.2
8.6
5.0
0.0
Sales of goods and services sold to associated companies and joint ventures amounted to EUR 1.4
(1.2) million in 2020.
CAPITAL STRUCTURE
71
Caverion Annual Review 2020
Accounting principles
The consolidated financial statements include associated companies in which the Group either holds
20%-50% of the voting rights or in which the Group otherwise has significant influence but not control.
Companies where the Group has joint control with another entity are considered as joint ventures.
Investments in associated companies and joint ventures are accounted for using the equity method:
they are initially recorded at cost and the carrying amount is increased or decreased by Caverion’s
share of the profit or loss. The Group determines at each reporting date whether there is any
indication of impairment.
share
of
post
-
acquisition
movements
in
other
comprehensive
income
with
a
corresponding
adjustment to the carrying amount of the investment. When the Group’s share of losses in an
associate exceeds its interest in the associate, including any other unsecured receivables, the Group
does not recognise further losses, unless it has incurred legal or constructive obligations or made
payments on behalf of the associate. Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest in each associate.
5.8
Employee benefit obligations
Obligations in the statement of financial position:
EUR million
2020
2019
Defined benefit plans
51.4
49.1
Liability in the statement of financial position
51.4
49.1
Pension asset in the statement of financial position
-2.4
-2.3
Net liability
49.0
46.7
Income statement charge:
EUR million
2020
2019
Defined benefit plans
-0.8
-0.9
Included in financial expenses
-0.5
-0.6
Income statement charge, total (income (+) / expense (-))
-1.3
-1.5
Remeasurements, included in other comprehensive income:
EUR million
2020
2019
Defined benefit plans
-2.1
-5.5
Change in foreign exchange rates
1.4
-0.2
Included in other comprehensive income. total
-0.7
-5.7
Defined benefit pension plans
The Group has defined benefit pension plans in Norway, Germany, Austria and Finland. In all plans the
pension liability has been calculated based on the number of years employed and the salary level.
Most of the pension plans are managed in insurance companies, which follow the local pension
legislation in their management.
The amounts recognised in the statement of financial position are determined as follows:
EUR million
2020
2019
Present value of funded obligations
5.8
5.6
Fair value of plan assets
-8.2
-7.9
Net deficit of funded plans
-2.4
-2.3
Present value of unfunded obligations
51.4
49.1
Total net deficit of defined benefit pension plans
49.0
46.7
Liability in the statement of financial position
51.4
49.1
Receivable in the statement of financial position
-2.4
-2.3
CAPITAL STRUCTURE
72
Caverion Annual Review 2020
The movement in the net defined benefit obligation over the year is as follows:
EUR million
Present value
of obligation
Fair value
of plan
assets
Total
net
obligation
At January 1, 2020
1)
56.3
-7.9
48.3
Current service cost
0.8
0.8
Interest expense
0.4
0.0
0.3
Past service costs
Gains on settlements
Remeasurements:
Return on plan assets. excluding interest expense
-0.5
-0.5
Gain (-) / loss (+) from change in demographic assumptions
Gain (-) / loss (+) from change in financial assumptions
2.4
2.4
Experience gains (-) / losses (+)
0.2
0.2
Exchange difference
-0.4
-0.4
Employers' contributions
-0.6
-0.6
Acquired pension liability
Benefit payments from plans
-1.9
0.2
-1.7
At December 31, 2020
57.1
-8.3
48.9
1)
Previously unrecognised benefit obligation from an acquisition carried out in 2019 has been taken into account in 2020 opening
balance.
EUR million
Present value
of obligation
Fair value
of plan
assets
Total
net
obligation
At January 1, 2019
49.1
-7.5
41.6
Current service cost
0.9
0.9
Interest expense
0.6
0.6
Past service costs
Gains on settlements
Remeasurements:
Return on plan assets. excluding interest expense
-0.8
-0.8
Gain (-) / loss (+) from change in demographic assumptions
Gain (-) / loss (+) from change in financial assumptions
5.6
5.6
Experience gains (-) / losses (+)
0.7
0.7
Exchange difference
0.1
0.1
Employers' contributions
-0.4
-0.4
Acquired pension liability
Benefit payments from plans
-2.0
0.3
-1.6
At December 31, 2019
54.6
-7.9
46.7
The weighted average duration of the defined benefit plan obligation in Caverion Group is 15 (15)
years.
The significant actuarial assumptions were as follows:
2020
Discount rate
Salary growth rate
Pension growth rate
Finland
0.20%
1.20%
1.50%
Norway
1.50%
2.00%
1.75% / 3.68%
Germany
0.50%
3.00%
2.00%
Austria
0.40%
-
2.25%
CAPITAL STRUCTURE
73
Caverion Annual Review 2020
2019
Discount rate
Salary growth rate
Pension growth rate
Finland
0.60%
1.20%
1.50%
Norway
1.80%
2.25%
2.00%
Germany
0.85%
3.00%
2.25%
Austria
0.84%
-
2.25%
The sensitivity of the defined benefit obligation to changes in the weighted principal
assumptions is:
2020
Impact on defined benefit obligation
1)
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
0.50%
decrease 7.2%
increase 8.1%
Salary growth rate
0.50%
increase 0.2%
decrease 0.2%
Pension growth rate
0.50%
increase 5.7%
decrease 5.4%
2019
Impact on defined benefit obligation
1)
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
0.50%
decrease 6.1%
increase 6.8%
Salary growth rate
0.50%
increase 0.2%
decrease 0.2%
Pension growth rate
0.50%
increase 6.3%
decrease 6.0%
1)
Based on the sensitivity analyses of the Group's most significant pension arrangements. The impacts of the other pension
arrangements are similar.
The above sensitivity analyses are based on a change in an assumption while holding all other
assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions
may be correlated. When calculating the sensitivity of the defined benefit obligation to significant
actuarial assumptions the same method has been applied as when calculating the pension liability
recognised within the statement of financial position.
Plan assets are comprised as follows:
EUR million
2020
2019
Equity instruments
4.6
56
4.5
56
Debt instruments
0.4
5
1.6
20
Investment funds
3.0
37
Cash and cash equivalents
0.2
2
2.0
24
Total plan assets
8.2
100
8.0
100
Employer contributions are expected to be zero in 2021.
Multi-employer plan in Sweden
In
Sweden,
Caverion
participates
in
a
multi
-
employer
defined
benefit
plan
in
Alecta
insu
rance
company. 833 employees of Caverion Sverige AB are insured through this pension plan in the end of
2020. This multi-employer plan has not been able to deliver sufficient information for defined benefit
accounting purposes, thus Caverion has accounted for this pension plan as a contribution plan.
Alecta's possible surplus may be credited to the employer, company or to the employee. The
expected contributions to the plan for the next annual reporting period are EUR 6.0 million.
Through its defined benefit pension plans the Group is exposed to a number of risks, the most
significant of which are detailed below:
Changes in bond yields
Inflation risk
will lead to higher liabilities.
Life expectancy
member, so increases in life expectancy will result in an increase in the plans’ liabilities.
Accounting principles
Caverion Group has several different pension schemes, both defined benefit and defined contribution
pension plans, in accordance with local regulations and practices in countries where it operates.
Contributions to defined contribution pension plans are recognised in the income statement in the
financial period during which the charge is due. Caverion Group has no legal or constructive obligations
to pay further contributions if the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current or prior periods.
The
Group
has
defined
benefit
pension
plans
in
Norway,
Austria,
Germany
and
Finland.
Obligations connected with the Group's defined benefit plans are calculated annually by independent
actuaries using the projected unit credit method. The discount rate used in calculating the present
value of the pension obligation is the market rate of high-quality corporate bonds. The maturity of the
bonds used to determine the reference rate substantially corresponds to the maturity of the related
pension obligation. In defined benefit plans, the pension liability recognised on the balance sheet is
the present value of the defined benefit obligation at the end of the reporting period less the fair value
of the plan assets. Pension expenditure is expensed in the income statement, allocating the costs
over the employment term of the employees. Actuarial gains and losses arising from experience
adjust
ments
and
changes
in
actuarial
assumptions
are
charged
or
credited
to
equity
in
other
comprehensive
income
in
the
period
in
which
they
arise.
Past
service
costs
are
recognised
immediately in the income statement.
Occupational
pensions
in
Sweden
have
been
insured
under
a
pension
scheme
shared
with
numerous employers. It has not been possible to acquire sufficient information on these pension
obligation for allocating the liabilities and assets by employers. Occupational pensions in Sweden
have been treated on a defined contribution basis.
The present value of pension obligations depends on various factors that are determined on an
actuarial
basis
using
a
number
of
assumptions,
including
the
discount
rate.
Changes
in
the
assumptions rate have an effect on the carrying amount of pension obligation. The discount rate used
CAPITAL STRUCTURE
74
Caverion Annual Review 2020
is the market rate of high-quality corporate bonds or the interest rate of treasury notes for the
currency in which the benefits will be realised. The maturity of the instruments used to determine the
reference rate used corresponds substantially to the maturity of the related pension obligation. Other
assumptions are based on actuarial statistics and prevailing market conditions.
5.9
Lease agreements
Set out below are the carrying amounts of the Group's right-of-use assets and their movements
during the period.
Right-of-use assets
EUR million
Buildings and
structures
Cars
Other assets
Total
1 January 2020
81.6
51.6
1.8
135.0
Translation differences
-1.1
-0.6
0.0
-1.7
Acquisitions
0.5
0.2
0.7
Additions
26.3
19.9
0.4
46.6
Disposals and business divestitures
-2.8
-1.2
0.0
-4.0
Depreciation and impairment
-25.0
-25.1
-0.9
-51.0
31 December 2020
79.5
44.6
1.3
125.5
Right-of-use assets
EUR million
Buildings and
structures
Cars
Other assets
Total
1 January 2019
89.0
51.2
1.3
141.6
Translation differences
0.1
0.1
0.0
0.2
Acquisitions
3.0
3.6
1.2
7.7
Additions
14.8
21.5
0.2
36.5
Disposals and business divestitures
-2.2
-0.8
0.0
-3.1
Depreciation and impairment
-23.0
-24.0
-0.9
-47.9
31 December 2019
81.6
51.6
1.8
135.0
In
2020,
the
depreciation
and
impairment
of
right
-
of
-
use
assets
included
EUR
1.1
million
of
impairment relating to the restructuring of premises. No impairments were booked in 2019.
Lease liabilities
EUR million
2020
2019
1 January
136.9
141.5
Translation differences
-1.6
0.0
Acquisitions
0.7
7.7
Additions
46.6
36.5
Disposals and business divestitures
-4.6
-3.1
Interest expenses
4.5
5.1
Payments
-53.2
-50.6
31 December
129.2
136.9
The Group recognised rent expenses from short-term lease liabilities of EUR 3.4 million (EUR 3.4
million) and leases of low-value assets of EUR 2.7 million (EUR 1.5 million) in January-December
2020. The nominal amount of leasing commitments of low-value and short-term leases amounted
to EUR 10.2 million at the end of 2020 (EUR 5.7 million). The present value of lease liability of leases
not yet commenced to which Caverion is committed amounted to EUR 0.1 million at the end of 2020
(EUR 5.9 million).
The Group has subleased some of its leased premises. The income recognised by the Group for
these premises during the year was EUR 0.9 million (EUR 0.3 million in 2019).
Accounting principles
Group as lessee
The
lease
liability
is
initially
measured
at
the
present
value
of
the
remaining
lease
payments,
discounted by using an estimate of the lessee’s incremental borrowing rate at the date of initial
application. Since the interest implicit in the lease contracts is not available, a management estimate
is used to determine the incremental borrowing rate. The components of the rate are the following:
the currency-specific reference rate and the interest margin that is derived from each individual
company’s risk assessment, adjusted to reflect the maturity of the lease contract.
Caverion measures the right-of-use asset at an amount equal to the lease liability. After the initial
measurement,
the
right
-
of
-
use
asset
is
measured
at
cost
less
accumulated
depreciation
and
accumulated impairment.
Caverion does not recognise an IFRS 16 lease liability for leases for which the underlying asset is
not material. The assessment of whether the underlying asset is material and is within the scope or
excluded from the recognition requirements of IFRS 16 is based on the concept of materiality in the
Conceptual Framework and IAS 1. Caverion recognises lease payments associated with such leases
as an expense on a straight-line basis, similar to previous IAS 17 accounting for operating leases.
Caverion does not recognise short-term leases in the balance sheet. Short-term leases are lease
contracts that have a lease term of 12 months or less, and which do not include an option to purchase
the underlying asset. Caverion has analysed lease contracts where the lease term is not fixed but both
the lessor and lessee have an option to terminate the lease within 1-12 months’ notice. Management
CAPITAL STRUCTURE
75
Caverion Annual Review 2020
judgement based on realistic estimates is used when determining the lease term for short-term and
leasing agreements with non-fixed terms. If the termination of the short-term contract is practically
realistic within the time of the notice (1-12 months), those contracts have been excluded from the
lease liability.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components and
instead account for a lease and its associated non-lease components as a single arrangement.
Caverion has used the practical expedient for car leases that include service components. On the other
hand, the non-lease component from real estate lease contracts has been separated and the non-
lease components have been booked as expenses.
Group as lessor
Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and
account for those two types of leases differently. Under IFRS 16, an intermediate lessor is required
to classify the sublease as a finance or operating lease by reference to the right-of-use assets arising
from the head lease (and not by reference to the underlying asset as was the case under IAS 17).
Caverion has not reclassified any of its sublease agreements as finance leases.
5.10
Commitments and contingent liabilities
EUR million
2020
2019
Other commitments
Other contingent liabilities
0.2
0.2
Accrued unrecognised interest on hybrid bond
1.5
1.7
The Group’s parent company has guaranteed obligations of its subsidiaries. On December 31, 2020
the total amount of these guarantees was EUR 454.9 (456.0) million. These consist of counter
guarantees for external guarantees and parent company guarantees given according to general
contracting practices.
Given the nature of Caverion’s Projects business, Group companies are involved in disputes and
legal proceedings in several projects. These disputes and legal proceedings typically concern claims
made against Caverion for allegedly defective or delayed delivery. In some cases, the collection of
receivables by Caverion may result in disputes and legal proceedings. There is a risk that the client
presents counter claims in these proceedings. The outcome of claims, disputes and legal proceedings
is difficult to predict. Write-downs and provisions are booked following the applicable accounting
rules.
In June 2018, Caverion reached a settlement for its part with the German Federal Office (FCO) in
a cartel case that had been investigated by the authority since 2014. The investigation concerned
several companies providing technical building services in Germany. Caverion Deutschland GmbH (and
its predecessors) was found to have participated in anti-competitive practices between 2005 and
2013. According to the FCO’s final decision issued on 3 July 2018, Caverion Deutschland GmbH was
imposed a fine of EUR 40.8 million. In the end of March 2020, the FCO issued its final decision on the
cartel case against the other building technology companies involved in the matter. There is a risk that
civil claims may be presented against the involved companies, including Caverion Deutschland GmbH.
It is not possible to evaluate the magnitude of the risk for Caverion at this time. Caverion will disclose
any relevant information on the potential civil law claims as required under the applicable regulations.
As part of Caverion’s co-operation with the authorities in the cartel matter, the company identified
activities between 2009 and 2011 that were likely to fulfil the criteria of corruption or other criminal
commitment in one of its client projects executed in that time. Caverion has brought its findings to
the attention of the authorities and supported them in further investigating the case. In the end of
June 2020, the public prosecutor's office in Munich informed Caverion that no further investigative
measures are intended and that no formal fine proceedings against Caverion will be initiated related
to those cases There is a risk that civil claims may be presented against Caverion Deutschland GmbH.
It is not possible to evaluate the magnitude of the risk for Caverion at this time. Caverion will disclose
any relevant information on the potential civil law claims as required under the applicable regulations.
Entities participating in the demerger are jointly and severally responsible for the liabilities of the
demerging
entity
which
have
been
generated
before
the
registration
of
the
demerger.
As
a
consequence, a secondary liability up to the allocated net asset value was generated to Caverion
Corporation, incorporated due to the partial demerger of YIT Corporation, for those liabilities that were
generated
before
the
registration
of
the
demerger
and
remain
with
YIT
Corporation
after
the
demerger. Creditors of YIT Corporation’s major financial liabilities have waived their right to claim for
settlement from Caverion Corporation on the basis of the secondary liability. Caverion Corporation
has a secondary liability relating to the Group guarantees which remain with YIT Corporation after the
demerger. These Group guarantees amounted to EUR 19.7 (30.9) million at the end of December
2020.
76
Caverion Annual Review 2020
6
Others
In this section
This section comprises the following notes:
......................................................
KEY MANAGEMENT
COMPENSATION
77
Caverion Annual Review 2020
6.1
Key management compensation
Key management includes members of the Board of Directors and Group Management Board of
Caverion
Corporation.
The
compensation
paid
to
key
management
for
employee
services
is
presented below:
EUR million
2020
2019
Salaries and other short-term employee benefits
5.2
4.8
Post-employment benefits
0.1
0.1
Termination benefits
0.2
0.6
Share-based payments
1)
0.6
5.0
Total
6.1
10.7
1)
The total value of transferred shares, cash bonus and transfer tax.
More detailed information on share-incentive schemes has been presented in note 6.2 Share-
based payments.
Compensation paid for the members of the Board of Directors and President and CEO
EUR million
2020
2019
President and CEO
Lehtoranta Ari
1.0
2.5
Members of the Board of Directors
Aho Jussi
0.1
0.1
Ehrnrooth Markus
0.1
0.1
Hallengren Joachim
0.1
0.1
Herlin Antti, member of the Board until 25 May 2020
0.0
0.1
Hinnerskov Thomas
0.1
0.1
Hyvönen Anna, member of the Board until 25 May 2020
0.0
0.1
Jahn Kristina, member of the Board as from 25 May 2020
0.0
Paulsson Mats, Chairman of the Board as from 25 March 2019
0.1
0.1
Rosenlew Michael, member and Chairman of the Board until 25
March 2019
0.0
Soravia Jasmin, member of the Board as from 25 May 2020
0.0
Total
0.4
0.5
Board membership fees for periods 25.5.2020-24.3.2021 and 26.3.2019-25.5.2020 were paid as
annual fees, 50% of which were paid as cash and 50% in Caverion shares according to the decision
by the Annual General Meeting. Due to the transition to a share-based payment, the Board
members exceptionally received payment in relation to two separate Board membership periods
during 2019.
Termination compensation, pensions and retirement age of the President and CEO
The President and CEO’s notice period for both parties is six months. Severance pay (if the company
terminates the agreement) is compensation amounting to 12 months’ base salary as monthly
payments after the termination date. Ari Lehtoranta has a supplementary defined contribution
pension plan, annual contribution being 20% of the base salary. Retirement age is 63 years.
Other members of the Group Management Board do not have any supplementary executive
pension schemes and the statutory retirement age applies.
Remuneration of the President and CEO and Group Management Board
President and CEO Ari Lehtoranta's total monthly salary is 55,000 EUR including fringe benefits. In
2020, Ari Lehtoranta did not receive any share payments in relation to share-based incentive plans.
In
2019,
a
share
payment
of
23,622
Restricted
Share
Units
was
made
to
Ari
Lehtoranta
in
accordance with the terms and conditions of Caverion's long-term incentive plan approved by the
Board of Directors on 1 January 2017 and a payment of 93,498 shares from the Matching Share
Plan was made in accordance with the terms and conditions of Caverion's long-term incentive plan
approved by the Board of Directors on 6 February 2018.
In 2020, a total of 18,615 shares were transferred to the Group Management Board from the
Restricted
Share
Plans
2016
-
2018
and
2017
-
2019
according
to
the
terms
and
conditions
approved by the Board of Directors on 18 December 2015 and 20 December 2016. In 2019, a total
of 233,882 shares were transferred to other members of the Group Management Board from the
Matching
Share
Plan
in
accordance
with
the
terms
and
conditions
of
Caverion's
long
-
term
incentive plan approved by the Board of Directors on 6 February 2018.
EUR million
Fixed base
salary
Fringe
benefits
Short-term
Incentive
Share-based
payments
Total
2020
Group Management Board
members excluding President and
CEO
1)
3.0
0.1
1.0
0.2
4.4
1)
Includes the members’ total remuneration for the period they have been members of the Group Management Board
Due to the increased uncertainty around the market outlook as a result of the corona pandemic,
the President and CEO and the top management of Caverion also decided to voluntarily lower their
compensation for 2020 in the spring of 2020.
In addition to the above compensation, some of the Group Management Board members are
part of country specific group pension arrangements.
Also,
a
total
of
EUR
0.2
million
of
compensation
related
to
the
termination
of
Group
Management Board members' employment was paid during financial year 2020 (EUR 0.6 million
in 2019).
Additional information of Management remuneration is presented in the parent company
financial statements.
SHARE-BASED PAYMENTS
78
Caverion Annual Review 2020
6.2
Share-based payments
Caverion has long-term share-based incentive plans for the company’s key senior executives. The
performance
share
plans
form
a
part
of
the
incentive
and
commitment
programme
for
the
management and key personnel of Caverion Group. The key aim is to align the interests of the
shareholders and the executives in order to promote shareholder value creation and to support
Caverion in reaching its targets. In addition, the aim is to commit the key executives to the company
and its strategic targets and to offer them a competitive reward plan based on the ownership of
the company’s shares.
Caverion’s Board of Directors approved a rolling long-term share-based incentive plan for the
Group’s senior management and key employees in December 2015. The share-based incentive
plan consisted of a Performance Share Plan (PSP) as the main structure, supported by a Restricted
Share Plan (RSP) as a complementary structure for specific situations. Both plans consisted of
annually commencing individual plans, each lasting a three-year period. The Board of Directors
decided to continue said incentive structure in December 2016 and in December 2017. The targets
set for the first and second Performance Share Plan 2016–2018 and 2017−2019 were not met
and, therefore, no rewards were paid. The targets set for the Performance Share Plan 2018−2020
were partially met and the respective share rewards will be delivered in February 2021.
Caverion’s Board of Directors approved the establishment of a new share-based long-term
incentive plan for key employees of the Group in December 2018. The new plan is based on a
performance
share
plan
(PSP)
structure.
At
the
same
time,
t
he
Board
approved
the
commencement of a new plan period 2019−2021 in the Restricted Share Plan (RSP) structure, a
complementary share-based incentive structure for specific situations.
The
potential
share
rewards
under
the
first
plan
(PSP
2019−2021)
within
the
new
PSP
structure will be paid in the spring 2022 provided that the performance targets set by the Board
a
re
achieved.
The
performance
target
KPI’s
are
the
relative
total
shareholder
return
of
the
Company’s share and earnings per share. If all targets are met, the share rewards based on PSP
2019−2021 will comprise a maximum of approximately 1.3 million Caverion shares (gross before
the deduction of applicable taxes).
In December 2019, Caverion's Board of Director's approved the commencement of a new plan
period 2020-2022 (Performance Share Plan 2020-2022) in the share-based long-term incentive
scheme originally established in December 2018. The scheme is based on a performance share
plan structure and may include a maximum of approximately 90 key employees of Caverion Group.
The
plan
comprises
a
three
-
year
performance
period
which
is
followed
by
the
payment
of
potentially attained share reward. The performance targets, based on which the potential share
rewards
under
PSP
2020
-
2022
will
be
pai
d,
are
the
relative
total
shareholder
return
of
the
Company's share and earnings per share. If all targets are met, the share rewards based on PSP
2020-2022 will comprise a maximum of approximately 1.6 million Caverion shares (gross before
the deduction of applicable taxes) delivered in the spring of 2023. However, on 30 April 2020,
Caverion's
Board
of
Dir
ectors
decided,
upon
management's
suggestion,
to
postpone
the
commencement of PSP 2020-2022 until the beginning of the year 2021.
In
addition
to
PSP
2020
-
2022,
Caverion's
Board
o
f
Directors
also
approved
the
commencement of a new plan period in the Restricted Share Plan structure (Restricted Share Plan
2020-2022) in December 2019. The plan is a complementary share-based incentive structure for
specific situations and any potential share rewards will be delivered in the spring of 2023.
The Restricted Share Plan is based on a rolling plan structure originally announced on 18
December 2015 and the commencement of each new plan within the structure is conditional on a
separate Board approval. Share allocations within the Restricted Share Plan will be made for
individually selected key employees in specific situations. Each RSP plan consists of a three-year
vesting
period
after
which
the
allocated
share
rewards
will
be
delivered
to
the
participants
provided that their employment with Caverion continues until the delivery of the share reward. The
potential
share
rewards
based
on
the
Restricted
Share
Plans
for
2016−2018,
2017−2019,
2018−2020, 2019−2021 as well as 2020−2022 total a maximum of approximately 601,200
shares (gross before the deduction of applicable payroll tax). Of these plans, a maximum of 85,000
shares will be delivered in the spring 2021, a maximum of 135,000 shares in the spring 2022 and
a maximum of 230,000 shares in the spring 2023.
In a stock exchange release on 7 February 2018, Caverion announced the establishment of a
share-based incentive plan directed at the key employees of the Group (“Matching Share Plan
2018−2022”). The aim of the plan is to align the objectives of the shareholders and the key
employees in order to increase the value of the company in the long-term, to encourage the key
employees to personally invest in the company’s shares, to retain them at the company and to
offer
them
a
competitive
reward
plan
that
is
based
on
acquiring,
receiving
and
holding
the
company’s shares. The prerequisite for participating in the Plan is that a key employee shall acquire
company shares up to the number and in the manner determined by the Board of Directors. The
plan
participant
may
not
participate
in
the
Performance
Share
Plan
simultaneously
with
participating in the Matching Share Plan. The rewards from the plan will be paid in four instalments,
one instalment each in 2019, 2020, 2021 and 2022. However, the reward payment will be
deferred, if a yield of the share has not reached the pre-set minimum yield level by the end of the
matching period in question.
SHARE-BASED PAYMENTS
79
Caverion Annual Review 2020
Plan
Performance share
programme
2019
Performance
share plan
2016-2020
Restricted share plan
Matching share
plan 2018-2022
Instrument
Performance
share plan
2019-2021
Performance
share plan
2018-2020
Restricted share
plan 2020-2022
Restricted share
plan 2019-2021
Restricted share
plan 2018-2020
Restricted share
plan 2017-2019
Restricted share
plan 2016-2018
Matching share
plan 2018-2022
Issuing date
Dec 17, 2018
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Feb 6, 2018
Maximum number of shares
1,301,250
850,000
230 000
135,000
85,000
85,000
66,200
2,520,000
Dividend adjustment
No
Yes
No
No
No
No
No
Yes
Grant date
Apr 3, 2019
Feb 28, 2018
May 18, 2020
Apr 12, 2019
Jun 12, 2018
Jun 16, 2017
Jan 1, 2017
Mar 1, 2018
Beginning of earning period
Jan 1, 2019
Jan 1, 2018
Jan1, 2020
Jan 1, 2019
Jan 1, 2018
Jan 1, 2017
Jan 1, 2016
Mar 1, 2018
End of earning period
Dec 31, 2021
Dec 31, 2018
Dec 31, 2022
Dec 31, 2021
Dec 31, 2020
Dec 31, 2019
Dec 31, 2018
Dec 31, 2022
End of restriction period
Apr 30, 2022
Feb 28, 2021
Feb 28, 2023
Feb 28, 2022
Feb 28, 2021
Feb 28, 2020
Jun 30, 2020
Jul 1, 2022
Vesting conditions
Relative total
shareholder return
(TSR), earnings per
share (EPS),
continued
employment
Earnings per share
(EPS), operating
cash flow before
financial and tax
items, continued
employment
Division EBITA
for selected
participants,
continued
employment
continued
employment
continued
employment
continued
employment
continued
employment
Minimum yield of
the share,
continued
employment
Maximum contractual life,
years
3.3
3.2
3.2
3.2
3.2
3.2
3.2
4.8
Remaining contractual life,
years
1.3
0.2
2.2
1.2
0.2
-
-
2.0
Number of persons at the end
of the reporting year
67
81
14
26
17
-
-
18
Payment method
Cash and shares
Cash and shares
Cash and shares
Cash and shares
Cash and shares
Cash and shares
Cash and shares
Cash and shares
Changes in plan during the period
Outstanding at the beginning
of the reporting period, January
1, 2020
935,000
70,808
-
97,000
84,500
84,500
12,000
1,458,885
Changes during the period
Granted
115,000
15,000
Forfeited
55,000
6,629
8,000
5,000
26,374
Earned (gross)
84,500
12,000
Outstanding at the end of the
period, December 31, 2020
880,000
64,179
115,000
104,000
79,500
-
-
1,432,511
RELATED PARTY TRANSACTIONS
80
Caverion Annual Review 2020
In 2019, Caverion's Board of Directors decided on share issues without consideration in which 23,622
Caverion Corporation shares were conveyed to a key person participating in the Restricted Share Plan
2016–2018 and 391,469 shares to key employees included in the Matching Share Plan 2018–2022.
In 2020, Caverion's Board of Directors decided on two directed share issues without consideration
for the payment of the reward instalments from Caverion's share plans. On 27 February 2020, a total
of 39,127 Caverion shares held by the company were conveyed to 16 key employees according to the
terms and conditions of the Restricted Share Plan 2017-2019. On 26 June 2020, a total of 6,673
shares
were
conveyed
to
a
ke
y
employee
in
accordance
with
the
terms
and
conditions
of
the
Restricted Share Plan 2016-2018. In addition, a total of 4,431 shares were returned to Caverion
during 2020 in relation to the December 2019 share issue in which shares held by the company were
conveyed as payment for the Matching Share Plan 2018-2022.
Costs recognised for the share-based incentive plans
The consolidated financial statements include costs from share plans amounting to EUR 2.8 (3.4)
million. EUR 1.9 (1.9) million of the cost recognised is related to the Group Management Board.
Performance and Restricted Share Plan 2021-2023
Caverion’s Board of Directors approved in December 2020 the commencement of a new plan period
2021–2023 in the share-based long-term incentive scheme originally established in December 2018.
The
scheme
is
based
on
a
performance
share
plan
(PSP)
structure
targeted
to
C
averion’s
management and selected key employees. The Board approved at the same time the commencement
of
a
new
plan
period
2021
–
2023
in
the
Restricted
Share
Plan
(RSP)
structure,
which
is
a
complementary share-based incentive structure for specific situations. Any potential share rewards
based on PSP 2021–2023 and RSP 2021–2023 will be delivered in the spring 2024. PSP 2021–2023
may include a maximum of approximately 90 key employees of Caverion Group. The performance
targets, based on which the potential share rewards under PSP 2021–2023 will be paid, are the
relative total shareholder return of the Company’s share and earnings per share. If all targets will be
met, the share rewards based on PSP 2021–2023 will comprise a maximum of approximately 1.6
million Caverion shares (gross before the deduction of applicable taxes) and the share rewards based
on RSP 2021-2023 will comprise a maximum of approximately 165,000 Caverion shares (gross
before the deduction of applicable taxes).
Accounting principles
Caverion has share-based incentive plans for its management and key employees.
The Performance Share Plan structure contains a maximum value for the share reward payable
to an individual participant. If the value of the share reward would at the time of payment exceed a
maximum value set by the Board, the exceeding portion of the reward will not be paid. A person
participating in the plan has the possibility to earn a share reward only if his/her employment
continues until the payment of the reward.
Share allocations within the Restricted Share Plan will be made for individually selected key
employees in special situations. Under the complementary Restricted Share Plan structure, each
individual plan consists of a three-year vesting period after which the allocated share rewards will be
delivered
to
the
participants
provided
that
their
employment
with
Caverion
continues
until
the
delivery of the share reward.
The prerequisite for participating in the Matching Share Plan is that a key employee acquires
company shares up to the number and in the manner determined by the Board of Directors. The plan
participant may not participate in the Performance Share Plan simultaneously with participating in
the Matching Share Plan. Receiving of the reward is tied to the continuance of the participant’s
employment or service upon reward payment.
The equity-settled and cash-settled share-based payments are valued based on the market price
of Caverion share as of the grant date and are recognised as an employee benefit expense over the
vesting period with corresponding entry in equity.
6.3
Related party transactions
Caverion
announced
in
February
2018
the
establishment
of
a
new
share
-
based
incentive
plan
directed for the key employees of the Group (“Matching Share Plan 2018-2022”). The company
provided the participants a possibility to finance the acquisition of the company’s shares through an
interest-bearing loan from the company, which some of the participants utilised. By the end of
December 2020 the total outstanding amount of these loans amounted to approximately EUR 4.3
(4.5) million. The loans will be repaid in full on 31 December 2023, at the latest. Company shares have
been pledged as a security for the loans. As a result, Caverion had 689,056 Caverion Corporation
shares as a pledge at the end of the reporting period on 31 December 2020.
Share
-
based
incentive
plans
have
been
described
in
more
detail
in
note
6.2
Share
-
based
payments.
Transactions with key management and entities controlled by key management
EUR million
2020
2019
Sale of goods and services
0.1
0.1
Purchase of goods and services
0.9
1.4
Receivables
4.4
4.5
Liabilities
0.0
0.0
Caverion has a 10-month fixed term contract with a member of the Board concerning consultancy
services. The value of the contract is not material.
All transactions with entities controlled by key management personnel have been carried out on
normal market terms and conditions and at market prices. Transactions with associated companies
are listed in note 5.7. Investments in associated companies.
INCOME STATEMENT AND BALANCE SHEET
81
Caverion Annual Review 2020
Income statement,
Parent company, FAS
EUR
Note
1.1.-31.12.2020
1.1.-31.12.2019
Other operating income
1
53,115,385.74
59,624,319.46
Personnel expenses
2
-10,993,100.54
-15,208,556.34
Depreciation, amortisation and impairments
3
-1,055,069.79
-1,562,303.55
Other operating expenses
4
-44,644,172.63
-49,930,809.68
Operating profit / loss
-3,576,957.22
-7,077,350.11
Financial income and expenses
5
-20,627,683.05
-19,092,056.87
Profit/loss before appropriations and taxes
-24,204,640.27
-26,169,406.98
Appropriations
6
18,186,674.91
11,030,188.36
Income taxes
7
-2 124,172.21
-156,730.97
Profit/loss for the financial period
-8,142,137.57
-15,295,949.59
Balance sheet,
Parent company, FAS
EUR
Note
31.12.2020
31.12.2019
Assets
Non-current assets
Intangible assets
8
5,502,240.57
3,636,009.21
Tangible assets
8
1,038,487.72
1,460,045.70
Investments
9
474,895,943.00
488,546,092.23
Total non-current assets
481,436,671.29
493,642,147.14
Current assets
Non-current receivables
10
21,284,953.81
21,014,114.51
Current receivables
11
60,943,024.39
78,894,414.37
Cash and cash equivalents
115,773,623.33
67,105,222.23
Total current assets
198,001,601.53
167,013,751.11
Total assets
679,438,272.82
660,655,898.25
Equity and liabilities
Equity
12
Share capital
1,000,000.00
1,000,000.00
Unrestricted equity reserve
66,676,176.49
66,676,176.49
Retained earnings
104,602,802.88
119,979,813.78
Profit/loss for the period
-8,142,137.57
-15,295,949.59
Treasury shares
-2,775,128.82
-3,077,109.63
Total equity
161,361,712.98
169,282,931.05
Appropriations
13
67,160.67
253,835.58
Liabilities
Non-current liabilities
15
170,499,999.99
191,059,999.99
Current liabilities
16
347,509,399.18
300,059,131.63
Total liabilities
518,009,399.17
491,119,131.62
Total equity and liabilities
679,438,272.82
660,655,898.25
CASH FLOW STATEMENT
82
Caverion Annual Review 2020
Cash flow statement, Parent company, FAS
EUR
1.1.-31.12.2020
1.1.-31.12.2019
Cash flow from operating activities
Profit / loss before appropriations and taxes
-24,204,640.27
-26,169,406.98
Adjustments for:
Depreciation, amortisation and impairments
1,055,069.79
1,562,303.55
Other adjustments
220,764.86
236,307.08
Financial income and expenses
20,627,683.05
19,092,056.87
Cash flow before change in working capital
-2,301,122.57
-5,278,739.48
Change in working capital
Change in trade and other current receivables
6,898,198.59
-1,740,459.79
Change in trade and other current payables
-1,612,841.98
-852,069.71
Cash flow before financial items and taxes
2,984,234.04
-7,871,268.98
Cash flow from operating activities
Interest paid and other financial expenses
-34,743,011.48
-24,602,279.77
Dividends received
3,289,000.00
5,216,756.22
Interest received and other financial income
31,178,731.72
21,108,951.56
Income taxes paid
-100,246.58
-131,432.03
Cash flow from operating activities
2,608,707.70
-6,279,273.00
EUR
1.1.-31.12.2020
1.1.-31.12.2019
Cash flow from investing activities
Purchases of tangible and intangible assets
-11,720,024.28
-9,095,017.74
Proceeds from the sales of tangible and intangible
assets
9,220,281.11
6,827,932.08
Investments in subsidiaries
-6,349,850.77
-77,477,662.04
Cash flow from investing activities
-8,849,593.94
-79,744,747.70
Cash flow from financing activities
Group contributions received
10,600,000.00
9,000,000.00
Repayment of non-current borrowings
-32,560,000.00
-92,606,666.66
Change in non-current loan receivables
-270,839.30
43,115,866.37
Proceeds from non-current borrowings
10,500,000.00
125,000,000.00
Change in short-term financing
66,640,126.64
38,398,174.98
Dividends paid
0.00
-6,783,403.51
Cash flow from financing activities
54,909,287.34
116,123,971.18
Net change in cash and cash equivalents
48,668,401.10
30,099,950.48
Cash and cash equivalents at the beginning of the
financial year
67,105,223.23
37,005,271.75
Cash and cash equivalents at the end of the financial
year
115,773,623.33
67,105,222.23
NOTES
83
Caverion Annual Review 2020
Notes to the financial statements, Parent company
Caverion Corporation accounting principles
The financial statements have been prepared in accordance with the Finnish accounting standards
(FAS).
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rate
prevailing on the date of the transaction. The balance sheet has been translated using the European
Central Bank rates on the closing date.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within “Financial income and expenses”.
Valuation of assets
Intangible and tangible assets are recognized in the balance sheet at original acquisition cost less
planned depreciation and amortisation and possible impairment.
Planned
depreciation
and
amortisation
are
calculated
using
the
straight
-
line
method
over
the
estimated useful lives of the assets.
The estimated useful lives of assets are the following:
Intangible assets
2-5 years
Buildings and structures
10 years
Machinery and equipment
3 years
Investments in subsidiaries as well as other investments are recognized at original acquisition cost or
at fair value if fair value is lower than acquisition cost.
Income recognition
The parent company’s income consists of services provided to Group subsidiaries. These service sales
are
booked
to
other
operating
income.
The
income
is
recognized
once
the
services
have
been
provided.
Future expenses and losses
Future expenses and losses which relate to the current or previous financial years and which are likely
or certain to materialize and do not relate to a likely or certain future income, are recognized as an
expense in the appropriate income statement category. When the precise amount or timing of the
expenses is not known, they are recorded as provisions in the balance sheet.
Accrual of pension costs
The pension cover of the parent company is handled by external pension insurance companies.
Pension costs are recognized in the income statement in the year to which these contributions relate.
Loans and other receivables
Loans and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Loans and receivables are included in current assets, except
for maturities greater than 12 months after the reporting period end. These are classified as non-
current. The assets are recognized at acquisition cost, and transaction costs are expensed in the
income statement over the period of the loan to which they relate.
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of the business. If collection is expected in 12 months or less, they are classified
as current. If not, they are classified as non-current.
Cash and cash equivalents include cash in hand, bank deposits withdrawable on demand and
other liquid short-term investments with original maturities of three months or less.
Financial liabilities and other liabilities
Hybrid bond is presented as a financial liability in the balance sheet of the parent company’s financial
statements. Borrowings are recorded on the settlement date at acquisition cost, and transaction
costs are expensed in the financing expenses of the statement of income over the period of the
liability to which they relate. Other borrowing costs are expensed in the period during which they are
incurred. Fees paid on the establishment of loan facilities are recognised as an expense over the
period of the facility to which they relate. Borrowings are derecognised when their contractual
obligations are discharged, cancelled or expire.
Borrowings are classified as current liabilities if payment is due within 12 months or less. If not,
they are classified as non-current.
NOTES
84
Caverion Annual Review 2020
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of the business from suppliers. Accounts payable are classified as current liabilities if payment
is due within 12 months or less. If not, they are presented as non-current liabilities. Trade payables
are recognized at acquisition cost.
Derivative instruments
Derivative contracts that are used to hedge currency and interest rate risks are valued at fair value.
The fair values of foreign exchange derivatives are presented in Note 18 Derivative instruments. At
the end of December 2020 Caverion has not used interest rate derivatives to hedge interest rate risk.
Foreign exchange derivatives are used to hedge against changes in forecasted foreign currency
denominated cash flows and changes in value of receivables and liabilities in foreign currency. Foreign
exchange derivatives are valued employing the market forward exchange rates quoted on the balance
sheet
date.
Foreign
exchange
gains
and
losses
related
to
business
operations
are
included
in
operating profit. Foreign exchange gains and losses associated with financing are reported in financial
income and expenses. Foreign exchange derivatives mature within 2021. Hedge accounting is not
applied to foreign exchange derivatives.
Income taxes
Income taxes relating to the financial year are recognized in the income statement. Deferred taxes
have not been booked in the parent company`s financial statements.
NOTES TO THE INCOME STATEMENT
85
Caverion Annual Review 2020
Notes to the income statement, Parent company
1.
Other operating income
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Service income
53,115.4
59,624.3
Total
53,115.4
59,624.3
2.
Information concerning personnel and key management
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Personnel expenses
Wages and salaries
9,428.0
12,925.3
Pension expenses
1,550.6
2,004.2
Other indirect personnel costs
14.5
279.0
Total
10,993.1
15,208.6
Average number of personnel during the financial period
82,5
85
Salaries and fees to the management
President and CEO
1,110.5
2,608.0
Members of the Board of Directors
429.3
524.3
Total
1,539.8
3,132.4
3.
Depreciation, amortisation and impairments
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Amortisation of intangible assets
606.4
1,119.4
Depreciation of buildings and structures
16.1
16.1
Depreciation of machinery and equipment
432.6
426.8
Total
1,055.1
1,562.3
4.
Other operating expenses
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Fees paid to the Auditor of the company
Audit fee
334.2
250.0
Tax services
2.0
0.0
Other services
2.6
23.4
Total
338.8
273.5
Ernst & Young Oy, Authorized Public Accountants, operated as the company’s auditor.
5.
Financial income and expenses
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Dividend income
From Group companies
3,289.0
4,476.6
Interest income from non-current investments
From Group companies
545.2
1,751.3
From others
71.0
84.6
Total
616.1
1,835.9
Other interest and financial income
From Group companies
3,100.7
3,211.0
From others
118.5
297.8
Total
3,219.1
3,508.8
Impairment on investment assets
Subsidiary shares
-20,000.0
-20,000.0
Total
-20,000.0
-20,000.0
Other interest and financial expenses
Interest expenses to Group companies
-348.2
-758.0
Interest expenses to others
-6,340.3
-6,702.1
Other expenses to others
-1,337.7
-2,135.7
Total
-8,026.1
-9,595.9
Exchange rate gains
27,135.8
15,903.9
Change in the fair value of derivatives
367.9
1,577.1
Exchange rate losses
-26,493.8
-16,798.5
Total
274.2
682.5
Total financial income and expenses
-20,627.7
-19,092.1
NOTES TO THE BALANCE SHEET
86
Caverion Annual Review 2020
Notes to the balance sheet, Parent company
6.
Appropriations
1,000 EUR
1.1.-31.12.2020
1.1.-31.12.2019
Change in the difference between planned and taxation
depreciation
186.7
430.2
Group contributions received
18,000.0
10,600.0
7.
Income taxes
1,000 EUR
1.1.-31.12.2020
1.-31.12.2019
Income taxes on operating activities, current year
-2,124,2
-77.9
Income taxes on operating activities, previous years
0.0
-78.8
Total
-2,124.2
-156.7
8.
Changes in fixed assets
1,000 EUR
31.12.2020
31.12.2019
Intangible assets
Intangible rights
Acquisition cost on Jan 1
10,883.9
10,789.8
Additions
3,634.1
94.0
Disposals
Acquisition cost on Dec 31
14,518.0
10,883.9
Accumulated amortisation and impairments on Jan 1
-10,619.6
-9,511.8
Amortisation for the period
-579.9
-1,107.8
Accumulated amortisation for disposals
Accumulated amortisation and impairments on Dec 31
-11,199.5
-10,619.6
Book value on December 31
3,318.5
264.3
Renovations
Acquisition cost on Jan 1
251.8
0.0
Additions
0.0
251.8
Disposals
0.0
0.0
Book value on December 31
251.8
251.8
Accumulated amortisation and impairments on Jan 1
-11.6
0.0
Amortisation for the period
-26.5
-11.6
Accumulated amortisation for disposals
Accumulated amortisation and impairments on Dec 31
-38.1
-11.6
Book value on December 31
213.8
240.2
Advance payments and construction in progress
Acquisition cost on Jan 1
3,131.5
2,524.3
Additions
8,058.8
7,572.9
Disposals
-9,220.3
-6,965.7
Acquisition cost on Dec 31
1,970.0
3,131.5
Book value on December 31
1,970.0
3,131.5
Total intangible assets
5,502.2
3,636.0
NOTES TO THE BALANCE SHEET
87
Caverion Annual Review 2020
9.
Investments
1,000 EUR
31.12.2020
31.12.2019
Tangible assets
Land and water areas
Acquisition cost on Jan 1
109.8
109.8
Additions
Disposals
,
,
Acquisition cost on Dec 31
109.8
109.8
Book value on December 31
109.8
109.8
Buildings and structures
Acquisition cost on Jan 1
160.9
160.9
Additions
Disposals
,
,
Acquisition cost on Dec 31
160.9
160.9
Accumulated depreciation and impairments on Jan 1
-104.6
-88.5
Depreciation for the period
-16.1
-16.1
Accumulated depreciation and impairments on Dec 31
-120.7
-104.6
Book value on December 31
40.2
56.3
Machinery and equipment
equipment
Acquisition cost on Jan 1
1,891.6
715.4
Additions
27.2
1,188.3
Disposals
0.0
-12.1
Acquisition cost on Dec 31
1,981.8
1,891.6
Accumulated depreciation and impairments on Jan 1
-597.7
-183.1
Depreciation for the period
-432.6
-414.7
Accumulated depreciation and impairments on Dec 31
-1,030.4
-597.7
Book value on December 31
888.4
1,293.9
Total tangible assets
1,038.5
1,460.0
1,000 EUR
31.12.2020
31.12.2019
Shares in Group companies
Acquisition cost on Jan 1
488,546.1
501,558.5
Additions
6,349.9
6,987.6
Impairments
-20,000.0
-20,000.0
Acquisition cost on Dec 31
474,895.9
488,546.1
Total investments
474,895.9
488,546.1
10.
Non-current receivables
1,000 EUR
31.12.2020
31.12.2019
Receivables from Group companies
Loan receivables
17,000.0
16,500.0
Receivables from associated personnel
Loan receivables
4,285.0
4,514.1
Total non-current receivables
21,285.0
21,014.1
Loan arrangements with Group key personnel are descriped in more detail in Note 19 Salaries and
fees to the management.
11.
Current receivables
1,000 EUR
31.12.2020
31.12.2019
Receivables from group companies
Trade receivables
12,238.5
19,342.5
Loan receivables
23,489.6
41,479.0
Other receivables
18,380.5
11,115.0
Receivables, external
Trade receivables
8.3
20.7
Other receivables
932.0
893.3
Accrued income
5,895.1
6,044.0
Total
60,944.0
78,894.5
Accrued income consists of:
Accrued financial expenses
553.5
647.5
Other receivables
5,341.6
5,396.5
Total
5,895.1
6,044.0
NOTES TO THE BALANCE SHEET
88
Caverion Annual Review 2020
12.
Equity
1,000 EUR
31.12.2020
31.12.2019
Share capital on Jan 1
1,000.0
1,000.0
Share capital on Dec 31
1,000.0
1,000.0
Unrestricted equity reserve on Jan 1
66,676.2
66,676.2
Unrestricted equity reserve on Dec 31
66,676.2
66,676.2
Retained earnings on Jan 1
101,606.8
123,686.7
Share-based incentive plans
-81.1
-136.9
Dividend distribution
0.0
-6,784.0
Distribution of own shares
302.0
136.9
Retained earnings on Dec 31
101,827.7
116,902.7
Net profit for the financial period
-8,142.1
-15,295.9
Fair value reserve on Jan 1
0.0
-98.6
Cash flow hedges
0.0
98.6
Fair value reserve on Dec 31
0.0
0.0
Total equity
161,361.7
169,282.9
Distributable funds on Dec 31
Retained earnings
101,827.7
116,902.7
Net profit for the financial period
-8,142.1
-15,295.9
Unrestricted equity reserve
66,676.2
66,676.2
Distributable funds from shareholders' equity
160,361.7
168,282.9
Treasury shares of Caverion Corporation
December 31, 2020 parent company had treasury shares as follows:
Number
Total number
of shares
% of total
share capital
and voting rights
2,807,991
138,920,092
2.02%
13.
Appropriations
1,000 EUR
31.12.2020
31.12.2019
Accumulated depreciation difference on Jan 1
253.8
684.0
Increase / decrease
-186.7
-430.2
Accumulated depreciation difference on Dec 31
67.2
253.8
14.
Deferred taxes and liabilities
1,000 EUR
31.12.2020
31.12.2019
Deferred tax assets
Tax losses
Total
Deferred tax liabilities
Accumulated depreciation difference
13.4
50.8
Total
13.4
50.8
Deferred taxes have not been recognized in the parent company’s financial statements.
15.
Non-current liabilities
1,000 EUR
31.12.2020
31.12.2019
Liabilities to Group companies
Other loans
10,500.0
0.0
Liabilities, external
Loans from credit institutions
50,000.0
50,000.0
Hybrid bond
35,000.0
66,060.0
Senior bond
75,000.0
75,000.0
Derivative liabilities
Total
170,500.0
191,060.0
NOTES TO THE BALANCE SHEET
89
Caverion Annual Review 2020
16.
Current liabilities
1,000 EUR
31.12.2020
31.12.2019
Liabilities to Group companies
Trade payables
501.0
768.1
Accrued expenses
110.3
460.5
Other liabilities
331,551.9
284,327.3
Liabilities, external
Trade payables
3,369.5
2,703.2
Other current liabilities
2,324.5
1,138.2
Accrued expenses
9,652.2
10,661.8
Total
347,509.4
300,059.1
Accrued expenses consist of:
Personnel expenses
2,838.8
4,212.8
Interest expenses
3,471.3
3,704.9
Accrued expenses to group companies
110.3
460.5
Other expenses
3,342.1
2,744.2
Total
9,762.5
11,122.3
17.
Commitments and contingent liabilities
1,000 EUR
31.12.2020
31.12.2019
Leasing commitments
Payable during the next fiscal year
2,490.1
2,689.6
Payable during subsequent years
22,237.2
20,873.1
Total
24,727.3
23,562.7
Guarantees
On behalf of Group companies
Contractual work guarantees
454.880.0
444,870.4
Loan guarantee
13,500.0
0.0
Leasing commitment guarantees
17,101.9
8,759.9
Factoring related guarantees
1,316.9
2,353.9
18.
Derivate instruments
1,000 EUR
31.12.2020
31.12.2019
External foreign currency forward contracts
Fair value
414.4
716.5
Value of underlying instruments
70,165.6
66,718.6
Internal foreign currency forward contracts
Fair value
-65.9
-0.1
Value of underlying instruments
2,644.9
3,376.5
Derivative instruments are categorized to be on Level 2 in the fair value hierarchy. The fair values for
the derivative instruments categorized in Level 2 have been defined as follows: The fair values of
foreign exchange forward agreements have been defined by using the market prices at the closing
day of the fiscal year.
NOTES TO THE BALANCE SHEET
90
Caverion Annual Review 2020
19.
Salaries and fees to the management
Decision-making procedure regarding remuneration
Caverion
Corporation’s
Annual
General
Meeting
decides
on
the
remuneration
of
the
Board
of
Directors. The Human Resources Committee of the Board of Directors prepares the proposal on the
remuneration of the Board of Directors for the Annual General Meeting. The Human Resources
Committee
also
prepares
the
general
remuneration
principles,
short
a
nd
long
-
term
incentive
schemes and the Remuneration Policy of Caverion Group which is approved by the Board of Directors.
The
Board
of
Directors
appoints
the
President
and
CEO
and
approves
his/her
terms
of
employment including remuneration. The Board of Directors also appoints the members of the Group
Management Board. According to Caverion Guidelines all individual remuneration decisions have to
be approved by the manager’s manager. The Chairman of the Board approves the remuneration of
the Group Management Board members.
Remuneration of the Board of Directors
Based on the decisions of Caverion Corporation's Annual General Meeting on May 25, 2020, the
members
of
the
Board
of
Directors
are
entitled
to
the
following
fees:
:
>
Chairman of the Board of Directors EUR 6,600 per month (EUR 79,200 per year)
>
Vice Chairman of the Board of Directors EUR 5,000 per month (EUR 60,000 per year)
>
Members of the Board of Directors EUR 3,900 per month (EUR 46,800 per year)
A meeting fee of EUR 550 is paid for each Board and Committee meeting held in the member’s
domicile or electronically and EUR 900 per meeting held outside the member’s domicile in addition to
the associated travel costs. In addition to and separate from the role as the Chairman of the Board
and Chairman of the HR Committee, a company solely owned by Mats Paulsson, Nääs Förvaltning AB
has
a
consulting
agreement
with
the
Company.
The
agreement
is
effective
from
1.6.2020
to
31.3.2021. Nääs Förvaltning AB has been paid consulting fees of EUR 70,000 during 2020. The
consulting agreement has been made in accordance with the Remuneration Policy. Apart from the
said consuting agreement with a company owned by Mats Paulsson, none of the board members
have an employment relationship or service agreement with Caverion Group and they are not part of
any of Caverion Group's short- or long-term incentive schemes or pension plans.
Fees paid to the Board of Directors
Board
membership
annual fee
23.3.2020-
24.3.2021
Audit
committee
meetings
Human
Resources
committee
meetings
Meeting
fees
Total
2020
Total
2019
Jussi Aho
46,800
2,200
5,500
54,500
64,907
Markus Ehrnrooth
60,000
2,750
5,500
68,250
81,748
Joachim Hallengren
46,800
2,750
5,500
55,050
64,907
Antti Herlin
8,078
1,100
1,650
10,828
64,907
Thomas Hinnerskov
46,800
2,750
5,500
55,050
64,907
Anna Hyvönen
8,078
1,100
1,650
10,828
64,907
Kristina Jahn
38,722
1,650
3,850
44,222
Mats Paulsson
79,200
2,200
5,500
86,900
97,307
Michael Rosenlew
20,743
Jasmin Soravia
38,722
1,100
3,850
43,672
Total
373,200
9,900
7,700
38,500
429,300
524,333
* Board membership fees for periods 25.5.2020-24.3.2021 and 26.3.2019 -25.5.2020 were paid as annual fees, 50% of which
were paid as cash and 50% in Caverion shares according to the decision by the Annual General Meeting. Due to the transition to a
share-based payment, the Board members exceptionally received payment in relation to two separate Board membership
periods
during
2019.
.
Management remuneration
The remuneration paid to the Group’s Management Board members consists of:
>
Fixed base salary
>
Fringe benefits
>
Short-term incentive scheme, such as annual performance bonus plan, and
>
Long-term incentive schemes, such as share-based incentive plans
Short term incentive schemes
The basis of remuneration at Caverion is a fixed base salary. In addition, the Group’s management and
most of the salaried employees are included in a performance based short-term incentive plan. The
aim of the annual short-term incentive plan is to reward the management and selected employees
based on the achievement of pre-defined and measurable financial and strategic targets. The Board
of Directors approves the terms of the short-term incentive plan every year, according to which
possible incentives are paid. Performance of the Group, the President and CEO as well as Group
Management
Board
members
is
evaluated
by
the
Board
of
Directors.
Potential
incentives
are
approved by the Board of Directors and they are paid out after the financial statements have been
finalised.
NOTES TO THE BALANCE SHEET
91
Caverion Annual Review 2020
The amount of the possible incentive payment is based on the achievement of the pre-set
financial performance targets, such as the Group’s and/or division’s and/or unit’s financial result,
strategic
targets
and/or
development
objectives
set
separately.
Individual
target
and
maximum
incentive opportunity are defined on the role based responsibilities. Possible incentive payments can
vary from zero payment to the pre-defined maximum incentive payment based on the achievement
of set targets.
Performance and development discussions are an essential part of the annual incentive plan and
performance development process at Caverion. Possible individual targets, their relative weighting
and achievement of the previously agreed targets are set and reviewed in these discussions.
The maximum short-term incentive paid to the President and CEO may be at the maximum level
100% of the annual fixed base salary. The maximum short-term incentive paid to the members of the
Group Management Board may equal at maximum level to 70-80% of the annual fixed base salary.
Long-term incentive schemes
Long-term incentive schemes at Caverion are determined by the Board of Directors and they are part
of the remuneration of the management and key personnel of Caverion Group. The aim is to align the
interests of the shareholders and the executives in order to promote shareholder value creation and
to support Caverion in becoming a leading service company and a selective master of projects by
covering the whole life cycle of buildings, industries and infrastructure. In addition, the aim is to
commit the key executives to the company and its strategic targets and to offer them a competitive
reward plan based on the ownership of the company’s shares.
Share-based long-term incentive plan 2016–2018
Caverion’s Board of Directors approved a share-based long-term incentive plan in its December 2015
meeting. The plan consists of a Performance Share Plan, complemented with a Restricted Share Plan
for
special
situations.
Both
plans
consist
of
annually
commencing
individual
plans,
each
with
a
threeyear period. The commencement of each new plan is subject to a separate decision of the Board.
In the directed share issues without consideration, 6,673 Caverion Corporation shares held by the
company were on 26 June 2020 conveyed to a key person participating in the Restricted Share Plan
2016–2018 that is used for special situations.
Share-based long-term incentive plan 2017–2019
Caverion’s Board of Directors approved a share-based long-term incentive plan in its December 2016
meeting. The plan consists of a Performance Share Plan, complemented with a Restricted Share Plan
for special situations. Both plans consist of annually commencing individual plans, each with a three
year period. The commencement of each new plan is subject to a separate decision of the Board.
The targets set for the Performance Share Plan 2017–2019 were not met and therefore no
reward will be paid to the participants of the plan.
In the directed share issues without consideration, 39,127 Caverion Corporation shares held by
the company were on 27 February 2020 conveyed to 16 key persons participating int the Restricted
Share Plan 2017-2019 that is used for special situations.
Share-based long-term incentive plan 2018–2020
Caverion’s Board of Directors approved a share-based long-term incentive plan in its December 2017
meeting. The plan consists of a Performance Share Plan, complemented with a Restricted Share Plan
for special situations. Both plans consist of annually commencing individual plans, each with a
threeyear period. The commencement of each new plan is subject to a separate decision of the Board.
The Performance Share Plan 2018-2020 consists of a one-year operative financial performance
period (2018), followed by a two-year share price performance period. The potential reward is based
on the targets set for Cash Flow from Operations and Earnings per share (EPS) at the end of 2018.
The targets set for the Performance Share Plan 2018-2020 were partially met and estimated share
rewards comprising approximately a total value corresponding to 84,000 shares (gross before the
deduction of applicable payroll tax) will be delivered in February 2021.
.
Matching Share Plan 2018–2022
Caverion’s Board of Directors approved a new share-based long-term incentive plan “Matching Share
Plan 2018–2022” in its February 2018 meeting. The prerequisite for participating in the Plan is that
a key employee shall acquire company shares up to the number and in the manner determined by the
Board of Directors. The Plan includes four matching periods, all beginning on 1 March 2018 and ending
on 28 February 2019, 29 February 2020, 28 February 2021 or 28 February 2022. The plan participant
may not participate in the Performance Share Plan 2018–2020 simultaneously with participating in
the Matching Share Plan.
The rewards from the plan will be paid in four instalments, one instalment each in 2019, 2020,
2021 and 2022. However, the reward payment will be deferred, if a yield of the share has not reached
the pre-set minimum yield level by the end of the matching period in question. If the pre-set minimum
yield level has not been reached by the end of reward instalment specific grace periods ending in
2021–2022, no reward from a matching period in question will be paid.
The target set for the second matching period of Matching Share Plan 2018-2022 was not
achieved during 2020. The reward payment is on grace period until 30 April 2022 according to the
Plan
Terms
&
Conditions.
Share-based long-term incentive plan 2019–2021
Caverion’s
Board
of
Directors
decided
on
a
new
share
-
based
long
-
term
incentive
plan
for
key
employees of the Group in its December 2018 meeting. The new plan is based on a performance share
plan (PSP) structure. The Board approved at the same time the commencement of a new plan period
2019−2021 in the Restricted Share Plan (RSP) structure, a complementary share-based incentive
structure for specific situations. Both plans consist of annually commencing individual plans, each
NOTES TO THE BALANCE SHEET
92
Caverion Annual Review 2020
with a three-year period. The commencement of each new plan is subject to a separate decision of
the Board.
The Performance Share Plan 2019-2021 consists of a three-year operative financial performance
period (2019-2021). The potential reward is based on the targets set for Total Shareholder Return
and
Earnings
per
share
(EPS).
.
Share-based long-term incentive plan 2020-2022
Caverion's
Board
of
Directors
decided
on
a
new
share
-
based
long
-
term
incentive
plan
for
key
employees of the Group in its December 2019 meeting. The new plan is based on a performance share
plan (PSP) structure. The Board approved at the same time the commencement of a new plan period
2019−2021 in the Restricted Share Plan (RSP) structure, a complementary share-based incentive
structure for specific situations. Both plans consist of annually commencing individual plans, each
with a three-year period. The commencement of each new plan is subject to a separate decision of
the
Board.
The Performance Share Plan 2020-2022 consists of a three-year operative financial performance
period (2020-2022). The potential reward is based on the targets set for Total Shareholder Return
and Earnings per share (EPS). However, on 30 April 2020, Caverion's Board of Directors decided, upon
management's suggestion, to postpone the commencement of PSP 2020-2022 until the beginning
of the year 2021.
Remuneration of the President and CEO
The Board of Directors decides on the remuneration, benefits and other terms of the Managing
Director agreement of the President and CEO. The remuneration paid to the President and CEO
consists of fixed base salary, fringe benefits, annual short-term incentive plan, long-term incentive
plan and other possible benefits such as defined contribution pension scheme. The President and
CEO’s annual short-term incentive can be up to 100% of the annual fixed base salary. In 2020, 25% of
the total incentive opportunity was based on Group’s Adjusted EBITA EUR and 75% on BU Projects
Adjusted EBITA %. These measures are based on Caverion’s strategic targets.
.
Ari Lehtoranta’s pension, retirement age and termination compensation
The contractual retirement age of the President and CEO Ari Lehtoranta is 63 years. He has a
supplementary
defined
contribution
pension
plan.
During
1.1.
-
31.12.2020
the
cost
of
his
total
pension
scheme
was
EUR
132,000.
.
The President and CEO’s notice period for both parties is six months. Severance pay (if the
company terminates the agreement) is compensation amounting to 12 months’ base salary as
monthly payments.
Remuneration paid to the President and CEO in 2020
Ari Lehtoranta's base salary and fringe benefits as the President and CEO during 1.1.-31.12.2020
were in total EUR 588,764. Ari Lehtoranta had a short-term incentive payment of EUR 389,730 based
on
the
achievement
of
the
2019
pre
-
set
targets.
.
EUR
Fixed
base salary
Fringe
benefitst
Short-term
incentive
payment
Long-term
incentive
payment
Supplementary
pension
scheme
Total
2020
Ari Lehtoranta
1.1. - 31.12.2020
588,524
240
389,730
0
132,000
1,110,494
President and CEO’s pension costs 1.1.–31.12.2020
Total
2020
Ari Lehtoranta
Statutory pension scheme
139,148
Ari Lehtoranta
Supplementary defined contribution pension scheme
132,000
A regularly updated table on the Group Management Board members’ holdings of shares is available
in insider register.
Loans to associated parties
The President and CEO and the members of the Board of Directors did not have cash loans from the
company or its subsidiaries on December 31, 2020.
Caverion announced on 7 February 2018 in a stock exchange release the establishment of a new
share-based incentive plan directed for the key employees of the Group (“Matching Share Plan 2018-
2022”).
The
company
provided
the
participants
a
possibility
to
finance
the
acquisition
of
the
company’s
shares
through
an
interest
-
bearing
loan
from
the
company,
which
some
of
the
participants utilised. By the end of December 2020, the total outstanding amount of these loans
amounted approximately to EUR 4.3 million. The loans will be repaid in full on 31 December 2023, at
the latest. Company shares have been pledged as a security for the loans.
SIGNATURES AND AUDITOR’S NOTE
93
Caverion Annual Review 2020
Signatures to the Board of Directors’ report and
Financial statements and Auditor’s note
Board of Directors’ proposal for the distribution of distributable
equity
The distributable equity of the parent company Caverion Corporation on December 31, 2020 is
(EUR):
Retained earnings
101,827,674.06
Result for the period
-8,142,137.57
Retained earnings, total
93,685,536.49
Unrestricted equity reserve
66,676,176.49
Distributable equity, total
160,361,712.98
The Board of Directors proposes to the Annual General Meeting to be held on 24 March 2021 that a
dividend of EUR 0.10 per share and an extraordinary dividend of EUR 0.10 per share, in total EUR 0.20
per share will be paid for the year 2020.
Signature of the report of the Board of Directors and Financial
statements
Helsinki, 10 February 2021
Caverion Corporation
Board of Directors
Mats Paulsson
Chairman
Markus Ehrnrooth
Vice Chairman
Jussi
Aho
Joachim
Hallengren
Thomas
Hinnerskov
Kristina
Jahn
Jasmin
Soravia
Ari Lehtoranta
President and CEO
The Auditor’s note
Our auditor’s report has been issued today
Helsinki, 10 February 2021
Ernst & Young Oy
Authorised Public Accountants
Antti Suominen
Authorised Public Accountant
94
Caverion Annual Review 2020
Auditor’s report (Translation of the Finnish original)
To the Annual General Meeting of Caverion Oyj
REPORT ON THE AUDIT OF
FINANCIAL STATEMENTS
Opinion
We
have
audited
the
financial
statements
of
Caverion
Oyj
(business
identity
code
2534127
-
4)
for
the
year
ended
31
December
2020.
The
financial
statements
comprise
the
consolidated
balance
sheet,
income
statement,
statement
of
comprehensive
income,
statement
of
changes
in
equity,
statement
of
cash
flows
and
notes,
including
a
summary
of
significant accounting policies, as well as the parent company’s
balance sheet, income statement, statement of cash flows and
notes.
In our opinion
>
the consolidated financial statements give a true and fair
view
of
the
group’s
financial
position
as
well
as
its
financial performance and its cash flows in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the EU.
>
the financial statements give a true and fair view of the
parent
company’s
financial
performance
and
financial
position
in
accordance
with
the
laws
and
regulations
governing
the
preparation
of
financial
statements
in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to
the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice
in Finland. Our responsibilities under good auditing practice are
further described in the
Auditor’s Responsibilities for the Audit of
Financial Statements
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements.
In
our
best
knowledge
and
understanding,
the
non
-
audit
services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable
in Finland regarding these services, and we have not provided any
prohibited
non
-
audit
services
referred
to
in
Article
5
(1)
of
regulation (EU) 537/2014. The non-audit services that we have
provided
have
been
disclosed
in
note
2.2
to
the
consolidated
financial statements.
We
believe
that
the
audit
evidence
we
have
obtained
is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key
audit
matters
are
those
matters
that,
in
our
professional
judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed
in the context of our audit of the financial statements as a whole,
and
in
forming
our
opinion
thereon,
and
we
do
not
provide
a
separate opinion on these matters.
We have fulfilled the responsibilities described in the
Auditor’s
responsibilities for the audit of the financial statements
our report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond
to our assessment of the risks of material misstatement of the
financial statements. The results of our audit procedures, including
the procedures performed to address the matters below, provide
the
basis
for
our
audit
opinion
on
the
acc
ompanying
financial
statements.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there was
evidence of management bias that represented a risk of material
misstatement due to fraud.
95
Caverion Annual Review 2020
Key audit matter
How our audit addressed the Key Audit Matter
Revenue recognition
The accounting principles and disclosures concerning revenue recognition are disclosed in Note 2.1.
In accordance with its accounting principles Caverion applies the percentage-of-completion
method for recognizing significant portion of its revenues.
The recognition of revenue by applying percentage-of-completion method and the estimation of
the
outcome
of
projects
require
significant
management
judgment
in
estimating
the
cost
-
to
-
complete as well as total revenues. From the financial statement perspective, significant judgment
is required especially when the project execution and the associated revenues extend over two or
more financials years.
The areas where significant judgment is required are more prone to the risk that the assumptions
may be deliberately misappropriated. Based on above, revenue recognition was a key audit matter.
This matter was also a significant risk of material misstatement referred to in EU Regulation No
537/2014, point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement included:
>
Assessing of the Group’s accounting policies over revenue recognition of projects.
>
Examination of the project documentation such as contracts, legal opinions and other
written communication.
>
Analytical procedures and review of financial KPI’s as well as development of projects by
>
reviewing
the
changes
in
estimated
total
revenues,
cost
-
to
-
complete
and
changes in reserves, and
>
discussing with the different levels of the organization including project, division
and group management.
>
Analyzing key elements in management’s estimates such as the estimated future costs-
to-complete and the estimated time necessary to complete the project.
>
Evaluating
the
appropriateness
of
the
Group’s
disclosures
in
respect
of
revenue
recognition.
Key audit matter
How our audit addressed the Key Audit Matter
Valuation of goodwill
The accounting principles and disclosures concerning goodwill are disclosed in Note 4.2.
The valuation of goodwill was a key audit matter because the assessment process is judgmental,
it is based on assumptions relating to market or economic conditions extending to the future, and
because of the significance of the goodwill to the financial statements. As of balance sheet date 31
December 2020, the value of goodwill amounted to 365 million euro representing 28 % of the total
assets and 186 % of the total equity.
The
valuatio
n
of
goodwill
is
based
on
management’s
estimate
about
the
value
-
in
-
use
calculations of the cash generating units. There are number of underlying assumptions used to
determine the value-in-use, including the revenue growth, EBITDA and discount rate applied on net
cash-flows.
Estimated value-in-use may vary significantly when the underlying assumptions are changed
and
the
changes
in
above
-
mentioned
individual
assumptions
may
result
in
an
impairment
of
goodwill.
Our audit procedures regarding the valuation of goodwill included involving valuation specialists to
assist us in evaluating testing methodologies, impairment calculations and underlying assumptions
applied by the management in the impairment testing.
In evaluation of methodologies, we compared the principles applied by the management in the
impairment tests to the requirements set in IAS 36
Impairment of assets
mathematical accuracy of the impairment calculations.
The key assumptions applied by the management in impairment tests were compared to
>
approved budgets and forecasts,
>
information available in external sources, as well as
>
our independently calculated industry averages such as weighted average cost of
capital used in discounting the cashflows.
In addition, we compared the sum of discounted cash flows in impairment tests to Caverion’s
market capitalization.
We also assessed the sufficiency of the disclosures as well as whether the disclosures about the
sensitivity of the impairment assessment are appropriate.
96
Caverion Annual Review 2020
Key audit matter
How our audit addressed the Key Audit Matter
Valuation of trade receivables
The accounting principles and disclosures concerning trade receivables are disclosed in Note 3.2
.
Valuation of trade receivables was a key audit matter because the valuation of overdue trade
receivables requires management to make significant judgments. As of balance sheet date 31
December 2020, the carrying value of trade receivables amounted to 317 million euros, of which 36
million euros were trade receivables overdue for more than 90 days.
The carrying value of trade receivables shown in the balance sheet as of 31 December 2020 is a
result of gross receivables deducted by reserve for estimated credit losses which is based on
management’s judgment.
Valuation
of
aged
trade
receivables
requires
management
to
evaluate
probability
of
the
recoverability of receivables and to record a reserve based on judgment for receivables for which
payment is not likely.
On the group level we evaluated the valuation methods applied on trade receivables as well as
performed quarterly analyses of overdue and undue gross receivable balance development and
corresponding movement in bad debt reserve.
In addition, we analyzed management’s assessment of the recoverability of the most significant
overdue receivables considering
>
the customer payment pattern,
>
legal opinions, and
>
recent negotiations with the counterparties.
We have also discussed the valuation with the group’s business and financial management as
well as with the legal management.
On subsidiary level our audit procedures regarding the valuation of trade receivables included
analysis
of
the
aging
of
receivables
as
well
as
evaluation
the
recoverability
of
individual
aged
receivable balances by sending balance confirmation requests or by testing of subsequent cash
receipts.
Responsibilities of the Board of
Directors and the Managing Director
for the Financial Statements
The Board of Directors and the Managing Director are responsible
for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with the
laws
and
regulations
governing
the
preparation
of
financial
statements in Finland and comply with statutory requirements.
The
Board
of
Directors
and
the
Managing
Director
are
also
responsible
for
such
internal
control
as
they
determine
is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Board of Directors
and
the
Managing
Director
are
responsible
for
assessing
the
parent company’s and the group’s ability to continue as going
concern,
disclosing,
as
applicable,
matters
relating
to
going
concern
and
using
the
going
concern
basis
of
accounting.
The
financial statements are prepared using the going concern basis of
accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of
Financial Statements
Our objectives are to obtain reasonable assurance on whether the
financial
statements
as
a
whole
are
free
from
material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with good auditing practice will always
detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice,
we
exercise
professional
judgment
and
maintain
professional
skepticism throughout the audit. We also:
>
Identify and assess the risks of material misstatement
of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud
may
involve
collusion,
forgery,
intentional
omissions,
misrepresentations,
or
the
override
of
internal control.
>
Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate
in
the
circumstances,
but
not
for
the
purpose of expressing an opinion on the effectiveness of
the parent company’s or the group’s internal control.
>
Evaluate
the
appropriateness
of
accounting
policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
>
Conclude
on
the
appropriateness
of
the
Board
of
Directors’ and the Managing Director’s use of the going
concern
basis
of
accounting
and
based
on
the
audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant
doubt on the parent company’s or the group’s ability to
97
Caverion Annual Review 2020
continue
as
a
going
concern.
If
we
conclude
that
a
material
uncertainty
exists,
we
are
required
to
draw
attention
in
our
auditor’s
report
to
the
related
disclosures
in
the
financial
statements
or,
if
such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up
to
the
date
of
our
auditor’s
report.
However,
future
events or conditions may cause the parent company or
the group to cease to continue as a going concern.
>
Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures,
and
whether
the
financial
statements
represent
the
underlying transactions and events so that the financial
statements give a true and fair view.
>
Obtain sufficient appropriate audit evidence regarding
the
financial
information
of
the
entities
or
business
activities within the group to express an opinion on the
consolidated financial statements. We are responsible
for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We
also
provide
those
charged
with
governance
with
a
statement
that
we
have
complied
with
relevant
ethical
requirements
regarding
independence,
and
communicate
with
them all relationships and other matters that may reasonably be
thought
to
bear
on
our
independence,
and
where
applicable,
related safeguards.
From
the
matters
communicated
with
those
charged
with
governance,
we
determine
those
matters
that
were
of
most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes
public
disclosure
about
the
matter
or
when,
in
extreme
ly
rare
circumstances,
we
determine
that
a
matter
should
not
be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We
were
first
appointed
as
auditors
by
the
Annual
General
Meeting on 26 March 2018, and our appointment represents a
total period of uninterrupted engagement of 3 years.
Other information
The Board of Directors and the Managing Director are responsible
for the other information. The other information comprises the
report of the Board of Directors and the information included in
the Annual Report, but does not include the financial statements
and our auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us after that
date.
Our opinion on the financial statements does not cover the
other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent
with
the
financial
statements
or
our
knowledge
obtained
in
the
audit,
or
otherwise
appears
to
be
materially
misstated. With respect to report of the Board of Directors, our
responsibility also includes considering whether the report of the
Board
of
Directors
has
been
prepared
in
accordance
with
the
applicable laws and regulations.
In our opinion, the information in the report of the Board of
Directors
is
consistent
with
the
information
in
the
financial
statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If,
b
ased
on
the
work
we
have
performed
on
the
other
information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report in this regard.
Helsinki, 10 February 2021
Ernst & Young Oy
,
Authorized Public Accountant Firm
Antti Suominen,
Authorized Public Accountant
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Caverion Annual Review 2020