2
Caverion Annual Review 2021
Table of contents
AUDITED
......................
...........................................................................
.....
..........................................
.............................................................
....................................................................................
.........................................
3
Caverion Annual Review 2021
We enable performance and
people’s wellbeing in smart
and sustainable built
environment
4
Caverion Annual Review 2021
Caverion – Building Performance
By making built environment 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 more than 14,000 professionals
in 10 countries in Northern and Central Europe. Our revenue in
2021 was approximately EUR 2.1 billion. Caverion’s shares are
listed on Nasdaq Helsinki. Caverion’s head office is located in
Vantaa, Finland.
Smart and sustainable solutions
In the future, Caverion sees good growth prospects especially in
smart and sustainable technology areas, including Building
Automation, Refrigeration, Security and Safety. 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 impact visible and measurable to our customers
throughout our offering. Since 2021, Caverion is a proud member
of the UN Global Compact, the world’s largest corporate
sustainability initiative. In February 2022, Caverion joined the
Science Based Targets initiative to further reinforce our
commitment to contributing to the fight against climate change
with the solutions and services we provide.
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 nation-wide or internationally. 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 the most reliable, transparent and trusted
partner to our customers and to deliver sustainable growth.
Projects
Caverion delivers building technology and infrastructure projects
for new built environment 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.
6
Caverion Annual Review 2021
From the CEO
As we are soon entering a new strategy period focusing on sustainable growth, we are closing
2021 on the notion of getting Caverion fit for growth. Despite the demanding past years of life
and work during the pandemic, we were able to deliver continued improvement in profitability
in 2021. We were continuously adjusting our delivery to the changing market demands and we
supported our customers in adapting to the new market environment.
Our purpose of enabling performance and people’s wellbeing in
smart and sustainable built environment guided us through the
pandemic. We focused on our customers and how we can
support them in serving their purpose and stakeholders. We
made investments into our own capabilities, both through
acquisitions and training programs. We further developed our
digital offering and advisory services in regard to energy
efficiency. We will give more details about our strategy and our
aim to deliver sustainable growth at our Capital Markets Day in
May. I want to highlight four themes that have been in our
focus throughout the latest strategy period and will continue as
our strategic themes also in the years to come.
Our people – at the core of everything
we do
Our more than 14,000 employees are what Caverion is all
about. They are the ones ensuring building performance and
building our brand by serving our customers every day. It is my
top priority to make sure that everyone can work in a safe and
healthy work environment every day. Therefore I am very
happy that we were able to continue our trend of reducing
LTIFR in 2021. It was lower than ever and is amongst the best
in our field.
We clearly see that our preventive and proactive measures, that have
become an integral part of our Building Performance culture, are
showing results. However, we will continue focusing on making
Caverion an even safer workplace.
Despite the pandemic, we offered last year apprenticeships to more
than 800 young professionals – future building performers looking to
make a difference in a job with a powerful purpose.
We believe that diversity, equity and inclusion create a great Building
Performance culture and enable us to serve our customers in the best
possible way. Therefore the work to enhance these topics is a high
priority for us. Our employee engagement survey in 2021 showed
above-industry ratings and further improvements compared to 2019
in the areas of performance, safety, leadership and wellbeing.
Happy employees who enjoy what they do in a safe work
environment, and feel enabled and appreciated, contribute and lead to
a great customer experience.
Customer experience – improvement in all
divisions
Customers are the center of all our ambitions, planning and
developments. Every change we make, every investment we plan, is
7
Caverion Annual Review 2021
being viewed through the lens of “How does this improve our customers’ experience with us? How
does this make us better in serving them?”
Throughout our Fit for Growth strategy period we have been able to increase our customer
satisfaction, loyalty and NPS rates year on year. In 2021 we reached a record high. I am particularly
proud of this, as it shows that we have been able to be a reliable, flexible, transparent and relevant
partner to our customers also in the challenging pandemic times. In 2021 we have continued the
close dialogue with our customers on all levels, also involving them closely through interviews and
surveys into the preparation work for our new strategy. We were able to start new partnerships and
expand existing relationships cross boarders through several large international managed services
and industrial process contracts. In these partnerships we can show the unique advantage we can
provide - a strong local presence and delivery capability across our geographies, paired with the
scalable expertise of a large Group company.
Sustainability – towards a carbon-neutral society
We have set ourselves ambitious sustainability targets. Already now we are providing a handprint
that is double the size of our footprint. By 2030, our goal is to achieve a handprint ten times bigger
compared to the footprint (Scope 1-2). In 2021, we took the planning of our activities into more
detail in all three areas of E (Environment), S (Social) and G (Governance) and completed the first
estimates of Scope 3 emissions.
For the first time we also reported our EU taxonomy eligibility levels for 2021 and can be very proud
of the difference we make every day. Our smart technology and digital solutions are meeting an
increasing market demand. We support our customers with advice, such as our Smart Readiness
Indicator consultation service, technical engineering, and installation and maintenance expertise.
The goal is to make our customers’ operations more energy-efficient and carbon-neutral and at the
same time to improve indoor conditions for their tenants and end-users. We help our customers
reach their own sustainability targets and thus improve our own handprint in the environment we
operate in – this is why we are proud of our purpose enabling performance and wellbeing in smart
and sustainable built environments.
We also joined the UN Global Compact in early 2021 (and most recently in early 2022 also the
Science Based Targets initiative) to further reinforce our commitment to contributing to the fight
against climate change with the solutions and services we provide.
Digitalisation – value to our customers
Digitalisation has been a megatrend driving our industry for years and it is at the core of the smart
city approach. For us, the focus on digitalisation goes hand in hand with the previous three themes:
How can digitalisation help our people serve customers better and work more safely? How can
digitalisation be used to improve people’s wellbeing in the environments we create? How can
digitalisation help us reduce our waste and emissions and contribute to the fight against climate
change? How can digitalisation bring direct value to our customers in their buildings or industrial
facilities and processes?
In 2021 we strengthened our digital solutions development, for instance, by expanding the offering
of Caverion SmartView. SmartView is a digital platform providing full insights into the performance
of buildings and actionable insights for building owners and facility managers on how to improve
energy efficiency and end-user wellbeing in their buildings. For our industrial customers, our
Caverion Intelligence solution provides full-coverage predictive monitoring service for industrial
processes. Our remote management services have been particularly valuable during the height of
the pandemic when we could partly support, maintain and secure our customer’s facilities without
sending anyone physically onsite. We have listened and learned a lot from our customers and have
taken their feedback and requirements into our agile solution development.
Internally also, we continue to focus on digitalising our processes further, with the focus of
providing operational excellence in the field, leading to a reliable, efficient and transparent service to
our customers.
I want to thank everyone who contributed to the improved performance in 2021, including our
Caverion colleagues across our divisions, our customers who trusted us, our partners who joined us
on the journey and our shareholders who supported the purpose we work for every day.
Jacob Götzsche
8
Caverion Annual Review 2021
Sustainability highlights 2021
Innovation: Turning condensation heat from supermarket into clean energy
In cooperation with retail chain Osuuskauppa Arina and energy company Oulun Energia, we
developed an innovative solution that captures condensation heat from the CO2 refrigeration and
the heat pump energy in supermarkets to feed clean energy into the district heating grid. The first
grocery store to utilise this technology will open in Oulu, Finland in spring 2022.
Our safety improvement continued
We care about the safety, health and wellbeing
of our people. In 2021, we continued the
systematic improvement of our safety and
reached an all time low LTIFR level of 4.0.
Proactive safety work will continue to be our
focus in the futureas our goal is zero accidents.
Optimal campus conditions for 25
years
Over 1,900 children in daycare as well as
elementary and secondary schools in Vienna,
Austria get to enjoy new sustainable facilities.
Caverion guarantees optimal indoor conditions
and energy efficiency at the new campuses for
25 years after completion.
Supporting smart building technology
research at Aalto University
We are partnering with Aalto University for the
development and education and research of
smart building technology and smart buildings.
Caverion is committed to financially supporting
the Intelligent Buildings Doctoral school in
Finland for the next five years.
Campaign to prevent harassment
We believe that diversity and inclusiveness are
critical elements in creating value for our
customers, business partners, employees and
shareholders. In November 2021, we launched a
campaign in Norway to prevent harassment. The
aim of the campaign is to make it clear that we
do not tolerate bullying, discrimination or
harassment in the workplace. The campaign has
received very positive feedback and awareness.
Electric service cars are the future
For example in Norway, about 75 fossil fuelled
service vehicles were replaced with EVs in 2021.
During the coming years, the replacement rate
will be approximately 200 new cars every year in
Norway alone. We aim to significantly increase
the share of electric cars throughout our
company in the future.
In addition, Caverion is one of the leading
installers of EV charging infrastructure in
Sweden and Norway.
Baltic Sea at the heart of Caverion
The Baltic Sea is our geographical heart. In 2021,
we challenged our customers, employees and
followers to learn more and act around smart
cities and sustainability. For every activity, points
were earned. For every point collected, we will
make a €1 donation to the John Nurminen
Foundation towards efforts to save the Baltic
Sea and its heritage for future generations.
9
Caverion Annual Review 2021
Our strategy
After delivering on our Fit for Growth strategy, we will start a
journey towards sustainable growth. Caverion is now well
positioned to help provide a sustainable, digital future for its
customers.
We started our Fit for Growth journey in 2018 after assessing the overall resilience and profitability
of our business. We decided to embark on a journey that would make our business portfolio
healthier, deleverage our debt profile and make Caverion our customers’ first choice in digitalising
built environments through our smart solutions.
In 2018–2019, as part of the first phase (Fit) of this strategy, we improved our financial
performance. In this phase, we implemented strict selection criteria in our projects business, made
changes to our geographical footprint, and discontinued unprofitable operations. The actions aimed
to create a solid foundation for growth. After successfully executing on the actions in the Fit phase,
we updated our strategy in late 2019 and started gearing us towards growth.
After very promising initial progress on our growth path, we were hit by the global coronavirus
pandemic. We adjusted fast and flexibly to the changing market conditions and further updated our
operating model; our number one priority was to support our customers in these challenging times
with the services they now needed most. Throughout 2020-2021, our teams took all the necessary
precautions in their daily work against the virus to ensure employee, customer and end-user safety.
We also used this decisive period to sharpen our future set up, and continued initiatives preparing
Caverion for the Growth phase of our strategy after the pandemic. This included investing in smart
technology and digital solutions, further developing our sustainability offering and strengthening
our purpose-driven brand. Our target in 2020-2021 has been to further accelerate profitable
growth in the Services business and exceed market growth. In Projects, we continued our selective
approach, keeping our risk profile healthy.
Fit for Growth strategy
Read more about our strategy and financial targets in Board of Directors’ report page 13.
10
Caverion Annual Review 2021
Towards our future strategy
During 2021, we worked on our new strategy that will guide us up until the year 2025. We expect to
finalise this work during the first half of 2022 and present it at our Capital Markets Day on May 10,
2022.
The new growth strategy is built around core future capabilities that will allow Caverion to
differentiate and focus on a market full of opportunities. It will deliver on Caverion’s purpose of
enabling performance and people’s wellbeing in smart and sustainable built environments.
Caverion’s strategic themes build the bridge between the previous and the future strategy periods.
We continue to focus on:
﴿
People
﴿
Customer experience
﴿
Digitalisation
﴿
Sustainability
Our people are our most important asset; we want to retain, attract, and grow the right people and
become the most attractive employer in our industry. Our Building Performance culture will be a key
element for the success in our new strategy period.
We are focusing on a customer-centric operating model to deliver on our promise of “Building
Performance” in every interaction we have with our customers. The voice of our customers will
continue guiding us in our strategy execution to ensure we explore and improve every day in a
partnership with our customers.
Digitalisation has been at the core of our solution development over the past years and will increase
in importance regarding in our offering but also in the way we work and serve our customers to
ensure we provide them transparent and reliable services and actionable insights into their built
environment.
Sustainability will be at the core of our offering and all our operations. Sustainability is also gaining
more and more emphasis in our customers' businesses. We can help our customers to achieve their
sustainability targets.
We will tell more about our future strategy at our Capital Markets Day in Helsinki on May 10, 2022.
11
Caverion Annual Review 2021
Read more about our sustainability targets in Board of
Directors’ report page 27.
Caverion drives sustainable impact
Sustainability is one of key themes of our current and future
strategy. We have four focus ESG areas:
﴿
Caring for our people
﴿
Ensuring sustainable value chain
﴿
Increasing our handprint
﴿
Decreasing our footprint
We have set clear actions and KPIs to reach our targets. Our
overall target is to create sustainable impact through our
solutions, with a positive carbon handprint 10 times greater
than our own carbon footprint (Scope 1-2) by 2030.
12
Caverion Annual Review 2021
Board of Directors’ Report January 1 –December 31, 2021
Operating environment in 2021
The corona pandemic continued to have an impact on the operating environment in 2021. The
emergence of the new variants of the corona virus affected the business operations negatively
primarily due to restrictions re-imposed by governments and the slow start of new investments in
the beginning of the year. In between the new waves of the corona virus, governmental restrictions
were lifted and the operating environment improved. However, the year closed in uncertainty with
soaring numbers of omicron variant infections and governmental restrictions being re-imposed.
During the year 2021, the building technology market was impacted by increases in material
prices. There have also been supply shortages and delays in some areas. Caverion has proactively
taken various measures to optimise the supply chain and to manage pricing.
More information on the operating environment of the business units has been presented in the
financial statements release published on 10 February 2022.
Market position
Caverion has a strong market position and is ranked among the top-5 players in the building solutions
market in most of its operating countries measured by revenue. The market is overall still very
fragmented in countries where Caverion operates. Caverion is the largest company in its market in
Finland and among the two or three largest companies in Austria and Norway and the fourth largest
company in Sweden in its market. In Germany and Denmark, Caverion is among the top-10 players in
the market. Additionally, the Company is one of the leading industrial solutions companies in Finland.
The largest industrial client segments are the forest and bioproducts 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 202 1
Caverion’s year 2021 was marked with profitability improvement that was visible throughout the
year. The profitability improvement helped by the efficiency and productivity improvements came
from both the Services and Projects sides of the business. The business mix change seen in recent
years continued; the Services business accounted for 65.5 (63.3) percent of Group revenue in 2021.
A highlight of the second half of the year was that the order backlog grew strongly both in Services
and Projects compared to last year. This provides a solid foundation for profitable growth in 2022.
For the full year, Caverion’s revenue decreased by 0.7 percent to EUR 2,139.5 (2,154.9) million.
The corona pandemic still continued to impact operations to a certain extent. The Group’s Services
business revenue increased by 2.7 percent and amounted to EUR 1,402.4 (1,364.9) million. The
Projects business revenue decreased by 6.7 percent to EUR 737.1 (790.0) million. During the year,
Caverion also completed seven bolt-on acquisitions and continues to actively search for suitable
acquisitions. Caverion also signed the divestment of its subsidiary in Russia and will no longer operate
in the country after this transaction. More information about the acquisitions the divestment in Russia
can be read under Group’s 2021 financial statement note 4.1 “Acquisitions and disposals”.
Caverion published its guidance for 2021 on 29 April 2021, according to which the Group’s
adjusted EBITA (2020: EUR 60.6 million) was estimated to grow in 2021 compared to 2020. The
guidance remained valid up until the publication of the Financial Statement Release on 10 February
2022. The Group’s adjusted EBITA amounted to EUR 87.7 (60.6) million, or 4.1 percent of revenue.
There were a few notable one-off items in 2021. The divestment of the non-core Russian
subsidiary at the end of the year resulted in a capital loss of EUR 10.0 million. The largest part of the
loss is explained by translation differences, which is a non-cash item and does not have an impact on
equity. The transaction only had a limited cash flow effect. In addition to this, Caverion settled certain
civil claims related to its old cartel case in Germany, totalling EUR 9.1 million in 2021. Caverion also
critically assessed its final remaining major risk project at the end of the year and made an additional
provision of EUR 2.0 million in the fourth quarter, totalling EUR 4.0 million during 2021. The project is
now handed over to the customer, however final discussions between the parties are still ongoing.
Information on potential risk factors is given under “Short-term risks and uncertainties”.
Caverion’s cash flow was again strong. Operating cash flow before financial and tax items
amounted to EUR 103.8 (157.6) million in 2021 and cash conversion (LTM) was 91.2 (158.5) percent.
The Group’s working capital at the end of 2021 was EUR -144.7 (-160.4) 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 69.8 (60.4) percent and the equity ratio 19.0 (18.9) percent at the end of
13
Caverion Annual Review 2021
December. Net debt amounted to EUR 140.7 (118.6) million at the end of December and the net
debt/EBITDA ratio was 1.1x (-0.2x ).
Group strategy and financial targets
Caverion’s Fit for Growth strategy and the financial targets launched on 4 November 2019 remained
valid in 2021. Caverion builds on several sources of growth. A very strong customer base and long-
term customer partnerships are the first foundation for growth. A second source is the accelerated
need for digitalisation which can be seen across all of Caverion’s customer segments and countries.
Supporting customers on their digitalisation journey while improving efficiency and long-term
sustainable outcomes, provides great opportunities for Caverion. The company’s digital solutions
such as Caverion SmartView, Remote Services and IoT solutions differentiate Caverion from its
competitors already today and will also be a foundation for future growth. Caverion has also invested
in building expertise in selected Smart Technologies such as Building Automation, Refrigeration and
Security. Those solutions require regular maintenance which links to Caverion’s core competence of
supporting customers throughout the lifecycle of their built environments. This is delivered by our
more than 14,000 highly skilled and dedicated employees. Caverion seeks growth both organically
and inorganically through acquisitions.
In 2021, Caverion continued the work on its new strategy that will guide the company up until the
year 2025 and expects to finalise this work during the first half of 2022. The new growth strategy is
built around core future capabilities that will allow Caverion to differentiate and focus in a market full
of opportunities. It will deliver on Caverion’s purpose of enabling performance and people’s wellbeing
in smart and sustainable built environments. Climate change continues to be the biggest threat our
earth is facing. Especially urban environments are a major source of carbon emissions, and solutions
to change the trajectory are urgent and in high demand. This impacts the strategic choices of
customers in all segments. Caverion is contributing to a carbon-neutral society through its energy-
efficient and sustainable solutions and will continue developing them in accordance with customer
demands. The Group’s strategic themes continue to be the focus on people, customer experience,
sustainability and digitalisation. Caverion expects market demand to pick up and all trends and
regulations to drive demand for the solutions and expertise Caverion can deliver.
In 2022, Caverion will report for the first time its EU taxonomy eligibility levels for 2021, which,
together with the sustainability targets, KPIs and actions, 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).
Financial targets
Caverion continues to prioritise cash flow generation. Organic growth is supported by bolt-on
acquisitions in selected growth areas and complementary capabilities. In the Services business, the
target is to boost profitable growth. In the Projects business, the improving performance has
gradually opened profitable growth opportunities.
Sustainably strong cash conversion, adjusted EBITA as well as organic revenue growth have been
the Group’s most important financial targets in the Fit for Growth strategy, supported by a moderate
debt leverage level.
The following table presents the Group’s financial targets and the progress in them during 2021.
Financial targets (mid-term)
Progress in 2021
Cash conversion
= Operating cash flow before financial
and tax items / EBITDA > 100%
- Cash conversion 91.2 (158.5)% in 2021
- Operating cash flow EUR 103.8 (157.6) million in
2021
Profitability
: Adjusted EBITA*
> 5.5% of revenue
- Adjusted EBITA margin amounted to 4.1 (2.8)% in
2021
Debt leverage
: Net debt/EBITDA** < 2.5x
- At the level of 1.1x (-0.2x) as per 12/2021
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
- Organic revenue growth -2.0% in 2021
- Services business revenue growth 2.7% in 2021
- The share of Services continued to grow to 65.5
(63.3) percent of revenue in 2021
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 28 March
2022 that a dividend of EUR 0.17 per share will be paid
for the year 2021.
* EBITA is defined as Operating profit + amortization and impairment on intangible assets. Adjustments according to defined Items
affecting comparability (IAC).
**Based on calculation principles confirmed with the lending parties, containing certain agreed adjustments. The calculation
principles take into account the impacts of the IFRS 16 standard as of Q4/2021, while prior to this period IFRS 16 standard impacts
were not applicable.
14
Caverion Annual Review 2021
Group financial development 2021
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 increased by 15.8 percent to EUR 1,863.8 million from the end
of December in the previous year (EUR 1,609.1 million). At comparable exchange rates the order
backlog increased by 15.5 percent from the end of December in the previous year. Order backlog
increased by 14.1 percent in Services and increased by 18.0 percent in Projects from the end of
December in the previous year.
Revenue
Revenue for January–December was EUR 2,139.5 (2,154.9) million. Revenue decreased by 0.7
percent compared to the previous year. At the previous year’s exchange rates, revenue was EUR
2,108.0 million and decreased by 2.2 percent compared to the previous year. Organic growth was
-2.0 percent.
Revenue was impacted by fluctuations in currency exchange rates mainly in Swedish
krona and Norwegian krone with a positive effect of EUR 13.9 million and EUR 18.5 million
respectively.
Revenue increased in Sweden, Germany and Norway, and decreased in other divisions.
The revenue of the Services business unit increased and was EUR 1,402.4 (1,364.9) million in
January–December, an increase of 2.7 percent, or 1.0 percent in local currencies. The revenue of the
Projects business unit was EUR 737.1 (790.0) million in January–December, a decrease of 6.7 percent,
or 7.7 percent in local currencies. Project business revenue was affected by the continuous selectivity
approach.
The Services business unit accounted for 65.5 (63.3) percent of Group revenue, and the Projects
business unit for 34.5 (36.7) percent of Group revenue in January–December.
Distribution of revenue by Division and Business Unit
Revenue, EUR million
1-12/2021
%
1-12/2020
%
Change
Sweden
424.4
19.8
420.6
19.5
0.9%
Finland
403.9
18.9
416.0
19.3
-2.9%
Germany
374.1
17.5
368.8
17.1
1.5%
Norway
352.5
16.5
318.9
14.8
10.6%
Industry
256.8
12.0
275.9
12.8
-6.9%
Austria
188.7
8.8
191.4
8.9
-1.4%
Denmark
80.0
3.7
93.6
4.3
-14.5%
Other countries*
59.0
2.8
69.7
3.2
-15.5%
Group, total
2,139.5
100.0
2,154.9
100.0
-0.7%
Services
1,402.4
65.5
1,364.9
63.3
2.7%
Projects
737.1
34.5
790.0
36.7
-6.7%
* Other countries include the Baltic countries and Russia.
Organic growth
Revenue change
Change
Change in local
currencies
Organic
growth *
Currency
impact
Acquisitions and
divestments
impact
Services
2.7%
1.0%
1.4%
1.7%
-0.3%
Projects
-6.7%
-7.7%
-7.7%
1.0%
0.0%
Group, total
-0.7%
-2.2%
-2.0%
1.5%
-0.2%
* Revenue change in local currencies, excluding acquisitions and divestments
15
Caverion Annual Review 2021
Profitability
Adjusted EBITA, EBITA and operating profit
Adjusted EBITA for January–December amounted to EUR 87.7 (60.6) million, or 4.1 (2.8) percent of
revenue and EBITA to EUR 59.4 (42.4) million, or 2.8 (2.0) percent of revenue.
The profitability improved during the period. Both Services and Projects improved their
profitability. Particularly divisions Sweden, Germany, Norway, Industry and Austria progressed well.
Division Finland continued its already strong performance. In Services, the performance continued
overall on a strong level year-to-date. In Projects, market demand started to pick up following the
stabilisation seen in the second quarter. In Projects, Caverion continued to improve its profitability.
Caverion has so far coped well with the increase in material prices, affecting particularly the Projects
business.
In the adjusted EBITA calculation, the capital loss from divestments and the transaction costs
related to divestments and acquisitions totalled EUR 10.7 million in January–December. Caverion
divested its non-core Russian subsidiary at the end of the year. A large part of the capital loss is
explained by translation differences. Caverion also critically assessed its final remaining major risk
project at the end of the year. The write-downs from separately identified major risk projects
amounted to EUR 4.0 million. The project is now handed over to the customer, however final
discussions between the parties are still ongoing. The Group’s restructuring costs amounted to EUR
2.9 million, the majority of which related to the parent company. Other items totalled EUR 10.6
million. Caverion settled certain civil claims related to its old cartel case in Germany, totalling EUR 9.1
million. Other items include also EUR 1.4 million previously capitalised expenses. These were booked
as operative expenses in the fourth quarter of 2021 due to change in accounting principle of
implementation costs in cloud computing arrangements (IAS 38, IFRIC Agenda decision April 2021).
The operating profit (EBIT) for January–December was EUR 43.5 (27.2) million, or 2.0 (1.3) percent
of revenue.
Costs related to materials and supplies decreased to EUR 523.9 (529.0) million and external
services decreased to EUR 398.4 (410.1) million in January–December. Personnel expenses
amounted to a total of EUR 889.9 (902.6) million for January–December. Other operating expenses
decreased to EUR 216.3 (225.3) million, due to savings in several categories. Other operating income
decreased to EUR 2.8 (11.5) million.
Depreciation, amortisation and impairment amounted to EUR 70.3 (72.2) million in January–
December. Of these EUR 54.3 (57.0) million were depreciations on tangible assets and EUR 15.9 (15.2)
million amortisations on intangible assets. Of the depreciations, the majority related to right-of-use
assets in accordance with IFRS 16 amounting to EUR 48.3 (51.0) 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 2021
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 2020 and 2021, major risk projects only include one
risk project in Germany reported under category (2). In 2020 and 2021, provisions and legal and other
costs related to the German anti-trust matter and in 2020 also costs related to a subsidiary in Russia
sold during the second quarter have been reported under category (4).
Adjusted EBITA and items affecting comparability (IAC)
EUR million
1–12/21
1–12/20
EBITA
59.4
42.4
EBITA margin, %
2.8
2.0
Items affecting comparability (IAC)
-
Capital gains and/or losses and transaction costs related to
divestments and acquisitions
10.7
-6.0
-
Write-downs, expenses and income from major risk projects*
4.0
12.8
-
Restructuring costs
2.9
10.7
-
Other items**
10.6
0.6
Adjusted EBITA
87.7
60.6
Adjusted EBITA margin, %
4.1
2.8
* Major risk projects include only one risk project in Germany in 20 20and 2021.
** In 2020 and 2021, provisions and legal and other costs related to the German anti-trust matter. In the fourth quarter of
2021 EUR 1.4 million previously capitalised expenses were booked as operative expenses due to change in accounting
principle of implementation costs in cloud computing arrangements. In 2020, also including costs related to a subsidiary in
Russia sold during the second quarter.
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.
Result before taxes, result for the period and earnings per share
Result before taxes amounted to EUR 34.9 (16.0) million, result for the period to EUR 25.1 (8.6)
million, and earnings per share to EUR 0.17 (0.05) in January–December. Net financing expenses in
January–December were EUR 8.6 (11.2) million. This includes an interest cost on lease liabilities
amounting to EUR 3.8 (4.5) million. In January–December 2020, net financing expenses included an
exchange rate loss from an internal loan denominated in euros in Russia amounting to EUR 1.0 million.
The Group's effective tax rate was 28.2 (46.0) percent in January–December 2021. The tax rate is
now at a more normalised level.
Capital expenditure, acquisitions and disposals
Gross capital expenditure on non-current assets (excluding capital expenditure on leased assets),
including acquisitions, totalled EUR 26.0 (16.7) million in January–December, representing 1.2 (0.8)
16
Caverion Annual Review 2021
percent of revenue. Investments in information technology totalled EUR 8.0 (9.7) million. IT
investments continued to be focused on building a harmonised IT infrastructure and common
platforms. Certain IT system renewals have been done. IT systems and mobile tools have been further
developed to improve the Group’s internal processes and efficiency going forward. Other
investments, including acquisitions, amounted to EUR 18.0 (7.0) million.
Information on acquisitions and disposals during 2021 is presented in the Group’s 2021 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 4.9 (3.6) million in 2021, representing 0.2 (0.2) percent
of revenue. Of the total amount EUR 2.5 (1.8) million was recognised as an expense in the income
statement and EUR 2.4 (1.8) million of the development expenses was capitalised.
Investments in research and development amounted to EUR 3.1 million in 2019, representing 0.1
percent of revenue. Of the total amount EUR 1.8 million was recognised as an expense in the income
statement and EUR 1.3 million of the development expenses was capitalised in 2019.
Cash flow, working capital and financing
The Group’s operating cash flow before financial and tax items decreased to EUR 103.8 (157.6) million
in January–December and cash conversion (LTM) was 91.2 (158.5) percent. Lower operating cash flow
was impacted by a change in working capital of EUR -21.0 million (EUR +54.0 million) due to higher
receivables. The Group’s free cash flow amounted to EUR 67.2 (137.3) million. Cash flow after
investments was EUR 58.2 (127.8) million. The Group’s working capital was EUR -144.7
(-160.4) million at the end of December. There were improvements in divisions Denmark, Austria and
Industry compared to the previous year.
The amount of trade and POC receivables increased to EUR 541.9 (506.5) million and other current
receivables increased to EUR 33.8 (30.2) million. On the liabilities side, advances received increased
to EUR 261.3 (252.2) million, other current liabilities increased to EUR 278.3 (273.3) million and trade
and POC payables increased to EUR 197.7 (188.0) million.
Caverion’s liquidity position was strong and Caverion had a high amount of undrawn credit
facilities on 31 December 2021. Caverion’s cash and cash equivalents amounted to EUR 130.9 (149.3)
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 135.9 (138.7) million at the end of December, and the average interest rate was 2.6 (2.7) percent.
Approximately 45 percent of the loans have been raised from banks and other financial institutions
and approximately 55 percent from capital markets. Lease liabilities amounted to
EUR 135.7 (129.2) million at the end of December 2021, resulting to total gross interest-bearing
liabilities of EUR 271.6 (267.9) million.
The Group’s interest-bearing net debt excluding lease liabilities amounted to EUR 5.0 (-10.6)
million at the end of December and including lease liabilities to EUR 140.7 (118.6) million. At the end
of December, the Group’s gearing was 69.8 (60.4) percent and the equity ratio 19.0 (18.9) percent.
Excluding the effect of IFRS 16, the equity ratio would have amounted to 21.7 (21.5) percent.
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.
In December 2021 Caverion agreed with its lending parties on refinancing of its bank loans and
revolving credit facility. The new facility agreement consists of a EUR 100 million revolving credit
facility and a EUR 50 million term loan with a termination date on 15 January 2025 and the possibility
to extend the maturity by two additional years. With this arrangement Caverion prolonged its loan
maturity and strengthened its long-term liquidity.
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 1.1x according to the confirmed calculation principles.
Board of Directors, Auditors, President and CEO
Board of Directors
The Annual General Meeting was held on 24 May 2021. 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 2022. The
same members served in the Board of Directors also from the beginning of 2021 until the closing of
the Annual General Meeting 2021.
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 2021. The auditor with the main responsibility is
Antti Suominen, Authorised Public Accountant.
17
Caverion Annual Review 2021
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 was Ari Lehtoranta from 1 January 2017 until 28
February 2021. Mats Paulsson was appointed the Interim President and CEO on 28 February 2021
and continued in this position until 8 August 2021.
Caverion announced on 19 May 2021 that the Board of Directors of Caverion Corporation had
appointed Jacob Götzsche (b. 1967), M.Sc. (Econ.), as the new President and CEO of Caverion
Corporation. He started in his position on 9 August 2021.
Personnel
Personnel by division,
end of period
12/21
12/20
Change
Finland
2,819
2,876
-2%
Sweden
2,528
2,601
-3%
Norway
2,331
2,366
-1%
Industry
2,243
2,464
-9%
Germany
2,177
2,260
-4%
Austria
903
852
6%
Other countries
609
1,050
-42%
Denmark
528
565
-7%
Group Services
160
129
24%
Group, total
14,298
15,163
-6%
Caverion Group employed 14,831 (15,773) people on average in January–December 2021. At the end
of December, the Group employed 14,298 (15,163) people. Personnel expenses for January–
December amounted to EUR 889.9 (902.6) million.
Employee safety continued to be a high focus area also in 2021. 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 4.0 (4.2).
Changes in Caverion’s Group Management
Manfred Simmet was appointed as a transitional Head of Division Germany as of 19 January 2021.
He will also continue in his current position as the Head of Division Austria.
The Board of Directors of Caverion Corporation and President and CEO Ari Lehtoranta mutually
agreed on 28 February 2021 that Ari Lehtoranta stepped down from his position as President and
CEO of Caverion Corporation. The Board of Directors of Caverion Corporation appointed the Chairman
of the Board of Directors Mats Paulsson as interim President and CEO effective as from 28 February
2021.
The Board of Directors of Caverion appointed Jacob Götzsche as the President and CEO of
Caverion Corporation in May 2021. He started in this position on 9 August 2021. Jacob Götzsche
joined Caverion after a long career in ISS, where he held the position of CEO of Europe most recently.
Uno Lundberg was appointed Head of Division Sweden starting on 1 August 2021. He joined
Caverion from Falck where his position was CEO for Falck Emergency in Scandinavia. Juha Mennander,
who has been Head of Division Sweden since June 2018, has been supporting in the onboarding phase
to ensure a smooth transition and will take on new challenges at Caverion after that.
Caverion announced on 9 November 2021 that CFO Martti Ala-Härkönen has resigned to accept
a position in another company. The search for his successor has commenced. Martti Ala-Härkönen
has been Caverion’s CFO since September 2016.
Events after the review period
Caverion announced on 28 January 2022 that Deputy CEO Thomas Hietto, responsible for Services,
Sustainability & Smart City Solutions, has resigned. Group Management Board member Kari
Sundbäck, responsible for Strategy, Marketing & Communications and Supply Operations, assumed
interim responsibility for Services as well as Sustainability & Smart City Solutions on top of his current
role. The changes became effective as of 28 January 2022.
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 Q3/2021. Those risks and uncertainties are still
valid.
Operating environment.
The impacts of the corona pandemic and the consequent economic
downturn on Caverion, and the actions taken by the company are summarised separately in this
report.
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 in form of the corona pandemic. The increasing cost
base, including increasing material and energy prices, could have a material adverse effect on
Caverion.
Operational risks and uncertainties.
Projects business. These include risks related to tendering (e.g. calculation and pricing), contractual
terms and conditions, partnering, subcontractors and the supply chain, procurement and price of
materials, long-term service commitments, guaranteed service levels, and availability of qualified
personnel and project management. To manage these risks, risk assessment and review processes
18
Caverion Annual Review 2021
for both the sales and execution phase are in place, and appropriate risk reservations are being made.
The Group’s Projects Business Unit and Services Business Unit are overseeing the overall risk of
Projects and Services, respectively, and addressing the necessary actions to Divisions to mitigate and
manage the risks.
Given the risks materialised in the Projects business, 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 clearly defined project management
processes and project controls, it is possible that some risks which could lead to project write-downs,
provisions, disputes and litigations may materialise and could have a negative impact on Caverion’s
financial performance and position.
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 to, 2021, Caverion reported only one old major risk project from Germany in
adjusted EBITA, the completion of which was delayed to the end of 2021. The project has been
handed over to the customer in the end of 2021. It is possible that further risks may emerge in regard
to this old project or other projects.
Receivables.
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.
Disputes.
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.
Compliance.
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.
Some civil claims have been settled between the parties in the fourth quarter of 2021. 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
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.
Financing.
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.
Financial guarantees.
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.
Information security.
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 unauthorised access and cyber threats pose a risk to Caverion's information assets. Data
19
Caverion Annual Review 2021
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.
Goodwill.
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.
Financial risks have been described in more detail in the 2021 Financial Statements under Note
5.5 “Financial risk management”.
Caverion’s risk management principles and the description of Caverion’s key risks are available on
the Company’s website
www.caverion.com/investors
.
Impact of corona pandemic on Caverion
The corona pandemic continued to negatively impact Caverion’s business in 2021, the level of revenue
in particular. At the end of the third quarter, the effects of the corona pandemic gradually started to
ease off and the operating environment generally improved. The ongoing corona vaccination
programmes have provided a helping hand seen in the lower number of severe COVID-19 cases. In
the end of November, the rapid spread by the new omicron variant of the coronavirus started to
impact the operating environment negatively as more restrictions by governments were once again
put in place. Caverion remains somewhat cautious with the pandemic as unpredictable virus variants
and new waves of the pandemic may continue to emerge.
Caverion’s business is exposed to various risks associated with the corona pandemic 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.
The business volume and the amount of new order intake are important determinants of
Caverion’s performance. A negative scenario whereby the corona pandemic continues due to
potential new corona variants cannot be ruled out. However, a large part of Caverion’s services is vital
in keeping critical services for buildings, industries and infrastructure up-and-running at all times.
Authorisations
Repurchase and/or acceptance as pledge of own shares of the company
The Annual General Meeting of Caverion Corporation, held on 24 March 2021, 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 May 2020 to
decide on the repurchase and/or on the acceptance as pledge of the Company’s own shares. The
authorisation is valid until 24 September 2022. 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 2021.
Share issues
The Annual General Meeting of Caverion Corporation, held on 24 March 2021, 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 under the authorisation 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 cancels the
authorisation given by the general meeting on 25 May 2020 to decide on the issuance of shares. The
authorisation is valid until the end of the next Annual General Meeting, however no later than 31
March 2022.
The Board of Directors has used the current authorisation to decide on share issues during the
period. The decisions on the directed share issues without payment described in the financial
statements release published on 10 February 2022 under “Share capital and number of shares” were
based partly on the current and partly on the previous authorisation.
Information about shares in Caverion Corporation
Updated lists of Caverion’s largest shareholders and ownership structure by sector as per December
31, 2021 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
20
Caverion Annual Review 2021
Group Management Board as per December 31, 2021 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
2021. Caverion held 2,807,991 treasury shares on 1 January 2021. At the end of the reporting period,
the total number of shares in Caverion was 138,920,092. Caverion held 2,502,467 treasury shares
on 31 December 2021, representing 1.80 percent of the total number of shares and voting rights. The
number of shares outstanding was 136,417,625 at the end of December 2021.
Caverion's Board of Di rectors approved in December 2021 the commencement of a new plan
period 2022-2024 in the share-based long-term incentive scheme. The scheme is based on 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 2022-
2024 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 14 December 2021. Any potential share rewards based on PSP 2022-2024 and
RSP 2022-2024 will be delivered in the spring 2025.
More information on the incentive plans is presented in the Consolidated Financial Statements
for 2021 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 5.81 at the beginning of 2021. The closing rate on the
last trading day of the review period on 31 December was EUR 6.39. The share price increased by 10
percent during January–December. The highest price of the share during the review period January–
December was EUR 7.94, the lowest was EUR 5.06 and the average price was EUR 6.13. Share
turnover on Nasdaq Helsinki in January–December amounted to 38.6 million shares. The value of
share turnover was EUR 236.6 million (source: Nasdaq Helsinki). Caverion's shares are also traded in
other marketplaces, such as Cboe and Turquoise.
The market capitalisation of the Caverion Corporation at the end of the review period was EUR
871.7 million. Market capitalisation has been calculated excluding the 2,502,467 shares held by the
company as per 31 December 2021.
Outlook for 2022
Guidance for 2022
Guidance for 2022
: In 2022, Caverion Group’s revenue (2021: EUR 2,139.5 million) and adjusted
EBITA (2021: EUR 87.7 million) will grow compared to 2021.
Market outlook for Caverion’s services and solutions and megatrends
impacting the industry
Caverion expects market demand to be overall positive in Services and to improve also in Projects
during 2022. This scenario assumes a successful outcome from the ongoing corona vaccination
programmes and a sufficient control of the corona pandemic impacts with no significant unforeseen
setbacks in 2022. Increased material prices and longer delivery times may still affect Caverion’s
business going forward, although the inflationary pressures are expected to be more moderate in
2022 compared to 2021. Potential risks may still emerge from the supply side, not only from raw
material price inflation but also from labour shortage, furthermore potentially fuelled by increased
sick leave levels or quarantines.
The business volume and the amount of new order intake are important determinants of
Caverion’s performance in 2022. A negative scenario whereby the corona pandemic continues and
starts to negatively impact market demand cannot be ruled out. However, a large part of Caverion’s
services is vital in keeping also critical services and infrastructure up-and-running at all times.
The monetary and fiscal policies currently in place are clearly supporting an economic recovery.
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 over the next few years. The main themes in the EU stimulus packages are
green growth and digitalisation. Caverion expects the national and EU programmes to increase
demand also in Caverion’s areas of operation in 2022. The ECB decided in December 2021 to reduce
its asset purchases step-by-step over the coming quarters with a goal to stabilise inflation at its
target over the medium term, while still maintaining flexibility in the conduct of its monetary policy.
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 environment, 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 sustainability 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. This is
furthermore supported by the society end-users’ general request for an environmentally friendly built
environment. The Energy Performance of Buildings Directive (EPBD) passed by the EU requires all
new buildings from 2021 to be nearly zero-energy buildings (NZEB). Other initiatives include e.g. the
“Fit for 55” climate package and the Renovation Wave Strategy. The “Fit for 55” climate package
proposes to make EU's climate, energy, transport and taxation policies fit for reducing net greenhouse
21
Caverion Annual Review 2021
gas emissions by at least 55% by 2030, compared to 1990 levels. The objective of the European
Commission’s Renovation Wave Strategy is to at least double the annual energy renovation rate of
residential and non-residential buildings by 2030. Mobilising forces at all levels towards these goals
is expected to result in 35 million building units renovated by 2030. The increased rate and depth of
renovation will have to be maintained and increased also post-2030 in order to reach EU-wide climate
neutrality by 2050. The proposed revision of the Energy Performance of Buildings Directive (EPBD) is
an example of the coming EU directives that highlight the importance of sustainability and energy
performance of the buildings. It, among other measures, aims to establish new EU-level Minimum
Energy Performance Standards (MEPS), with enhanced requirements for both existing and new
building stock. Caverion has been putting an effort to develop its offering and solutions to meet this
demand and is well positioned with its more than 14,000 skilled employees.
Services
Caverion expects market demand to be overall positive during 2022. 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 as well as in
digital solutions development. These 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 up opportunities for Caverion
through outsourcing of industrial operation and maintenance, property maintenance as well as facility
management.
Projects
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. Caverion expects market demand to improve also in Projects during 2022.
According to Euroconstruct reports published in November 2021, the European construction
industry has already fully recovered from the negative corona impacts, as the total construction
volume in Western Europe was expected to grow by 5.6 percent in 2021, following a drop of 4.7
percent in 2020. Euroconstruct has a positive outlook for 2022, expecting a healthy growth (3.6%) in
2022 for Western European countries. The non-residential construction market is expected to
perform relatively better than the housing market in the near future according to Euroconstruct.
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.
22
Caverion Annual Review 2021
Disclosure regarding non-financial information
Driving sustainable impact
sustainable built environments. To maximise positive sustainable impact, Caverion needs to offer
solutions that help tackle the impacts of climate change and provide sustainable services for the
current and future needs of customers and end-users/society. Caverion is committed to being a
sustainable business. This means that Caverion adds value to society and to future business. To
achieve this ambition, Caverion does business in a financially, environmentally and socially
responsible way. This approach is integrated into the decision-making in strategies and actions,
always keeping in mind the expectations of the key stakeholders of the company including
shareholders, employees, partners, the communities in which Caverion is present and the global
society Caverion is part of. Caverion aims for continuous development by decreasing its carbon
footprint, increasing its carbon handprint, caring for its people and ensuring sustainable value chain
operations.
carbon-neutral society by reducing its own emissions and by promoting its energy-efficient and
sustainable solutions. Caverion is committed to work in achieving a positive carbon handprint five
times greater than its Scope-1–2 carbon footprint, by 2025.
Footprint
Caverion’s footprint and the carbon Scope-1–2 emissions – the direct impact Caverion has on the
environment – are moderate, due to the business being focused on installation and services rather
than physical product manufacturing. In 2021, in Caverion’s own operations, the CO2 emissions of its
service vehicle fleet was again more substantial than the emissions from its energy consumption.
In order to mitigate service fleet emissions, Caverion is focusing on increasing remote services,
optimising routes and increasing the use of biofuels and electric vehicles. Caverion’s service fleet in
2021 consisted of 4300 vehicles, of which over 100 were electric vehicles. The CO2 emissions of
Caverion’s service fleet remained on the same level as previous year, on the level of 15,000 tCO2. 95%
of the fuel used by vehicle fleet is diesel, with an increasing number of biodiesels in use. Promoting
ecological driving behaviour, efficient route planning and reduced pick-ups are also important to
reducing Scope-1 emissions. Work in introducing a more environmentally friendly service vehicle fleet
is on-going.
Scope-2 emissions are mainly from Caverion´s leased office buildings. Caverion is committed to
increasing the share of renewable energy use in its own buildings and to implementing everyday
energy efficiency activities, which have already been deployed at company headquarters and multiple
other locations. Some of the divisions are already shifting to 100% renewable energy use in 2022.
In 2021, Caverion conducted a comprehensive study and estimation of its Scope-3 emissions for
the first time. Caverion screened all the Scope-3 emission categories and identified purchased goods
and services and the use of sold products as the biggest emission sources. Caverion aims to be the
front-runner in its industry in carbon footprint and handprint work, so Caverion is taking the
challenging yet decisive route in calculating Scope-3 emissions. Caverion is aiming to improve the
accuracy of carbon calculations and to be able to compare them year-on-year. Based on Caverion´s
estimate, Scope 3 accounts for over 90% of its carbon emissions. The aim is to externally announce
emissions for each Scope-3 category in the future. Caverion has drawn up Group-level Scope 3
emission reduction plans with key reduction areas such as efficient waste and material management
and the procurement of products and services.
Caverion is working with its suppliers to ensure that the existing and new products Caverion
installs are fit for circularity and Caverion aims to calculate the environmental footprint of all the major
devices installed for customers. Caverion is also planning collaboration with key suppliers to reduce
the emissions and waste generated by its products. Acknowledging the biggest Scope-3 emission
sources, Caverion aims to further improve and mitigate the environmental impacts the products
Caverion offer to customers and thus to expand its carbon handprint.
23
Caverion Annual Review 2021
Handprint
The main parts of Caverion cabon handprint accumulate from, for example, smart building
automation, smart heating and cooling, EV charging, solar panel installations, energy management
and Energy Performance Contracting (EPC) and industrial solutions and advisory services. These
solutions offer major CO2-saving capabilities for customers and society. Annual savings from EPC,
energy management and EV charging stations CO2 savings is already providing savings well above
twice of Caverion´s Scope-1–2 footprint. As Caverion exapands its carbon emission calculations and
carries out more sales with a positive handprint impact, Caverion is very well positioned for
sustainable growth and achieving the ambitious 5X target by 2025.
The proposed revision of the Energy Performance of Buildings Directive (EPBD) is one example of
the coming EU directives that highlight the importance of the sustainability and energy performance
of buildings. Additionally, EU taxonomy for sustainable activities combined with heightened customer
ambitions related to climate and sustainability targets are driving sales of projects that results in a
positive carbon handprint. Many of major customers have committed to these ambitious emission
reduction targets, such as World Green Building Councils 's Net Zero Carbon Buildings Commitment.
As a provider of technical services and projects for buildings, infrastructure as well as industrial sites
and processes, Caverion is part of the solution for a green, low-carbon transition. In 2021, 33.0
percent of Caverion’s Group revenue was considered eligible with EU Taxonomy. Caverion’s taxonomy
eligible revenue consists mainly of building technology and energy generation-related projects and
services, which have a positive impact through carbon emissions reductions. Activities not considered
eligible with EU Taxonomy accounted for 67.0 percent of Group revenue in 2021, consisting of
technical building services not contributing to carbon emission reductions and industrial services
outside the renewable energy sector. Caverion’s capital expenditure and operating expenses resulting
from services or products associated with economic activities considered eligible with EU taxonomy
amounted to 13.8 percent and 3.1 percent of its 2021 denominators of Capital Expenditure KPI and
Operating Expenditure KPI, respectively. Caverion’s business model is asset-light and does not
require large-scale investments to cope with the EU taxonomy. Most of Caverion’s investments are
M&A or IT investments. More information on the calculation principles related to Caverion’s EU
Taxonomy eligible figures can be found on Caverion’s website.
*
Total of EUR 80.7 million includes EUR 54.7 million capital expenditure on leased assets
Environmentally sustainable activities according to EU taxonomy
With these levels of eligibility, Caverion demonstrates its strong position in environment and climate
protection. Caverion also reaffirms its sustainability target of having a positive carbon handprint five
times greater than its carbon footprint by 2025. In the longer term, Caverion’s target by 2030 is to
create a sustainable impact through its solutions, with a positive carbon handprint 10 times greater
than its carbon footprint (Scope 1-2).
greenhouse gas emissions, making them the single largest energy consumer in Europe (source: EU).
Caverion’s solutions help its customers to improve their energy efficiency and thereby reduce their
carbon footprint. 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.
Caverion has identified close to 30 EU taxonomy activities in seven sectors of economic activity. The
most significant sectors for Caverion include Construction & Real Estate and Energy, together
representing approximately 87% of the total EU taxonomy eligible revenue. The relevant sustainable
activities relating to the objective of climate change mitigation for Caverion according to EU Taxonomy
include the following seven activity categories, with company products, technologies and services
listed below each category:
25
Caverion Annual Review 2021
Caverion did not classify any activities under categories “Construction of new buildings (7.1)” and
“Renovation of existing buildings (7.2)” as the company interprets these categories as belonging
building construction and renovation activities rather than technical building system related
installations and services. However, had this approach been adopted, Caverion would have been able
to report a material additional share of its building technology revenue as taxonomy eligible.
With regard to taxonomy activity category “Energy”, Caverion’s interpretation is that
“Construction or operation of energy generation facilities” includes Caverion’s installation projects as
well as preventive maintenance and other services that are crucial to the energy generation process
(i.e. to keeping energy generation running) although the company does not engage in energy
generation activities as such.
Social and employee aspects
In 2021, Caverion continued to build its capabilities in becoming a leading service company and
selective master of projects as well as being a pioneer in smart technologies. In order to achieve these
ambitious business targets, Caverion wants to become the most attractive employer, both for current
employees and potential future employees.
According to a comprehensive 2021 customer survey, Caverions strengths were identified to be
its service mindset and the ability to respond quickly to, and in an efficient manner solve, the
challenges of its customers. Our people are the interface to our customers in everything we do. It is
therefore crucial to offer a working environment where everyone can perform their best and thereby
provide an excellent level of service to our customers. To ensure this, Caverion has defined key
principles in management as well as clear guidance on safety, leadership and many other important
people-based practices. In 2021, Caverion enhanced its common ways of working across divisions
and has developed its reporting in many management areas. In 2021, Caverion furthermore finalised
its new values and defined value-based behaviours that serve as the foundation for our way of
leading and working together. These will be published as part of Caverion´s updated strategy in 2022.
The abrupt effects of the pandemic, combined with slower-paced changes brought about by the
megatrends of digitalisation and sustainability, have impacted our people. Not only has the way we
do our work had to change, but also the type of work we do has started to change. In order to be able
to react to and capitalise on these changes, we have kept our people-related focus on previously
identified areas: Top performance at every level, Inspiring leadership, Right people in right places and
Professional growth.
Caverion’s Service and Project business units have continued to enhance both their technical and
management capabilities. The work on Project Management capability enhancement has started to
show results, and Caverion currently has a much better foundation to build on. A new area given extra
focus has been Sales Competence Development by building a common competence frame and
assessing key sales positions at the end of 2021. The new digital learning platform Campus enables
easy access to Caverion’s learning offering and enhances Caverion’s ability to manage learning paths
on different topics.
Caverion is among the top performers in terms of safety in its industry. The accident frequency
rate was record low in 2021 at 4.0 (4.2). Caverion continues to develop even safer ways of working,
and a long-term target is to get as close to zero accidents as possible. Every Caverion employee has
the right and responsibility to perform their work safely – our safety mission is to guarantee a safe
working environment and working methods, and to be a leader in the field of proactive safety work.
In recent years, Caverion´s work safety culture has taken major steps forward. As a result of our
systematic approach, more and more attention in being drawn to issues that improve work safety.
Caverion strives to understand, for example, the root cause of each accident and to spend more time
on investigating it. Caverion then develops and implements relevant work-safety measures to
prevent similar accidents from happening in the future.
Diversity, equity and inclusion are important for Caverion, and work to live by these values is an
important part Caverion’s target to build a Performance Culture. As a company Caverion is committed
to the UN’s Sustainable development goals. Caverion believes that offering a diverse and inclusive
work environment is a prerequisite to attracting the best people in the industry. It is fundamentally
important for Caverion that everyone feels included and valued at work. We are at the beginning of
the journey, but Caverion is committed to making a difference regarding diversity and equity in our
industry. Caverion’s Board of Directors represents five different nationalities and 29% of the members
of Caverion Board of Directors are female.
It is crucially important for all managers to commit to our common values and act as role models.
Caverion employees think that 89% of managers demonstrate honest and ethical behaviour in their
daily work, 87% of employees feel respected by their managers and 91% by their colleagues. But that
is not enough – everyone needs to contribute. Therefore, Caverion will focus on creating awareness
and interest by providing knowledge throughout the company.
In 2021, Caverion built a frame for the activities that will take as further on this journey. The
divisions have worked on local activities and will continue doing so, and Caverion will also have
common company-wide activities embedded into its Culture Journey.
Human rights
In accordance with Caverion’s Code of Conduct, the company 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 provides active
guidance towards improved equality and promotes gender equality and diversity. Human rights
safeguarded by international conventions are respected. Caverion applies a zero-tolerance approach
to discrimination, harassment or any unlawful act. In 2021, company-wide Code of Conduct eLearning
was rolled out to all employees with an excellent completion rate of 92%. This training is also part of
Caverion employee onboarding during the first week of employment.
Caverion utilises a separate Supplier Code of Conduct with its partners. Suppliers, subcontractors and
other business partners shall:
>
Respect human rights by following international conventions, in particular the United
Nations’ Universal Declaration of Human Rights;
26
Caverion Annual Review 2021
>
Comply with fundamental conventions as defined by the International Labour
Organization;
>
Ensure that their own suppliers comply with requirements that meet or exceed the
requirements laid down in Caverion’s Supplier Code of Conduct.
In 2021, the sign-off rate for the Supplier Code of Conduct by major Caverion suppliers was 66%
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 an ethical reporting channel through which its employees and suppliers can
confidentially and anonymously report their observations of suspected misconduct. In addition,
reports can be submitted via email.
Anti-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, the use of ethical reporting channels, reviews, due diligence
measures and approvals) in tender preparation and procurement activities as well as in the delivery
and execution of Caverion services and projects.
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 also has a
Group-level Compliance unit and network headed by the Compliance Officer. 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. Caverion also operates a
Group Ethics & Compliance Committee consisting of the President and CEO, CFO, Group General
Counsel, Head of HR and Safety and the Compliance Officer. The committee reviews the annual
compliance plan and its progress, the reported or otherwise identified compliance cases and other
Group-level ethics and compliance matters.
Caverion has compiled Group-level policies, instructions and guidelines in a structured manner
into Caverion Guidelines. Caverion’s Code of Conduct is the cornerstone of Caverion’s policies. The
Code of Conduct clearly sets out Caverion’s policy on corruption and bribery: Caverion applies a zero-
tolerance approach to corruption, bribery, anti-competitive practices, discrimination, harassment or
any unlawful act.
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 its
relationships with its suppliers, subcontractors and other business partners;
>
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.
27
Caverion Annual Review 2021
Caverion sustainability performance and KPIs
For more information on Caverion sustainability KPIs and actions, please read the Sustainability Report 2021
28
Caverion Annual Review 2021
Key figures
29
Caverion Annual Review 2021
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.
30
Caverion Annual Review 2021
Shareholders
At the end of December 2021, the number of registered shareholders in Caverion was 27,582 (2020:
26,747). At the end of December 2021, a total of 31.1 percent of the shares were owned by nominee-
registered and non-Finnish investors (2020: 31.0%).
Updated lists of Caverion’s largest shareholders, the holdings of public insiders and ownership
structure by sector as per December 31, 2021, are available on Caverion’s website at
www.caverion.com/investors.
No shareholder, 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, 2021
Sector
Share-
holders
% of
owners
Shares
% of all
shares
Nominee registered and non-Finnish holders
143
0.5
43,153,761
31.1
Households
26,075
94.5
25,276,452
18.2
General government
18
0.1
19,457,480
14.0
Financial and insurance corporations
50
0.2
12,730,346
9.2
Non-profit institutions
247
0.9
4,946,233
3.6
Non-financial corporations and housing corporations
1,049
3.8
33,355,820
24.0
Total
27,582
100.0
138,920,092
100.0
Largest shareholders on December 31, 2021
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
5,759,892
4.1
5. Säästöpankki funds
3,701,562
2.7
6. Ilmarinen Mutual Pension Insurance Company
3,602,955
2.6
7. Elo Mutual Pension Insurance Company
3,229,583
2.3
8. Caverion Oyj
2,502,467
1.8
9. The State Pension Fund
2,050,000
1.5
10. Nordea funds
1,994,614
1.4
11. Brotherus Ilkka
1,803,765
1.3
12. OP funds
1,510,055
1.1
13. Aktia funds
1,050,000
0.8
14. Kaleva Mutual Insurance Company
969,025
0.7
15. Sinituote Oy
772,400
0.6
16. S-Bank funds
607,315
0.4
17. Veritas Pension Insurance Company Ltd .
603,470
0.4
18. Hisra Consulting and Finance Oy
550,000
0.4
19. Fondita funds
490,000
0.4
20. Lehtoranta Ari
367,051
0.3
20 largest, total
75,966,803
54.7
Other shareholders
34,408,781
24.8
Nominee registered total
28,544,508
20.5
All shares
138,920,092
100.0
31
Caverion Annual Review 2021
Public insider ownership of Caverion Group on December 31, 2021
Board of Directors
Direct
holdings
Holdings of
controlled
companies
Total
Aho Jussi
Member
50,713
-
50,713
Ehrnrooth Markus
Vice Chairman of the Board
13,735
-
13,735
Hallengren Joachim
Member
16,713
11,000
27,713
Hinnerskov Thomas
Member
50,713
-
50,713
Jahn Kristina
Member
6,501
-
6,501
Paulsson Mats
Chairman of the Board
18,130
136,200
154,330
Soravia Jasmin
Member
6,501
-
6,501
Total
163,006
147,200
310,206
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
110,967
110,967
Götzsche Jacob
President and CEO
55,000
55,000
Hietto Thomas
Deputy DEO. Head of Business Unit Services,
Sustainability & Smart City Solutions
159,422
159,422
Kaiser Michael
Head of Business Unit Projects
164,578
164,578
Lundberg Uno
Head of Division Sweden
10,000
10,000
Mennander Juha
Adviser to President and CEO (interim)
78,923
78,923
Schrey-Hyppänen Minna
Head of Human Resources
87,361
87,361
Simmet Manfred
Head of Division Austria
82,980
82,980
Sørensen Carsten
Head of Division Denmark
93,006
93,006
Sundbäck Kari
Head of Strategy, Marketing, Communications,
Transformation and Supply Operations
94,224
94,224
Tamminen Ville
Head of Division Finland
101,833
101,833
Viitala Anne
Head of Legal & Compliance
80,100
80,100
Total
1,262,841
1,262,841
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
Caverion Lietuva UAB
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
Teollisuus Invest Oy
Helsinki
100.00
GTS Automation GmbH
Bad Vöslau
100.00
GTS Automation System SRL (RO)
Jilava
100.00
Huurre Sweden Ab
Västerås
100.00
Caverion Poland S.A.
Zabrze
100.00
Maintpartner RO S.p.z.oo
Gdynia
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.
32
Caverion Annual Review 2021
Consolidated income statement
EUR million
Note
1.1.-31.12.2021
%
1.1.-31.12.2020
%
Revenue
2.1
Other operating income
2.2
Materials and supplies
-523.9
-529.0
External services
-398.4
-410.1
Employee benefit expenses
2.2
-889.9
-902.6
Other operating expenses
2.2
-216.3
-225.3
Share of results in associated companies
5.7
Depreciation, amortisation and impairment
2.3
-70.3
-72.2
Operating profit
2.0
1.3
Financial income
Exchange rate differences (net)
-0.9
Financial expenses
-9.4
-11.2
Financial income and expenses
2.4
-8.6
-11.2
Result before taxes
1.6
0.7
Income taxes
2.5
-9.8
-7.3
Result for the financial year
1.2
0.4
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.-31.12.2021
1.1.-31.12.2020
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
-0.1
-0.7
-Deferred tax
-0.5
Change in fair value of other investments
5.4
- Deferred tax
Items that may be reclassified subsequently to profit or
loss:
Translation differences
-9.3
Other comprehensive income, total
-9.5
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
Konsernitilinpäätös
33
Caverion Annual Review 2021
Consolidated statement of financial position
EUR million
Note
Dec 31, 2021
Dec 31, 2020
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, 2021
Dec 31, 2020
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
5.2
Share capital
Treasury shares
-2.4
-2.8
Translation differences
-6.0
-14.1
Fair value reserve
-0.2
-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
34
Caverion Annual Review 2021
Consolidated statement of cash flows
EUR million
Note
1.1.-
31.12.2021
1.1.-
31.12.2020
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:
-40.4
-0.5
Total change in working capital
-21.0
Operating cash flow before financial and tax items
Interest paid
-10.0
-10.6
Other financial items, net
Interest received
Dividends received
Taxes paid
-14.3
-8.5
Net cash generated from operating activities
Cash flow from investing activities
Acquisition of subsidiaries and businesses,
net of cash
4.1
-9.7
-2.1
Disposals of subsidiaries and businesses,
net of cash
4.1
-0.9
Purchases of property, plant and equipment
4.3
-4.8
-5.1
Purchases of intangible assets
4.3
-7.4
-9.1
Proceeds from sale of tangible and intangible assets
Proceeds from sale of investments
Net cash used in investing activities
-22.3
-11.8
EUR million
Note
1.1.-
31.12.2021
1.1.-
31.12.2020
Cash flow from financing activities
Change in loan receivables
Proceeds from borrowings
5.3
Repayments of borrowings
5.3
-53.2
-1.5
Repayments of lease liabilities
5.4
-46.9
-48.2
Change in current liabilities, net
5.3
Hybrid capital repayment
5.2
-66.1
Proceeds from hybrid capital
5.2
Hybrid capital expenses and interests
-2.4
-3.0
Dividends paid
-27.3
Other distribution of equity
-0.1
Net cash used in financing activities
-79.5
-68.5
Net change in cash and cash equivalents
-21.3
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
35
Caverion Annual Review 2021
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, 2021
-14.1
-0.1
-2.8
Comprehensive income 1-12/2021
Result for the period
Other comprehensive income:
Change in fair value of defined benefit pension
-0.1
-0.1
-0.1
- Deferred tax
-0.5
-0.5
-0.5
Change in fair value of other investments
5.4
-Deferred tax
Translation differences
Comprehensive income 1-12/2021, total
Dividend distribution
5.2
-27.3
-27.3
-27.3
Share-based payments
6.2
Transfer of own shares
5.2
-0.4
Hybrid capital interests and costs after taxes
5.2
-1.9
-1.9
-1.9
Equity on December 31, 2021
-6.0
-0.2
-2.4
STATEMENT OF CHANGES IN EQUITY
36
Caverion Annual Review 2021
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 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
The notes are an integral part of the consolidated financial statements.
BASIS OF PREPARATION
37
Caverion Annual Review 2021
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
38
Caverion Annual Review 2021
General Information
“Caverion” or “Caverion Group”) is a
. 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
,
, 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,
, 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
, 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 9 February 2022 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
with the International Financial Reporting Standards (IFRS) as adopted by the European Union
observing the standards and interpretations effective on December 31, 2021. 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 2021 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
39
Caverion Annual Review 2021
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make
estimates and exercise judgement in the application 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
2021
Income statement
January-December
2020
Statement of
financial position
Dec 31, 2021
Statement of
financial position
Dec 31, 2020
1 EUR = DKK
7.4371
7.4543
7.4364
7.4409
NOK
10.1635
10.7261
9.9888
10.4703
PLN
4.5647
4.4436
4.5969
4.5597
RUB
87.2208
82.6883
85.3004
91.4671
SEK
10.1452
10.4875
10.2503
10.0343
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 2021, 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.
Accounting for cloud computing arrangements
In April 2021, the IFRS Interpretations Committee issued its final agenda decision on the accounting
treatment of configuration or customisation costs in a cloud computing arrangement (IAS 38
Intangible Assets). In this agenda decision, the Interpretations Committee examined whether,
applying IAS 38, the configuration and customisation of software shall be recognised as an
intangible asset and, if an intangible asset is not recognised, how these configuration and
customisation costs are to be recognised. Caverion’s accounting principles have been updated to
comply with this agenda decision. If implementation includes only costs incurred to prepare the
supplier’s application software in a Software as a Service arrangement for its indented use and
Caverion do not control the software being configured, then the costs are not capitalised. Due to this
change, EUR 1.4 million capitalised implementation expenses were booked as operative expenses.
40
Caverion Annual Review 2021
2
Financial performance
Revenue, EUR million
2,139.5
EBITDA, EUR million
113.8
EBITA, EUR million
59.4
In this section
This section comprises the following notes
describing Caverions’s financial performance in
2021:
FINANCIAL PERFORMANCE
41
Caverion Annual Review 2021
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
2021
%
2020
%
Business units
Services
1,402.4
66%
1,364.9
63%
Projects
737.1
34%
790.0
37%
Total revenue from contracts with customers
2,139.5
100%
2,154.9
100%
Revenue by division
Sweden
424.4
20%
420.6
20%
Finland
403.9
19%
416.0
19%
Germany
374.1
17%
368.8
17%
Norway
352.5
16%
318.9
15%
Industry
256.8
12%
275.9
13%
Austria
188.7
9%
191.4
9%
Denmark
80.0
4%
93.6
4%
Other countries
59.0
3%
69.7
3%
Total revenue from contracts with customers
2,139.5
100%
2,154.9
100%
Revenue from contracts with customers is recognised mainly over time.
The corona pandemic continued to negatively impact on Group’s revenue in 2021. In Services,
Caverion experienced increased investment activity among several customer segments as of the
second quarter. As an example, certain annual industrial shutdowns in Finland postponed from 2020
took place in the second quarter of 2021. In Projects, market demand continued on a lower level in
the beginning of the year, after which there were clear signs of market stabilisation as of the end of
the second quarter. In the third quarter, market demand started to gradually pick up also in Projects
and the trend continued until the end of the year. Stimulus packages did not yet have a clear impact
on general demand in 2021.
Contract balances
EUR million
12/31/2021
12/31/2020
Contract assets
POC receivables
195.6
190.0
Work in progress
3.2
1.9
Contract liabilities
Advances received
1)
261.3
252.2
Accrued expenses from long-term contracts
30.2
24.4
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 2021 or 2020.
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.
FINANCIAL PERFORMANCE
42
Caverion Annual Review 2021
In Services business performance obligations are maintenance agreements and separate repair
orders which are distinct.
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
2021
2020
Within one year
937.5
842.1
More than one year
926.3
767.0
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.
FINANCIAL PERFORMANCE
43
Caverion Annual Review 2021
2.2
Costs and expenses
Employee benefit expenses
EUR million
2021
2020
Wages and salaries
1)
715.2
726.6
Pension costs
2)
61.5
66.5
Share-based compensations
4.0
2.8
Other indirect employee costs
109.3
106.8
Total
889.9
902.6
Average number of personnel
14,831
15,773
1)
Division Sweden received a grant from the government relating to the corona pandemic for short-term layoffs and sick-leave
compensation amounting to about EUR 1.5 (3.6) million. This has been presented in income statement as a reduction of personnel
expenses. Usually government grants are recognised as other operating income unless they compensate a specific cost item in the
income statement.
2)
In 2021, division Sweden received a payment from collectively bargained AGS group sickness insurance policy amounting to EUR 7.5
million. Payment was made to the employers that had previously received repayment of AGS premiums for the years 2004–2008
and which had a valid insurance contract in December 2020, when the Confederation of Swedish Enterprise and the Swedish Trade
Union Confederation reached an agreement concerning the payment. This has been presented in income statement as a reduction of
pension expenses, where also the original actual expenses have been recognised.
Information on the management’s salaries and fees and other employee benefits is presented in
note 6.1 Key management compensation.
Other operating income and expenses
EUR million
2021
2020
Loss on disposal of tangible and intangible assets
1)
10.7
-0.1
Expenses for office facilities
5.0
4.2
Other expenses for leases
24.6
23.1
Voluntary indirect personnel expenses
10.3
10.1
Other variable expenses
40.4
66.4
Travel expenses
33.6
34.8
IT expenses
40.8
40.3
Premises expenses
9.7
10.1
Other fixed expenses
2)
41.2
36.3
Total of other operating expenses
216.3
225.3
Other operating income
3)
2.8
11.5
Total of other operating items
213.4
213.8
1)
In 2021 EUR 10.0 million related to divestment of our non-core Russian subsidiary.
2)
Other fixed expenses include consulting, legal, administrative, marketing and other fixed costs. In 2021, Caverion settled certain civil
claims related to its old cartel case in Germany, totalling EUR 9.1 million.
3)
Other operating income includes e.g. gains on the sale of tangible and intangible assets and rental income.
The Group's research and development expenses amounted to EUR 4.9 (3.6) million in 2021. Research expenditure is expensed in
the income statement as incurred.
Audit fee
The Annual General Meeting, held on 24 March 2021, 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
2021
2020
Ernst & Young
Audit fee
0.8
0.9
Statement
0.0
0.0
Tax services
0.1
0.0
Other services
0.3
0.0
Others
0.0
0.1
Total
1.1
1.0
Expenses for non-audit services Ernst & Young Oy has provided to Caverion Group entities in Finland
amounted to EUR 0.2 (0.0) million during the financial year 2021. The services included tax services
(EUR 0.2 million) and other services (EUR 0.1 million).
FINANCIAL PERFORMANCE
44
Caverion Annual Review 2021
Restructuring costs
EUR million
2021
2020
Personnel related costs
3.0
9.0
Rents
-0.1
1.5
Other restructuring costs
0.0
0.2
Total
2.9
10.7
Due to the lengthened corona crisis and the resulting downturn, Caverion announced in November
2020 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
2021
2020
Depreciation and amortisation by asset category
Intangible assets
Allocations from business combinations
-3.9
-3.8
Other intangible assets
-12.1
-11.4
Tangible assets
1)
-54.3
-57.0
Total
-70.3
-72.2
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
2.4
Financial income and expenses
EUR million
2021
2020
Financial income
Dividend income on investments
0.0
0.0
Interest income on loans and other receivables
0.4
0.7
Other financial income on loans and other receivables
0.1
0.1
Financial income, total
0.5
0.8
Financial expenses
Interest expenses on liabilities at amortised cost
-4.2
-4.9
Other financial expenses on liabilities at amortised cost
-1.5
-1.8
Interest expenses on leases
-3.8
-4.5
Changes in fair values on financial instruments at fair value
through profit and loss account
0.0
0.0
Financial expenses, total
-9.4
-11.2
Exchange rate gains
19.0
26.7
Exchange rate losses
1)
-18.6
-27.6
Exchange rate differences, net
0.3
-0.9
Financial expenses, net
-8.6
-11.3
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.
The booking 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.
FINANCIAL PERFORMANCE
45
Caverion Annual Review 2021
2.5
Income taxes
Income taxes in the income statement
EUR million
2021
2020
Tax expense for current year
6.7
9.0
Tax expense for previous years
-0.3
-1.3
Change in deferred tax assets and liabilities
3.4
-0.3
Total income taxes
9.8
7.3
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
2021
2020
Result before taxes
34.9
16.0
Income taxes at the tax rate in Finland (20.0%)
7.0
3.2
Effect of different tax rates outside Finland
-1.0
-1.6
Tax exempt income and non-deductible expenses
1.4
-1.0
Impact of the changes in the tax rates on deferred taxes
1)
0.0
0.1
Impact of losses for which deferred taxes is not recognised
3.3
7.2
Unrecognized losses from previous years
0.0
0.0
Reassessment of deferred taxes
-0.6
0.8
Taxes for previous years
-0.3
-1.3
Income taxes in the income statement
9.8
7.3
1)
In 2020, the effect of the change of tax rate mainly in Sweden from 21.4% to 20.6% in 2021.
Group's effective tax rate was 28.2 (46.0) percent in January-December 2021. Due to the prudence
principle applied, the deferred tax asset on losses was not fully recorded for two divisions. The
economic uncertainties caused by the corona pandemic were also considered in this valuation
assessment.
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 evaluations by
management. Evaluating the total amount of income taxes at the Group level requires significant
judgement, so the amount of total tax includes uncertainty.
2.6
Earnings per share
2021
2020
Result for the financial year, EUR million
25.0
8.6
Hybrid capital expenses and accrued interest after tax, EUR million
-1.9
-2.3
Adjusted result for the financial year, EUR million
23.1
6.3
Weighted average number of shares (1,000 shares)
136,298
136,105
Earnings per share, basic, EUR
0.17
0.05
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 2021 and 2020.
46
Caverion Annual Review 2021
3
Working capital and
deferred taxes
Working capital,
EUR million
-144.7
EUR milion
2021
2020
Inventories
16.9
16.3
Trade and POC receivables
541.9
506.5
Other current receivables
33.8
30.2
Trade and POC payables
-197.7
-188.0
Other current liabilities
-278.3
-273.3
Advances received
-261.3
-252.2
Working capital
-144.7
-160.4
In this section
This section comprises the following notes describing Caverion’s
working capital and deferred taxes for 2021:
....................................................................
WORKING CAPITAL AND DEFERRED TAXES
47
Caverion Annual Review 2021
3.1
Inventories
EUR million
2021
2020
Raw materials and consumables
13.7
13.3
Work in progress
3.2
1.9
Advance payments
0.0
1.0
Total
16.9
16.3
The Group did not make any material write-downs in inventories in 2021 or 2020.
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
2021
2020
EUR million
Carrying value
Carrying value
Trade receivables
346.0
316.5
POC-receivables
195.6
190.0
Prepayments and other accrued income
20.5
18.2
Other receivables
13.9
12.7
Non-current receivables
1)
9.6
8.1
Total
585.6
545.6
1)
EUR 4.4 (4.3) million were loan receivables, EUR 3.3 (2.4) million defined benefit pension plan assets and EUR 1.9 (1.4) million
other receivables.
The average amount of trade receivables was EUR 287.9 (272.6) million in 2021.
Aging profile of trade receivables
Age analysis of trade receivables December 31, 2021
EUR million
Carrying amount
Impaired
Gross
Not past due
1)
254.9
-0.7
255.6
1 to 90 days
35.1
-0.1
35.2
91 to 180 days
25.2
-0.4
25.6
181 to 360 days
4.6
-0.5
5.1
Over 360 days
26.1
-2.8
28.9
Total
346.0
-4.5
350.5
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
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.
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. Due to the continuing
corona pandemic in 2021, the Group continued to place special attention to evaluating customer
WORKING CAPITAL AND DEFERRED TAXES
48
Caverion Annual Review 2021
credit risks related to its receivables. The growth in the overdue category 91 to 180 days compared
to the previous year relates mainly to one project in one Division, where revenue has been
recognized for only a small part of the receivable and where legal opinions validate the receivable
at risk. Caverion Group did not experience any major unexpected credit losses in 2021. 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 +1.6 (-3.0) million due to
settlements of certain old receivables. There were no material credit losses due to the corona
pandemic. The Group’s maximum exposure to credit risk at the balance sheet date (December 31,
2021) is the carrying amount of the financial assets. There are EUR 30.7 (32.9) million overdue
receivables that are more than 180 days old. The majority of these receivables are related to
disputed contracts and for many receivables revenue has been recognized for only a small part of
the receivable. 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
2021
2020
EUR million
Carrying value
Carrying value
Non-current liabilities
Liabilities of derivative instruments
0.0
0.0
Other liabilities
7.1
5.7
Total non-current payables
7.1
5.7
Current liabilities
Trade payables
167.4
163.6
Accrued expenses
144.1
144.1
Accrued expenses from long-term contracts
30.2
24.4
Advances received
1)
261.3
252.2
Other payables
102.1
94.6
Total current payables
705.2
678.9
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
49
Caverion Annual Review 2021
3.4
Provisions
EUR million
Warranty provision
Provisions for loss making projects
Restructuring provisions
Legal provisions
Other provisions
Total
January 1, 2021
24.1
7.8
5.2
3.7
7.2
48.0
Translation differences
0.1
0.0
0.0
0.0
0.0
0.1
Provision additions
5.5
9.2
1.1
1.3
1.0
18.0
Released during the period
-5.4
-7.2
-4.2
-0.9
-2.4
-20.1
Reversals of unused provisions
0.0
0.0
-0.6
-0.6
0.0
-1.3
Acquisitions through business combinations
Business disposals
December 31, 2021
24.2
9.8
1.5
3.4
5.8
44.6
Non-current provisions
8.8
0.2
0.1
1.5
10.6
Current provisions
15.4
9.8
1.3
3.3
4.3
34.0
Total
24.2
9.8
1.5
3.4
5.8
44.6
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
The recognition of provisions involves estimates concerning probability, time of realization and quantity. As of December 31, 2021 the provisions amounted to EUR 44.6 (48.0) 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
50
Caverion Annual Review 2021
3.5
Deferred tax assets and liabilities
EUR million
2021
2020
Deferred tax asset
16.8
19.6
Deferred tax liability
-34.0
-31.6
Deferred tax liability, net
-17.1
-12.0
Changes in deferred tax assets and liabilities:
Deferred tax liability, net January 1
-12.0
-13.4
Translation difference
-0.4
0.5
Changes recognised in income statement
-3.5
0.3
Changes recognised in comprehensive income
-0.5
0.5
Changes recognised in equity
0.5
0.6
Acquisitions and allocations
-0.9
-0.5
Disposals
-0.4
Deferred tax liability, net December 31
-17.1
-12.0
WORKING CAPITAL AND DEFERRED TAXES
51
Caverion Annual Review 2021
Changes in deferred tax assets and liabilities before the offset
2021
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
6.5
0.1
0.1
6.7
Tax losses carried forward
23.1
0.0
0.0
-0.3
22.7
Pension obligations
9.7
0.1
-0.1
-0.3
9.4
Percentage of completion method
0.7
0.0
0.8
-0.2
1.4
Right-of-use assets (IFRS 16)
0.9
0.0
0.1
1.1
Other items
3.8
0.0
0.3
0.3
-0.2
4.2
Total deferred tax assets
44.8
0.2
1.2
-0.3
0.3
-0.7
45.4
Deferred tax liabilities:
Allocation of intangible assets
1)
38.7
0.6
-0.1
1.0
40.2
Accumulated depreciation differences
2.4
0.0
-0.3
0.0
2.0
Pension obligations
0.8
0.1
0.1
1.0
Percentage of completion method
13.6
4.6
0.1
-0.3
18.1
Other items
1.3
0.0
0.4
-0.5
0.0
0.0
1.1
Total deferred tax liabilities
56.8
0.6
4.7
0.1
-0.5
1.1
-0.3
62.5
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
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 45.0 million, for which corresponding deferred
tax assets of EUR 12.8 million have not been recorded as of 31 December 2021 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
52
Caverion Annual Review 2021
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.
53
Caverion Annual Review 2021
4
Business
combinations and
capital expenditure
In 2021, Caverion completed seven bolt-on
acquisitions and sold its Russian operations.
In this section
This section comprises the following notes, which describe Caverion’s
business combinations and capital expenditure in 2021:
..................................................................
BUSINESS COMBINATIONS AND CAPEX
54
Caverion Annual Review 2021
4.1
Acquisitions and disposals
Acquisitions
Acquisitions completed in 2021
Acquired unit
Division
Business unit
Technical area
Acquisition type
Acquisition
period
Number of
employees
Prior fiscal year annual
sales, EUR million
Electro Berchtold
Austria
Services
Technical maintenance
Business
January
13
2.5
RPH Linc
Sweden
Services
Security and safety
Business
July
9
2.5
GTS Immobilien GmbH
Austria
Projects
Building automation
Shares
July
40
5.8
Felcon GmbH
Austria
Services
Ventilation and air conditioning
Shares
September
13
2.4
Bott Kälte- und Klimatechnik
Germany
Services
Cooling
Business
October
8
0.7
Rørlegger'n Innlandet
Norway
Services
Heating and sanitation
Business
December
7
0.7
Merius
Industry
Services
Industrial design and advisory
Business
December
20
1.4
Assets and liabilities of the acquired businesses (including fair value adjustments)
EUR million
2021
2020
Intangible assets
8.7
Right-of-use assets
0.7
0.5
Tangible assets
0.4
2.7
Inventories
0.4
0.1
Investments
0.1
Trade and other receivables
2.6
0.1
Deferred tax assets
0.3
Cash and cash equivalents
0.9
0.2
Total assets
14.1
3.6
Interest-bearing debt
0.2
Trade payables
0.4
0.0
Advances received
0.1
Pension liabilities
0.1
Provisions
0.2
Lease liabilities
0.7
0.5
Deferred tax liabilities
1.1
0.5
Other liabilities
1.1
0.3
Total liabilities
3.9
1.4
Net assets
10.2
2.2
Acquisition cost paid in cash during the fiscal period
10.6
2.1
Contingent consideration, to be paid during future
fiscal periods
4.5
0.3
Goodwill
4.9
0.2
Year 2021
In 2021, Caverion acquired the shares of GTS Immobilien GmbH and Felcon GmbH in Austria as well
as the businesses of Austrian Electro Berchtold GmbH, Swedish RPH Linc AB, German Bott Kälte- und
Klimatechnik, Norwegian Rørlegger'n Innlandet AS and Finnish Merius Oy.
In the fair value measurement of the 2021 acquisitions, customer relationships, technology and
order backlog were identified as intangible assets. A total fair value of EUR 5.6 million was allocated
to customer relationships, EUR 2.7 million to technology and EUR 0.5 million to order backlog. The
acquisition prices of the 2021 acquisitions contained EUR 0.4 million of payments which were
conditional to continuing employment and therefore treated as personnel benefit expenses during
the period to which they relate.
GTS
On 2 July 2021, Caverion completed the acquisition of Austrian GTS Immobilien GmbH including its
subsidiaries. The transaction excluded, however, the non-automation business of GTS as well as its
Swiss operations. Through its subsidiary GTS Automation GmbH, GTS Group is a well-known company
on the Austrian market for building automation. Through the acquisition, Caverion supported its
growth strategy and strengthened its market position in smart technologies. At the time of
acquisition, GTS employed approx. 40 employees.
The full year 2021 revenue of the acquired business amounted to EUR 5.6 million and EBITDA to
EUR 0.3 million according to the acquired companies' local accounting standards. IFRS revenue after
the acquisition date amounted to EUR 3.2 million and EBITDA excluding IFRS 16 adjustments to EUR
0.3 million. The goodwill arising from the acquisition was mainly attributable to workforce and
expected synergies. The goodwill was not tax deductible. The transaction price was not disclosed.
BUSINESS COMBINATIONS AND CAPEX
55
Caverion Annual Review 2021
Other acquisitions
In December 2020, Caverion signed an agreement to acquire the business of Electro Berchtold GmbH
in Austria. The transaction was completed on 1 January 2021. Electro Berchtold is a provider of
maintenance services for ski lift and snow systems and had 13 employees at the time of the
acquisition. The acquired business's IFRS revenue totaled EUR 1.8 million and EBITDA EUR 0.1 million
for the whole of 2021. No goodwill arose as a result of the acquisition and the transaction price was
not disclosed.
On 1 July 2021, Caverion closed on an agreement to acquire the business of Swedish RPH Linc AB
and further strengthened its smart security solutions offering. RPH Linc is a system integrator in the
area of electrical security focusing on high-end security solutions for enterprise and multisite
customers and the public sector. The acquisition was a bolt-on acquisition for Caverion in the area of
smart technology services and included the transfer of 9 employees into Caverion's service. For the
fiscal year ending in April 2021, the acquired business's revenue amounted to EUR 2.5 million and
EBITDA to EUR 0.6 million in accordance with the company's local accounting standards. The IFRS
revenue after the acquisition date amounted to EUR 1.2 million and EBITDA to EUR 0.2 million for
fiscal year 2021. The goodwill arising from the acquisition was mainly attributable to personnel know-
how and expected synergies. EUR 0.9 million of the IFRS goodwill was considered tax deductible. The
transaction price was not disclosed.
On 13 September 2021, Caverion closed on an agreement to acquire the shares of Felcon GmbH
in Austria. Felcon is a small clean room specialist based in Vienna, Austria and provides design,
construction, installation, validation as well as technical services, among others. Its customers include
companies in the pharma & medical, biotech as well as food & cosmetics industries. Through the
acquisition, Caverion supported its growth strategy and strengthened its market position in the clean
room business. Felcon had 13 employees at the time of the acquisition and the year 2020 revenue of
the acquired company amounted to EUR 2.4 million and EBITDA to EUR 0.2 million according to the
company's local accounting standards. No goodwill arose as a result of the acquisition and the
transaction price was not disclosed.
On 29 October 2021, Caverion closed on an agreement to acquire the business of Bott Kälte- und
Klimatechnik in Germany. Bott is a small cooling and air conditioning specialist based in Wiesbaden,
Germany. Through the acquisition, Caverion supported its growth strategy and strengthened its
market position in smart technologies. 8 employees transferred into Caverion's service in the
acquisition. For the fiscal year ending in December 2020, the acquired business's revenue amounted
to EUR 0.7 million and EBITDA to EUR 0.2 million in accordance with the company's local accounting
standards. No goodwill arose as a result of the acquisition and the transaction price was not disclosed.
On 1 December 2021, Caverion closed on an agreement to acquire the business of a small
Norwegian company Rørlegger'n Innlandet AS. Rørlegger'n Innlandet is based in Raufoss, Norway and
provides services in the area of plumbing, heating and sanitation. 7 employees transferred into
Caverion's service in the acquisition. For the fiscal year 2020, the acquired business's revenue
amounted to EUR 0.7 million in accordance with the company's local accounting standards. The
acquisition did not have a material effect on the Group's profitability. The goodwill arising from the
acquisition was mainly attributable to personnel know-how, expected synergies and geographical
coverage. EUR 0.1 million of the IFRS goodwill was considered tax deductible. The transaction price
was not disclosed.
On 15 December 2021, Caverion closed on an agreement to acquire the industrial design and
advisory business of the Finnish company Merius Oy. Merius provides surveying, design and
consulting services for industrial investments by using 3D digitisation, virtual and visualisation
technologies. The software business of the company was excluded from the transaction and
continued to operate under the name Merius Oy. The acquisition complemented the design and
advisory services of Caverion Industry to provide added value in industrial plant investments and to
utilise digital design technologies. As a result of the transaction, 20 experts from Kokkola, Jyväskylä,
Oulu and Kuusamo joined Caverion. For the fiscal year 2020, the acquired business's revenue
amounted to EUR 1.4 million and EBITDA to EUR 0.1 million in accordance with the company's local
accounting standards. Due to the December acquisition date, the acquisition did not have a material
effect on Caverion's 2021 revenue or profitability. The goodwill arising from the acquisition was
mainly attributable to workforce and expected synergies. EUR 0.6 million of the IFRS goodwill was
considered tax deductible. The transaction price was not disclosed.
In December 2021, Caverion also signed an agreement to acquire the business of Frödéns
Ventilation AB in Sweden. Frödéns offers service and maintenance, inspections, energy optimisations
and smaller projects in the area of ventilation and mainly operates in the Jönköping area. Frödéns has
12 employees and the revenue of the acquired business amounted to EUR 2.7 million for fiscal year
2020 in accordance with the company's local accounting standards. The acquisition was a bolt-on
acquisition for Caverion in the ventilation business in Sweden. The transaction was completed in the
beginning of 2022 and did not have an effect on Caverion Group's 2021 figures. The transaction price
was not disclosed.
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 was 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 2020.
Accounting principles
The consolidation of the acquired business in accordance with IFRS 3 is still provisional as of 31
December 2021. Therefore, the fair value measurement of the acquired assets and liabilities is
BUSINESS COMBINATIONS AND CAPEX
56
Caverion Annual Review 2021
preliminary and subject to adjustments during the 12-month period during which the acquisition
calculations will be finalized.
Disposals
Assets and liabilities of the disposed businesses
EUR million
2021
2020
Goodwill
1.9
Right-of-use assets
0.3
0.4
Other intangible assets
0.9
Tangible assets
0.1
0.0
Inventories
0.3
0.1
Trade and other receivables
5.8
Deferred tax assets
0.4
Cash and cash equivalents
0.9
0.0
Total assets
7.8
3.4
Trade payables
0.7
Advances received
0.3
Lease liabilities
0.3
0.4
Other liabilities
2.1
1.3
Total liabilities
3.4
1.7
Net assets
4.4
1.7
Consideration to be paid in cash (including contingent
consideration)
0.3
1.8
Translation differences
-5.6
7.3
Other items affecting gain/loss on sales
-0.4
Gain/loss on sales
-10.0
7.3
Year 2021
In the end of December 2021, Caverion sold the share capital of its subsidiary JSC “Caverion Rus” in
Russia to Aim Cosmetics Rus, LTD. The transaction covered Caverion’s entire operations in Russia
which are focused on the St. Petersburg and Moscow regions and employed 421 persons at the end
of 2021. The divestment of the Russian subsidiary was a part of Caverion's strategy to focus on the
Group's core businesses in its main market areas and to improve the Group's financial performance.
The IFRS revenue of Caverion's Russian operations amounted to EUR 13.9 million and EBITDA to
EUR 0.5 million in 2021. The figures of JSC “Caverion Rus" were included in the Group's consolidated
income statement until the end of 2021. Caverion recognised a capital loss of EUR 10.0 million in
relation to the divestment in its 2021 result. The largest part of the capital loss was related to
negative translation differences which had no cash flow effect or effect on the Group’s total equity.
The transaction costs were expensed during the financial year 2021 and were not material in value.
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 was 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 business transfer covered total outsourcing agreements in industrial services mainly
with customers in the chemical and energy industries. Furthermore, the sale included 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 while 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 did not engage in
operating activities during financial year 2020. The capital gain from the divestment amounted to EUR
7.3 million and was 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 2020 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 for year 2020.
BUSINESS COMBINATIONS AND CAPEX
57
Caverion Annual Review 2021
4.2
Goodwill
Goodwill is allocated to the cash generating units (CGU) as follows:
EUR million
2021
2020
Finland
80.8
80.8
Germany
77.7
77.7
Norway
69.8
69.7
Industry
64.6
64.0
Sweden
47.7
46.8
Austria
21.6
18.3
Denmark
7.8
7.8
Total goodwill
369.9
365.0
In 2021, Caverion acquired the shares of GTS Immobilien GmbH and Felcon GmbH in Austria as
well as the businesses of Austrian Electro Berchtold GmbH, Swedish RPH Linc AB, German Bott Kälte-
und Klimatechnik, Norwegian Rørlegger'n Innlandet and Finnish Merius Oy. In 2021 Goodwill
increased by EUR 4.9 million. This was due to following acquisitions: GTS Immobilien GmbH EUR 3.3
million, RPH Linc business EUR 0.9 million, Rørlegger'n Innlandet business EUR 0.1 million and Merius
business EUR 0.6 million.
In 2020, Caverion acquired Gunderlund A/S, a Danish company specialising in power grid
expansions and renovations. 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.
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 four 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 1.75 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.
The corona pandemic continued to have an impact on the operating environment in 2021. The
emerging of the new variants of the corona virus affected the business operations negatively
primarily due to restrictions re-imposed by governments and slow-down of investments. In between
the new waves of the corona virus, governmental restrictions were lifted and the operating
environment improved. However, the year closed in uncertainty with soaring numbers of omicron
variant infections and governmental restrictions being re-imposed. Estimating the future cash flows
of CGUs has been challenging in 2021 due to the corona pandemic and there-related uncertainty in
the economic environment. 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 and also profitability of most of the CGUs was on an improving track in 2021. Taking
all this into account, the potential effects of COVID-19 were still assessed.
BUSINESS COMBINATIONS AND CAPEX
58
Caverion Annual Review 2021
Assumptions used in goodwill impairment testing 2021
CGU 1 =
Finland
CGU 2 =
Sweden
CGU 3 =
Norway
CGU 4 =
Denmark
CGU 5 =
Industry
CGU 6 =
Germany
CGU 7 =
Austria
Pre-tax WACC
9.38%
9.37%
9.46%
9.24%
9.39%
10.15%
9.69%
Recoverable amount exceeds balance sheet value
>50%
>50%
>50%
>50%
>50%
20-50%
>50%
Recoverable amount in different sensitivity analysis scenarios in
relation to balance sheet value
Revenue -10% and operating profit -1%
>50%
>50%
>50%
Impairment
Impairment
Impairment
>50%
WACC +2%-points
>50%
>50%
>50%
>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%
>50%
>50%
Impairment
Impairment
Impairment
>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 2021 or in
2020. In the 2021 testing the recoverable amount exceeded the balance sheet value in Germany
clearly and in other CGUs substantially. In the 2020 testing the recoverable amount exceeded the
balance sheet value in Germany slightly 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
resulting in
break even
Revenue in the forecast period (scenario 1)
4.7% average growth (CAGR)
-3.5% p.p.
Average EBITDA percentage in the forecast period
(scenario 1)
5.6%
-0.7% p.p.
Pre-tax WACC (scenario 2)
10.15%
+2.6% p.p.
Terminal growth assumption (scenario 3)
1.75%
-2.2% 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
recoverable 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
59
Caverion Annual Review 2021
4.3
Tangible and intangible assets
Property, plant and equipment
2021
EUR million
Land and
water
areas
Buildings
and
structures
Machinery
and
equipment
Other
tangible
assets
1)
Advance
payments
Total
Historical cost on Jan 1, 2021
0.6
6.1
50.4
21.2
0.2
78.5
Translation differences
0.0
0.0
0.1
0.1
0.2
Increases
0.1
2.9
1.4
0.4
4.7
Acquisitions
0.4
0.4
Decreases
-0.4
-8.4
-1.1
-9.8
Business disposals
-2.0
-2.0
Reclassifications between
classes
0.0
0.2
0.0
-0.4
-0.2
Historical cost on Dec 31, 2021
0.6
5.8
43.6
21.6
0.2
71.8
Accumulated depreciation and
impairment on Jan 1, 2021
-3.6
-39.9
-16.1
-59.6
Translation differences
0.0
0.0
-0.1
-0.1
Depreciation
-0.3
-4.1
-1.6
-6.0
Accumulated depreciation of
increases and acquisitions
0.0
0.0
Accumulated depreciation of
decreases and business disposals
0.2
10.2
1.1
11.4
Reclassification between classes
0.0
0.0
Accumulated depreciation and
impairment on Dec 31, 2021
-3.7
-33.9
-16.7
-54.3
Carrying value on January 1, 2021
0.6
2.5
10.4
5.1
0.2
18.9
Carrying value on Dec 31, 2021
0.6
2.1
9.7
4.9
0.2
17.4
1)
Other tangible assets include, among other things, capitalised leasehold improvement costs.
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 Jan 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
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
60
Caverion Annual Review 2021
Intangible assets
2021
EUR million
Goodwill
Allocations
from business
combinations
Other
intangible
assets
1)
Total other
intangible
assets
Historical cost on January 1, 2021
365.0
79.3
123.3
202.6
Increases
7.5
7.5
Acquisitions
4.9
8.7
0.0
8.8
Decreases
-1.0
-4.3
-5.2
Business disposals
0.0
0.0
Reclassifications between classes
0.2
0.2
Translation differences
-0.4
0.1
-0.3
Historical cost on December 31, 2021
369.9
86.7
126.8
213.5
Accumulated amortisation and
impairment on January 1, 2021
-56.5
-97.1
-153.6
Amortisation and impairment
-4.1
-12.5
-16.6
Translation differences
0.4
0.0
0.4
Accumulated amortisation of increases
and acquisitions
0.0
Accumulated amortisation of decreases
and reclassifications
1.1
2.8
3.9
Accumulated amortisation of business
disposals
0.0
0.0
Accumulated amortisation and
impairment on December 31, 2021
-59.0
-106.8
-165.8
Carrying value on January 1, 2021
365.0
22.9
26.2
49.1
Carrying value on December 31, 2021
369.9
27.7
20.0
47.7
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
1)
Other intangible assets consist mainly of IT infrastructure, systems and solutions.
BUSINESS COMBINATIONS AND CAPEX
61
Caverion Annual Review 2021
Allocations from business combinations:
EUR million
2021
2020
Customer relations and contract bases
21.7
19.3
Unpatented technology
3.7
1.4
Trademarks
1.1
1.2
Patents
0.9
0.9
Order backlog
0.4
0.1
Total
27.7
22.9
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 acquisitions 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.
62
Caverion Annual Review 2021
5
Capital structure
Net debt, EUR million
140.7
Equity ratio, %
19.0
Net debt/EBITDA ratio
1.1x
In this section
This section comprises the following
notes describing Caverion’s capital structure for
2021:
CAPITAL STRUCTURE
63
Caverion Annual Review 2021
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.
In December 2021 Caverion agreed with its lending parties on refinancing of its bank loans and
revolving credit facility. The new facility agreement consists of a EUR 100 million revolving credit
facility and a EUR 50 million term loan with a bullet maturity of 3 years and the possibility to extend
the maturity by two additional years. With this arrangement Caverion prolonged its loan maturity
and strengthened it long-term liquidity.
Caverion has an outstanding hybrid bond in amount of EUR 35 million, Hybrid bond is 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. Caverion's business model is asset light and typically requires little investments.
Caverion’s targeted operational capex level (excluding acquisitions and capitalised lease contracts)
should not exceed 1 percent of revenue. Growth will be supported by bolt-on acquisitions in
selected growth areas and complementary capabilities. 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 management 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
2021
2020
Share capital
1.0
1.0
Hybrid capital
35.0
35.0
Unrestricted equity reserve
66.0
66.0
Other equity
99.1
94.3
Equity attributable to owners of the parent company
201.1
196.3
Non-controlling interest
0.3
0.3
Total equity
201.4
196.6
Non-current borrowings
226.9
223.2
Current borrowings
44.7
44.7
Total interest-bearing debt
271.6
267.9
Total capital
473.0
464.5
Total interest-bearing debt
271.6
267.9
Cash and cash equivalents
130.9
149.3
Net debt
140.7
118.6
Net debt to EBITDA
1)
1.1
-0.2
Gearing ratio, %
69.8
60.4
Equity ratio, %
19.0
18.9
1)
Based on calculation principles confirmed with the lending parties, containing certain agreed adjustments. The calculation principles
take into account the impacts of the IFRS 16 standard as of Q4/2021, while prior to this period it was not applicable.
5.2
Shareholders’ equity
Share capital and treasury shares
Number of
outstanding shares
Share capital
EUR million
Treasury shares
EUR million
Jan 1, 2021
136,112,101
1.0
-2.8
Transfer of treasury shares
352,501
0.4
Return of treasury shares
46,977
0.0
Dec 31, 2021
136,417,625
1.0
-2.4
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
CAPITAL STRUCTURE
64
Caverion Annual Review 2021
The total number of
's shares was 138,920,092 (138,920,092) and the share
capital amounted to EUR 1.0 (1.0) million on December 31, 2021.
All the issued and subscribed shares have been fully paid to the company. Shares do not have
a nominal value.
Treasury shares
Caverion held 2,502,467 (2,807,991) treasury shares on December 31, 2021.
The consideration paid for the treasury shares amounted to EUR 2.4 million on December 31,
2021 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 2021 or 2020.
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 (1.5) million at 31 December 2021.
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.In 2021, EUR 2.4 million interest was paid.
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
2018-2022”). 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 24 March 2021 decided 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 proposes to the Annual General Meeting to be held on 28 March 2022
that a dividend of EUR 0.17 per share will be paid for the year 2021.
CAPITAL STRUCTURE
65
Caverion Annual Review 2021
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 2021
135.7
129.2
3.0
149.3
118.6
Change in net debt, cash:
Proceeds from non-current borrowings
50.2
Repayment of non-current borrowings
-53.2
-47.7
Change in current liabilities
0.1
Change in cash and cash equivalents
-21.3
Change in net debt, non-cash:
Additions
54.7
Acquisitions
0.7
Disposals and business divestitures
-2.3
Foreign exchange adjustments
1)
1.1
2.9
Other non-cash changes
0.2
Net debt as at 31 December 2021
132.9
135.7
3.1
130.9
140.7
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
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
66
Caverion Annual Review 2021
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.
2021
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
6.1
6.1
Current financial assets
Trade receivables and other receivables
555.4
555.4
Derivatives (hedge accounting not
applied)
0.1
0.1
Cash and cash equivalents
130.9
130.9
Total
0.7
0.7
692.4
693.8
Non-current financial liabilities
Loans from financial institutions
49.9
49.9
Bonds
74.8
74.8
Pension loans
7.5
7.5
Other loans
0.5
0.5
Lease liabilities
94.1
94.1
Total non-current interest-bearing
liabilities
226.9
226.9
Trade payables and other liabilities
2.0
2.0
Derivatives (hedge accounting not
applied)
Current financial liabilities
Loans from financial institutions
0.1
0.1
Pension loans
3.0
3.0
Other loans
Lease liabilities
41.6
41.6
Total current interest-bearing liabilities
44.7
44.7
Trade payables and other liabilities
530.9
530.9
Derivatives (hedge accounting not
applied)
0.1
0.1
Total
0.1
804.5
804.6
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
CAPITAL STRUCTURE
67
Caverion Annual Review 2021
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 136.8 (141.4) million at the end of
2021. 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 1.00% - 2.00% p.a (2.00% - 3.00% in 2020).
Investments consist of as follows:
2021
2020
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 value. 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
68
Caverion Annual Review 2021
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 recognised, 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 corona pandemic in 2020 increased the general risk level, but during 2021 the impact was
easing off in the financial markets. The risks related to the availability of financing, the availability of
guarantee facilities as well as foreign exchange related risks are gradually returning to the pre-
pandemic levels. However, the year closed in uncertainty with soaring numbers of omicron variant
infections and governmental restrictions being re-imposed. Therefore, Caverion remains cautious
with the financial risk management.
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 areas 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 13.6 (22.1) months. At the end of
December 2021 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 2.6% (2.7%) at the end of December 2021. Fixed-rate loans accounted for approximately 66 (64)
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.
CAPITAL STRUCTURE
69
Caverion Annual Review 2021
Interest rate risk sensitivity
EUR million
2021
Result before
taxes
2020
Interest rate of net debt 1 percentage point higher
1.0
1.0
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 demerger, if YIT
Corporation falls into default. These Group guarantees amounted to EUR 18.6 (19.7) million at the
end of December 2021.
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.
In 2021 Caverion took actions to prolong its loan maturity and strengthen long-term liquidity.
Caverion agreed with its lending parties in December on refinancing of its bank loans and revolving
credit facility. The new facility agreement consists of a EUR 100 million revolving credit facility and a
EUR 50 million term loan with a termination date on 15 January 2025 and the possibility to extend
the maturity by two additional years. Caverion mitigated corona pandemic related liquidity risks by
maintaining higher liquidity buffer throughout the year.
Caverion Group’s interest-bearing loans and borrowings amounted to 135.9 (138.7) million at the
end of December. Approximately 45 percent of the loans have been raised from financial institutions
and 55 percent from bond investors. The Group’s net debt amounted to EUR 5.0 (-10.6) million at the
end of December excluding IFRS 16 effects and EUR 140.7 including IFRS 16 effects. At the end of
December, the Group’s gearing was 69.8 (60.4) percent and its equity ratio 19.0 (18.9) percent
including IFRS 16 effects. The hybrid bond in amount of EUR 35 million that Caverion issued in 2020
is 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.
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 1.1x according to the confirmed calculation principles. The confirmed
calculation principles include the effects of the IFRS 16 standard as of Q4/2021. Before, the effects
of the IFRS 16 standard were not taken into account in the confirmed calculation principles.
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 130.9 (149.3) million at the end of December 2021. 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 January
2025.
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, 2021 (December 31, 2020). 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, 2021
EUR million
2022
2023
2024
2025
2026
2027-
Total
Loans from financial institutions
3.1
78.1
0.7
50.0
131.9
Pension loans
3.2
3.2
3.1
1.5
11.0
Lease liabilities
44.5
34.6
22.8
14.0
9.3
20.1
145.1
Other financial liabilities
0.5
0.5
Trade and other payables
530.9
Foreign currency derivatives
0.1
0.1
CAPITAL STRUCTURE
70
Caverion Annual Review 2021
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
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
2021
Net
investment
2021
EUR stregthens
by 10%, effect
on equity
2021
EUR weakens
by 10%, effect
on equity
2020
Net
investment
2020
EUR stregthens
by 10%, effect
on equity
2020
EUR weakens
by 10%, effect
on equity
SEK
6.5
-0.6
0.6
-7.0
0.7
-0.7
NOK
18.6
-1.9
1.9
7.2
-0.7
0.7
DKK
7.3
-0.7
0.7
3.1
-0.3
0.3
Other currencies
0.0
0.0
0.0
3.7
-0.4
0.4
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 no 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 2022. There were no outstanding
interest rate swaps in December 2021.
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
2021
2020
Foreign exchange forward contracts, hedge accounting not applied
65.2
70.2
CAPITAL STRUCTURE
71
Caverion Annual Review 2021
Fair values
EUR million
2021
Positive
fair value
(carrying
value)
2021
Negative
fair value
(carrying
value)
2021
Net
value
2020
Positive
fair value
(carrying
value)
2020
Negative
fair value
(carrying
value)
2020
Net
value
Foreign exchange forward
contracts
Hedge accounting not
applied
0.1
-0.1
0.0
0.6
-0.2
0.4
Total
0.1
-0.1
0.0
0.6
-0.2
0.4
Netting fair values of
derivative financial
instruments subject to
netting agreements
0.0
0.0
-0.1
0.1
Net total
0.1
-0.1
0.0
0.5
-0.1
0.4
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
2021
2020
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
1.6
1.7
Share of the profit
0.0
0.0
0.0
0.0
0.0
0.0
Decreases
-0.3
-0.3
Historical costs on Dec 31
0.1
1.4
1.5
0.1
1.6
1.7
The carrying amounts of the shares in associated companies do not include goodwill.
2021
EUR million
Domicile
Assets
Liabilities
Revenue
Profit/
loss
Ownership
Joint ventures
CG FH St. Pölten GmbH
Wien
42.2
39.5
38.6
0.0
50%
Associated companies
Arandur Oy
Vantaa
5.1
4.8
4.9
0.0
33%
Total
47.3
44.2
43.5
0.0
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
Sales of goods and services sold to associated companies and joint ventures amounted to EUR 1.4
(1.4) million in 2021.
CAPITAL STRUCTURE
72
Caverion Annual Review 2021
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
2021
2020
Defined benefit plans
50.6
51.4
Liability in the statement of financial position
50.6
51.4
Pension asset in the statement of financial position
-3.3
-2.4
Net liability
47.2
49.0
Income statement charge:
EUR million
2021
2020
Defined benefit plans
-0.8
-0.8
Included in financial expenses
-0.3
-0.5
Income statement charge, total (income (+) / expense (-))
-1.1
-1.3
Remeasurements, included in other comprehensive income:
EUR million
2021
2020
Defined benefit plans
1.1
-2.1
Change in foreign exchange rates
-1.2
1.4
Included in other comprehensive income. total
-0.1
-0.7
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
2021
2020
Present value of funded obligations
5.8
5.8
Fair value of plan assets
-9.1
-8.2
Net deficit of funded plans
-3.3
-2.4
Present value of unfunded obligations
50.6
51.4
Total net deficit of defined benefit pension plans
47.2
49.0
Liability in the statement of financial position
50.6
51.4
Receivable in the statement of financial position
-3.3
-2.4
CAPITAL STRUCTURE
73
Caverion Annual Review 2021
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, 2021
57.1
-8.3
48.9
Current service cost
0.8
0.8
Interest expense
0.3
0.0
0.3
Past service costs
Gains on settlements
Remeasurements:
Return on plan assets. excluding interest expense
-1.0
-1.0
Gain (-) / loss (+) from change in demographic assumptions
Gain (-) / loss (+) from change in financial assumptions
-1.7
-1.7
Experience gains (-) / losses (+)
1.6
1.6
Exchange difference
0.4
0.4
Employers' contributions
-0.4
0.0
-0.4
Acquired pension liability
0.2
-0.2
0.0
Benefit payments from plans
-2.0
0.2
-1.8
At December 31, 2021
56.3
-9.1
47.2
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.
The weighted average duration of the defined benefit plan obligation in Caverion Group is 14 (15)
years.
The significant actuarial assumptions were as follows:
2021
Discount rate
Salary growth rate
Pension growth rate
Finland
0.80%
1.95%
2.25%
Norway
1.50%
2.50%
2.25%
Germany
0.90%
3.00%
2.00%
Austria
0.80%
-
2.25%
CAPITAL STRUCTURE
74
Caverion Annual Review 2021
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%
The sensitivity of the defined benefit obligation to changes in the weighted principal
assumptions is:
2021
Impact on defined benefit obligation
1)
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
0.50%
decrease 6.8%
increase 7.6%
Salary growth rate
0.50%
increase 0.2%
decrease 0.2%
Pension growth rate
0.50%
increase 5.4%
decrease 5.0%
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%
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
2021
2020
Equity instruments
4.8
52
4.6
56
Debt instruments
2.7
29
0.4
5
Property
1.3
14
Investment funds
3.0
37
Cash and cash equivalents
0.2
2
0.2
2
Other investments
0.2
2
Total plan assets
9.1
100
8.2
100
Employer contributions are expected to be zero in 2022.
Multi-employer plan in Sweden
In Sweden, Caverion participates in a multi-employer defined benefit plan in Alecta insurance
company. 824 employees of Caverion Sverige AB are insured through this pension plan in the end of
2021. 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 6.8 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
adjustments 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.
CAPITAL STRUCTURE
75
Caverion Annual Review 2021
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
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
Group as lessee
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 2021
79.5
44.6
1.3
125.5
Translation differences
0.6
0.4
0.0
1.0
Acquisitions
0.5
0.2
0.7
Additions
27.9
26.7
0.0
54.7
Reclassifications
1.1
-1.1
Disposals and business divestitures
-1.5
-0.9
-2.4
Depreciation and impairment
-23.3
-24.9
-0.1
-48.3
31 December 2021
83.8
47.2
0.2
131.2
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
In 2021, the depreciation and impairment of right-of-use assets did not include any material
impairments relating to the restructuring of premises (EUR 1.1 million in 2020).
Lease liabilities
EUR million
2021
2020
1 January
129.2
136.9
Translation differences
1.1
-1.6
Acquisitions
0.7
0.7
Additions
54.7
46.6
Disposals and business divestitures
-2.3
-4.6
Interest expenses
3.8
4.5
Payments
-51.5
-53.2
31 December
135.7
129.2
The Group recognised rent expenses from short-term lease liabilities in the amount of EUR 2.9 million
(EUR 3.4 million) and from leases of low-value assets in the amount of EUR 3.4 million (EUR 2.7
million) in 2021. The nominal amount of leasing commitments of low-value and short-term leases
amounted to EUR 8.8 million at the end of 2021 (EUR 10.2 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 2021 (EUR 0.1 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 0.9 million in 2020).
Group as lessor
As a lessor, the Group has finance lease contracts for which the net investment in the balance sheet
amounted to EUR 0.3 million at the end of the year 2021. The income statement effect of these
finance lease contracts amounted to EUR 0.0 million in 2021 comprising the selling profit of the
contract and interest income. The Group did not have any finance lease contracts during 2020.
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.
At the inception of the lease, 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
CAPITAL STRUCTURE
76
Caverion Annual Review 2021
Conceptual Framework and IAS 1. Caverion recognises lease payments associated with such leases
as an expense on a straight-line basis.
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
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 classifies arrangements which convey a right to use a specific asset as either
finance leases or operating leases and accounts for these two types of leases differently. Caverion's
lease contracts relate to different types of machinery and equipment which are installed to operate
within the customer's buildings and structures. These lease contracts vary in terms of conditions.
In finance leases, the risks and rewards incidental to ownership of the leased asset have
substantially transferred from Caverion to the lessee. Sales derived from finance leases are
recognized at the beginning of the lease period in accordance with the same principles as in the
outright sale of similar assets. The net investment in finance leases is recognized as a part of non-
current and current receivables and lease payments are disclosed as repayments of the finance lease
receivable and interest income. The interest income is recognised on the income statement over the
lease term so as to achieve a constant interest rate on the outstanding balance.
In operating leases, the risks and rewards incidental to ownership of the leased asset remain with
the lessor. The leased assets are recognised in the balance sheet as a part of tangible assets and
depreciated in accordance with the policy applied to similar assets in own use as well as considering
the planned use after the lease period. The lease income from operating leases is recognized on a
straight-line basis over the lease term on the income statement.
Under IFRS 16, an intermediate lessor is additionally required to classify its subleases as finance
or operating leases by reference to the right-of-use assets arising from the head lease. Caverion has
not reclassified any of its sublease agreements as finance leases.
5.10
Commitments and contingent liabilities
EUR million
2021
2020
Other commitments
Other contingent liabilities
0.2
0.2
Accrued unrecognised interest on hybrid bond
1.5
1.5
The Group’s parent company has guaranteed obligations of its subsidiaries. On December 31, 2021
the total amount of these guarantees was EUR 467.9 (454.9) 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. Some civil claims
presented against Caverion Deutschland GmbH have been settled in 2021, totalling EUR 9.1 million
in 2021.
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
CAPITAL STRUCTURE
77
Caverion Annual Review 2021
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 18.6 (19.7) million at the end of December
2021.
78
Caverion Annual Review 2021
6
Others
In this section
This section comprises the following notes:
......................................................
KEY MANAGEMENT
COMPENSATION
79
Caverion Annual Review 2021
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
depicted in the table below.
Compensation paid to key management
EUR million
2021
2020
Salaries and other short-term employee benefits
4.7
5.2
Post-employment benefits
1)
0.2
0.1
Termination benefits
0.9
0.2
Share-based payments
2)
3.4
0.6
Total
9.2
6.1
1)
Post-employment benefits include separate supplementary executive pension schemes but exclude statutory pension
payments and country specific group pension arrangements to which key management maybe be party to.
2)
The total value of transferred shares, cash bonus and transfer tax.
Compensation paid to the members of the Board of Directors and President and CEO
EUR million
2021
2020
President and CEO
1)
Ari Lehtoranta, until 28 February 2021
2)
0.2
1.1
Mats Paulsson, 28 February - 8 August 2021
0.2
Jacob Götzsche, as from 9 August 2021
0.3
Total
0.7
1.1
Members of the Board of Directors
Jussi Aho
0.1
0.1
Markus Ehrnrooth
0.1
0.1
Joachim Hallengren
0.1
0.1
Antti Herlin, member of the Board until 25 May 2020
0.0
Thomas Hinnerskov
0.1
0.1
Anna Hyvönen, member of the Board until 25 May 2020
0.0
Kristina Jahn, member of the Board as from 25 May 2020
0.1
0.0
Mats Paulsson, Chairman of the Board
0.1
0.1
Jasmin Soravia, member of the Board as from 25 May 2020
0.1
0.0
Total
0.5
0.4
1)
Compensation paid to the President and CEO includes only separate supplementary executive pension schemes in regards to
post-employment benefits and does not include any statutory pension payments.
2)
The compensation paid to Ari Lehtoranta contains only the remuneration paid from his period as Caverion's President and CEO.
Ari Lehtoranta's notice period compensation and the following severance payments have been disclosed in the section
"Remuneration of the President and CEO".
Board membership fees are paid as annual fees, 50% of which are paid as cash and 50% as Caverion
shares according to the decision by the Annual General Meeting.
More detailed information on share-incentive schemes has been presented in note 6.2 Share-
based payments.
Remuneration of the President and CEO
Ari Lehtoranta held the position of Caverion Corporation's President and CEO until 28 February
2021 when the Board of Directors of Caverion Corporation and Ari Lehtoranta mutually agreed that
he would leave his position as President and CEO. Mr. Lehtoranta's base salary and fringe benefits
as the President and CEO during 1 January - 28 February 2021 were in total EUR 176,000 (EUR
588,764 in 2020). Mr. Lehtoranta did not receive any short-term incentive payments or share
payments in 2021 (short-term incentive payments amounted to EUR 389,730 in 2020). After 28
February 2021, Mr. Lehtoranta was paid the contractual 6 months' notice period salary of EUR
330,000 (including fringe benefits). He was also entitled to a severance payment amounting to 12
months' base salary as monthly payments after the termination date. The severance paid in 2021
amounted to EUR 220,000. The last monthly severance payment will be paid in August 2022, the
total severance payment being EUR 660,000. The whole severance payment amount has been
recognised as an expense in Caverion's 2021 result. Ari Lehtoranta also had a supplementary
defined contribution pension plan, annual contribution being 20 percent of the base salary
(including the 6 months' notice period). Additionally, he was eligible for the Finnish statutory
pension.
Mats Paulsson, the Chairman of Caverion's Board of Directors, held the position of Interim
President and CEO from 28 February to 8 August 2021. His base salary and fringe benefits during
this period amounted to EUR 202,837. Mats Paulsson's termination notice period was one week
for both parties with no entitlement to severance pay. Mr. Paulsson was included in the Swedish
statutory social security pension and he was paid a supplementary defined contribution pension
to compensate for the difference between country specific pension practices. Mats Paulsson was
not a participant in any of Caverion’s short-term or long-term incentive plans.
Jacob Götzsche joined Caverion Corporation as President and CEO on 9 August 2021. Mr.
Götzsche's base salary and fringe benefits amounted to EUR 253,036 in 2021. In case of
termination, Mr. Götzsche's notice period is six months for both parties. Mr. Götzsche is entitled to
a severance pay amounting to 12 months’ base salary if the company terminates the agreement.
The company will not provide pension coverage for Jacob Götzsche, but to compensate for this he
is paid an additional 20 percent cash allowance calculated from his fixed annual base salary to
obtain a pension coverage by himself. No specific retirement age has been agreed. Mr. Götzsche
was not a participant in Caverion's short-term incentive plan in 2021 nor did he receive any share
payments during the year.
SHARE-BASED PAYMENTS
80
Caverion Annual Review 2021
Remuneration of the Group Management Board (excluding President and CEO)
EUR million
Fixed base
salary
Fringe
benefits
Short-term
Incentive
Share-based
payments
Total
2021
Group Management Board
members excluding President and
CEO
1)
3.1
0.1
0.6
3.2
7.0
1)
Includes the members’ total remuneration for the period they have been members of the Group Management Board
In 2021, a total of 215,270 Caverion Corporation shares were transferred to the Group
Management Board (excluding President and CEO) as a reward from the Matching Share Plan
2018-2022 as well as from the Restricted Share Plan 2018-2020.
In 2020, a total of 18,615 shares were transferred to the Group Management Board (excluding
President and CEO) as a reward from the Restricted Share Plans 2016-2018 and 2017-2019.
In addition to the above compensation, some of the Group Management Board members take
part in country specific group pension arrangements. The members of the Group Management
Board (excluding President and CEO) do not, however, have any supplementary executive pension
schemes and the statutory retirement age applies.
Also, a total of EUR 0.4 million of compensation related to the termination of the Group
Management Board members' (excluding President and CEO) employment was paid during
financial year 2021 (EUR 0.2 million in 2020).
Additional information on Management remuneration is presented in the parent company
financial statements.
6.2
Share-based payments
Caverion has long-term share-based incentive schemes which are a part of the remuneration and
commitment programme for the management and key employees 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 commit the key employees 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 consists 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 consist of
annually commencing individual plans, each lasting a three-year period. The commencement of
each new plan is subject to a separate decision of the Board. The performance share plans which
commenced during the years 2016-2018 are based on the rolling incentive plan approved in
December 2015. Also all restricted share plans commencing during years 2016-2021 are based
on the rolling structure originally approved in December 2015.
In December 2018, Caverion’s Board of Directors approved the establishment of a new share-
based long-term incentive plan which is based on a performance share plan (PSP) structure. This
new incentive structure consists of annually commencing individual performance share plans, each
with a three-year performance period, which is followed by the payment of the potentially attained
share reward. The performance share plans commencing during years 2019-2021 are based on
the rolling incentive structure approved in December 2018.
Performance and Restricted Share Plan 2016-2018
In its December 2015 meeting, Caverion's Board of Directors approved the commencement of
Performance Share Plan 2016-2018 and Restricted Share Plan 2016-2018. The targets for PSP
2016-2018 were not met and, therefore, no rewards were paid. In 2019, 23,622 Caverion
Corporation shares were conveyed in a share issue without consideration to a key person
participating in RSP 2016-2018 and 6,673 shares were conveyed in 2020.
Performance and Restricted Share Plan 2017-2019
In its December 2016 meeting, Caverion's Board of Directors approved the commencement of
Performance Share Plan 2017-2019 and Restricted Share Plan 2017-2019. The targets for PSP
2017-2019 were not met and, therefore, no rewards were paid. In 2020, 39,127 Caverion
Corporation shares were conveyed in a share issue without consideration to 16 key employees
participating in RSP 2017-2019.
Performance and Restricted Share Plan 2018-2020
In its December 2017 meeting, Caverion's Board of Directors approved the commencement of
Performance Share Plan 2018-2020 and Restricted Share Plan 2018-2020. PSP 2018-2020 could
include a maximum of approximately 120 members of senior management and key employees of
Caverion Group. The three-year plan period consisted of a one-year operative financial
performance period, followed by a two-year share price performance period. The share reward
was based on the targets set for the year 2018 for earnings per share and operating cash flow
before financial and tax items. If all targets had been met, the share rewards based on PSP 2018-
2020 would have comprised a maximum of 850,000 Caverion shares (gross before the deduction
of applicable taxes). The targets for PSP 2018-2020 were partially met and, in a share issue
without consideration, 28,169 Caverion Corporation shares were on 23 February 2021 conveyed
to 77 employees participating in the plan.
Within RSP 2018-2020, share allocations were made for individually selected key employees
in special situations. The maximum number of shares that could have been allocated and delivered
totaled 85,000 shares (gross before the deduction of applicable taxes). In a directed share issue
without consideration, 35,483 Caverion Corporation shares held by the company were on 23
February 2021 conveyed to 16 key employees participating in RSP 2018-2020.
Matching Share Plan 2018-2022
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 (MSP) 2018−2022”. The aim of
the plan is to align the objectives of the shareholders and the key employees in order to increase
SHARE-BASED PAYMENTS
81
Caverion Annual Review 2021
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 MSP 2018-2022 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 PSP 2018-2020 or PSP 2019-2021 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 the yield of
the share has not reached the pre-set minimum yield level by the end of the matching period in
question. The deferred reward will be paid as soon as practical after the pre-set minimum yield
level has been reached. 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 the matching
period in question will be paid. Furthermore, receiving of the reward is tied to the continuance of
the participant’s employment or service upon reward payment.
The target group of MSP 2018-2022 consists of approximately 20 people, including the
members of the Group Management Board. The rewards to be paid on the basis of the MSP
correspond to the value of an approximate maximum total of 2,520,000 Caverion Corporation
shares (including also the proportion to be paid in cash). In 2019, Caverion's Board of Directors
decided on share issues without consideration in which 391,469 shares were conveyed to key
employees participating in MSP 2018-2022 as a reward from the matching period 1 March 2018 -
28 February 2019. A total of 4,431 shares from this issue were returned to Caverion during 2020.
On 30 April 2021, 120,199 Caverion Corporation shares were conveyed to key employees
participating in MSP 2018-2020 in a directed share issue without consideration. The shares were
delivered as a reward from the matching period 1 March 2018 - 29 February 2020 and, for
participants who joined the plan at a later stage, also as a reward from the matching period 1 March
2018 - 28 February 2019. In addition, on 25 August 2021, 168,650 Caverion Corporation shares
were conveyed as a reward from the matching period 1 March 2018 - 28 February 2021. From the
2021 share issues, a total of 16,911 own shares were returned to Caverion on 14 September 2021
and 30,066 own shares on 16 November 2021.
Performance and Restricted Share Plan 2019-2021
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, the Board approved the
commencement of a new plan period, RSP 2019−2021, in the Restricted Share Plan structure. The
first plan, PSP 2019-2021, within the new PSP structure can include a maximum of approximately
75 key employees of Caverion Group. 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). The targets set for PSP 2019−2021 will
be evaluated in March 2022 and the potential share rewards will be delivered by the end of April
2022.
Within RSP 2019-2021, share allocations were made for individually selected key employees
in special situations. The maximum number of shares that may be allocated and delivered totals
135,000 shares (gross before the deduction of applicable taxes). The share rewards will be
delivered to the participants in spring 2022 provided that their employment with Caverion
continues until the delivery of the share reward.
Performance and Restricted Share Plan 2020-2022
In December 2019, Caverion's Board of Director's approved the commencement PSP 2020-2022
and RSP 2020-2022. However, on 30 April 2020, the Board decided, upon management's
suggestion, to postpone the commencement of PSP 2020-2022 until the beginning of the year
2021. PSP 2020-2022 may include a maximum of approximately 90 key employees of Caverion
Group. The performance targets for the plan 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.
Within RSP 2020-2022, share allocations are made for individually selected key employees in
special situations. The maximum number of shares that may be allocated and delivered totals
230,000 shares (gross before the deduction of applicable taxes). The share rewards will be
delivered to the participants in spring 2023 provided that their employment with Caverion
continues until the delivery of the share reward.
Performance and Restricted Share Plan 2021-2023
Caverion’s Board of Directors approved in December 2020 the commencement of PSP 2021-2023
and RSP 2021-2023. 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) delivered in the spring of 2024.
Within RSP 2021-2023, share allocations are made for individually selected key employees in
special situations. The maximum number of shares that may be allocated and delivered totals
165,000 shares (gross before the deduction of applicable taxes). The share rewards will be
delivered to the participants in spring 2024 provided that their employment with Caverion
continues until the delivery of the share reward.
SHARE-BASED PAYMENTS
82
Caverion Annual Review 2021
Plan
Performance share plan,
December 2018
Performance
share plan,
December 2015
Restricted share plan
Matching
share plan
Instrument
PSP
2021–2023
PSP
2020–2022
PSP
2019–2021
PSP
2018-2020
RSP
2021-2023
RSP
2020-2022
RSP
2019-2021
RSP
2018-2020
MSP
2018-2022
Issuing date
Dec 17, 2018
Dec 17, 2018
Dec 17, 2018
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Dec 17, 2015
Feb 6, 2018
Maximum number of shares
1,600,000
1,301,250
850,000
165,000
230,000
135,000
85,000
2,520,000
Dividend adjustment
No
No
No
Yes
No
No
No
No
Yes
Grant date
May 5, 2021
Jan 25, 2021
Apr 3, 2019
Feb 28, 2018
Feb 17, 2021
May 18, 2020
Apr 12, 2019
Jun 12, 2018
Mar 1, 2018
Beginning of earning period
Jan 1, 2021
Jan 1, 2020
Jan 1, 2019
Jan 1, 2018
Jan 1, 2021
Jan 1, 2020
Jan 1, 2019
Jan 1, 2018
Mar 1, 2018
End of earning period
Dec 31, 2023
Dec 31, 2022
Dec 31, 2021
Dec 31, 2018
Dec 31,2023
Dec 31, 2022
Dec 31, 2021
Dec 31, 2020
Dec 31, 2022
End of restriction period
Apr 30, 2024
Apr 30, 2023
Apr 30, 2022
Feb 28, 2021
Feb 28, 2024
Feb 28, 2023
Feb 28, 2022
Feb 28, 2021
Jul 1, 2022
Vesting conditions
Relative total
shareholder return
(TSR), earnings per
share (EPS),
continued
employment
Relative total
shareholder return
(TSR), earnings per
share (EPS),
continued
employment
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
continued
employment
Division EBITA for
selected
participants,
continued
employment
continued
employment
continued
employment
Minimum yield of
the share,
continued
employment
Maximum contractual life,
years
3.3
3.3
3.3
3.2
3.2
3.2
3.2
3.2
4.8
Remaining contractual life,
years
2.3
1.3
0.3
-
2.2
1.2
0.2
-
1.0
Number of persons at the end
of the reporting year
82
80
56
-
24
34
25
-
15
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
Cash and shares
Changes in plan during the period
Outstanding at the beginning
of the reporting period,
1 January 2021
-
-
880,000
64,179
-
115,000
104,000
79,500
1,432,511
Changes during the period
Granted
1,456,500
1,540,500
61,000
93,500
31,000
Forfeited
108,250
268,000
157,500
11,850
2,000
13,500
9,500
4,000
496,201
Earned (gross)
52,329
75,500
502,363
Outstanding at the end of the
period, 31 December 2021
1,348,250
1,272,500
722,500
-
59,000
195,000
125,500
-
433,947
Delivered during the period
(net)
28,169
35,483
241,872
RELATED PARTY TRANSACTIONS
83
Caverion Annual Review 2021
Costs recognised for the share-based incentive plans
The consolidated financial statements include costs from share plans amounting to EUR 4.0 (2.8)
million. EUR 1.5 (1.9) million of the cost recognised is related to the Group Management Board.
Performance and Restricted Share Plan 2022-2024
In December 2021, Caverion’s Board of Directors approved the commencement of a new plan period,
PSP 2022–2024, in the performance share plan structure first approved in December 2018. At the
same time, the Board approved the commencement of a new plan period, RSP 2022-2024, in the
restricted share plan structure, which is a complementary share-based incentive structure for specific
situations first approved in December 2015. Any potential share rewards based on PSP 2022–2024
and RSP 2022–2024 will be delivered in the spring 2025. PSP 2022–2024 may include a maximum
of approximately 90 key employees of Caverion Group. The performance targets, based on which the
potential share rewards under PSP 2022–2024 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 2022–2024 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 2022-2024 a maximum of
approximately 85,000 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 (PSP) 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 (RSP) will be made for individually selected key
employees in special situations. Under the complementary RSP 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 (MSP) 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 PSP 2018-2020 or PSP 2019-2021 simultaneously with
participating in the MSP. Receiving of the reward is tied to the continuance of the participant’s
employment or service upon reward payment. A participant is entitled to choose whether he or she
wants to receive the potential reward partly in the company shares and partly in cash or fully in
shares. The shares paid as reward may be transferred after a reward instalment specific restriction
period of up to two years. Should the reward payment be deferred, such deferral will not lengthen the
relevant restriction period.
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 2021 the total outstanding amount of these loans amounted to approximately EUR 4.4
(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. As a result, Caverion had 689,056 Caverion Corporation
shares as a pledge at the end of the reporting period on 31 December 2021.
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
2021
2020
Sale of goods and services
0.0
0.1
Purchase of goods and services
0.1
0.9
Receivables
4.4
4.4
Liabilities
0.0
0.0
Caverion had a fixed term contract until 28 February 2021 with a member of the Board concerning
consulting services. The value of the contract was not material.
Caverion entered into a new fixed term contract until 31 March 2022 with a member of the Board
concerning consulting services in August 2021. After the reporting period, this contract has been
prolonged until 31 December 2022. 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
84
Caverion Annual Review 2021
Income statement,
Parent company, FAS
EUR
Note
1.1.-31.12.2021
1.1.-31.12.2020
Other operating income
1
55,478,581.90
53,115,385.74
Personnel expenses
2
-14,651,322.59
-10,993,100.54
Depreciation, amortisation and impairments
3
-871,219.88
-1,055,069.79
Other operating expenses
4
-45, 894,744.45
-44,644,172.63
Operating profit / loss
-5,938,705.02
-3,576,957.22
Financial income and expenses
5
-6 ,504, 496.75
-20,627,683.05
Result before appropriations and taxes
-12,443,201.77
-24,204,640.27
Appropriations
6
9 ,067, 160.67
18,186,674.91
Income taxes
7
-112, 381.62
-2 124,172.21
Result for the period
-3,488,422.72
-8,142,137.57
Balance sheet,
Parent company, FAS
EUR
Note
31.12.2021
31.12.2020
Assets
Non-current assets
Intangible assets
8
5,661,797.26
5,502,240.57
Tangible assets
8
589,793.25
1,038,487.72
Investments
9
503,426,384.15
474,895,943.00
Total non-current assets
509,677,974.66
481,436,671.29
Current assets
Non-current receivables
10
21,529,360.58
21,284,953.81
Current receivables
11
29,107,838.94
60,943,024.39
Cash and cash equivalents
102,823,909.98
115,773,623.33
Total current assets
153,461,109.50
198,001,601.53
Total assets
663,139,084.16
679,438,272.82
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
69,116,233.71
104,602,802.88
Result for the period
-3,488,422.72
-8,142,137.57
Treasury shares
-2,358,078.82
-2,775,128.82
Total equity
130,945,908.66
161,361,712.98
Appropriations
13
67,160.67
Liabilities
Non-current liabilities
15
167,499,999.99
170,499,999.99
Current liabilities
16
364,693,175.51
347,509,399.18
Total liabilities
532,193,175.50
518,009,399.17
Total equity and liabilities
663,139,084.16
679,438,272.82
CASH FLOW STATEMENT
85
Caverion Annual Review 2021
Cash flow statement, Parent company, FAS
EUR
1.1.-31.12.2021
1.1.-31.12.2020
Cash flow from operating activities
Result before appropriations and taxes
-12,443,201.77
-24,204,640.27
Adjustments for:
Depreciation, amortisation and impairments
871,219.88
1,055,069.79
Other adjustments
307,769.00
220,764.86
Financial income and expenses
6,504,496.75
20,627,683.05
Cash flow before change in working capital
-4,759,716.14
-2,301,122.57
Change in working capital
Change in trade and other current receivables
678,793.24
6,898,198.59
Change in trade and other current payables
1,911,905.37
-1,612,841.98
Cash flow before financial items and taxes
-3,526,604.01
2,984,234.04
Cash flow from operating activities
Interest paid and other financial expenses
-25,988,015.78
-34,743,011.48
Dividends received
3,289,000.00
Interest received and other financial income
23,238,729.16
31,178,731.72
Income taxes paid
-2.127,832.34
-100,246.58
Cash flow from operating activities
-8,403,722.97
2,608,707.70
EUR
1.1.-31.12.2021
1.1.-31.12.2020
Cash flow from investing activities
Purchases of tangible and intangible assets
-7,094,951.84
-11,720,024.28
Proceeds from the sales of tangible and intangible
assets
6,512,869,74
9,220,281.11
Investments in subsidiaries
-14,119,545.49
-6,349,850.77
Cash flow from investing activities
-14,701,627.59
-8,849,593.94
Cash flow from financing activities
Group contributions received
18,000,000.00
10,600,000.00
Repayment of non-current borrowings
-53,000,000.00
-32,560,000.00
Change in non-current loan receivables
-244,406.77
-270,839.30
Proceeds from non-current borrowings
50,000,000.00
10,500,000.00
Change in short-term financing
22,634,945.58
66,640,126.64
Dividends paid
-27,234,901.60
0.00
Cash flow from financing activities
10,155,637.21
54,909,287.34
Net change in cash and cash equivalents
-12,949,713.35
48,668,401.10
Cash and cash equivalents at the beginning of the
financial year
115,773,623.33
67,105,223.23
Cash and cash equivalents at the end of the financial
year
102,823,909.98
115,773,623.33
NOTES
86
Caverion Annual Review 2021
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
87
Caverion Annual Review 2021
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 2021 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 2022. 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
88
Caverion Annual Review 2021
Notes to the income statement, Parent company
1.
Other operating income
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Service income
55,478.6
53,115.4
Total
55,478.6
53,115.4
2.
Information concerning personnel and key management
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Personnel expenses
Wages and salaries
12,615.2
9,428.0
Pension expenses
1,930.6
1,550.6
Other indirect personnel costs
105.5
14.5
Total
14,651.3
10,993.1
Average number of personnel during the financial period
94,0
82,5
Salaries and fees to the management
President and CEO
735.0
1,110.5
Members of the Board of Directors
458.6
429.3
Total
1,193.6
1,539.8
3.
Depreciation, amortisation and impairments
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Amortisation of intangible assets
422.5
606.4
Depreciation of buildings and structures
16.1
16.1
Depreciation of machinery and equipment
432.6
432.6
Total
871.2
1,055.1
4.
Other operating expenses
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Fees paid to the Auditor of the company
Audit fee
297.3
334.2
Tax services
36.2
2.0
Other services
62.1
2.6
Total
395.7
338.8
Ernst & Young Oy, Authorized Public Accountants, operated as the company’s auditor.
5.
Financial income and expenses
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Dividend income
From Group companies
3,289.0
Interest income from non-current investments
From Group companies
684.1
545.2
From others
67.5
71.0
Total
751.5
616.1
Other interest and financial income
From Group companies
3,232.6
3,100.7
From others
68.2
118.5
Total
3,300.8
3,219.1
Impairment on investment assets
Subsidiary shares
-3,839.0
-20,000.0
Total
-3,839.0
-20,000.0
Other interest and financial expenses
Interest expenses to Group companies
-296.3
-348.2
Interest expenses to others
-5,651.7
-6,340.3
Other expenses to others
-1,104.0
-1,337.7
Total
-7,051.9
-8,026.1
Exchange rate gains
19,490.6
27,135.8
Change in the fair value of derivatives
-323.4
-367.9
Exchange rate losses
-18,833.1
-26,493.8
Total
334.1
274.2
Total financial income and expenses
-6,504.5
-20,627.7
NOTES TO THE BALANCE SHEET
89
Caverion Annual Review 2021
Notes to the balance sheet, Parent company
6.
Appropriations
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Change in the difference between planned and taxation
depreciation
67.2
186.7
Group contributions received
9,000.0
18,000.0
7.
Income taxes
1,000 EUR
1.1.-31.12.2021
1.1.-31.12.2020
Income taxes on operating activities, current year
-112,4
-2,124,2
Total
-112.4
-2,124.2
8.
Changes in fixed assets
1,000 EUR
31.12.2021
31.12.2020
Intangible assets
Intangible rights
Acquisition cost on Jan 1
14,518.0
10,883.9
Additions
3,634.1
Acquisition cost on Dec 31
14,518.0
14,518.0
Accumulated amortisation and impairments on Jan 1
-11,199.5
-10,619.6
Amortisation for the period
-392.7
-579.9
Accumulated amortisation and impairments on Dec 31
-11,592.2
-11,199.5
Book value on December 31
2,925.7
3,318.5
Renovations
Acquisition cost on Jan 1
251.8
251.8
Additions
62.9
0.0
Book value on December 31
314.7
251.8
Accumulated amortisation and impairments on Jan 1
-38.1
-11.6
Amortisation for the period
-29.8
-26.5
Accumulated amortisation and impairments on Dec 31
-67.9
-38.1
Book value on December 31
246.9
213.8
Advance payments and construction in progress
Acquisition cost on Jan 1
1,970.0
3,131.5
Additions
7,032.1
8,058.8
Disposals
-6,512.9
-9,220.3
Acquisition cost on Dec 31
2,489.2
1,970.0
Book value on December 31
2,489.2
1,970.0
Total intangible assets
5,661.8
5,502.2
NOTES TO THE BALANCE SHEET
90
Caverion Annual Review 2021
9.
Investments
1,000 EUR
31.12.2021
31.12.2020
Tangible assets
Land and water areas
Acquisition cost on Jan 1
109.8
109.8
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
Acquisition cost on Dec 31
160.9
160.9
Accumulated depreciation and impairments on Jan 1
-120.7
-104.6
Depreciation for the period
-16.1
-16.1
Accumulated depreciation and impairments on Dec 31
-136.8
-120.7
Book value on December 31
24.1
40.2
Machinery and equipment
Acquisition cost on Jan 1
1,918.8
1,891.6
Additions
27.2
Acquisition cost on Dec 31
1,918.8
1,918.8
Accumulated depreciation and impairments on Jan 1
-1,030.4
-597.7
Depreciation for the period
-432.6
-432.6
Accumulated depreciation and impairments on Dec 31
-1,463.0
-1,030.4
Book value on December 31
455.8
888.4
Total tangible assets
589.8
1,038.5
1,000 EUR
31.12.2021
31.12.2020
Shares in Group companies
Acquisition cost on Jan 1
474,895.9
488,546.1
Additions
32,369.4
6,349.9
Impairments
-3,839.0
-20,000.0
Acquisition cost on Dec 31
503,426.4
474,895.9
Total investments
503,426.4
474,895.9
10.
Non-current receivables
1,000 EUR
31.12.2021
31.12.2020
Receivables from Group companies
Loan receivables
17,170.0
17,000.0
Receivables from associated personnel
Loan receivables
4,359.4
4,285.0
Total non-current receivables
21,529.4
21,285.0
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
31.12.2021
31.12.2020
Receivables from group companies
Trade receivables
11,334.8
12,238.5
Loan receivables
23,489.6
Other receivables
9,757.0
18,380.5
Receivables, external
Trade receivables
20.2
7.8
Other receivables
640.1
931.5
Accrued income
7,355.8
5,895.1
Total
29,107.8
60,943.0
Accrued income consists of:
Accrued financial expenses
767.8
553.5
Other receivables
6,587.9
5,341.6
Total
7,355.8
5,895.1
NOTES TO THE BALANCE SHEET
91
Caverion Annual Review 2021
12.
Equity
1,000 EUR
31.12.2021
31.12.2020
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
93,685.5
101,606.8
Share-based incentive plans
-109.3
-81.1
Dividend distribution
-27,235.2
0.0
Distribution of own shares
417.1
302.0
Retained earnings on Dec 31
66,758.2
101,827.7
Result for the period
-3,488.4
-8,142.1
Total equity
130,945.9
161,361.7
Distributable funds on Dec 31
Retained earnings
66,758.2
101,827.7
Net result for the financial period
-3,488.4
-8,142.1
Unrestricted equity reserve
66,676.2
66,676.2
Distributable funds from shareholders' equity
129,945.9
160,361.7
Treasury shares of Caverion Corporation
December 31, 2021 parent company had treasury shares as follows:
Number
Total number
of shares
% of total
share capital
and voting rights
2,502,467
138,920,092
1.80%
13.
Appropriations
1,000 EUR
31.12.2021
31.12.2020
Accumulated depreciation difference on Jan 1
67.2
253.8
Increase / decrease
-67.2
-186.7
Accumulated depreciation difference on Dec 31
67.2
14.
Deferred taxes and liabilities
1,000 EUR
31.12.2021
31.12.2020
Deferred tax assets
Accumulated depreciation difference
27.9
Total
27.9
Deferred tax liabilities
Accumulated depreciation difference
13.4
Total
13.4
Deferred taxes have not been recognized in the parent company’s financial statements.
15.
Non-current liabilities
1,000 EUR
31.12.2021
31.12.2020
Liabilities to Group companies
Other loans
7,500.0
10,500.0
Liabilities, external
Loans from credit institutions
50,000.0
50,000.0
Hybrid bond
35,000.0
35,000.0
Senior bond
75,000.0
75,000.0
Total
167,500.0
170,500.0
NOTES TO THE BALANCE SHEET
92
Caverion Annual Review 2021
16.
Current liabilities
1,000 EUR
31.12.2021
31.12.2020
Liabilities to Group companies
Trade payables
405.8
501.0
Accrued expenses
19,388.8
110.3
Other liabilities
330,834.3
331,551.9
Liabilities, external
Trade payables
3,503.1
3,369.5
Other current liabilities
337.2
2,324.5
Accrued expenses
10,223.8
9,652.2
Total
364,693.1
347,509.4
Accrued expenses consist of:
Personnel expenses
4,021.4
2,838.8
Interest expenses
3,369.9
3,471.3
Accrued expenses to group companies
19,388.8
110.3
Other expenses
2,832.4
3,342.1
Total
29,612.6
9,762.5
17.
Commitments and contingent liabilities
1,000 EUR
31.12.2021
31.12.2020
Leasing commitments
Payable during the next fiscal year
2,669.1
2,490.1
Payable during subsequent years
20,763.6
22,237.2
Total
23,432.8
24,727.3
Guarantees
On behalf of Group companies
Contractual work guarantees
467.947.9
454.880.0
Loan guarantee
10,500.0
13,500.0
Leasing commitment guarantees
17,254.9
17,101.9
Factoring related guarantees
1,989.9
1,316.9
18.
Derivate instruments
1,000 EUR
31.12.2020
31.12.2020
External foreign currency forward contracts
Fair value
3.9
414.4
Value of underlying instruments
65,177.0
70,165.6
Internal foreign currency forward contracts
Fair value
21.2
-65.9
Value of underlying instruments
2,150.6
2,644.9
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
93
Caverion Annual Review 2021
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- and 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 24 March 2021, 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 has had a consulting
agreement with the Company. The agreement was effective for 1.1.-28.2.2021 and from 9.8.2021.
The value of the contract is not material. The consulting agreement has been made in accordance
with the Remuneration Policy. Apart from the said consulting 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*
25.3.2021-
28.3.2022
Audit
committee
meetings
Human
Resources
committee
meetings
Meeting
fees
Total
2021
Total
2020
Jussi Aho
46,800
2,200
9,700
58,700
54,500
Markus Ehrnrooth
60,000
3,300
9,700
73,000
68,250
Joachim Hallengren
46,800
3,300
8,800
58,900
55,050
Antti Herlin
0
10,828
Thomas Hinnerskov
46,800
3,300
8,800
58,900
55,050
Anna Hyvönen
10,828
Kristina Jahn
46,800
3,300
9,700
59,800
44,222
Mats Paulsson
79,200
2,200
9,700
91,100
86,900
Jasmin Soravia
46,800
1,650
9,700
58,150
43,672
Total
373,200
13,200
6,050
66,100
458,550
429,300
* Board membership fees 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.
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.
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
NOTES TO THE BALANCE SHEET
94
Caverion Annual Review 2021
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 2018–2020
Caverion’s Board of Directors approved a share-based long-term incentive plan in its December 2017
meeting. The plan consisted 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 Performance Share Plan 2018-2020 consisted of a one-year operative financial performance
period (2018), followed by a two-year share price performance period 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 in a directed share issues without
consideration, 28,169 Caverion Corporation shares held by the company were on 23 February 2021
conveyed to 77 participants. 35,483 Caverion Corporation shares held by the company were on 23
February 2021 conveyed to 16 key persons participating in the Restricted Share Plan 2018–2020
that is used for special situations.
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 and/or 2019-2021 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.
In a directed share issue without consideration, 120,199 Caverion Corporation shares held by the
company were on 30 April 2021 conveyed to key employees included in the Matching Share Plan
2018-2022. The shares were delivered as a reward from the matching period 1 March 2018 - 29
February 2020 and, for participants who have joined the plan at a later stage, also as a reward from
the matching period 1 March 2018 - 28 February 2019.
In a directed share issue without consideration, 168,650 Caverion Corporation shares held by the
company were on 25 August 2021 conveyed to key employees included in the Matching Share Plan
2018 - 2022. The shares were delivered as a reward from the matching period 1 March 2018 - 28
February 2021.
From the 2021 share issues, a total of 16,911 own shares were returned to Caverion on 14
September 2021 and 30,066 own shares on 16 November 2021.
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
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 the Relative Total
Shareholder Return and Earnings per share (EPS). The Board of Directors evaluates the target
achievement in March 2022 and the potential share reward will be paid to the participants in April
2022.
Within RSP 2019-2021, share allocations were made for individually selected key employees in
special situations. The maximum number of shares that may be allocated and delivered totals
135,000 shares (gross before the deduction of applicable taxes). The share rewards will be delivered
to the participants in spring 2022 provided that their employment with Caverion continues until the
delivery of the share reward.
NOTES TO THE BALANCE SHEET
95
Caverion Annual Review 2021
Share-based long-term incentive plan 2020-2022
Caverion's Board of Directors decided on a commencement of new plan period 2020-2022 of the
company's performance share plan (PSP) structure in its December 2019 meeting. The Board
approved at the same time the commencement of a new plan period 2020−2022 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 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 the Relative Total
Shareholder Return and Earnings per share (EPS). 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. Potential share rewards will be delivered to the participants in spring
2023.
Share-based long-term incentive plan 2021-2023
Caverion's Board of Directors decided on a commencement of new plan period 2021-2023 of the
company's performance share plan (PSP) structure in its December 2020 meeting. The Board
approved at the same time the commencement of a new plan period 2021−2023 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 Performance Share Plan 2021-2023 consists of a three-year operative financial performance
period (2021-2023). The potential reward is based on the targets set for the Relative Total
Shareholder Return and Earnings per share (EPS). Potential share rewards will be delivered to the
participants in spring 2024.
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 and the
measures are based in Caverion's strategic targets set by the Board. Due to the CEO change and
relatively short periods of service in 2021, no short-term incentive will be paid for any of the CEO's
for the 2021 performance.
Termination compensation, pensions and retirement age of the President and CEO
Ari Lehtoranta held the position of Caverion Corporation's President and CEO until 28 February 2021
when the Board of Directors of Caverion Corporation and Ari Lehtoranta mutually agreed that he
would leave his position as President and CEO. The contractual retirement age of the President and
CEO Ari Lehtoranta was 63 years. He had a supplementary defined contribution pension plan as the
President and CEO for the period 1.1.-28.2.2021. After the mutual agreement on 28 February 2021,
Mr. Lehtoranta has been paid the contractual 6 months’ notice period salary of 330,000 euros
(including fringe benefits 40 euros) and supplementary pension of 66,000 euros. The cost of the
Finnish statutory pension during the notice period was 51,645 euros. Mr Lehtoranta was entitled to
a severance payment amounting to 12 months' base salary as monthly payments after the
termination date. The severance paid in 2021 was 220,000 euros. The last monthly severance
payment will be paid in August 2022, total severance payment being 660,000 euros. The whole
severance payment amount has been recognised as an expense in the company’s 2021 result.
Mats Paulsson, the Chairman of Caverion's Board of Directors, held the position of Interim
President and CEO from 28 February to 8 August 2021. Mats Paulsson's notice period was one week
for both parties with no entitlement to severance pay. Mats Paulsson was included in the Swedish
statutory social security pension and the company paid a supplementary defined contribution pension
to compensate for a difference between country specific pension practices.
Jacob Götzsche joined Caverion Corporation as the President and CEO on 9 August 2021. In case
of termination, his notice period is six months for both parties. Jacob Götzsche is entitled to a
severance pay amounting to 12 months’ base salary if the company terminates the agreement. The
company will not provide a pension coverage for Jacob Götzsche, but to compensate for this he is paid
an additional 20 percent cash allowance calculated from his fixed annual base salary to obtain a
pension coverage by himself. No specific retirement age has been agreed.
Remuneration paid to the President and CEO in 2021
Ari Lehtoranta's base salary and fringe benefits as the President and CEO during 1.1.-28.2.2021 were
in total EUR 176,000. Ari Lehtoranta was not paid short or long-term incentives during 2021.
Mats Paulsson's base salary and fringe benefits as the President and CEO during 28.2.-8.8.2021
were in total EUR 202,837. Mats Paulsson was not paid short or long-term incentives during 2021.
Jacob Götzsche's base salary and fringe benefits as the President and CEO during 9.8.-31.12.2021
were in total EUR 253,036. Jacob Götzsche was not paid short or long-term incentives during 2021.
EUR
Fixed
base salary
Fringe
benefits
Short-term
incentive
payment
Long-term
incentive
payment
Supplementary
pension
scheme
Total
2021
Ari Lehtoranta
1.1-28.2.2021
175,960
40
22,000
198,000
Mats Paulsson
28.2.-8.8.2021
202,837
31,849
234,686
Jacob Götzsche
9.8.-31.12.2021
246,563
6,473
49,321
302,356
Total
625,359
6,513
103,169
735,042
NOTES TO THE BALANCE SHEET
96
Caverion Annual Review 2021
President and CEO’s pension costs
Total 2021
Ari Lehtoranta
1.1.-28.2.2021
Statutory pension scheme
27,538
Supplementary defined contribution pension scheme
22,000
Mats Paulsson
28.2.-8.8.2021
Statutory pension scheme
21,927
Supplementary defined contribution pension scheme *
31,849
Jacob Götzsche
9.8.-31.12.2021
Statutory pension scheme
127
Supplementary defined contribution pension scheme **
49,321
* Paid to Mats Paulsson to compensate for a difference between country specific pension practices.
** Jacob Götzsche is paid a 20% cash allowance calculated of his fixed annual base salary to obtain a pension coverage.
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, 2021.
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 2021 the total outstanding amount of these loans
amounted approximately to EUR 4.4 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
97
Caverion Annual Review 2021
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, 2021 is
(EUR):
Retained earnings
66,758,154.89
Result for the period
-3,488,422.72
Retained earnings, total
63,269,732.17
Unrestricted equity reserve
66,676,176.49
Distributable equity, total
129,945,908.66
The Board of Directors proposes to the Annual General Meeting to be held on 28 March 2022 that a
dividend of 0.17 per share will be paid for the year 2021.
Signature of the report of the Board of Directors and Financial
statements
Helsinki, 9 February 2022
Caverion Corporation
Board of Directors
Mats Paulsson
Chairman
Markus Ehrnrooth
Vice Chairman
Jussi Aho Joachim Hallengren Thomas Hinnerskov
Kristina Jahn Jasmin Soravia
Jacob Götzsche
President and CEO
The Auditor’s note
Our auditor’s report has been issued today
Helsinki, 9 February 2022
Ernst & Young Oy
Authorized Public Accountant Firm
Antti Suominen
Authorized Public Accountant
98
Caverion Annual Review 2021
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 2021. 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 accompanying 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.
99
Caverion Annual Review 2021
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 2021, the value of goodwill amounted to 365 million euro representing 28 % of the total
assets and 184 % of the total equity.
The valuation 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.
100
Caverion Annual Review 2021
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 2021, the carrying value of trade receivables amounted to 346 million euros, of which 56
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 2021 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
101
Caverion Annual Review 2021
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 extremely 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, based 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, 9 February 2022
Ernst & Young Oy
Authorized Public Accountant Firm
Antti Suominen
Authorized Public Accountant
102
Caverion Annual Review 2021
Independent Auditor’s report on Caverion Oyj’s ESEF Consolidated
Financial Statements (Translation of the Finnish original)
To the Board of Directors of Caverion Oyj
We have performed a reasonable assurance engagement on
the iXBRL tagging of the consolidated financial statements
included in the digital files “7437007ECQWVPCJIS695-2021-12-
31_fi.zip” of Caverion Oyj for the financial year 1.1. – 31.12.2021
to ensure that the financial statements are tagged with iXBRL
mark ups in accordance with the requirements of Article 4 of EU
Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).
Responsibilities of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible
for the preparation of the Report of Board of Directors and
financial statements (ESEF financial statements) that comply with
the ESEF RTS. This responsibility includes:
>
preparation of ESEF financial statements in accordance
with Article 3 of ESEF RTS
>
Tagging the consolidated financial statements included
within the ESEF financial statements by using the iXBRL
mark ups in accordance with Article 4 of ESEF RTS
>
Ensuring consistency between ESEF financial
statements and audited financial statements
The Board of Directors and Managing Director are also
responsible for such internal control as they determine is
necessary to enable the preparation of ESEF financial statements
in accordance the requirements of ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the
ethical requirements that are applicable in Finland and are relevant
to the engagement we have performed, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements.
The auditor applies International Standard on Quality Control
(ISQC) 1 and therefore maintains a comprehensive quality control
system including documented policies and procedures regarding
compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Auditor’s Responsibilities
In accordance with the Engagement Letter we will express an
opinion on whether the electronic tagging of the consolidated
financial statements complies in all material respects with the
Article 4 of ESEF RTS. We have conducted a reasonable assurance
engagement in accordance with International Standard on
Assurance Engagements ISAE 3000.
The engagement includes procedures to obtain evidence on:
>
whether the tagging of the primary financial statements
in the consolidated financial statements complies in all
material respects with Article 4 of the ESEF RTS
>
whether the ESEF financial statements are consistent
with the audited financial statements
The nature, timing and extent of the procedures selected
depend on the auditor’s judgement including the assessment of
risk of material departures from requirements sets out in the ESEF
RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our statement.
Opinion
In our opinion the tagging of the consolidated financial
statement included in the ESEF financial statements of Caverion
Oyj “7437007ECQWVPCJIS695-2021-12-31_fi.zip” for the year
ended 31.12.2021 complies in all material respects with the
requirements of ESEF RTS.
Our audit opinion on the consolidated financial statements of
Caverion Oyj for the year ended 31.12.2021 is included in our
Independent Auditor’s Report dated 9.2.2022. In this report, we do
not express an audit opinion or any other assurance on the
consolidated financial statements.
Helsinki, 28 February 2022
Ernst & Young Oy
Authorized Public Accountant Firm
Antti Suominen
Authorized Public Accountant
103
Caverion Annual Review 2021