Consti Oyj — Interim / Quarterly Report 2018

Jul 26, 2018

Consti Group Plc Half-Year Financial Report for January - June 2018

Consti Group Plc Half-Year Financial Report for January - June 2018

CONSTI GROUP PLC HALF-YEAR FINANCIAL REPORT 26 JULY 2018, at 8.30 a.m.

Consti Group Plc Half-Year Financial Report for January - June 2018

ORDER BACKLOG GREW, RESULT TURNED POSITIVE

4-6/2018 highlights (comparison figures in parenthesis 4-6/2017):
* Net sales EUR 77.8 (78.8) million; change -1.3%
* EBITDA EUR 2.1 (3.2) million and EBITDA margin 2.7% (4.1%)
* Operating profit (EBIT) EUR 1.7 (2.7) million and operating profit (EBIT)
margin 2.1% (3.4%)
* Order backlog EUR 286.2 (227.9) million; growth 25.6 %
* Free cash flow EUR 2.2 (4.0) million
* Earnings per share EUR 0.16 (0.26)

1-6/2018 highlights (comparison figures in parenthesis 1-6/2017):
* Net sales EUR 140.0 (136.1) million; growth 2.9%
* EBITDA EUR 2.3 (4.0) million and EBITDA margin 1.7% (2.9%)
* Operating profit (EBIT) EUR 1.5 (3.0) million and operating profit (EBIT)
margin 1.0% (2.2%)
* Free cash flow EUR -5.6 (3.5) million
* Earnings per share EUR 0.12 (0.26)

Guidance on the Group outlook for 2018:
The Company estimates that its operating result for 2018 will grow compared to
2017.

+--------------------+-------+-------+--------+-------+-------+--------+-------+
|KEY FIGURES (EUR | 4-6/ | 4-6/ |Change %| 1-6/ | 1-6/ |Change %| 1-12/ |
|1,000) | 2018 | 2017 | | 2018 | 2017 | | 2017 |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Net sales | 77,773| 78,811| -1.3 %|140,041|136,079| 2.9 %|300,203|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|EBITDA | 2,084| 3,206| -35.0 %| 2,315| 3,978| -41.8 %| 1,714|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|EBITDA margin, % | 2.7 %| 4.1 %|  | 1.7 %| 2.9 %|  | 0.6 %|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Operating profit | 1,664| 2,697| -38.3 %| 1,464| 2,975| -50.8 %| -375|
|(EBIT) | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Operating profit | 2.1 %| 3.4 %|  | 1.0 %| 2.2 %|  | -0.1 %|
|(EBIT) margin, % | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Profit for the | 1,194| 1,996| -40.2 %| 907| 2,013| -54.9 %| -1,074|
|period | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Order backlog |  |  |  |286,201|227,907| 25.6 %|225,721|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Free cash flow | 2,229| 3,980| -44.0 %| -5,572| 3,502|  | 8,936|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Cash conversion, % |107.0 %|124.1 %|  | n/a| 88.0 %|  |521.4 %|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Net interest-bearing|  |  |  | 18,455| 15,514| 19.0 %| 12,070|
|debt | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Gearing, % |  |  |  | 69.7 %| 55.0 %|  | 47.7 %|
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Return on |  |  |  | -3.8 %| 23.7 %|  | -0.7 %|
|investment, ROI % | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Number of personnel |  |  |  | 1,153| 1,165| -1.0 %| 1,079|
|at period end | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+
|Earnings per share, | 0.16| 0.26| -38.6 %| 0.12| 0.26| -54.4 %| -0.14|
|undiluted (EUR) | | | | | | | |
+--------------------+-------+-------+--------+-------+-------+--------+-------+

CEO Esa Korkeela's comment

"Our net sales for the second quarter of the year were at nearly the same level
as in the comparison period, amounting to 77.8 million euro. Net sales growth
continued strong in our Building Facades business area, but second quarter
volumes in Technical Building Services still reflected the business areas'
reorganising which was started towards the end of 2017; as well as taking new
operating models into use, and the more disciplined bidding activity applied to
pipeline renovation services. Our operating profit improved clearly compared to
the previous quarter. Although we could already see a positive impact on our
result due to the corrective actions we have taken, our profitability was still
weakened by certain already identified low-margin projects, as well as carrying
out final performance obligations in one Renovation Contracting project during
the reporting period.

The market environment continued mainly good during the second quarter. During
April-June we received new orders amounting to 88.7 million euro, which is a
6.9 percent growth to the comparison period. New order intake grew particularly
much in facade renovations in the Greater Helsinki area. Due to the good
development in new order intake, our order backlog at the end of June, 286.2
million euro, was 25.6 percent larger than in the comparison period, which puts
us in a good position to return to a path of profitable growth.  At the same
time, however, we note that a certain project in our Renovation Contracting
business area still has open risks, which we have to the best of our ability
taken into consideration in our result. The building in question has already
been handed over to the customer and the project's final financial statement
notes that there is a significant disagreement between the parties.

We continued carrying out our updated strategy during the second quarter of the
year. In addition to actions improving profitability, we also advanced in for
example launching new services. In April, we launched our new Consti Kodikas
service concept. Consti Kodikas is a product family offered to housing
corporations. It aims to provide comprehensively planned residential building
renovations that increase the value and comfort of the property as cost
effectively as possible. In our actions to improve profitability we are
continuing the implementation of common practises relating to steering and
reporting in our projects, as well as clarifying profit and reporting
responsibilities.

Our current market and business outlook leads us to believe that the demand for
renovations and technical building services will remain at a good level during
the latter half of the year as well. I expect that our strong order backlog
combined with our actions to improve performance will support us in achieving a
turn in our profitability during the second part of the year, although restoring
our Technical Building Services business areas' performance to the required
level will take somewhat longer than expected."

Operating environment and outlook for the 2018

In Finland, nearly six percent of the GDP is spent on renovations, which is
significantly more than the European average. During recent years, renovations
have increased their share of the total construction market steadily. Due to our
building stock's age, growth in Finland has been rapid compared to the rest of
Europe.

European construction business research group Euroconstruct estimated in its
June 2018 forecast that total building in 2018 will increase approximately 4.3
percent from the previous year, renovation construction will grow about 1.5
percent, and new building 6.9 percent from 2017. In renovation construction
demand growth is estimated to continue progressing steadily during upcoming
years and the growth is estimated to be faster than new building growth on
average.

The Confederation of Finnish Construction Industries RT estimated in its March
2018 review of market conditions that renovations will continue growing at
approximately 2.0 percent both during the current and upcoming year. Growth is
expected especially from residential building renovations in growth centres.
Business premises renovations are also expected to grow due to the improved
economic environment. Renovation prospects are also improved by the more
systematic renovations of public sector properties.

The general economic climate has a significantly smaller impact on renovations
and technical building services than it does on new construction. Prerequisites
for office building renovations also improve with economic growth. In upcoming
years as well, renovation construction activity will be maintained by the aging
building stock, renovation debt built up throughout the years, urbanisation,
changes in building use purpose and energy efficiency requirements.

The company estimates that its operating result for 2018 will grow compared to
2017.

Press conference

A press conference for analysts, portfolio managers and media will be arranged
on Thursday 26 July 2018 at 10.00 Glo Hotel Kluuvi's Board -conference room, at
Kluuvikatu 4, Helsinki. The conference is hosted by CEO Esa Korkeela and CFO
Joni Sorsanen.

Financial communication in 2018

Consti Group Plc shall publish one more interim report during 2018:

* Interim report 1-9/2018 published 26 October 2018

CONSTI GROUP PLC

Further information:

Esa Korkeela, CEO, Consti Group Plc, Tel. +358 40 730 8568
Joni Sorsanen, CFO, Consti Group Plc, Tel. +358 50 443 3045

Distribution:

Nasdaq Helsinki Ltd.
Major media
www.consti.fi

Consti is a leading Finnish company concentrating on renovation and technical
services. Consti offers comprehensive building technology, pipeline renovation,
renovation contracting, façade renovation and other demanding construction and
maintenance services for residential and commercial buildings. In 2017, Consti
Group's net sales amounted to 300 million euro. It employs over 1000
professionals in renovation construction and building technology.

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

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