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Expert Corporate Governance Service (ECGS)
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Konecranes, March, 28 2019

In general, Konecranes is in compliance with the Finnish regulations relating to the organization and procedures of the Annual General Meeting.

Under ITEM 8, the Board of Directors proposes to distribute a dividend of EUR 1.20 per share. The proposed dividend distribution (EUR 94.6 million) is fully covered by consolidated net earnings (pay-out of 96.2%), but it is not fully covered by cash generation (FCF was EUR 73.1 million in 2018). We also note that dividends were not covered by FCF in fiscal years 2017 and 2016. As Konecranes has a solid financial situation (net debt was 26.2% of market capitalization and 43.1% of equity), we recommend to vote FOR, but we urge the Company to review its dividend policy for the coming years, to make it more consistent with its cash flow capacities.

Under ITEM 14, the Board proposes to re-appoint Ernst & Young as the Company's statutory auditor. Although ECGS has no concerns over the level of non-audit fees, ECGS notes that Ernst & Young has been in office for 13 years and there is no disclosure to suggest that the current mandate has been tendered in the past. As such the current term in office of the statutory auditor is not in accordance with ECGS' guidelines. In line with EU regulation, ECGS recommends a term of maximum 10 years (plus an additional maximum term of 10 years, if a tender is undertaken). Therefore, ECGS recommends to vote OPPOSE.

Underlying
Konecranes Oyj

Konecranes reports two business areas, Service and Equipment, as its primary business segments. Co.'s Service business area provides maintenance and modernization services for all types and brands of industrial cranes, lifting equipment, and machine tools. Co.'s service offering covers inspections, preventive maintenance programs, repairs and improvements, on-call service, spare parts, modernizations, and a range of consultation services. Co.'s Equipment business area provides components, cranes, and material handling solutions for a range of customers. As its secondary segments, Co. reports three geographical areas: Europe, Middle East and Africa; Americas; and Asia-Pacific.

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Proxinvest
Proxinvest

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Expert Corporate Governance Service (ECGS)

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