Slide 1: Revenue unchanged, weaker margins push the result into the red
Revenue unchanged, weaker margins push the result into the red Interim report 1-9/2019, SRV Group Plc 31 October 2019 Saku Sipola, President and CEO Ilkka Pitkänen, CFO
Slide 2: Agenda
AGENDA Urbanisation and SRV 1-9/2019 in brief SRV Group and business area results Balance sheet and key figures SRV of the future and outlook Recovery programme 2
Slide 3: Urbanisation and SRV
Urbanisation and SRV 3
Slide 4: Increase in prosperity
Increase in prosperity and service culture and polarisation of society COURAGE IN DEVELOPMENT Rise of communiti ecological thinking and well-being Ageing populations e Vy %, Ly %, b a —_ Digitalisation and use of technology in everyday life Urbanisation Changes in consumer behaviour SRV and ways of
Slide 5: SRV has a key role as a developer of the city centers
SRV has a key role as a developer of the city centers KEIMOLANMÄKI KIVISTÖ VANTAANKOSKI TIKKURILA METROLINE RING RAIL LINE JOKERI LIGHT RAIL SRV PROJECTS SÄTERINPORTTI PERKKAA PASILA KALASATAMA OTANIEMI KEILANIEMI NIITTYKUMPU TAPIOLA JÄTKÄSAARI KIVENLAHTI KOIVUSAARI 5 ESPOONLAHTI
Slide 6: January-September 2019 in brief
January-September 2019 in brief Revenue declined by 0.4% in Group. Revenue declined in business construction and increased in housing construction. More developer-contracted housing units were recognised as income, 301 (253) housing units. Operative operating profit totalled EUR -9.6 (-11.6) m
Slide 7: Key figures 1-9/2019
1─9/ 1─9/ Change, Change, 1─12/ MEUR 2019 2018 MEUR % 2018 Revenue 657.2 659.9 -2.7 -0.4 959.7 Revenue declined by 0.4% Operative operating profit*) -9.6 -11.6 1.9 -10.0 Revenue declined in business construction and grew in Operative operating profit, %*) -1.5 -1.8 -1.0 housing construction [Taulu
Slide 8: SRV Group results 1-9/2019
SRV GROUP RESULTS 1─9/2019
Slide 9: Group revenue unchanged, operative operating profit declined
Group revenue unchanged, operative operating profit declined
Slide 10: New agreements worth of EUR 345 million
New agreements worth of EUR 345 million New agreements in Q3 EUR 123 million, the most significant new projects: Tampere Wallesmanni, Tampere Deck Opaali and Raisio production facility 10
Slide 11: Results of the business areas
RESULT OF THE LIIKETOIMINTOJEN TULOKSETAREAS BUSINESS 1─6/2018 1─9/2019
Slide 12: Construction – Revenue declined and operating profit improved, order backlog solid
Construction – Revenue declined and operating profit improved, order backlog solid Revenue Revenue Revenue from the business construction decreased by 0.7% and housing construction grew by 0.4%. 654.6 (656.9) A total of 301 (253) developer-contracted housing units were recognised as income. EUR
Slide 13: Housing units' recognition as income
Q3/2019: More housing Housing units’ recognition as income units were recognised as income, 98 (49). Revenue EUR 21,6 million. The amount of completed, unsold apartments were low, 84 (102) units. The higher number of start- ups in 2017 will reflect in the 2019 revenue – 809 housing units estimated t
Slide 14: Investments – Revenue rose and operating profit decreased by impairments
Investments – Revenue rose and operating profit decreased by impairments of investments Revenue Revenue Mainly consists of revenue from shopping centre management 4.2 (3.6) EUR million Operative operating profit Occupancy rates and rental income of the shopping centres improved Capital employed
Slide 15: Investments – Capital employed
Investments – Capital employed Capital employed 30 September 30 September 31 December (EUR Million) 2019 2018 2018 • Invested capital largely consists of REDI shopping centre and investments in subsidiaries, joint parking facility 96.7 117.9 118.4 ventures and associated 84.8 82.7 78.4 companies; lo
Slide 16: Large projects, especially shopping centres, are capital intensive
Large projects, especially shopping SRV is currently working on numerous projects in which we centres, are capital intensive are also in the role of an owner, which ties up our capital Our large shopping centre 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 projects in Finland and Russia as w
Slide 17: Balance sheet and key figures
BALANCE SHEET AND KEY FIGURES 17
Slide 18: Key financials
SRV strengthened its Key financials financial position with new financing arrangements When analyzing SRV please note DEBT MATURITY PROFILE OVERVIEW (MILJ. EUR) 1)2) capital intensive property development 1) The impacts of IFRS 16 in 2019 have been adjusted out of the figures. 18 2) Based on the con
Slide 19: Future SRV and outlook
FUTURE SRV AND OUTLOOK
Slide 20: Kalasatama Towers: Majakka and Loisto
Kalasatama Towers: LOISTO Majakka and Loisto Kalasatama, Helsinki 98% of 282 apartments sold in Majakka residential tower. Majakka’s residents will be able to move into their new homes in November 2019. New housing services available in Majakka. The sale of the apartments in the second residential t
Slide 21: Kalasatama Towers: Horizon
Kalasataman Towers: Horizon Kalasatama, Helsinki Horizon is Finland’s first office skyscraper. Horizon rises over 100 metres above the sea level, and consists of 26 floors. Advance marketing of business premises continues. The shopping centre REDI is located at the The 24th floor offers terrace and
Slide 22: Tampere Deck and Arena
Tampere Deck and Arena Hybrid project, Tampere Total value about EUR 550 million KALASATAMA 15,000 capacity multi-purpose arena 5 tower buildings Around 1,000 apartments A centre of new urban life, rising above the railway tracks, bringing people together amid an international Partners: OP, LocalTap
Slide 23: Tampere Deck apartments
Tampere Deck apartments Hybrid project, Tampere On sale Tampere Deck TOPAASI 105 apartments There will be a new, versatile, urban area in 60 per cent of apartments Tampere above the railway and right in the city centre. reserved Tower buildings rising from the deck will 16 floors (apartment floors f
Slide 24: Hospital Nova
Hospital Nova Jyväskylä, Central Finland 108 345 gross square meters KALASATAMA 7 floors + helicopter level on the 8th floor Central Finland Healthcare The Central Finland Hospital Nova will replace all District of the functions of the present central hospital as it opens in 2020. Client The hospita
Slide 25: Bridge Hospital
Bridge Hospital Meilahti, Helsinki 71,500 gross square meters KALASATAMA 8+1 floors 215 beds 58 intensive care unit beds 16 operating theatres The largest construction project in the history of HUS, The Bridge Hospital, will be constructed in the centre of the hospital area at Meilahti. The hosp
Slide 26: Finavia T2
Finavia T2 Expansion and renovation of Terminal 2, Helsinki Airport, new parking garage and connection to Kehärata rail network. Appr. 128,000 gross square meters, of which the extension is about 40,000 gross square meters Parking garage of 53,000 gross square meters for 1,800 cars Connection to Keh
Slide 27: The Finnish-Russian school
The Finnish-Russian school Maununneva, Helsinki Client Senate Properties Facilities for approximately 700 students KALASATAMA About 6,300 square meters Total value of the project The modern school is built ecologically from wood. When completed, approx. EUR 23 million the new school building will be
Slide 28: The Monikko School Centre
The Monikko School Centre Leppävaara, Espoo Facilities for 1,300 children KALASATAMA About 15 000 gross square meters The three-storey school center will provide premises for a Total value of the project Swedish-speaking elementary school and day-care centre as well approx. EUR 39 million as for a F
Slide 29: Outlook for 2019 (updated on 10 Oct)
Outlook for 2019 (updated on 10 Oct) More developer-contracted housing units will be completed in 2019 than in the comparison period. It is estimated that a total of 809 developer-contracted housing units will be completed in 2019 (526 in 2018). SRV makes long-term procurement agreements, due to
Slide 30: Recovery programme
Recovery programme SRV is launching a recovery programme with the short-term goal of ensuring its operative operating profit and cash flow for 2020 are positive and returning its operative operating profit for 2021 to the level of 2017. The programme focuses on organisation and organisational cu
Slide 31: Lightening of balance sheet
Lightening of balance sheet Lightening of balance sheet continues by selling e.g. completed housing units, plots and investments at an accelerated rate. In addition, the company is exploring opportunities to reduce its ownership in various collaborative projects. The goal is to reduce the balance
Slide 32: Procurement savings
Procurement savings Centralising housing production’s procurement further, strengthening the management of the procurement categories for business construction and increasing the share of international procurement in the total volume play a key role in improving profit. The goal is to achieve sa
Slide 33: Organisation and personnel
Organisation and personnel The company plans to renew its operational culture and organisation with the aim of improving the quality and efficiency of its operations. Due to production and financial reasons as well as possible reorganisation of operations, the company will start co-operation neg
Slide 34: Strategic aim
Strategic aim The company’s strategic aim is to significantly improve its profitability and reduce the level of its capital employed gradually by EUR 250–300 million after the realisation of current shopping centre investments, estimated to be completed by the end of 2024. The company will deter
Slide 35: Building cities of the future
Building cities of the future 35
Slide 36: Thank You!
Thank You! 36
Slide 37: Appendices
Appendices
Slide 38: The largest ongoing business construction projects 1/3
The largest ongoing business construction projects (estimated figures) 1/3 Project, location Value of SRV Project type Level of Completion, % Completion contract date (estimated) MEUR Tampere Deck, southern deck and * Public 73 Q3/2021 infrastructure** Tampere Deck, multipurpose arena** * Retail 11
Slide 39: The largest ongoing business construction projects 2/3
The largest ongoing business construction projects (estimated figures) 2/3 Project. location Value of SRV Project type Level of Completion, % Completion contract date (estimated) MEUR Central Finland Hospital Nova, Jyväskylä 325 Public 76 Q3/2020 Helsinki Airport, terminal 2 260 Retail 18 Q1/2022 HU
Slide 40: The largest ongoing business construction projects 3/3
The largest ongoing business construction projects (estimated figures) 3/3 Project, location Value of SRV Project type Level of Completion, % Completion contract, date (estimated) MEUR Jokirinne learning centre, Kirkkonummi 33 Public 26 Q4/2020 Hämeenlinna Women’s prison 30 Public 32 Q4/2020 Hotel M
Slide 41: The largest developer-contracted housing projects under construction in Finland
The largest developer-contracted housing projects under construction in Finland (estimated figures) Project, location Value of SRV Completion, estimate Sold For sale contract, MEUR REDI Majakka, Helsinki 106 Q4/2019 274 8 REDI Loisto, Helsinki 105 Q4/2021 36 213 Wallesmanni, Tampere 42 Q4/2020 44 17
Slide 42: The largest ongoing housing projects in Finland, housing contracting
The largest ongoing housing projects in Finland, housing contracting (estimated figures) Housing project, developer Completion Completion date (estimated) level, % 89 Pihapuisto ja Puistoniitty, Espoo, LocalTapiola Q4/2019 Anna Sahlsteninkatu, Espoo, LocalTapiola 65 Q4/2019 Punanotko, Helsinki, Ilma
Slide 43: Consolidated income statement
Consolidated income statement Previous EUR million 1-9/2019 1-9/2018 1-12/2018 12 months Revenue 657.2 659.9 959.7 956.9 Other operating income 0.9 1.7 16.9 16.1 Change in inventories of finished good and work in progress 23.2 60.6 34.5 -2.9 Use of materials and services -621.2 -661.6 -919.3 -879.0
Slide 44: Balance sheet
Balance sheet EUR million 30.9.2019 % 30.9.2018 % 31.12.2018 % Non-current assets 314.8 28.7 % 305.8 31.9 % 294.4 31.1 % Inventories 636.1 58.0 % 472.5 46.4 % 438.2 46.3 % Other current assets 121.5 11.1 % 123.5 16.2 % 121.4 12.8 % Cash and cash equivalents 24.1 2.2 % 75.0 5.6 % 93.1 9.8 % Total ass
Slide 45: Indebtedness in detail
Indebtedness in detail EUR million 30.9.2019 30.9.2018 31.12.2018 Non-current interest bearing liabilities Loans from financial institutions 64.0 22.6 31.7 Bonds 136.5 174.0 174.1 Housing corporation loans 103.4 99.1 78.3 Lease liabilities. IFRS 16 171.2 0.0 0.0 Subtotal 475.1 295.7 284.1 Current in
Slide 46: Consolidated cash flow statement
Consolidated cash flow statement EUR million 1-9/2019 1-9/2018 1-12/2018 Cash receipts from customers 656.4 680,0 986.1 Cash receipts from other operating income 0.9 1.7 2.1 Cash generated from operations -731.8 -695,4 -946.0 Net cash before interests and taxes -74.5 -13.7 42.1 Interests received an