Slide 1: SRV – Building for life
SRV – Building for life Interim Report 1-3/2014 Jukka Hienonen CEO 7 May 2014 1
Slide 2: Three cornerstones of business operations
Three cornerstones of business operations 1-3/2014 Domestic Operations Share of Group revenue 90 % International Operations Business construction Housing construction Share of Group revenue 10 % 55 %* 45 %* • Offices and retail facilities • Owner-occupied flats • Shopping centres • Hotels and specia
Slide 3: Effect of project type on returns, risks and recognition of income
Effect of project type on returns, risks and recognition of income Project margin % Ownership of developer- contracted shopping SRV’s focus centre projects (e.g. Pearl in 2014 Plaza, Okhta Mall) Recognition of income on the basis of completed contracts. A proportion equivalent to the holding is elim
Slide 4: Q1/2014 – Positive development on many fronts
Q1/2014 – Positive development on many fronts • Group’s order backlog grew by 21% and remains robust - New agreements EUR 185 million (EUR 40 million Q1/13) - Order backlog EUR 880 million (EUR 727 million) • Group’s profitability improved, operating profit EUR 4.4 million (EUR 1.2 million Q1/13) -
Slide 5: Number of new agreements increased – robust order backlog
Number of new agreements increased – robust order backlog • Clear growth in the number of new 800 New agreements, Meur ( LTM, Q1/13 vs Q1/14) agreements (Q1/2014 and 12 700 month-rolling) 600 - In Finland, investments in new 500 contracts succeeded 400 745 - A critical approach to fixed-price 300 59
Slide 6: Measures to improve domestic profitability yielded good results
Measures to improve domestic profitability yielded good results Meur Domestic operations, net sales (LTM) 700 • Revenue (12-month rolling) remains 600 solid, maintained by a strong order 500 backlog 400 • Order backlog (Q1/14) grew to EUR 721 300 568 583 561 576 575 564 million, EUR +35 million vs Q
Slide 7: 1-3/2014 in brief
1-3/2014 in brief 1-3/ 1-3/ change, change, 1-12/ 2014 2013 meur % 2013 Revenues, meur 138.5 158.4 -19.9 -12.6% 679.4 Opera ng pro t, meur 4.4 1.2 +3.2 +269.2% 26.4 Opera ng pro t, % 3.2% 0.8% 3.9% Pro t before taxes, meur 2.2 0.7 +1.5 +208.2% 22.8 Order backlog 1), meur 880.2 726.7 +153.6 +21.1% 82
Slide 8: SRV Group
SRV Group Meur Meur Revenue Operating profit 200 16 14 150 12 10 100 8 179 170 172 13,7 158 6 138 50 4 6,9 2 4,6 4,4 0 0 1,2 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Meur Meur Order backlog Profit before taxes 14 1 000 959 911 880 12 826 213 800 727 207 182 10 208 600 194 8 13,3 6
Slide 9: Domestic operations
Domestic operations Meur Meur Revenue Operating profit 200 9 5,3% 6% 5,1% 8 4,7% 155 156 5% 150 135 7 129 124 6 4% 67 67 5 100 68 54 55 2,5% 3% 4 2,1% 8,0 7,3 6,6 3 2% 50 88 89 2 68 75 69 3,4 1% 1 2,7 0 0 0% Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Housing Business premises Meur O
Slide 10: Increase in production of own rental housing development projects
Increase in production of own rental housing development projects SRV's housing sales in Finland (units) 900 800 745 680 701 700 638 600 268 198 *) 500 404 404 400 300 482 477 200 297 100 234 0 1-12/11 1-12/12 1-12/13 LTM Developer contracting Institutional sales, negotiation contracts 10
Slide 11: 91% of production under construction sold
91% of production under construction sold Housing production in Finland (units) 100 % 90 % 334 Construction 80 % 455 contracts 969 70 % 1 377 60 % 50 % 471 Negotiation 40 % contracts, investor 294 559 sold 198 30 % 20 % 622 586 10 % 249 171 Developer contracting 0% 12/2011 2197 12/2012 1849 12/2013
Slide 12: Number of housing startups aimed for consumers has been reduced
Number of housing startups aimed for consumers has been reduced Housing start-ups, developer contracting (units) 500 Start-ups, LTM 415 426 397 • SRV has reacted to decline in 400 consumer sales by reducing startups 300 297 - Number of startups in consumer 202 189 200 production in Q1/2014 (12-month
Slide 13: International operations
International operations Meur Meur Revenue Operating profit 60 14 12 50 10 40 8 6 12,3 30 50 4 20 2 23 0 -0,8 0,2 -0,6 10 -1,7 15 16 14 -2 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 0 -4 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Meur Order backlog 200 150 100 188 184 180 159 50 40 0 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 13
Slide 14: Russia’s real estate market from SRV’s point of view
Russia’s real estate marked from SRV’s point of view • Situation before the crisis in Ukraine - Lack of high class premises. Especially in the shopping centre market demand remained strong, retail market grew by about 4% (Q4/13) - International chains planned to expand to Russia. Russia’s consumer g
Slide 15: SRV’s main shopping centre projects in Russia 1.
SRV’s main shopping centre projects in Russia 1. • Pearl Plaza shopping centre was opened on 24 Aug. 2013 - Phase I: EUR 140 million, scope 92,000 m2. SRV's holding is 50% and investment EUR 22 million - SRV is responsible for shopping centre management and leasing, 93% of the premises have been lea
Slide 16: SRV’s main shopping centre projects in Russia 2.
SRV’s main shopping centre projects in Russia 2. •Okhta Mall shopping to be opened in spring 2016 - Part of SRV's large-scale construction project in the Okhta area. 55% holding sold to Russia Invest, of which SRV owns 27%. SRV also has a 45% minority interest - SRV is responsible for commercialisat
Slide 17: Modern new shopping centres in St. Petersburg, 2013-2015
Modern new shopping centres in St. Petersburg, 2013- 2015 No Name 1 Admiralteiskaya 2 Galaktika 3 London Park 4 PEARL PLAZA, COMPLETED 5 Monpansye 6 Pyat ozer 7 Zanevskiy Kaskad, Phase III 15 8 Evropolis 9 Skandinavia 10 Piter-Raduga Phase II 11 Port Nakhodka, Phase II 12 Hollywood 4 13 Hines Outlet
Slide 18: REDI shopping centre and car park
REDI shopping centre and car park • Leasing of REDI is progressing - REDI will be a unique shopping centre in Finland – customer flows will be directed to the centre from many levels - Leasing negotiations are under way with anchor tenants and a wide range of potential tenants. If the ongoing lease
Slide 19: Business properties ready for sale
Business properties ready for sale • Derby Business Park, Espoo - SRV-developed business property project concerning three office buildings in Perkkaa, Espoo, which borders the new intersection on the Turku motorway - Occupancy rate over 90%, almost 600 parking spaces. Phase I was completed in 8/201
Slide 20: SRV’s financial position remains strong
SRV’s financial position remains strong • Solid financing reserves to start own projects Equity to assets ratio and Gearing - Equity ratio 39.0% 50 % 160 180 - Group’s financing reserves EUR 162 million. Ready- 45 % 150 to-be-sold business premises as additional financing 126 Equity to assets ratio,
Slide 21: Outlook for 2014 remains unchanged
Outlook for 2014 remains unchanged • The quarterly variation and development of revenue and result in 2014 will be affected by several factors, such as: SRV's own projects are recognised as income upon delivery, the part of the order backlog that is continuously recognised as income mainly consists
Slide 22: Appendices
Appendices SRW
Slide 23: Domestic Operations
Domestic Operations 1-3/ 1-3/ change change 1-12/ 2014 2013 Meur % 2013 Revenue, Meur 124.4 135.0 -10.6 -7.9% 574.8 - Business premises, Meur 69.0 67.5 +1.5 +2.2% 319.2 - Housing construction, Meur 55.4 67.5 -12.1 -17.9% 255.5 Operating profit, Meur 6.6 3.4 +3.2 +93.1% 21.4 Operating profit, % 5.3%
Slide 24: International Operations
International Operations 1-3/ 1-3/ change change 1-12/ 2014 2013 meur % 2013 Revenue, Meur 14.2 23.5 -9.3 -39.6% 104.7 Operating profit, Meur -0.6 -0.8 +0.3 -31.7% 10.0 Operating profit, % -4.0% -3.6% 9.5% Order backlog, Meur 158.8 39.8 +119.0 +299.0 180.1 • Revenue declined - Construction of the Ok
Slide 25: SRV Group
SRV Group 1-3/ 1-3/ change change 1-12/ 2014 2013 Meur % 2013 Revenues, Meur 138.5 158.4 -19.9 -12.6% 679.4 Operating profit, Meur 4.4 1.2 +3.2 +269.2% 26.4 Operating profit, % 3.2% 0.8% 3.9% Financial income and expenses, Meur -2.3 -0.5 -1.8 +356.0% -3.6 Profit before taxes, Meur 2.2 0.7 +1.5 +208.