Slide 1: Order backlog almost doubled
Order backlog almost doubled Full-year revenue grew – Good result in last quarter Interim Report 1-12/2015 Juha Pekka Ojala, CEO Ilkka Pitkänen, CFO 1
Slide 2: Agenda
Tampere Deck and Arena UUSI KUVA Agenda • SRV Group 1-12/2015 • Operations in Finland - Market - Result 1-12/2015 • International Operations - Market - Result 1-12/2015 • Projects • SRV’s Strategy 2016-2020 • Outlook 2
Slide 3: Key figures 1-12/2015
Full-year revenue grew – Order backlog The result of the end of year was improved KEY FIGURES 1-12 / almost doubled by several completed developer contracting housing units 2015 and the higher profitability of projects Order backlog Revenue Operating profit 1 583,4 MEUR 719,1 MEUR 24,3 MEUR REDI-pro
Slide 4: Order backlog almost doubled from last year
Order backlog almost doubled from last year The largest projects of the year 2015 are REDI, TAYS, Niittykumpu Metro Center, Kalasatama TeHyKe 4
Slide 5: SRV Group 1-12/2015
SRV Group 1-12/2015 SRW
Slide 6: Full-year revenue growing – good result in the fourth quarter
Full-year revenue growing – good result in the fourth quarter MEUR 2015 2014 change, % Q4 2015 Q4 2014 change, % Revenue 719,1 684,4 5,1 226,6 193,8 16,9 Operating profit 24,4 24,9 -1,9 17,0 9,6 77 Operating profit % 3,4 3,6 7,5 5,0 50 Return on equity, % 5,6 6,9 Return on investment, % 5,9 5,4 Equi
Slide 7: Full-year result as predicted
Full-year result as predicted 7
Slide 8: High amount of housing startups in 2015 to improve future result
High amount of housing startups in 2015 to High amount of housing improve future result startups in 2015 will be At the moment, SRV is the largest visible in result housing and revenue in constructor in the 2016-17 Helsinki metropolitan area – nearly 1 900 homes under construction In 2016, over two
Slide 9: Operations in Finland 1-12/2015
Niittykumpu Metro Centre Operations in Finland 1-12/2015 9
Slide 10: Housing demand in the Helsinki metropolitan area continues to grow
Housing demand in the Helsinki metropolitan area continues to grow Demand for housing production, number Location of housing production, urbanization scenario Population in the Helsinki Cumulated metropolitan housing deficit, area is predicted immigration and to grow about urbanization → 10-15 % by
Slide 11: Full-year result improved by completed housing project
Full-year result improved by completed housing 1-12 / project in late 2015 – growth in revenue 2015 • The revenue and result improved Revenue - developer-contracted housing production units in late 2015, recognised as income upon delivery 654,1 MEUR - improved project profitability (4,2 %) • The rev
Slide 12: Growth of contracting and order backlog increased revenue
Growth of contracting and order backlog increased revenue New agreements in Q4 for almost 300 EUR million 12
Slide 13: Share of residential development projects has increased
Share of residential development projects has increased Developer- contracted housing launches almost doubled from 2014 - 802 (330) Housing sales successful – 76 % of almost 1 900 housing units sold, and the amount of unsold units nearly halved REDI’s Majakka excluded from 2015 figures 13
Slide 14: International operations 1-12/2015
Okhta Mall, St. Petersburg International operations 1-12/2015 14
Slide 15: Some positive signs in Russia's economy
Some positive signs in Russia’s economy In Russia, the amount of shopping centres Development of Russia’s GDP still half of that in the Western Europe (in relation to population) Middle class consumption focuses to homeland → travelling abroad -40%, domestic travelling +30%, top destinations St. Pet
Slide 16: Revenue increased – projects proceed according to the plan
Revenue increased– projects proceed according to the plan • Most of revenue generated by construction of 1-12 / Revenue Okhta Mall and Daily shopping centres 2015 65,1 Meur • Operating profit close to zero despite the country’s ( 14,4 %) challenging situation • Projects under construction are procee
Slide 17: Number of visitors and sales continue to grow in Pearl Plaza
Number of visitors and sales continue to grow in Pearl Plaza Number of visitors 1.1.2014-31.1.2016 Ruble sales 1.1.2014-31.1.2016 Thousands Mill. rubles 950950 000 900 900 000 000 RUR 800 800 000 000 RUR 850850 000 January 700 January 700 000 000 RUR 750750 000 613,9 644,2 600 600 000 000 RUR 650650
Slide 18: Profit close to zero despite of the challenging situation
Profit close to zero despite of the challenging situation Focus on the construction and operation of existing projects 18
Slide 19: Estimated implementation of on-going shopping centre projects
Estimated implementation of on-going shopping centre projects 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Pearl Plaza 1 (50 % ownership) Okhta Mall (45 % ownership) Daily (20 % ownership) REDI shopping mall and parking premises During the (40 % ownership) current year already three Constructio
Slide 20: Projects
Projects 20
Slide 21: SRV has a key role as a developer of Metro Line
SRV has a key role as a developer of Metro Line KIVENLAHDEN KALASATAMA ESPOONLAHTI NIITTYKUMPU TAPIOLA KEILANIEMI METROKESKUS REDI 21
Slide 22: SRV part of developing Ring Rail Line
SRV part of developing Ring Rail Line KEIMOLANMÄKI VANTAANKOSKI MARTINLAAKSO AVIAPOLIS KIVISTÖ Ilmala MYYRMÄKI TIKKURILA 22
Slide 23: Largest commercial premises projects under construction
Largest commercial premises projects under construction (estimated figures) Project, location Worth of SRV Project type Completion sold/ for sale contract, MEUR DEVELOPMENT PROJECTS REDI, Kalasatama, Hki 390 Commercial, parking Q3/2018 Sold Health and Wellbeing Centre, Kalasatama, Hki * Public servi
Slide 24: Largest housing projects under construction
Largest housing projects under construction (estimated figures) Project, location Worth of SRV Apartments, Degree of Completion Sold/for contract, pieces readiness % sale 3,500 homes in MEUR the development DEVELOPER CONTRACTING PROJECTS IN THE RS SYSTEM pipeline – target to build 15,000- Niittykump
Slide 25: REDI proceeding well
Excavation work is REDI proceeding well in its final stage – the total amount of Reinforcement and rock and land concreting work of the removed from the foundation and the site equals the size frame is in of 9 x Parliament progress, the House shopping centre’s steel frame work and the excavation wor
Slide 26: Excellent demand for apartments at Kalasatama REDI's first tower
Excellent demand for apartments at At pre- marketing kick- Kalasatama REDI’s first tower off, over 150 apartments were reserved More than 200 of during the first Majakka’s 283 week apartments have been reserved, actual sales to start in summer 2016 Housing and Majakka is services form ready a unique
Slide 27: Tampere's Central Deck and Arena project
Finland’s Group of Tampere’s Central Deck and Arena project biggest multi- purpose arena companies - over 1000 created by SRV apartments, as further develops well as the project – restaurants and negotiations with a hotel interested financing partners continue The unique realization in city center,
Slide 28: Kivenlahti Metro Center, Espoo
Kivenlahti Metro Center, Espoo SRV is one of the The project developers of strengthens SRV:s position as a new Kivenlahti developer and Metro Centre and builder of Helsinki surrounding Metropolitan Area residential blocks transport nodes Construction work will start Four blocks: appr. after land use
Slide 29: Aalto University campus building
Aalto University campus building 33,000 square metres in four levels: multi- functional education and work facilities and a daily consumer good store, speciality stores and restaurant premises SRV builds a new campus building for The project is to Aalto University’s be launched in School of Arts, De
Slide 30: Strategy 2016-2020
Strategy 2016-2020 SRW
Slide 31: Vision 2020 and strategy overview
& “ny. Increase in prosperity Asp, and service culture a and polarisation of Changes in consumer ALINIGISNOdS3aY Urbanisation 4%, society behaviour and ways Sy of working VISION 2020 SRV CREATES THE BEST am COURAGE IN DEVELOPryey Sustainability CUSTOMER EXPERIENCE in everything we do AS A CONSTRUCTO
Slide 32: Financial objectives
Financial objectives • Strategic objectives for the term 2016–2020: • During the strategy period, faster growth than the industry will be pursued through large-scale projects • Operating margin rises to over 8 % by the end of strategy period • Return on equity will be at least 15 % by the end of str
Slide 33: Initiatives to reach long-term profitability targets
Initiatives to reach long-term profitability targets SRV’s goal is to improve its Targeted operating long-term profitability profit margin over 8% Initiatives Better project mix Shopping centre projects Operational efficiency Limited participation in low Increased profit from Sourcing savings
Slide 34: Outlook
Outlook 34
Slide 35: Year 2015 in brief
Year 2015 in brief The result of end of year was improved Revenue Order backlog by several increased to almost doubled to completed 719,1 MEUR 1.6 billion euros developer contracting housing units REDI proceeding Russian projects Dividend proposal well – SRV is one of proceeding EUR 0.10 the biggest
Slide 36: Outlook is improving
Outlook is improving OUTLOOK FOR CONSTRUCTION • The total volume of construction in Finland is predicted to start increasing in 2016 • Housing demand increases in growth centres by almost 29,000 per annum • Startups have increased, but no growth is forecast for 2016 • Small apartments sell well in g
Slide 37: Thank you!
Thank you! 37
Slide 38: SRV project overview as of 31/12/2015
SRV project overview as of 31/12/2015 Order backlog (EUR m) Number Net sales Order backlog Net sales of 2015 as of 12 2015 2014 1583 projects (EUR m) (EUR m) (EUR m) 77 Construction contracts, total 68 353 595 379 of which housing construction 15 49 71 57 554 1,1% of which business premises construc
Slide 39: Consolidated income statement
Consolidated income statement EUR million 2015 2014 2013 Revenue 719.1 684.4 679.4 Other operating income 1.8 4.9 4.1 Change in inventories of finished good and work in progress 24.7 -54.6 18.7 Use of materials and services -639.0 -533.2 -594.8 Employee benefit expenses -64.6 -63.2 -63.6 Share of pr
Slide 40: Balance sheet
Balance sheet EUR million 12/31/2015 % 12/31/2014 % Non-current assets 271.9 35.6 160.8 27.9 Inventories 336.6 44.1 312.8 54.3 Other current assets 119.2 15.6 84.0 14.6 Cash and cash equivalents 35.0 4.6 18.4 3.2 Total assets 762.6 100.0 576.1 100.0 Equity 277.2 36.3 225.2 39.1 Non-current interest
Slide 41: Indebtedness in detail
Indebtedness in detail EUR million 12/31/2015 12/31/2014 12/31/2013 Non-current interest bearing liabilities Loans from financial institutions 29.5 26.6 42.7 Bonds 74.9 74.9 75.0 Housing corporation loans 58.9 45.6 61.4 Subtotal 163.2 147.0 179.1 Current interest bearing liabilities Loans from finan
Slide 42: Consolidated cash flow statement
Consolidated cash flow statement EUR million 2015 2014 2013 Net profit 14.0 15.4 18.3 Non-cash transaction / Financial income and expenses / 12.0 10.8 18.6 Income taxes Depreciation and impairments 3.5 2.0 3.1 Change in working capital 40.2 34.7 69.1 Interest paid and received -14.7 -14.7 -10.7 Inco