Slide 1: SRV’s result improved in every quarter
SRV’s result improved in every quarter Financial Statement 1-12/2014 Juha Pekka Ojala, CEO Ilkka Pitkänen, CFO 11 February 2015 1
Slide 2: The three cornerstones of our business
The three cornerstones of our business 1-12/2014 Operations in Finland 92% of the Group's revenue International Operations Business construction Housing construction 8% of the Group's revenue 63%* 37%* • Offices and retail premises • Owner-occupied housing • Shopping centres • Hotels and special-pur
Slide 3: Focus on measures to increase profitability
Focus on measures to increase profitability Direct effect on profitability Long-term effect Project margin % Start-up of shopping centre projects Ownership of developer- Start-up of contracted shopping centre developer- projects (e.g. Pearl Plaza, Okhta contracted projects Mall, Promenade, REDI) Rec
Slide 4: 1-12/2014 – Focusing of operations has yielded results
1-12/2014 – Focusing of operations has yielded results Pearl Plaza, Footfall developing positively; footfall nearly 600,000 in St. Petersburg + August. 97% of premises leased. opened 8/2013 Okhta Mall, Construction proceeding. Estimated cost savings €25m. Developer- St. Petersburg + Financing secure
Slide 5: Group: order backlog at high level, equity ratio rose
1-12 / Group: order backlog at high level, 2014 equity ratio rose • Group’s order backlog €860.4m (€825.8m) • New agreements €700.3m (€600.7m) • Order backlog mostly contracting work; sold order backlog €729m (85%) • Group’s revenue at previous year’s level; operating profit, earnings and EPS fell s
Slide 6: Group’s key figures
1-12 / Group’s key figures 2014 Change 1- Change 1- 1-12/ 1-12/ 10-12/ 10-12/ 12/14 vs 1- 12/14 vs 1- 2014 2013 12/13 12/13 2014 2013 Revenue, MEUR 684.4 679.4 +5.0 +0.7% 193.8 171.6 Operating Profit, MEUR 24.9 26.4 -1.5 -5.5% 9.6 4.6 Operating Profit, % 3.6% 3.9% 5.0% 2.7% Net financial items, MEUR
Slide 7: SRV Group
SRV Group Meur Revenue 16 Operating profit 14 12 10 oN BD Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 03/14 Q4/14 Meur 14 12 10 Orderbacklog 4947 959 826 880 oN FT OO Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 03/14 Q4/14 WSoldorderbacklog _— = Unsold order backlog Q1/13 Q2/13 03/13 Q4/13 Q1/14 Q2/14 03/14 Q4/14 P
Slide 8: Order backlog remained at a high level
Order backlog remained at a high level • Number of new agreements grew Meur SRV Group: new agreements 800 • Efforts to obtain new contracts were 700 successful 600 • Start-ups of housing production for 500 consumers increased 400 700 • Start-up decisions made for 163 units. 300 595 601 These units a
Slide 9: Operations in Finland: profitability grew in every quarter
1-12 / 2014 Operations in Finland: profitability grew in every quarter • Profitability of Operations in Finland continued to grow • Revenue €627.9m (€574.8m), + 9% • In Finland, operating profit €30.0m (€21.4m) , + 40% • Operating profit % 4.8% (3.7%) • Total housing sales 756 (701). Investor sales
Slide 10: Operations in Finland
Operations in Finland Operations in Finland 92% of the Group's revenue Business construction Housing construction 63 %* 37 %* Offices and retail premises Owner-occupied housing Hotels and special-purpose premises Rental housing Logistics facilities Regional development Rock construction and projects
Slide 11: Profitability of Operations in Finland improved
Profitability of Operations in Finland improved Meur Operations in Finland: net sales (LTM ) and order backlog • In Finland, revenue has remained at a 1 000 920 good level as order backlog continues to 900 772 778 800 grow 700 687 728 646 721 723 Net sales (LTM) • In Finland, order backlog €723m 600
Slide 12: Total sales of housing units increased moderately
Total sales of housing units increased moderately SRV's housing sales in Finland (units) 900 • Total sales of housing production 800 745 756 701 developed by SRV increased by 7% 700 680 600 268 • 468 rental housing units developed by 198 500 468 404 SRV were sold to investors (404 1-12/13) 400 • Of
Slide 13: Decision made to increase own housing production start-ups
Decision made to increase own housing production start-ups Developer contracting, housing starts in Finland (units) 500 • SRV reacted to decline in consumer 400 415 sales by reducing start-ups in Q3/13- 330 Q2/14 300 • SRV started construction of 197 new units 200 202 197 in Q4/14 95 • On the basis
Slide 14: International Operations: weakening of rouble has no significant impact
1-12 / International Operations: weakening of 2014 rouble has no significant impact • Revenue was €56.9m (€104.7m) and operating profit €1.1m (€10.0m) • Most of the revenue was generated by the construction of the Okhta Mall shopping centre • The comparison period’s revenue and operating profit were
Slide 15: International Operations
International Operations Revenue Operating profit Order backlog International Operations 8% of the Group’s revenue • Shopping centres • Shopping centre management • Other business premises projects 15
Slide 16: Financing structure of SRV’s main projects in Russia
Financing structure of SRV’s main projects in Russia SRV’s NOI SRV’s Project’s Status additional Other target ownership bank loan investment Pearl Plaza, ready, 97% SRV’s investment €23m, Phase €18m 50% €0m €95m St. Petersburg leased 2 planning under way Etmia, ready, 100% €4m 50% €0m €33m SRV’s inv
Slide 17: REDI
REDI • The largest shopping mall in Helsinki inner city – almost 200 stores and diversified services • The tallest buildings in Finland – almost 132 m • 1,200 residences in six towers – homes for 2,000 people • One office (10,000 m2) and one hotel tower (10,000 m2) • Underground parking for 2,000 ca
Slide 18: REDI shopping centre and car park
REDI shopping centre and car park • REDI leasing is proceeding • In addition to anchor tenants, leasing negotiations are extensively under way with other tenants. If ongoing negotiations lead to agreements, 70% of the retail space would be leased • Final and preliminary lease agreements have already
Slide 19: Niittykumpu
Niittykumpu • The Espoo City Board approved the co- operation and preliminary agreement made between Espoo, Länsimetro, SRV and SATO for the Niittykumpu metro station on 16 June 2014. The design of Phase I, which encompasses around 20,000 m2, has progressed according to schedule and the goal is to l
Slide 20: Outlook for construction
Outlook for construction • The outlook for the world economy is mildly optimistic, the Finnish economy shows few signs of improvement • The weak business cycle will continue in the construction sector. • The poor economic situation and consumer uncertainty have contributed to a downswing in housing
Slide 21: Outlook for 2015
2015 Outlook for 2015 • During 2015, SRV's revenue and result will be affected by several factors, in addition to general economic trends, 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 of lo
Slide 22: Appendices
Appendices SRW
Slide 23: Operations in Finland
Operations in Finland Change 1- Change 1- 1-12/ 1-12/ 10-12/ 10-12/ 12/14 vs 1- 12/14 vs 1- 2014 2013 12/13 12/13 2014 2013 Revenue, MEUR 627.9 574.8 +53.1 +9.2% 176.0 155.8 business premises construction 395.5 319.2 +76.2 +23.9% 99.1 89.1 housing construction 232.5 255.5 -23.1 -9.0% 76.9 66.8 Opera
Slide 24: International Operations
International Operations 1-12/ 1-12/ Change 1- Change 1- 10-12/ 10-12/ 12/14 vs 1- 12/14 vs 1- 2014 2013 12/13 12/13 2014 2013 Revenue, MEUR 56.9 104.7 -47.7 -45.6% 17.8 15.7 Operating Profit, MEUR 1.1 10.0 -8.9 -89.3% 1.8 -1.7 Operating Profit, % 1.9% 9.5% 10.1% -10.7% Order backlog, MEUR 137.2 180
Slide 25: SRV’s shopping centre projects in Russia: Pearl Plaza
SRV’s shopping centre projects in Russia: Pearl Plaza Opened 24 August 2013 • Phase I: €140m, scope 92,000 m2. SRV’s holding 50% and investment €23m • SRV is responsible for shopping centre management and leasing; around 97% of the space has been leased • Annual rental income target around €18m. Foo
Slide 26: SRV’s shopping centre projects in Russia: Okhta Mall
SRV’s shopping centre projects in Russia: Okhta Mall Opening in spring 2016 • Part of large-scale project to be built in Okhta area • Ownership: Russia Invest1 55%, SRV 45 % (+ indirect holding 15%) • SRV is responsible for commercialisation and construction; the agreements are valued at around €140
Slide 27: SRV’s shopping centre projects in Russia: Promenade
SRV’s shopping centre projects in Russia: Promenade Opening in early 2016 • SRV development project under construction in city of Mytishi, Greater Moscow Area • Investors: SRV (19%), Blagosostoyanie1 (55%) and Vicus2 (26%). SRV’s total ownership is 20%, taking into account SRV’s 6.4% ownership of Vi
Slide 28: Ready-for-sale business premises
Ready-for-sale business premises • Etmia II & III office building, Moscow • SRV-developed project office in Moscow • Location next to Prospekt Mira metro station; Etmia II was completed in Q4/2009; Etmia III expansion was completed in 2012 • Etmia II forms the majority of the property; it is a Class