Slide 1: Revenue and order backlog still growing
Revenue and order backlog still growing Result fell short of comparison period Interim report 1-6/2015 Juha Pekka Ojala, CEO Ilkka Pitkänen, CFO 1
Slide 2: Agenda
Agenda • SRV Group 1-6/2015 • Operations in Finland 1-6/2015 • International operations 1-6/2015 • Projects • Coming up - Financial targets - Preparations for share issue - Outlook 2
Slide 3: Focusing actions to increase profitability
Focusing actions to increase profitability Direct impact on profitability Long-term impact Project margin % Launching shopping centre projects Ownership of developer- Launching contracted shopping centre developer- projects contracted projects ~ 20 % Developer-contracted Increasing own- projects dev
Slide 4: SRV Group 1-6/2015
SRV Group 1-6/2015 SRW Elaémasi rakentaja
Slide 5: Key figures 1-6/2015: Revenue and order backlog grew 20%
KEY FIGURES 1-6 / Revenue and order backlog grew 20% 2015 REDI project and Niittykumpu Metro Centre Revenue Order backlog Result before taxes €337.4 €2.6 million €1258.8 million million (-52.5%) (+ 19.8%) (+ 20.2%) Start-up of REDI shopping centre and Equity ratio parking contract Earnings per share
Slide 6: 1-6/2015 – Focusing of operations has yielded results
1-6/2015 – Focusing of operations has yielded results Pearl Plaza, Footfall grew 23% and sales 37% compared with H1/14. St. Petersburg + 99% of premises leased. opened 8/2013 Okhta Mall, Construction and leasing proceeding according to plan. Final St. Petersburg opening summer + lease agreements 27%
Slide 7: New contractor agreements increase order backlog to a record level
New contractor agreements increase order backlog Meur to a record level in the company’s history 1 259 1 200 99 1 047 International 1 000 127 352 operations 860 811 828 826 800 53 137 287 100 180 Operations in 595 Finland; 600 20 336 273 489 Housing 349 253 32 construction 400 303 807 202 Operations
Slide 8: SRV Group
SRV SRVGroup Group Meur Meur Revenue Operating profit 250 12 200 10 8 150 6 100 209 194 9,6 173 165 4 138 143 6,0 50 2 4,4 4,9 2,5 0 0 0,8 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Meur Meur Order backlog 1259 Profit before taxes 1180 8 1047 185 142 6 1 000 944 880 174
Slide 9: Low amount of housing starts during 2013-2014 is now seen in low amount of completed units
Low amount of housing starts during High amount of starts in 2013-2014 is now seen in low amount of 2015 will be evident in completed units result and revenue in 2016-17 9 Q2/15
Slide 10: Operations in Finland 1-6/2015
Operations in Finland 1-6/2015 10
Slide 11: REDI increased revenue
1-6 / 2015 REDI increased revenue • Revenue was increased by the start-up of the REDI shopping centre and parking facility, as excavation Revenue and other infrastructure work done before the €304.0 official start-up decision was recognised in revenue according to percentage of completion million (+
Slide 12: Operations in Finland
Operations in Finland Meur Revenue Operations in Finland Meur Operating profit 250 12 200 10 8 150 6 100 197 10,2 176 157 4 131 147 6,6 7,0 6,2 124 50 2 3,3 2,4 0 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Meur Order backlog 1159 1 200 1063 1 000 920 352 262 778 800 72
Slide 13: Housing production under construction remained at nearly the same level
Housing production under construction remained at nearly the same level 100 % 90 % 334 498 Construction 80 % 625 492 contracts 70 % 60 % 380 50 % 471 468 Negotiation 40 % 670 contracts, investor sold 30 % 750 20 % 396 10 % 249 330 Developer contracting 0% 12/2013 12/2014 3/2015 1356 units 6/2015 162
Slide 14: International operations 1-6/2015
International operations 1-6/2015 14
Slide 15: Russian projects proceeding according to plan
1-6 / 2015 Russian projects proceeding according to plan • Most of revenue generated by construction of Revenue Okhta Mall and Daily shopping centres €33.4 million (+ 25.8%) • Pearl Plaza’s visitor number and sales continue to grow • Okhta Mall’s construction is progressing, financing Operating prof
Slide 16: International Operations
International Operations International operations Meur Meur Revenue Operating profit 20 2,0 1,5 15 1,0 1,8 10 0,5 18 18 0,7 14 16 0,2 12 13 0,0 0,1 5 -0,6 -0,4 -0,5 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 0 -1,0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Meur Order backlog 200 150 100 159 166 127 137 50 117 99
Slide 17: Financing structure of SRV's main projects in Russia
Financing structure of SRV’s main projects in Russia SRV’s NOI SRV’s additional Project’s Status target ownership investment bank loan Other (estimation) SRV’s investment €24 million. Phase 2 commercial concept Pearl Plaza, ready, 99% St. Petersburg €18m 50% €0m €95m planning completed and leased co
Slide 18: Projects
Projects Elaémasi rakentaja
Slide 19: Estimated implementation of shopping centre projects under way
Estimated implementation of shopping centre projects under way Strategy period 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Etmia 1&2 Pearl Plaza 1 Pearl Plaza 2 (no decision) Okhta Mall Daily REDI shopping centre and parking facility Construction and leasing Stabilisation of leasing business (
Slide 20: REDI proceeding well
REDI proceeding well Volume of rock excavated Construction from site launched in equivalent to April 2015 large passenger ferry New traffic arrangement Shopping operating well centre – over 200 people working opens in on the site daily 2018
Slide 21: Niittykumpu Metro Centre
Niittykumpu Metro Centre 24- and 12- Commercial storey centre was residential sold to OP- towers ready Vuokratuott in 2017 and o special 2018 investment fund Commercial centre ready in 2016
Slide 22: Tampere University Hospital front yard contractor agreement
Tampere University Hospital front yard one of SRV’s history’s largest contractor agreements • In June, SRV signed a significant EUR 170 million project management contractor agreement • The agreement concerns the construction of three new buildings in the Tampere University Hospital front yard as we
Slide 23: SRV builds Finland's health care, culture and education
SRV builds Finland’s health care, culture and education HEALTH CARE - New Children’s Hospital, Helsinki - TAYS Central Hospital yard, Tampere - Kalasatama’s TeHyKe Health Centre, Helsinki TeHyKe Health - Renovastion and extension of Naistenklinikka, Centre sold to a property Helsinki investment fund
Slide 24: SRV to participate in Fennovoima's construction project
SRV to participate in Fennovoima’s construction project • SRV to participate in Fennovoima’s nuclear power plant construction project as project manager and investor - Purely a business role - The model of being involved also as an investor in a construction project is already familiar to us (REDI a
Slide 25: Shopping Centres in St. Petersburg and Moscow
Shopping Centres in St. Petersburg and Moscow Golden Brick Award 2015 in June Pearl Plaza, St. Petersburg - SRV’s ownership 50% - Opened in August 2013 - H1: Footfall grew 23% and sales 37% - 99% leased - Total investment €140 million Okhta Mall, St. Petersburg - SRV’s ownership 45% (+15%) - 42% of
Slide 26: 1-6/2015 in summary
1-6/2015 in summary Low revenue Order backlog recognition of Revenue grew grew 20% to housing projects 20% to €1.3 billion reduced €340 million operating profit Extraordinary General Meeting REDI Russian projects approved Board of proceeding advancing Directors’ share well according to plan issue au
Slide 27: Coming up
Coming up 27
Slide 28: Financial targets
Financial targets • New strategic goals for 2015–2019: • During the strategy period, faster growth than the industry will be pursued through large-scale projects • The operating profit margin will rise to more than 8% by the end of the strategy period • Return on equity will be at least 15% by the e
Slide 29: Preparations for share issue proceeding
Preparations for share issue proceeding • The Extraordinary General Meeting on 22 June authorised the Board of Directors to prepare a share issue Size • Based on the authorisation, a maximum of 27,000,000 shares may be issued •The plan is to increase the company’s equity capital by EUR 30–50 million
Slide 30: Outlook
Outlook OUTLOOK FOR CONSTRUCTION • The total volume of construction in Finland is not expected to change this year • Slight signs of recovery in housing construction • Start-ups in business premises construction are expected to grow significantly this year • In Russia, 2015 overshadowed by great unc
Slide 31: Thank you!
Thank you! SRW iil Elaémasi rakentaja
Slide 32: Appendices
Appendices 32
Slide 33: SRV Group
SRV Group 1-6/ 4-6/ 1-6/ 2014 Change, Meur Change, % 4-6/ 2015 1-12/ 2014 2015 2014 Revenue, MEUR 337,4 281,6 +55,9 +19,8% 164,5 143,1 684,4 Operating Profit, MEUR 3,4 9,3 -6,0 -63,8% 0,8 4,9 24,9 Operating Profit, % 1,0% 3,3% 0,5% 3,4% 3,6% Net financial items, MEUR -0,7 -3,8 +3,0 -80,5% -1,5 -1,5
Slide 34: Operations in Finland
Operations in Finland 1-6/ 2015 1-6/ 2014 Change, Meur Change, % 4-6/ 2015 4-6/ 2014 1-12/ 2014 Revenue, MEUR 304,0 255,3 +48,7 +19,1% 146,9 131,0 627,9 business premises construction 208,5 151,5 +57,0 +37,7% 94,5 82,5 395,5 housing construction 95,5 103,9 -8,4 -8,1% 52,4 48,5 232,5 Operating Profit
Slide 35: International operations
International operations 1-6/ 4-6/ 1-6/ 2014 Change, Meur Change, % 4-6/ 2015 1-12/ 2014 2015 2014 Revenue, MEUR 33,4 26,6 +6,9 +25,8% 17,6 12,4 56,9 Operating Profit, MEUR 0,7 -0,9 +1,7 -180,3% 0,1 -0,4 1,1 Operating Profit, % 2,2% -3,5% 0,5% -2,9% 1,9% Order backlog, MEUR 99,5 126,9 -27,5 -21,6% 1
Slide 36: Operations in Finland: revenue (12-month rolling) and order backlog
Operations in Finland: revenue (12-month rolling) and order backlog Meur 1 300 1 200 1159 1 100 1063 1 000 920 Net sales 900 778 (LTM) 800 721 723 700 600 500 400 Order 661 677 backlog 300 566 608 628 564 200 100 0 Q2/13 - Q3/13 - Q4/13 - Q1-Q4/14 Q2/14 - Q3/14 - Q1/14 Q2/14 Q3/14 Q1/15 Q2/15 36
Slide 37: Operations in Finland: operating profit (12-month rolling)
Operations in Finland: operating profit (12- month rolling) Meur 30 6% 5,1 % 25 4,8 % 5% 4,6 % 4,4 % Operating 4,0 % profit (LTM) 20 4% 3,3 % 15 29,0 30,0 3% 27,8 26,7 24,6 22,1 Operating 10 2% profit, % 5 1% 0 0% Q2/13 - Q3/13 - Q4/13 - Q1-Q4/14 Q2/14 - Q3/14 - Q1/14 Q2/14 Q3/14 Q1/15 Q2/15 37
Slide 38: Number of new contracts increased
Number of new contracts increased Meur 800 700 600 500 400 700 717 300 595 601 502 200 100 0 2012 2013 2014 1-6/2014 1-6/2015 38
Slide 39: Three pillars of business operations
Three pillars of business operations Operations International in Finland 90% Operations 10% Business Housing Shopping centres premises 69% * 31% * Shopping centre management Other business premises Offices and retail facilities Owner-occupied housing Hotels and logistics facilities Rental housing Un
Slide 40: First half of year impacted by launch of large-scale projects
1-6 / First half of year impacted by launch of 2015 large-scale projects • The record level of the Group’s order backlog is due to new Order backlog contractor agreements, of which the largest are the REDI project and the Niittykumpu Metro Centre €1258.8 million • Group revenue was increased by the