Annual Review 2017 Content
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ANNUAL REVIEW 2017 CONTENT SRV IN BRIEF ............................................................................................................. 3 CEO'S REVIEW 2017 ........................................................................................... 5 Highlights from the most memorable encounters in 2017 ................7 KEY FIGURES 2017 .............................................................................................. 8 MAJOR ENCOUNTERS IN 2017 ................................................................... 9 MEGATRENDS ...................................................................................................... 12 SRV’S STRATEGY ............................................................................................... 14 Strategic development programmes .......................................................... 15 The group’s strategic financial objectives for the period 2018–2022 ............................................................................................................ 19 SRV's value ceation model ................................................................................ 20 OPERATIONS IN FINLAND ............................................................................ 24 Housing construction in Finland .................................................................... 25 Business construction in Finland .................................................................. 26 INTERNATIONAL OPERATIONS ................................................................ 28 SUSTAINABILITY ................................................................................................ 30 Performance, content and value creation – Sustainability management evolves .......................................................................................... 30 Reporting framework developed as demands grow ........................... 31 Sustainability programme clarifies roles ................................................... 33 Trust is earned and value created by carrying responsibility ........ 35 High-quality construction stands up to time and saves environment ............................................................................................................. 38 Good attitude and taking responsibility are the key elements of safety ................................................................................................ 43 Working in a network requires cooperation and trust ........................ 46 SRV is a bold developer and innovator in the construction industry. Stakeholders expect openness and concrete action ........................ 48 We want to offer the best customer experience as a constructor of CORPORATE GOVERNANCE ...................................................................... 50 urban city centres, while also being the most attractive employer in the Corporate governance statement (cg statement) .............................. 51 industry. Our genuine cooperation and enthusiasm for our work comes Risk management ................................................................................................. 57 across in every encounter. Established in 1987, we are a publicly listed Board of directors ................................................................................................. 58 company that operates in selected growth centres in Finland, Russia Corporate executive team ............................................................................... 59 and Estonia. Our revenue in 2017 was over EUR 1.1 billion. Just over Information for investors ................................................................................... 60 1,000 people work for us and we also employ a network of almost More information ................................................................................................... 62 4,000 subcontractors in our projects. SRV ANNUAL REVIEW 2017 / CONTENT YEAR 2017 MEGATRENDS AND STRATEGY OPERATIONS SUSTAINABILITY CORPORATE GOVERNANCE INFORMATION FOR INVESTORS SRV IN BRIEF SRV aims to develop and build premises and homes where people enjoy living, working, passing through or spending time. Our strengths are long-term development work and a comprehensive understanding of customers’ needs – things that SRV has done already for 30 years. Revenue (2017) The company builds a new city district in Tampere: Tampere Central Deck and Arena EUR 1.1 BILLION The largest construction site in a city centre: Order backlog (31 Dec. 2017) the REDI shopping and experience centre plus 8 tower buildings What are we working on? are under construction EUR in Kalasatama, Helsinki Infrastructure Homes construction 1.548 34 % 7 % of revenue of revenue MILLION 3 shopping centres operating in Russia Renovation Hospitals construction 17 % 6 % SRV seeks to build of revenue of revenue around 15,000 STRATEGY AND VALUES Mission Vision Values new homes Our mission is to SRV creates the best • Sustainability Schools and in growth centres Shopping centres improve quality customer experience • Enthusiasm at work over the next 10 years. SRV educational institutions of life through as a constructor of • Courage in sustainable solutions development has over 3,200 housing units 16 % urban city centres. of revenue 8 % for the built • Result driven currently under construction of revenue environment. • Open collaboration Annually we employ about In 2017 as much as 65,000 30 years of experience More than 1,000 employees 90 sites in 2017 4,000 subcontractors workers completed orientation SRV ANNUAL REVIEW 2017 / SRV IN BRIEF 3 YEAR 2017 MEGATRENDS AND STRATEGY OPERATIONS SUSTAINABILITY CORPORATE GOVERNANCE INFORMATION FOR INVESTORS SRV’s business segments are Operations in Finland, International Operations, and Other Operations. Operations in Finland are divided into property development, housing construction, and business construction (which comprises retail, office, logistics and specialised construction, and earthworks and rock construction). International Operations comprises SRV’s business activities in Russia and Es- tonia. The Other Operations segment primarily consists of the parent company, SRV Group Plc's group operations, property and project development operations in Finland, and equipment service for Finnish construction sites. OPERATIONS IN FINLAND INTERNATIONAL OPERATIONS Housing construction Business construction (retail, office and logistics construction, earthworks, and specialised and rock construction) PERCENTAGE OF REVENUE 34 per cent 64 per cent 2 per cent SEGMENTS SRV primarily focuses its housing construction on urban growth SRV primarily focuses its business construction on urban growth In Russia, SRV mainly operates in Moscow and St Petersburg. centres. The largest construction projects are located in Helsinki, centres. The largest construction projects are located in Helsinki, The Okhta Mall and Pearl Plaza shopping centres are located Espoo, Vantaa, Jyväskylä, Turku, Tampere and Oulu. Espoo, Vantaa, Jyväskylä, Turku, Tampere and Oulu. in St Petersburg and the 4Daily shopping centre is in Moscow. SRV is also building apartment blocks in Vyborg. MARKET POSITION One of Finland’s largest housing constructors in urban growth One of the main operators in Finland. One of the largest constructors and managers of shopping centres centres. abroad. CUSTOMERS Households, private and institutional investors. Companies, the public sector, and institutional investors. Companies, the public sector, and institutional investors, shopping centre tenants and customers. MAIN COMPETITORS YIT, Bonava, Skanska, NCC, Peab, Hartela, Lehto, Lujatalo, JM, Lapti YIT, Skanska, NCC, Peab, Hartela, Destia. Local companies. and smaller local companies. STRENGTHS Thanks to its strong project development, SRV has plots in urban SRV is known for its demanding construction projects, many SRV partially owns and manages some of the most modern growth centres next to good transport connections. SRV has been of which it also partially owns. SRV is one of Finland’s largest shopping centres in Russia. SRV has won awards for its shopping able to increase its number of developer-contracted constructors of healthcare and hospital premises. SRV's shopping centre management, such as its successful marketing. housing sites for several years. centre construction also boosted revenue in Operations in Finland. SRV currently has several alliance projects that can provide additional earnings potential over and above ordinary income recognition. PREMISES SRV designs and implements apartment blocks in growth centres. Hospitals, schools and educational institutions, shopping centres, Shopping centres in the biggest cities in Russia. Aparment blocks SRV sells part of the apartment blocks directly to consumers and infrastructure construction, renovation construction, industrial in Vyborg. private investors through its own salespeople (developer contracting). and logistics properties and public transport facilities. Projects In addition, some of the projects are made and sold directly to include new and renovation projects. investors (investor sales). In addition, SRV builds some apartments for builders. ROLES Builder, developer, owner, financier, broker and consultant. Builder, developer, owner, financier and user. Builder, developer, real estate investor, owner, financier, shopping centre operator, user and consultant. SRV ANNUAL REVIEW 2017 / SRV IN BRIEF 4 YEAR 2017 MEGATRENDS AND STRATEGY OPERATIONS SUSTAINABILITY CORPORATE GOVERNANCE INFORMATION