SATO's Report 2015
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journey continues 2015 report and sustainability annual SATO’s everyday moments in my city #hereitgoes #firstlight #cityawakens #mycity SATO Corporation Panuntie 4, Po Box 401, FI–00601 Helsinki, Finland Tel. +358 201 34 4000 SATO’s report 2015 www.sato.fi The dawn breaks in the city. It is still quiet on the streets when Good people in thousands of SATO homes are morning, my home waking up for a new day. We at SATO town! are doing all we can to ensure that our residents enjoy themselves a little more in their homes. At the same time, we are creating new types of housing solutions following modern trends, such as the social StudioHome introduced in 2015. Welcome to our journey! 6% Share of SATO RentHomes from rental homes in the major cities 77% Share of investments #beautifulmorning #mytown #homeismyplace from turnover content 06 Together towards new opportunities the best way 18 Markets provide opportunities 26 We have a sustainable impact 35 SATO RentHomes for every taste to start a morning 38 We grow by investing 43 Widening funding base 50 Quality through partnerships is to have a cup of 52 Towards a better service 56 It all starts from people coffee in a cosy 59 Combating climate change GRI / CORPORATE GOVERNANCE / FINANCIAL STATEMENTS #morningcoffee #almostseven home#bestpartoftheweek #soontowork GRI tables 64 Annual Report of the Board 90 Independent assurance report 78 Financial Statements and Notes 96 Corporate Governance Statement 81 Auditor’s report 142 Report on salaries and remuneration 85 Key indicators 143 Board of Directors 86 Information for shareholders 145 Corporate Management Group 88 4 SATO in brief 5 A 75-YEAR-OLD FACTS ABOUT US SATO in 2015 SATO YOUNGSTER SATO RentHome SATO RentHomes offer safe rental housing. We offer a large range of homes, and we help our customers find the perfect home. The rent includes an SATO is a reliable lessor which operates in the Internet connection and other variable customer benefits. Living is easy in homes for senior citizens thanks to the correct equipment and the central long term, while taking care of its customers. location. In terms of renovated and new homes, we stand out from the rest We are one of the most active housing investors because of our good design solutions and material choices. in Finland. We acquire new and old rental homes SATO HotelHome The internationalization of business life has increased the need for temporary and maintain and develop them. housing. SATO HotelHomes offer home-like housing in stylishly furnished flats We have operated in the housing market for as an alternative to the ordinary hotel living. Our service also includes linen and weekly cleaning. 75 years, and we have acquired know-how concerning the changing customer needs and market dynamics along the way. Some 170 Our vision best home address – 50,000 happy residents SATO employees are working daily with our partnership network for better housing. SATO homes Operating areas We are passionate about what we do and Helsinki metropolitan area, Tampere, 23,600 Turku, Jyväskylä, Oulu and St. Petersburg are proud of SATO. Personnel 170 Investments/ year, € million 150–200 Fair value of investment assets a home the way #homelikeyouwantit #everythingworks #besthome #greatservices €2.8 billion you want it SATO’s report 2015 7 TOGETHER TOWARDS NEW OPPORTUNITIES Dear reader, their floor area of 16 square metres would suggest. The design For me, the first few months at SATO have been a valuable work for the first site is well under way, and we hope to start time of learning. This has been an easy working community its construction during 2016. to join, and I have been warmly welcomed by competent A significant change of ownership structure coincides with colleagues who have provided strong support for my familiari- the start of my work at SATO. The largest pension insurance sation process. SATO employees have a strong will to develop companies Varma and Ilmarinen have divested their SATO the company, its methods and services. We also have profes- holdings, and the Swedish company Fastighets Ab Balder has sional, development-orientated partners. This team makes become the largest shareholder. Cooperation with the new it easy to start steering SATO, the company that provides largest shareholder has begun well and I believe that Balder increasingly good services. will provide strong support to the development of SATO. we have ambitious Significant activity in the rental housing market Aiming high An efficient team is particularly important right now, because We will continue the story of SATO — which began 75 years our business environment is clearly undergoing a change. ago — with the same ambition that has carried the company so In Finland, the housing culture is dominantly based on far. SATO’s key strategic areas — growth, profitability, excellent owner-occupancy. Of the 2.6 million homes in the country, only customer experience and inspiring corporate culture — give a one-third are rental homes and of these, about half are owned good bearing for our work. They also constitute the basis of goals and the by private individuals. However, the popularity of living in our corporate responsibility. rented accommodation is rapidly gaining ground in major cities. In order to succeed in our key areas of focus in a changing This development is driven by many trends, such as urbani- environment, we must reform and find ever better solutions. sation and smaller households. The long period of economic The most important area for development in which we want gloom and increased immigration also lead to growing demand. to aim considerably higher is the service experience of our As the demand has increased, new operators, such as customers in all encounters. This will require a good control right spirit Finnish and foreign housing funds, have started offering rental of the entire supply chain and the commitment of our part- homes. The pension insurance companies have become more ners towards our goals. We will promote responsible modes of active because of the temporary possibility of using borrowed operation in close cooperation. capital leverage. The values jointly created by SATO employees in 2014, The customers’ purchasing power has been developing Aiming high, A human to human and Joy and ease of exper- sluggishly for a long time. We are concerned that the cost-in- tise, give a good direction for our goal-seeking development #newjob #greatcolleagues #excellentpartners #fullsteamahead creasing regulations and their associated interpretations work. that are applicable to the construction of homes lead to rent levels which in this situation are too high for people in need of Human to human homes. This will also limit the mobility of workforce. Home is very important to everyone, which is why we want to The purpose of our SATO StudioHome concept was to emphasise human orientation in our operations. introduce an alternative for affordable housing. The homes We aim to provide an easy and uncomplicated service that built in accordance with the concept have low rents, and the creates positive interaction and builds long-lasting customer homes are clearly bigger and have a more spacious feel than relationships. We still have some way to go until we reach this SATO’s report 2015 8 Review by the President and CEO 9 goal, but we have taken our first steps with enthusiasm and In addition to many success stories, there were also chal- healthy curiosity. We were delighted to see SATO’s customer lenges during the year. The economic occupancy rate of our service being rated the developer of the year in the Custom- rental homes fell short of the previous year’s level in spite of er’s Voice competition. our several actions aimed at improving the letting out busi- SATO in 2015 SATO I hope that our resident forum will help us to get our ness. As far as we know, many other operators in the business customers to join in creating the best service in the industry. had the same experience as the market situation changed in certain locations. We will turn this trend with a number of Joy and ease of expertise actions during the coming year. We at SATO invest in strengthening the open and confidential atmosphere. By doing things together, we will learn from each The continuity of operations is being other and achieve the best results. Our will is to build a strong taken care of service culture and turn out efficient high-quality work in all More rental homes will be required in the future. There are main areas of our operations. The courage to seek for new several new housing areas currently under construction in thank you for solutions and ideas together with colleagues is just the atti- the Helsinki region and other major cities. This may even tude I want to see. create temporary situations of excessive supply in some areas. However, urbanisation will in the long run lead to a situation Power to change, success stories and even where the number of rental homes available is insufficient to all these years challenges meet the demand. We will absolutely need investments for SATO has a strong track record of power to change over its 75 the construction of homes, as well as other infrastructure in Erkka Valkila, CEO until 15 November 2015 years of operation. As the needs of society have changed, the order to ensure the smooth functioning of society. property development for owner-occupied homes at the early SATO continued its strong regime of rental housing invest- stages has changed into housing investment activities and ments. The investments amounted to EUR 250 million, the provision of rental homes in growth centres.