Srv Annual Review 2020 / Year 2020 3 Year 2020 Strategy Value Creation Governance
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2020 ANNUAL REVIEW CONTENTS SRV IN BRIEF .........................................................................................................3 CEO’S REVIEW 2020 ......................................................................................4 2020 IN FIGURES ..............................................................................................7 EVENTS IN 2020 ................................................................................................8 MARKETS................................................................................................................9 SRV is a developer and innovator in the construction Construction ........................................................................................................10 industry. Our objective is a new lifecycle-wise reality Investments ..........................................................................................................13 where solutions related to construction ensure well-being, STRATEGY .......................................................................................................... 16 financial value and the benefit of users, residents and SRV’s strategy .....................................................................................................17 environment – for years and generations to come. Our Risks and risk management .........................................................................21 genuine cooperation and enthusiasm for our work comes VALUE CREATION ..........................................................................................24 across in every encounter. Sustainability is reflected in all Value creation model ......................................................................................25 our activities. Sustainability management .........................................................................27 Sustainability programme ............................................................................31 Value for customers ........................................................................................32 Our company, established in 1987, is listed on the Helsinki Value for personnel .........................................................................................35 Stock Exchange. We operate in growth centres in Finland Value for partners ............................................................................................38 and Russia. In 2020, our revenue totalled EUR 975.5 million. Value for society ...............................................................................................40 In addition to about 1,000 SRV employees, we employ a Value for the environment ............................................................................44 network of around 4,200 subcontractors. Value for investors ............................................................................................47 GOVERNANCE .................................................................................................50 SRV – Building for life Corporate Governance Statement 2020 ...........................................51 Board of Directors ...........................................................................................59 Corporate Executive Team 1 January 2021 ....................................60 Information for investors ...............................................................................61 More information ...............................................................................................62 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE SRV IN BRIEF Revenue (2020) A brand-new hospital HOSPITAL NOVA was completed near the existing Central Finland Central Hospital in Kukkumäki, Jyväskylä. SRV’s solid experience in EUR MILLION building healthcare and demanding specialised premises can be 975.5 seen in, for example, the Regional State Administrative Agency’s official inspection: zero errors were detected in the project. SRV was also very successful in fighting the grey economy. What are we working on? Order backlog (31.12.2020) Schools and Homes educational institutions WOOD CITY EUR 31% 9% The Supercell office and a multi-storey car park were of revenue of revenue completed in the unique Wood City block. Two apartment buildings have already been inhabited for a year. It is still Business premises Infrastructure construction possible to build more office and retail premises. Wood City is a 16% 3% flagship of Finnish wood construction with international appeal. 1.15 of revenue of revenue 3 SHOPPING CENTRES Hospitals Renovation construction BILLION • three in operation in Russia 37% 4% of revenue of revenue OUR OBJECTIVE Values Our objective is, together with Our operations are guided SRV – BUILDING FOR LIFE our partners, to create a new by our shared values: lifecycle-wise reality, where • Sustainability solutions related to construction • Enthusiasm at work ensure well-being, financial value and the benefit of users, residents • Courage in development Over 30 years About 1,000 Annually about Yearly 28,000 64 active and environment – for years and • Result driven of experience employees 4,200 subcontractors workers on sites sites generations to come. • Open collaboration SRV ANNUAL REVIEW 2020 / YEAR 2020 3 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE CEO’S REVIEW 2020 2020 was a turning point for us and a year of recovery. In the first half of the year, we implemented a recovery programme that successfully focused on renewing our organisation and operating culture, bolstering the company’s financial position and performance level, and improving profitability. Towards the end of the year, we turned our gaze firmly to the future and worked on a new strategy that was published in conjunction with our annual result. With our new strategy, we are aiming to develop long- term competitive advantage, provide an excellent customer experience, tap into opportunities for lifecycle services, improve profitability and reduce indebtedness. As part of the recovery programme, we divested our holding the most serious consequences and our construction sites in the REDI shopping centre and reduced our holding in the have mainly been operational in spite of the exceptional cir- Tampere Central Deck and Arena project. We rearranged cumstances. When travel restrictions began in the spring, our financing in cooperation with banks and extended the SRV’s foreign workforce largely remained in Finland to work, tenor of our bonds. We strengthened our balance sheet and which helped us to make progress and keep to our sched- liquidity via two share issues. ules. Although the pandemic reared its head again towards The recovery programme progressed rapidly in all areas the end of the year, this did not cause any changes to on-site and we managed to complete all of the planned measures operations. Wearing masks, maintaining a safe distance from by the end of the second quarter. I am extremely satisfied others and the staggered use of employee facilities have be- with our greater financial stability and the new direction in come part of everyday life. which the company is heading. Good developments in operational activities Impact of the coronavirus pandemic on Our operational activities developed well during the year and construction relatively minor we are continuing our efforts to improve profitability (espe- The impacts of the coronavirus pandemic have been mod- cially in housing construction in the Helsinki Metropolitan erate on the whole, but the potential prolongment of the pan- Area) and to boost efficiency throughout our chain of oper- demic and its effects on the construction market are still ations. The earnings trend in construction remained favour- clouding the outlook for the future. However, SRV’s con- able during 2020 and our ongoing projects progressed as struction sites have managed to continue operating well planned. However, operative operating profit was impacted thanks to the effective action taken by our personnel and by changes in the valuation of balance sheet items in the In- partners. Ensuring safe working conditions has played a key vestments segment, which had a combined negative impact role in safeguarding both progress in our work and our per- of around EUR 12 million. These changes in value consist of sonnel’s and partners’ health on all of our construction sites. a decrease in the value of the additional sales price of the In order to take precautions against the Covid-19 virus REDI shopping centre, the reclassification of the Pearl Pla- in the spring, we had to make special arrangements that in- za shopping centre and changes in the value of two other curred some extra costs. However, we managed to avoid asset items. SRV ANNUAL REVIEW 2020 / YEAR 2020 4 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE Several major projects were completed during the Six apartment buildings containing more than 400 year. For example, construction work on Hospital Nova in apartments are being planned for Kalevankulma in Tampere. Jyväskylä (the largest public-sector project in SRV’s histo- The project will include both developer-contracted housing TOWARDS ry), a women’s prison in Hämeenlinna equipped with digi- and sites that will be sold to investors. At the end of the year, tal cells, and Finland’s largest wooden office building in a total of 1,375 units were under construction for investors, Jätkäsaari, Helsinki were all completed to the agreed sched- mainly in Helsinki, Espoo, Vantaa and Tampere. ules. Construction