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 building healthcare and demanding specialised premises can be EUR MILLION 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 work is progressing as planned on the We also started up the construction of a developer-con- LIFECYCLE- extension of Terminal 2 at Helsinki Airport and on the sub- tracted housing project in Helsinki that had been on hold terranean Espoonlahti metro station site. Work is also well for around a year and a half. These apartments will be rec- underway in the Tampere Central Deck and Arena project. ognised as income in 2022. Where possible, we are seek- WISE Construction work on the Arena, its adjoining hotel, and the ing to increase the number of good developer-contracted office and residential tower Topaasi are all progressing to projects alongside projects sold to investors in a controlled plan. These sites will be completed towards the end of 2021. manner, so that our product offering becomes even more In the autumn, we launched construction of the Tampere diverse and profitable. REALITY Deck’s second residential tower, Opaali. Fewer housing units were completed and recognised as Although our order backlog is down on last year, we are income in 2020 than in the previous year. The coronavirus still working on many wonderful projects. For example, we pandemic slowed down housing sales in the period from late launched and entered the following projects into our order March to early May in particular, which impacted on the pace backlog during the year: school projects in Kaarina, Espoo of sales. However, housing sales picked up during the sum- and Helsinki, and education and wellbeing centre in Siuntio. mer and returned to normal in the autumn. A total of 515 de- veloper-contracted housing units were recognised as income Housing construction now focusing on during the review year (833 in 2019). Housing construction development projects accounts for 31 per cent of SRV’s revenue. There were few Demand for housing remains good in the Helsinki Metropol- unsold new units at the end of the year: 92 (87) units. At year- itan Area, Tampere and Turku, among both consumers and end, we had 2,127 (2,142) units under construction. investors. We shifted our focus from developer-contracted housing to development projects in line with our objectives. Demanding business premises projects SRV’s own capital is not tied up in development projects, completed and launched during the year as the housing is sold to investors in its entirety before con- The construction of demanding commercial premises has struction begins. Lumo One – the third residential tower be- become one of our strongest cornerstones in business con- ing built in the Kalasatama district of Helsinki – is one good struction. We are currently building new premises for the Ra- example of a site that has been sold to an investor. With diation and Nuclear Safety Authority (STUK) in Jokiniemi, Lumo One, we have successfully harnessed everything we Vantaa. The STUK project includes exceptionally challeng- have learnt about high-rise construction, which has enabled ing laboratory facilities that place high demands on con- us to build at a rate of one storey every six days compared struction. We are also building new premises for the Finnish to one storey every two and a half weeks a few years ago. Security and Intelligence Service (Supo) in Kaartinkaupunki,

SRV ANNUAL REVIEW 2020 / YEAR 2020 5 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

Helsinki. The requirements for these premises and struc- the third quarter, and this was reflected in rising visitor num- vironments. You can read about our new strategy in more tures are particularly strict. Supo's new premises are the bers and sales during August and September. Sales volumes detail in the strategy section of this report. fifth spearhead project that SRV is implementing as an developed favourably towards the end of the year, almost At the beginning of December, we announced changes alliance project for Senate Properties, the work environ- reaching the same level as in the previous year. in our Corporate Executive Team and organisational struc- ment partner and specialist of the Finnish government. The company’s holding in the Pearl Plaza shopping cen- ture that came into effect gradually during late 2020 and Both STUK’s and Supo’s premises are being built using an tre had previously been designated as an asset held for sale. early 2021. These organisational changes will strengthen alliance model. The second wave of the pandemic was the main reason why SRV’s renewal in terms of customer-orientation, profitabili- Notable developer-contracted business projects include the sales negotiations ended without reaching an agree- ty and implementing our new strategy. I’m delighted that our the logistics centre Lumijälki 2 in Pakkala, Vantaa. This cen- ment. During the fourth quarter, the property was therefore new and energetic Corporate Executive Team will be able tre will provide a warehouse, production and office building reclassified as a holding in associated companies and joint to bring its diverse expertise to our work. Our organisational for three companies. The design, engineering and imple- ventures. We are now focusing on further developing the restructuring will not cause any changes in the company’s mentation of the Lumijälki 2 project takes into account the shopping centre’s operations and will look into its potential current reporting structure, which will continue to consist of City of Vantaa’s environmental objective for becoming a re- sale when the market situation improves. the Construction and Investments segments. source-wise city, aimed at promoting well-being and sus- The coronavirus pandemic has had temporary nega- I would like to thank all our customers, partners and em- tainable development through the prudent and responsible tive impacts on shopping centres’ rental income. Due to the ployees for both the past year and their confidence in us. use of natural resources. coronavirus pandemic and economic uncertainty in Russia, You are welcome to join us in making our lifecycle-wise ap- Of our new projects, the Helsinki Upper Secondary it is possible that the sale of Russian shopping centres may proach a reality in 2021! School of Languages will be implemented as a lifecycle pro- be postponed. We will continue to develop these shopping ject, with SRV taking on responsibility for the design, imple- centres in line with our strategy. Saku Sipola mentation, maintenance and upkeep of the property for 20 President and CEO years. The school is the fourth lifecycle project that we have Towards a lifecycle-wise reality won in a short period of time. It is precisely this kind of ex- At the beginning of February, we published our strategy and pertise on which we are basing our lifecycle approach to long-term objectives for 2021–2024. With our new strategy, smarter construction. The next steps will be to introduce we are aiming to develop long-term competitive advantage, this approach in our offering for private-sector customers provide an excellent customer experience, tap into opportu- in collaborative contracts and sites sold to investors. nities for lifecycle services, improve profitability and reduce indebtedness. In the spring, we will launch three strategic Russian shopping centres recovered in late programmes and a long-term strategic project based on life- 2020 cycle-wisdom. SRV has built up extensive lifecycle expertise SRV operates three shopping centres in Russia. The corona- within the company through both the energy business that virus pandemic closed shopping centres almost completely was established three years ago and our existing expertise towards the end of the first quarter, which made it extreme- in technical building systems. This expertise will enable us ly difficult for tenants to operate. The authorities restricted to bring a comprehensive economic perspective to value the opening of stores in March–August, which weakened the creation in real estate properties. We want to be a pioneer in operational capabilities of shopping centres and reduced a rapidly changing world in which climate targets and tech- their rental income. Shopping centres opened gradually in nological advances are shaping demand and operating en-

SRV ANNUAL REVIEW 2020 / YEAR 2020 6 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

2020 IN FIGURES 2020 was a year aimed at recovery. SRV’s recovery programme was successfully completed during the first half of the year. Net sales fell to EUR 975.5 million. Operative operating profit totalled EUR 5.8 million. During the year, the order backlog rose by EUR 707 million to EUR 1.15 billion.

01 06 02

Revenue (EUR million) Equity ratio (%) Operative operating profit1 and operating profit (EUR million)

1,200 50 40 1,114.1 27.7 1,060.9 26.3 27.0 1,000 959.7 975.5 20 15.3 40 38.3 884.1 5.8 35.5 1.5 800 0 30 28.5 -10.0 600 -20 -19.8 21.2 22.6 20 400 -40

10 -60 200

-80 0 0 -93.0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 -96.8 -100 Change from 2019: -8.1% Change from 2019: 1.4% 2016 2017 2018 2019 2020

03 04 Operative operating profit Operating profit

1 In order to improve comparability in the case of actual earnings, SRV has adopted the new 1 concept of operative operating profit as of 20 July 2017. It differs from the IFRS definition Order backlog (EUR million) Personnel (persons) of operative profit by eliminating the calculated differences in currency exchange rates and their potential hedging impacts included in financial items in Russian operations. As the operating currency was changed in September 2016, the figures from 2015 is not effected by differences in currency exchange rates and their potential hedging impacts. 1,200 2,000 1,134 1,129 1,758.5 1,816.0 1,089 1,080 991 1,000 1,547.9 1,500 1,344.2 800 1,153.4

1,000 600

400 500 200

0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Change from 2019: -14.2% Change from 2019: -8.2%

1 At the period-end.

SRV ANNUAL REVIEW 2020 / YEAR 2020 7 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

EVENTS IN 2020

4 December 2020 Rose for Building goes to Wood City The City of Helsinki awarded its Rose for Building to the Supercell head office in Wood City, a wooden block in the Jätkäsaari district. According to the award criteria, the project is an example of the kind of impressive new wooden construction that is much needed in Finland. The area required an insightful comprehensive approach to construction, 1 December 2020 which succeeded in harmonising the fragmented Hospital Nova inauguration environment in many ways. Central Finland Hospital Nova was completed in Jyväskylä at the end of October, and a virtual inauguration was held at the hospital on 1 December. The event showcased the organisations involved in the project, explained how the new hospital will operate, and presented some of the art that has been acquired to cheer up patients. In the summer

Terminal 2 extension project at Helsinki-Vantaa Airport 30 October 2020 Due to the exceptional nature of the year, the topping out ceremony was held over several days with small groups sitting down to celebratory lunches. The project is progressing according to schedule and the first Hämeenlinna Women’s Prison construction milestone was reached in August with the completion of a nine-storey car park for 1,800 completed vehicles. The car park was handed over to the customer on schedule. SRV’s Ossi Inkilä is the project manager. The Hämeenlinna Women’s Prison was completed in October. The prison has advanced digital cells, that is, they are equipped with cell terminals. The goal is to better 16 April 2020 30 June 2020 prepare released prisoners for living a crime-free life.

SRV reaches the top spot in the Vision Recovery programme 21 December 2020 Zero Forum’s safety classification completed For the first time, SRV reached the highest safety level in In the first half of the year, we implemented Virtual Christmas concert the annual classification carried out by the Finnish Institute a recovery programme that focused on Due to the exceptional circumstances arising of Occupational Health’s Vision Zero Forum: I – World Class renewing our organisation and operating from the coronavirus, the year culminated in a Achievement. A total of 29 companies reached the highest culture, bolstering the company’s financial virtual Christmas concert for personnel and other level in this nationwide classification of occupational safety. position and performance level, and stakeholders. Everyone was able to get into the SRV was the only construction company among them. improving profitability. Christmas spirit safely over remote connections.

SRV ANNUAL REVIEW 2020 / YEAR 2020 8 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

MARKETS The second wave of the Covid-19 pandemic put the brakes on economic growth towards the end of 2020. Finland’s GDP is expected to contract by 3.3 per cent in 2020. Economic decision- makers are more bullish about the future thanks to the rollout of vaccines in the spring.

The Finnish economy is expected to recover in 2021 and and the outlook is weakened by the uncertainty surrounding GDP to swing to growth of 2.5 per cent. Efforts to manage demand for premises due to the pandemic. The strong drop the pandemic and support measures will maintain public ex- in industrial construction in the previous year will level off and CONTINUED penditure at a high level, and the general government deficit in 2021 the volume of start-ups will remain at the 2020 level will remain large. of 8.7 million cubic metres. The implementation of planned Urbanisation continues in Finland and the population large-scale projects complicates forecasting. URBANI­ shift maintains demand for both housing and business con- The coronavirus crisis muted the investment market in struction, especially in growth centres, which are SRV’s stra- spring 2020. However, interest among foreign and Finnish in- tegic focal points. Although the measures taken to combat vestors in properties located in Finnish growth centres has the pandemic restricted economic activity in many sectors, strengthened – these properties represent an attractive in- SATION construction activity outperformed expectations in 2020 and vestment category for capital looking for stable returns. The was almost as high as in the previous year. However, a de- coronavirus crisis has impacted different real-estate sectors cline in the number of permits and tighter financing indicate in different ways. Due to the crisis, investor demand has in- that the contraction will accelerate, and the Confederation creasingly focused on rental apartments in large cities and IN FINLAND of Finnish Construction Industries predicts that construction this demand is expected to remain strong in the years ahead, will fall by 4 per cent in 2021. As financing becomes tighter, too. Investors are also interested in logistics, public services construction will increasingly focus on large cities. premises, good offices and grocery store properties. On the Thus far, housing construction has withstood the impacts other hand, the crisis has weakened the outlook for shopping of the pandemic better than expected and the volume of centre properties. Interest in hotel properties is currently low, housing construction remained relatively high in 2020 (about too, but this sector is expected to recover quickly. 35,000 housing start-ups). The tighter financing for housing The Russian economy was severely impacted by the production and general uncertainty will reduce production this plunging oil market and the coronavirus pandemic in 2020. year and the number of housing start-ups is expected to de- Service sectors such as hospitality and restaurants have suf- cline to 31,000 units. However, low interest rates and consum- fered from the measures taken to limit the pandemic. Russia’s ers’ desire to buy homes will maintain demand at a good level. GDP is estimated to have contracted by around 4 per cent in The slowdown in business construction is felt particularly 2020, but it is expected that consumer and corporate confi- outside large cities. The volume of public construction is con- dence will improve this year due to the introduction of coro- tinuing to decline to 4.9 million cubic metres. Public construc- navirus vaccines. Moderate growth of 2–3 per cent is fore- tion is supported by urbanisation and the aging of both the cast for 2021–2022. building stock and the population. Retail and office construc- (Sources: Ministry of Finance, Confederation of Finnish Construction tion will remain at a historical low of 4.1 million cubic metres Industries RT, KTI & Newsec, Bofit & East Office)

SRV ANNUAL REVIEW 2020 / YEAR 2020 9 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

CONSTRUCTION Construction covers all of SRV’s construction activities, including the capital and plots required for developer-contracted housing production. It encompasses housing, business and infrastructure construction in Finland. Construction employs about 810 people, that is, the majority of all of SRV’s personnel.

The Construction segment focuses on implementation ser- vices for demand-driven, high-quality and efficient building projects, for both the company’s own sites and those for external developers. This segment is also responsible for the development of SRV’s own residential sites, including housing sales and services for residents, and for the lifecycle maintenance of commercial properties. Construction’s main objective is to harness its specialist expertise in order to provide an excellent customer experi- ence in project management and production, and to help improve the profitability of SRV’s business. It takes the SRV Approach, which is based on understanding customer needs and the effective implementation of projects in collabora- tion with our extensive network of professional partners. This segment focuses on housing, business and infrastruc- ture construction in selected urban growth centres, as per the company’s strategy. As a result of the reorganisation carried out at the end of 2020, the Construction segment was divided into four separate business units: 1) Regional Units, 2) Housing, Helsinki Metropolitan Area, 3) Business Premises, Helsinki Metropolitan Area and 4) construction within Operations in Russia and Estonia.

Housing construction In line with its strategy, SRV builds homes primarily in growth centres and in close proximity to good transport connec- tions. For the last few years, SRV has been one of the larg- est housing constructors in the Helsinki Metropolitan Area. At the end of the year, SRV had a total of 2,127 housing units under construction all across Finland, of which a significant part were in the Helsinki Metropolitan Area. 383 develop- er-contracted housing units are under construction, with

SRV ANNUAL REVIEW 2020 / YEAR 2020 10 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

07

1,375 units sold to investors. During the year, SRV’s focus Revenue, Construction (EUR million) Operating profit, Construction (EUR million) shifted from developer-contracted housing to development projects. SRV started up the construction of a develop- 1,200 30 27.4 er-contracted housing project in Helsinki that had been on 25 hold for around a year and a half. These apartments will be 1,000 377.9 20 recognised as income in 2022. Where possible, SRV is seek- 800 289.3 Business premises ing to increase the number of good developer-contracted Housing construction 15 projects alongside projects sold to investors in a controlled 600 10 manner so that our product offering is a better match for Change in revenue, 7.0 400 both demand and our financial objectives. 679.7 680.7 business premises: 0.1% 5 Change in revenue, 200 Revenue from housing construction fell slightly in housing construction: -23.4% 0 January–December 2020. Revenue declined mainly be- 0 Total change in revenue: -8.3% -5 cause fewer developer-contracted housing units were rec- 2019 2020 2019 2020 ognised as income than in the comparison period, a total of 515. There were few unsold new units at the end of the year:

92 units. The order backlog remains at a good level. 09 10 The largest construction project in SRV’s history is currently ongoing in the Kalasatama district of Helsinki. Order backlog, business premises1 Order backlog, housing construction1 Construction of the second residential tower, Loisto, is well (EUR million) (EUR million) underway and more than 50 per cent of its apartments have 1,500 800 been sold or reserved. Loisto is scheduled for completion in

2021. The third residential tower, Lumo One, is under con- 1,200 struction for Kojamo as rental apartments. A total of eight 600 861.5 482.7 towers are planned for Kalasatama. 900 435.2 718.2 SRV is planning to build six apartment buildings with a 400 total of more than 400 apartments in the Kalevankulma area 600 of Tampere. Agreements have already been announced in 200 2020 for the construction of three residential buildings. 300 Construction of the first building began in January 2021. 0 0 The project includes both rental apartments and develop- 2019 2020 2019 2020 er-contracted housing, of which Tampereen Kalevan Divaani Change in order backlog, business premises: -16.6% Change in order backlog, housing construction: -9.8% is in pre-marketing. Kalevankulma is located in the prestig- ious Kaleva district near the centre of Tampere. It is close to 1 At the period-end. 1 At the period-end. good services and will also be near one of the main stops of the tramline that is currently under construction. SRV intends to build another 10,000–15,000 new homes over the next 10 years. The majority of SRV’s housing produc- tion consists of development projects or developer-contract-

SRV ANNUAL REVIEW 2020 / YEAR 2020 11 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

ed housing units for which SRV manages the entire chain, all Bridge Hospital under construction for HUS and is imple- the way from land acquisition to construction and sales. In fu- menting a basic renovation of the operating theatres at DURING ture, demand is expected to focus more on housing units for HUS’s Jorvi Hospital. In addition to hospitals, SRV is either investors, driven especially by the widespread trend for renting. building or renovating several educational institutions, such SRV builds projects next to good connections, especially as the Siuntio education and wellness campus, the Finnish- THE YEAR, rail. For example, more than 1,000 homes were built in Espoo Russian School in Helsinki, the Monikko School Centre, along the Western Metro line in 2015–2019 and more than the Helsinki Upper Secondary School of Languages, and 2,500 more homes are being planned along this line over Jousenkaari School in Espoo. Matinkylä Upper Secondary the coming years. School is currently at the planning stage. The Siuntio educa- SRV’S SRV’s largest developer-contracted housing pro- tion and wellness campus will be implemented using a lifecy- jects are both in Helsinki: Loisto (in Kalasatama) and cle model that includes a turn-key construction project and Väinämöisenrinne. a property maintenance service agreement that will cover the campus for 20 years. In the fourth quarter of 2020, SRV FOCUS finalised an agreement on the Helsinki Upper Secondary Business and infrastructure construction SRV currently has many commercial projects under construc- School of Languages, which will be implemented as a 20- tion, such as offices, educational establishments and hospi- year lifecycle project. A design phase agreement for the SHIFTED tals. The most significant projects that were completed during Uusikaupunki education and wellness campus was signed 2020 were Central Finland Hospital Nova, Hämeenlinna Wom- in August 2020. The Jokirinne Learning Centre, which was en’s Prison, the Jokirinne Learning Centre, and Supercell’s of- also implemented as a lifecycle project, was completed dur- fice building in Wood City. Wood City Office is a construction ing 2020. TO DEVEL- project in Jätkäsaari, Helsinki, which comprises an eight-storey SRV has had numerous projects along the route of the wooden office building and a three-storey carpark for 170 cars. Western Metro line. The company is currently building the SRV's revenue from business construction fell slightly in 2020. metro station in Espoonlahti. Work on the underground OPMENT A large proportion of SRV’s business construction is im- premises of the Espoonlahti metro station, which is being plemented using open project management contracts or an implemented as a project management contract, is pro- alliance model. These projects provide additional earnings gressing well. Construction will end and commissioning be- potential over and above ordinary income recognition. The gin in summer 2022. The Tampere Central Deck and Arena, PROJECTS most significant ongoing commercial development project a hybrid project, comprises a multipurpose arena, residen- that is being implemented as an alliance project is Finavia’s tial towers, office and retail space, and a hotel. The deck extension of Terminal 2 at Helsinki Airport. The new con- was completed during the review year. The arena and ho- struction component of the project is currently scheduled tel are currently being built on top of it. The Arena is sched- for completion in early 2022. A nine-storey parking facili- uled for completion in late 2021. Two combined office and ty was completed in the immediate vicinity of Terminal residential towers are currently under construction as part 2 in summer 2020. A significant new alliance project was of the Central Deck and Arena project. They will be home launched for Senate Properties in September 2020: prem- to Asunto Oy Opaali, Asunto Oy Topaasi and KOy Kruunu. ises for the Finnish Security Intelligence Service. The main ongoing project in infrastructure construction Hospital and school construction generates about 25 is a sewer tunnel for the Blominmäki wastewater treatment per cent of consolidated revenue. SRV currently has the plant in Espoo.

SRV ANNUAL REVIEW 2020 / YEAR 2020 12 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

INVESTMENTS The Investments segment focuses on the management and realisation of the Group’s real estate investments; the creation and ownership of new joint investment structures; and the operation of selected properties.

Investments’ key objectives are to increase SRV’s financ- ing capacity with the aid of joint financing structures; har- ness the value chains created by projects more extensively through longer-term ownership; diversify capital risk; and generate positive cash flow. SRV’s investment strategy re- volves around the Group’s strategy of building urban centres and harnessing the key megatrends that are affecting the built environment. “Building urban centres” primarily means the construction and ownership of central urban premises, such as housing, offices and retail premises. Investments encompass both complete and incomplete sites in which the company is a long-term investor. Plots that SRV will develop itself, and whose expected profits will be generated through development, are also reported on under Investments. The segment focuses on the manage- ment and realisation of the Group’s real estate investments, and on the creation and ownership of new joint investment structures. The segment’s revenue fell -18.5 per cent in January– December 2020. The majority of the segment’s revenue is generated by Russian shopping centre management. SRV sold its holding in the REDI shopping centre to its co-inves- tors in February 2020. Operative operating profit was signif- icantly negatively impacted by changes in the valuation of balance sheet items in the Investments segment, which had a combined impact of around EUR 12.3 million. Pearl Plaza was reclassified as a holding in associated companies and joint ventures during the fourth quarter when sales negoti- ations ended without reaching an agreement. Capital employed was EUR 171.8 million at the end of the year. Capital employed was reduced by the divestment of

SRV ANNUAL REVIEW 2020 / YEAR 2020 13 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

11 12

SRV’s holding in REDI and a change in the value of its ad- Revenue, Investments (EUR million) Operative operating profit1 and operating profit, ditional sales price receivable in the last quarter, as well as Investments (EUR million) a decrease in the company’s holding in the Tampere Deck 6 5.9 200 and Arena project in the first quarter. The weakening of the 5 4.8 0 rouble exchange rate also affected capital employed. Total -18.0 Operative operating profit capital employed decreased by about EUR 75 million. The 4 -20 -22.4 Operating profit majority of SRV’s capital employed consists of investments 3 -40 1 Operative operating profit is determined in associated companies. by deducting the calculated currency exchange differences included in -60 financial items in Russian operations 2 and their potential hedging impacts Coronavirus pandemic closed shopping from operating profit. centres in the spring 1 -80 -92.5-96.3 SRV partially owns and manages three shopping centres in 0 -100 Russia, two of which are located in St Petersburg and one in 2019 2020 2019 2020 Mytishchi near Moscow. SRV intends to sell its holdings once Change from 2019: -18.5% stable rental income has been achieved or the market situa- tion allows. Due to the coronavirus pandemic and economic 13 uncertainty in Russia, the sale of Russian shopping centres may be postponed. Capital Employed The coronavirus pandemic that began at the end of Return on investment (%) the first quarter of 2020 has negatively impacted shop- 5 ping centre operations by undermining tenants’ ability 300 245.7 0 to do business. The authorities restricted the opening of 250 stores in March–August, which weakened the operation- -5 200 al capabilities of shopping centres and reduced their rent- 171.9 -10 al income. Shopping centres opened gradually in the third 150 -15 -14.3 quarter, which was reflected in the rising visitor numbers -20 and sales in August to September. Shopping centres re- 100 mained open in October–December, but the coronavirus -25 50 restrictions continued to have an impact on the business -30 -32.6 of some of the tenants. 0 -35 2019 2020 2019 2020 The 4Daily shopping centre near Moscow opened its doors in April 2017. By the end of December, about 86 per Change from 2019: -30.1% Change from 2019: 18.3% cent of the shopping centre’s premises were leased. At the end of December, 73 per cent of its stores were open. In the January–December period, sales rose by 31 per cent and visitor numbers by 2 per cent on the comparison period.

SRV ANNUAL REVIEW 2020 / YEAR 2020 14 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

The Pearl Plaza shopping and entertainment centre in Negotiations on the sale of Pearl Plaza ended inconclusively St Petersburg is fully leased. Visitor numbers fell by 29 per and the shopping centre was reclassified as a holding in associat- IN LINE cent year-on-year during the January–December period as ed companies and joint ventures. In line with its strategy, SRV will a result of the coronavirus pandemic that began in March. continue to develop the property and intends to sell its holding Sales in roubles saw a decline of 23 per cent compared with when the market situation allows. WITH ITS the corresponding period of the previous year. Visitor num- The Okhta Mall in downtown St Petersburg opened its doors bers and sales grew in the first quarter, but when the coro- in August 2016. The shopping centre’s occupancy rate stood at navirus restrictions came into force in the second quarter, about 96 per cent at the end of December. 91 per cent of its stores STRATEGY, both visitor numbers and sales plummeted. Strong recovery were open at the end of December. Sales decreased by 22 per was seen in August–September and continued in October– cent in January–December and visitor numbers fell by 35 per cent December, especially in sales figures, which rebounded to as a result of the coronavirus pandemic that began in March. Okhta almost the same level as a year earlier. The shopping centre Mall was also issued with a ‘COVID Compliant’ certificate. SRV WILL was issued with a ‘COVID Compliant’ certificate. This certif- icate is awarded to shopping centres that follow health and CONTINUE TO safety guidelines and regulations in an exemplary manner. Shopping centres DEVELOP ITS Pearl Plaza, St Petersburg Okhta Mall, St Petersburg 4Daily, Moscow SRV’s holding: 50% SRV’s holding: 45% SRV also has a 27 per cent holding SRV’s holding: 18.68% in Russia Invest, the centre’s other owner

SHOPPING Opened in 2013 Opened in 2016 Opened in 2017 Pearl Plaza has been fully leased since 2017 Occupancy rate at the end of December: 96 per cent Occupancy rate at the end of December: 86 per CENTRES cent Largest tenant: Prisma The largest tenant is the Russian grocery chain Lenta Anchor tenants are the electronics company DNS and the grocery store Perekrostok

Pearl Plaza received a ‘COVID Compliant’ certificate in In 2020, Okhta Mall was a finalist in two different New tenants included Sinsay, Familia and Gloria 2020. categories of the Global Retail Real Estate (GGREAt) Jeans competition. Okhta Mall received a ‘COVID Compliant’ certificate in 2020.

SRV ANNUAL REVIEW 2020 / YEAR 2020 15 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE BUILDING A LIFECYCLE-WISE REALITY

SRV ANNUAL REVIEW 2020 / STRATEGY 16 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

SRV’S STRATEGY AND FINANCIAL OBJECTIVES FOR 2021-2024: BUILDING A LIFECYCLE-WISE REALITY During 2020, SRV considered its strategy and published its new strategy and long-term financial objectives for 2021–2024. The strategy aims to develop long-term competitive advantage, provide an excellent customer experience, tap into opportunities for lifecycle services, improve profitability and reduce indebtedness.

The new strategy responds to the major challenges in our operating environment – accelerating climate change and further urban growth and high-density development. Our objective is to create a new lifecycle-wise reality, where de- cisions related to construction ensure well-being, value and profitability – for years and generations to come. SRV’s strategy is based on developing the built environ- ment so that the entire lifecycle is taken into account. We call this lifecycle wisdom. It means that we always optimise the en- vironmental footprint and costs of buildings in the long-term. Energy consumption and carbon footprint are optimised es- pecially through the choice of energy production methods and materials and through energy-efficient solutions. SRV has implemented and is starting up numerous li- fecycle projects for the public sector, such as the Jokirinne Learning Centre in Kirkkonummi, education and wellness campuses in Uusikaupunki and Siuntio, and the Helsinki Upper Secondary School of Languages. The company is now launching a spearhead programme, which incorpo- rates lifecycle wisdom with all construction and cooper- ation from the selection of construction site locations to maintenance and services. Sipola states that this allows the company’s customers to have safe and sustainable solutions for value creation in the long term, renews SRV's way of working and paves the way for the industry towards the future.

SRV ANNUAL REVIEW 2020 / STRATEGY 17 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

SRV will improve profitability and reduce indebtedness The updated definition of operative operating profit is used with three strategic programmes: in these financial objectives. • achieving a leading market position in the business The achievement of the set strategic objectives is based premises market on operational efficiency and stable cash flow. In addition, • streamlining operations throughout the construction the company must bolster its position in the private-sector chain and business premises market and step up its developer-con- • developing the profitability of housing construction. tracted housing production alongside projects for investors. The company seeks to divest itself of shopping centres that WE ARE In its Investments business, the company continues to focus are in the management phase at an appropriate time on the on lightening the balance sheet. The company is developing basis of the development phase of the centres and the mar- the line operations of its shopping centres in Russia with the ket situation. AIMING TO aim of divesting them at an appropriate time on the basis of Reaching the profitability targets requires not only their development phase and the market situation. The fo- boosting the efficiency of the company’s own operations, cus of the Investments business will be re-evaluated once but also the more prudent selection of new projects with re- the Russian shopping centres have been divested. During gard to risk level, profitability and capital commitment. The PROVIDE AN the strategy period, SRV can act as a co-investor in select- company anticipates that it will achieve its strategic earn- ed projects in Finland. ings level by the end of 2024.

Long-term financial objectives EXCELLENT SRV’s strategy and all of its operations are guided by the 2021–2024 strategic financial objectives that were approved in February 2021: CUSTOMER • Operative operating profit: 6 per cent by the end of the period. • Gearing excluding the impact of IFRS 16: 40–60 per cent by the end of the period. EXPERIENCE • As the company gradually reduces its indebtedness, SRV expects that it will pay dividends in accordance with its dividend policy no earlier than for the 1 January–31 December 2023 financial year. The longer-term objective is to distribute dividend of 30–50 per cent of the annual result, taking into ac- count the capital needs of business operations.

SRV ANNUAL REVIEW 2020 / STRATEGY 18 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

TOWARDS A LIFECYCLE-WISE REALITY SRV’s strategy 2021–2024

Value through lifecycle-wise construction OUR OBJECTIVE Streamlining operations throughout is, together with our partners, the construction chain OUR AIM IS IN to create a new lifecycle-wise Leading market position in the commercial reality, where solutions related to 1. Developing competitive advantage premises market in the long term construction ensure well-being, 2. Excellent customer experience financial value and the benefit of Housing construction at the forefront of profitability 3. Tapping into opportunities for lifecycle users, residents and environment services – for years and generations 4. Improving profitability and decreasing to come. indebtedness

at work Courage ity Enthusiasm in development ustainabil Result d S: S riven ALUE Open UR V coope O ration

Accelerating climate change Denser cities Accelerating digitalisation

SRV ANNUAL REVIEW 2020 / STRATEGY 19 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

Strategic development programmes 2020 Providing an unbeatable customer experience ly emphasise sustainability themes. SRV has strengthened SRV continued with its strategic development themes SRV aims to provide the best customer experience in the indus- its expertise as a lifecycle service provider. In the lifecycle in 2020. try as a builder of urban centres. Our goal is for each interaction model, SRV as the service provider takes responsibility for to be so successful that the customer is prepared to recom- project design, construction and maintenance over a long Improving profitability and the cost-effectiveness mend SRV to others. The SRV customer experience was meas- contractual period, typically 10–20 years. SRV has devel- of projects ured again in 2020 using an NPS (Net Promoter Score) survey. oped a lifecycle model for its service concept, and has firmly SRV continued its long-term efforts to improve profitability We renewed our method for calculating the NPS for business integrated energy efficiency and low-carbon perspectives and cost-effectiveness during 2020. This year, the focus was premises and also included other corporate customers, such into this model. on developing project scheduling and the broader introduc- as housing investors. Homebuyer satisfaction is measured after tion of collaborative working methods. Collaborative working the sale, when residents move in, and after annual inspections. Recovery programme methods will enable us to involve project personnel, contrac- As part of the customer experience, our goal is to im- In 2020, we continued with measures in our recovery pro- tors and other stakeholders extensively in both planning and prove people’s quality of life with both services and solutions gramme to improve both SRV’s balance sheet and liquidi- day-to-day management. for the built environment. Co-development involves users ty. The recovery programme was successfully completed A project’s schedule is one of the most important pro- in development in a variety of ways. During the coronavirus during the first half of the year, which led to a significant im- ject management tools. This year, SRV has focused on fur- pandemic, we have been holding virtual workshops. You can provement in both SRV’s equity ratio and debt-to-equity ra- ther improving its scheduling by specifying the criteria for read more about the value that SRV generates for its cus- tio. Key measures that were implemented in 2020 include a good-quality schedule. Schedule management has also tomers on pages 32–34. the sale of the REDI shopping centre, a reduction of SRV’s been enhanced by, for example, ensuring that monthly pro- holding in the Tampere Central Deck and Arena project, ject steering meetings are centred around monitoring criti- Harnessing digitalisation and new technology new financing and capital arrangements to strengthen the cal work phases. Schedule-related software expertise has We harness digitalisation in all of SRV’s operations: in project balance sheet, and extended bond maturity. We have also also been extensively developed. development and planning, technical building systems, con- altered our project portfolio to reduce its risks and require The Last Planner method has been introduced on an struction site management, communications and marketing, smaller capital commitments. increasing number of SRV’s construction sites. In the Last and the products and services we provide. At the beginning Planner method, schedules and work phases are planned of 2020, we carried out an extensive analysis of the current on a weekly and daily basis with the contractor. For exam- state and functionality of SRV’s digitalisation and systems, ple, Last Planner was used for Supercell’s new headquarters as well as any challenges they faced. Our analysis of the cur- project in Wood City during the design and planning phase, rent state was used to draw up a target state towards which to steer subcontractors’ and users’ systems, and to coordi- we are systematically progressing. The goal is to raise SRV’s nate work. Using this method enabled a complex project to digitalisation level throughout the organisation. be implemented on schedule while successfully managing Making even more extensive use of information mod- a large number of changes. els is one of the key focal points in our digital development. SRV continued to develop its takt time model in 2020. During 2020, we continued to improve automation and us- The takt time model has been piloted in the Helsinki Airport ability in SRV’s information model environment. Terminal 2 and Bridge Hospital projects, where it has helped us to keep to tight project schedules. Our goal is to develop Building future growth SRV’s own production to utilise the best aspects of takt time, Urbanisation is continuing, particularly in Finland’s growth and then put it to wider use within projects. triangle, and future construction solutions will increasing-

SRV ANNUAL REVIEW 2020 / STRATEGY 20 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

RISKS AND RISK MANAGEMENT SRV has published a separate Corporate Governance Statement in its Annual Review and on the company's website. More detailed information about the company's business risks and risk management has been provided in the 2019 Notes to the Financial Statements and Annual Review, and published on the company's website on 2 March 2020. Corresponding reports for 2020 will be provided on 5 March 2021 when the company publishes its 2020 Financial Statements.

The most significant risks concern negative changes in prevent access to personnel resources and materials. The part of its previously announced recovery programme, the SRV’s and its customers’ operating environment and cur- uncertainty caused by this situation also weakens the con- company carried out numerous measures, such as divest- rently the coronavirus pandemic in particular, capital em- fidence of companies and private individuals and their out- ments of assets, refinancing and two share issues during the ployed in major projects, SRV’s earnings trend, availability look for the future. This reduces investments and consump- first part of 2020. As a result, the company’s balance sheet of financing for SRV and its projects, the development of the tion, and temporarily puts economic development in reverse. and financing position and liquidity improved significantly situation in Russia, the rouble exchange rate and key project Many countries started to lift restrictions in the early sum- by the end of the second quarter. However, availability of fi- implementation risks. mer 2020, but had to tighten them again in the latter part of nancing for developer contracting projects and certain guar- Demand for SRV’s products and services might be the year as the pandemic took a turn for the worse. The se- antees remains challenging. weakened by negative changes in, for instance, general eco- riousness of the situation will be significantly impacted if the Financing for developer-contracted projects is ensured nomic development, the business environment of SRV and pandemic is prolonged further. The scheduling and effective- with sales of projects, project-specific credit and the use its customers, the functionality of financial markets and the ness of Covid-19 vaccinations will be decisive. In spite of the of the company’s general financing reserves. The compa- political operating environment. SRV’s business opportuni- pandemic, construction activity in Finland remained at a high- ny only starts up projects for which financing has been se- ties would be weakened by the deterioration of the operat- er level than expected in 2020. However, the Confederation of cured. The implementation of new orders recognised in the ing conditions of business premises customers, the weaken- Finnish Construction Industries estimates that construction order backlog in 2020 will not require any financing from ing of corporate and consumer confidence and purchasing will decline by about 4 per cent in 2021. Thus far, the coro- SRV, with the exception of developer-contracted housing power, an increase in interest rates, more difficult availability navirus pandemic has only caused relatively minor problems projects. The company will only consider launching other of financing or financial problems in public administration. to SRV’s construction operations in Finland. The developing new projects if there is sufficient demand and the necessary In particular, a decline in the need for business premises, impacts of the pandemic are being assessed closely and the financing can be assured with the aid of the company’s gen- growth in the yield requirements of investors, tighter invest- necessary measures are being taken proactively to main- eral financing reserves and the sale of project-specific -re ment criteria, a decrease in the demand for and prices of tain health and wellbeing, prevent the spread of the pandem- ceivables to financial institutions and project-specific loans apartments, and the weakening of investment opportunities ic and ensure business continuity. Over the longer term, the negotiated separately before the start-up of the project in in public administration may pose a substantial risk to the population shift into SRV’s main business areas in Finland’s question. Receivables can be sold for the purpose of liquid- company’s financial position and profitability. key growth centres will continue, laying down a good founda- ity management only within the limits allowed. The main risk is currently posed by the coronavirus pan- tion for operations when the situation returns to normal. The Net rental income from SRV’s shopping centre invest- demic and its impact not only on the operating conditions aforementioned risks have been addressed in the accounting ments typically reaches its target level about 3–5 years af- and business of SRV, its customers and other partners, but principles for this financial statement release. ter opening. Once this occurs, it is SRV’s strategy to sell the also its broader effects on general economic development. SRV’s ongoing major projects and completed shopping investment. Developments in rental income are impacted by Any cases of illness, quarantines and the restrictions im- centre projects are tying up a great deal of capital, as does factors such as general economic trends, consumer behav- posed by countries have a negative impact on the business developer-contracted construction. The availability and iour, successful shopping centre management, the shopping performance of various parties because they weaken or price of financing are critical to the company's business. As centre’s reputation and, in Russia, also the rouble exchange

SRV ANNUAL REVIEW 2020 / STRATEGY 21 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

rate. Weaker-than-planned developments in different factors -6.3 million on the Group’s equity translation differences. and the assumptions made, both when starting up shopping A ten per cent weakening in the exchange rate would cor- centres and on the scheduled sale date, may result in a need respondingly have an impact of about EUR -4.9 million on to lower the shopping centre’s value in the balance sheet. The SRV’s earnings if the effect of currency hedging were not prolongation of the coronavirus pandemic and economic un- taken into account. The exact rouble hedging rate varies certainty in Russia might mean that the sale of Russian shop- over time. SRV’s transaction risk largely comprises the eu- ping centres will be postponed. SRV’s investments in shop- ro-denominated loans of associated companies that are ping centres are minority interests in associated companies. partly owned by SRV. The remaining exchange rate risk is THE MAIN The initiation of their sale or the timing of the sale are agreed hedged in accordance with the hedging policy approved by upon in the shareholder agreement of each investment. That the Board of Directors. is, SRV cannot decide on the sale of projects or their date of SRV Group Plc's Russian subsidiary, of which SRV Group sale on its own. If, on the other hand, the shareholder agree- Plc indirectly owns 51 per cent, is involved in legal proceedings RISK IS ment permits the other shareholders to sell the property be- in Russia. A court of first instance ruled that SRV’s subsidiary fore it reaches its optimal financial value, and they decide to must pay EUR 3.1 million in compensation to a counterparty. do so, this may lead to the need to reduce the balance sheet This sum was recognised in full as a provision for expenses in value of the shopping centre. the second quarter. However, the court of second instance CURRENTLY Negotiations on the sale of the Pearl Plaza shopping cen- overturned the ruling of the court of first instance in August tre ended without reaching an agreement during the review due to an appeal by the subsidiary, as a result of which this period. In line with its strategy, SRV still intends to divest the EUR 3.1 million provision was dissolved in the third-quarter re- shopping centre, but it is not possible to predict when ex- sult. The counterparty lodged an appeal against the decision THE IMPACT actly it will do so. with the court of third instance during the review period. In SRV has made a financing commitment equating to a the end of the year, the appeal proceedings were still ongoing. 1.8 per cent holding in the Hanhikivi-1 nuclear power plant To increase the comparability of operations, the com- project to Fennovoima’s main owner, Voimaosakeyhtiö pany reports operative operating profit in addition to oper- OF CORONA- SF. SRV has the same rights and obligations as oth- ating profit. Operative operating profit differs from the IFRS er Voimaosakeyhtiö SF shareholders. In April 2020, definition of operating profit in that it eliminates the calcu- Fennovoima announced that construction will start in 2021. lated currency exchange differences included in financial The balance sheet value of the investment is EUR 10.7 mil- items in Russian operations and their potential hedging im- VIRUS lion, which corresponds to the amount that SRV has in- pacts. SRV also reports certain key figures without the im- vested in the project. The current and future value of the pact of IFRS 16. investment involves risks, particularly with regard to the Competitive project operations with products and ser- longer-term price of electricity. vices comprise a critical success factor for SRV’s business PANDEMIC In its Russian business, fluctuations in the rouble ex- and may be subject to significant risks. SRV seeks to imple- change rate expose SRV to translation and transaction risks. ment profitable contracting projects for developers and to A ten per cent weakening of the rouble against the euro on develop profitable developer contracting projects and prop- the reporting date would have had an impact of about EUR erty projects together with its partners. A key challenge is to

SRV ANNUAL REVIEW 2020 / STRATEGY 22 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

ensure that the portfolio consists of viable projects in each Sustainability risks contractor chaining is limited to two tiers. Certified manage- economic cycle and market situation. Identified risks relate to issues such as serious accidents, ment systems create a strict framework for operation and The company continuously monitors the needs of cus- the grey economy, labour exploitation, working conditions in require continual improvement and development, including tomers and the market situation, and seeks to react rapidly the supply chain, adapting to climate change, climate risks, in risk management. to changes. Large development projects that tie up a great meeting investors’ requirements, and our reputation through SRV’s new strategy, which was published in February 2021, amount of capital are especially vulnerable to fluctuations stakeholders’ eyes. The coronavirus has brought new risks, takes a firm stand on the role that business plays in combat- and risks. In its own development projects, the company is not only in the form of a physical threat but also to coping ing climate change and adapting to a changing business en- currently pursuing more projects carried out with partners, and satisfaction at work. These risks are different in on-site vironment. Thanks to this new strategy, the physical threats and in contracting it seeks to utilise cost-flexible means of and office work. and business opportunities and risks associated with climate implementation that do not require financing from the com- The physical effects of climate change, such as ex- change will also be analysed more comprehensively. We will pany. The company might also lose markets to new or grow- treme weather phenomena, may hinder construction and continue to assess human rights impacts in 2021, so that we ing competitors or business models. SRV seeks to manage property maintenance. Climate impacts are increasingly can use this information to implement practical measures in these risks by retaining its position as one of the top com- being considered in financing decisions as well. Integrating both our own operations and our supply chain. More informa- panies in its field by investing in the development of its sys- climate risks into financing costs is an effective means of tion about sustainability-related risks and their management tems and own customer-focused, flexible and networked encouraging companies to act in the best interests of the can be found in the table on page 30. operating model (SRV Approach). environment. Green taxonomy is part of the EU’s sustain- Retention of skilled employees, hiring of competent new able finance action plan, and it provides the financial sec- employees and maintaining a partner network for profes- tor with tools for assessing the sustainability of potential in- sional implementation also pose risks to operations. The vestments. company takes care of the health and safety of its employ- In recent years, labour exploitation has also been ex- ees with well-run health services, systematic guidelines and posed in supply chains in Finland. Due to workforce mo- monitoring. In addition, the company continuously offers its bility and the complex nature of supply chains, it is impor- personnel opportunities to engage in training, development tant that all parties are aware of their rights and obligations. and communal activities. Efficient and committed action to Companies influence human rights on a daily basis through achieve the company’s objectives also reduces the likeli- their subcontractors, partners, customers and other hood that various risks will materialise. stakeholders. Success in project planning and implementation and the Together with the Sustainability Director, SRV’s senior management of the partner network also involve risks related management and risk management organisation are re- to issues such as operational quality, costs, scheduling, safety, sponsible for identifying and reporting sustainability risks, the shadow economy and the environment. The operations and for implementing risk management measures. We are system that guides SRV’s functions incorporates ISO-certified continually working to control and reduce risks in both our quality, environmental, occupational health and safety sys- own operations and our subcontractor network. tems as well as a procurement system and the SRV Network SRV’s Code of Conduct for its own personnel and suppliers Register. Project operations are developed proactively. The creates a foundation for compliance. The SRV Construction key perspectives include not only costs, quality and customer Contract Programme defines the basic sustainability require- service, but also responsibility and harnessing digitalisation. ments for our partners and subcontractors. For example, sub-

SRV ANNUAL REVIEW 2020 / STRATEGY 23 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE SRV IS A CONSTRUCTOR, PROPERTY DEVELOPER, INVESTOR AND OWNER

SRV ANNUAL REVIEW 2020 / VALUE CREATION 24 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE CREATION MODEL

Board of IMPACTS Value creation Directors Financial Corporate and value Partners Executives preservation capital and Shareholders manufactured Investors capital communitiesLocal Own ROLES personnel APPROAC Value for SRV H customers CO Builder NS N TR Human and IG U S C intangible E T Value for D IO capital N OUTPUTS personnel Investor

P R E Value for O C J N partners E A C N Houses Schools T E D T E N Developer V AI Offices Neighbourhoods Natural EL M OPM ND capital ENT USE A Value for Hospitals Services society

Provider of user The generalNGOs and maintenance Value for public services Customers investors Circular Reduction Media Social economy of CO2 Industry Authorities solutions emissions capital Decision associations makers Operator Value for environment

SRV ANNUAL REVIEW 2020 / VALUE CREATION 25 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

MORE AND BETTER INFORMATION SRV is a constructor, property developer, investor and owner.

SRV serves customers in matters such as the choice of SRV seeks to be in demand as a project implement- construction site, site development, management of land er, and wants partners to feel that working with SRV yields use, specifying space needs, project budgeting and acquir- sustainable value for their own business. The model can be CAPITAL ing funding. Capital management is an essential element of used as a tool for business development across unit and project value formation. In addition to its own financing ca- function borders. It takes into account all kinds of capital, pacity, SRV seeks funding for specific projects from banks, not just financial capital, and presents a broad range of in- MANAGEMENT investors, customers and partners. SRV implements devel- puts, outputs and impacts. oper-contracted housing projects, development projects, The most important types of capital at SRV are human, and construction projects. intangible and social capital. With respect to human capital, IS AN This value creation model will also show how the com- the following aspects are particularly important: customer ex- pany creates value via its operations and how it makes use pertise, interaction, design expertise, zoning expertise, man- of the variety of different types of capital in its operating en- agement of the supplier pool and management expertise. The ESSENTIAL vironment in its own value creation process. It paints a re- major elements of intangible capital are the SRV Approach, alistic image of the company’s interaction models and fun- the SRV Network Register, references, brand, concepts and damental risks. operating models. The key areas in social capital are stake- ELEMENT holder relationships with cities, investors and the local envi- SRV’s value creation ronment as well as the employer image and partnerships. A picture of SRV’s value creation has been built around the SRV’s new strategy published in February 2021 takes SRV Approach. To obtain background information, we in- a strong stand on the role of business in tackling climate OF PROJECT terviewed customers, investors, financiers, decision-mak- change. SRV will initiate a spearhead programme bringing ers and influencers. Internally, we also considered important lifecycle-wise reality into all construction and cooperation, types of capital, inputs, the role of value creation in projects, ranging from site planning all the way to property mainte- VALUE what kind of value SRV creates for stakeholders, society and nance and services. During 2021, our goal is to update the the environment, and what kind of outputs and impacts re- description of our value creation model to ensure that it is sult from our business. closely aligned with the objectives of our new strategy. FORMATION

SRV ANNUAL REVIEW 2020 / VALUE CREATION 26 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

SUSTAINABILITY MANAGEMENT For executive management, sustainable business means creating added value for business through sustainability. In the current operating environment, it is even more important for management to read changes in the environment and ensure that their company’s product and service portfolio meets the future demands of climate change and will be competitive in, for example, the one-and-a-half degree scenario.

The strategy published in February 2021 is SRV’s response Waste management and recycling building demolition to this. Our new strategy takes a firm stand on the role that waste both play a major role by allowing waste streams to business plays in combating climate change and adapting to end up as raw materials. The Ministry of the Environment FIGHTING a changing operating environment through the lifecycle-wise and the Confederation of Finnish Construction Industries reality concept. have negotiated a green deal for the construction sector that seeks to promote the recycling of plastic film (pack- LABOUR Risks and opportunities are changing rapidly aging and protective plastics). For construction firms, this in our operating environment means sorting plastic waste more accurately. The financial and investment sector is requiring companies EXPLOITATION to have increasingly more reliable and comprehensive ESG Preventing labour exploitation forms part of reporting, and EU-level taxonomy defines what sustainable our cooperation with partners business is. The price and availability of financing will also be In recent years, there has been increasing debate over the IS AN impacted by the subject’s sustainability classification. These use of forced labour in global supply chains. Corporate busi- requirements – and ultimately also increased regulation – ness ethics is the subject of growing interest from consum- will force companies to expand their reporting to other sec- ers, the media, civil society, investors, and the authorities. IMPORTANT tors outside investment and finance. However, local and national structures have been largely ne- Stricter requirements are also being seen in the com- glected in these discussions. Preventing labour exploitation plete reform of the Land Use and Construction Act, whose is now one of SRV’s most important themes and forms part amendments include a requirement for buildings to be of our regular cooperation with partners. THEME low-carbon. The goal is for a building’s carbon footprint to be calculated when applying for a building permit (as is the Sustainability programme highlights case with the e-factor), with legislation eventually including requirements a carbon footprint ceiling. Our sustainability programme lists SRV’s main sustainability In the construction sector, taking a circular economy ap- themes and their associated long- and short-term objec- proach means material- and energy-efficient buildings that tives. It reflects the requirements placed on companies both are adaptable, repairable and built to last. Recyclability en- in general and in the construction sector in particular. This sures that construction elements, equipment and materials programme makes it easier to see the big picture and com- are recyclable at the end of their lifecycles; that is, they can municate the issues to various target groups. The sustain- either be returned to the producer, reused as is, or used as ability programme enables every SRV employee to identify raw materials to make new products. their own role in sustainability development.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 27 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

The themes of SRV’s sustainability programme have been built around value creation. The themes in this annual report STAKEHOLDER'S EXPECTATIONS are also presented in accordance with the programme’s struc- ture. Our goal is to ensure that the sustainability programme’s themes support business development and the attainment of OWN PERSONNEL BOARD OF DIRECTORS, SHAREHOLDERS SRV’s strategic targets in the best possible way. During 2021, Safety and wellbeing at work, training CORPORATE EXECUTIVE Share value development, building and we will go through the sustainability programme and update its and development, good corporate TEAM protecting brand and reputation, risk targets to align with our new strategy. spirit, strong reputation, ethically Share value development, building and management, ESG requirements, financial Moderate progress was made towards our objectives sound behaviour, financial performance protecting brand and reputation, risk man- performance and stability and stability in 2020. Compliance efforts have been stepped up and a agement, financial performance and stability Compliance Team was established in autumn 2020. The goal of the compliance team is to increase the level of awareness of compliance issues inside SRV and to improve the informa- INDUSTRY MEDIA NON-GOVERNMENTAL tion flow between units in compliance related matters. ASSOCIATIONS Interesting topics, openness and ORGANISATIONS, An SDG analysis has been performed and its results are Promoting industry interests, transparency, short response time, GENERAL PUBLIC summarised on SRV’s website. We continued our efforts to providing information and answers to agreements,preparing for jointfuture statements, legislation Facts, background information,information, expertise, expertise, common common improve overall quality by, for example, introducing a new au- questions, proactive communication preparing for future legislation interest, addressingaddressing societal societal challenges, challenges, openness penness dit form and on-site HSEQ kick-off meetings. and transparency, ethically ethically sound sound behaviour behaviour We have continued to take a strict approach towards safety, even though the coronavirus has caused a great deal of extra work and has required special arrangements on con- struction sites. Management is highly committed and has al- AUTHORITIES, CUSTOMERS PARTNERS LOCAL located more resources to safety. The declining trend in job DECISION Customer experience, Trustworthiness, COMMUNITIES, satisfaction has ended: we achieved an AA PeoplePower rat- MAKERS quality, tailortailor-made made fair competition, NEIGHBOURHOODS solutions, flexibility, easi- good reputation, ing and SRV was recognised as one of Finland’s Most Inspiring Facts, background ness and safety of buying, interesting projects, Being fair neighbours, low impact Workplaces in Eezy Spirit’s comparison. information, expertise, predictability, innovations, financial performance on everyday lives of communities, Environmental perspectives have also been introduced at efficiency, quality, location, services, return and stability staying within pre-agreed schedules, ethically sound behaviour, on investment, brand minimising heavy traffic, danger, dis- the supplier registration phase alongside other sustainability addressing societal turbance, noise, providing timely and topics. We have continued our discussions with suppliers on and reputation, ecological challenges viewpoints, ethically sound accurate information, well organised preventing labour exploitation during indirect procurement. behaviour, financial site and surroundings, functioning Carbon footprints have been calculated for several properties performance and stability walkways and driveways and another new tool has been introduced in the form of RTS environmental classification. A performance target has been set for SRV’s environmental activities and it will be updated as our new strategy is put into practice. Continued success has been seen in SRV’s Energy and lifecycle services. Our climate risk assessment was postponed until 2021. The situation will now be analysed on the basis of our new strategy and a list of proposed measures will be drawn up.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 28 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

We will continue to enhance our reporting on climate im- measures. In 2020, we drew up a list that will make it easier for in- pacts and investigate opportunities for green financing. terested parties – and particularly investors – to find the most im- Sustainable concepts will also be built on the new strategic portant ESG information. This list can also be found on the website. foundation. As part of our risk management development in The most important reporting target for 2021 is to renew the 2021, we will revise both our list of sustainability risks (includ- environmental reporting system and further develop reporting re- ing human rights risks) and their related processes. lated to climate risks and opportunities. Climate impacts are in- In addition to climate efforts, we will work towards even creasingly being considered in financing decisions, and this re- more sustainable procurement and further improving ma- quires adequate environmental reporting from the customer. terial traceability. The circular economy is linked to our new In accordance with the requirements of the Accounting strategy and forms part of our overall sustainability pack- Act, a report on HR issues, social responsibility, human rights, age. In 2021, we will be seeking further practical solutions environmental and climate issues, and bribery and corruption that can be more widely utilised in a number of areas, such is provided in the financial statements section of the Report as recycling soil and making better use of surplus materials. of the Board of Directors. A summary of the report is also pre- SRV HAS sented in the table on page 30. Reporting provides information in the correct format Ethical operations based on transparency AN ETHICS Sustainability reporting is expected to meet stakeholders’ SRV’s values – sustainability, enthusiasm, profitability, bold in growing demands for information. Investors, and financiers development and open in cooperation – will continue to create in particular, have an increased need for sustainability data. a firm foundation for further development. Our Code of Con- These days, sustainability themes such as climate change duct creates a sustainable foundation for everything we do. All CHANNEL are part of routine business and increasing volumes of sus- of SRV’s companies, Board members, management and em- tainability data are also required to support decision-mak- ployees are obligated to comply with the Code of Conduct re- ing. Sustainability is no longer a separate section in our re- gardless of their station. SRV also seeks to get third parties, OPEN FOR porting, but rather one of its main themes. such as subcontractors and other cooperation partners, to When reporting is tied to sustainable business solutions, it commit to the Code of Conduct. has the potential to generate greater added value for both SRV SRV has an Ethics Channel through which anyone can anony- ANYONE and our stakeholders. Appropriateness continues to be the mously report observed or suspected behaviour that contravenes watchword for SRV’s sustainability reporting. We comply with the Code of Conduct. We received three reports via the Ethics statutory and industry-wide reporting requirements, and pro- Channel in 2020. Three reports were received through other chan- vide both internal and external stakeholders with up-to-date nels. There were also some safety related reports received through and comprehensible information to support decision-making. the Channel. These reports were processed in SRV Turva system. Unless otherwise stated, our sustainability reporting adheres All reports received through the Ethics Channel were investigated to the same boundaries as our financial reporting. in accordance with the agreed process. Reporting was developed in 2020 and will continue to be further developed. In 2020, we put a lot of work into analysing Youth Panel focuses on sustainable cities of the the sustainable development targets that are essential to SRV’s future business. The results are available on SRV’s website, which Stakeholders – both together and individually – continually shows SRV’s material SDGs and their associated themes and weigh up whether, in their eyes, the company has permission

SRV ANNUAL REVIEW 2020 / VALUE CREATION 29 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

Risks related to personnel, social responsibility, human rights, climate and environmental issues and bribery to operate. Reputation in itself is important, but even more and corruption prevention important are the elements that this reputation consists of – and also, from the company’s perspective, whether this reputation leads to positive action from stakeholders. THEMES IDENTIFIED RISKS RISK IDENTIFICATION AND RISK MANAGEMENT SRV’s Youth Panel started up in 2020. Its members con- ALL THEMES • Ethical operating principles • Internal audit • Ethical operating principles for partners and suppliers • Compliance Team sist of young people with an interest in urban development. • Ethics Channel • Construction Contract Programme The panel has given opinions on the development of real construction projects on SRV’s drawing board. PERSONNEL, SOCIAL • Accidents at work • OHSAS18001 health and safety management system • Safety information meetings In 2020, the Youth Panel met four times at the SRV RESPONSIBILITY, • Work exhaustion due to • ISO9001 quality management system • Safety observations HUMAN RIGHTS heavy work load • Audits and management reviews • TR and MVR measurements Living Room in REDI and once remotely. The meetings cov- • Negligence of terms of • Management site safety reviews • Personnel survey ered topics such as the development of the Myyrmäki dis- employment or working • External audits • Register trict, the Kalasatama towers, future housing, and a variety of conditions • Internal audits (cross-function) • Process Network and instructions for handling potential • Work related discrimination • Site kick-off meetings for HSEQ issues harassment or discrimination incidents distance learning and remote working facilities. The Youth and harassment • TTT-reviews • Responsible sourcing steering group Panel will continue to meet in 2021. • Labour exploitation in • Safety teams • Supplier cooperation supply chain • TURVA system • Collecting and analysing customer feedback During the year, SRV representatives met with numerous • Negligence of societal investors and analysts, mainly at quarterly events that were obligations • Health and safety of local held remotely due to the coronavirus pandemic. Investors, communities analysts and media representatives who follow SRV were in- • Product responsibility to vited to attend our quarterly interim report briefings, which customers were held as webcasts. Physical meetings were kept to a ENVIRONMENTAL • Environmental damage and • ISO14001 environmental management system • Environmental plan minimum due to the coronavirus pandemic. The sustaina- ISSUES accidents • External audits • Site kick-off meeting for HSEQ issues • Climate risks - physical risks • Project risk management process • Site instructions bility-related inquiries we received from investors concerned • Identification and management of process risks • Internal audits issues such as the concrete implementation of project re- sponsibility at construction site level, carbon dioxide emis- sion volumes, and CDP (Carbon Disclosure Project) report- ing. CLIMATE CHANGE • Legal requirements and • Energy and lifecycle services • ESG reporting development We met with subcontractors and suppliers at bilateral ADAPTATION increased regulation • Carbon footprint, LCA calculations • New solutions and concepts according to the new strategy negotiations concerning topics such as the ethical issues • Customer, investor and • RTS environmental classification tool financier demands for surrounding agency-hired labour. These discussions fo- business cused on preventing labour exploitation and promoting re- sponsible operating methods in the sector. BRIBERY AND • Illegal or inappropriate • Compliance related training • Responsible sourcing steering group Collaboration is mostly carried out under the umbrel- CORRUPTION activities • Supplier register data • Network Register la of organisations such as the Confederation of Finnish PREVENTION • Negligence of societal • Grey economy prevention days • Procurement background checks obligations Construction Industries RT. We were particularly active in the areas of environmental sustainability and occupational safety. SRV’s representatives have been involved in the Environment and Energy group of the Confederation of Finnish Construction Industries RT and the Green Building Council Finland. SRV is also a member of Finnish Business and Society (FiBS).

SRV ANNUAL REVIEW 2020 / VALUE CREATION 30 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

SUSTAINABILITY PROGRAMME

THEME QUALITATIVE TARGETS QUANTITATIVE TARGETS

SUSTAINABILITY MANAGEMENT • Improved results in the Trust & Reputation survey • Systematic identification of risks and opportunities in the • 100% of personnel have completed Code of Conduct training • Development of Compliance team work (according to the value chain • 100% of the target group have completed competition law training • Value creation model • Ethical business annual plan) • Bringing the climate reporting to the next level (TCFD) • Stakeholder relations • Risk management • Compliance themes presented in SRV intranet monthly • Renewing the environmental reporting system • Reporting • Utilise the Youth Panel’s perspectives in development work • Improving the Ethics Channel awareness in the value chain

VALUE FOR CUSTOMERS • Finding best lifecycle-wise solutions for housing • Enhancing overall quality throughout the value chain • NPS 40 (housing) • NPS 60 (business premises) • Residential services • High-quality products and • Developing and extending residential services – sharing best practices • Sustainable concepts services • Developing customer based operating model and • Developing the (site) auditing process and reporting increasing customer satisfaction VALUE FOR PERSONNEL • Strengthening the management commitment and improving • Introducing the electronic TRA (work risk assessment) reports • Long term goal of zero accidents • Occupational health and safety the quality of work accident investigations • Improving performance management and developing a • 10% reduction in accident frequency/year • Competence development • Increase the level of participation of unit heads in the results driven culture • 85 % work accident investigations conducted according to process timeline • Sense of community, personnel wellbeing investigation of serious work accidents in their areas of • Improving employer image and increasing the • TR measurement result 96% • Human rights responsibility attractiveness of construction industry to pursue increased • 18,000 safety observations/year • Safety management development competitiveness • 100% of on-going work sites audited • Creating and providing more accurate and timely • Assessment of psychosocial stress factors among project management reporting employees in TTT-reviews • Systematic utilisation of fines and sanctions listed in the • Assessing the level of possible discrimination and Construction Contract Programme in safety negligence harassment experienced by own personnel and other incidents personnel at sites VALUE FOR PARTNERS • Integrating sustainability themes into supplier process from • Mapping human rights related risks in selected • 4 supplier audits/year/procurement manager • Construction Contract Programme registration to performance procurement categories • Responsible procurement • Creating a series of indicators to assess supplier and partner • Performing supplier audits according to the plan performance

VALUE FOR SOCIETY • Developing the Network Register and cooperation with • Continuing the work to prevent labour exploitation • 4 grey economy prevention days per year • Combatting the grey economy authorities through e.g. supplier and partner meetings • Tax footprint • Improving performance based on the analysis of Grey • Employment Economy prevention days’ results

VALUE FOR THE ENVIRONMENT • Developing lifecycle-wise solutions together with businesses • Calculating the baseline for SRV emission factor • Waste utilisation rate 92% (according to strategy) • Creating a scenario and plan for carbon neutral construction • Sorting degree (per construction type) 50–70–75% (+5% compared to • Fighting climate change • Tracking the projects with environmental classification (e.g. • Identifying practical solutions for circular economy 2020) • Circular economy solutions RTS) • Guiding projects to improve energy efficiency • Characteristic waste volume (per construction type) 2,5–14 kg/rm3 • Energy and lifecycle services • Identifying climate risks and opportunities • Introducing the electronic chemical register • More comprehensive follow-up of SRV Infra

VALUE FOR INVESTORS • Answering to ESG reporting requirements • Identifying the green finance opportunities • ESG requirements • Green finance

SRV ANNUAL REVIEW 2020 / VALUE CREATION 31 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR CUSTOMERS Customer experience is the sum of all the experiences that a customer has through various interactions with SRV. SRV aims to provide the best customer experience in the business, and thus every interaction must go so smoothly that the customer is prepared to recommend SRV to others.

The SRV customer experience was measured again in 2020 out by SRV, 94 per cent of Majakka residents in Kalasatama using a NPS (Net Promoter Score) survey. We renewed are satisfied with living in a residential tower. 82 per cent COLLAB- our method for calculating the NPS for business premis- were satisfied with the building’s unique communal areas, es and also included other corporate customers, such as of which the terrace and fitness facilities were most popu- housing investors. Homebuyer satisfaction is measured lar. Three out of four residents appreciated the housing ser- after the sale, when residents move in, and after annual vices. The most valued service was Asumi, which is used for ORATION inspections. booking facilities and services, and also serves as the build- According to our new calculation method, the NPS for ing’s own information channel. business premises in 2020 was 35 (42). There were some We will continue to develop housing services in collabo- AIMS AT excellent successes in business premises this year, such as ration with current residents, while also creating a new foun- the Kirkkonummi main library. SRV joined the project at a dation for Loisto’s services. Loisto, which is currently under challenging juncture, after the previous contractor had gone construction, will boast a new feature: a guest apartment UNDER- bankrupt. However, open dialogue with the customer was whose concept is being developed with future residents. quickly established and enabled us to handle some chal- lenging issues. The result was a successful project and an Strong development in energy and lifecycle excellent customer experience. services STANDING SRV’s full-year NPS for housing was 40 in 2020 (34). SRV has developed a lifecycle model for its service concept, Satisfaction with housing rose, and one contributing factor and has firmly integrated energy efficiency and low-carbon was overall satisfaction with SRV’s unique and high-qual- perspectives into this model. The lifecycle property service CUSTOMER ity projects, which are prime examples of future living. period offered by SRV includes everything from property Feedback on moving in improved with the introduction of management to general and technical maintenance and up- SRV’s updated moving concept. The new concept seeks to keep. As the service provider, SRV is also responsible for the NEEDS make moving in as easy and effortless as possible by, for ex- property’s energy consumption. ample, providing assistance with carrying household goods The development team of SRV’s energy and lifecycle and scheduling moves to avoid congestion. services has been busy recently. SRV won three significant In 2020, we continued to develop housing services for lifecycle construction projects in 2020: education and well- residential towers with both current Majakka residents and ness centre in Siuntio, and a new building for the Helsinki those who have bought Loisto apartments. By engaging in Upper Secondary School of Languages. The service period this co-development, we hope to gain an even better under- for SRV’s first lifecycle school project, the Jokirinne Learning standing of residents’ needs. According to a survey carried Centre, began on 1 January 2021. In addition to these new

SRV ANNUAL REVIEW 2020 / VALUE CREATION 32 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

premises, SRV will be providing renewable energy solu- information model work in projects, and has also given train- team meetings, and the audit form has been revised and tions as a service as part of an energy renovation of busi- ing on how to start using the information model environment. put into extensive use. Knowledge management is an ever-­ ness premises in Kuninkaanportti. The next goals are to further expand the information model strengthening trend that can also been seen in quality as- SRV’s new strategy published in February 2021 takes environment offering and develop the models’ data analyt- surance – in reporting requirements, for example. Its goal is a strong stand on the role of business in tackling climate ics to provide support for decision-making. to generate real-time and relevant information to support change. SRV will initiate a spearhead programme bringing In 2020, SRV’s Bridge Hospital project was victorious decision-making. lifecycle-wise reality into all construction and cooperation, in the Public Projects category of the international Tekla When it comes to developing technical quality, we have all the way from plot selection to property use and mainte- Global Building Information Modeling (BIM) Awards. This also collected feedback and requests from the field. This nance. Lifecycle-wise reality means always optimising the competition is held every second year and entries include data will be used to, for example, plan training. Apart from a energy consumption, environmental footprint and costs dur- some of the world’s most impressive information model-­ few exceptions, most of the audits in 2020 were organised ing the whole lifecycle of the building. based construction projects that use Tekla software. The remotely. We are currently testing how to integrate internal Bridge Hospital project has employed and extensively ap- audits into the overall audit process, and a new procedure Digital status reporting improves plied SRV’s new information modelling tools. The project will be introduced in spring 2021. Revising audit reports is transparency has also had an exceptionally enthusiastic and innovative another of our 2021 objectives. At the beginning of 2020, we carried out an extensive anal- atmosphere, and cooperation between SRV’s information A standardised HSEQ kick-off meeting has been intro- ysis of the current state and functionality of SRV’s digital- model team and the construction site organisation has been duced on new construction sites to handle environmental, isation and systems, as well as any challenges they faced. open and direct. quality and safety issues. This practice has proven to be suc- Our analysis of the current state was used to draw up a tar- cessful, and has also been well-received on site. The first get state towards which we are systematically progressing. Our goal is to enhance overall quality HSEQ webinar was held in autumn 2020 and more webinars The goal is to raise SRV’s digitalisation level throughout the SRV Construction’s certification audits were held in spring are planned for 2021. The HSEQ team received additional organisation. 2020. This audit round was held to renew the certificates. resources in 2020, and the quality team got a new quality In the second half of 2020, we delved more deeply into As a result, all three SRV Construction certificates were engineer. The goal is to strengthen support and expertise in the automation of project status reporting. The traffic light renewed: quality management system (ISO 9001:2015), SRV Infra in particular. system that SRV has been using to monitor the status of environmental management system ISO (14001:2015) projects has now been digitalised. The “traffic lights” that are and occupational health and safety management system monitored for projects relate to safety, costs, schedules and (ISO 45001:2019). No serious non-conformities were re- the customer experience. Digital status monitoring achieves corded on this audit round. Kiwa Inspecta Certification more real-time transparency with regard to a project’s status Oy grants the certificates. SRV Infra certification renewal at all levels – project, unit and company – which in turn ena- audits will be held in the beginning of 2021 and follow-up bles a rapid response to any deviations. It also reduces the audits for SRV Construction will be held during the spring amount of manual reporting required for projects. 2021. Making even more extensive use of information mod- SRV takes a goal-oriented approach to enhancing els is one of the key focal points in our digital development. quality throughout the value chain. In 2020, we focused on During 2020, we continued to improve automation and us- things such as intervening in deviations, systematically go- ability in SRV’s information model environment. SRV’s in- ing through corrective measures and drawing up statistics. formation model team has provided extensive support for Quality has also been thoroughly discussed at production

SRV ANNUAL REVIEW 2020 / VALUE CREATION 33 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

LIFECYCLE the owner’s representatives during the con- struction phase,” says Jere. “For the client, PROJECTS one of the most significant benefits of a lifecycle project is that no repair or mainte- nance backlog will develop in the same way REPRESENT as in a standard project. In terms of technol- ogy, the building will be kept right up to date throughout its entire lifecycle. Lifecycle pro- jects are a new kind of business for SRV, as SRV’S NEW the company is also acting as a service pro- vider. We believe that orders for these types of projects will also start coming in from the BUSINESS private sector,” says Jere Pirhonen. When it comes to maintenance ser- vices, the level of service to be provided New learning centre in Kirkkonummi to is agreed on in advance and monitored throughout the service period. The service be implemented as a lifecycle project provider is, therefore, also responsible for The Jokirinne Learning Centre in the Vesi- Genuine partnership and usability and good indoor air quality. Trans- torninmäki district of Kirkkonummi will be shouldering responsibility ferring responsibility for lifecycle and main- implemented as a ten-year lifecycle project. “When you start designing a brand-new tenance services to a service provider will The three-storey learning centre will house a property as a lifecycle project, the client reduce the municipality’s risks and ensure school, a daycare centre and leisure facilities can rest safe in the knowledge that it will that the costs incurred by the municipali- for a total of 1,100 pupils in grades 1–9 and be in responsible hands from the outset. ty are known in advance. The municipality 240 kindergarteners. When the same organisation first builds will also be relieved of the responsibility A ‘lifecycle project’ means that SRV will and then maintains a property, all the re- of managing maintenance operations and handle design, construction and maintenance quired information about what has been ensuring personnel availability. as a turnkey project for the municipality of Kirk- done and how is always available. Continu- “Openness is an essential aspect of konummi. The service agreement will cover life- al measurement and reporting also ensure lifecycle projects, as is the idea of a recip- cycle services for the learning centre for a period that things such as indoor air quality rocal partnership in which both parties of ten years. These services are: property and remain good year after year,” says Jere benefit. These principles have definitely building management services, the maintenance Pirhonen, Director, Energy and Lifecycle been realised in the Jokirinne project, and and upkeep of the property and its outdoor Services at SRV. it’s been a pleasure to work with SRV,” says areas, energy use and its management, waste “When we build a property that we Hanne Nylund, Development Engineer, Mu- management services, and cleaning services. intend to maintain ourselves, we become nicipality of Kirkkonummi.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 34 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR PERSONNEL SRV wants to be a safe and equal opportunity workplace with a good sense of community. When you have a good framework in place, it is easy to focus on both doing the job in hand and personal development.

In January–December 2020 SRV employed an average of 991 (1080) people. 810 (867) people worked in Construction and 124 (139) people worked in Investments. 56 (74) people worked in Group operations.

Training, on-the-job learning and wellbeing at work during exceptional circumstances At SRV, the impacts of the coronavirus pandemic were re- flected as a decrease in training and events for personnel in 2020. The number of training days per person in Finland was 1.0 (2.1). Face-to-face training was possible for some inter- nal training sessions with a low number of participants, but otherwise training and events were held using a variety of distance learning solutions. In August, we released three new SRV Approach e-courses on the topics of financial control, schedule management and environmental activities. Online study has not been included in the calculation of the number of training days. A two-part online coaching course was arranged for all supervisors on team development and support for wellbe- ing and coping at work. This training began in December and continued into 2021. The SRV Trainee programme contin- ued, and a total of about 80 construction students worked under this programme during summer 2020. At the end of the year, we launched an extensive cam- paign to support wellbeing in collaboration with Firstbeat Technologies Oy. Wellbeing webinars were held and the Firstbeat Life measurement solution was offered to all SRV personnel for 3 months. Topics covered by SRV’s internal communications during the first half of the year included the recovery pro-

SRV ANNUAL REVIEW 2020 / VALUE CREATION 35 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

gramme. Change projects – and an associated results-hun- Employees1 in Finland 2020 (persons) OCCUPATIONAL SAFETY 2020 2019 gry culture – were covered during the latter half of the year. Lost-time injury frequency (LTIF) rate (SRV 4.8 8.9 The coronavirus pandemic dominated internal communica- personnel, number/one million hours worked) 1,000 tions from the spring onward. Guidelines and templates were Lost-time injury frequency (LTIF) rate (subcon- 17.9 16.6 797 797 created for changing circumstances. Efforts were also made 800 tractors, number/one million hours worked) 146 89 to support personnel and, above all, ensure they were able Lost-time injuries (SRV personnel) number of 7 8 to work safely. A variety of virtual events helped to brighten 600 Lost-time injuries, serious (SRV personnel) 0 0 up everyone’s daily lives. number of 400 708 Performance management and developing a results 651 Lost-time injuries (sub-contractors) number of 116 114 Men (82%) driven culture are the main goals for 2021. Measures to im- Women (18%) Lost-time injuries, serious (sub-contractors) 10 11 200 prove employer image and to increase the attractiveness number of Permanently employed (89%) of construction industry are also paramount when pursuing Weekly statutory construction site safety 95.9 95.8 0 Temporarily employed (11%) increased competitiveness. measurement, average, SRV sites (%) 1 Personnel on 31 Dec. 2020. Weekly statutory construction site safety meas- 1,892 1,321 Our goal is zero accidents urements performed, number of In 2020, 79 (39) corporate executive safety inspections Weekly statutory construction site safety 96.1 96.1 were carried out at different sites. measurement, average, SRV sites (%) Employees1 internationally 2020 (persons) In 2020, the themes of our occupational safety efforts Weekly statutory construction site safety 93 157 were developing our safety culture and the activities of the measurements performed, number of 1,000 Safety Support Group, updating and further developing Safety observations, number of 17,165 17,161 tools and operating instructions, internal audits in accord- 800 ance with ISO 45001 and updates to orientation materials. Number of safety observations rises The special themes in TTT reviews (occupational health and yet again 600 safety reviews) were content quality and conducting work In 2020, the accident frequency rate at SRV sites was bet- 400 risk assessments (WRAs). Audits also examined safety ter than in the previous year. For SRV’s own employees, the Men (42%) plans and the number of safety observations entered into accident frequency rate was 4.8/million hours worked (8.9). 200 Women (58%) SRV Safety. For contractors, the accident frequency rate was 17.9/million 135 135 57 45 Permanently employed (67%) hours worked (16.6), which is roughly the same as in 2019. 78 90 0 Temporarily employed (33%) SRV Network Register and induction play an SRV has firmly established a culture of making safety obser- 1 important role vations. A total of 17,178 (17,765) observations were made in Personnel on 31 Dec. 2020. In 2020, a total of 40,348 (30,438) access rights 2020. SRV’s observation frequency rate for 2020 was 2,445 were granted to 27,697 individuals for SRV construc- safety observations per million hours worked (industry aver- tion sites in Finland. More than 20,000 digital induc- age is ca 1,000 safety observations per million hours worked). tion courses were carried out via distance learning in A total of 123 accidents leading to absence occurred on 2020. Our remote induction material was revised during SRV construction sites during 2020, 10 of which were seri- 2020. ous (+30 days’ absence). 96.0 per cent was SRV’s 2020 goal for the TR measurements taken during the statutory weekly safety inspection required on building construction sites. The

SRV ANNUAL REVIEW 2020 / VALUE CREATION 36 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

company fell short of this target by a fraction, with an average TR measurement of 95.97 per cent in 2020. Our systemat- ic and ambitious safety efforts will continue in line with our updated 2021 guidelines towards our goal of zero accidents. The main safety goals for 2021 include strengthening the top management commitment to safety, improving the quality of accident investigation, developing general safety management and clarifying the management view of safe- ty. Fighting grey economy, responsible procurement and im- proving the transparency of operations are also among the goals for 2021.

Promoting human rights on many fronts SRV has been assessing human rights impacts since 2018. In conjunction with this, we went through human rights norms, partially linking them together and also adding examples of the human rights impacts of SRV’s operations. In 2020, we revised our list of the most important hu- man rights. We continued our discussions with labour hire Vision Zero is our mindset agencies on the issue of preventing labour exploitation, and the feedback from these discussions has been constructive. The Finnish Institute of Occupational SRV was the only construction company to ical goals and more about developing a SRV’s human rights work has been presented to external Health’s Vision Zero Forum was established reach the highest level. thinking and operating model. stakeholders at seminars arranged by, among others, HEUNI in 2003 to support Finnish workplaces in The Vision Zero Forum’s annual “Safety involves continual develop- and the Finland Chamber of Commerce. their efforts to improve occupational health classifications are based on criteria ment, and this is done one small step at a In cooperation with the procurement team, questions and safety. The network currently compris- that have been created in collaboration time in cooperation with construction sites. pertaining to human rights were added to the digital form es more than 400 workplaces all across with member workplaces. These crite- Construction is a high-risk sector, but we that must be completed by new suppliers. This work will con- Finland, and covers more than 16 per cent ria include the frequency and serious- aim to get both our own and our subcon- tinue in 2021. of the country’s employed workforce. ness of accidents in the workplace, and tractors’ employees to commit to SRV’s In SIHTI project, published in January 2021 SRV's per- For the first time, SRV reached the workplaces must properly investigate safety culture. Awareness, communica- formance was rated above average.The SIHTI project exam- highest safety level in the annual classifi- and report all accidents and dangerous tion and stakeholder relations play a key ined how Finnish companies are fulfilling their human rights cation carried out by the Finnish Institute situations. Classification seeks to support role in this. For example, we regularly send responsibilities in relation to expectations set out in the UN of Occupational Health’s Vision Zero workplaces in the long-term development newsletters to our subcontractors as well. Guiding Principles on Business and Human Rights. Forum: I – World Class Achievement. A of safety at work, and to highlight positive In recent years, we’ve improved process- Other goals for 2021 are to assess any potential discrim- total of 29 companies reached the highest examples of workplaces where safety is es, created more effective tools for risk ination and harassment experienced by our own personnel level in this nationwide classification of an integral part of everyday working life. identification and management, and taken and everyone working on our construction sites, and to fur- occupational safety. SRV’s achievement is SRV’s Safety Manager Aleksi Auer preventative measures to combat risks,” ther analyse the human rights risks of direct purchases in even more noteworthy due to the fact that says that Vision Zero is less about numer- says Aleksi. certain significant categories.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 37 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR PARTNERS Fighting the corona pandemic has required close cooperation at our sites. SRV’s coronavirus team functioned throughout the year and assured that everyone working at the site was aware of all restrictions and procedures.

Good cooperation gets us through In 2020, in cooperation with legal and procurement, we the corona year finished additional questions for our supplier registration The state of the pandemic and the instructions issued by the process, which ask suppliers to provide information about authorities were in constant flux during the year – it was es- themselves and responsibility themes. In other words, com- sential for the coronavirus team to always keep an eye on the panies are asked to provide this information as soon as they situation and react rapidly. The team had to communicate register as SRV partners. to multiple target groups in several channels, both clearly This information is used to assess suppliers, who may SRV’S and in numerous languages. With the right actions, good be asked to provide additional information later on, either cooperation and right attitude, the SRV sites were kept in in connection with a competitive tender or if SRV is con- operation. sidering them as a new partner. This work will continue into CORONA TEAM 2021 with the goal of making sustainability themes an inte- Stricter requirements for sustainability gral part of our supplier path all the way from initial registra- SRV is facing ever-stricter requirements for sustainability tion to post-work/contract assessments. FUNCTIONED at the customer interface, and these requirements natu- rally filter down the entire value chain. SRV has to ensure Human rights issues focused on preventing that its subcontractors and suppliers meet these require- labour exploitation ments and do not cause an increased risk to projects. We During 2020, we focused on preventing labour exploitation in THROUGHOUT use contractual means, such as the Construction Contract the supply chain and held meetings with our year-round labour Programme, to ensure the commitment of our suppliers and hire partners. Meetings with these labour hire agencies cov- subcontractors. ered both the development measures being implemented by THE YEAR SRV’s Supplier Code of Conduct supplements the re- our partners and the current situation, mainly in relation to the quirements of the Construction Contract Programme. challenges posed by foreign workers and vulnerable groups. When it comes to the role that procurement plays as an This work will continue as part of our standard coop- enabler of sustainable operation, closer cooperation with eration with partners, and the answers we have received suppliers, competence development and increased under- will also be utilised in our competitive tendering for labour standing are all important targets. hire agencies in spring 2021.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 38 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

RAPID information would flow fast and that dif- ferent perspectives would be taken into RESPONSE consideration from the outset. The corona- virus team maintained an overview of the situation, drafted guidelines and worked AND PRECAU­ in close cooperation with the company’s management to provide information and presentations to support decision-making. Operations at sites were analysed. TIONARY Potential situations and premises in which it is difficult to comply with safe distanc- es were identified. Among other meas- MEASURES ures, SRV staggered arrivals and breaks, enhanced cleaning, installed additional handwashing and disinfection points, PRODUCED limited the number of people allowed in social facilities and lifts, and introduced face masks as required. We kept offices RESULTS closed, primarily held remote meetings and imposed strict restrictions on site The coronavirus team helped visits. We sought to hold all essential meet- construction sites to deal with ings outdoors. The sites carried out weekly exceptional circumstances coronavirus reviews to ensure compliance with the guidelines and identify aspects in We will all remember 2020 as the year continuity, we had to take the pandemic need of development. when everything changed. Finns started seriously from the very beginning. Rapid response and a variety of pre- using the phrase “the new normal” to When the pandemic broke out, SRV cautionary measures produced results. describe how things had been turned responded immediately by establishing SRV’s personnel survey in the autumn upside down in 2020 by the coronavirus a coronavirus team. Right from the start, indicated that personnel were satisfied pandemic. That said, one thing has not the team served as a multidisciplinary, with the coronavirus guidelines and work changed. Construction cannot be done fast-moving and flexible organisation, arrangements. Even though individual in- remotely – work continued at our sites. To including representatives of HR, ICT, fections were detected, SRV’s sites could ensure that we could keep working safely communications, safety, procurement, operate almost entirely without interrup- at our sites and safeguard operational sites and employees. This ensured that tions in 2020.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 39 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR SOCIETY SRV is a significant actor with a broad range of social impacts. It is increasingly important for stakeholders that, in addition to seeking profit, companies also have objectives related to positive social impact. Many socially significant projects were both completed and under construction in 2020.

Hospital construction remains strong an extension that doubled the area of the building to 5,000 environment for about 480 primary schoolchildren, as well as In October 2020, a brand-new hospital (Hospital Nova) was gross square metres. The new Jokirinne Learning Centre evening and weekend users. The Jousenkaari School’s new completed near the existing Central Finland Central Hospi- was completed in Vesitorninmäki, Kirkkonummi at the end building will be built in close proximity to the existing school. tal in Kukkumäki. Most of the premises will be used for spe- of 2020. This project includes a ten-year lifecycle service The solutions used for the Jousenkaari School aim at cialist care, while the City of Jyväskylä will use some for pri- contract for the centre. Construction of the Kirkkonummi structures and materials that are healthy and easy to main- mary healthcare. Construction was launched in 2016, and wellness centre was launched to the north of the Jokiniiitty tain, as well as at the lowest possible energy consumption. the project covers an area that is more than five times the swimming pool in January 2020, and the building is sched- Solar power, geothermal systems and other solutions will be size of the Finnish Parliament House. This large-scale con- uled for completion in 2022. The wellness centre will replace used to minimise energy consumption and make the proper- struction project generated employment equating to 2,100 the healthcare centre in the downtown area, as well as nu- ty as carbon-neutral as possible. Pupils will transfer to their person-work-years. merous locations in rented premises. new school at the start of the 2022 autumn term. Bridge Hospital – the largest construction project in In summer 2020, an education and wellness campus New premises are currently being built for the Finnish- HUS’s history – progressed rapidly in 2020. The Bridge construction project was launched in Kirkkonummi’s neigh- Russian School in Maununneva, Helsinki. When complete, Hospital will be built in the Meilahti hospital area. When com- bouring municipality, Siuntio. The new premises will enable the school will be one of Finland’s largest wooden schools pleted in 2022, it will replace the functions of Töölö Hospital Finnish- and Swedish-speaking pupils to enjoy a safe and and the first school in Finland to combine all grades – from and some of the present Comprehensive Cancer Center familiar learning environment from preschool to the end of pre-schoolers all the way up to upper secondary students functions. comprehensive education in healthy and up-to-date facilities – in an open learning environment. The two-storey school Summer 2020 saw the start of the implementation in a central location in the Siuntio town centre. The campus building will be built from cross-laminated timber (CLT) and phase of the basic renovation of Jorvi Hospital’s Surgery will also include a library and youth facilities. It is a lifecycle gluelam structures. The school is scheduled for completion Department K and the premises below it. This project will project in which SRV will also be responsible for the mainte- in August 2021. modernise the premises of the anaesthesia and surgical de- nance and upkeep of the new property for 20 years. The Hovirinta School in Kaarina is being built on the site partment, heart centre and laboratory. The hospital is re- of the, already partly demolished, old school. The new school maining operational while the basic renovation takes place, New schools in Espoo, Helsinki and Kaarina building will house premises for both the Finnish-speaking which requires special arrangements on the construction A new type of education centre combining Finnish- and Swed- Hovirinta School and the Swedish-speaking S:t Karins sven- site. The renovation is scheduled for completion in 2023. ish-speaking schools and early education facilities is being ska skola for grades 1–6 and preschoolers. The two-storey built in Leppävaara, Espoo. When finished, the Monikko ed- school will have room for about 630 pupils and is scheduled New library, learning centre and wellness ucation centre will provide safe, healthy and functional facili- for completion in 2022. centre in Kirkkonummi ties for almost 1,300 children. The new school is scheduled for Fyyri, the new main library, was completed in downtown completion in May 2021. Jousenkaari School, which is current- A new-concept prison in Hämeenlinna Kirkkonummi in October 2020. The project refurbished ly under construction in the Tapiola district of Espoo, will pro- SRV completed a new prison building in Hämeenlinna in au- the old library building, which dated from 1982, and added vide adaptable multipurpose premises and an open learning tumn 2020. This closed prison for women can hold a hun-

SRV ANNUAL REVIEW 2020 / VALUE CREATION 40 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

dred inmates and was opened at the beginning of November. ued at around EUR 48 million. The station will be implement- Grey economy prevention days 2020 It is an internationally unique project and the first prison to ed as a project management contract. Work on Espoonlahti be built according to a new concept that includes “digital Metro Station began in December 2018 and will continue Q1 2020 Q2 2020 Q3 2020 Q4 2020 cells”. The Hämeenlinna Women’s Prison also has extensive as per the schedule agreed on with the client, the Western Number of 42 37 40 41 outdoor areas with nature trails and good opportunities for Metro. Construction will end and commissioning begin in participating sites (of active sites) sports, exercise and even urban farming. summer 2022. Participating sites (of 100 100 100 100 active sites), % Construction of new airport terminal in full Blominmäki wastewater treatment plant will Total workforce on 3,364 3,271 3,042 3,358 swing in Vantaa reduce loading in the Baltic Sea active sites (persons) As part of the extension and alteration of Helsinki Airport’s Blominmäki is a subterranean wastewater treatment plant (according to Network Terminal 2, a brand-new kind of service area is being built for that is currently under construction in Espoo. A total of about Register) passengers in front of the terminal. The extension covers a 18 kilometres of underground sewer intake and outtake tun- Number of workers 1,050 1,770 1,855 1,679 inspected gross area of 40,000 square metres, and the new section will nels will be built between Suomenoja and Blominmäki. As house the airport’s new main entrance, a multimodal trav- part of a joint venture, SRV will be implementing the south- Workers inspected, % 31 54 61 46 el centre, and new check-in, baggage drop-off and security ernmost sewer tunnels between Länsiväylä highway and Number of companies 533 753 764 744 check areas. The Terminal 2 extension is part of Finavia’s ap- Suomenoja (a total of 3.7 kilometres of intake and outtake inspected proximately EUR 1 billion development programme to build tunnels). The plant was commissioned by Helsinki Region an airport of the future. The investments will strengthen Hel- Environmental Services and, on its completion in 2022, will sinki Airport’s position as a major European airport and pre- treat wastewater from 400,000 residents in Espoo, Kauni- pare to serve 30 million passengers. ainen, Kirkkonummi, Siuntio and western Vantaa. SRV is building a new bus depot in the Ojanko district of It will replace the current treatment plant in Suomenoja, Collected taxes paid in Finland eastern Vantaa, to the north of Ring Road III. The project en- Espoo. The wastewater treatment basins and most of compasses the construction of an approximately four-hec- the plant’s other facilities will be built in rock caves under EUR million 2020 2019 2018 tare depot area for 200 buses, complete with refuelling and Blominmäki in Espoo. Thanks to this new wastewater treat- Payroll taxes 16,2 17,1 17,8 recharging points, as well as a maintenance hall, office, and ment plant, nutrient loading in the Baltic Sea will be reduced. Social costs 0,7 0,5 0,5 bus wash system. The depot is scheduled for completion The goal is to remove more than 96 per cent of the phospho- Net VAT1 72,1 98,6 129,2 in autumn 2021. The Ojanko depot will replace the current rus and organic matter contained in wastewater, and more Corporate income tax -0,7 -0,8 0,6 cramped depot, which is located close to residences in than 90 per cent of the nitrogen. These targets are much downtown Hakunila, and enable the efficient and more -en stricter than the recommendations issued by the EU and Transfer tax 0,6 0,2 0,6 vironmentally friendly organisation of public transport. The HELCOM (Helsinki Commission). Real estate tax 0,7 1,6 0,7 depot’s ecological bus wash saves a considerable amount of Collected taxes paid, total 89,6 117,1 149,4 water, as 75 per cent of the water used by the washing equip- Tax collection ensured by fighting the grey ment is recycled for reuse within the system. economy 1 The figures exclude shares of joint and associated companies Construction of the Espoonlahti Metro Station and bus Four Anti-Grey Economy Days were held in 2020. On these terminal is progressing as planned. The project was recog- days, construction sites inspected the documents required nised in SRV’s order backlog in November 2018 and is val- by contractors and their subcontractors under the Act on

SRV ANNUAL REVIEW 2020 / VALUE CREATION 41 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

the Contractor’s Obligations and Liability. The sites also in- SRV provides employment and creates an spected the personal IDs of all those working on site, deter- impact throughout the entire value chain mined their employers and tax numbers, and ensured they SRV employed an average of 991 (1,080) people in 2020. had received proper orientation. During the year, SRV had a total of 4,238 (4,623) contrac- The results of the Anti-Grey Economy Days showed that tors working on a total of 64 (78) construction sites. A total the challenges we face are still employees not clocking-in to of 27,697 (30,438) people were recorded as working on con- construction sites and employees without personal IDs and struction sites. 72.1 (73.3) per cent were Finns and 27.9 (26.7) orientation stickers. The clocking-in rate is being improved per cent were foreigners. The most common non-Finnish na- THE by, for example, better fencing around construction sites, the tionalities on our construction sites were Estonian, Latvian, use of turnstiles, and more effective management of SRV Russian and Polish. The total number of different nationali- Network Register access permits. ties represented was 104 (101). A good level has been attained with regard to sub- Ensuring that human rights are realised, and that labour NETWORK contractors and issues relating to the Act on Contractor’s is not exploited in the supply chain, is also crucial for socie- Obligations and Liability. No temporary prohibitions or oth- ty. SRV supports equality in the labour market, and plays its er sanctions were issued by the authorities during inspec- part in preventing labour market segregation and inequali- tions relating to occupational safety, foreigners and the Act ty. During 2020, we focused on preventing labour exploita- REGISTER on the Contractor’s Obligations and Liability on SRV’s con- tion in the supply chain in cooperation with, for example, our struction sites in 2020. year-round labour-hire partners. In 2020, we finished some additional questions for our supplier registration process, which ask suppliers to provide Tax footprint mainly consists of VAT HELPS IN information about themselves and responsibility themes. and salary-related taxes The information about suppliers in particular will be used to SRV pays its taxes and tax-like charges in accordance with further strengthen our fight against the grey economy. local legislation. A significant proportion of tax-like charges SRV adheres to official procurement procedures in the consist of salary-related taxes and VAT on goods and ser- FIGHTING management of all new suppliers and existing supplier re- vices. SRV also pays other taxes, such as income tax, trans- lationships, and the Network Register is an element of this. fer tax, and property tax. The company also has consider- The Network Register is an IT system that helps SRV to able impact as an indirect taxpayer – SRV also generates combat the grey economy, promote cooperation with the indirect revenue for the State from the income tax and social GREY authorities, increase construction site safety, and ensure a security payments paid via subcontracting and hired labour. continuous overall picture of large projects. The Network Register is continually updated to meet both the practical needs of SRV’s work and authorities’ re- ECONOMY quirements and wishes. In 2020, we further developed the SRV Network Register with regard to features such as dig- ital time cards and integrations with Power BI systems that will facilitate security status reporting.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 42 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

CLOSE COOPERATION WITH AUTHORITIES AND GOOD ORIENTATION Hospital NOVA megaproject weeds out BORE FRUIT grey economic activity Hospital projects exemplify SRV’s role The building’s total gross area of 108,345 accurately and take preventive measures. in society as a developer and builder of square metres houses 360 examination One essential aspect of these preventive urban centres. The significance of this and reception rooms, 368 patient rooms, 24 measures is for contractors to send all of social aspect of construction increases operating theatres, 10 delivery rooms and 11 the required documents before orienta- in large-scale projects. Combatting the population shelters. Up to 700 people were tion takes place. grey economy takes on an important role, working on the construction site at any one Anti-Grey Economy Days were reg- and the Hospital NOVA construction site time, which adds up to a total of 2,100 per- ularly organised on site, in connection has been thoroughly weeding it out. Close son-work years over the four years the site with which the entire construction site cooperation with the authorities, coupled was operational. 6,419 access permits were was inspected four times a year. Proac- with successful and correctly resourced issued during the construction period. tive cooperation with local authorities, orientation, have meant that no deficien- Successful and correctly resourced coupled with inter-authority cooperation cies were detected in inspections of client orientation bore fruit throughout the con- in Safety Support Groups, helped keep responsibility documentation in the first struction period. Three-person orienta- the grey economy at bay. months of 2020. tion team enabled the company to work

SRV ANNUAL REVIEW 2020 / VALUE CREATION 43 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR THE ENVIRONMENT The concrete consequences of climate change on both individuals and companies can be seen in stakeholders’ growing interest in environmental issues. SRV’s responds to these requirements with legislative compliance, environmental protection, operational development, and continuous improvement with the aid of the ISO 14001 environmental system. We also require our subcontractors and partners to follow the same principles.

In accordance with our environmental policy, the goals of our operations in constantly changing site organisations all The goals for 2021 include improving the waste utilisa- SRV’s environmental activities are developing material across Finland. Construction sites have introduced stand- tion and sorting rates. SRV Infra’s environmental perfor- efficiency and waste management on sites, reducing the ardised HSEQ kick-off meetings to ensure that certain things mance will be followed and monitored in a more systemat- energy consumption of sites, implementing projects and are properly taken care of, such as environmental issues and ic manner. RTS environmental classification will be widely buildings that place a smaller burden on the environment, resources. This has helped to improve the quality of our op- utilised and the required changes into processes will be and encouraging partners to develop more sustainable op- erations and clarify on-site responsibilities. made. Integrating the environmental perspective into oth- erating methods. er processes than production will be continued in 2021. SRV has developed a lifecycle model for its ser- Ambitious targets Furthermore, we are preparing for long-term goal setting vice concept, and has firmly integrated energy efficien- When SRV’s operations are examined a whole, waste targets and renewing the environmental reporting system. The cy and low-carbon perspectives into this model. The li- were achieved in 2020, even though certain targets were 2020 goal for analysing climate risks and opportunities will fecycle property service period offered by SRV includes not achieved on some sites. There is still some variation be moved to 2021. As previously mentioned, the environ- everything from property management to general and between sites when it comes to waste indicators, although mental goals will be updated and synchronised with the cli- technical maintenance and upkeep. As the service pro- this is expected to decrease in the future through enhanced mate ambitious new strategy. vider, SRV is also responsible for the property’s energy operational quality. However, SRV has a broad spectrum of consumption. projects and there are regional differences in waste man- An increase in environmental classifications SRV’s new strategy published in February 2021 takes agement services. It is therefore important for management and property performance measurements a strong stand on the role of business in tackling climate reviews to run through the reasons for our successes and In addition to property owners and users, the environmental change. SRV will initiate a spearhead programme bringing challenges – and for us to learn from them. Promoting these performance of properties is also of interest to the author- lifecycle-wise reality into all construction and cooperation, targets has been facilitated by our partners and the entire ities, investors, and the international community. Lifecycle all the way from plot selection to property use and mainte- chain that utilises raw materials. Assessments (LCAs) have long been used to compare the nance. Lifecycle-wise reality means always optimising the No major damage occurred in 2020. The most common effects of various alternatives on a building’s lifecycle. SRV energy consumption, environmental footprint and costs dur- deviations related to oil and fuel leaks, which were most of- has tested both the EU Level(s) method and Finland’s na- ing the whole lifecycle of the building. This spearhead pro- ten caused by subcontractors’ machinery. As a conse- tional method for calculating carbon footprints. In 2021, SRV gramme will guide our environmental themes and goals from quence, we have further emphasised the importance of will start creating a roadmap for carbon-neutral construc- 2021 onwards. proper maintenance and inspection for machinery, and have tion. SRV’s environmental policy steers both its own and also urged our subcontractors to keep absorption agents its partners’ efforts towards environmentally friendly car- Environmental work requires systematic near machinery to aid in the speedy clean-up of any dam- bon-neutral solutions. planning age. Changing climatic conditions, such as increased pre- In 2020, we continued to clarify SRV’s environmental system cipitation and milder winters, are also affecting construction. and operating guidelines with the aim of further harmonising Windstorm damage was also reported in 2020.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 44 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

15 17

Energy consumption (%) Waste utilisation rate1 (%) Characteristic waste volume per construction type2 (kg/rm3)

100 94.2 93.0 92.9 % MWh Office 92.0 92.0 Electricity 41.9 36,108 80 85.0 Logistic Gas 0.2 145 Schools and Fuel 19.2 16,558 60 accommodation 2020 DATA District heating 38.8 33,431 Hospitals and 40 laboratories

CO2 Emissions (tn) 18,424 Renovation 20 Energy use on Finnish operations (scope 1 and scope 2), evaluation based on cost information. Apartments Emissions evaluated by using average emission factors for each energy type. 0 0 5 10 15 20 2018 2019 2020 Characteristic waste volume Target Waste utilisation rate Target 2 Finnish worksites, average of projects completed during 2020. 1 Domestic worksites. Reported amounts do not include demolition. Reported amounts do not include demolition waste or soil excavation waste. 16 18 16 Construction waste1 (1,000 tonnes) Sorting degree per construction type2 (%) 18 Construction waste1 (1,000 tonnes) THE AIM IS TO 25,000 Sorting degree per construction type2 (%) 25,000 Office

20,000 8.8 7.1 Logistics 20,000 8.8 Office 7.1 CONTINUOUSLY Schools and 6.3 15,000 accommodation Logistics 6.3 15,000 Hospitals and laboratoriesSchools and 10,000 accommodation IMPROVE 16.2 16.3 12.8 10,000 HospitalsRenovation and laboratories16.2 16.3 12.8 5,000 Apartments 5,000 Renovation THE SORTING 0 0 10 20 30 40 50 60 70 80 2018 2019 2020 Apartments 0 Sorting2018 degree 2019 Target2020 Assorted at the site Mixed waste 0 10 20 30 40 50 60 70 80 2 Finnish worksites,Assorted average at the ofsite projects completed Mixed during waste 2020. DEGREE AT SITES 1 Domestic worksites. Reported amounts do not include demolition. Reported Sorting amounts degree do not include demolition Target waste or soil excavation waste. 1 Domestic worksites. Reported amounts do not include demolition. 2 Finnish worksites, average of projects completed during 2020. Reported amounts do not include demolition waste or soil excavation waste. 3 Masonry facades increase the target level by 2 kg/rm3 and cast in-situ by 1.5 kg/rm3

SRV ANNUAL REVIEW 2020 / VALUE CREATION 45 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

WOOD CITY tial apartment blocks that are already in use and a wooden hotel that will be built IS THE next to them. As a whole, the area can be considered a spearhead project for wood construction in Finland. LARGEST “Wood construction has been in- creasing in recent years, and has also been generating a great deal of interna- tional interest. I would argue that this is WOODEN the SRV project that has attracted the most international interest. We’ve had visitors from as far away as Chile and OFFICE Japan,” says SRV’s Business Develop- ment Director Antti Aaltonen, who is also the project manager for the Wood City BUILDING project. Finland’s largest wooden office In addition to Wood City, Stora Enso has building was built in the best interests supplied solid wood products to more than IN FINLAND of both the client and the environment 20,000 projects around the world over a period of 10 years. The new headquarters of the Finnish game material that can easily be combined with “We seek to share information and company Supercell is a unique building other construction materials. When building expertise, and to encourage those em- in Wood City in the Jätkäsaari district of with wood, you can erect a building up to 70 barking on construction projects with our Helsinki. This building is the largest wooden per cent faster and reduce truck deliveries construction concepts and experiences in office building in Finland in terms of the to the construction site by up to 80 per cent. wood construction. In addition to our com- amount of wood used. Wooden construc- So even construction itself can be more prehensive product range, we develop ser- tion is becoming increasingly popular in environmentally friendly. It has been calcu- vices to support the design and implemen- Finland. One reason for this is, naturally, its lated that the wood used in Supercell’s office tation of wooden buildings. We also invest environmental friendliness. For example, building binds carbon dioxide equivalent in digital solutions that serve the entire carbon dioxide emissions from the frame to about 600 passenger cars per year. The construction value chain and support the of Supercell’s new headquarters are 30 per office is about to receive a Platinum LEED use of our wood products, all the way from cent lower than those of a concrete control certificate, which is the highest level of LEED design in the early project phase to on-site frame when calculated using the lifecycle environmental certification. implementation and installation,” says assessment (LCA) method for a useful life of In addition to the Supercell office, Antto Kauhanen, Business Development 60 years. Wood is a strong yet lightweight Wood City also encompasses two residen- Manager at Stora Enso.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 46 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

VALUE FOR INVESTORS It is investors and financiers who are putting companies under the greatest pressure to operate responsibly. At corporate level, investors’ and financiers’ interest is being reflected in the need for a new kind of ESG information.

Responsibility has long been one of the criteria for public pro- SRV’s new strategy published in February 2021 takes curements, and plot conveyance policies increasingly often a strong stand on the role of business in tackling climate include requirements relating to carbon footprints or the cir- change. SRV will initiate a spearhead programme bringing ENERGY AND cular economy. Carbon neutrality targets mean that wood lifecycle-wise reality into all construction and cooperation. construction is on the rise. For investors this clarifies SRV’s stand when it comes to fu- ture demands for sustainability and low-carbon future. LIFECYCLE Sustainability indicators required It is important to create concrete indicators for how business Staying in touch during exceptional should adapt to future sustainability issues. SRV’s objective circumstances SERVICES is to meet investors’ ESG requirements even more compre- During the year, SRV representatives met with numerous hensively, and to communicate the sustainability of our oper- investors and analysts, mainly at quarterly events that were ations to stakeholders more effectively (such as the percent- held remotely due to the coronavirus pandemic. During the MEET age of sites in our project portfolio that are environmentally first half of the year, the company implemented its recovery classified or otherwise meet sustainability criteria). We are programme, which included a directed share issue and rights also analysing the impacts of climate change on SRV’s busi- issue. Investors, analysts and media representatives who fol- CUSTOMERS’ ness and investigating opportunities for green funding. low SRV were invited to attend our quarterly interim report We will continue to calculate our carbon footprint in our briefings, which were held as webcasts. Physical meetings own housing projects, and are introducing RTS environmen- were kept to a minimum due to the coronavirus pandemic. AND tal classification and its requirements into the design and SRV did not organise any Capital Markets Days in construction of housing. SRV’s Energy and lifecycle services 2020. No changes to the company’s strategy or finan- effectively meet customers’ and investors’ needs, and their cial objectives were published during the year either. The success brings not only SRV’s business but also society in sustainability-­related inquiries we received from investors INVESTORS’ general closer to carbon-neutral targets. concerned issues such as the concrete implementation of Acquiring the data required for new indicators and tak- project responsibility at construction site level, carbon diox- ing ESG reporting to the next level will require major devel- ide emission volumes, and CDP (Carbon Disclosure Project) NEEDS opments in environmental reporting. reporting.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 47 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

RENTAL APARTMENTS IN KALASATAMA TOWERS’ LUMO ONE

Kalasatama Towers’ Lumo One – upscale downtown rental apartments by the sea As an urban developer, SRV builds apart- The Kalasatama Towers are currently the need for high-quality rental housing in ments in urban growth centres close to only option for anyone who wants to live excellent locations. Thanks to its good good transport connections, and we have in a real skyscraper in Finland. offering, SRV is prepared to respond to been one of the largest housing construc- The Kalasatama Towers complex this challenge. tors in the Helsinki Metropolitan Area for also includes Lumo One – a 31-storey “Long-term cooperation between some time. The Kalasatama Towers – an skyscraper that soars 120 metres above SRV and Kojamo will meet housing eight-tower complex being built in the sea level and boasts 291 new Kojamo demand in growth centres. Lumo One Kalasatama district of Helsinki – is the Lumo rental homes. Lumo One is a good is one of the Kalasatama Towers being largest construction project in our history. example of the ongoing revolution in developed by SRV. It provides upscale We aren’t just constructing buildings in urban housing. Residents are conscious- housing in a prime location in the Kalasa- Kalasatama: we’re creating functional ly opting to live in rental housing, espe- tama district of Helsinki next to excellent living environments built around a good cially in growth centres. They prefer not transport connections and a full range of location, beautiful views, diverse traffic to commit their money into home owner- services,” says Ville Raitio, Chief Invest- connections and easy access to services. ship – and this means there is a growing ment Officer, Kojamo.

SRV ANNUAL REVIEW 2020 / VALUE CREATION 48 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE WE INCORPORATE LIFECYCLE WISDOM WITH ALL CONSTRUCTION AND COOPERATION

SRV ANNUAL REVIEW 2020/ GOVERNANCE 49 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

GOVERNANCE

Contents

Corporate Governance Statement...... 51

Board of Directors...... 59

Corporate Executive Team...... 60

Information for investors...... 61

More information...... 62

SRV ANNUAL REVIEW 2020/ GOVERNANCE 50 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

CORPORATE GOVERNANCE STATEMENT 2020

Introduction Association, the standing orders of SRV’s Board of Directors termined by the Board of Directors. The AGM makes de- SRV Group Plc (hereinafter SRV or the Company) adheres and its committees, and the rules and guidelines of Nasdaq cisions on matters such as the election and remuneration to the Finnish Corporate Governance Code for listed com- Helsinki Oy. of Board members, the Chair of the Board and the auditor; panies that was published by the Securities Market Associ- the adoption of the financial statements and consolidated ation on 1 January 2020. The Corporate Governance Code Descriptions concerning Corporate financial statements; the release of Board members and the is publicly available on the Securities Market Association’s Governance President & CEO from liability; and the disposal of profits as website: www.cgfinland.fi. Administrative structure shown in the balance sheet. The General Meeting also deals SRV’s Corporate Governance Statement for the finan- The administration, management and supervision of SRV with other matters specified in the Companies Act as be- cial year 2020 has been prepared in accordance with the are divided between the General Meeting of Shareholders, ing the business of General Meetings, as well as any of the reporting period stipulated in the Corporate Governance the Board of Directors, and the President & CEO. An internal Board’s other proposals to the General Meeting. As per the Code. The Corporate Governance Statement is published auditing unit reporting to the Board of Directors is responsi- Companies Act, the General Meeting will also deal with mat- separately from the Report of the Board of Directors and ble for internal auditing, and external auditing is carried out ters added to the agenda by shareholders. An Extraordinary is available on the Company’s website at www.srv.fi/en/in- by auditors. The President & CEO attends to line operations General Meeting shall be held when the Board of Directors vestors/cg. The Corporate Governance Statement is also with the assistance of the Corporate Executive Team. deems it necessary or when required by law. included in the Company’s 2020 Annual Review as a sep- Each SRV share confers its holder the right to one arate section. General Meeting vote at a General Meeting. The Company’s 2020 Annual In its corporate governance and decision-making, the SRV’s highest decision-making body is the Company’s Gen- General Meeting (AGM) was held on 26 March 2020. Due Company complies with the Finnish Companies Act, reg- eral Meeting of shareholders. The Annual General Meeting to Covid-19 pandemic, the participation of members ulations concerning listed companies, SRV’s Articles of (AGM) is held once a year by the end of June on a date de- of the Board of Directors and the Corporate Executive Team was limited to a minimum. A total of 18 sharehold- ers attended the meeting, representing about 67.98 per GENERAL MEETING cent of the Company’s shares and votes. The minutes of the AGM are available on www.srv.fi/en/investors/cg/ Elects Submits an Auditor’s Report Elects Proposes annual-general-meeting/annual-general-meeting-2020.

Auditor BOARD OF DIRECTORS Shareholders’ Shareholders’ Nomination Board Nomination Board Reports Audit Committee The 2020 Annual General Meeting resolved to establish a Reports Shareholders’ Nomination Board consisting of shareholders HR and Nomination Committee or representatives of shareholders whose task is to prepare Elects, steers, controls Reports annual proposals concerning the composition and remu- neration of the Board of Directors for the next Annual Gen- Internal audit CEO eral Meeting. The Nomination Board consists of four mem- Leads Reports bers. The Company’s three largest shareholders (as per 31 August of each calendar year) are each entitled to appoint CORPORATE EXECUTIVE TEAM one member. The Chair of the Board of Directors will be the fourth member of the Board.

SRV ANNUAL REVIEW 2020/ GOVERNANCE 51 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

The members of the Shareholders’ Nomination Board The Annual General Meeting of 2020 elected the following six members to the Board of Directors: will elect a Chair at their first meeting. The Group’s General Counsel will act as the Secretary of the Shareholders’ Member SRV shares at Member of the Board since Born Education Main occupation 31 Dec 20201 Nomination Board. The Shareholders’ Nomination Board has standing orders that comply with the Company’s Tomi Yli-Kyyny 2019 1962 MSc. (Tech.) Caruna Networks Oy, 66,000 Chair President & CEO Articles of Association. These rules describe the Board’s tasks, meeting practices and member election process Olli-Pekka Kallasvuo 2011 1953 LL.D.h.c. Investor 266,664 Vice Chair in more detail. The standing orders for the Shareholders’ Nomination Board are publicly available on www.srv.fi/en/ Minna Alitalo 2012 1962 MSc. (Econ.) Nightingale Health Oy, CFO - investors/cg/nomination-board. Hannu Leinonen 2020 1962 MSc. (Tech.) - The Shareholders’ Nomination Board is quorate Heikki Leppänen 2020 1957 Lic.Sc. (Tech.) Corporate management coach - when all of its members are present. The Shareholders’ and business development Nomination Board must make unanimous decisions. consultant The members of the Shareholders’ Nomination Board Timo Kokkila 2010 1979 MSc. (Tech.) Pontos Group Oy, CEO 15,741,398 in 2020-2021 were: Ilpo Kokkila (Chair of the Board of share ownership in a company under his Directors, Pontos Oy), Mikko Mursula (Chief Investment control (Havu Capital Oy) Officer, Ilmarinen Mutual Pension Insurance Company), Timo Ritakallio (President and Group Executive Chairman, 1 Including any shares and share-based rights owned by entities under the control of Board members. OP Financial Group) and Tomi Yli-Kyyny (Chair of the Board of Directors, SRV Group Plc). Ilpo Kokkila chaired Ilpo Kokkila (Chair until the 2020 AGM) and Juhani Hintikka were also members of the Board in 2020. Their membership the Shareholders’ Nomination Board. ended at the 2020 AGM and the information below was valid as of 26 March 2020: The Shareholders’ Nomination Board convened three times in 2020–2021. Members of the Shareholders’ Membership Name period Born Education Main occupation Nomination Board attended meetings as follows: Ilpo Kokkila 1987–2020 1947 MSc. (Tech.) Pontos Oy, Chair of the Board Attendance former Chair Name Attendance (%) at meetings Juhani Hintikka 2017–2020 1966 MSc. (Tech.) LEE Capital, Chair of the Board Ilpo Kokkila (Chair) 100 3/3 Mikko Mursula 100 3/3 Timo Ritakallio 100 3/3 Articles of Association, the Board of Directors may have 5–8 ed to the Board. Hannu Leinonen and Heikki Leppänen Tomi Yli-Kyyny 100 3/3 members. The term of office for Board members begins at were elected as new members. The AGM elected Tomi Yli- the General Meeting at which they are elected and ends at Kyyny as Chair of the Board of Directors, and the Board the close of the next Annual General Meeting. The Board of elected Olli-Pekka Kallasvuo as Vice Chair from among its Board of Directors Directors shall elect a vice chair from among its members. members. Board members’ personal details, main occu- Composition of the Board The Annual General Meeting of 2020 elected six mem- pation and SRV shareholdings are presented in the table The Annual General Meeting elects the Chair of the Board bers to the Board of Directors. Minna Alitalo, Olli-Pekka above. and the other members of the Board. According to SRV’s Kallasvuo, Timo Kokkila and Tomi Yli-Kyyny were re-elect-

SRV ANNUAL REVIEW 2020/ GOVERNANCE 52 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

Independence of Board members • reviewing and approving the Report of the Board of Di- Attendance at meetings The Board of Directors conducts an annual assessment of rectors, the consolidated Financial Statements, interim The Board of Directors convened 35 times in 2020. Members the independence of its members. Each Board member sub- reports and any associated stock exchange releases; had an average attendance rate of 98 per cent at Board meet- mits sufficient information for this purpose and also self-eval- • general supervision of the Company’s business, includ- ings. The attendance record of Board members is as follows: uates their independence. The Board of Directors then evalu- ing approving and overseeing the principles for risk ates the independence of its members and announces which management and internal control; Attendance/no. of of its members have been deemed to be independent of the • deciding on highly significant business matters in Member of the Board meetings Attendance, % Company and of its major shareholders. The Board evaluat- accordance with the decision-making author-isa- Tomi Yli-Kyyny (Chair) 35/35 100% ed its independence in accordance with the recommenda- tions approved by the Board (such as acquisitions Olli-Pekka Kallasvuo 35/35 100% tion contained in the Corporate Governance Code. or significant contracts; investments, divestments, (Vice Chair) The Board of Directors has evaluated that, of its mem- loans or other financial obligations; the use of financial Minna Alitalo 35/35 100% bers, Minna Alitalo, Hannu Leinonen, Heikki Leppänen, Olli- instruments and the provision of collateral when this Pekka Kallasvuo and Tomi Yli-Kyyny are independent of both does not fall within the scope of the financial manage- Hannu Leinonen* 15/17 88% the Company and its major shareholders. Timo Kokkila is not ment team); Heikki Leppänen* 17/17 100% independent of the company based on overall evaluation, • specifying and approving management authorisations; Timo Kokkila 34/35 97% especially considering his consecutive membership of the • appointing the President & CEO and other members Ilpo Kokkila** 18/18 100% Board of Directors for more than 10 years. He is not inde- of the Corporate Executive Team, and approving the Juhani Hintikka** 17/18 94 % pendent of the company’s significant shareholder AS Pontos terms and conditions of their service contracts and Baltic, as he is the CEO of AS Pontos Baltic. remuneration schemes; * Member of the Board as of 26 March 2020 • approving remuneration schemes for other personnel; ** Member of the Board until 26 March 2020 Activities of the Board of Directors and The Board’s task is to lead and supervise the Company’s • deciding on proposals for General Meetings. Diversity of the Board of Directors operations in accordance with the Companies Act, SRV’s The Board of Directors has drafted diversity principles for Articles of Association, and any other applicable legislation The standing orders of the Board of Directors are availa- the Board. The Shareholders’ Nomination Board2 prepares and regulations. ble in their entirety on www.srv.fi/en/investors/cg/board-of a proposal to the General Meeting on the number of Board The Board of Directors has prepared written standing -directors/. members to be elected, the candidates, and their remuner- orders for its activities, specifying the key tasks and operat- ation. When preparing its proposal to the General Meeting, ing principles of the Board and its Chair. It is the Chair’s task The Board of Directors meets regularly according to a pre- the Shareholders’ Nomination Board pays attention to the to manage Board work in such a manner that the Board’s du- set schedule, and also when necessary. The CEO and Gen- diversity principles for the Board. ties are carried out as efficiently and appropriately as possi- eral Counsel, who serves as the secretary of the Board, ble. The Board of Directors decides on matters of principle attend Board meetings. Other members of the Corporate Diversity issues and objectives and far-reaching significance to the Group, including: Executive Team may attend Board meetings at the invita- Diversity among the Board of Directors seeks to promote the tion of the Board. The Board of Directors conducts an annu- Company’s business and its development, strengthen Board • approving and overseeing the Group’s strategy; al assessment of its activities and working procedures, and work and decision-making, and increase open discussion. Di- • approving and overseeing the annual budget and develops its activities based on the results. This assessment versity assessments take into account the eligibility of Board action plan; is usually carried out as a selfassessment. members with respect to the requirements of the Company’s current position. Sufficient diversity will be assessed on the basis of factors such as Board members’ experience, edu-

SRV ANNUAL REVIEW 2020/ GOVERNANCE 53 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

cation and knowledge of the Company’s various businesses, Audit Committee and an HR and Nomination Committee. members of the Audit Committee were Minna Alitalo (Chair), and the Board’s age and gender distribution. The committees operate in accordance with the standing Timo Kokkila and Tomi Yli-Kyyny. After the Annual General Diversity targets require Board members to have a range orders approved by the Board of Directors, and report to the Meeting of 26 March 2020, the members were Minna Alitalo of different areas of expertise that support the achievement Board. The committees do not have independent power of (Chair), Hannu Leinonen and Timo Kokkila. of the Company’s current strategic objectives. In addition to decision. Their task is to enhance the effectiveness of the The Audit Committee convened nine times in 2020 with expertise in the field of industry, these areas of expertise in- Board of Directors by preparing matters for decision by the an attendance rate of 96 per cent. The attendance rate at clude finance and funding, digitality, business management, Board and the General Meeting. Committee meetings is shown below: strategy development and management, and international business operations. Board members must have sufficient ed- Audit Committee Attendance/no. of ucation that supports the company’s operations and achieve- The Audit Committee assists the Board of Directors in its Committee member meetings Attendance, % ment of objectives. In future, the Company will seek to ensure role in the preparation of financial reporting and supervision Minna Alitalo (Chair) 9/9 100% a more gender-balanced Board, not only through the compe- tasks as well as audit-related matters. The Audit Committee Timo Kokkila 9/9 100% tences required from Board members, but also in the prepa- monitors the company's financial reporting and prepares Hannu Leinonen* 4/5 80% ration of the Board candidate proposal. matters concerning the Group's financial situation and fi- nancial reporting, evaluating and risk management for the Tomi Yli-Kyyny** 4/4 100% Implementation and results Board. In order to discharge its tasks, the Audit Committee * Member of the Audit Committee as of 26 March 2020 Diversity targets have been well met. All members of the follows trends in SRV’s financial position, asks questions of ** Member of the Audit Committee until 26 March 2020 Board of Directors have a university degree and experience the auditors, reviews drafts of the financial statements and in business management, strategic management and stra- interim reports, and monitors and assesses the effective- HR and Nomination Committee tegic development. All Board members are serving or have ness of internal control, internal auditing, risk management The HR & Nomination Committee prepares the Board’s pro- served in corporate managerial or Board positions in differ- systems, and related-party principles and processes. In posal to the General Meeting on remuneration policy; mat- ent fields of business. The Board has professional expertise addition, the Audit Committee prepares a proposal on the ters related to the appointment and remuneration of the in construction, property investment and international busi- choice of auditor for presentation to the General Meeting, President & CEO, the Deputy CEO and other management; ness. The Board members are of different ages. Both gen- and also monitors and evaluates both the independence and matters related to remuneration and incentive schemes ders are represented on the Board, with five men and one of the auditor and the non-audit services provided by the for personnel. The Committee assesses the activities of sen- woman. No progress has yet been made in balancing gender auditor. The standing orders of the Audit Committee are ior management, oversees successor planning, plans com- representation on the Board. available on www.srv.fi/en/investors/cg/board-of-directors/ petence development for management and personnel, and committees/. monitors personnel satisfaction and working capacity.3The Board Committees The Audit Committee is comprised of three members standing orders of the HR and Nomination Committee are General whom the Board of Directors elects from amongst its num- available on at www.srv.fi/en/investors/cg/board-of-direc- The Board of Directors has established two committees: an ber. Until the Annual General Meeting of 26 March 2020, the tors/committees/.

2 The 2020 Annual General Meeting decided to establish the Shareholders’ Nomination Board. The Board of Directors’ HR & Nomination Committee prepared the proposal to the 2020 Annual General Meeting on the number of Board members to be elected, the candidates, and their remuneration. 3 Until the 2020 Annual General Meeting, it was also the HR and Nomination Committee’s task to prepare a proposal concerning the election and remuneration of members of the Board of Directors for presentation to the Annual General Meeting. The 2020 Annual General Meeting resolved to establish a Shareholders’ Nomination Board to prepare proposals concerning the composition and remuneration of the Board of Directors to the Annual General Meeting.

SRV ANNUAL REVIEW 2020/ GOVERNANCE 54 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

The HR and Nomination Committee comprises three The 2020 Corporate Executive Team4: members whom the Board of Directors elects from amongst its number. Until the Annual General Meeting of 26 March SRV shares Name Born Education Area of responsibility 31 Dec 2020 2020, the HR and Nomination Committee consisted of Ilpo Kokkila (Chair), Juhani Hintikka and Olli-Pekka Kallasvuo. Saku Sipola 1968 MSc. (Tech.) CEO 4,000 After the Annual General Meeting of 26 March 2020, it con- Timo Nieminen 1958 MSc. (Tech.) Deputy CEO and Executive Vice President, 776,310 sisted of Tomi Yli-Kyyny (Chair), Olli-Pekka Kallasvuo and Strategic Project Development Heikki Leppänen. Juha Toimela 1963 MSc. (Tech.), MBA Executive Vice President, Business Premis- 41,316 The HR and Nomination Committee convened six times es, Helsinki Metropolitan Area during 2020 with an attendance rate of 100 per cent. The Kim Jolkkonen 1971 Lic.Sc. (Tech.) Senior Vice President, Housing, Helsinki - attendance rate at Committee meetings is shown below: Metropolitan Area Maija Karhusaari 1972 MSc. (Econ.) Vice President, Communications and 700 Marketing Attendance/no. of Committee member meetings Attendance, % Kimmo Kurki 1960 BSc. (CE) Senior Vice President, Internal Services 32,238 and Infrastructure Tomi Yli-Kyyny (Chair)* 5/5 100% Olli-Pekka Kallasvuo 6/6 100% Johanna Metsä-Tokila 1977 LL.M. trained on the bench Senior Vice President, General Counsel. 50,016 Heikki Leppänen* 5/5 100% Antti Nummi 1971 M.Soc.Sc. Senior Vice President, Business Devel- - opment Ilpo Kokkila** 1/1 100% Ilkka Pitkänen 1966 MSc. (Econ.) CFO 40,000 Juhani Hintikka** 1/1 100% Jarkko Rantala 1986 MSc. (Econ.) Senior Vice President, Investments 8,000 * Member of the HR and Nomination Committee as of 26 March 2020 Henri Sulankivi 1967 MSc. (Tech.) Senior Vice President, Regional Units 3,000 ** Member of the HR and Nomination Committee until 26 March 2020 Jussi Tuisku 1967 BA(Hons), eMBA Senior Vice President, Russia and Estonia 5,000

4 The table above shows the composition of the Group’s Corporate Executive Team and its members’ areas of responsibility at 31 December 2020. Changes occurred in both the Team’s composition and areas of responsibility on 3 December 2020, when Henri Sulankivi was appointed to the CEO Team with responsibility for Regional Units. At the same time, Juha Toimela’s area of responsibility changed to Business Premises, Helsinki The CEO’s task is to manage and develop SRV’s business Metropolitan Area (formerly Business Premises, Regional Units and Infrastructure) and Kimmo Kurki took responsibility for Internal Services and and handle the routine management of the company. The Infrastructure (formerly Internal Services). The Group’s Corporate Executive Team saw further changes on 1 January 2021, when Jarkko Rantala CEO is responsible for preparing matters to be dealt with was appointed CFO in addition to his previous area of responsibility. Miia Eloranta was appointed Senior Vice President, Communications and Marketing as of 4 January 2021, Kristiina Sotka Senior Vice President, Human Resources as of 1 February 2021 and Jouni Forsman Senior Vice and decided by the Board of Directors, implementing the President, Business Premises, Helsinki Metropolitan Area as of 16 February 2021 (Juha Toimela until 1.3.2021). Board’s decisions, and ensuring that any goals set by the Board are attained. The CEO ensures that the Compa- Shareholdings include the shares owned by the Corporate Executive Team member and any shares owned by a com- ny's bookkeeping complies with applicable legislation, and pany under their control. Corporate Executive Team members do not own shares in any other company that is part of that funds are managed in a reliable manner. The CEO also the same group as SRV. serves as the Chair of the Corporate Executive Team. The Board of Directors appoints the CEO and Deputy CEO, and relieves them of their duties.

SRV ANNUAL REVIEW 2020/ GOVERNANCE 55 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

Saku Sipola (b. 1968) has been serving as President & comprehensive approach for identifying and assessing SRV's business operations are guided by consistent CEO of SRV Group Plc since 1 September 2019. The holdings risks, and also for reporting on operations and implement- Group-wide business principles, decision-making authori- of the President & CEO are disclosed below, along with the ing any required risk management measures. The annual sations and the Company’s values. Internal control is found- holdings of Corporate Executive Team members. Group-level risk management process comprises the iden- ed on a healthy corporate and management culture, and on SRV’s Deputy CEO is Timo Nieminen (b. 1958), MSc. tification of material risks related to the Company’s opera- specified reporting and its fundamental principles. In par- (Tech.). tions, assessment of the status of risks, and the planning of ticular, internal control is based on financial reports, man- measures to eliminate risks or mitigate their impacts. Risks agement reports, risk reports and internal audit reports. Corporate Executive Team identified during this process are rated in terms of their se- The Company's main operations are controlled by means The Corporate Executive Team assists the President & CEO in verity. Continuous risk management is planned and imple- of written internal instructions, operating policies and pro- operational planning, line management, and decsion-making. It mented on a function- and site-specific basis for SRV’s cedures. also prepares matters to be dealt with by the Company's Board various functions, development projects, construction pro- of Directors. The Corporate Executive Team handles matters jects and investments. Any key risk management meas- Financial control concerning business operations and operational control and ures that must be complied with during construction pro- The internal control system is the responsibility of SRV's development. The duties of the Group’s Corporate Execu- jects are included in the process diagrams and other aids Board of Directors and Audit Committee, the Corporate Ex- tive Team are based on the Company’s management system, contained in SRV’s operating system. The Company also ecutive Team, the executive teams of SRV’s business areas, and the Group’s Corporate Executive Team has no authority uses certified ISO-standard systems for quality assurance, and financial administration. Management’s monthly finan- grounded in law or the Company’s Articles of Association. environmental management, occupational healthcare and cial reporting is a key control process in ensuring the accu- The Corporate Executive Team consists of the President & safety. racy of the Group's financial reporting. It includes analyses CEO as the Chair plus other members appointed by the Board Overall responsibility for risk management lies with the of deviations between actual results, budgets and continu- of Directors. Each member of the Corporate Executive Team company's Board of Directors and the CEO. The Board en- ously updated forecasts. An external auditor audits finan- has his or her own area of responsibility. The Vice President, sures that risk management is taken into account at both cial reporting on a regular basis and reports directly to the Development Affairs acts as the secretary of the Corporate strategic and operational level. The Audit Committee re- Audit Committee. Executive Team. views a quarterly report on operational risks and reports The internal control system applied to business op- on them to the Board of Directors. Line management is in erations is the responsibility of the executive teams of Descriptions of internal control procedures charge of implementing, leading and supervising day-to-day SRV’s business areas and the Group’s controller func- and the main features of risk management risk management for both business in general and individual tion, in accordance with SRV's Group policies and instruc- projects. The Group's risk management function supports tions. Monthly financial reporting is a key control process Risk management system the application of risk management policies and develops in ensuring the effectiveness and efficiency of operations. SRV engages in systematic risk management, both to pro- Group-wide ways of working. It also includes analyses of deviations between actual re- tect itself against factors that might hinder its business op- sults, budgets, and continuously updated forecasts for erations and to recognise new opportunities. The Company General description of internal control overall financial performance and individual construction improves the profitability and stability of its operations by SRV continuously monitors its functions to ensure the reli- projects. identifying and reacting to strategic and operational risks in ability of its result. Internal control seeks to ensure that the Financial management and operational control are sup- time. Risk management is part of SRV's management sys- Company's operations are efficient and productive, report- ported and coordinated by the Group's financial adminis- tem. It supports the Company's values, vision, strategy and ing is reliable, and laws and regulations are complied with. tration and the SRV’s controller function. SRV has drafted the attainment of its earnings objectives. However, the internal control system cannot provide full cer- Group-level reporting models for standardising the finan- To this end, SRV ensures that it has a systematic and tainty that risks will not be realised. cial reporting of its business functions. Their reports seek

SRV ANNUAL REVIEW 2020/ GOVERNANCE 56 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

to ensure that control covers all the major aspects of SRV’s efficiency of risk management. This function carries out inde- and form part of ordinary business must be implemented and business operations. This ensures that any deviations from pendent audits of business functions, Group companies, pro- approved in accordance with the company’s internal guide- financial objectives are identified, communicated and re- cesses and especially of selected targets to ensure the func- lines. If a transaction does not meet market conditions or form acted to efficiently, in a harmonised and timely manner. An tionality of internal control. The internal audit seeks to ensure part of ordinary business, the transaction must either be sub- important part of the forecasting process for construction compliance with internal policies, guidelines and regulations. mitted to SRV’s Board of Directors for approval or not be exe- projects is the project-specific identification, assessment It operates under the supervision of the Audit Committee cuted. Decision-making must comply with the disqualification and reporting of risks and opportunities, along with action and reports on its observations to the Audit Committee, which provisions laid down in the Limited Liability Companies Act. plans to address any issues. These activities are coordinat- in turn reports to the Board of Directors. An annual plan for Related-party transactions and their assessment ed by the controller organisation. internal audits is drawn up for the Audit Committee to verify criteria are reported to the Board of Directors’ Audit Financial control measures also include management’s and approve. The focus areas of the internal audit are identi- Committee. The Audit Committee monitors and assess- continual business control procedures. Financial reports de- fied risks in business operations. es compliance with principles and procedures for relat- fine key control indicators that aim to measure and support The 2020 internal audit was performed by an external ed-party transactions within the Group. SRV regularly re- business efficiency and consistency, and to monitor pro- service provider chosen by SRV, namely Ernst & Young Oy. ports related-party transactions as part of its financial gress towards the attainment of SRV’s objectives. SRV’s own controller organisation assisted Ernst & Young Oy reporting and publishes related-party transactions as re- in commissions relating to the auditing of construction pro- quired by the regulations. Reliability of financial reporting jects. Internal audits were carried out in 2020 in accordance The monitoring of financial reporting reliability is based on with the annual plan for internal audits. Insider administration the principles and guidelines SRV has defined for the finan- The company complies with the insider guidelines approved cial reporting process. The interpretation and application Related-party transactions by the Board of Directors. This insider policy describes es- of financial statement standards, including compliance with SRV’s Board of Directors has defined principles for monitoring sential rules, instructions and procedures concerning mar- these standards, are centralised in the Group's financial ad- and assessing related-party transactions within the Group, ket abuse and, in particular, the prohibition on market ma- ministration, which is supervised by the Company’s Audit and these have been included in SRV’s related-party guide- nipulation and using of insider information. Committee. Budgeting and reporting processes are based lines. The guidelines define SRV’s related parties and stipulate According to the Market Abuse Regulation (MAR), on SRV's internal instructions. The Group's financial admin- principles and processes for identifying and making decisions the company’s management includes the members of istration is responsible for drafting and maintaining these on related-party transactions. SRV maintains a register of re- SRV’s Board of Directors, the President & CEO and as of instructions centrally. These principles are applied consist- lated parties and has identified ordinary business situations February 2021 the CFO. Management and their close circle ently throughout the Group. in which related-party transactions may occur. must report all business transactions involving the compa- Related-party transactions must always be carefully and ny’s securities to both SRV and the Financial Supervisory Other information transparently prepared to ensure that market conditions are Authority. The company will issue a stock exchange release met and the transaction is in the best interests of the com- on all such transactions. Internal audit pany. The assessment of whether a transaction meets mar- SRV’s management may not trade in the company’s The internal audit is part of SRV’s internal control framework. ket conditions and falls within the scope of ordinary busi- securities (either in person or through a third party) dur- It is an independent, objective and consulting function that is ness will take into account generally accepted contractual ing a 30-day “closed window” before the publication of designed to create added value and improve the functions and market practices and the commercial terms and con- each of the company’s financial statement bulletins or in- of the Company. The internal audit is intended to support ditions of any comparable agreements with the Company’s terim reports, and not on the date of publication of the the Board of Directors and management in the monitoring of customers and other partners. company’s interim reports or financial statement bulle- good administration, internal management control, and the Related-party transactions that meet market conditions tins. This prohibition remains in force whether or not the

SRV ANNUAL REVIEW 2020/ GOVERNANCE 57 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

person in question is in possession of any insider infor- pervising insider issues, arranging training, giving advice, mation at the time. and sending notifications to management, insiders and The company maintains and updates a register of those other relevant organisations. SRV’s insider administration who regularly receive unpublished financial information via function cooperates with the company’s communications, their position or authorisations (“those who participate in which handles the publication of management’s business the preparation of financial reviews”). The closed window activities. and non-disclosure obligations also apply to these individ- uals, and they are also forbidden from providing information Audit or advice to others for the purpose of trading in the com- The auditor is elected at the Annual General Meeting to a pany’s securities. term of office that ends at the close of the next Annual Gen- SRV draws up a list of individuals who have access to eral Meeting following the auditor's election. The Company’s insider information and who have signed an employment auditor must be a firm of Authorised Public Accountants ap- contract with the company, or who otherwise perform du- proved by the Finnish Patent and Registration Office, and ties which grant them access to insider information. SRV the chief auditor must be an Authorised Public Accountant. does not maintain a permanent insider register. Instead, all The Annual General Meeting of 26 March 2020 elect- individuals participating in insider projects are included in ed PricewaterhouseCoopers Oy, Authorised Public project-specific insider lists. Anyone whose name appears Accountants, as the Company’s auditor with Samuli Perälä, on one of these lists may not trade in the company’s secu- Authorised Public Accountant, as the chief auditor. rities until they have been notified that any trading restric- The auditor was paid auditing fees of EUR 434,000 in tions have been lifted. 2020. The auditor was paid an additional EUR 271,000 for SRV recommends that trading be restricted to situations other services (including all the companies belonging to the in which the market is in possession of the most comprehen- same group or chain). sive information about factors affecting the company’s secu- rities, that is, after the publication of an interim report or fi- nancial statement bulletin. SRV recommends that those who are in a management position or prepare financial reviews should make long-term investments rather than trading in securities belonging to or related to the company. Insider policy forbids the aforementioned individuals from engaging in short-term trading and speculative activities with securi- ties belonging to or related to the company. SRV’s insider administration organisation consists of the General Counsel, the person responsible for insiders, and the insider register custodian. Insider administration is responsible for the daily management and supervision of compliance with the MAR and SRV’s insider policy, which includes tasks such as maintaining insider registers, su-

SRV ANNUAL REVIEW 2020/ GOVERNANCE 58 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

BOARD OF DIRECTORS

Tomi Yli-Kyyny Olli-Pekka Kallasvuo Minna Alitalo b. 1962, MSc. (Tech.) b. 1953, LL.M. (trained on b. 1962, MSc. (Econ.) CEO, Caruna Networks Oy the bench) CFO, Nightingale Health Oy Chair of the Board (2020–) Investor Member of the Board (2012–) Chair of the HR and Member of the Board and Chair of the Audit Committee Nomination Committee Vice Chair (2011–) (2013–) (2020–) Member of the HR and Member of the Audit Member of the Board Nomination Committee Committee (2012–) (2019–2020) (2017–) Member of the Audit Chair of the Audit Committee (2019–2020) Committee (2012–2013). Member of the Audit Committee (2011–2017)

Timo Kokkila Hannu Leinonen Heikki Leppänen b. 1979, MSc. (Tech.) b. 1962, MSc. (Tech.) b. 1957, Lic.Sc. (Tech.) CEO, Pontos Group Member of the Board Corporate management Member of the Board (2010–) (2020–) coach and business Member of the Audit Member of the Audit development consultant Committee (2010–) Committee (2020–) Member of the Board (2020–) Member of the HR and Nomination Committee (2020–)

More information on Board members is available at: www.srv.fi < Investors < Corporate governance < Board of Directors

SRV ANNUAL REVIEW 2020/ GOVERNANCE 59 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

CORPORATE EXECUTIVE TEAM 1 JANUARY 2021

Saku Sipola Timo Nieminen Miia Eloranta Jouni Forsman b. 1968, b. 1958, b. 1973, b. 1969, MSc. (Tech.) MSc. (Tech.) M.Soc.Sc. MSc. (Tech.) President and CEO Executive Senior Vice Senior Vice President, Employed by SRV Vice President, President, Business Premises, since 2019. Deputy CEO Communications Helsinki metropolitan Senior Vice and Marketing area President, Strategic Employed by SRV Employed by SRV Project Development since 4 January since 16 February Employed by SRV 2021. 2021. since 1987.

Kim Jolkkonen Kimmo Kurki Johanna Antti Nummi b. 1971, b. 1960, Metsä-Tokila b. 1971, Lic.Sc. (Tech.) Civil Engineer b. 1977, MSc. (Soc.) Senior Vice President, Senior Vice President, LL.M. Senior Vice Housing, Helsinki Internal Services Senior Vice President, President, metropolitan area and Infrastructure General Counsel Business Employed by SRV Employed by SRV Employed by SRV Development since 2019. since 1998. since 2016. Employed by SRV since 2019.

Jarkko Rantala Kristiina Sotka Henri Sulankivi Jussi Tuisku b. 1986, s. 1968, b. 1967, b. 1967, MSc. (Econ.) MSc. (Econ.), MSc. (Tech.) BA (Hons), eMBA CFO MSc. (Politics) Senior Vice Senior Vice Employed by SRV Senior Vice President, President, President, since 2012. Human Resources Regional Units Operations in Russia Employed by SRV Employed by SRV and Estonia since 1 February 2021. since 2014. Employed by SRV since 2019.

Juha Toimela, Executive Vice President, Senior Vice President, Business premises Helsinki metropolitan area, More information on Corporate Executive Team members is available at: Member of the Corporate Executive Team and employed by SRV until 1 March 2021. www.srv.fi < SRV as a company < Corporate executive team Maija Karhusaari, Senior Vice President, Communications and Marketing. Member of the Corporate Executive Team and employed by SRV until 4 January 2021. Ilkka Pitkänen, CFO, Member of the Corporate Executive Team until 31 December 2020. Employed by SRV until 31 January 2021.

SRV ANNUAL REVIEW 2020/ GOVERNANCE 60 YEAR 2020 STRATEGY VALUE CREATION GOVERNANCE

INFORMATION FOR INVESTORS

IMPORTANT DATES FOR 2021 The key tasks of investor relations: ance sheet, strengthening cash flow and achieving cost-savings. General Meeting SRV’s investor relations seek to support SRV’s share value and pro- The programme was successfully completed during the first half The Annual General Meeting of SRV Group Plc is scheduled for vide essential and up-to-date information equally to all parties in the of the year. Monday 29 March 2021, starting at 4 pm. market. Our investor relations team is responsible for planning and In February 2020, as part of this recovery programme, the com- implementing investor communications, contacting owners and an- pany agreed on the replacement of its EUR 100 million revolving SRV Group Plc will publish the following financial releases in 2021: alysts, and arranging meetings with investors. credit facility with the banks that had granted it. The facility was The Financial Statement Release 2020 will be published on Thursday 4 Our most important tasks include writing interim reports, fi- replaced with two separate revolving credit facilities, one of EUR February 2021 at 8:30 am. nancial statement bulletins, stock exchange releases and investor 60 million and one of EUR 40 million. The EUR 40 million revolving The 2020 Annual Review (including the Financial Statements and Report of presentations. In addition to reporting, the investor relations team credit facility is used only to finance construction projects. At the the Board of Directors) will be published on Friday 5 March 2021. organises teleconferences for analysts and investors, roadshows, end of June, the company made an agreement with the banks that The Interim Report for January–March 2021 will be published on Thursday 29 participatory investor seminars and events, meetings with inves- granted the credit facility whereby the undrawn portion of the EUR April 2021 at 8:30 am. tors and analysts, and Capital Markets Days. 60 million credit facility would be terminated. The remaining amount The Half-year Report for January–June 2021 will be published on Wednesday of the facility was EUR 51 million. EUR 36 million of the EUR 40 mil- 21 July 2021 at 8:30 am. Meetings and events in 2020: lion credit facility remained undrawn at the end of June. At the end The Interim Report for January–September 2021 will be published on Thurs- day 28 October 2021 at 8:30 am. During the year, SRV representatives met with numerous investors of June, the company terminated the undrawn portion, amounting and analysts, mainly at remotely held quarterly events. During the to EUR 9 million, of its EUR 60 million credit facility. The remain- first half of the year, the company implemented its recovery pro- ing credit facility will be repaid in the amount of EUR 11 million in SRV’S SHARE gramme, which included a directed share issue and rights issue. In- December 2021 and EUR 40 million in January 2022. SRV Plc’s share is quoted on Nasdaq Helsinki. The company vestors, analysts and media representatives who follow SRV were At the end of May, SRV carried out written procedures to extend has one class of shares. The shares are in the book-entry se- invited to attend our quarterly interim report briefings, which were the one-year tenor of its EUR 100 million (of which EUR 62.1 million curities system maintained by Euroclear Finland Oy. held as virtual events. Physical meetings were kept to a minimum was outstanding at the end of the year) senior unsecured callable • Listing: Nasdaq Helsinki due to the coronavirus pandemic. fixed-rate notes due 23 March 2021 and the one-and-a-half-year • Listed since: 12 June 2007 Investors outside Finland accounted for about 18 per cent of all tenor of its EUR 75 million senior unsecured callable fixed-rate notes • No. of shares: 263,017,341 investments. due 27 March 2022, as well as to amend certain terms and condi- • Trading currency: EUR SRV did not organise any Capital Markets Days in 2020. No chang- tions of these notes. The extensions to the tenor of these notes and • Listing: Small Cap Helsinki es to the company’s strategy or financial objectives were published the amended terms and conditions improved SRV’s balance sheet • Ticker symbol: SRV1V • ISIN code: FI0009015309 during the year either. position and liquidity. SRV arranged two share issues during the spring and sum- Recovery programme measures in 2020: mer: a directed share issue for hybrid holders and a rights issue SRV worked through an extensive recovery programme in 2020. The for both new and existing shareholders. In the directed issue, about Analysts that follow SRV: short-term target was to ensure that operative operating profit and EUR 75 million of the EUR 92 million principal of the hybrid bonds, Olli Koponen, Inderes cash flow in 2020 were in the black and to return operative operating including interest, was converted into shares. The rights issue Jerker Salokivi, Evli profit for 2021 to its 2017 level. The recovery programme focused on was oversubscribed and generated about EUR 50 million in new Markku Moilanen, OP renewing the organisation and operating culture, lightening the bal- capital.

SRV ANNUAL REVIEW 2020/ GOVERNANCE 61 MORE INFORMATION

Contact details

CFO Jarkko Rantala Tel. +358 (0)40 674 1949 [email protected]

SVP, Communications and Marketing Miia Eloranta Tel. +358 (0)50 441 4221 [email protected]

Sustainability Director Anne-Maria Flanagan Tel. +358 (0)40 662 5570 [email protected]

Communications Manager Johanna Ylitalo Tel. +358 (0)40 510 8604 [email protected] [email protected]

Address: Derby Business Park, Tarvonsalmenkatu 15, 02600 Espoo, Finland Tel: +358 (0)20 145 5200 Internet: www.srv.fi