SRV as an Investment
The focus of SRV’s business is in Finland’s developing urban centres located next to good transport links, particularly rail transport. In the long term, the company will pursue profitable growth by implementing business premises projects suitable for the needs of different companies and organisations, apartment block projects for everyday living, earth and rock construction, comprehensive area development projects, and special projects such as projects hospitals and public works. In addition, SRV implements and operates profitable shopping centres in Moscow and St. Petersburg in Russia and also in Finland.
SRV introduced to Finland a project management model (the SRV Approach) that has become one of the most adopted approaches to implementing construction projects in the country. SRV has remained faithful to this customer-oriented business model, which enables it to create for each project the most appropriate organisation to implement projects efficiently, professionally and, above all, according to the customer’s needs. This business model means that SRV has significantly fewer employees than its competitors and that the company’s cost structure is more resilient to the ups and downs of the economy.
At the same time, SRV has positioned itself in the Finnish construction sector among the highest quality constructors and, as one of the Helsinki Metropolitan Area’s largest house builders, SRV is purposefully seeking to improve its profitability. As a result of determined development work in recent years, SRV has become increasingly more than a construction company, but also a real estate investor and developer. Currently, there are several projects under construction in which SRV is participating in the role of owner, which ties up capital. Most capital is tied up in our large shopping centres in Finland and Russia as well as in building land. Additional capital is also tied up in the high number of developer-contracted housing units under construction. In order to provide investors with a better picture of how the different types of business operations generate profit and where capital is committed, SRV renewed its segment reporting from the beginning of 2019 so that construction and real estate investment activities would be reported separately instead according to the present geographic segmentation. The new segments are Construction and Investments.
The construction market may fluctuate strongly in changing economic conditions. At such times, SRV’s structural and financial flexibility allows it to adjust to the situation in question. SRV’s ability to take controlled risks has made it a desired partner in many development projects that call for developer-contracted accountability. SRV has such projects in Finland’s growth centres, particularly in the Helsinki Metropolitan Area, and in Russia.
The focus of SRV business is clearly in Finland – Operations in Finland accounted for 99% of revenue in 2018. SRV is seeking long-term profitable growth in business and housing construction in Finland’s developing urban centres. Megatrends such as urbanisation, migration to growth centres, population ageing and increasing prosperity act as drivers for SRV’s projects in Finland. Long-standing, goal-directed work in city centres and with land areas and properties located next to good transport links is generating large-scale area development projects.
SRV has been established in Russia for a long time. Focusing on clearly-defined shopping centre operations in a large market gives SRV a diverse earnings opportunity as a project developer, commercialiser, investor and builder. Russia’s economic situation has been turbulent, and forecasting Russia’s economic development is now really difficult. Those matters in SRV’s own hands have progressed well: SRV has part ownership in St. Petersburg of the Pearl Plaza shopping centre, which is generating a good cash flow, and the opening of a second St. Petersburg shopping centre, Okhta Mall, took place in September 2016. The third shopping centre, 4Daily in Moscow, opened in April 2017.
SRV’s clear strategy, flexible changes in operational priorities and controlled business risk as well as its innovativeness, good customer service and high-quality construction also enable the company to best fulfill investors’ expectations for value formation. SRV’s strong order backlog, purposeful focus on higher added value own-development projects as well as its customer-oriented, scalable business model ensure that, as a company, SRV is also heading in the right direction, against the mainstream.