Capital Markets Day: Domestic profitability improved through determined effort, Russian projects progressing as planned

Today, 22 May 2014, SRV is arranging a Capital Markets Day for analysts and institutional investors in St. Petersburg. The event features management presentations on SRV’s group strategy, domestic operations, the situation and outlook in Russia, and shopping centre operations in Russia. The programme also includes visits to the Pearl Plaza shopping centre, which opened last August, and the site of the Okhta Mall shopping centre, which will be completed in 2016.

Determined effort led to improved domestic profitability

SRV’s domestic business strategy is based on underlying assumptions: residential construction in Finland is focused on growth centres close to good transport links; construction of business premises is focused on public construction; and ageing business premises are creating a market for renovation construction.

A flexible operating model is SRV’s strength and SRV has focused on improving profitability in a difficult market situation. The profitability of domestic operations nearly doubled to EUR 6.6 million in the first quarter. This improved performance is based on measures to improve the profitability of contracting and on the launch of SRV’s own projects in line with its strategy. SRV has a clear and critical view on what business to pursue and what to avoid. Particular attention has been paid to business structure. SRV has purposefully focused on higher value added projects in which SRV has been able to increase its own-development share. Fixed-price contracting has been the subject of critical review, and site management and procurement have been decisively developed. As a result of these steps, the order backlog has also strengthened both from March last year and since the turn of the year.

SRV’s spearhead projects in the Helsinki Metropolitan Area are, in business premises, the Airport Station Building, Stockmann Logistics Centre, Jorvi Hospital Emergency Service Extension, HUSLab, Koivusaari Metro Station, VTT Nuclear Safety Building, Kalasatama public construction project, Opinmäki Campus and Tapiola Central Parking Facility as well as housing projects at Lehtikallio in Vantaa and at Nihtisilta, Suurpelto and Revontuli in Espoo.

Pearl Plaza shopping centre successful, Okhta Mall progressing according to plan

In line with its strategy, SRV is focusing in Russia on the development and real-estate management of shopping centre projects in St. Petersburg and Moscow. Despite the news overshadowing the Russian economy, visitor numbers at the Pearl Plaza shopping centre, which opened in August, have grown strongly. Both retailers and consumers consider the centre to be a great success.

Construction, which also began in August last year, at the site of the Okhta Mall shopping centre has proceeded according to plan and the centre is expected to open in 2016. Okhta Mall tenant acquisition has proceeded well and bank financing for the project will be finalised during summer 2014. The weaker rouble has in the short term had a positive impact, as SRV’s construction costs are calculated in roubles and business premises rents in euros.

SRV is utilising its shopping centre expertise throughout the value chain and is also operating in Russia as a real-estate manager. SRV established a shopping centre REAM function in 2013 in order to maintain contact with whole value chain. The sites currently under management are the Pearl Plaza shopping centre and the existing Okhta City office complex and storage facilities. The management of the Eightedges office complex will begin in autumn 2014. Tenant acquisition also supports the project development of future shopping centres. The planning is under way for the Promenade shopping centre, which will be situated to north of Moscow.

By continuing the implementation of its strategy in Russia, SRV can strengthen its competitive position.

The Capital Markets Day presentation material will be published at the address www.srv.fi/en/investors.

SRV Group Plc

Taneli Hassinen
Vice President, Communications
Tel. +358 40 504 3321
taneli.hassinen@srv.fi

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