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SRV announces its new strategy and financial objectives for 2021-2024: Building a lifecycle-wise reality

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SRV GROUP PLC     STOCK EXCHANGE RELEASE     4 FEBRUARY 2021     8.20 EET

SRV announces its new strategy and financial objectives for 2021-2024: Building a lifecycle-wise reality

SRV Group Plc has released its new strategy and long-term financial objectives for 2021–2024 today. 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.

“Our new strategy responds to the major challenges in our operating environment – accelerating climate change and further urban growth and high-density development,” says Saku Sipola, President and CEO of SRV.

“Our objective is to create a new lifecycle-wise reality, where decisions related to construction ensure well-being, value and profitability – for years and generations to come.”

“SRV’s strategy is based on developing the built environment so that the entire lifecycle is taken into account. We call this lifecycle wisdom. It means that we always optimise the environmental footprint and costs of buildings in the long-term. Energy consumption and carbon footprint are optimised especially through the choice of energy production methods and materials and through energy-efficient solutions.”

SRV has implemented and is starting up numerous lifecycle 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 incorporates lifecycle wisdom with all construction and cooperation 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 will improve profitability and reduce indebtedness with three strategic programmes:

  • achieving a leading market position in the business premises market
  • streamlining operations throughout the construction chain and
  • developing the profitability of housing construction.

In its Investments business, the company continues to focus on lightening the balance sheet. The company is developing the line operations of its shopping centres in Russia with the aim of divesting them at an appropriate time on the basis of their development phase and the market situation. The focus of the Investments business will be re-evaluated once the Russian shopping centres have been divested. During the strategy period, SRV can act as a co-investor in selected projects in Finland. 
 

Long-term financial objectives

SRV’s strategy and all of its operations are guided by the 2021–2024 strategic financial objectives that were approved in February 2021:

  • 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.
  • 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 account the capital needs of business operations.

The updated definition of operative operating profit is used in these financial objectives.

The achievement of the set strategic objectives is based on operational efficiency and stable cash flow. In addition, the company must bolster its position in the private-sector business premises market and step up its developer-contracted housing production alongside projects for investors. The company seeks to divest itself of shopping centres that are in the management phase at an appropriate time on the basis of the development phase of the centres and the market situation.

Reaching the profitability targets requires not only boosting the efficiency of the company’s own operations, but also the more prudent selection of new projects with regard to risk level, profitability and capital commitment. The company anticipates that it will achieve its strategic earnings level by the end of 2024.

The company’s strategy will be discussed in the financial statements release briefing (in Finnish) that is held on 4 February at 10.00 EET as webcast. The webcast can be followed live at www.srv.fi/sijoittajat.

For further information, please contact:
Saku Sipola, President & CEO, tel. +358 (0)40 551 5953, saku.sipola@srv.fi
Jarkko Rantala, CFO, tel. +358 (0)40 674 1949, jarkko.rantala@srv.fi
Miia Eloranta, Senior Vice President, Communications and Marketing, tel. +358 (0)50 441 4221, miia.eloranta@srv.fi  
 

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SRV in brief
SRV is a developer and innovator in the construction industry. We want to offer the best customer experience as a constructor of urban city centres, while also being the most attractive employer in the industry. Our genuine cooperation and enthusiasm for our work comes across in every encounter. Sustainability is reflected in all our activities.

Our company was established in 1987 and was listed on the Helsinki Stock Exchange in 2007. We operate in growth centres in Finland and Russia. In 2019, our revenue amounted to EUR 1,061 million and we employed more than 1,000 people. Our projects also employ a network of almost 4,000 subcontractors.

SRV – Building for life 

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