Consti Oyj : Annual report 2021

CONSTI PLC ANNUAL REPORT

EXPERT IN MULTIPLE TYPES OF CONSTRUCTION

Cover photo: Pasi Salminen

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Contents

Consti in brief	4
CEO's review	7
Business strategy	8
Board of Directors' Report	14
Financial statements	27
	Consolidated statement of comprehensive income	28
	Consolidated balance sheet	29
	Consolidated statement of changes in equity	30
	Consolidated statement of cash flows	31
	Notes to the consolidated financial statements	32
	Parent company	59
	Income statement of the parent company (FAS)	60
	Balance sheet of the parent company (FAS)	61
	Cash flow statement of the parent company (FAS)	63
	Notes to the financial statements of the parent company (FAS)	64
	Board of Directors' dividend proposal	72
	Signatures to the Financial Statements and Board of Directors' Report	73
Auditor's report	74
Auditor's ESEF assurance report	76
Corporate governance	78
	Board of Directors	83
	Management Team	84
Key figures and information for shareholders	87
	Key figures and calculation of key figures	88
	Items affecting comparability	90
	Information for investors and shareholders	92
	Consti's net impact profile	94

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Salminen Pasi Photo:

CONSTI PLC CONSTI IN BRIEF

CONSTI IN BRIEF

NET SALES

(EUR million)

CONSTI PLC CONSTI IN BRIEF

ADJUSTED OPERATING RESULT

(EUR million)

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Consti is one of Finland's leading companies focused on renovation contracting and technical building services.

Consti offers comprehensive renovation and building technology services and selected new construction services to housing companies, corporations, investors and the public sector. Our services also include service contracts and maintenance. Our operations concentrate to Finland's growth areas.

Consti has four business areas:

• Housing Companies
• Corporations
• Public Sector
• Building Technology

The group's parent company is Consti Plc. At the end of 2021, the business areas operated in subsidiaries completely owned by the parent company: Consti Korjausrakentaminen Oy, Consti Talotekniikka Oy and RA-Urakointi Oy. Business areas are reported in one segment. In addition, Consti reports net sales for each business area.

NET SALES BY CUSTOMER GROUP

LOCATIONS AND NET SALES

BY GEOGRAPHICAL AREA

13%

Oulu, Lahti, Jyväskylä, Hämeenlinna, Turku and other areas

in Finland

17%

Tampere &

Pirkanmaa

70%

Helsinki &

Uusimaa

	316	315
300
				289
			275
2017	2018	2019	2020	2021

KEY FIGURES (EUR million)	2017	2018	2019	2020	2021
Net sales	300.2	315.8	314.8	274.6	288.8
EBITDA	1.7	-0.5	8.1	11.4	9.2
EBITDA margin, %	0.6%	-0.1%	2.6%	4.2%	3.2%
Adjusted operating result	-0.4	-2.1	5.4	9.5	9.5
Adjusted operating result
margin, %	-0.1%	-0.7%	1.7%	3.5%	3.3%
Operating result	-0.4	-2.1	4.6	8.2	5.7
Operating result margin, %	-0.1%	-0.7%	1.5%	3.0%	2.0%
Profit/loss for the year	-1.1	-2.3	2.7	5.7	3.7
Earnings per share,
undiluted (EUR)	-0.14	-0.30	0.30	0.70	0.47
Dividend / share (EUR)	-	-	0.16	0.40	0.45*
Order backlog	225.7	225.1	185.8	177.9	218.6
Order intake	278.1	228.5	214.8	214.3	275.1
Free cash flow	8.9	-7.1	4.0	18.3	5.5
Cash conversion, %	521.4%	-	48.9%	160.3%	59.3%
Net interest bearing debt	12.1	19.6	18.9	4.7	14.3
Equity ratio, %	28.6%	25.4%	29.8%	32.7%	29.8%
Gearing, %	47.7%	83.6%	64.4%	14.1%	44.7%
Return on investment, ROI %	-0.7%	-4.5%	8.9%	13.6%	9.2%
Number of persionnel at period end	1,079	1,046	990	927	961

10				9.5	9.5
8
		5.4
6
4
2
0
-0.4	-2.1
-2
2017	2018	2019	2020	2021

FREE CASH FLOW (EUR million)*

22
20
			18.3
18
16
14
12
8.9
10
8
6
		4.0		5.5
4
2
0
-2
-4
-6
-8			-7.1
		2017	2018	2019	2020	2021

• Net cash flow from operating activities before financial and tax items less investments in intangible and tangible assets

2021	21%										34%	20%			26%
18%												33%			18%							31%
2020
17%								21%										33%					29%
2019
24%			17%								36%	23%
2018
32%						15%					17%									35%
2017
Housing companies	Corporations			Real estate investors	Public sector

* Board of Directors proposal to the Annual General Meeting
Net sales		Earnings per share
288.8		0.47 €
€ Million

Personnel

961

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CONSTI PLC CEO'S REVIEW

Photo: Pasi Salminen

CEO'S REVIEW OF THE YEAR 2021

SOLID PERFORMANCE

CONTINUED

For Consti, the year 2021 was marked by our new strategy. Simultaneously, our net sales grew approximately five percent from the previous year and amounted to 289 million euro. Our operating result before items affecting comparability remained on level with the previous year.

The market environment for construction and technical building services remained adequate despite the rapid rise in material costs.

Net sales grew in our Housing Companies, Corporations, and Building Technology business are- as. Our only business area with lower net sales than last year was Public Sector, which typically has extensive and long-lasting projects. The coronavirus pandemic did not have a significant impact on demand or our business.

Our strategy, announced in February 2021, focuses on utilising attractive growth opportunities in the company's existing businesses, expanding into new construction, sustainability, and expanding the value we create for customers.

During the summer we received two orders for new construction in accordance with our strategy, and we strengthened our position in the housing company market with an acquisition.

In line with our sustainability themes, we have developed services that enable us to better support our cus- tomers' environmental goals. We will also continue work to ensure that we are able to monitor the energy and water consumption of our work sites, and the recycling of waste more closely than before. We are building new partnership models and we are involved in several collaborative projects to develop services and operating methods together with other actors in the field.

Our operating result before items affecting comparability remained on level with last year and was 9.5 million euro, or 3.3 percent of net sales. The reported operating result was 5.7 million euro and 2.0 percent of net sales, while the corresponding figures for the previous year were 8.2 million euro and 3.0 percent.

Thanks to our strong order intake, our order backlog at the end of the year was about 219 million euro, which is approximately 23 percent higher than one year ago.

I see demand for renovation and building services remaining at an adequate level also in 2022. The most significant uncertainties in our operating environment are related to increases in construction costs and the availability of materials.

Our good order intake for the financial year, our strengthened order backlog, and our increase in net sales indicate that our customers have received our strategy well. This provides a great basis for the positive development of our business in 2022 as well.

A warm thanks for the past year to our customers, our staff, and all of our partners and owners.

Esa Korkeela

CEO

Salminen Pasi Photo:

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CONSTI PLC BUSINESS STRATEGY

AN EXPERT IN MULTIPLE

TYPES OF CONSTRUCTION

Consti offers comprehensive renovation and building technology services, as well as selected new construction services to housing companies, corporations, investors, and the public sector in Finland's growth centres. Consti's vision is to be "our customer's number one

CONSTI PLC BUSINESS STRATEGY

Group Strategy

Strategic goals 2021-2023

Implementing strategy in 2021

partner and expert in multiple types of construction".

the structure

Growth in current businesses

Controlled and profitable growth in attractive renovation and building technology segments

•	Expansion to Jyväskylä, growth outside the Helsinki
	metropolitan region
•	Acquisition of RA-Urakointi, expansion into the row house
	market and microbial repairs, strengthened facade repairs and

Consti's market position is strong especially in the Helsinki metropolitan area, Pirkanmaa, Turku and Oulu. In 2021, the Helsinki metropolitan area accounted for 70 percent of the Group's net sales, which is five percentage points less than in the previous year. Operations were expanded during the year to Jyväskylä. An acquisition strengthened Consti's position in the housing company market as well as in maintenance and special contracting.

Consti's strategy for the period 2021-2023 is based on utilising the full potential of Consti's customer-oriented organisational structure. The goal is to grow profitably. The strategy emphasises the utilisation of attractive growth opportunities in the company's current business operations and expanding the value created for customers.

maintenance services, especially in building technolo- gy. In 2021, Service business provided by all Business Areas accounted for 13 percent of the Group's net sales, compared to 16 percent the previous year. Value chain thinking also includes the diversity of project forms.

Consti's goal is to have the industry's most efficient production and a steady level of performance in project deliveries. In 2021, among other things, procurement was developed, and an operating model was defined for the partner network, which aims to develop operating methods together. The use of takt time production was expanded, especially in apartment renovations.

Consti's goal is to be the most desirable employer in its field. In 2021, in particular, harmonised practices were strengthened in line with the Consti Way

Utilising the full potential of customer-oriented organisational

New businesses

Comprehensive response to customer needs by growing in attractive new construction projects

Improving relative profitability

Expanding the value created for customers and actively managing the business portfolio

maintenance, and bathroom renovations of housing companies

• Strengthening the capabilities in new construction business

• Two new office buildings in Helsinki's Ilmalanrinne,

commissioned by KOy Ilmalanrinne 1 with Sweco

as the contractee

• Järvenpää co-educational school

• Strengthening project development and BIM expertise

• Strengthening the service business of building technology

As renovations often involve new construction, expanding Consti's offering to new construction will increase the company's competitiveness in projects that require both renovation and new construction capacity. In building technology installations, Consti has been involved in new construction for a long time. In 2021, the first new construction projects in accordance with the current strategy were started: two new office buildings in Helsinki's Ilmala, and a school building in Järvenpää. In addition to office space and public buildings, new construction projects can include, for example, industrial and warehouse space.

Expansion in the construction value chain also means participating in project planning at the beginning of the value chain and strengthening service and

model and cooperation between educational institutions was developed. HR operations also continued to emphasise the demands on health safety caused by the corona pandemic.

As a starting point for the next few years, Consti sees the demand for renovations continuing to grow stead- ily, while the importance of sustainable development is increasing.

Consti's Corporate Social Responsibility themes are Environmental friendliness, Supply chain, Occupational safety and well-being at work, and Customer satisfac- tion. Corporate Social Responsibility themes are discussed in the Board of Directors' Report on page 20.

Production efficiency

The most efficient production in the industry, and better profitability, as well as a steady level of performance in project deliveries

People and management

Development of management, development of staff competence, development, and well-being at work, strengthening of diversity and introduction of the Consti Way model into daily work

• Development of procurement
• Launch of the Subcontractor Partnership Programme
• A new digital tool for project quality management
• Lean and takt time production in widespread use
•	New online tool e.g., for work site orientation
•	Definition and support material for HR processes and
	standard training in the use of systems as part of Consti
	Way's harmonized practices
• Detailed corona operating instructions for work sites to
	ensure health safety
• Diversity in new recruitments

Renovation needs are increased by:

• Urbanisation
• Population ageing
• Ageing building stock
• Growing need for flexible and versatile space solutions
• Energy efficiency and sustainability requirements
• Digital solutions and technologies bring opportunities and also set new requirements to construction.

Corporate social responsibility and sustainable development

Environmental friendliness, occupational safety and well-being at work, supply chain and customer satisfaction.

• Development of sustainability tools and indicators, e.g.,

site waste monitoring, carbon footprint, occupational

safety, and customer satisfaction monitoring.

• Sustainability measures are described in more detail

in the Board of Directors' Report on page 20 and in a

separate Sustainability Report, which will be published

during the second quarter of 2022.

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