2
OVERVIEW ON STEINER
Business overview
Strong positioning of Steiner in Switzerland
Fully Integrated real estate developer and TC/GC company
Overall No. 2 Player in Swiss RE development and construction
No. 1 in the institutional client segment
No. 1 in MCHF 100 plus segment
Local presence in all major cities in Switzerland
Steiner AG ("Steiner" together with its subsidiaries the "Steiner Group") is a real estate
developer (RED) and total and general construction service contractor (TC/GC)
headquartered in Zurich, Switzerland
With a total of 800 employees, Steiner generates annual revenues of approx. MCHF
1000 and has operations in Switzerland, France, Germany and India
Steiner Switzerland currently has a development backlog of CHF2.5bn
Brands & services
Real estate development
Planning services
TC/GC new construction
TC/GC renovation
TC/GC renovation (brand currently
withdrawn from market)
3
DEVELOPMENT OF STEINER GROUP
Steiner can look back on a long and successful corporate history of close to 100 years
Steiner corporate development
Hindustan
Construction
Company Ltd
(HCC) acquires a
majority interest in
Steiner Group
Founding of a
carpentry workshop
by Carl Steiner-
Schuhmacher
Karl Steiner
becomes
owner of the
carpentry
workshop
Company moves
to Hagenholz-
strasse in Zurich,
commencement of
activities as
general contractor
Renovation and
refurbishment
businesses are
now marketed
with the
Unirenova brand
Incorporation of
Karl Steiner AG
Introduction of
Total Service
Contractor
business model
Peter Steiner
becomes new
owner
New name,
Steiner AG and
new headquarter,
Business Center
Andreaspark
Incorporation of
Evostate for the
financing of real
estate
development
projects
Introduction
of Holding
structure New corporate
identity for
Steiner Group;
introduction of
one-brand
strategy
1915 1944 1948 1973 1980 1988 2001 2010 2011 2005 2006 2013 2014
HCC acquires
remaining shares
from Peter
Steiner and now
holds 100% of
the Steiner AG
share capital
4
HCC AND STEINER, A STRONG LONG-TERM PARTNERSHIP
Steiner and HCC combine complementary strengths in two different home markets
Steiner Group HCC Group
Strategic position in India
Infrastructure construction competencies
Public clients
High-growth emerging market
HCC
Engineering
&
Construction
HCC
Infra-
structure
HCC
Real Estate
Lavasa
Corporation
Development
and execution
of infrastructure
projects in
sectors such as
hydro power
plants,
transportation
infrastructure
(bridges,
highways etc.),
water supply,
nuclear power
plant
Development
and operation
(concessions)
of infrastructure
in
transportation,
electrical power
supply, urban
infrastructure
Development
and execution
of high-end real
estate projects
(residential and
commercial/
offices))
Development
and
construction of
Lavasa City
(c. 93 km2,
300'000
inhabitants)
Development of real estate projects
TC/GC-services in new building and renovation
construction
Real estate sale as well as project management and
engineering
Steiner India incorporated as 100% subsidiary to
benefit from HCC's market access in India and to
operate as contractor for Lavasa
Strategic position in Switzerland
Building construction competencies
Private clients (institutional, corporates etc.)
Mature and stable market
Key service segments
5
ESTABLISHED PRESENCE IN SWISS ANCHOR MARKETS
Group Functions 49
Monitoring 8
Legal Services 16
Quality, Safety & Environment
7
TC/GC 301
RED 31
Technical Department
55
Central Procurement
13
480
East 60%
Centre 15%
West 25%
East 85%
Centre 7%
West 8%
Local RED and TC/GC execution teams in three regions, supported by centralized corporate and project
expert functions based in Zurich
West
Centre East
Head office
Regional office
Geneva
Tolochenaz
Berne
Lucerne
Basel
Zurich St Gallen
80
TC/GC Real estate development
Regional offices in all major towns across Switzerland
400
Project Execution and support (FTE)
Local presence
with project
managers and
project support
staff across
Switzerland
Regional revenue split (FY 2013/2014)
Key central
support functions
based in Zurich
Back-office functions (FTE)
6
STRONG REPUTATION WITH EXCELLENT TRACK RECORD IN
LANDMARK PROJECTS IN SWITZERLAND Steiner is the partner of choice for large institutional real estate investors in Switzerland
Cli
en
t b
reak
do
wn
S
ele
cte
d r
ea
lize
d p
roje
cts
Institutional
clients
Public
sector
Corporate
& private
clients
Sihlcity, Zurich (2007)
Client: Credit Suisse
Project: Shopping, Cinema, Hotel &Spa
Contract: Development and TC/GC
Size: CHF 500m
Prime Tower, Zurich (2011)
Highest tower in Switzerland
Client: Swiss Prime Site
Project: Office complex and restaurant
Contract: Total contracting
Size: CHF 250m
Löwenbräu, Zurich (2012)
Client: PSP Swiss Property
Project: Office and residential
Contract: Total contracting
Size: CHF 155m
Serono, Geneva (2006)
Client: Merck-Serono
Project: Research centre / head office
Contract: Total contracting
Size: CHF 235m
Park Hyatt, Zurich (2004)
Client: Zürich Escherwiese Hotel GmbH
Project: Hotel
Contract: Total contracting
Size: CHF 90m
Montjoie, Lausanne (2010)
Client: Migros Pension Fund / Private clients
Project: 143 apartments and 95 condominiums
Contract: Development and TC/GC
Size: CHF 120m
Average revenue split
(last 2 years)
27%
8%
65%
7
SITUATION AT THE TIME OF ACQUISITION…DISTRESS PRE
TURNAROUND PHASE
Past (pre 2010)
Long-standing reputation and heritage
Known for quality products
Top Brand name with strong customer loyalty
Family Office culture, one man decides, low to no ownership of results, no transparency
Limited data focus…decisions based on feel good basis
Hybrid systems with very complex interfaces, manual data processing, no single version of truth
POC accounting didn’t reflect project performance
Narrow segment focus, not well diversified across value chain…at the mercy of market and large clients
Cash consuming business model, capital intensive with longer development cycle
Purely project-driven organization with small degree of centralized functions and processes
Project management was entirely driven by individuals
No contract management experts, didn’t adapt to change in market behaviour
No independent project monitoring, controlling focus on project accounting only
No technical department to back project cost calculations and optimization
Risks and risky projects identification post POC 90%...too late to mitigate
Warranty claims handled by project execution teams
Double digit losses
8
BUILDING CONSTRUCTION VALUE CHAIN
[to come] Foundation Construction planning Execution Utilisation
Acq
uis
itio
n o
f la
nd
De
fin
itio
n o
f re
qu
ire
me
nts
Pla
nn
ing
crite
ria
Co
nce
ptu
al d
esig
n
De
sig
n / q
ualit
y r
eq
uire
me
nts
Ma
teria
l / d
ime
nsio
nin
g
Te
chn
ica
l sp
ecific
ation
s
Ord
er
pro
ce
ssin
g
Co
nstr
uction
Lea
se / s
ale
to
users
Ad
min
istr
ation
Op
era
tion
/ m
ain
ten
ance
Re
no
va
tion
/ c
han
ge
of u
se
Building owner /
Investor
Property developer
Total contractor
General contractor
Subcontractor
Involvement Steiner core competencies
Comprehensive service package along the whole construction value chain
Co
mm
erc
ializ
ation
9
As developer and TC/GC-contractor, Steiner is uniquely positioned along the entire real estate life cycle
from development to realization and renovation
TC/GC = Total Contracting / General Contracting
The total / general contractor generally commits to provide the entirety of work required for the construction of a building, while a substantial part of the work is delegated to subcontractors. As opposed to the general
contractor which is exclusively in the construction building phase, the total contractor is also involved in the construction planning process
Project and market know how
Funding / capital requirements
Optimized utilization of resources
Project profitability
Land is usually secured and not bought until project is sold
Sale of RED projects to investor(s) before start of project execution
Use of 3rd party and in-house TC/GC as financing source for RED
results in capital commitment of only 3-5% of project volume
Mutual benefits from integrated business model Capital light business model
Identify opportunity Buy / reserve
land Development process Sale to investor
Transfer to Steiner
TC/GC
Client prepayments from TC/GC as financing
source for RED
Extensive local market knowledge and superior
project cost calculation based on in-house TC/GC
know how
Valuable client contacts for RED through broad
network and strong reputation of Steiner
Mutual
benefits
TC/GC — New constructions / Renovation
Cen
tralized
gro
up
an
d
su
pp
ort
fu
ncti
on
s
Real Estate Development (RED)
Direct sourcing of TC/GC projects with lower
execution risks via own RED pipeline
Increase predictability of TC/GC revenues
through execution of own RED projects
Optimize utilization of resources in TC/GC
Project sourcing Calculation /
release of bid Project setup Project realization Hand over
Steiner's integrated business model
CREATION OF SELF SUSTAINING AND CAPITAL LIGHT BUSINESS
MODEL…RESULTING IN LOWER WORKING CAPITAL REQUIREMENTS
10
STEINER GATE SYSTEM—THE CORE OF OUR RISK MANAGEMENT
The philosophy behind the Steiner gate system is to streamline and standardize the core steps in the
value chain and identify project risks and risky projects an earlier stage
Group Management, Finance & Controlling, Human Resources and Marketing & Business Development
Legal Department, Quality – Safety – Environment, Information Technology and Communication
TC/GC Realisation
TC/GC Acquisition
Customer Service
Technical Department
Procurement
Monitoring
Real Estate Development
Selection Engagement Launch Bid release Review of contract
Transfer Objective POC 50% POC 100% Guarantee expiration
Closing
…and align all support functions to increase efficiency and effectiveness of the service processes
11
Strategy re-formulation/ Re-organization
From top-line focus to EBIT focus
Re-organization of key support functions to secure and
increase project margins
Introduction of Steiner client service model with dedicated
Customer Service Group resulting in lower cost of warranty
and higher customer satisfaction
Change in percentage-of-completion accounting to capture
true project completion and profitability
Higher ownership and accountability at all levels within the
Company
Change in corporate culture
Project management: from individual-driven to team-
based decision making and solutions
Performance improvement through personal ownership,
accountability and transparency
Employee goals aligned with corporate objectives
through better incentive schemes
Technical Department
Contract management
Procurement
Monitoring
Customer Service Group
Independent team of building experts in Technical Department provide cost calculation and
active support during project execution
Contract and order management by specialists with legal and construction expertise
Central procurement setup for sourcing of standardized and high-value building materials
Dedicated team monitoring projects on schedule, scope and budget
Newly established Customer Service Group fully focused on warranty risk management
Newly established support functions
SUCCESSFUL BUSINESS REENGINEERING…CREATION OF NEW
COMPETENCE CENTERS…CHANGE FROM PROJECT TO PROCESS
ORGANIZATION
12
PROJECT EXECUTION… TEAM APPROACH BY CREATING COMPETENCE
CENTERS…INCREASED FOCUS ON PROFIT OPTIMIZATION
Steiner has established a progressive project monitoring approach unique in today's industry…
Text
Ensures legal contract compliance
Provides templates
Handling of legal claims
Legal
Project submission and calculation
Value engineering and technical
project management
Technical Department
Actively supports project manager
Ensure compliance of contracts vs. the
builder owner and sub-contractor
Manages change requests and claims
Complements legal with technical know-
how
Contract Management
Face to suppliers and subcontractors
Partnering with sub-contractors
Negotiating contracts
Frame agreements
Supplier database
Procurement
Focus on technical and financial controlling
Identifies issues early
Supports project manager to initiate
counter measures
Monitoring & Controlling
Project manager
P&L responsibility
Key person to
coordinate
Indispensable
know-how
Entrepreneur
Systematic and consistent management of project warranty
with standard process and tools
Pool approach to manage financial risk
Dedicated teams in all regions
Customer Service Group
Project execution – Steiner project monitoring process overview
Post execution services
Systematic approach to limit project
execution and financial risk with
positive impact on margins
Clearly defined KPIs for all group
supporting functions
Steiner's New Customer Service
Group—a clear differentiator
vis-à-vis its peers in the market
Steiner expert functions ensure that
important project know how remains
within the company
…strengthening the project manager's focus on the project with support from expert functions in the
process
13
FULL ALIGNMENT OF COMPETENCE CENTER KPIS WITH COMPANY
GOALS
Ro
le a
nd
re
sp
on
sib
ilit
ies
O
rga
niz
ati
on
Project calculation and technical
contract analysis for RED & TC/GC
during acquisition and execution
Verification of tender quotes before
submission
Ensuring sustainable project
planning and budgeting
Quality control on project
calculation
Team of 55 people
Reporting to COO
Teams organized by regions (East,
Center, West) and by categories
(core and shell, mechanical and
electrical, finishing)
All employees with strong technical
backgrounds
Negotiate and sign framework
agreements with suppliers
Centralized purchasing of approx.
20 categories of building materials
to reduce costs
Lead in tendering and negotiating
procurement contracts of >CHF50k
Strengthen relationship with major
key suppliers/sub-contractors
Team of 13 people
Reporting to COO
Teams organized by categories
(core and shell, mechanical and
electrical, finishing)
Support function to project
manager and technical department
Technical controlling – acting as
the liaison between project
management and financial
controlling
Monitor ongoing projects (identify
issues, quality defects, time delays
etc.) and pro-actively initiate
counter measures
Support project team in setting up
project budget
Team of 12 people
Directly reporting to CEO
Integrated into existing project
review cycle (e.g. once a month)
Support function for project
manager in close collaboration with
financial controlling
Technical Department Procurement Monitoring & Controlling Legal & Contract
Management
Identify and address risks &
opportunities in construction
contracts
Advise project management in all
contract-related questions and
ensure compliance with legal
requirements
Manage guarantees issued to
clients
Coordinate with authorities
Prevent and resolve third party
claims and enforce own claims
Team of 16 people
Directly reporting to CEO
KP
Is
> 90% of finalized new projects
captured in database
Accuracy calculation vs. “project
budget” down to ±3%
Accuracy calculation vs. effective
project costs ±3%
80% of third-party spend
purchased centrally
<500 suppliers
3-5 % of savings achieved annually
on purchase volume
Purchasing mix (CH/EU/Others)
60-70% of Steiner third party cost
monitored
Monthly report for all projects
All projects > 30MCHF monitored
All projects with a baseline
Contract Management:
Chance & risk analysis of every
project
Documentation on every
contract change
14
POOLING OF POST COMPLETION PROJECTS RISKS BY
ESTABLISHING CENTRAL CUSTOMER SERVICE GROUP Steiner established a post-execution team handling all client interaction after project hand over in order
to increase client satisfaction and limit warranty claims
Systematic and consistent management of client warranty
claims
Dedicated and timely resources solely focused on post-
execution client service
Standard processes and tools in claims management
Clear accountability for:
• warranty and claims process
• methods (advanced planning and controls)
• pool approach to manage financial risk
• provide standard tools (e.g. templates, databases)
• implementation (training, starting operations)
Objectives of client service and warranty group
Status of implementation
Separate team “client service” in all regions operational
Reasonably staffed with a total of 18 FTE
Consistent process in place across the organisation
“Client service manual” established and piloted in Region
West
Central warranty pool provision set up
Most legacy issues closed
Core activities
Customer Service Group as first point of contact for clients
after handover from project execution management
Customer complaint management post project completion
Pro-active building assessment two years after project
completion
Warranty related work management during whole warranty
period
Coordination of claims with sub-contractors
Warranty cost management and warranty bond risk
management
Alignment of risks within the full value chain
15
STEINER PROJECT RISK MANAGEMENT AND MONITORING MODEL
Steiner project risk management in TC/GC is state-of-the-art in the market
Transfer into
execution
Objective
50 % POC
100% POC
2-year warranty
5-year warranty
10-year warranty
Prior to beginning of construction
= Start contract management
Master contract for subcontractor
General prerequisites
Special prerequisites
Coordination with Insurance
Template Minutes of Negotiations
Subcontractor / contract for services
Excavation/excavation pit/securing of
excavation pit
Architect/Water Resistance Concept
Building Shell
HVAC / Electric
Electric
Planner
Expert Planner (SIA-Contracts)
Purchasers / Condominium Community
Contracts Purchase Support /
Condominium Community
During the construction period
Log Change Orders from owner
Log Change Orders from subcontractors
Look for opportunities, claims
Minimise risk
Talk over project
Final Review
During warranty period
Special event of loss or damage
Legal disputes / litigations
Establishing Conformance Procedure
Log deficiencies upon completion
Log acceptance protocol
Project closing
Review performance of contract
Log service and maintenance contracts
Log acceptance protocol
Log „Project Completion“ form
► Delivery Customer Service Group
Action upon contract disputes
Action upon
contract disputes
“Interim Gate” 3 months prior to 100%
delivery to building owner
Support via Legal Department
Risk analysis
Selection till „Bouclage“
16
MILESTONES IN STEINER DEVELOPMENT
Past (pre 2010)
Turnaround (2013)
Profit growth (2014 onwards)
Turnaround Transformation
Long-standing reputation
and heritage
Purely project-driven
organization with small
degree of centralized
functions and processes
Project management was
entirely driven by
individuals
No independent project
monitoring
No technical department
to back project cost
calculations
Warranty claims handled
by project execution
teams themselves
After the successful turnaround, Steiner has embarked on a clear growth path
New partner
Successful turnaround of
company through HCC-
involvement
New strategy, processes
and organizational setup
in place
Phasing out of non-
profitable legacy projects
CHF2.6bn of secured
backlog of profitable
projects in Switzerland
Clear revenue and
margin visibility based on
current backlog
Majority shareholder with
long-term commitment
Steiner India established,
all entry costs realized
New equity capital to
develop additional real
estate projects
Major shift in Swiss
revenue and EBIT mix
towards higher margin
RED business
Build on already strong
positioning among
institutional clients
Attractive return for new
investor/partner
Growing India business
based on secured project
pipeline (growth already
fully financed)
DRAFT
17 Steiner Group – An Overview | March 2014
VULCANO, ZURICH
Project: Commercial and residential building
Client: Credit Suisse
Architect: Dominique Perrault, Paris