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From the President & CEO

"The operative operating profit in the January-September period improved but the operating profit declined due to the ruble exchange rate compared the comparison period. Our objective has been to increase the share of revenue generated by our housing construction in Finland, and housing comprised a robust cornerstone of our result. We are currently building in 38 various locations, a total of 3,346 units. During the third quarter, we recognised a total of 213 housing units as income.

More than 800 units will be recognised 26 October 2017 at 8:30 am 3 (27) Q3 as income in 2017. Thus, as in 2016, we will rack up our largest haul in the last quarter of the year, when 360 units will be recognised as income. We are constantly developing our housing business to cater to the needs of people and cities. The strong housing sales is reflected in the market situation. Small apartments built in city centres are still in particularly high demand in housing sales to consumers. Different housing funds and institutional investors have also been active in the housing market. The most important factor behind housing purchase decisions is still the price of the apartment. For this reason, SRV has developed a new housing concept that targets families with children in particular. Our aim is to ensure that monthly living expenses in these homes will be lower than rent levels in the area where the homes are located.

Revenue from our International Operations declined again, as expected, as we have completed our shopping centres and are now shifting our operations to shopping centres management. Changes in the calculated currency exchange rate of the rouble have significantly cut into our earnings this year. The second quarter in particular was truly challenging. That said, operations at the shopping centres have continued to improve, as both sales and visitor numbers have increased.

After the end of the review period, we received good news about two of the large-scale projects we are developing. The Tampere Central Deck and Arena project took another important step towards its final realisation when we and our investor partners signed a joint venture agreement and a shareholder agreement for the city’s multi-purpose arena on behalf of the project company.

Another positive development was that the complaint lodged against the Keilaniemi project was dismissed by the administrative court. Although construction of the tower buildings can only commence when the Ring Road I tunnel project has been completed in 2019, Keilaniemi is another unfortunate example of the Finnish culture of complaining. It’s important for people to be able to express their opinions when projects are being prepared and zoned. At the same time, it should be kept in mind that even a single complaint impacts on the service offerings of an entire area and thus on the lives of thousands of people. REDI is a good example – if a complaint had not been lodged against it, the thousands of people living in that area would already have been able to enjoy the wide-ranging services of the shopping centre for some time.

The Kalasatama Health and Wellness Centre, built right next to REDI, is one of the projects we handed over after the period in October. It’s another excellent addition to SRV’s strong portfolio in hospital and wellness construction, which accounts for about 16 per cent of our revenue. In addition to the large hospital projects we currently have under construction, such as TAYS Etupiha, Nova in Jyväskylä and the New Children’s Hospital in Helsinki, we are already accepted to participate in the last phase of the competition to make an offer for a two new hospital projects: SRV is competing for the extension of the Vaasa Central Hospital and a new healthcare service centre for the Kanta-Häme Hospital District. The total value of these two projects, which will be decided on in January 2018, is close to EUR 400 million.

Once again, we will generate the largest share of our full-year earnings in the fourth quarter. I believe that we can reach our project objectives in the final months of the year and achieve the new objectives outlined in the previous interim report. "

Juha Pekka Ojala
President & CEO
 
SRV Group Plc
Q3/2017 Interim Report