SRV’s half-year financial report January–June 2021: Financing arrangements improve balance sheet and financing structure; favourable trends in profitability continue


SRV’s half-year financial report January–June 2021: Financing arrangements improve balance sheet and financing structure; favourable trends in profitability continue

January–June 2021 in brief:

  • Revenue declined by 14.4 per cent to EUR 405.1 million (473.1 1−6/2020).
  • Operative operating profit improved to EUR 10.5 (4.9) million.
  • Operating profit was EUR 11.4 (7.8) million.
  • The result before taxes  was EUR 3.6 (-6.4) million.
  • Cash flow from business and investment activities totalled EUR 3.9 (49.2) million.
  • The equity ratio was 26.1 (25.3) per cent and gearing was 151.9 (148.5) per cent. Excluding the impact of IFRS 16, the equity ratio was 32.5 (30.6) per cent and gearing was 80.3 (83.5). The equity ratio in accordance with the loan covenant calculation was 35.2 per cent.
  • At period-end, the order backlog stood at EUR 1,047.5 (1,332.4) million. New agreements valued at EUR 261.3 (411.9) million were signed in January–June. The sold share of the order backlog was 90.0 (85.7) per cent.
  • Earnings per share were EUR 0.01 (-0.09). The comparison figure has been adjusted for share issues.
  • During the review period, the company amended the terms of its senior unsecured callable notes and signed a loan agreement for new credit facilities. The maturity structure of the company’s unsecured debts improved significantly.
  • In April, the company was chosen to build Laakso Joint Hospital in Helsinki using an alliance model. The project will be entered into the order backlog in stages during 2021–2028, as it will be divided into several development and implementation stages with a total value of about EUR 730 million.

April–June 2021 in brief: 

  • Revenue amounted to EUR 218.0 (265.0) million.
  • Operative operating profit amounted to EUR 5.7 (0.5) million.
  • Operating profit was EUR 6.3 (3.3) million.
  • Cash flow from business and investment activities totalled EUR 27.2 (29.6) million.
  • New agreements valued at EUR 176.0 (213.7) million were entered into the order backlog.

Events after the period

  • On 2 July 2021, SRV announced that the company had signed an implementation phase agreement and will launch construction of the Kotka event centre in July.
  • On 9 July 2021, SRV announced that the company had sold DWS a portfolio of 257 housing units at three locations in Helsinki, Espoo and Kerava. The agreement is valued at around EUR 82 million.

CEO's review

The first half of the year was concluded as planned, and we made progress towards our strategic objectives. Significant successes during the review period included new financing arrangements, a reduction in indebtedness, and positive cash flow in the second quarter. Favourable earnings trends in operative business also continued. During the review period, we won several new projects, of which the most significant was Laakso Joint Hospital valued at a total of EUR 730 million. However, many of the projects we won will only be entered into our order backlog later, as the contracts are gradually confirmed.

We also completed significant new financing arrangements during the review period. The written procedure to extend the maturity of our two notes was successfully completed, and we agreed on new bank financing in the spirit of good cooperation. Both solutions led to longer loan periods that will enable long-term business development and give us more room to manoeuvre in furthering our strategic objectives. Our indebtedness decreased considerably thanks to both these financing arrangements and positive cash flow in the second quarter.  Excellent progress in housing sales was an essential component in improving cash flow, and also means that the number of completed unsold housing units is at an all-time low and will remain low until the end of the year.

Our ongoing projects mainly progressed according to plan, and favourable trends have continued in profitability. I am very pleased with how our personnel have acted during these exceptional circumstances, and the way they have ensured health security on our construction sites throughout the pandemic. The impacts of the pandemic have been moderate on the whole, but its effects on the construction market are still unclear and cloud the outlook for the future.

Relative profitability will probably weaken slightly during the latter half of the year. The reason for this trend is the high share of generated revenue accounted for by two large low-margin projects, Loisto and Tampere Arena. On the other hand, when Loisto will be recognised as income, it will release a considerable amount of capital and generate significant cash flow. In addition, the lessons learned from the construction and planning solutions we have used in high-rise construction will also be valuable in our future high-rise projects. Also, a sharp rise in the market prices of materials during the spring poses challenges in maintaining our favourable trends in profitability, but we expect the impact to be temporary.

We entered new projects valued at about EUR 260 million into the order backlog in January–June, including both housing projects and the construction and renovation of business premises.  Our order backlog has decreased on the comparison period. However, at the same time, we have won projects that will increase our order backlog in the future, such as the Laakso Joint Hospital project, which will be entered into SRV’s order backlog in stages during 2021–2028. After the review period, we announced the construction of housing projects in the Helsinki Metropolitan Area for DWS Institutional Funds. The total value of these projects is EUR 82 million. This agreement is particularly important for us, as it will enable us to build energy-efficient housing units in accordance with our lifecycle-wise strategy. The agreement also reflects ongoing strong demand for housing units among investors, without which Finland’s urbanisation trend would not continue.

Housing sales have remained brisk and we have only 14 completed unsold units. In June, we sold all of our completed unsold housing units outside the Helsinki Metropolitan Area to a fund managed by S-Bank. The sale of Loisto in Helsinki is proceeding excellently and over 96 per cent of its apartments have now been sold or reserved. During the review period, we launched the construction of four developer-contracted residential projects in Vantaa, Oulu, Kaarina and Tampere. Most of these housing units will be recognised as income in 2022. To ensure that our housing construction is diverse and well balanced, we will also be increasing the number of good developer-contracted projects alongside projects sold to investors in a controlled manner.

Favourable trends were seen in sales at Russian shopping centres during the first half of the year, with sales even exceeding 2019 levels (which is a more relevant comparison year than the pandemic year of 2020). However, the coronavirus pandemic is still being reflected in visitor numbers, which remain lower than before the pandemic. The realisation of risks associated with virus variants will also impact sales and visitor numbers during the latter half of the year.

All in all, we are well-poised to continue developing our operative earnings performance and business in line with our strategy. I would like to thank our personnel for their firm commitment and excellent work. And at the same time, I would like to welcome two new members to SRV’s Corporate Executive Team: Anu Tuomola, Senior Vice President, General Counsel, and Jorma Seppä, Senior Vice President, Housing, Helsinki Metropolitan Area.

Saku Sipola, President and CEO


Overall review

Group key figures                  

1-6/1-6/ change,4-6/4-6/1-12/Previous
(IFRS, EUR million)20212020change%20212020202012 mo.
Other operations and eliminations-3,21,4-4,5-326,8-1,5-0,20,7-3,8
Operative operating profit 1)10,54,95,6114,95,70,515,821,4
Investments-1,2-5,44,2 -0,9-4,0-5,7-1,5
Other operations and eliminations-2,1-2,60,4 -0,8-2,4-3,5-3,1
Operative operating profit, %2,61,0  2,60,21,62,4
Operating profit11,47,83,646,66,33,31,55,1
Investments-0,3-3,12,8 0,1-1,7-22,4-19,5
Other operations and eliminations-2,1-2,60,4 -0,8-2,4-3,5-3,1
Operating profit, %2,81,6  2,91,20,20,6
Financial income and expenses, total-7,8-14,26,4 -3,7-3,1-29,4-23,0
Profit before taxes3,6-6,410,0 2,60,2-28,0-18,0
Net profit for the period 3,6-7,611,3 2,1-0,1-25,1-13,8
Net profit for the period, %0,9-1,6  0,90,0-2,6-1,5
Order backlog (unrecognised)1047,51 332,4-285,0-21,4 1 153,4868,4
New agreements261,3411,9-150,6-36,6176,0213,7707,1556,5

  1. The reconciliation calculation for operative operating profit can be found underneath the “Key figures” table.

  2. The Group’s order backlog consists of the Construction business.

Group key figures                  

1-6/1-6/ change,1-12/
(IFRS, EUR million)20212020change,%2020
Equity ratio, %26,125,3  22,6
Equity ratio, %, excl.32,530,6  27,8
Net interest-bearing debt279,8307,4-27,5-9,0289,1
Net interest-bearing debt, excl.  IFRS16 1)152,5177,0-24,5-13,9152,9
Net gearing ratio, %151,9148,5  159,7
Net gearing ratio, %, excl.  IFRS16 1)80,383,5  82,1
Return on investment, %5,21,9  -0,8
Capital employed524,1612,6-88,4-14,4566,8
Other operations and eliminations-37,027,9-64,98,1
Capital employed, excl. IFRS16 1)402,4487,1-84,7-17,4436,0
Return on equity, %4,0-8,0  -14,1
Earnings per share, EUR0,01-0,090,10-0,15
Share price at end of period0,660,480,1837,50,59
Weighted number of shares at end of period, millions 2)262,284,7  173,9

  1. The figure has been adjusted to remove the impacts of IFRS 16.

  2. The comparison figures have been adjusted to reflect share issues.


Earnings trends for the segments

Construction January–June 2021

Revenue from Construction declined to EUR 406.3 (469.0 1-6/2020) million in the January–June period. This fall in revenue was mainly due to business premises contracting.

Construction’s operating profit rose to EUR 13.9 (13.5) million. Favourable earnings trends in both residential development projects and developer-contracted housing had a positive impact on operating profit. However, operative operating profit was also weakened by reduced volumes in business premises contracting.

Construction’s order backlog stood at EUR 1,047.5 (1,332.4) million. 90.0 (85.7) per cent of the order backlog has been sold. New agreements valued at EUR 261.3 (411.9) million were entered into the Group’s order backlog in January–June.

Construction’s capital employed totalled EUR 384.9 (391.1) million.

April–June 2021

Revenue from Construction in April-June amounted to EUR 218.5 (264.1) million. Operating profit was EUR 7.0 (7.4) million. New agreements valued at EUR 175.9 (213.7) million were entered into the order backlog in April–June.


Investments January–June 2021

Investments’ revenue totalled EUR 2.0 (2.8) million in the January–June period. It mainly consists of revenue from shopping centre management. In accordance with SRV’s operating model, revenue from associated companies’ projects and joint ventures is reported under the Construction segment.

The operative operating profit totalled EUR -1.2 (-5.4) million. In addition to SRV’s Group companies, the result contains shares of the results of the associated companies that own the Okhta Mall and Pearl Plaza shopping centres, including not only their operating margin, but also depreciation, financial expenses and taxes. The result for the comparison period was burdened by EUR 3.1 million in expense provisions that were dissolved in late 2020. 

Investments’ operating profit was EUR -0.3 (-3.1) million. The net effect of currency exchange fluctuations was EUR 0.9 (2.3) million, which arose from valuation of the euro-denominated loans of associated companies in roubles and the net impact of currency hedging.

Capital employed totalled EUR 176.2 million (171.9 12/2020). During the review period, capital employed was increased by a EUR 0.8 million investment in Voimaosakeyhtiö SF, a EUR 0.5 million investment in the Arena hotel in Tampere, and the strengthening rouble exchange rate.

The return on investment was 2.3 (-5.5) per cent. When calculating the return on investment, the income from interest on loans granted to associated companies and changes in the value of loans are also taken into consideration.

In spite of the coronavirus pandemic, shopping centre operations recovered well during the first quarter. Shopping centres remained open in January–March, but the coronavirus restrictions continued to have an impact on the business of some of the tenants. However, restrictions had to be tightened again towards the end of the second quarter as a consequence of the worsening coronavirus situation.

April–June 2021

Investments’ revenue totalled EUR 1.0 million in the April–June period (1.2 4–6/2020. Revenue was generated by shopping centre management.

Operative operating profit amounted to EUR -0.5 (-4.4) million. The result for the comparison period was burdened by EUR 3.1 million in expense provisions that were dissolved in late 2020.


Outlook for 2021

During 2021, SRV's revenue and result will be affected by several factors in addition to general economic trends, such as: the timing and amount of income recognition for SRV's own projects, which are recognised as income upon delivery; the part of the order backlog that is recognised as income over time mainly consists of contracting; trends in the order backlog's profit margins; the start-up of new contracts and development projects; and the rouble exchange rate and the development of the Russian economy. To date, the impacts of the pandemic have been moderate on the whole, but its effects on the construction market are unclear and cause uncertainty regarding the outlook for the future. The result for 2021 is also affected by the fact that the company has not been able to start up developer-contracted housing projects in line with the target schedule of the recovery programme. In 2021, the company will continue to focus on reducing indebtedness and seeks strong cash flow.

  • Consolidated revenue for 2021 is expected to amount to EUR 900 – 1,050 million (revenue in 2020: EUR 975.5 million).

  • Operative operating profit is expected to improve on 2020 and to amount to EUR 16-26 million (operative operating profit for 2020 in accordance with the new definition: EUR 15.8 million).


Espoo, 21 July 2021

Board of Directors

All forward-looking statements in this review are based on management’s current expectations and beliefs about future events. The company’s actual results and financial position may differ materially from the expectations and beliefs such statements contain due to a number of factors that have been presented in this interim report, and in particular the ongoing coronavirus pandemic.


Financial results briefing

A conference for analysts, fund managers, investors and representatives of the media will be held on 21 July 2021 at 12.00 EET as a webcast. The event will be held in Finnish. A live webcast of the conference will begin at 12.00 EET, available through the company’s website The presentation will be available on the company's website.

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

Nasdaq Helsinki

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SRV in brief
SRV is a developer and innovator in the construction industry. Our objective is a new lifecycle-wise reality where solutions related to construction ensure well-being, financial value and the benefit of users, residents and environment – for years and generations to come. Our genuine cooperation and enthusiasm for our work comes across in every encounter. Sustainability is reflected in all our activities.

Our company, established in 1987, is listed on the Helsinki Stock Exchange. We operate in growth centres in Finland and Russia. In 2020, our revenue totalled EUR 975.5 million. In addition to about 1,000 SRV employees, we employ a network of around 4,200 subcontractors.

SRV - Building for life


Contact information

SRV head officePostal address:
P.O. BOX 555
FIN-02601 Espoo,

Visiting address:
Derby Business Park,
Tarvonsalmenkatu 15,
FIN-02600 Espoo

020 145 5200

Business ID - 1707186-8
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