SRV’s half-year financial report January–June 2022: Stronger balance sheet due to a successful financing arrangement, operative operating profit improves


SRV’s half-year financial report January–June 2022: Stronger balance sheet due to a successful financing arrangement, operative operating profit improves

January–June 2022 in brief:

  • Revenue amounted to EUR 402.1 million (405.1 1–6/2021).
  • Operative operating profit amounted to EUR 14.7 (10.5) million.
  • Operating profit was EUR -75.6 (11.4) million. The write-downs of assets in Russia and the Fennovoima holding, the dissolution of profit margin eliminations and the weakening of the rouble had a total impact of EUR -90.3 million.
  • The result before taxes was EUR -74.8 (3.6) million. Write-downs and the strengthening of the rouble had an impact of
    EUR -126.6 million and the financial arrangements an impact of EUR 38.6 million.
  • Cash flow from operating and investment activities totalled EUR -17.2 (3.9) million.
  • The company carried out the comprehensive restructuring of financing as planned during the review period due to the impairments of assets in Russia and the holding in Fennovoima. The restructuring sought to counteract the effects of these impairments by substantially strengthening equity and reducing net interest-bearing debt. As a result of the comprehensive restructuring, the equity ratio was strengthened to 33.3 (26.1) per cent and gearing was reduced to 64.2 (151.9) per cent. Excluding the impact of IFRS 16, the equity ratio was 43.9 (32.5) per cent and gearing was -3.1 (80.3) per cent. The equity ratio in accordance with the loan covenant calculation was 45.9 per cent.
  • At period-end, the order backlog stood at EUR 745.9 (1,047.5) million. New agreements valued at EUR 202.4 (261.3) million were signed in January–June. The sold share of the order backlog was 91.1 (90.0) per cent.
  • Earnings per share were EUR -8.66 (0.28). The key figure has been calculated by considering the share issues during the reporting period, the effect of the price of the shares issued and the 40:1 reverse split conducted in July.

April–June 2022 in brief:

  • Revenue was EUR 211.4 million (218.0 4−6/2021).
  • Operative operating profit amounted to EUR 9.8 (5.7) million.
  • Operating profit was EUR 10.1 (6.3) million.
  • Cash flow from operating and investment activities totalled EUR 8.6 (27.2) million.
  • New agreements valued at EUR 72.3 (176.0) million were entered into the order backlog.

Updated outlook for 2022:

  • Consolidated revenue for 2022 is expected to amount to EUR 800–860 million (earlier outlook: EUR 800–950 million) (revenue in 2021: EUR 932.6 million).
  • Operative operating profit is expected to improve on 2021 and to be EUR 15–25 million (earlier outlook:  Operative operating profit is expected to improve on 2021) (operative operating profit in 2021: EUR 5.3 million).

Events after the end of the review period:

  • On 4 July 2022, SRV executed a reverse share split, including a directed share issue without consideration, redemption of shares and cancellation of shares. After these measures, the new number of shares in the company is 16,982,343. The new number of shares was registered with the Trade Register maintained by the Finnish Patent and Registration Office on 4 July 2022, and trading with the merged shares commenced on Tuesday, 5 July 2022 under the new ISIN code FI4000523675. SRV’s trading code SRV1V remained the same. The reverse share split and related redemption of shares were executed such that each forty (40) shares of SRV were merged into one (1) share. The purpose of merging the shares was to facilitate trade in the company’s shares by increasing the value of an individual share and to contribute to the shares’ efficient price formation.
  • In connection with the reverse share split on 4 July 2022, the maximum number of shares that can be subscribed for with special rights in accordance with the terms and conditions of the convertible hybrid bonds ISIN FI4000198122 (with an outstanding principal of EUR 21,061,512) and ISIN FI4000315395 (with an outstanding principal of EUR 36,047,145) was amended such that the maximum number of the shares that can be subscribed is 14,277,165. After the reverse share split, the subscription price of the shares that can be subscribed for with the convertible bonds is EUR 4.00 per share.

CEO’s review

“I’m very pleased that we successfully completed our extensive financing arrangement as planned during the second quarter. The overall arrangement fulfilled our objectives and restored our equity ratio to the level it had stood at before Russia invaded Ukraine. Furthermore, thanks to the arrangement, SRV is a virtually net debt-free company. The overall arrangement consisted of the partial repurchase of previously issued notes and the amendment of the terms of the remaining notes to convert them to hybrid bonds, the conversion of old hybrid bonds to shares, the extension of our revolving credit facility and project financing facility, and a rights issue. All aspects of the arrangement were successful.

Our balance sheet is stronger thanks to the overall arrangement, enabling us to execute our strategy in full. SRV’s future will be based on good and revitalised construction operations in Finland. Our order backlog is on a healthy and relatively low-risk footing, and we will continue to focus on cooperative contracting. Later this year, we will reassess our long-term financial objectives and will consider restructuring our segments after our exit from Russia. We have pursued our aim of exiting Russia by negotiating on the sale of our assets in the country, but these negotiations have not led to results so far.

Our performance in operational activities was in line with plans, and our operating result for the review period improved. At the same time, we can observe that the revenue recognised for the quarter was more profitable than had been forecast for the rest of the year. Earnings performance in a challenging market has been supported by cost discipline and proactive procurements. With these measures, we have kept the impacts of inflation under control and ensured the availability of materials to enable our sites to operate with almost no interruptions. In addition, we have hardly any unsold completed residential units, which is a good thing in the current market situation.

Our order backlog is smaller than in the comparison period and the inflow of new orders remains modest. Startups of projects that we have won but which have not been entered into the order backlog yet have been delayed due to, for example, city plan schedules, but we still see that these projects will generate a flow of orders and profitable business in the future. At the end of the review period, the value of such projects amounted to around EUR 1.3 billion.
During the review period, our order backlog was increased by about EUR 70 million by WithSecure’s headquarters and the Eastern Uusimaa Main Police Station and Prison, from which we expect to recognise a further EUR 61 million in the order backlog later this year. We did not achieve the growth we sought in developer-contracted housing construction, as we pushed back the startup of some of the planned projects due to cost inflation in the spring.

During the review period, we continued to proactively mobilise our lifecycle-wise strategy at the project level. The lifecycle wisdom of the projects we build is based on emission-free construction sites, environmentally friendly material choices, energy and resource efficiency, use of renewable energy, taking the environment into consideration through materials recycling, and SRV’s recently launched biodiversity targets. WithSecure’s new headquarters represent an excellent example of project development in line with our lifecycle-wise strategy – it also minimises the carbon footprint over the ownership period. In addition, the second office building in Wood City is one of the first projects in Finland aligned with the new EU taxonomy. In line with our strategy, our aim is to keep offering sustainable space solutions to companies in different sectors, producing steady cash flow to investors.

In general, we expect that market conditions will remain cloudy, primarily due to uncertainties surrounding demand, inflationary pressure on energy prices and the housing construction boom seen in Finland in recent years, which is expected to settle down closer to the long-term average in the near future. On the other hand, trends in the prices of many basic materials – which saw steep price hikes immediately when the war broke out – have levelled off, and predictability has improved as operators have found new supply channels.

I would like to thank our shareholders and financiers for the successful result of the financing arrangement as well as our customers, other partners and our committed personnel for the half-year period now ended. Enjoy the rest of the summer!”

Saku Sipola, President & CEO

Overall review


Group key figures                   1-6/1-6/change,4-6/4-6/1-12/Previous
(IFRS, EUR million)20222021change%20222021202112 mo.
Other operations and eliminations14.2-3.217.4-0.2-1.5-4.413.0
Operative operating profit 1)14.710.54.340.
Other operations and eliminations-2.4-2.1-0.2-1.2-0.8-4.3-4.5
Operative operating profit, %
Operating profit-75.611.4-87.0-736.010.16.3-1.7-88.7
Other operations and eliminations12.2-2.114.3-1.2-0.8-4.310.1
Operating profit, %-
Financial income and expenses, total0.8-7.88.643.6-3.7-18.6-10.1
Profit before taxes-74.83.6-78.4-2,
Net profit for the period-82.13.6-85.751.32.1-19.9-105.6
Net profit for the period, %-20.40.924.20.9-2.1-11.4
Order backlog (unrecognised) 2)745.91,047.5-301.5-28.8872.3
New agreements202.4261.3-58.9-22.672.3176.0588.6529.7

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)20222021change,%2021
Equity ratio, %33.326.127.4
Equity ratio, %, excl. IFRS 161)43.932.532.8
Net interest-bearing debt90.1279.8-189.7-67.8170.0
Net interest-bearing debt, excl. IFRS 161)-4.6152.5-157.1-103.081.0
Net gearing ratio, %64.2151.9103.0
Net gearing ratio, %, excl. IFRS 161)-3.180.347.5
Return on investment, %-17.410.9-1.4
Capital employed276.1524.1-248.0-47.3403.0
Other operations and eliminations54.4-37.091.4-241.840.0
Capital employed, excl. IFRS 161)187.3402.4-215.1-53.4319.4
Return on equity, %-107.54.0-11.5
Earnings per share, EUR2)-8.660.28 -8.9-3,192.7-2.1
Share price at end of period0.130.66-0.53-80.30.53
Weighted number of shares at end of period, millions 2)381.5375.9375.9

1) The figure has been adjusted to remove the impacts of IFRS 16.
2) The key figure has been adjusted for the share issue and the reverse share split in July.

Earnings trends for the segments

Construction January–June 2022

Construction’s revenue declined to EUR 382.0 million (406.3 1-6/2021). Revenue fell due to the smaller volume of business premises contracting. This was because large projects completed at the end of last year were removed from the order backlog. Revenue from housing construction increased, mainly due to the growth in the volume of contracting carried out as development projects.

Construction’s operating profit rose to EUR 16.2 (13.9) million. Operating profit from housing construction increased thanks to growth in contracting carried out as development projects. On the other hand, decreased volume in business premises contracting had a negative impact on operating profit.

Construction’s order backlog stood at EUR 745.9 (1,047.5) million and 91.1 (90.0) per cent of the order backlog has been sold. New agreements valued at EUR 202.4 (261.3) million were entered into the Group’s order backlog in January–June.

Construction’s capital employed totalled EUR 207.4 million (195.8 12/2021).

Construction April–June 2022

Revenue from construction totalled EUR 206.8 (218.5) million. Operating profit was EUR 9.9 (7.0) million. New agreements valued at EUR 72.3 (176.0) million were entered into the order backlog.

Investments January–June 2022

Investments’ revenue was EUR 5.9 (2.0) million.

Investments’ operative operating profit amounted to EUR 0.9 (-1.2) million, affected by capital gains from the sale of a commercial centre in Porvoo.

Investments’ operating profit was EUR -104.0 (-0.3) million. Operating profit was impacted by substantial write-downs of assets in Russia and the Fennovoima holding, which had a total impact of EUR -115.5 million. After the write-downs, the total value of SRV’s holdings in Russia amounts to EUR 4.2 million. In addition, operating profit was affected by the net impact of the change in the exchange rate of the rouble, which was recognised prior to the asset write-downs and amounted to EUR 10.7 (1.1) million. The exchange rate impact, which largely had no effect on cash flow, was caused by the valuation of the euro-denominated loans of associated companies in roubles, currency hedging expenses and changes in the market value of currency hedges.

Capital employed totalled EUR 14.3 million (167.3 12/2021). Capital employed decreased due to write-downs of Russia-related investments. The amount of capital employed remaining in Russia was EUR 4.2 million. The remainder of capital employed mainly comprises investments in the Tampere Central Deck and Arena project.

The return on investment was -216.7 (4.5) per cent. Return on investment was impacted primarily by write-downs of assets in Russia.

Outlook for 2022

During 2022, 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 margin of the order backlog and its development; the start-up of new contracts and development projects; the war that Russia started against Ukraine, including its related direct and indirect effects, such as material costs and the availability of materials and labour; and changes in demand. The impacts of the coronavirus pandemic have been moderate on the whole, but its effects on the construction market remain unclear and cause uncertainty regarding the outlook for the future. Revenue in 2022 will mainly be generated by cooperative contracting and development projects sold to investors. In 2022, the share of revenue accounted for by developer-contracted housing production will remain relatively small.

  • Consolidated revenue for 2022 is expected to amount to EUR 800–860 million (earlier outlook: EUR 800–950 million) (revenue in 2021: EUR 932.6 million).
  • Operative operating profit is expected to improve on 2021 and to be EUR 15–25 million (earlier outlook: Operative operating profit is expected to improve on 2021) (operative operating profit in 2021: EUR 5.3 million).

Espoo, 21 July 2022

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 briefing for analysts, fund managers, investors and media representatives will be held on 21 July 2022, starting at 11:00 EEST as a webcast. The event will be held in Finnish.The webcast can be followed live at
. 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 Finnish developer and innovator in the construction industry. We are building a more sustainable and responsible urban environment that fosters economic value and takes into consideration the wellbeing of both the environment and people. We call this approach lifecycle wisdom. Our genuine engagement and enthusiasm for our work comes across in every encounter – and listening is one of our most important ways of working. We believe that the only way to change the world is through discussion.

Our company, established in 1987, is listed on the Helsinki Stock Exchange. We operate in growth centres in both Finland and Russia. In 2021, our revenue totalled EUR 932.6 million. In addition to about 1,000 SRV employees, we have a network of around 3,600 partners.

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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