SRV’s Interim report January-March 2022: SRV writes down its assets in Russia and initiatives and set of measures to strengthen its balance sheet – operative operating profit...

SRV GROUP PLC     INTERIM REPORT     28 APRIL 2022      08:30 EET

SRV’s Interim report January-March 2022: SRV writes down its assets in Russia and initiatives and set of measures to strengthen its balance sheet – operative operating profit at the same level as in the comparable period

January-March 2022 in brief:

  • Assets in Russia and the Fennovoima holding were substantially written down due to the market situation and the weakening of the rouble. Total asset values decreased by EUR 141.2 million and the value of assets remaining in Russia totalled EUR 2.6 million.
  • Revenue rose by 1.9 per cent to EUR 190.7 million (187.1 1–3/2021).
  • Operative operating profit amounted to EUR 4.9 (4.8) million.
  • Operating profit was EUR -85.7 (5.2) million. The write-downs, the dissolution of profit margin eliminations and the weakening of the rouble had a total impact of EUR -90.6 million.
  • The result before taxes was EUR -128.5 (1.1) million. Write-downs and the weakening of the rouble had an impact of EUR -133.6 million.
  • Cash flow from operating and investment activities totalled EUR -25.8 (-23.3) million.
  • The equity ratio was 6.4 (23.8) per cent and gearing was 748.4 (170.8) per cent. Excluding the impact of IFRS 16, the equity ratio was 9.7 (29.4) per cent and gearing was 343.2 (96.5) per cent. The equity ratio in accordance with the loan covenant calculation was 12.3 per cent.
  • At period-end, the order backlog stood at EUR 858.0 (1,061.1) million. New agreements valued at EUR 130.1 (85.4) million were signed in January–March. The sold share of the order backlog was 91.9 (87.7) per cent.
  • Earnings per share were EUR -0.51 (0.00).

Events after the period

On 28 April 2022, SRV decided to initiate a set of measures in order to comprehensively restructure the company’s financing due to the impairment of Russian business functions following Russia’s invasion of Ukraine and the related economic sanctions. The weakening of asset values has a major impact on SRV’s shareholders’ equity and equity ratio. The restructuring of financing is intended to strengthen the company’s equity. The objective is that after the arrangement, SRV will have very limited risks in Russia and virtually no net debt (IFRS 16-adjusted) and will engage in good, healthy construction operations in Finland. The effects of the write-downs made due to impairment, the measures related to the financing arrangement, and the related terms and conditions are described in more detail later in this interim report and in the stock exchange release on this matter published on 28 April 2022.

CEO’s review

“We started the year in optimistic spirits – the implementation of our strategy was progressing well in all areas, our project backlog had recovered, our average profitability had improved and we had won several major new projects. In addition, our balance sheet was well on its way to health, we had reached our gearing target and in practice we did not have any unsold completed residential units. The war that Russia started against Ukraine changed everything dramatically – and we were forced to reassess the valuations of our holdings in Russia.

As a consequence of the war, we have decided to exit from our holdings in Russia on an accelerated schedule. SRV has conducted negotiations regarding the sale of its assets in Russia. Negotiations are still ongoing. Due to war and the followed market situation, we have written down the balance sheet values of practically all of our shopping centres and other holdings in Russia and our investments in Fennovoima, in a total amount of EUR 141.2 million. After the write-downs, the total value of SRV’s holdings in Russia amounts to EUR 2.6 million and there are no more unrecognised profit margin eliminations.

At the same time, we have initiated a financing arrangement seeking to increase our equity by around EUR 100 million as well as reduce our interest bearing net debt by the same amount. We have strong support for the financing arrangement from our major shareholders, bond and hybrid loan investors as well as the banks giving us confidence that the arrangement will be completed. Once the finance arrangement has been completed, we have virtually no net debt (IFRS 16-adjusted) and have very limited risk in Russia. The company has good, healthy construction operations in Finland.

Once the financing arrangement is completed, our company’s balance sheet is expected to recover to its healthy level prior to the write-downs of Russian assets, which will enable the full-scale implementation of our strategy. SRV’s future will be built on good and revitalised construction operations in Finland. Our order backlog is on a healthy and relatively low-risk footing, which we have achieved with our focus on cooperative contracting. During the past year, we have announced many new projects that are expected to increase our order backlog and which are all based on our core strengths, that is, client-focused project development, cooperative contracting and lifecycle wisdom. In our business operations, we will focus on growth centres in Finland and seek to increase the share of our revenue accounted for by housing construction. We are one of the largest construction companies in Finland and have a strong track record in demanding and professionally attractive projects, such as the extension of the Terminal 2 at Helsinki Airport and Supercell’s headquarters at Wood City, Helsinki.

The market situation is currently uncertain and visibility is weak. The impacts of the war on investment demand, housing sales and interest rates remain unclear. At the same time, there is a great deal of uncertainty surrounding the availability of labour and materials, and the prices of materials. Under these circumstances, our first-quarter operative operating profit was satisfactory. We are now focusing on the development of our construction business in Finland and the successful completion of our financing arrangement. Our full-year financial guidance remains unchanged: consolidated revenue for 2022 is expected to amount to EUR 800–950 million and operative operating profit is expected to improve compared with 2021.

We will assess our long-term financial objectives at a later date this year, and will consider restructuring our segment reporting after our exit from Russia.

Putting together an extensive financing package in the middle of a crisis that has diverted resources from the development of operations has required a great deal of effort. The financing arrangement that we have launched has called for hard work from many different parties and has in many respects also meant disappointing the expectations of investors and financiers. I would like to thank all the parties for their contributions, and SRV’s personnel, customers and partners for their solid work during these tough times. We will be in good shape on a new foundation and are highly committed to meeting the expectations of all stakeholders.”

Saku Sipola, President & CEO


Group key figures                   1-3/1-3/change,1-12/Previous
(IFRS, EUR million)20222021change%202112 mo.
Other operations and eliminations14.4-1.716.1,-4.411.7
Operative operating profit 1)
Other operations and eliminations-1.2-1.30.1-4.3-4.1
Operative operating profit, %
Operating profit-85.75.2-90.8-1760.8-1.7-92.5
Other operations and eliminations13.4-1.314.7-4.310.4
Operating profit, %-44.92.8-0.2-9.9
Financial income and expenses, total-42.8-4.1-38.7-18.6-57.4
Profit before taxes-128.51.1-129.6-20.3-149.9
Net profit for the period-133.31.6-134.9-19.9-154.8
Net profit for the period, %-69.90.8-2.1-16.5
Order backlog (unrecognised) 2)858.01,061.1-203.1-19.1872.3669.1
New agreements130.185.444.852.4588.6633.4
  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                   1-3/1-3/change,1-12/
(IFRS, EUR million)20222021change,%2021
Equity ratio, %6.423.827.4
Equity ratio, %, excl. IFRS 16 1)9.729.432.8
Net interest-bearing debt197.7309.5-111.7-36.1170.0
Net interest-bearing debt, excl. IFRS 16 1)110.1180.5-70.4-39.081.0
Net gearing ratio, %748.4170.8103.0
Net gearing ratio, %, excl. IFRS 16 1)343.296.547.5
Return on investment,  %-103.94.7-0.6
Capital employed261.4553.8-292.4-52.8403.0
Other operations and eliminations53.55.248.2920.140.0
Capital employed, excl. IFRS 16 1) 179.4430.6-251.2-58.3319.4
Return on equity, %-557.03.5-11.5
Earnings per share, EUR-0.510.00-0.51-0.08
Share price at end of period0.410.57-0.16-28.10.53
Weighted number of shares at end of period, millions 2)261.8262.2262.2
  1. The figure has been adjusted to remove the impacts of IFRS 16.

Construction January-March 2022

Revenue from Construction declined to EUR 175.2 million (187.8 1–3/2021) in the January–March period. 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 declined to EUR 6.3 (6.9) million. Decreased volume in business premises contracting had a negative impact on operating profit. Operating profit from housing construction increased thanks to growth in contracting carried out as development projects.

Construction’s order backlog stood at EUR 858.0 (1,061.1) million and 91.9 (87.7) per cent of the order backlog has been sold. New agreements valued at EUR 130.1 (85.4) million were signed in January–March.

Construction’s capital employed totalled EUR 190.9 (195.8 12/2021) million.

Investments January-March 2022

Investments’ revenue totalled EUR 1.1 (1.0) million in the January–March period. It mainly consists of revenue from shopping centre management.


The operative operating profit totalled EUR -0.2 (-0.8) million. The decrease in the operative operating loss of the Investments segment was affected by the exceptionally high sales figures at shopping centres in March. 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.

Investments’ operating profit was EUR -105.4 (-0.4) million. Operating profit was impacted by substantial write-downs of assets in Russia and the Fennovoima holding, which had a total impact of EUR -102.5 million. After the write-downs, the total value of SRV’s holdings in Russia amounts to EUR 2.6 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 -2.7 (0.5) 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 17.0 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 2.6 million. The remainder of capital employed mainly comprises investments in the Tampere Central Deck and Arena project.

The return on investment % was -459.6 (1.8) 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.

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; and 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. 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 still remain relatively small.

  • Consolidated revenue for 2022 is expected to amount to EUR 800–950 million (revenue in 2021: EUR 932.6 million).
  • Operative operating profit is expected to improve compared with 2021 (operative operating profit in 2021: EUR 5.3 million).

Espoo, 28 April 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.

Financial results briefing

A briefing for analysts, fund managers, investors and media representatives will be held on 28 April 2022, starting at 11:00 EET as a webcast. The webcast can be followed live at The recording will be available on the website after the presentation. The materials will also be made available on the 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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