SRV’s interim report January–September 2021: Balance sheet strengthened and indebtedness decreased further, result burdened by the significantly weaker margin of a single project


SRV’s interim report January–September 2021: Balance sheet strengthened and indebtedness decreased further, result burdened by the significantly weaker margin of a single project

January–September 2021 in brief:

  • Revenue declined by 12.7 per cent to EUR 596.3 million (683.0 1−9/2020).
  • Operative operating profit amounted to EUR 9.9 (10.5) million.
  • Operating profit was EUR 9.8 (9.5) million.
  • The result before taxes was EUR -0.8 (-13.4) million.
  • Cash flow from business and investment activities totalled EUR 14.0 (33.6) million.
  • The equity ratio was 27.0 (23.8) per cent and gearing was 147.5 (177.4) per cent. Excluding the impact of IFRS 16, the equity ratio was 34.0 (29.6) per cent and gearing was 75.5 (98.4) per cent. The equity ratio in accordance with the loan covenant calculation was 37.7 per cent.
  • At period-end, the order backlog stood at EUR 1,038.2 (1,280.3) million. New agreements valued at EUR 427.9 (566.3) million were signed in January–September. The sold share of the order backlog was 92.1 (86.9) per cent.
  • Earnings per share were EUR -0.01 (-0.11). The comparison figure has been adjusted for share issues.
  • On 13 September 2021, SRV signed a letter of intent to sell the shopping centre Pearl Plaza in St Petersburg.
  • SRV revises its outlook for revenue and operative operating profit in 2021. Revenue is expected to amount to EUR 900–1,000 million (previously EUR 900–1,050 million) and operative operating profit to EUR 16–21 million (previously EUR 16–26 million).

July–September 2021 in brief: 

  • Revenue in July–September amounted to EUR 191.1 (209.9) million.
  • Operative operating profit amounted to EUR -0.6 (5.6) million.
  • Operating profit was EUR -1.6 (1.7) million.
  • Cash flow from business and investment activities totalled EUR 10.1 (-15.6) million.
  • New agreements valued at EUR 166.6 (154.4) million were entered into the order backlog.

Events after the period

  • On 18 October 2021, SRV announced that the company had signed an implementation phase agreement to construct the Matinkylä upper secondary school in Espoo. SRV’s contract is valued at EUR 37.5 million and the project will be recognised in SRV’s order backlog for October.
  • On 13 October 2021, SRV announced that it had signed an implementation phase agreement and will start the construction of a multipurpose shipbuilding hall at RMC’s Rauma Shipyard in November. SRV’s contract amounts to around EUR 19 million and the project will be recognised in SRV’s order backlog for October.

CEO's review

The third quarter of the year was challenging as we anticipated. The rise in prices of materials and the postponement of the startup of some projects due to material availability problems as well as the weak financial development of the Tampere Arena project had a significant negative impact on third quarter earnings. As a result, we revised our outlook for 2021. The completion of Tampere Arena still involves risks related to schedule and final costs during the rest of the year, although our site staff has been able to solve many challenges during the autumn.

Most importantly, we continued to make good progress towards our strategic goals, especially with respect to strengthening our balance sheet and reducing indebtedness. This development is expected to remain strong also in the fourth quarter, when e.g. Loisto will be recognised, with practically all of its residential units sold. The number of lifecycle-wise projects is growing, and concept development is advancing rapidly.

The profitability of the project portfolio has continued to develop positively, with the exception of designated projects, and our efficiency programmes are producing results, which creates strong belief in the future. Also in tower construction, controllability has improved significantly with the lessons learned from the completed Majakka and Loisto, as well as Lumo One, which is under construction. For the next tower projects, for which we aim for one transaction by the end of the year, the developed design and engineering solutions will significantly improve cost-efficiency. Our work on project development has started yielding good new project prospects. For instance, we will seek to start up significantly more developer-contracted housing projects next year.

Despite the good development in many areas, next year's performance is still somewhat overshadowed by certain projects based on old contracts. We expect that the effectiveness of development programmes and next year's developer-contracted projects will fully accelerate earnings development especially from 2023 onwards.

We entered new projects valued at about EUR 428 million into the order backlog in January–September, including both housing projects and the construction and renovation of business premises. Our major successes during the review period include the EUR 82 million agreement with DWS on the construction of residential units in accordance with our lifecycle-wise strategy. However, our order backlog is smaller than in the comparison period.

We are investing in project development and sales both in housing projects and business premises construction, and these new project startups will enable us to reach our strategic goals in the coming years.  The most significant project we announced this year – which will contribute to our order backlog only in the future – is the Laakso Joint Hospital. After the review period, we signed an implementation phase agreement to construct the Matinkylä upper secondary school in Espoo and made an agreement to build a multipurpose shipbuilding hall at Rauma Shipyard.

Our housing sales have remained brisk and we have only eight completed unsold units. In the future, we’ll step up the number of good developer-contracted projects alongside projects sold to investors in a controlled manner – this will ensure that our housing construction is diverse and well-balanced and will serve to bolster our order backlog.

Favourable trends in sales at Russian shopping centres have continued this year, with sales even exceeding 2019 levels (which is a more relevant comparison year than the pandemic year of 2020). However, the worrying development of the pandemic creates uncertainty to the outlook of the shopping centres. In September, we signed a letter of intent on the divestment of the Pearl Plaza shopping centre and aim to complete the sale this year. In September, we inaugurated the store building we constructed for Decathlon in Mytishchi. The parking garage we built next to Okhta Mall in St Petersburg will be opened in October.

As part of our corporate responsibility governance, we have long developed operating methods to combat the grey economy and ensure the manageability, transparency and legality of the operating chain. Preventing labour exploitation has been identified as an important theme. Going forward, we require all third-country nationals working on the company’s construction sites to have a Finnish-issued residence permit that entitles them to work.

After several changes, our Corporate Executive Team and our whole organisation have found an active touch in developing our operations and building a stronger future. This is a good place to continue forward.

Saku Sipola, President and CEO


Overall review

Group key figures1-9/1-9/change,7-9/7-9/1-12/Previous
(IFRS, EUR million)20212020change%20212020202012 months
Other operations and eliminations-4.21.1-5.3-497.3-1.1-0.30.7-4.6
Operative operating profit1)9.910.5-0.6-5.9-0.65.615.815.2
Other operations and eliminations-2.7-2.3-0.4-0.60.3-3.5-4.0
Operative operating profit, %1.71.5-
Operating profit9.
Other operations and eliminations-2.7-2.3-0.4-0.60.3-3.5-4.0
Operating profit, %1.61.4-
Financial income and expenses, total-10.6-22.912.4-2.8-8.8-29.4-17.1
Profit before taxes-0.8-13.412.6-4.4-7.0-28.0-15.3
Net profit for the period-0.4-14.514.1-4.0-6.9-25.1-11.0
Net profit for the period, %-0.1-2.1-2.1-3.3-2.6-1.2
Order backlog (unrecognised)2)1038.21 280.3-242.1-18.91 153.4911.3
New agreements427.9566.3-138.4-24.4166.6154.4707.1568.6
  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                  1-9/1-9/change,1-12/
(IFRS, EUR million)20212020change,%2020
Equity ratio, %27.023.822.6
Equity ratio, %, excl. IFRS 16 1)34.029.627.8
Net interest-bearing debt269.0341.7-72.8-21.3289.1
Net interest-bearing debt, excl. IFRS 161)142.1194.9-52.8-27.1152.9
Net gearing ratio, %147.5177.4159.7
Net gearing ratio, %, excl. IFRS 161)75.598.482.1
Return on investment, %3.40.9-0.8
Capital employed502.4605.0-102.5-16.9566.8
Other operations and eliminations-64.26.4-70.6-1097.28.1
Capital employed, excl. IFRS 161)381.5463.5-82.0-17.7436.0
Return on equity, %-0.3-10.5-14.1
Earnings per share, EUR 2)-0.01-0.110.10-93.5-0.15
Share price at end of period0.580.530.059.40.59
Weighted number of shares at end of period, millions 2)262.2144.3173.9
  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–September 2021

Revenue from Construction declined to EUR 594.3 million (678.1 1-9/2020) in the January–September period. This fall in revenue was mainly due to the smaller volume of business premises contracting. Revenue from housing construction increased. Loisto was completed and some of the apartments were handed over at the end of the review period. The major share of the revenue from the project will be recognised in the fourth quarter of the year.

Construction’s operating profit declined to EUR 15.4 (18.7) million. Earnings trends in developer-contracted housing and residential development projects had a positive impact on operating profit. However, reduced volumes in business premises contracting and the significantly weaker margin of Tampere Arena also weakened operating profit.

Construction’s order backlog stood at EUR 1,038.2 (1,280.3) million and 92.1 (86.9) per cent of the order backlog has been sold. New agreements valued at EUR 427.9 (566.3) million were recognised in the order backlog in January–September.

Construction’s capital employed totalled EUR 389.6 (417.4) million.

July–September 2021

Revenue from Construction totalled EUR 188.0 (209.1) million in the July–September period. Operating profit was EUR 1.6 (5.2) million. New agreements valued at EUR 166.6 (154.4) million were entered into the order backlog in July–September.


Investments January–September 2021

Investments’ revenue totalled EUR 6.2 (3.9) million in the January–September period. Revenue was primarily generated by shopping centre management and the recognition of sales income from the Decathlon project. 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 -2.8 (-3.8) 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.

Investments’ operating profit was EUR -2.9 (-6.9) million. Operating profit was impacted by the EUR 1.4 million impairment of a plot of land owned by the Russian subsidiary. The net effect of currency exchange fluctuations was EUR 1.3 (-3.1) 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 177.0 million (171.9 12/2020). During the review period, capital employed was increased by a EUR 1.5 million investment in Voimaosakeyhtiö SF, a EUR 0.8 million investment in the Arena hotel in Tampere, and the strengthening rouble exchange rate.

The return on investment was 0.4 (-8.6) 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 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. Restrictions were still in place during the third quarter.

July–September 2021

Investments’ revenue totalled EUR 4.2 million in the July–September period (1.1 7–9/2020). Revenue was generated by shopping centre management and the recognition of sales income from the Decathlon project.


Outlook for 2021 (updated)

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 remain 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. Operative operating profit for the last quarter will be significantly affected by the cost management of the work on the final phase of Tampere Arena. SRV aims to complete the sale of the Pearl Plaza shopping centre during 2021. The expected result of the transaction is included in the 2021 forecast.

  • Consolidated revenue for 2021 is expected to amount to EUR 900–1,000 million (revenue in 2020: EUR 975.5 million). (Previously: EUR 900–1,050 million.)
  • Operative operating profit is expected to improve on 2020 and to amount to EUR 16–21 million (operative operating profit for 2020 in accordance with the new definition: EUR 15.8 million). (Previously: EUR 16–26 million.)

Espoo, 28 October 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 28 October 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, jarkko.rantala 
Miia Eloranta, Senior Vice President, Communications and Marketing, tel. +358 (0)50 441 4221,  

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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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