SRV GROUP PLC FINANCIAL STATEMENT RELEASE 6 FEBRUARY 2025 AT 08.30 EET
SRV Financial statement release 1–12/2024: Revenue and operative operating profit develop favourably, order backlog remains strong
October–December 2024 in brief:
- Revenue amounted to EUR 209.1 (181.8) million (+15.1%). Revenue from alliance and project management contracts increased in business and infrastructure construction.
- Operative operating profit amounted to EUR 3.0 (2.4) million. Operative operating profit rose on the comparison period, thanks to higher revenue in business and infrastructure construction.
- Operating profit was EUR 4.7 (3.1) million. Operating profit was improved by the recognition of EUR 5.1 million from the sale of the Pearl Plaza shopping centre, of which translation differences accounted for EUR -4.9 million. Operating profit was weakened by a write-down of EUR -3.4 million on the lease agreement for SRV’s current head office.
- The result before taxes was EUR 3.3 (0.7) million.
- Equity ratio was 35.1 per cent (34.4% 12/2023) and gearing was 65.5 per cent (71.7% 12/2023). Excluding the impact of IFRS 16, the equity ratio was 48.2 (48.0) per cent and gearing was -6.0 (-4.3) per cent.
- At period-end, the order backlog stood at EUR 1,052.8 (1,048.6) million. The sold share of the order backlog was 92.7 (92.6) per cent.
- New agreements valued at EUR 66.0 (253.1) million were signed in October–December.
- Emission intensity (scope 1 and 2, rolling 12 months) decreased to 2.4 (2.9) tCO2 per million euros of revenue at the end of December. SRV’s emission intensity has stabilised, but varies moderately in relation to revenue and project phases.
- The Board of Directors proposes to the General Meeting that no dividend be paid for the 2024 financial year.
January–December 2024 in brief:
- Revenue amounted to EUR 745.8 (610.0) million (+22.3%).
- Operative operating profit amounted to EUR 10.3 (1.1) million with an operating profit of EUR 12.0 (-6.8) million.
- The result before taxes was EUR 5.7 (-15.7) million.
- Earnings per share were EUR 0.2 (-1.0).
- New agreements valued at EUR 691.2 (781.4) million were signed in January–December.
Outlook for 2025
During 2025, SRV's revenue and result will be affected by several factors in addition to general economic trends, such as: the margin of the order backlog and its development; the start-up of new contracts and development projects; geopolitical risks, including their related direct and indirect effects, such as material costs and the availability of materials and labour; and changes in demand. At the beginning of the year, private demand for new construction is very low in several segments. For this reason, there is significant uncertainty about the startup of new projects and their estimated revenue and margin accrual.
In 2025, revenue will mainly consist of relatively low-margin – yet also low-risk – cooperative contracting and, to a lesser extent, of competitive and negotiated contracts. The share accounted for by development projects sold to investors will remain low. The share of revenue accounted for by developer-contracted housing production will be very slight in 2025, as no new developer-contracted projects will be completed during the year.
- Full-year consolidated revenue for 2025 is expected to decline compared with 2024 and to amount to EUR 630-710 million (revenue in 2024: EUR 745.8 million).
- Operative operating profit is expected to be positive (operative operating profit in 2024: EUR 10.3 million). Significant events after the period
President & CEO's review
“Our business developed well even though the market remained challenging. Our revenue increased by about 22 per cent year-on-year, totalling EUR 745.8 million. Our operative operating profit improved to EUR 10.3 million. In the fourth quarter, our operative operating profit also increased from the comparison period thanks to higher revenue in both business and infrastructure construction. This trend was driven by our excellent performance in project management across the organisation, which was also reflected in record-high customer satisfaction.
Considering the state of the market, the result is reasonable, although it still falls short of our target due to delays in the development of our strategic project portfolio. Due to the current lack of consumer and investor demand, in 2024 we were not able to launch any of our planned development or developer-contracted projects.
Our order backlog remained robust and was EUR 1,052.8 million at the end of the year. In the fourth quarter, the projects transferred to our order backlog included the service block to be built for the City of Helsinki in Kruunuvuorenranta. This project will be executed as a project management contract with a total value to SRV of approximately EUR 60 million, of which EUR 45 million was recognised in the order backlog in December. In addition, previously won contracts and projects under preliminary contracts that have not as yet been recognised in our order backlog totalled around EUR 689 million at the end of the year. After the review period, we decided to start the building of our first developer-contracted residential project after a break of over two years: Asunto Oy Espoon Niittykummun Neuvokas in Espoo. The reservation rate for its 53 lifecycle-wise residential units has developed well. The startup of a new owner-occupied apartment building is a step towards our strategic objective of stepping up our residential construction. In December, we also signed a deal for a housing company that owns a plot zoned for residential construction in Niittykumpu, Espoo. Market-financed residential units with a total floor area of about 4,600 square metres can be built on this plot.
At the same time as we seek to start up higher-margin projects in line with our strategy, we ensure that the company remains on a strong footing: the balance sheet is in good shape, IFRS 16-adjusted gearing is -6.0 per cent and the company has not committed a significant amount of its own capital into completed but unsold housing units, of which there were few at year’s end, a total of 95.
With a transaction carried out in December, we finally concluded our divestment of Russian business operations. Our proactive efforts to exit Russia began in 2022. After the sale of our last asset in Russia – a 50 per cent stake in the Pearl Plaza shopping centre in St. Petersburg – to CP Invest Limited, SRV no longer has any assets or business in Russia.
The controllability of our projects improved over the course of the year, and this was positively reflected in many of our activities. I’m extremely pleased with our excellent performance in customer satisfaction in the review year. NPS (B2B) for customer satisfaction was 78 at the end of December, testifying to exceptional development: we have succeeded in our goal of including our customer promise – “By listening, we build wisely” – as a guideline in all that we do. One example of our successful customer work during the year comprises the two apartment buildings we completed for eQ in September: As Oy Hippoksenkatu 44, with 52 units in Kissanmaa, Tampere, and Asunto Oy Espoon Anna Sahlsténinkatu 15, with 86 units in Perkkaa, Espoo. In the handover phase, both projects had an NPS of a perfect 100. In addition, these projects were completed as zero-error handovers. The work motivation of our knowledgeable personnel has remained excellent during difficult times. Thanks to interesting projects and well-developed business, the eNPS for our personnel rose to 29.
The company is in a strong position and we are prepared to pursue profitable growth, but the delayed market upswing continues to put the brakes on the strategic restructuring of our project portfolio and thereby on significant improvements in profitability. We do not expect the market to turn around in the first half of the current year, but I believe that the situation will gradually improve and that oversupply will dissolve in the autumn and the last months of the year in the case of both owner-occupied and rental housing. We are constantly on the lookout for new growth opportunities in project development and plot acquisitions. The market is heading in the right direction, but it remains difficult to predict when the turnaround will happen and how vigorous it will be. We are prepared for rapid changes in different customer segments if several market players deem that the time is right to start investing. Building costs are at their lowest in the cycle, the affordability and availability of financing are improving, the oversupply of housing is levelling out and rents are beginning to creep up, which makes this a highly attractive market for property investors who are able to see the potential for return, say, five years down the line. The first signs of this starting to happen are already there.
I want to thank all our customers and stakeholders – and especially our staff – for a productive year in 2024.”
Saku Sipola
Group Key Figures
| 10-12/ | 10-12/ | 1-12/ | 1-12/ | |||||
| (IFRS, EUR million) | 2024 | 2023 | change | change, % | 2024 | 2023 | change | change, % |
| Revenue | 209.1 | 181.8 | 27.4 | 15.1 | 745.8 | 610.0 | 135.8 | 22.3 |
| Operative operating profit | 3.0 | 2.4 | 0.6 | 24.3 | 10.3 | 1.1 | 9.3 | |
| Operative operating profit, % | 1.5 | 1.3 | 0.1 | 1.4 | 0.2 | 1.2 | ||
| Operating profit | 4.7 | 3.1 | 1.6 | 49.6 | 12.0 | -6.8 | 18.8 | |
| Operating profit, % | 2.2 | 1.7 | 0.5 | 1.6 | -1.1 | 2.7 | ||
| Profit before taxes | 3.3 | 0.7 | 2.7 | 5.7 | -15.7 | 21.3 | ||
| Net profit for the period | 3.6 | -0.6 | 4.2 | 5.3 | -15.1 | 20.4 | ||
| Net profit for the period, % | 1.7 | -0.4 | 2.1 | 0.7 | -2.5 | 3.2 | ||
| Earnings per share, eur 1) | 0.18 | -0.05 | 0.23 | 0.18 | -1.02 | 1.20 | ||
| Order backlog (unrecognised) | 1052.8 | 1048.6 | 4.3 | 0.4 | ||||
| Equity ratio, % | 35.1 | 34.4 | 0.7 | |||||
| Equity ratio, %, excl. IFRS 16 2) | 48.2 | 48.0 | 0.2 | |||||
| Net interest-bearing debt | 96.2 | 99.4 | -3.2 | -3.3 | ||||
| Net interest-bearing debt, excl. IFRS 16 2) | -9.2 | -6.3 | -2.9 | |||||
| Net gearing ratio, % | 65.5 | 71.7 | -6.2 | |||||
| Net gearing ratio, %, excl. IFRS 16 2) | -6.0 | -4.3 | -1.7 | |||||
| Financing reserves | 79.6 | 78.6 | 0.9 | 1.2 |
1. The figure has been calculated excluding the hybrid bond interest, tax adjusted
2. The figure has been adjusted to remove the impacts of IFRS 16
Significant events after the period
On 31 January 2025, SRV announced that Minna Korander, M.Sc. (Food Economics), 54 years old, has been appointed Senior Vice President, Human Resources and a member of the Corporate Executive Team of SRV Group Plc. She will start in her new role by 1 May 2025 at the latest. Kristiina Sotka, the current SVP, Human Resources and a member of the Corporate Executive Team is leaving the company at the end of January to join another employer.
Espoo, 6 February 2025
Board of Directors
All forward-looking statements in this interim report 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.
Briefing, webcast and presentation materials
A briefing for analysts, investors and media representatives will be held as a webcast on 6 February 2025, starting at 11:00 EET. The webcast can be followed live at www.srv.fi/en/investors. 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, saku.sipola@srv.fi
Jarkko Rantala, CFO, tel. +358 (0)40 674 1949, jarkko.rantala@srv.fi
Miia Eloranta, Senior Vice President, Communications and Marketing, tel. +358 (0)50 441 4221, miia.eloranta@srv.fi
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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 the wellbeing of both the environment and people into consideration. 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 Finland. In 2023, our revenue totalled EUR 610 million. In addition to approximately 800 in-house staff, we had a network of around 3,300 partners.
SRV – Building for life