2016-11-03 07:30:01 CET
2016-11-03 07:30:01 CET
REGLAMENTUOJAMA INFORMACIJA
SRV Yhtiöt Oyj - Interim report (Q1 and Q3)
SRV`s interim report January-September 2016: Revenue and operating profit grow – full-year result outlook unchanged
Espoo, Finland, 2016-11-03 07:30 CET (GLOBE NEWSWIRE) -- SRV GROUP PLC
INTERIM REPORT 3.11.2016, AT 8.30 AM
SRV`s interim report January-September 2016: Revenue and operating profit grow
– full-year result outlook unchanged
January–September 2016 in brief:
-- Revenue increased to EUR 555.5 (492.5 Q1–Q3/2015) million. Growth in
revenue was driven particularly by large business construction projects in
Finland.
-- Operating profit rose to EUR 11.4 (7.5) million, primarily due to improved
margins in business construction in Finland. Operating profit weakened in
Russia.
-- The result before taxes was EUR -3.1 (2.7) million. The result was burdened
by a EUR -7.8 (-2.8) million fair value revaluation of a ten-year interest
rate hedge.
-- Earnings per share were EUR -0.11 (-0.02).
-- At period-end, the order backlog stood at EUR 1,888.1 (1,517.5) million.
Major projects agreed on during the spring, such as new central hospital in
Central Finland and the Ring Road I tunnel project, have entered the
construction phase.
-- The equity ratio stood at 37.8 (41.6) per cent and gearing at 99.7 (91.5)
per cent.
July–September 2016 in brief:
-- Revenue increased to EUR 193.1 (
155.1 Q3/2015
) million. Growth in revenue was driven particularly by large business
construction projects in Finland.
-- Operating profit rose to EUR 7.3 (4.1) million as a result of better
margins and increased revenue from operations in Finland.
-- The result before taxes was EUR 3.9 (0.1) million. The result was burdened
by a EUR -1.2 (-2.8) million fair value revaluation of interest rate
derivatives.
-- Earnings per share were EUR 0.04 (-0.03).
Events after the end of the review period:
-- In October, Finland's Slot Machine Association (RAY) chose to locate
Finland's second casino in Tampere's new multi-purpose arena, which is
being developed by SRV.
-- In October, the Okhta Mall shopping centre received a very distinguished
award in the European Property Awards 2016 competition.
-- SRV signed a letter of intent to sell a property in Kerava. The agreement
covers a commercial centre and 140 apartments, and is valued at around EUR
51 million.
Outlook
-- The earnings forecast for 2016 remains unchanged. Full-year revenue for
2016 is expected to increase and operating profit to improve on 2015
(revenue EUR 719 million and operating profit EUR 24.4 million). The
company's earnings forecast has been drawn up on the basis of the current
rouble exchange rate and may be impacted by any major fluctuations in the
exchange rate.
-- Due to the completion schedules of SRV's developer-contracted housing
projects, a significant proportion of the company's operating profit will
be made in the last quarter.
-- Financing expenses will increase on 2015 as the result of growth in
interest-bearing debt.
This interim report has been prepared in accordance with IAS 34, and the
disclosed information is unaudited.
CEO's review
“SRV's revenue and operating profit further increased during the third quarter.
We have received numerous orders for major projects this year, such as a new
central hospital in Central Finland, and forging ahead to complete these
large-scale projects is already having a favourable effect on our revenue.
Although we haven not received any major new orders in recent months, our order
backlog remains at a record high and we're expecting more interesting new
entries in our order book at the end of the year.
The lengthy recession in Russia is naturally being reflected in our operations,
for example, in temporary rent discounts granted to shopping centre tenants. In
view of the circumstances, our shopping centres in St Petersburg are performing
excellently. In the last few months, Pearl Plaza has broken its previous
records for both visitor numbers and earnings. Business also got off to a good
start at the Okhta Mall. The shopping centre opened in August and in October
they received a very distinguished award in the European Property Awards 2016
competition. The Russian shopping centre market has become increasing
rouble-based, and we therefore changed our operating currency to the rouble in
September. However, this will leave us more susceptible to currency exchange
rate fluctuations.
One of our strategic objectives is to improve profitability, and we are still a
long way off achieving this. On a positive note, there has been a clear
increase in the number of developer-contracted housing projects, particularly
in the capital city region, and we will complete about 500 developer-contracted
units this year, the majority of which will be visible in our Q4 result. Thanks
to new orders and our personnel's strong commitment, we're expecting plenty of
good things for the rest of 2016,” says CEO Juha Pekka Ojala.
Overall review
Group key figures 1–9/201 1–9/201 change change 7–9/20 7–9/20 1-12/20
(IFRS, EUR million) 6 5 , % 16 15 15
--------------------------------------------------------------------------------
----------------------
Revenue 555.5 492.5 63.0 12.8 193.1 155.1 719.1
Operating profit 11.4 7.5 4.0 53.4 7.3 4.1 24.4
Financial income and -14.5 -4.7 -9.8 -3.4 -4.0 -6.8
expenses, total *)
Profit before taxes -3.1 2.7 -5.8 -213.1 3.9 0.1 17.6
Order backlog 1,888.1 1,517.5 370.7 24.4 1,583.4
New agreements 829.9 1,106.6 -276.7 -25.0 54.9 389.9 1,393.5
Operating profit, % 2.1 1.5 3.8 2.6 3.4
Net profit -2.5 1.7 -4.1 -250.8 3.3 -0.3 14.0
Net profit, % -0.4 0.3 1.7 -0.2 1.9
*) - of which -7.8 -2.8 -5.0 -1.2 -2.8 -3.3
accounted for by
derivatives
January–September 2016
In the January–September period of 2016, the Group's order backlog rose to EUR
1,888.1 (1,517.5) million (up 24.4%). The largest new projects announced in
early 2016 included a new central hospital in Central Finland, the Ring Road I
tunnel project, a contractor agreement for the expansion of Tapiola city
centre, as well as the construction of a new campus building for Aalto
University and retail premises in the Metro Centre, both in Otaniemi, Espoo.
The order backlog saw growth in operations in Finland in particular, largely in
the second quarter. No significant new orders were announced in July–September.
The Group's revenue rose by 12.8 per cent to EUR 555.5 (492.5) million, largely
thanks to increased revenue from business construction in Finland. The major
projects agreed on during the spring have entered the construction phase and
are now generating revenue. Figures for the comparison period include
excavation and other infrastructure work that was completed at the REDI site
prior to the official start-up decision and was recognised as revenue (EUR 40
million) in January–March 2015 in accordance with the level of completion.
The Group's operating profit rose to EUR 11.4 (7.5) million, primarily due to
improved profitability and higher revenue in SRV's operations in Finland.
However, the rise in construction costs associated with the REDI shopping
centre and parking facility weakened SRV's operating profit. Operating profit
in Russia also weakened, even though a change in the rouble exchange rate
improved the earnings of Russian associated companies by EUR 0.5 million.
Operating profit and its relative level are also lowered by the elimination of
a share equivalent to SRV's ownership from the profit margins of three shopping
centre projects under construction (Okhta Mall, 4Daily and REDI), which will be
recognised as income only when the investment is sold.
The Group's profit before taxes was EUR -3.1 (2.7) million. The result was
weakened by higher interest expenses and a EUR -7.8 million fair value
revaluation of a ten-year interest rate hedge.
The Group's earnings per share were EUR -0.11 (EUR -0.02). Earnings per share
were weakened not only by the lower result, but also by the cost of repaying
the hybrid bond.
Quarterly variation in SRV's operating profit and operating profit margin is
affected by several factors. SRV’s own projects are recognised as income upon
delivery; the part of the order backlog that is continuously recognised as
income based on the level of completion mainly consists of low-margin
contracting; and the nature of the company's operations (project development).
The Group's equity ratio stood at 37.8 per cent (42.5% 12/2015). Gearing was
99.7 per cent (83.3% 12/2015). The changes in equity ratio and gearing were due
to an increase in interest-bearing debt. Net debt totalled EUR 285.0 (248.3)
million and liquid assets EUR 37.9 (28.1) million.
July–September 2016
In the July-September period of 2016, the Group’s revenue rose by 24.5 per cent
to EUR 193.1 (155.1) million. Growth in revenue was driven particularly by
large business construction projects. The Group’s operating profit increased to
EUR 7.3 (4.1) million thanks to improved margins and higher revenue in
operations in Finland. Operating profit in International operations improved
slightly, to EUR 1.2 (-0.3) million. The Group's profit before taxes was EUR
3.9 (0.1) million. The result was weakened by higher interest expenses and a
EUR -1.2 million fair value revaluation of a 10-year interest rate hedge.
Group key figures 1–9/20 1–9/20 change change, 1-12/
(IFRS, EUR million) 16 15 % 2015
--------------------------------------------------------------------------------
Equity ratio, % 37.8 41.6 42.5
--------------------------------------------------------------------------------
Net interest-bearing debt 285.0 248.3 36.7 14.8 230.8
--------------------------------------------------------------------------------
Gearing, % 99.7 91.5 83.3
--------------------------------------------------------------------------------
Return on investment, % 3.3 3.2 5.9
--------------------------------------------------------------------------------
Return on equity, % -1.3 0.9 5.6
--------------------------------------------------------------------------------
Earnings per share, EUR *) -0.11 -0.02 -0.08 0.25
--------------------------------------------------------------------------------
Equity per share, EUR *) 3.81 3.80 0.01 0.3 3.90
--------------------------------------------------------------------------------
Share price at end of period, EUR 4.40 2.53 1.87 73.9 3.10
--------------------------------------------------------------------------------
Weighted average number of shares 59.3 37.0 42.6
outstanding, millions *)
--------------------------------------------------------------------------------
*) The comparison data has been adjusted to reflect the share issue.
Espoo, 2 November 2016
Board of Directors
All forward-looking statements in this review are based on management’s current
expectations and beliefs about future events, and actual results may differ
materially from the expectations and beliefs such statements contain.
More information
This is a summary of SRV’s interim report and the complete report is attached
as a pdf-file to this release and is also available on the company website.
The interim report will be presented to the media and analysts at a joint press
conference, which will take place on Thursday, 3 November at 11.00 a.m. at the
Living Lab test environment, Suvilahti, address Kaasutehtaankatu 1, 00540
Helsinki.
President & CEO Juha Pekka Ojala and CFO Ilkka Pitkänen will be present at the
event.
A live webcast of the press conference will be available on the company’s
website www.srv.fi/en/investors.
For further information, please contact
Juha Pekka Ojala, CEO, +358 (0)40 733 4173, jp.ojala@srv.fi
Ilkka Pitkänen, CFO, +358 (0)40 667 0906, ilkka.pitkanen@srv.fi
Päivi Kauhanen, SVP, Communications, tel. +358 (0)50 598 9560,
paivi.kauhanen@srv.fi
www.srv.fi
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