01 2021

INTERIM REPORT, 1 JANUARY–31 MARCH 2021

SRV GROUP PLC

29 April 2021 at 8:30 am

SRV

Interim Report, 1 January–31 March 2021

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POSITIVE TREND IN PROFITABILITY CONTINUED, MAJOR FINANCING ARRANGEMENT INITIATED DURING Q1 WAS IMPLEMENTED IN APRIL

SRV GROUP PLC INTERIM REPORT, 1 JANUARY–31 MARCH 2021

January–March 2021 in brief:

Revenue declined by 10.1 per cent to EUR 187.1 million (208.1 1–3/2020).
Operative operating profit amounted to EUR 4.8 (4.3) million.
Operating profit was EUR 5.2 (4.5) million.
The result before taxes was EUR 1.1 (-6.6) million.
Cash flow from business and investment activities totalled EUR -23.3 (19.6) million.
The equity ratio was 23.8 (20.4) per cent and gearing was 170.8 (260.2) per cent. Excluding the impact of IFRS 16, the equity ratio was 29.4 (25.8) per cent and gearing was 96.5 (160.2). The equity ratio in accordance with the loan covenant calculation was 30.9 per cent.
At period-end, the order backlog stood at EUR 1,061.1 (1,361.5) million. New agreements valued at EUR 85.4 (198.2) million were signed in January–March. The sold share of the order backlog was 87.7 (84.7) per cent.
Earnings per share were EUR 0.00 (-0.11). The comparison figure has been adjusted for share issues.
On 29 March 2021, the company announced it commences written procedures to amend terms of its senior unsecured notes and negotiates the renewal of its revolving credit facility. Financing arrangements were completed after the review period on 28 April 2021. As a result of the aforementioned arrangements, the maturity structure of the company’s unsecured debts and the company’s equity ratio will both improve significantly.

Events after the period

The company’s maturity structure of its unsecured debts and equity ratio improved significantly through the financing arrangement:
On 27 April 2021, the company carried out written procedures to amend the terms and conditions of its two bonds. Under the new terms and conditions, the due dates for the bonds were extended until March 2025, SRV will make a partial early repayment of a total nominal amount of EUR 27.1 million and will undertake to make payments of a total nominal amount of EUR 5 million on each interest payment day. In addition, amendments were made to some other terms and conditions.
On 28 April 2021, the company agreed on the replacement of its current EUR 51 million revolving credit facility and EUR 40 million project financing facility with the syndicate banks; the facilities were replaced with a new EUR 40 million committed revolving credit facility, a EUR 40 million committed project financing facility and a EUR 63 million non-committed project financing facility. EUR 10 million of the new EUR 40 million revolving credit facility will mature in March 2022 and EUR 30 million in April 2023.
On 23 April 2021, SRV was chosen to develop and build Laakso Joint Hospital in Helsinki as an alliance project. The clients are the City of Helsinki and the Helsinki and Uusimaa Hospital District. The project is divided into several development and construction phases, with a total value of approximately EUR 730 million.
On 22 April 2021, SRV announced the company’s SVP, General Counsel and a member of Corporate Executive Team Johanna Metsä-Tokila has resigned. She will take on a position in another company.
On 22 April 2021, SRV announced the company will pay interest on its 2019 hybrid notes on 24 May 2021.

SRV

Interim Report, 1 January–31 March 2021

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OVERALL REVIEW

Group key figures (IFRS, EUR million)	1–3/2021	1–3/2020	change	change, %	1-12/2020	Previous 12 months
Revenue	187.1	208.1	-21.0	-10.1	975.5	954.6
Construction	187.8	204.9	-17.0	-8.3	970.0	953.0
Investments	1.0	1.6	-0.6	-38.7	4.8	4.2
Other operations and eliminations	-1.7	1.6	-3.3		0.7	-2.6
Operative operating profit^{1)}	4.8	4.3	0.4	9.7	15.8	16.2
Construction	6.9	5.5	1.3	23.6	25.1	26.4
Investments	-0.8	-1.0	0.2		-5.7	-5.5
Other operations and eliminations	-1.3	-0.2	-1.1		-3.5	-4.7
Operative operating profit, %	2.5	2.1			1.6	1.7
Operating profit	5.2	4.5	0.6	14.0	1.5	2.1
Construction	6.9	6.2	0.7	11.2	27.4	28.1
Investments	-0.4	-1.4	1.1		-22.4	-21.3
Other operations and eliminations	-1.3	-0.2	-1.1		-3.5	-4.7
Operating profit, %	2.8	2.2			0.2	0.2
Financial income and expenses, total	-4.1	-11.1	7.0		-29.4	-22.4
Profit before taxes	1.1	-6.6	7.7		-28.0	-20.3
Net profit for the period	1.6	-7.6	9.1		-25.1	-16.0
Net profit for the period, %	0.8	-3.6			-2.6	-1.7
Order backlog (unrecognised)^{2)}	1,061.1	1,361.5	-300.4	-22.1	1,153.4	853.0
New agreements	85.4	198.2	-112.9	-56.9	707.1	594.2

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.

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Interim Report, 1 January–31 March 2021
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Group key figures (IFRS, EUR million)	1–3/2021	1–3/2020	change	change, %	1–12/2020
Equity ratio, %	23.8	20.4			22.6
Equity ratio, %, excl. IFRS 16^{1)}	29.4	25.8			27.8
Net interest-bearing debt	309.5	400.4	-90.9	-22.7	289.1
Net interest-bearing debt, excl. IFRS 16^{1)}	180.5	254.1	-73.5	-28.9	152.9
Net gearing ratio, %	170.8	260.2			159.7
Net gearing ratio, %, excl. IFRS 16^{1)}	96.5	160.2			82.1
Return on investment, %	4.7	-0.4			-0.8
Capital employed	553.8	593.7	-39.9	-6.7	566.8
Construction	375.1	403.0	-27.9	-6.9	386.8
Investments	173.4	193.1	-19.6	-10.2	171.9
Other operations and eliminations	5.2	-2.3	7.6		8.1
Capital employed, excl. IFRS 16^{1)}	430.6	452.0	-21.4	-4.7	436.0
Return on equity, %	3.5	-18.4			-14.1
Earnings per share, EUR^{2)}	0.00	-0.11	0.11		-0.15
Share price at end of period, EUR^{)}	0.57	0.94	-0.37	-39.4	0.59
Weighted average number of shares outstanding, millions^{2)}	262.2	72.1			173.9

1) The figure has been adjusted to remove the impacts of IFRS 16.
2) The comparison figures have been adjusted to reflect share issues.

January–March 2021

The Group’s revenue declined by 10.1 per cent to EUR 187.1 million (208.1 1–3/2020). This fall in revenue was mainly due to a contraction in revenue from business premises contracting.

The Group’s operative operating profit amounted to EUR 4.8 (4.3) million. Operative operating profit totalled EUR 6.9 (5.5) million for the Construction segment and EUR -0.8 (-1.0) million for the Investments segment. Favourable earnings trends in both residential development projects and developer-contracted housing had a positive impact on operative operating profit. On the other hand, operative operating profit was also weakened by reduced volumes in business premises contracting and the fact that no developer-contracted housing units were completed during the review period. Shopping centre operations in Russia have started to get back to normal, which contributed to the increase in operative operating profit in the Investments segment.

The Group’s operating profit was EUR 5.2 (4.5) million. Operating profit was influenced by a change in the exchange rate of the rouble, which had a net impact of EUR 0.4 (-0.4) 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, hedging expenses and changes in the market value of hedges.

Financial income and expenses amounted to EUR -4.1 (-11.1) million. Net financial expenses included EUR 0.8 (1.3) million in dividend and interest income, exchange rate differences amounting to EUR 0.6 (-6.5) million arising from the conversion of subsidiary and associated company loans, which did not have an impact on cash flow, interest paid on derivatives and fair value changes amounting to EUR 0.4 (-0.8) million,

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Interim Report, 1 January–31 March 2021

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and interest expenses of EUR -3.2 (-3.2) million, of which EUR 0.1 (0.2) million was capitalised as of the beginning of the year. In addition, financial expenses included EUR -1.4 (-1.5) million in interest on lease agreement debts under IFRS 16 and EUR -1.4 (-0.6) million in other financial expenses.

The Group's profit before taxes totalled EUR 1.1 (-6.6) million. This includes currency exchange rate gains with no cash flow impact of EUR 0.6 million (-6.5).

Cash flow from operating activities was EUR -22.5 (-17.3) million and cash flow from investing activities was EUR -0.7 (36.9) million. Cash flow from operating activities was negatively impacted by the fact that no developer-contracted housing units were completed during the review period and the construction of ongoing developer-contracted projects continued as planned. Cash flow was also negatively impacted by VAT payment arrangements made in 2020 and the reduction of sold accounts receivables from EUR 10 million year-end level to about EUR 2 million. During the comparison period, cash flow from investments was positively affected by the sale of holdings in REDI and Tampere Deck and Arena.

The equity ratio was 23.8 (20.4) per cent and gearing was 170.8 (260.2) per cent. Excluding the impact of IFRS 16, the equity ratio was 29.4 (25.8) per cent and gearing was 96.5 (160.2). The equity ratio in accordance with the loan covenant calculation was 30.9 per cent.

At the end of review period, the Group's order backlog stood at EUR 1,061.1 (1,361.5) million. New agreements valued at EUR 85.4 (198.2) million were signed in January–March. Three developer-contracted housing construction projects were launched, encompassing a total of 124 housing units. Other significant new projects included the construction of 153 housing units for several trade unions in Tampere and the construction of 40 rental apartments for NREP in Vantaa. The sold share of the order backlog was 87.7 (84.7) per cent.

The Group's earnings per share were EUR 0.00 (-0.11). The comparison figure has been adjusted for share issues.

In spite of the effects of the coronavirus pandemic, we have been able to keep our construction sites in operation and the sites have for the most part continued to operate as planned. That said, precautionary measures against the pandemic have caused additional costs. Housing sales have not been affected by the coronavirus pandemic. In the second half of 2020, shopping centre operations in Russia started to get back to normal after the coronavirus crisis, and this recovery continued during the review period.

We are getting back on track and progressing as planned towards our strategic targets. Positive developments are being seen in operational activities, start-ups of new developer-contracted projects and success with significant financing arrangements.

The earnings trend in construction remained favourable during the review period and our ongoing projects progressed largely in line with plans. Improving profitability and reducing indebtedness towards our strategic objectives will continue to be important themes.

In January--March, we entered approximately EUR 85 million worth of new projects into the order backlog. These are mainly housing construction projects. Although the number of new agreements made during the review period was lower than in the previous period, the market remains fairly strong and we anticipate good order intake in the second quarter. In April, SRV announced that the company has been chosen to develop and build Laakso Joint Hospital in Helsinki as an alliance project. The project is divided into several development and construction phases, with a total value of approximately EUR 730 million. The project will be entered in SRV's order backlog in accordance with the phases during the years 2021-2028. The project will not tie up SRV's capital and, if realised, will generate a significant part of SRV's revenue in the coming years. The procurement decision is not yet final. When realised, the project will have a significant impact on SRV's order backlog.

Housing sales have remained brisk and the number of completed unsold units has stayed low. There are currently 46 unsold housing units in Finland. The sale of Loisto in Helsinki is proceeding to plan and over 90 per cent of its apartments have now been sold or reserved. During the review period, we launched the construction of three developer-contracted residential projects in Vantaa, Oulu and Kaarina. These housing units will be recognised as income mainly in 2022. Where possible, we are increasing the number of good developer-contracted projects alongside projects sold to investors in a controlled manner, so that our product offering is a better match for both demand and our financial objectives.

Russian shopping centres were able to stay open during the first quarter. Although the continuing restrictions were still reflected in visitor numbers, good trends were seen in sales volumes, which by March had already exceeded figures for the previous two years on a monthly basis. Favourable developments were also seen in visitor numbers towards the end of the review period.

The significant financing arrangements initiated at the end of the review period, were completed after the period. The written procedure to extend the maturity of our two bonds was successful, and, in addition, we were able to agree on new financing in good cooperation with the banks. With longer loan periods, both solutions bring persistency in the development of business operations and give us more room to manoeuvre in furthering our strategic objectives.

The new strategy that we published at the beginning of February aims to develop long-term competitive advantage, provide an excellent customer experience, tap into opportunities for lifecycle services, improve profitability and reduce indebtedness. We launched our strategic programmes as planned during early 2021. A clear upswing was seen in SRV's customer satisfaction, and we improved in all areas of the EPSI Rating survey.

Saku Sipola, President and CEO

The number of coronavirus infections rose again in early 2021, which is slowing down economic recovery. It is expected that economic growth will be accelerated by private consumption towards the end of the year. The economy is forecast to grow by 2.6% in 2021, with recovery set to continue in 2022. An increase in vaccination coverage will support economic confidence. (Source: Bank of Finland)

The coronavirus crisis has had a smaller-than-expected impact on production in the construction sector, which only contracted by one per cent in 2020. Urbanisation is continuing in Finland and the population shift is maintaining demand for both housing and commercial construction, especially in growth centres. New construction is forecast to contract by two per cent during the year, and will focus on growth centres. (Source: Confederation of Finnish Construction Industries RT)

Housing construction has slowed down less than was predicted in earlier forecasts. The construction of an estimated 37,000 residential units will begin during 2021 and housing production will remain at a historically good level. Next year, the number of start-ups is expected to fall to 34,000 residential units. Low interest rates are supporting demand among both investors and consumers, and regional disparities are continuing to form. Although commercial construction will slow during 2021, public construction will remain at a good level. Slight growth is expected in the construction of all kinds of commercial premises next year. (Source: Confederation of Finnish Construction Industries RT)

As a result of the impacts of the coronavirus pandemic, investors have primarily been interested in housing, logistics and civic properties, while investments in hotels and shopping centres have slowed down. There is a great deal of capital seeking good investments in real estate property. Foreign investors are expected to become active again once vaccination coverage increases and travel restrictions ease. (Source: KTI/Newsec)

Forecasts for the Russian economy have improved since last autumn. These positive developments have been influenced by the trend in the price of oil and the impacts of the coronavirus pandemic being less than expected. GDP is expected to recover rapidly from the downswing in 2020, with growth of almost three per cent forecast for 2021. Private consumption will continue to recover this year and over the next few years. (Source: Bofit)

Segment Reporting

The Construction segment covers all of SRV's construction activities, including the capital and plots required for developer-contracted housing production. It is SRV's intention to develop, build and sell these plots to a faster schedule than those we report on in the Investments segment. Construction encompasses housing construction, business construction, infrastructure construction, project development, technical units and procurement, as well as internal services in Finland and Russia. Operationally, Construction is divided into four business units: 1) Regional Units, 2) Housing, Helsinki Metropolitan Area, 3) Business Premises, Helsinki Metropolitan Area and 4) construction within Operations in Russia and Estonia.

Investments encompasses both complete and incomplete sites in which the company is a long-term investor. Plots that SRV will develop itself, and whose expected profits will be generated through development and long-term ownership, are also reported on under Investments. The Investments segment focuses on the management and realisation of the Group's real estate investments; the creation and ownership of new joint investment structures; and the operation of properties.

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Interim Report, 1 January–31 March 2021

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Other operations and eliminations includes the parent company's (SRV Group Plc) strategic project development, finance and financing, communications and marketing, information management, and business development. Group eliminations are also included in this unit.

CONSTRUCTION

SRV provides efficient, top-quality and end-to-end project management contracting and construction services for both its own and its customers' development projects. This segment focuses on housing, business and infrastructure construction in selected urban growth centres, as per the company's strategy. It is also responsible for housing sales, services for residents, and the lifecycle maintenance of commercial properties.

One of Construction's main objectives is to enhance the profitability of SRV's business and provide an excellent customer experience as a professional in project management and production implementation. It takes the SRV Approach, which is based on understanding customer needs and the effective implementation of projects in collaboration with our extensive network of professional partners.

Construction (EUR million)	1–3/2021	1–3/2020	change	change, %	1–12/2020	Previous 12 months
Revenue	187.8	204.9	-17.0	-8.3	970.0	953.0
business construction	140.5	154.0	-13.5	-8.8	680.7	667.2
housing construction	47.3	50.8	-3.6	-7.0	289.3	285.8
Operative operating profit	6.9	5.5	1.3	23.6	25.1	26.4
Operative operating profit, %	3.7	2.7			2.6	2.8
Operating profit	6.9	6.2	0.7	11.2	27.4	28.1
Operating profit, %	3.7	3.0			2.8	2.9
Capital employed	375.1	403.0	-27.9	-6.9	386.8	358.9
Return on investment, %	7.5	7.2			7.6	8.0
Order backlog¹)	1,061.1	1,361.5	-300.4	-22.1	1,153.4
business construction	606.5	858.4	-251,9	-29.3	718.2
housing construction	454.6	503.1	-48.5	-9.6	435.2
Group, total¹)	1,061.1	1,361.5	-300.4	-22.1	1,153.4
- sold order backlog	930.6	1,153.2	-222.6	-19.3	996.6
- unsold order backlog	130.5	208.3	-77.8	-37.3	157.7
- sold order backlog, %	87.7	84.7			86.4
- unsold order backlog, %	12.3	15.3			13.6

¹) The Group’s order backlog consists of the Construction business.

January–March 2021

Revenue from Construction declined to EUR 187.8 million (204.9 1–3/2020) in the January–March period. This decrease in revenue was mainly due to a decline in revenue from business premises contracting.

Construction’s operating profit rose to EUR 6.9 (6.2) million. Favourable earnings trends in both residential development projects and developer-contracted housing had a positive impact on operating profit. However, operating profit was also weakened by reduced volumes in business premises contracting.

SRV

Interim Report, 1 January–31 March 2021

Construction’s order backlog stood at EUR 1,061.1 (1,361.5) million. Although the order backlog has declined, it remains at a good level, and 87.7 (84.7) per cent of the order backlog has been sold. New agreements valued at EUR 85.4 (198.2) million were signed in January–March. Three new developer-contracted projects were entered into the order backlog in January–March.

Construction’s capital employed totalled EUR 375.1 (403.0) million.

Housing construction

January–March 2021

Revenue from housing construction in January–March declined to EUR 47.3 million (50.8 1–3/2020), largely as a result of a reduction in revenue from projects contracted to external developers. More developer-contracted housing units were recognised as income than in the comparison period, a total of 44 (25). The order backlog for housing construction stood at EUR 454.6 (503.1) million. The construction of three new developer-contracted housing construction projects was launched during the review period.

Housing under construction

In accordance with SRV’s strategy, the company’s housing construction mainly consists of residential development projects and developer-contracted housing projects in Finland’s strongest growth centres, and particularly in the Helsinki Metropolitan Area. There are no housing units currently under construction in Russia and all of the units in previous Russian projects have been sold. In addition, SRV selectively carries out housing construction projects for external clients. A developer-contracted residential project is a project that is developed by SRV and which has not been sold when construction begins. SRV bears the risks involved in both the sale and construction of such projects, which are recognised as income when the project has been completed and as the units are sold. A residential development project is a project that is developed by SRV, but which is sold to an investor before construction begins. SRV bears the construction risks in such projects, which are recognised as income according to the percentage of completion. Construction contracts are construction projects that are launched by other parties but implemented by SRV. They are recognised as revenue on the basis of the percentage of completion or as set out in the agreement.

At the end of March, SRV had a total of 2,271 (2,168) housing units under construction in Finland, mostly in growth centres. There were 507 (835) developer-contracted housing units under construction. The number of developer-contracted units currently under construction will affect SRV’s result in the future when the units are sold. The average construction period is about 18 months. At the end of March, a total of 1,335 (1,006) housing units were under construction for investors, mainly in Helsinki, Espoo, Vantaa and Tampere.

The Kalasatama towers being built in Kalasatama, Helsinki comprise the largest construction project in SRV’s history. 234 apartments had been sold or reserved in the second tower, Loisto, by the end of March. Loisto will rise to a height of 124 metres above sea level. Its 249 apartments are located on top of the REDI shopping centre, on floors 6–32. Construction is proceeding according to plan and Loisto is scheduled for completion in autumn 2021. The construction of the third residential tower (Lumo One, previously called Kompassi, for Kojamo) began in April 2020 and the tower reached its rooftop height in March 2021.

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Interim Report, 1 January–31 March 2021
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Housing construction projects under development

SRV focuses on residential project development in urban growth centres. SRV is currently developing housing construction projects in areas such as Kivenlahti, Espoonlahti, Vermonniitty and Keilaniemi in Espoo and Lapinmäentie and Bunkkeri in the Jätkäsaari district of Helsinki.

Completed housing units

No developer-contracted housing units were completed during January–March (0 in 1-3/2020). The number of unsold housing units has continued to decline. At the end of March, 46 (60) completed units remained unsold. Housing sales have been good in spite of the coronavirus pandemic. A total of 170 (108) developer-contracted housing units were sold during January–March.

Housing units recognised as income

In January–March, 44 (25) developer-contracted housing units were recognised as income, generating total revenue of EUR 11.6 million.

Housing construction, Group units	1-3/2021	1-3/2020	change, units	1-12/2020	Previous 12 months
Units sold, total	348	364	-16	1,266	1,250
- developer contracting	170	108	62	354	416
- investor sales	178	256	-78	912	834
Developer contracting
- start-ups	124	0	124	68	192
- completed	0	0	0	520	520
- recognised as income	44	25	19	515	534
- completed and unsold	46	60	-14	92
Under construction, total	2,271	2,168	103	2,127
- contracts	0	80	-80	0
- negotiated contracts	409	247	162	369
- sold to investors	1,355	1,006	349	1,375
- developer contracting	507	835	-328	383
- sold	334	454	-120	210
- unsold	173	381	-208	173
- sold, %	66	54		55
- unsold, %	34	46		45
Order backlog, housing construction (EUR million)	3/2021	3/2020	change	12/2020
---	---	---	---	---
Contracts and negotiated contracts	207	191	17	202
Under construction, sold developer contracting	117	104	13	77
Under construction, unsold developer contracting	114	183	-69	128
Completed and unsold developer contracting	17	25	-9	28
Housing construction, total	455	503	-48	435

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The Group’s largest developer-contracted housing projects under construction in Finland

Project name	Location	SRV, contract value, EUR million	Completion date (estimated)	Units	Sold	For sale
REDI Loisto	Helsinki	105	Q4/2021	249	185	64
Väinämöisenrinne	Helsinki	22	Q2/2021	66	65	1
Ilmarisenpuisto	Helsinki	20	Q2/2022	68	52	16
Satamarannan
Jahti	Oulu	11	Q1/2022	53	31	22
Aarni	Vantaa	9	Q3/2022	42	0	42
Kartanonrinne	Kaarina	6	Q2/2022	29	1	28

Total value of projects approx. EUR 173 million

The largest ongoing housing projects in Finland, investor projects and housing contracting

Project name	Location	Developer	Completion level, %	Completion date (estimated)
Tikkurila Central Block	Vantaa	NREP	91	Q2/2021
Kullervonkoti	Helsinki	Kojamo	66	Q3/2021
Runoratsunkatu 11	Espoo	Kojamo	66	Q4/2021
Joukahaisenpiha	Helsinki	Kojamo	54	Q4/2021
Tammelan Engel	Tampere	Taaleri	8	Q2/2022
Piispanristi	Espoo	Kojamo	33	Q3/2022
Lumo One	Helsinki	Kojamo	50	Q3/2022
Kannen Opaali	Tampere	Tampere Towers	29	Q4/2022
Kalevan Klaffi	Tampere	Pro ry, PAM ry, JHL ry	1	Q4/2022
Kalevan Vitriini	Tampere	Pro ry, PAM ry, JHL ry	1	Q1/2023

Total value of projects approx. EUR 302 million

Business and infrastructure construction

January–March 2021

Revenue from business construction fell to EUR 140.5 million (154.0 1–3/2020) and the order backlog decreased to EUR 606.5 (858.4) million.

In accordance with SRV’s strategy, the company’s business construction mainly consists of project management contracts and alliance projects for external clients, lifecycle projects, and SRV’s own development projects. Alliance projects offer the potential for extra earnings in addition to the basic profit margin if the objectives set for the project are completed. Project management contracts are based either on a target price and guaranteed maximum price or a target budget. Like alliance projects, they offer the potential for extra earnings. In lifecycle projects, SRV is responsible for both the construction of the building

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and, for a separate service charge, also the property's maintenance for an agreed service period. A business development project is a project that is developed by SRV, but which is sold to an investor before construction begins. SRV bears the risks involved in both the construction and leasing of such projects.

Business and infrastructure projects under construction

The most significant business and infrastructure projects currently under construction include the HUS Bridge Hospital in Helsinki, the Espoonlahti metro station, and the basic renovation and refurbishment of Siltasaari 10. These will all be implemented as project management contracts. An alliance model is being used for the expansion of Helsinki Airport and the renovation of Terminal 2. The Tampere Deck and Arena project, and Topaasi and Kruunu, being built in conjunction with the Arena, are progressing well.

SRV’s other ongoing projects also include the Helsinki Upper Secondary School of Languages and Upper Secondary School for Adults, Jousenkaari School in Espoo, Hovirinta School in Kaarina, business premises for Sponda and Senate Properties, Siuntio education and wellness campus (as a lifecycle project), the Lumijälki logistics centre in Vantaa, and the basic renovations of the National Theatre and the operating theatres at HUS Jorvi hospital.

Business and infrastructure projects under development

SRV’s project development is developing a diverse range of business premises, such as offices, hotels, logistics centres and retail premises in Finland’s strongest urban centres. Examples of major projects currently under development include Tower A (aka Pohjola Building) on Lapinmäentie, the Wood City quarter, the Pressi office and logistics area in Vantaa, the metro centre in Kivenlahti, and Bunkkeri in Jätkäsaari. The aim is, that Bunkkeri is turned into a 13-storey landmark with versatile sports facilities, a swimming pool, and about 300 apartments.

Completed business and infrastructure projects

No business construction projects were completed in January–March.

The largest ongoing business construction projects

Project	Location	SRV total contract value, EUR million	Project type	Completion level, %	Completion (estimate)
DEVELOPMENT PROJECTS
Deck, southern deck and infra**	Tampere	*	Infrastructure	97	Q4/2021
Deck, multipurpose arena**	Tampere	*	Retail	63	Q4/2021
Deck, arena hotel**	Tampere	*	Retail	66	Q4/2021
Topaasi ja Kruunu**	Tampere	*	Hybrid	89	Q3/2021
Vantaan Lumijälki	Vantaa	*	Logistics	72	Q3/2021
BUSINESS PREMISES
Monikko Learning Centre	Espoo	39	Public sector	96	Q2/2021
Finnish-Russian School	Helsinki	25	Public sector	75	Q3/2021
Espoonlahti Metro Station	Espoo	48	Public sector	77	Q4/2021

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Siltasaari 10	Helsinki	51	Retail	57	Q3/2021
T2 Alliance, phase 1	Vantaa	260	Public sector	75	Q1/2022
Kirkkonummi Wellbeing Centre	Kirkkonummi	32	Public sector	33	Q2/2022
Siuntio education and wellness campus	Siuntio	37	Public sector	22	Q2/2022
Open Innovation House	Espoo	25	Public sector	18	Q2/2022
Oulu Market Square Hotel	Oulu	*	Retail	40	Q2/2022
HUS Bridge Hospital	Helsinki	243	Public sector	77	Q4/2022
STUK commercial premises	Vantaa	46	Public sector	39	Q4/2021
HUS Jorvi, basic renovation of operating theatres	Espoo	39	Public sector	13	Q1/2023
Basic renovation of the Finnish National Theatre	Helsinki	40	Public sector	14	Q2/2023
Helsinki Upper Secondary School of Languages and Upper Secondary School for Adults	Helsinki	38	Public sector	1	Q3/2023

The value of individual contracts has not been made public.
*The total value of the Tampere Deck and Arena project is EUR 550 million, of which EUR 317 million has been entered into SRV’s order backlog to date.

INVESTMENTS

SRV’s investments focus on the management and realisation of the Group’s real estate investments; the creation and ownership of new joint investment structures; and the operation of selected properties. Investments’ key objectives are to increase SRV’s financing capacity with the aid of joint financing structures; harness the value chains created by projects more extensively through longer-term ownership; diversify capital risk; and generate positive cash flow.

Investments segment (EUR million)	1-3/2021	1-3/2020	change	change, %	1-12/2020	Previous 12 months
Revenue	1.0	1.6	-0.6	-38.7	4.8	4.2
Percentage of associated companies’ profits	0.3	-6.9	7.2		-13.4	-6.2
Operative operating profit	-0.8	-1.0	0.2		-5.7	-5.5
Operating profit	-0.4	-1.4	1.1		-22.4	-21.3
Capital employed	173.4	193.1	-19.6	-10.2	171.9	152.3
Return on investment, %	1.8	-13.4	15.2		-14.3	0.9

January–March 2021

Investments’ revenue totalled EUR 1.0 million in the January–March period (1.6 1-3/2020). It mainly consists of revenue from shopping centre management. 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 -0.8 (-1.0) 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

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shopping centres, including not only their operating margin, but also depreciation, financial expenses and taxes.

Investments' operating profit was EUR -0.4 (-1.4) million. The net effect of currency exchange fluctuations was EUR 0.4 (-0.4) 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 173.4 million (171.9 12/2020). Capital employed was increased by a EUR 0.8 million investment in Voimaosakeyhtiö SF and the strengthening rouble exchange rate.

The return on investment was 1.8.(-13.4 1-3/2020) 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 have recovered well 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.

Capital employed

Capital employed (EUR million)	31 Mar 2021	31 Dec 2020
Okhta Mall, shopping centre	67.5	67.1
Pearl Plaza, shopping centre	18.4	17.3
Tampere Deck and Arena	9.2	9.0
4Daily, shopping centre	5.9	5.6
Plots and other holdings	72.4	72.9
Total	173.4	171.9

Capital employed largely consists of investments in subsidiaries, joint ventures and associated companies; loans issued; accrued income from associated companies; and their impairment and expense entries. Fluctuations in the rouble exchange rate also affect the amount of capital employed.

Shopping centres

SRV is a co-investor in three shopping centre projects through its associated companies. SRV is also responsible for leasing, marketing and managing premises in completed shopping centres. SRV intends to sell its holdings once stable rental income has been achieved or the market situation allows. Stable rental income is usually reached 3–4 years after opening. However, as mentioned in the risk section, due to the coronavirus pandemic and economic uncertainty in Russia, it is possible that the sale of Russian shopping centres may be postponed.

Pearl Plaza, St Petersburg

SRV has a 50 per cent holding in Pearl Plaza. This shopping and entertainment centre in St Petersburg is fully leased. In January–March, visitor numbers fell by 16 per cent on the comparison quarter, which was when the coronavirus pandemic first started to have an impact. In spite of the current restrictions, sales in roubles rose by 7 per cent compared to the corresponding period of last year.

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Okhta Mall, St Petersburg

The Okhta Mall in downtown St Petersburg opened its doors in August 2016. SRV owns 45 per cent of the Okhta Mall directly, and another 15 per cent indirectly through the property investment company Russia Invest. At the end of March, the shopping centre’s occupancy rate was about 95.6 per cent and about 94 per cent of its stores were open. Sales fell by 2 per cent in the January–March period compared to the first quarter of last year. Visitor numbers fell by 24 per cent in January–March. In spite of the partial coronavirus restrictions, positive trends continued in both sales and visitor numbers, and particularly towards the end of the review period.

The Okhta Mall’s parking facility was completed during the review period. The building will be commissioned during 2021.

4Daily, Moscow

The 4Daily shopping centre in the Moscow region opened its doors in April 2017. SRV owns 19 per cent of the shopping centre. By the end of March, about 85.3 per cent of the centre’s premises were leased and 84.8 per cent of its stores were open. In spite of the coronavirus restrictions, visitor numbers rose by 5 per cent in January–March and sales increased by 33 per cent on the comparison period.

Although the shopping centre’s occupancy rate, and therefore its profitability, are still at an insufficient level, the change in the tenant structure and growing visitor numbers are creating a foundation for increasing the occupancy rate.

Other projects

SRV owns 5 per cent of Tampere Arena and has an 8.33 per cent holding in other Tampere Deck and Arena projects.

Plot holdings in Russia for future development include the Okhta City plot adjoining the Okhta Mall in St Petersburg, a 51 per cent holding in the Eurograd plot in St Petersburg and the Mira-II plots adjoining 4Daily in Mytishchi. For the latter, SRV has an agreement with the international sports giant Decathlon for the construction of a store building and to sell part of the plot. Construction of the Decathlon store building is underway.

SRV owns 50 per cent of the Etmia II office project in downtown Moscow. Bankruptcy proceedings have been started for the company. The financing bank will realise the property held as collateral for its loan receivables.

In addition, SRV owns a commercial property in Porvoo (Ratsumestarinkatu 6), and has a 1.8 per cent holding in Voimaosakeyhtiö SF and a 6.4 per cent holding in Vicus Oy.

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Most significant completed investment projects, 31 March 2021

Project	Holding, %	Opened	Floor area (m²)	Occupancy rate 3/2021, %	Target sales date**
Pearl Plaza, shopping centre, St Petersburg	SRV 50	August	Gross floor area	Binding lease agreements 100	2021 –
	Shanghai	2013	96,000
	Industrial Investment Company 50		Leasable area 48,000

Okhta Mall, shopping centre, St Petersburg	SRV 45	August	Gross floor area	Binding lease agreements	2021 –
	Russia Invest 55 *	2016	144,000	95.6
			Leasable area 78,000
4Daily, shopping centre, Moscow	Vicus 26	April	Gross floor area	Binding lease agreements	2022 –
	SRV 19	2017	52,000	85.3
	Blagosostoyanie		Leasable area
	55		25,500

Russia Invest’s shareholders are Finnish institutional investors. Ilmarinen owns a 40 per cent stake in Russia Invest, Sponda and SRV have 27 per cent holdings, and Conficap owns six per cent.
*Due to the coronavirus pandemic and economic uncertainty in Russia, it is possible that the sale of Russian shopping centres may be postponed.

Land reserves

| Land reserves
31 Mar 2021 | Business construction | Housing construction | Investments | Total |
| --- | --- | --- | --- | --- |
| Unbuilt land areas,
land acquisition commitments
and rented plots | | | | |
| Building rights¹), 1,000 m² | 130 | 253 | 433 | 816 |
| Land development agreements | | | | |
| Building rights¹), 1,000 m² | 61 | 201 | 0 | 262 |

1) Building rights also include the estimated building rights/construction volume of unzoned land reserves and land areas covered by agreements in projects that are wholly or partly owned by SRV.

FINANCING AND FINANCIAL POSITION

IFRS, EUR million	31 Mar 2021	31 March 2020	31 Dec 2020
Equity ratio, %	23.8	20.4	22.6
Equity ratio, %, excl. IFRS 16¹)	29.4	25.8	27.8
Net gearing ratio, %	170.8	260.2	159.7
Net gearing ratio, %, excl. IFRS 16¹)	96.5	160.2	82.1

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Shareholders’ equity	181.2	153.9	17.7	181.0
Capital employed	553.8	593.7	-6.7	566.8
Net interest-bearing debt	309.5	400.4	-22.7	289.1
Net interest-bearing debt, excl. IFRS 16^{1)}	180.5	254.1	-28.9	152.9
Interest-bearing debt	372.6	439.8	-15.3	385.8
- of which short-term	117.7	86.8	35.7	17.4
- of which long-term	254.8	353.1	-27.8	368.4
Interest-bearing debt, excl. IFRS 16^{1)}	243.6	293.5	-17.0	249.7
Cash and cash equivalents	63.1	39.4	60.0	96.7
Unused committed revolving credit facility	0.0	0.0	0.0	0.0
Unused project loans that can be drawn immediately	27,3	1.7	1,532.9	20.0

1) The figure has been adjusted to remove the impacts of IFRS 16.

At the end of March, the company’s equity ratio excluding the impact of IFRS 16 was 29.4 per cent (27.8 12/2020) and gearing excluding the impact of IFRS 16 was 96.5 per cent (82.1). The equity ratio calculated as per the covenants of financing agreements was 30.9 per cent, as the covenant calculation took into account the recognition of income from developer-contracted projects on the basis of percentage of completion. The equity ratio level was affected by the high amount of cash and cash equivalents on the balance sheet date.

Net interest-bearing debt totalled EUR 309.5 million (289.1 12/2020) at the end of the review period. Net interest-bearing debt saw year-on-year growth of EUR 20.4 million. Excluding the impact of IFRS 16, net interest-bearing debt totalled EUR 180.5 million, representing a rise of EUR 27.6 million on the comparison period. Housing corporation loans account for EUR 35.2 (40.7) million of the interest-bearing debt.

At the end of the period, the Group’s financing reserves totalled EUR 90.4 million (116.8 12/2020), consisting of unused project loans (EUR 27.3 million) and cash and cash equivalents (EUR 63.1 million). Financing reserves were affected by EUR -23.3 (19.6 1-3/2020) million in cash flow from operating activities and investments, EUR -10.7 (-7.2) million in cash flow from financing activities, and an increase in undrawn project loans. The company’s current revolving credit facility of EUR 51 million was completely withdrawn at the end of the review period. EUR 30.5 million of the company’s EUR 40 million facility for project financing was unused at the end of the review period.

The financial covenants of SRV’s financing agreements are equity ratio, net gearing, minimum operating margin, minimum cash, the interest coverage ratio and certain other restrictions. The interest coverage ratio is the ratio of the Group’s operating margin (EBITDA) to its net financial expenses. The interest cover ratio is tested only if and when new loan financing is withdrawn; the covenant does not prevent the refinancing of existing sources of financing. Due to the interest cover ratio covenant related to these notes, the total amount of SRV’s drawn down loans, such as the commercial paper programme, revolving credit facility, overdraft facilities, pension insurance (TyEl) re-lending, new bonds and hybrid loans and some other loans, may amount to EUR 137 million if the interest cover ratio test is failed. At the end of March, the drawn amounts for the items referred to above amounted to EUR 51 million in total. The main covenants of the financing agreements are presented in note 11 to the interim report.

The covenant levels of these financing agreements are determined on the basis of the accounting principles in force when the loan agreements were signed. Recognition of income on the basis of percentage of completion in developer contracting projects and the inclusion of capital loans into equity are taken into consideration in the calculation of the equity ratio covenant. The loan agreements also contain some other

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deviations from traditional covenant calculation methods. The covenants for all loan agreements were met on 31 March 2021.

SRV's investment commitments totalled EUR 25.4 (26.4 12/2020) million at the end of March, and mainly consisted of investments in Fennovoima’s Hanhikivi-1 nuclear power plant project and the Tampere Deck and Arena project.

SRV is exposed to changes in the exchange rate of the rouble through its Russian subsidiaries, associated companies and joint ventures. The strengthening rouble led to translation differences of EUR 1.3 (-14.2 1-3/2020) million, which impacted both shareholders' equity and the comprehensive result for the period. In addition to currency exchange rate gains with no cash flow impact amounting to EUR 0.6 (-6.5) million in financial income and expenses, the Group also entered similarly derived currency exchange rate gains of EUR 0.5 (-6.3) million with no cash flow impact under the profit accounted for by associated companies, which are due primarily to the conversion of currency-denominated loans to roubles and the stronger rouble exchange rate. Currency exchange rate gains were reduced by EUR -0.1 (5.8) million in net hedging returns. The total impact on shareholders' equity was EUR 2.3 million. The currency risk position is presented in note 12 to the interim report.

In April 2021, after the end of the review period, the company agreed on the replacement of its current EUR 51 million revolving credit facility and EUR 40 million project financing facility with the syndicate banks; the facilities were replaced with a new EUR 40 million committed revolving credit facility, a EUR 40 million committed project financing facility and a EUR 63 million non-committed project financing facility. EUR 10 million of the new EUR 40 million revolving credit facility will mature in March 2022 and EUR 30 million in April 2023. The new project financing facilities of EUR 40 and 63 million will be used to finance future construction projects. They fall due in April 2023 or within another repayment period agreed for separate construction projects.

At the end of April 2021, SRV carried out written procedures to extend the tenor of its EUR 100 million (of which EUR 62.1 million is outstanding) senior unsecured callable fixed-rate notes due 23 March 2022 by three years and the tenor of its EUR 75 million senior unsecured callable fixed-rate notes due 27 September 2023 by two and half years, as well as to amend certain terms and conditions of these notes. In May 2021, SRV will make a partial early repayment on the aforementioned notes of a total nominal amount of EUR 27.1 million and will also undertake to make partial early repayments of a total nominal amount of EUR 5 million on each interest payment day. The new due dates are 23 March 2025 for the EUR 100 million senior unsecured callable fixed-rate notes (with an outstanding principal of EUR 62.1 million at the end of the review period) and 27 March 2025 for the EUR 75 million senior unsecured callable fixed-rate notes.

As a result of the aforementioned arrangements after the end of the review period, the company's equity ratio and the maturity structure of its unsecured debts will both improve significantly.

RISKS, RISK MANAGEMENT AND CORPORATE GOVERNANCE

SRV has published a separate Corporate Governance Statement in its Annual Review and on the company's website. More detailed information about the company's business risks and risk management has been provided in the 2020 Notes to the Financial Statements and Annual Review, which have been published on the company's website.

The most significant risks concern negative changes in SRV’s and its customers’ operating environment and currently the coronavirus pandemic in particular, capital employed in major projects, SRV’s earnings trend, availability of financing for SRV and its projects, the development of the situation in Russia, the rouble exchange rate and key project implementation risks.

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A significant risk is still posed by the coronavirus pandemic and its impact not only on the operating conditions and business of SRV, its customers and other partners, but also its broader effects on general economic development. Although the pandemic situation worsened in early 2021, infection rates started to decline again in mid-March. Measures to lift restrictions are currently being planned and economic growth is forecast to pick up towards the end of the year. However, how the situation develops is largely dependent on whether or not the pandemic is prolonged further. The scheduling and effectiveness of Covid-19 vaccinations will be decisive.

In its Russian business, fluctuations in the rouble exchange rate expose SRV to translation and transaction risks. A ten per cent weakening of the rouble against the euro on the reporting date would have had an impact of about EUR -6.7 million on the Group’s equity translation differences. A ten per cent weakening in the exchange rate would correspondingly have an impact of about EUR -5.0 million on SRV’s earnings if the effect of currency hedging were not taken into account. The exact rouble hedging rate varies over time. SRV’s transaction risk largely comprises the euro-denominated loans of associated companies that are partly owned by SRV. The remaining exchange rate risk is hedged in accordance with the hedging policy approved by the Board of Directors.

SRV Group Plc's Russian subsidiary, of which SRV Group Plc indirectly owns 51 per cent, is involved in legal proceedings in Russia. This lawsuit is still ongoing, as the counterparty appealed to the Supreme Court after the end of the review period. The lawsuit concerns an agreement for an electrical connection that was never implemented.

There is a risk that the land lease on a particular plot owned by SRV Group Plc’s subsidiary in Russia will not be extended. The development of this plot has been delayed due to the market situation and it is possible that the City will not extend the land lease agreement beyond autumn 2021. If this happens, the EUR 1.7 million acquisition cost of SRV’s lease would become worthless.

In order to develop its business, the company has launched a strategic spearhead programme to integrate a lifecycle-wise approach into all construction and cooperation. Other strategic development programmes include “streamlining operations throughout the construction chain”, “housing construction at the forefront of profitability”, and “a leading market position in the business premises market”.

PERSONNEL

Personnel by segment at end of period	31 Mar 2021	31 March 2020	Percentage of Group personnel, 31 Mar 2021
Construction	767	793	83
Investments	107	134	12
Other operations	53	58	6
Group, total	927	985	100

SRV employed an average of 930 (997 1–3/2020) people in January–March. On average, 774 (804) people worked in Construction and 105 (134) people worked in Investments. 51 (59) people worked in Group operations.

The company continued recruiting during the first quarter, particularly for construction site management positions.

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Changes in the Corporate Executive Team

The following joined SRV Group Plc as members of the Corporate Executive Team: Miia Eloranta, Senior Vice President, Communications and Marketing, on 4 January 2021; Kristiina Sotka, Senior Vice President, HR, on 1 February 2021; and Jouni Forsman, Senior Vice President, Business Premises, Helsinki Metropolitan Area, on 16 February 2021.

The following left their positions at the company: Maija Karhusaari, Senior Vice President, Communications and Marketing, on 4 January 2021; Ilkka Pitkänen, CFO, on 31 January 2021; and Juha Toimela, Deputy CEO and Senior Vice President, Business Premises, Helsinki Metropolitan Area, on 1 March 2021.

SUSTAINABILITY

Occupational safety

SRV’s long-term target is to reach a level of zero accidents. The short-term target is to reduce the accident frequency by 10 per cent every year.

At the end of the review period, the Group’s twelve-month rolling accident frequency rate for its own and subcontractors’ personnel stood at 14.40 accidents per million hours worked. The accident frequency rate target for 2021 is 14.30 accidents per million hours worked.

TR measurement is a method of making occupational safety observations on building construction sites, thereby enabling sites to prevent accidents. At the end of the review period, the Group’s twelve-month rolling TR measurement was 95.95 per cent compared to its target of 96 per cent.

MVR measurement is a method of assessing the safety of earthworks and hydraulic engineering sites. The MVR and TR indexes are both expressed as percentages. That is, the number of correct observations as a percentage of the total number of observations made. The larger the proportion of correct observations, the better the index and the higher the safety level. At the end of the review period, the Group’s twelve-month rolling MVR measurement was 95.77 per cent compared to its target of 96 per cent.

Environment

Material efficiency and minimising the amount of waste are two of the main objectives of SRV’s environmental activities.

The Group’s twelve-month rolling recycling rate stood at 95.2 per cent at the end of the review period. The recycling rate target for 2021 is 92 per cent.

The Group’s twelve-month rolling sorting rate stood at 66.4 per cent at the end of the review period. Although the Group’s sorting rate is monitored on a monthly basis, sorting rate targets are always set by project. The sorting rate targets for 2021 range between 50 and 75 per cent, depending on the type of project in question. SRV’s goal is to increase the sorting rate by five per cent for all types of projects in 2021.

Sustainability at SRV is presented in more detail in the 2020 Annual Review.

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CORPORATE GOVERNANCE AND THE DECISIONS OF THE ANNUAL GENERAL MEETING

SRV Group Plc’s Annual General Meeting (AGM) was held on Monday 29 March 2021.

The AGM was held remotely on the basis of temporary legislation. Company shareholders could attend the meeting and exercise their shareholders’ rights only by voting in advance and submitting any counterproposals and questions in advance. The AGM adopted SRV Group Plc’s Financial Statements for the period 1 January–31 December 2020 and released the members of the Board of Directors and the President & CEO from liability. The AGM decided that no dividend would be paid for the financial year 2020.

The number of members of the Board of Directors was confirmed as five (5). Timo Kokkila, M.Sc. (Tech.), Tomi Yli-Kyyny, M.Sc. (Tech.), Hannu Leinonen, M.Sc. (Tech.), and Heikki Leppänen, Lic.Sc. (Tech.), were re-elected to the Board of Directors and Heli Iisakka, MSc. (Econ.), was elected as a new member. Tomi Yli-Kyyny was elected as the Chair of the Board of Directors. The Annual General Meeting resolved that the remuneration for the members of the Board of Directors shall be EUR 6,000 per month for the Chair, EUR 4,000 per month for the Vice Chair and EUR 3,000 per month per member. The Chair of the Audit Committee will receive EUR 4,000 per month on condition that the Chair of the Audit Committee is not also the Chair or Vice Chair of the Board. In addition, a EUR 700 fee will be paid to each member per Board and committee meeting. Travel expenses arising from performing the duties of a member of the Board of Directors will also be reimbursed according to company’s travel policy.

In its meeting after the AGM, the Board of Directors elected a Vice Chair, Timo Kokkila, from among its members. Heli Iisakka was elected as Chair of the Audit Committee, and Hannu Leinonen and Timo Kokkila as members. Tomi Yli-Kyyny was elected as Chair of the HR and Nomination Committee, and Hannu Leinonen and Heikki Leppänen as members. The AGM authorised the Board of Directors to decide on the acquisition of the company’s own shares. The Board of Directors was authorised to acquire a maximum of 26,000,000 shares in the company so that the number of shares acquired on the basis of the authorisation, when combined with the shares already owned by the company and its subsidiaries, does not at any given time exceed a total of 10 per cent of all shares in the company. The authorisation is valid until 30 June 2022.

The Annual General Meeting also authorised the Board of Directors to decide on the issuance of new shares and/or granting of other special rights entitling to shares as referred to in Chapter 10, Section 1 of the Finnish Companies Act, either for consideration or free of consideration, and in one or several instalments. Under the authorisation, the number of shares to be issued or the number of reissued shares held by the company, including the shares issued on the basis of the special rights, shall not exceed 26,000,000 shares. The authorisation may be used, for example, when issuing new shares or conveying shares as consideration in corporate acquisitions, when the company acquires assets relating to its business, in order to strengthen the company’s capital structure and for implementing incentive schemes. The Board of Directors was authorised to resolve on all other terms and conditions of the share issue. The authorisation is valid until 30 June 2022.

The AGM also decided to change Section 6 of the Articles of Association (representation rights) and approved the company’s executive remuneration report for 2020. The firm of public accountants PricewaterhouseCoopers Oy was elected as the company’s auditor. Enel Sintonen, authorised public accountant, is the principal auditor. The auditors’ remuneration was confirmed as payable on the basis of an approved invoice.

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SHARE-BASED INCENTIVE SCHEME

On 29 March, SRV Group Plc's Board of Directors decided to establish a new long-term share-based incentive scheme for 2021–2025 and a one-off long-term share-based incentive scheme for 2021–2022 for the Group's key personnel. The purpose of these schemes is to align the objectives of shareholders and key personnel in order to increase the company's value over the long term, and to enhance key personnel's commitment to the company.

Any incentives paid as part of the long-term scheme (2021–2025) would be based on the company's total shareholder return (TSR) in relation to a separately selected reference group, the company's indebtedness and the increase in share price. The scheme has three three-year earning periods starting in 2021–2023. The first earning period will begin in 2021 with a target group of about 30 people. The total value of the incentives paid on the basis of the 2021–2023 earning period will be equivalent to a maximum of about 4,400,000 SRV Group Plc shares. The scheme's calculated IFRS cost is about EUR 1.0 million, which will be accrued over the 2021–2023 earning period.

Any incentives paid as part of the one-off long-term scheme (2021–2022) would be based on the Group's operative cash flow and total shareholder return (TSR) on the SRV Group Plc share over a period of two years. The target group for the scheme is about 30 key personnel and the total value of any incentives paid would be equivalent to a maximum of about 4,400,000 SRV Group Plc shares. The scheme's calculated IFRS cost is about EUR 0.9 million, which will be accrued over the 2021–2022 earning period.

SHARES AND SHAREHOLDERS

SRV Group Plc's share capital is EUR 3.1 million. The share has no nominal value and the number of shares outstanding is 263,017,341. The company has one class of shares.

The closing price at Nasdaq Helsinki on 31 March 2021 was EUR 0.57 (EUR -0.02 on 31 December 2020, change -3.4%). The highest share price during the reporting period was EUR 0.61 and the lowest EUR 0.55. At the end of the period, SRV's equity per share excluding the hybrid bond was EUR 0.65. On 31 March 2021, SRV had a market capitalisation of EUR 149.4 million, excluding the Group's treasury shares. 12.4 million shares were traded during the review period with a trade volume of EUR 7.0 million.

FINANCIAL OBJECTIVES

SRV's strategy and all of its operations are guided by the 2021–2024 strategic financial objectives that were approved in February 2021:

Operative operating profit: 6 per cent by the end of the period.
Gearing excluding the impact of IFRS 16: 40-60 per cent by the end of the period.
As the company gradually reduces its indebtedness, SRV expects that it will pay dividends in accordance with its dividend policy no earlier than for the 1 January–31 December 2023 financial year. The longer-term objective is to distribute dividend of 30-50 per cent of the annual result, taking into account the capital needs of business operations.

The updated definition of operative operating profit is used in these financial objectives (see Outlook for 2021).

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OUTLOOK FOR 2021

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 are 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.

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

Espoo, 29 April 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.

About this interim report

This interim report has been prepared in accordance with IAS 34, and the disclosed information is unaudited. The figures in parentheses are the comparison figures for 2020.

Briefing, webcast and presentation materials

A briefing for analysts, fund managers, investors and media representatives will be held on 29 April 2021, starting at 12:00 EET as a webcast. 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.

Next interim report

SRV Group Plc will publish its half-year report for 2021 on 21 July 2021. During the silent period (21 June–21 July), the company will not comment on anything relating to market outlooks, business or earnings trends.

For further information, please contact:

Saku Sipola, President & CEO, tel. +358 (0)40 551 5953, [email protected]
Jarkko Rantala, CFO, tel. +358 (0)40 674 1949, [email protected]
Miia Eloranta, Senior Vice President, Communications and Marketing, tel. +358 (0)50 441 4221, [email protected]

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Key figures

EUR million	1-3/2021	1-3/2020	1-12/2020	Last 12 Months
Revenue	187.1	208.1	975.5	954.6
Operative operating profit 1)	4.8	4.3	15.8	16.2
Operative operating profit, % revenue 1)	2.5	2.1	1.6
Operating profit	5.2	4.5	1.5	2.1
Operating profit, % revenue	2.8	2.2	0.2
Operating profit, excl. IFRS16 2)	4.3	3.6	-2.7	-2.0
Operating profit, % revenue excl. IFRS16 2)	2.3	1.7	-0.3
Profit before taxes	1.1	-6.6	-28.0	-20.3
Profit before taxes, % of revenue	0.6	-3.2	-2.9
Net profit attributable to equity holders of the parent company	1.5	-6.1	-22.8	-15.2
Return on equity, %	3.5	-18.4	-14.1
Return on investment, % 5)	4.7	-0.4	-0.8
Return on investment % excl. IFRS16 2) 5)	5.3	-1.4	-2.0
Capital employed	553.8	593.7	566.8
Capital employed excl. IFRS16 2)	430.6	452.0	436.0
Equity ratio %	23.8	20.4	22.6
Equity ratio excl. IFRS16, % 2)	29.4	25.8	27.8
Net interest-bearing debt	309.5	400.4	289.1
Net interest-bearing debt excl. IFRS16 2)	180.5	254.1	152.9
Net gearing ratio, %	170.8	260.2	159.7
Net gearing ratio excl. IFRS16, % 2)	96.5	160.2	82.1
Order backlog 3)	1,061.1	1,361.5	1,153.4
New agreements	85.4	198.2	707.1
Personnel on average	930	997	991
Earnings per share 4)	0.00	-0.11	-0.15	-0.04
Earnings per share (diluted) 4)	0.00	-0.11	-0.15	-0.04
Equity per share 4)	0.71	2.18	0.71
Equity per share (without hybrid bond), euros 4)	0.65	1.03	0.65
Dividend per share, euros	0.00	0.00	0.00
Dividend payout ratio, % 4)	0.0	0.0	0.0
Dividend yield, % 4)	0.0	0.0	0.0
Price per earnings ratio	138.6	neg.	neg.
Share price development:
Share price at the end of the period, eur	0.57	0.94	0.59
Average share price, eur	0.57	1.22	0.60
Lowest share price, eur	0.55	0.82	0.45
Highest share price, eur	0.61	1.50	1.10
Market capitalisation at the end of the period 4)	149.4	67.8	154.7
Trading volume, 1 000 units 4)	12,360	4,219	45,524
Trading volume, % 4)	4.7	5.8	26.2
Weighted average number of shares outstanding during the period, 1 000 units 4)	262,170	72,149	173,891
Weighted average number of shares outstanding during the period (diluted) 1 000 units 4)	262,170	72,149	173,925
Number of shares outstanding at the end of the period, 1 000 units 4)	262,175	72,149	262,167

1) The reconciliation calculation for operative operating profit can be found underneath this table
2) The effects of IFRS16 have been adjusted from the figure.
3) The Group's order backlog consists of the Construction business.
4) Comparative data is share issue adjusted.
5) In calculation of the key ratios, only the profit for the review period has been annualised.

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Interim Report, 1 January–31 March 2021

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Alternative performance measures used in interim reporting

The company discloses certain other widely used performance measures that can for the most part be derived from the income statement and balance sheet. The company also publishes key figures excluding effect of IFRS 16. The formulas for these performance measures are provided in the next page. In the company's view, these measures clarify the result of operations and financial position based on the income statement and balance sheet.

SRV presents key figures for operative operating profit and operating profit margin in the interim report

The key figure for operative operating profit is considered to provide a better view of the Group's operations when comparing the reported period to earlier periods. The currency exchange rate gains and losses of associated companies as well as income and expenses from hedging and items affecting comparability are eliminated from operating profit. The currency exchange rate gains and losses of associated companies are included above operating profit on the line "share of profits of associated and joint venture companies". Income and expenses from currency hedging are included above operating profit on the line "Income and expenses on currency derivatives".

Operative operating profit's reconciliation table

| SRV Group
(EUR million) | 1-3/
2021 | 1-3/
2020 | 1-12/
2020 |
| --- | --- | --- | --- |
| Operative operating profit in accordance with the new definition | 4.8 | 4.3 | 15.8 |
| +/- exchange rate gains and losses of associated companies and joint ventures and | 0.5 | -6.3 | -9.9 |
| +/- income and expenses from currency hedging | -0.1 | 5.8 | 5.5 |
| +/- Items affecting comparability | | | |
| +/- Impairments of assets and their reversal | -0.4 | 0.0 | -12.3 |
| +/- gains and losses from exceptional sales of assets | 0.4 | 0.6 | 2.3 |
| +/- income and expenses due to changes in the Group structure | 0.0 | 0.0 | 0.0 |
| +/- Items affecting comparability in total | 0.0 | 0.6 | -9.9 |
| Operating profit | 5.2 | 4.5 | 1.5 |

SRV presents key figures excluding effect of IFRS 16 standard

The company publishes alternative key figures, that is, IFRS 16 key figures that have been adjusted to exclude the impact of the IFRS 16 Leases standard on the balance sheet and result.

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Interim Report, 1 January–31 March 2021

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Calculation of key figures

Return on equity, %	=	100 x	Net profit for the period
			Total equity, average
Capital employed	=		Total assets – non-interest bearing debt – deferred tax liabilities – provisions
Capital employed, excl. IFR$16	=		Total assets – non-interest bearing debt – deferred tax liabilities – provisions – property, plant and equipment, right-of-use asset – inventories, right-of-use asset
Return on investment, %	=	100 x	Operating profit + interest and other financial income (incl. exchange rate gains and losses) + Financial receivables write-down and sales loss (interim periods annualized)
			Invested capital, average
Return on investment, % excl. IFR$16	=	100 x	Operating profit excl. IFR$16 bookings + interest and other financial income (incl. exchange rate gains and losses) + Financial receivables write-down and sales loss (interim periods annualized)
			Capital employed excl. IFR$16, average
Equity ratio, %	=	100 x	Total equity
			Total assets – advances received
Equity ratio,% excl. IFR$16	=	100 x	Total equity – IFR$16 depreciations, leases and interest and financial expenses recognised in income statement
			Total assets – advances received – IFR$16 depreciations, leases and interest and financial expenses recognised in income statement
Net interest-bearing debt	=		Interest-bearing debt – cash and cash equivalents
Net interest-bearing debt excl. IFR$16	=		Interest-bearing debt - interest-bearing lease liabilities – cash and cash equivalents
Net gearing ratio, %	=	100 x	Net interest-bearing debt
			Total equity
Net gearing ratio,% excl. IFR$16	=	100 x	Interest-bearing debt - interest-bearing lease liabilities – cash and cash equivalents
			Total equity – IFR$16 depreciations, leases, interest and financial expenses recognized in income statement
Earnings per share attributable to equity holders of the parent company	=		Result for the period – non-controlling interest – hybrid bond interest, tax adjusted
			Average number of shares
Earnings per share attributable to equity holders of the parent company (diluted)	=		Result for the period – non-controlling interest – hybrid bond interest, tax adjusted
			Average number of shares (diluted)
Equity per share	=		Shareholders’ equity attributable to equity holders of the parent company
			Average number of shares at end of period
			Earnings per share
Equity per share (without hybrid bond)	=		Shareholders’ equity attributable to equity holders of the parent company – hybrid bond
			Average number of shares at end of period
Price per earnings ratio (P/E-ratio)	=		Share price at end of period
			Earnings per share
Dividend payout ratio, %	=	100 x	Dividend per share
			Earnings per share
Dividend yield, %	=	100 x	Dividend per share
			Share price at end of period
Average share price	=		Number of shares traded in euros during the period
			Number of shares traded during the period
Market capitalisation at the end of the period	=		Number of shares outstanding at the end of the period x share price at the end of the period
Trading volume	=		Number of shares traded during the period and their percentage of the weighted average number of shares outstanding
Operative operating profit	=		Operating profit +/- currency exchange rate gains and losses +/- income and expenses from hedging +/- items affecting comparability

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Interim Report, 1 January–31 March 2021

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Group and Segment information by quarter

SRV Group	1-3/	10-12/	7-9/	4-6/	1-3/
EUR million	2021	2020	2020	2020	2020
Revenue	187.1	292.5	209.9	265.0	208.1
Operative operating profit	4.8	5.3	5.6	0.5	4.3
Operating profit	5.2	-8.0	1.7	3.3	4.5
Financial income and expenses, total	-4.1	-6.5	-8.8	-3.1	-11.1
Profit before taxes	1.1	-14.5	-7.0	0.2	-6.6
Order backlog 1)	1,061.1	1,153.4	1,280.3	1,332.4	1,361.5
New agreements	85.4	140.7	154.4	213.7	198.2
Earnings per share, eur 2)	0.00	-0.05	-0.01	0.02	-0.11
Equity per share, eur	0.65	0.65	0.69	0.75	1.03
Share closing price, eur	0.57	0.59	0.53	0.48	0.94
Equity ratio, %	23.8	22.6	23.8	25.3	20.4
Equity ratio, % excl. IFRS16 3)	29.4	27.8	29.6	30.6	25.8
Net interest-bearing liabilities	309.5	289.1	341.7	307.4	400.4
Net interest-bearing liabilities excl. IFRS16 3)	180.5	152.9	194.9	177.0	254.1
Net gearing, %	170.8	159.7	177.4	148.5	260.2
Net gearing, % excl. IFRS16 3)	96.5	82.1	98.4	83.5	160.2
Revenue	1-3/	10-12/	7-9/	4-6/	1-3/
EUR million	2021	2020	2020	2020	2020
Construction	187.8	292.0	209.1	264.1	204.9
business construction	140.5	186.7	157.8	182.2	154.0
housing construction	47.3	105.3	51.3	81.9	50.8
Investments	1.0	0.9	1.1	1.2	1.6
Other operations and eliminations	-1.7	-0.3	-0.3	-0.2	1.6
Group, total	187.1	292.5	209.9	265.0	208.1
Operative operating profit	1-3/	10-12/	7-9/	4-6/	1-3/
EUR million	2021	2020	2020	2020	2020
Construction	6.9	8.5	3.7	7.4	5.5
Investments	-0.8	-1.9	1.6	-4.4	-1.0
Other operations and eliminations	-1.3	-1.3	0.3	-2.4	-0.2
Group, total	4.8	5.3	5.6	0.5	4.3
	1-3/	10-12/	7-9/	4-6/	1-3/
Operative operating profit (%)	2021	2020	2020	2020	2020
Construction	3.7	2.9	1.8	2.8	2.7
Investments	-	-	-	-	-
Group	2.5	1.8	2.7	0.2	2.1
Operating profit	1-3/	10-12/	7-9/	4-6/	1-3/
EUR million	2021	2020	2020	2020	2020
Construction	6.9	8.7	5.2	7.4	6.2
Investments	-0.4	-15.4	-3.8	-1.7	-1.4
Other operations and eliminations	-1.3	-1.3	0.3	-2.4	-0.2
Group, total	5.2	-8.0	1.7	3.3	4.5
	1-3/	10-12/	7-9/	4-6/	1-3/
Operating profit (%)	2021	2020	2020	2020	2020
Construction	3.7	3.0	2.5	2.8	3.0
Investments	-	-	-	-	-
Group	2.8	-2.8	0.8	1.2	2.2

1) The Group's order backlog consists of the Construction business.
2) The comparison figure have been adjusted for share issues.
3) The effects of IFRS16 have been adjusted from the figure.

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Interim Report, 1 January–31 March 2021

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Order backlog EUR million	31.3.2021	31.12.2020	30.9.2020	30.6.2020	31.3.2020
- business construction	606.5	718.2	825.8	837.9	858.4
- housing construction	454.6	435.2	454.5	494.6	503.1
Group, total 3)	1,061.1	1,153.4	1,280.3	1,332.4	1,361.5
sold order backlog	931	997	1,113	1,142	1,153
unsold order backlog	131	157	168	191	208

1) Group's order backlog consists only of construction segment.

Order backlog, housing construction in Group
EUR million	31.3.2021	31.12.2020	30.9.2020	30.6.2020	31.3.2020
Negotiation and construction contracts	207	202	187	210	191
Under construction, sold	117	77	100	94	104
Under construction, unsold	114	128	147	162	183
Completed and unsold	17	28	21	28	25
Housing construction, total	455	435	455	495	503
Housing production in Group (units)	1-3/2021	10-12/2020	7-9/2020	4-6/2020	1-3/2020
---	---	---	---	---	---

Housing sales, total	348	327	130	445	364
sales, developer contracting	170	104	83	59	108
sales, negotiation contracts	178	223	47	386	256
Developer contracting
- start-ups	124	68	0	0	0
- completed	0	282	96	142	0
- recognized in revenue	44	235	127	128	25
- completed and unsold	46	92	45	76	60
Under construction, total	2,271	2,127	2,076	2,316	2,168
construction contracts	0	0	80	80	80
negotiation contracts	409	369	247	247	247
negotiated contracts	1,355	1,375	1,152	1,296	1,006
developer contracting	507	383	597	693	835
- of which sold	334	210	341	385	454
- of which unsold	173	173	256	308	381

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SRV GROUP PLC THE INTERIM REPORT, 1 JANUARY–31 MARCH 2021: TABLES

1) Accounting policies
2) Consolidated income statement and consolidated statement of comprehensive income
3) Consolidated balance sheet
4) Consolidated cash flow statement
5) Statement of changes in Group equity
6) Group commitments and contingent liabilities
7) Financial assets and liabilities by measurement categories
8) Breakdown of revenue
9) Group and segment information
10) Inventories
11) Changes in financial position
12) Currency Risks
13) Related party transactions
14) Assets designated as held for sale and sales made during the period

1) The interim Report 1 January – 31 March 2021

Accounting policies

This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting. In preparing this Interim report release, SRV has applied the same accounting policies as in its annual Financial Statements for 2020. The information disclosed in this Interim Report is unaudited. The figures in this Interim Report have been rounded up to millions of euros, so the sum total of individual figures may deviate from the sum total presented.

Impacts of the coronavirus on SRV’s financial reporting

SRV continuously assesses how the coronavirus epidemic is developing and its potential impacts on financial reporting.

SRV uses certain stimulus measures introduced in 2020 in response to the coronavirus epidemic. The company still uses payment arrangements for VAT liabilities. At the end of the review period, other liabilities included EUR 39.1 million in tax liabilities for which the tax authorities had granted payment arrangements by the end of the period. In accordance with these payment arrangements, the company must repay the tax liabilities in even instalments such that they have been repaid in full in June 2022. Interest of 2.5 per cent is paid on the liabilities covered by the payment arrangement.

The potential risks arising from the coronavirus pandemic that, if realised, could impact the company’s result, balance sheet and cash flows are described below. Other potential coronavirus-related risks to SRV’s business have been described in the section of the Interim Report release titled ‘Risks, risk management and corporate governance’.

Potential financial risks associated with the coronavirus pandemic

It is difficult to forecast the impacts of the coronavirus pandemic (including the timing, duration and extent of these impacts) on the global economy, on the economy in SRV’s operating countries, and on SRV’s business and that of its subcontractors and customers, particularly as both the situation and resulting government measures are changing very rapidly.

The pandemic and its associated restrictions are affecting both the company’s subcontractors and employees. Impacts on subcontractors may lead to a rise in material prices and increased problems and disruptions in material delivery logistics. Combined with sickness absences and restrictions on the movement of SRV personnel, they could lead to delays or the suspension of work on construction sites. This could in turn have a negative impact on the amount of revenue that can be recognised from projects and when it can be recognised, and also on project profit margins and the profitability of SRV’s business.

An epidemic or pandemic may significantly impact the financial position and financing of SRV’s customers, which can in turn lead to development projects being delayed, temporary shutdowns of construction sites, cancellations of agreed orders, and the postponement

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Interim Report, 1 January–31 March 2021

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of start-ups. A deterioration in customers' financial positions may also lead to an increase in SRV's credit losses as trade receivables decrease in value.

The coronavirus-related restrictions placed on the business activities of shopping centre tenants, including any potential rent reductions for tenants have led and may lead in lower income from the shopping centres operated by SRV in Russia. They may have an impact on the value of loan receivables, either those from the associated companies that own the Russian shopping centres or those of SRV's holdings in associated companies. Lower-than-expected rental income could also affect the additional sale price that may potentially be obtained from the sale of the REDI Shopping Centre. The value of the additional sales price of the REDI shopping centre was decreased by EUR 13.0 million during the fourth quarter on the basis of an updated cash flow-based forecast.

The pandemic could also affect demand for SRV's projects and services, such as commercial premises and housing. Reduced demand could have a negative impact on SRV's future revenue, cash flow, liquidity and, for example, whether SRV will be able to meet the covenants for its financing agreements. The pandemic may also affect the availability of project and working capital financing. A protracted pandemic could also lead to a reduction in the value of SRV's financial assets, deferred tax assets, unbuilt plots, and any development projects classified as inventories. In addition, the progress of the pandemic in Russia may affect the exchange rate of the rouble and, consequently, the valuation of SRV's assets located in Russia.

Use of estimates

The preparation of the Interim Report in accordance with IFRS requires Group management to make estimates and assumptions that affect both the values of assets and liabilities on the balance sheet date, and income and expenditure for the financial period. Judgements also have to be made in applying the accounting principles. As these estimates and assumptions are based on current perceptions of the situation on the balance sheet date, they involve risks and uncertainties. Actual results may therefore differ from the estimates and assumptions. The key accounting estimates and judgement-based solutions are presented in greater detail in the accounting principles of the consolidated financial statements for 2020.

This Interim Report has been prepared on a going concern basis, as SRV's management considers that there are no material uncertainties concerning the ability to continue as a going concern. In addition to the coronavirus-related risks detailed above, the future development of the Group's operations will be affected by factors such as its earnings trend, availability of financing for projects that tie up capital, sufficiency of liquidity, and the development of the situation in Russia and the rouble exchange rate. The Group's management has made estimates of the future revenues, operating margins, investments, financial position, the expected cash flows from investments and loan receivables of associated and joint ventures and working capital requirements of the companies.

SRV has estimated the impacts of the risks caused by the coronavirus epidemic on the Interim Report income statement and balance sheet. In particular, the company has assessed whether there are indications of the impairment of assets or the need to update provisions or other accounting estimates.

Events after the period

On 27 April 2021, the company carried out written procedures to amend the terms and conditions of its two bonds. Under the new terms and conditions, the due dates for the bonds were extended until March 2025, SRV will make a partial early repayment of a total nominal amount of EUR 27.1 million and will undertake to make payments of a total nominal amount of EUR 5 million on each interest payment day. In addition, amendments were made to some other terms and conditions.

On 28 April 2021, the company agreed on the replacement of its current EUR 51 million revolving credit facility and EUR 40 million project financing facility with the syndicate banks; the facilities were replaced with a new EUR 40 million committed revolving credit facility, a EUR 40 million committed project financing facility and a EUR 63 million non-committed project financing facility. EUR 10 million of the new EUR 40 million revolving credit facility will mature in March 2022 and EUR 30 million in April 2023.

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2) Consolidated income statement and statement of comprehensive income

Consolidated income statement	1-3/2021	1-3/2020	change MEUR	change %	1-12/2020	Last 12 Months
EUR million
Revenue	187.1	208.1	-21.0	-10.1	975.5	954.6
Other operating income	1.0	0.2	0.9	542.8	2.2	3.0
Change in inventories of finished goods and work in progress	4.3	8.9	-4.6	-51.9	-0.8	-5.4
Use of materials and services	-165.4	-186.9	21.5	-11.5	-868.2	-846.7
Employee benefit expenses	-18.1	-19.3	1.2	-6.3	-69.4	-68.2
Share of profits of associated and joint venture companies	0.2	-6.9	7.1		-13.6	-6.4
Depreciation	-1.5	-2.0	0.4	-21.2	-7.4	-7.0
Impairments	0.0	0.0	0.0		-11.5	-11.5
Other operating expenses	-2.2	-3.3	1.1	-32.9	-10.9	-9.8
Income and expenses on currency derivatives	-0.1	5.8	-6.0		5.5	-0.5
Operating profit	5.2	4.5	0.6	14.0	1.5	2.1
Financial income	1.5	1.3	0.2	11.8	3.7	3.9
Financial expenses	-5.6	-12.4	6.9	-55.1	-33.1	-26.3
Financial income and expenses, total	-4.1	-11.1	7.0	-63.1	-29.4	-22.4
Profit before taxes	1.1	-6.6	7.7		-28.0	-20.3
Income taxes	0.5	-1.0	1.5		2.9	4.3
Net profit for the period	1.6	-7.6	9.1		-25.1	-16.0
Attributable to
Equity holders of the parent company	1.5	-6.1			-22.8	-15.2
Non-Controlling interests	0.1	-1.4			-2.3	-0.8
Earnings per share attributable to equity holders of the parent company	0.00	-0.11			-0.15	-0.04
Earnings per share attributable to equity holders of the parent company (diluted)	0.00	-0.11			-0.15	-0.04
Consolidated statement of comprehensive income	1-3/2021	1-3/2020			1-12/2020	Last 12 Months
EUR million
Net profit for the period	1.6	-7.6			-25.1	-16.0
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Gains and losses arising from translating the financial statements of a foreign operation	2.5	-3.0			-3.3	2.2
Share of other comprehensive income of associated and joint ventures companies	-0.9	-11.2			-15.1	-4.8
Other comprehensive income for the period, net of tax	1.5	-14.3			-18.3	-2.5
The share of comprehensive income attributable to equity holders of the parent company	1.3	-14.3			-18.6
Non-controlling interests in comprehensive income	0.2	0.0			0.2
Total comprehensive income for the period	3.1	-21.8			-43.4	-18.5
Attributable to
Equity holders of the parent company	2.8	-20.4			-41.4	-18.2
Non-Controlling interests	0.3	-1.4			-2.1	-0.3

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3) Consolidated balance sheet

Consolidated balance sheet EUR million	31.3.2021	31.3.2020	change,%	31.12.2020
ASSETS
Non-current assets
Property, plant and equipment	3.3	4.9	-32.2	3.8
Property, plant and equipment, right-of-use asset	10.4	11.5	-9.7	10.7
Goodwill	1.7	1.7	0.0	1.7
Other intangible assets	1.1	1.4	-23.4	1.2
Shares in associated companies and joint ventures	49.1	38.8	26.4	48.1
Other financial assets	22.9	18.7	22.3	22.2
Receivables	9.6	29.6	-67.5	9.4
Loan receivables from associated companies and joint ventures	45.0	43.1	4.4	44.3
Deferred tax assets	42.8	34.8	23.1	41.6
Non-current assets, total	185.9	184.6	0.7	183.0
Current assets
Inventories	357.9	374.6	-4.5	355.3
Inventories, right-of-use asset	111.4	129.1	-13.7	118.8
Trade and other receivables	141.2	108.2	30.5	143.5
Loan receivables from associated companies and joint ventures	0.0	0.0		1.6
Current tax receivables (based on profit for the review period)	0.0	0.6	-95.4	0.0
Cash and cash equivalents	63.1	39.4	60.0	96.7
Assets classified as held for sale	0.0	14.7	-100.0	0.0
Current assets, total	673.6	666.6	1.0	715.9
ASSETS, TOTAL	859.5	851.2	1.0	898.9
Consolidated balance sheet EUR million	31.3.2021	31.3.2020	change,%	31.12.2020
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital	3.1	3.1	0.0	3.1
Invested free equity fund	264.7	142.5	85.7	264.7
Translation differences	-18.7	-15.7	19.3	-20.0
Hybrid bond	15.4	82.9	-81.5	15.4
Retained earnings	-78.8	-55.4	42.2	-78.2
Equity attributable to equity holders of the parent company, total	185.7	157.5	17.9	185.0
Non-controlling interests	-4.5	-3.6	24.7	-4.0
Total equity	181.2	153.9	17.7	181.0
Non-current liabilities
Deferred tax liabilities	2.4	2.4	-2.2	2.4
Provisions	12.6	10.1	24.9	12.4
Interest-bearing liabilities excl. lease liabilities	128.4	200.2	-35.9	234.9
Subordinated loan	0.0	9.0	-100.0	0.0
Interest-bearing lease liabilities	126.5	143.9	-12.1	133.6
Other liabilities	17.7	21.6	-17.9	20.8
Non-current liabilities, total	287.5	387.2	-25.7	404.0
Current liabilities
Trade and other payables	262.1	215.0	21.9	284.5
Current tax payables (based on profit for the review period)	0.2	0.0	460.0	0.7
Provisions	10.7	8.4	28.5	11.4
Interest-bearing liabilities excl. lease liabilities	115.2	84.3	36.7	14.8
Interest-bearing lease liabilities	2.5	2.5	0.4	2.6
Current liabilities, total	390.8	310.1	26.0	314.0
Liabilities, total	678.3	697.3	-2.7	718.0
EQUITY AND LIABILITIES, total	859.5	851.2	1.0	898.9

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Interim Report, 1 January–31 March 2021

32(40)

4) Consolidated cash flow statement	1-3/2021	1-3/2020	1-12/2020	Last 12 Months
EUR million
Cash flows from operating activities
Cash receipts from customers	192.3	220.1	953.6	925.7
Cash receipts from other operating income	0.9	0.0	3.3	4.2
Cash paid to suppliers and employees	-207.9	-223.7	-888.7	-872.8
Net cash before interests and taxes	-14.7	-3.7	68.2	57.2
Interests received and other financial income	0.1	0.5	7.6	7.2
Interests paid and other expenses from financial costs	-7.8	-14.1	-29.6	-23.2
Income taxes paid or received	-0.1	0.0	0.0	-0.1
Cash flows from operating activities	-22.5	-17.3	46.3	41.1
Cash flow from investing activities
Purchase of tangible and intangible assets	0.0	-0.1	-0.8	-0.7
Sale of tangible and intangible assets	0.3	0.2	0.8	0.9
Purchase of investments	-0.8	-0.9	-4.6	-4.5
Proceeds from sale of investments	0.0	11.0	11.0	0.0
Investments in associated companies and joint ventures	0.0	-3.9	-7.4	-3.5
Associated companies and joint ventures sold	0.0	28.0	28.0	0.0
Increase in loan receivable from associated companies and joint ventures	0.0	0.0	-2.7	-2.7
Decrease in loan receivable from associated companies and joint ventures	0.0	2.5	2.5	0.0
Loans granted	-0.2	0.0	-0.2	-0.4
Net cash used in investing activities	-0.7	36.9	26.6	-11.0
Cash flows from operating and investing activities in total	-23.3	19.6	73.0	30.1
Cash flow from financing activities
Net cash from share issue	0.0	0.0	37.4	37.4
Proceeds from loans	0.0	9.0	9.0	0.0
Repayment of loans	-1.7	-11.2	-17.4	-7.8
Hybrid bond intrests	-2.8	0.0	-0.4	-3.2
Change in housing corporation loans	-5.5	14.5	-9.7	-29.7
Net change in short-term loans	0.0	-18.5	-18.5	0.0
Dividends paid	0.0	0.0	-0.1	-0.1
Repayment of lease liabilities	-0.7	-1.0	-2.6	-2.3
Net cash flow from financing activities	-10.7	-7.2	-2.2	-5.7
Net change in cash and cash equivalents	-33.9	12.4	70.7	24.4
Cash and cash equivalents at the beginning of period	96.7	27.7	27.7	96.7
Effect of exchange rate changes in cash and cash equivalents	0.3	-0.7	-1.7	-0.8
Cash and cash equivalents at the end of period	63.1	39.4	96.7	120.4

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Interim Report, 1 January–31 March 2021

33(40)

5) Statement of changes in Group equity

	Equity attributable to the equity holders of the parent company
	Share Capital	Invested Free Equity Fund	Hybrid Bond	Translation differences	Fair value reserve	Retained earnings	Total	Non-controlling interests	Total equity
1 January- 31 March 2021 (EUR million)
Equity 1 January 2021	3.1	264.7	15.4	-20.0	0.0	-78.2	185.0	-4.0	181.0
Net profit for the financial year	0.0	0.0	0.0	0.0	0.0	1.5	1.5	0.1	1.6
Other comprehensive income items (with the tax effect)
Other comprehensive income total	0.0	0.0	0.0	1.3	0.0	0.0	1.3	0.2	1.5
Comprehensive income for the financial year	0.0	0.0	0.0	1.3	0.0	1.5	2.8	0.3	3.1
Share-based incentive plan	0.0	0.0	0.0	0.0	0.0	0.1	0.1	0.0	0.1
Hybrid bond interests	0.0	0.0	0.0	0.0	0.0	-2.2	-2.2	0.0	-2.2
Other changes	0.0	0.0	0.0	0.0	0.0	0.0	0.0	-0.8	-0.8
Equity on 31 March 2021	3.1	264.7	15.4	-18.7	0.0	-78.8	185.7	-4.5	181.2
	Equity attributable to the equity holders of the parent company
	Share Capital	Invested Free Equity Fund	Hybrid Bond	Translation differences	Fair value reserve	Retained earnings	Total	Non-controlling interests	Total equity
1 January- 31 March 2020 (EUR million)
Equity 1 January 2020	3.1	142.5	82.9	-1.4	0.0	-49.5	177.6	-2.0	175.6
Net profit for the financial year	0.0	0.0	0.0	0.0	0.0	-6.1	-6.1	-1.4	-7.6
Other comprehensive income items (with the tax effect)
Other comprehensive income total	0.0	0.0	0.0	-14.3	0.0	0.0	-14.3	-0.1	-14.4
Comprehensive income for the financial year	0.0	0.0	0.0	-14.3	0.0	-6.1	-20.4	-1.5	-21.9
Share-based incentive plan	0.0	0.0	0.0	0.0	0.0	0.3	0.3	0.0	0.3
Equity on 30 March 2020	3.1	142.5	82.9	-15.7	0.0	-55.4	157.5	-3.6	153.9
	Equity attributable to the equity holders of the parent company
	Share Capital	Invested Free Equity Fund	Hybrid Bond	Translation differences	Fair value reserve	Retained earnings	Total	Non-controlling interests	Total equity
1 January- 31 December 2020 (EUR million)
Equity 1 January 2020	3.1	142.5	82.9	-1.4	0.0	-49.5	177.6	-2.0	175.6
Net profit for the financial year	0.0	0.0	0.0	0.0	0.0	-22.8	-22.8	-2.3	-25.1
Other comprehensive income items (with the tax effect)
Other comprehensive income total	0.0	0.0	0.0	-18.6	0.0	0.0	-18.6	0.2	-18.3
Comprehensive income for the financial year	0.0	0.0	0.0	-18.6	0.0	-22.8	-41.4	-2.1	-43.4
Dividends paid	0.0	0.0	0.0	0.0	0.0	0.0	0.0	-0.1	-0.1
Share-based incentive plan	0.0	0.0	0.0	0.0	0.0	0.5	0.5	0.0	0.5
Share issue	0.0	49.8	0.0	0.0	0.0	0.0	49.8	0.0	49.8
Hybrid bond, 2016	0.0	14.0	-12.7	0.0	0.0	-1.1	0.3	0.0	0.3
Hybrid bond, 2019	0.0	61.0	-54.8	0.0	0.0	-4.9	1.2	0.0	1.2
Costs related to share issue, excluding tax	0.0	-2.7	0.0	0.0	0.0	0.0	-2.7	0.0	-2.7
Hybrid bond interests	0.0	0.0	0.0	0.0	0.0	-0.3	-0.3	0.0	-0.3
Other changes	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.1	0.1
Equity on 31 December 2020	3.1	264.7	15.4	-20.0	0.0	-78.2	185.0	-4.0	181.0

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Interim Report, 1 January–31 March 2021

34(40)

6) Group commitments and contingent liabilities

(EUR million)	31.3.2021	31.3.2020	change, %	31.12.2020
Collateral given for own liabilities
Real estate mortgages given 1)	39.2	74.2	-47.2	44.3
Other commitments
Investment commitments given	25.4	33.5	-24.1	26.4
Plots purchase commitments	33.4	46.8	-28.7	33.4

1) Real estate mortgages include the total amount of mortgages given as collateral for developer contracting housing production against the housing corporation loans of uncompleted and unsold completed projects.

7) Financial assets and liabilities by measurement categories

31.3.2021(EUR million)	Financial assets and liabilities at fair value through profit and loss	Financial assets and liabilities measured at amortised cost	Carrying amounts by balance sheet item	Fair value
Non-current financial asset
Long-term interest bearing receivables	0.0	9.1	9.1	9.1
Long-term receivables	0.5	0.0	0.5	0.5
Loan receivables from associated companies and joint ventures	0.0	45.0	45.0	45.0
Other financial assets	22.9	0.0	22.9	22.9
Current financial assets
Accounts receivables	0.0	56.7	56.7	56.7
Other interest bearing receivables	0.0	11.8	11.8	11.8
Cash and cash equivalents	0.0	63.1	63.1	63.1
Total	23.4	185.7	209.1	209.1
Non-current financial liabilities
Interest bearing liabilities	0.0	128.4	128.4	103.7
Derivative instruments	8.4	0.0	8.4	8.4
Other non-current liabilities	0.0	9.3	9.3	9.3
Current financial liabilities
Interest bearing liabilities	0.0	115.2	115.2	115.2
Accounts payables	0.0	62.8	62.8	62.8
Total	8.4	315.8	324.1	299.4
31.12.2020(EUR million)	Financial assets and liabilities at fair value through profit and loss	Financial assets and liabilities measured at amortised cost	Carrying amounts by balance sheet item	Fair value
Non-current financial asset
Long-term interest bearing receivables	0.0	8.9	8.9	8.9
Long-term receivables	0.5	0.0	0.5	0.5
Loan receivables from associated companies and joint ventures	0.0	44.3	44.3	44.3
Other financial assets	22.2	0.0	22.2	22.2
Current financial assets
Accounts receivables	0.0	56.2	56.2	56.2
Other interest bearing receivables	0.0	15.8	15.8	15.8
Loan receivables from associated companies and joint ventures	0.0	1.6	1.6	1.6
Cash and cash equivalents	0.0	96.7	96.7	96.7
Total	22.7	223.5	246.3	246.3
Non-current financial liabilities
Interest bearing liabilities	0.0	234.9	234.9	207.5
Derivative instruments	9.0	0.0	9.0	9.0
Other non-current liabilities	0.0	11.8	11.8	11.8
Current financial liabilities
Interest bearing liabilities	0.0	14.8	14.8	14.8
Accounts payables	0.0	59.6	59.6	59.6
Total	9.0	321.1	330.1	302.7

SRV

Interim Report, 1 January–31 March 2021

35(40)

Liability of derivative instruments (EUR million)	3/2021		3/2020		12/2020
	Fair value		Fair value		Fair value
	Posit.	Negat.	Posit.	Negat.	Posit.	Negat.
Hedge accounting not applied
Currency options 1)	0.0	0.0	7.5	0.0	0.0	0.0
Interest rate swaps	0.0	8.4	0.0	9.4	0.0	9.0

1) The currency options were short-term in maturity and have been exercised before the publication of the interim report.

	3/2021	3/2020	12/2020
Nominal values of derivative instruments
Currency option	10.0	120.0	10.0
Interest rate swaps	100.0	100.0	100.0

Fair value hierarchy of financial assets and liabilities

Financial assets at fair value through profit or loss

The company had foreign exchange option contracts and interest rate swaps recognised at fair value through profit or loss.

Derivative financial instruments at fair value through profit or loss

(EUR million)	Level 1	Level 2	Level 3	Total
31.3.2021
Derivative financial assets	0.0	0.0	0.0	0.0
Derivative financial liabilities	0.0	8.4	0.0	8.4

31.3.2020

Derivative financial assets	0.0	0.0	0.0	0.0
Derivative financial liabilities	0.0	9.4	0.0	9.4

31.12.2020

Derivative financial assets	0.0	0.0	0.0	0.0
Derivative financial liabilities	0.0	9.0	0.0	9.0

Other financial assets at fair value through profit or loss

(EUR million)	31.3.21	31.3.20	31.12.20
Other financial assets	22.7	11.9	11.9
Inreases	0.8	6.8	10.6
Reclassification of assets as classified
held for sale	-	13.5	13.5
Changes in fair values	-	-	-13.0
Decreases	-0.1	-	-0.3
Total	23.4	32.2	22.7
Non-current	23.4	32.2	22.7
---	---	---	---
Current	-	-	-

Other financial assets at fair value through profit or loss

(EUR million)	Level 1	Level 2	Level 3	Total
31.3.2021
Unlisted shares	-	0.6	22.3	22.9
Long-term receivables	-	-	0.5	0.5

31.3.2020

Unlisted shares	-	0.6	18.1	18.7
Long-term receivables	-	-	13.5	13.5

31.12.2020

Unlisted shares	-	0.6	21.6	22.2
Long-term receivables	-	-	0.5	0.5

Level 1 instruments are traded in active markets and their fair values are directly based on the market price

The fair values of level 2 instruments are derived from market data.

The fair values of level 3 instruments are not based on observable market data, but may also be based quotations provided by brokers, external market valuation reports or cash flow-based forecast. Valuation may also be based on acquisition cost if this the best estimate of fair value.

Unlisted shares and investments consist mainly of shares purchased for leisure facilities used by SRV's employees (level 2) as well as shares in Voimaosakeyhtiö SF and investments in and related to real estate funds and projects (level 3).

Assets recognised in level 3 consist mainly of SRV Voima's investment in Voimaosakeyhtiö SF (3 2021 EUR 11.5 million) and in Tampere Central Deck and Arena (3 2021 EUR 8.8 million), in addition to which they include investments in and related to real estate funds and projects. Level 3 also includes REDI shopping centre the additional EUR 0.5 million sales price receivable.

The company sold its holding of about 40 per cent in the REDI shopping centre in February 2020 and recorded a EUR 13.5 million sales price receivable related to the possible additional future sales price of EUR 50 million agreed in connection with the transaction.

Due to the updated cash flow-based forecast for the REDI shopping centre, SRV has booked a change in the value of the additional sales price receivable, which had a negative impact of about EUR 13 million on operating profit for 2020.

SRV

Interim Report, 1 January–31 March 2021

36(40)

8) Breakdown of revenue

Revenue	1-3/2021	1-3/2020	change MEUR	change, %	1-12/2020	Last 12 Months
(EUR million)
Revenue recognition at a point in time	11.6	12.5	-0.9	-6.9	107.2	106.4
Revenue recognition over time	175.1	189.6	-14.5	-7.6	854.6	840.1
Other revenue	0.3	6.0	-5.6	-94.4	13.7	8.1
Total	187.1	208.1	-21.0	-10.1	975.5	954.6

9) Group and Segment Information

SRV Group's segments are Construction, Investments and Other operations and elimination.

Revenue	1-3/2021	1-3/2020	change MEUR	change, %	1-12/2020	Last 12 Months
EUR million
Revenue recognition at a point in time	11.6	12.5	-0.9	-6.9	107.2	106.4
Construction	11.6	12.5	-0.9	-6.9	107.2	106.4
Investments	0.0	0.0	0.0		0.0	0.0
Revenue recognition over time	175.1	189.6	-14.5	-7.6	854.6	840.1
Construction	174.6	188.5	-14.0	-7.4	851.5	837.5
Investments	0.6	1.1	-0.5	-47.3	3.1	2.6
Other revenue	0.3	6.0	-5.6	-94.4	13.7	8.1
Construction	1.6	3.9	-2.2	-57.3	11.3	9.1
Investments	0.4	0.5	-0.1	-18.7	1.6	1.5
Other operations and eliminations	-1.7	1.6	-3.3		0.7	-2.6
Group, total	187.1	208.1	-21.0	-10.1	975.5	954.6
Construction revenue	187.8	204.9	-17.0	-8.3	970.0	953.0
Construction, external	186.6	204.5	-17.9	-8.8	969.3	951.4
Construction, internal	1.2	0.3	0.9	259.5	0.7	1.6
Investments revenue	1.0	1.6	-0.6	-38.7	4.8	4.2
Investments, external	0.9	1.6	-0.6	-39.3	4.7	4.1
Investments, internal	0.0	0.0	0.0	13.0	0.1	0.1
Other operations and eliminations revenue	-1.7	1.6	-3.3		0.7	-2.6
Other operations and eliminations, external	-0.4	2.0	-2.4		1.5	-0.9
Other operations and eliminations, internal	-1.3	-0.4	-0.9		-0.8	-1.7
Total	187.1	208.1	-21.0	-10.1	975.5	954.6
Operation profit	1-3/2021	1-3/2020	change MEUR	change, %	1-12/2020	Last 12 Months
---	---	---	---	---	---	---
EUR million
Construction	6.9	6.2	0.7	11.2	27.4	28.1
Investments	-0.4	-1.4	1.1		-22.4	-21.3
Other operations and eliminations	-1.3	-0.2	-1.1		-3.5	-4.7
Group, total	5.2	4.5	0.6	14.0	1.5	2.1
Operating profit,	1-3/2021	1-3/2020			1-12/2020	Last 12 Months
%
Construction	3.7	3.0			2.8	2.9
Investments	-	-			-	-
Group, total	2.8	2.2			0.2	0.2

SRV
Interim Report, 1 January–31 March 2021
37(40)

Assets			change	change,
EUR million	31.3.2021	31.3.2020	MEUR	%	31.12.2020
Construction	651.4	631.3	20.1	3.2	687.9
Investments	180.6	197.4	-16.8	-8.5	178.6
Other operations and eliminations	27.5	22.5	5.1		32.4
Group, total	859.5	851.2	8.3	1.0	898.9
Non-interest-bearing liabilities			change	change,
---	---	---	---	---	---
EUR million	31.3.2021	31.3.2020	MEUR	%	31.12.2020
Construction	276.3	228.3	48.0	21.0	301.2
Investments	7.1	4.4	2.8	64.1	6.7
Other operations and eliminations	22.3	24.8	-2.5	-10.2	24.3
Group, total	305.8	257.5	48.3	18.8	332.2
Capital Employed			change	change,
---	---	---	---	---	---
EUR million	31.3.2021	31.3.2020	MEUR	%	31.12.2020
Construction	375.1	403.0	-27.9	-6.9	386.8
Investments	173.4	193.1	-19.6	-10.2	171.9
Other operations and eliminations	5.2	-2.3	7.6		8.1
Group, total	553.8	593.7	-39.9	-6.7	566.8
Return on investment			change	change,
---	---	---	---	---	---
EUR million	31.3.2021	31.3.2020	MEUR	%	31.12.2020
Construction	7.1	7.0	0.2	2.7	29.0
Investments	0.8	-7.4	8.1		-29.9
Group	6.6	-0.7	7.3		-4.7
Return on investment %	31.3.2021	31.3.2020		31.12.2020
---	---	---	---	---
Construction	7.5	7.2		7.6
Investment	1.8	-13.4		-14.3
Group	4.7	-0.4		-0.8

10) Inventories

EUR million	change
	31.3.2021	31.3.2020	MEUR	31.12.2020
Land areas and plot-owning companies	143.1	136.9	6.2	145.9
Construction	87.3	82.2	5.0	92.2
Investments	55.8	54.6	1.2	53.7
Work in progress	194.4	211.6	-17.3	180.6
Construction	194.4	211.6	-17.3	180.9
Investments	0.0	0.0	0.0	0.0
Shares in completed housing corporations and real estate companies	16.3	23.7	-7.4	24.8
Construction	13.8	20.4	-6.6	22.1
Investments	2.4	3.3	-0.9	2.7
Other inventories	115.6	131.5	-15.9	122.8
Construction	4.2	2.4	2.7	4.0
Investments	0.0	0.0	0.0	0.0
Right-of-use asset, total	111.4	129.1	-17.7	118.8
Inventories, total	469.3	503.7	-34.4	474.0

SRV

Interim Report, 1 January–31 March 2021

38(40)

11) Changes in financial position

Financial liabilities, excluding lease liabilities

31.3.2021
EUR million	Carrying amount	Contractual liability 1)	2021	2022	2023	2024	later
Bonds	136.8	152.9	4.0	69.0	79.9	0.0	0.0
Loans from financial institutions	55.0	57.5	14.6	41.0	2.0	0.0	0.0
Housing loans 2)	35.2	42.1	0.3	0.5	0.8	1.7	38.7
Commercial Papers	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Other liabilities	16.7	16.7	0.0	0.0	0.0	0.0	16.7
Other liabilities non-interest bearing	11.6	11.7	0.0	2.6	5.4	0.0	3.9
Derivative liabilities	8.4	8.4	1.5	1.8	1.8	1.8	1.5
Accounts payables	62.8	62.8	62.8	0.0	0.0	0.0	0.0
Total	326.4	352.1	83.3	114.8	89.9	3.5	60.8

Financial liabilities, lease liabilities

31.3.2021
EUR million	Carrying amount	Contractual liability	2021	2022	2023	2024	later
Lease liabilities	129.0	320.0	9.0	8.8	8.2	8.1	285.9

Financial liabilities, excluding lease liabilities

31.12.2020
EUR million	Carrying amount	Contractual liability 1)	2020	2021	2022	2023	later
Bonds	135.6	156.8	7.9	69.0	79.9	0.0	0.0
Loans from financial institutions	56.7	60.1	17.3	42.9	0.0	0.0	0.0
Housing loans 2)	40.7	48.5	0.6	0.6	1.1	2.2	44.0
Commercial Papers	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Other liabilities	16.7	16.7	0.0	0.0	0.0	0.0	16.7
Other liabilities non-interest bearing	11.8	11.8	0.0	2.6	5.4	0.0	3.9
Derivative liabilities	9.0	8.6	1.8	1.8	1.8	1.8	1.5
Accounts payables	59.6	59.6	59.6	0.0	0.0	0.0	0.0
Total	330.1	362.2	87.2	116.8	88.2	3.9	66.1

Financial liabilities, lease liabilities

31.12.2020
EUR million	Carrying amount	Contractual liability	2020	2021	2022	2023	later
Lease liabilities	136.2	341.1	9.4	9.1	8.5	8.5	305.6

1) Includes all contractual payments, e.g. interest and commitment fees.
2) At the time of handing over the apartment, the responsibility for repaying the principal and interest on the housing loans passes to the buyer of the apartment. Irrespective of whether the apartment is unfinished or completed, but not handed over to the buyer, SRV's debt capital and interest are presented in full up to the maturity of the loan. Only when control of the apartment is transferred will interest and principal be removed from the table.

In April 2021, after the end of the review period, the company agreed on the replacement of its current EUR 51 million revolving credit facility and EUR 40 million project financing facility with the syndicate banks; the facilities were replaced with a new EUR 40 million committed revolving credit facility, a EUR 40 million committed project financing facility and a EUR 63 million non-committed project financing facility. EUR 10 million of the new EUR 40 million revolving credit facility will mature in March 2022 and EUR 30 million in April 2023. The new project project financing facilities of EUR 40 and 63 million will be used to finance future construction projects. They fall due in April 2023 or within another repayment period agreed for separate construction projects.

At the end of April 2021, SRV carried out written procedures to extend the tenor of its EUR 100 million (of which EUR 62.1 million is outstanding) senior unsecured callable fixed-rate notes due 23 March 2022 by three years and the tenor of its EUR 75 million senior unsecured callable fixed-rate notes due 27 September 2023 by two and a half years, as well as to amend certain terms and conditions of these notes. In May 2021, SRV will make a partial early repayment on the aforementioned notes of a total nominal amount of EUR 27.1 million and will also undertake to make partial early repayments of a total nominal amount of EUR 5 million on each interest payment day. The new due dates are 23 March 2025 for the EUR 100 million senior unsecured callable fixed-rate notes (with an outstanding principal of EUR 62.1 million at the end of the review period) and 27 March 2025 for the EUR 75 million senior unsecured callable fixed-rate notes.

As a result of the aforementioned arrangements after the end of the review period, the company's equity ratio and the maturity structure of its unsecured debts will both improve significantly.

SRV

Interim Report, 1 January–31 March 2021

39(40)

Covenants

SRV's financing agreements contains standard covenants that relate to, among other, certain key financial indicators and ratios, and the guarantees given by SRV. The covenants of the revolving credit facility (RCF) are based on FAS or IFRS figures, adjusted and calculated in accordance with the methods defined in the terms and conditions of the RCF agreement. The covenants are percentage of completion equity ratio, net gearing excluding IFRS 16 impact, Last 12 months minimum EBITDA excluding the share of associated companies' income and the impact of transaction costs and impairments, minimum cash and certain other limitations. Of the aforementioned covenants equity ratio, net gearing and minimum EBITDA are tested quarterly. Minimum cash is tested monthly.

The table below presents the covenants and covenant levels of the RCF in place at 31.03.2021:

Financial covenants of the RCF		Covenant value
Equity ratio (overtime revenue recognition)		>28 per cent
Net gearing (excluding IFRS 16 impact)		≤140 per cent
Minimum cash		>EUR 10 million at the period end, >EUR 5 million on other occasions
Minimum EBITDA (excluding the share of associated company results and before transaction costs and impairments)		Varies between EUR 2.5 million to EUR 10 million depending on the testing date

The financial covenants of SRV's EUR 100.0 million unsecured bond due 23 March 2022 with an outstanding principal of EUR 62.1 million and a fixed annual interest rate of 6.875 per cent, as well as the EUR 75 million unsecured bond maturing on 27 September 2023 with a fixed annual interest rate of 4.875 per cent are cross acceleration, negative pledge, restriction on mergers, restriction on asset disposal, equity ratio >26 adjusted and calculated in accordance with bond terms and interest coverage ratio. All covenant levels were met as at 31 March 2021.

12) Currency Risks

SRV is exposed to changes in the exchange rate of the rouble through its Russian subsidiaries, associated companies and joint ventures. Currency risks are divided into transaction risk and translation risk. Transaction risk relates to foreign currency-denominated business (sales and purchases) and financing (loans) cash flows. Translation risk relates to investments in foreign subsidiaries, associated companies and project companies in which the functional currency is not the euro, and whose imputed effects are reflected in translation differences in the Group's consolidated equity.

Ruble exchange risk position

EUR million	31.3.2021	31.12.2020
Translation risk position
Group Companies equity	8.9	13.5
Joint ventures and associated companies equity	57.1	54.8
Total	66.0	68.4
Transaction risk position
Group Companies euro loan receivable/debt	19.6	19.5
Joint ventures and associated companies euro loan receivables/debt	39.9	39.4
Total	59.5	58.9
Ruble exchange risk position total	125.5	127.2
Short-term foreign exchange option- and forward contracts capital	10.0	10.0

SRV

Interim Report, 1 January–31 March 2021

40(40)

13) Related party transactions

EUR million	Salaries and compensation	Sale of goods and services	Purchase of goods and services	Interest income	Receivables	Liabilities
31.3.2021
Management and the Board of Directors
Joint ventures	0.7	0.0	0.0	0.0	0.0	0.0
Associated companies	0.0	0.2	0.0	0.0	0.2	0.0
Other related parties	0.0	2.9	0.0	0.8	48.4	0.0
Total	0.7	3.1	0.0	0.8	48.6	0.0
	Salaries and compensation	Sale of goods and services	Purchase of goods and services	Interest income	Receivables	Liabilities
31.3.2020
Management and the Board of Directors
Joint ventures	1.0	0.0	0.0	0.0	0.0	0.0
Associated companies	0.0	0.3	0.0	0.0	0.2	0.0
Other related parties	0.0	1.8	0.0	0.5	46.4	0.0
Total	1.0	2.1	0.0	0.5	46.6	0.0
	Salaries and compensation	Sale of goods and services	Purchase of goods and interest income	Interest income	Receivables	Liabilities
31.12.2020
Management and the Board of Directors
Joint ventures	3.2	0.0	0.0	0.0	0.0	3.2
Associated companies	0.0	7.0	0.0	0.0	2.5	0.0
Other related parties	0.0	14.8	0.0	2.5	54.6	0.0
Total	3.2	21.8	0.0	2.5	57.1	0.0

1) These financial transactions concern share issues involving the participation of related parties with their converted hybrid bonds and subscription rights.

14) Assets classified as held for sale and sales made during the period

During the review period, SRV had no assets held for sale. However, in comparative period SRV's holding in the Pearl Plaza shopping center was classified as an asset held for sale amounting EUR 14.7 million.

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SRV Yhtiöt Oyj — Interim / Quarterly Report 2021

3343_rns_2021-04-29_d2e3a38e-480e-4958-a3fc-df09dfe95099.pdf

01 2021

POSITIVE TREND IN PROFITABILITY CONTINUED, MAJOR FINANCING ARRANGEMENT INITIATED DURING Q1 WAS IMPLEMENTED IN APRIL

January–March 2021 in brief:

Events after the period

OVERALL REVIEW

January–March 2021

Segment Reporting

CONSTRUCTION

January–March 2021

Housing construction

January–March 2021

Housing under construction

Housing construction projects under development

Completed housing units

Housing units recognised as income

Business and infrastructure construction

Business and infrastructure projects under construction

Business and infrastructure projects under development

Completed business and infrastructure projects

The largest ongoing business construction projects

INVESTMENTS

January–March 2021

Shopping centres

Pearl Plaza, St Petersburg

Okhta Mall, St Petersburg

4Daily, Moscow

Other projects

RISKS, RISK MANAGEMENT AND CORPORATE GOVERNANCE

PERSONNEL

Changes in the Corporate Executive Team

SUSTAINABILITY

Occupational safety

Environment

CORPORATE GOVERNANCE AND THE DECISIONS OF THE ANNUAL GENERAL MEETING

SHARE-BASED INCENTIVE SCHEME

SHARES AND SHAREHOLDERS

FINANCIAL OBJECTIVES

OUTLOOK FOR 2021

Board of Directors

About this interim report

Briefing, webcast and presentation materials

Next interim report

For further information, please contact:

Alternative performance measures used in interim reporting

SRV presents key figures for operative operating profit and operating profit margin in the interim report

Operative operating profit's reconciliation table

SRV presents key figures excluding effect of IFRS 16 standard

Calculation of key figures

SRV GROUP PLC THE INTERIM REPORT, 1 JANUARY–31 MARCH 2021: TABLES

1) The interim Report 1 January – 31 March 2021

Accounting policies

Impacts of the coronavirus on SRV’s financial reporting

Potential financial risks associated with the coronavirus pandemic

Use of estimates

Events after the period

Fair value hierarchy of financial assets and liabilities

Financial assets at fair value through profit or loss

Derivative financial instruments at fair value through profit or loss

Other financial assets at fair value through profit or loss

Other financial assets at fair value through profit or loss

10) Inventories

11) Changes in financial position

Covenants

12) Currency Risks

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SRV Yhtiöt Oyj Interim / Quarterly Report 2021