743700GB29FXC0VXF414-2024-02-28-en

Financial year 1 January - 31 December
2023 in brief
• Revenue totalled EUR 610.0 (770.1 1-12/2022)
million.
• Operative operating profit amounted to EUR 1.1
(18.9) million.
• Operating profit was EUR -6.8 (-76.4) million.The
divestment of SRV Russia Oy in the third quarter
had a EUR -9.5 million impact on operating profit, of
which EUR -9.3 million consisted of the recognition
of translation differences in income.
• The result before taxes was EUR -15.7 (-79.1)
million.

• Cash flow from operating and investment activities
totalled EUR 0.0 (-8,0) million.
• The equity ratio fell to 34.4 per cent (36.3%) and
gearing rose to 71.7 per cent (55.1%). Excluding the
impact of IFRS 16, the equity ratio was 48.0 (48.2)
per cent and gearing was -4.3 (-7.5) per cent.

• At period-end, the order backlog stood at EUR
1,048.6 (838.8) million. New agreements valued at
EUR 781.4 (624.6)million were signed in January–
December. The sold share of the order backlog was
92.6 (89.2) per cent..
• Earnings per share were EUR -1.02 (-6.62).

Report of the Board of Directors

Business model, operating environment and description of the value chain

Megatrends

Our operating environment is constantly changing. Cities

are getting denser, climate change is accelerating and

digitalisation is increasing – these trends are reshaping the

world around us.

Denser cities

Finland’s population is ageing as a result of both increased

life expectancy and a rapid decline in the birth rate. This

will change the outlook for regions that were previously

forecast to be growth centres. Only the largest cities –

Helsinki, Tampere and Turku – are expected to see

substantial growth by 2040.

More than 70% of Finns live in urban areas, in which

80% of our GDP is generated. More and more of us want to

live in cities, as urban life is perceived to be easier thanks

to the availability of jobs, services and public transport.

The need to mitigate climate change and adopt more

energy-efficient lifestyles is also steering us towards

denser housing. New construction and renovation offer us

the opportunity to develop our urban structure in a more

sustainable direction, for example, by choosing renewable

energy for properties. New construction and renovation will

also meet the new spatial requirements of denser cities,

such as the need for hybrid offices and more versatile

homes that has been created by an increase in remote

working. Cities are growing and developing near good

transport connections. Public transport, combined with

walking and cycling, enables smooth and ecological daily

life in urban areas.

Finland’s rate of urbanisation is expected to rise from

73 per cent in 2020 to 79 per cent in 2050. We need to find

homes for everyone in the city, and the best solution is

often new and supplementary construction.

Accelerating climate change

The physical impacts of climate change and a scarcity of

natural resources can be seen throughout the world. It is

clear that mitigating and adapting to climate change requires

action to be taken in the construction and real estate sector.

Properties must be sustainable from many perspectives –

from people’s wellbeing, energy efficiency and the circular

economy to the retention of their economic value.

The construction and real estate sector is responsible

for 35 per cent of Finland’s energy consumption, and the

majority of emissions from buildings are generated by

consumption during occupancy. Therefore, there is, a great

need to improve energy efficiency and harness renewable

energy. New construction enables new ways of recycling

and storing energy. Comprehensive regional solutions also

help to optimise overall energy management.

Supporting biodiversity is an even greater priority in

denser cities. There are many ways to support urban

biodiversity and prevent its loss, such as preserving old

trees, building parks or creating a variety of rooftop

gardens and yard decks. Green urban nature increases

residents’ wellbeing and helps to maintain biodiversity in

denser urban areas.

The circular economy is another effective means of

curbing the climatic impacts of construction. Choosing

low-emission or recycled building materials can reduce the

carbon footprint of a building. However, the growing

market for renovation is bringing existing building stock

closer to a sustainable level.

Climate change is causing an increase in extreme

weather conditions and phenomena. Storm-related wind

damage in Finland is predicted to increase as the climate

warms, because the frost season will be shorter and

precipitation will increasingly be in the form of rain rather

than snow. Preparing for extreme conditions will require

the construction sector to take action, in order to

guarantee the long-term preservation of property values.

Increasing digitalisation

Digitalisation continues to evolve, reshaping both society in

general and the construction and real estate sector.

Digitalisation creates opportunities and provides solutions

for the construction industry: from project planning to

streamlining the construction process, and from renewable

practices to property services while buildings are

occupied.

Artificial intelligence has manifold potential in the

construction sector, and the benefits it confers will increase

year by year. Artificial intelligence can be used to

streamline and automate operations by, for example,

producing a variety of design and planning solutions,

forecasting project schedules and costs, or automating

production control. However, artificial intelligence requires

a store of high-quality data. By continuously collecting data,

we can obtain a real-time situational picture during the


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design, construction and occupancy stages of a building’s

lifecycle. For example, data about indoor conditions can be

collected with the aid of sensors while a property is

occupied. This data can then be used to control and

optimise both indoor conditions and energy consumption.

Digitalisation provides solutions for things such as

scheduling and information flow, which makes project

management more efficient and helps to streamline the

construction process. For example, building information

models promote information flow throughout the project,

and can be used to view plans, calculate quantities, and

inspect and illustrate plans.

The solutions brought by digitalisation have increased

the use of various services in our daily lives – services that

improve housing, mobility and premises usage. For

example, the sharing economy has become more

widespread as a result of digitalisation: if you live in the city,

you no longer need your own car, bike or e-scooter, as a

variety of apps makes it easy to use shared vehicles.

Markets

The Finnish economy was generally weak in 2023, with

GDP contracting by 0.5 per cent. The economy has been

burdened by rising prices and interest rates, coupled with

weak export demand. Employment dipped during the

autumn after rising for a long time, and the business

community’s confidence in economic prospects dimmed.

Changing the course of public spending has proved

difficult, and the deficit will increase over the next few

years. Although the cost level has remained high, a rapid

slowdown in inflation has improved household

consumption opportunities. Recovery from the recession

will be slow and will not begin until late 2024. GDP is

forecast to contract by 0.2 per cent in 2024 before picking

up again with growth of 1.5 per cent in 2025. There are risks

that trends in the global economy could be less favourable

(source: Bank of Finland).

The ECB’s Governing Council implemented several

interest rate rises during 2023 in an endeavour to ensure

that inflation returns to its two per cent target. In September,

the Governing Council raised the ECB's key interest rate to

4.00 per cent in the belief that it would slow inflation and

steer it to the target level. The 12-month Euribor rate is

expected to fall slightly in year 2024. Rising interest rates

and inflation have posed challenges for consumers, and this

has been clearly evident in the marked weakening of

demand in the housing market (source: Bank of Finland).

Consumer confidence remained low throughout the

year. According to Statistics Finland, the balance figure for

the consumer confidence indicator was -12.4 in November

compared to the long-term average of -2.4. Consumers’

assessments of their own finances and the Finnish

economy, both at present and in a year’s time, have

remained at a very low level. Forecasted trends in

employment figures became gloomier during the autumn

(source: Statistics Finland).

Construction began to contract in autumn 2022, and

both start-ups and permits for new construction fell sharply

during 2023. The Confederation of Finnish Construction

Industries (RT) estimates that construction decreased by

10 per cent during 2023 and will continue to decline by

another two per cent in 2024. Housing construction* 1

shrank the most, 38%. The construction industry estimates

that construction will continue to decrease by two percent

in 2024 and will continue to decline by another two per cent

in 2024. Households’ intentions to buy a residential unit

remained at a historically low level throughout the year as a

result of rising interest rates and weakening purchasing

power. Poor demand among both consumers and investors

has brought housing start-ups down to an historically low

level. An estimated 16,000 residential units were started in

2023. Housing sales are forecast to pick up slightly during

2024, and it is expected that around 19,500 residential

units will be started. The number of permits issued for

business construction also continued to fall in 2023. The

2024 outlook for public service construction, industrial and

warehouse construction, and commercial and office

construction is brighter than for other types of

construction. Investments in the years ahead will be

supported by a slowdown in the rise of construction costs.

Urbanisation is maintaining demand for both housing and

business construction in Finland, especially in growth

centres (source: Confederation of Finnish Construction

Industries RT).

2023 was a challenging year for the real estate market

and sales slowed significantly compared to the high

volumes seen in 2022. The transaction volume reached

only EUR 2.6 billion in 2023, which is the lowest in ten

years.The average size of sales transactions was also

clearly lower than in previous years. Residential units

accounted for the largest proportion of the transaction

volume at 27 per cent, followed by industrial properties (22

per cent) and community properties (22 per cent). The

transaction volumes for offices (17 per cent) and

commercial properties (10 per cent) were extremely

low.Transactions by foreign investors represented more

than fifty cent of the total volume. Investors are cautious

due to the recession, inflation and rising interest rates, and

yield requirements have increased in all property

segments. Investors expect real estate sales to pick up

during 2024 as interest rates stabilise (source: KTI).

Based on SRV’s assessment of the prevailing market

situation and its impacts on the company’s operations,

demand for newly built housing will remain weak in the near

future among both consumers and investors. There are

many completed yet unsold residential units available in

the market. Start-ups of new housing projects will remain


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1 *Apartment buildings, terraced houses, detached houses and others (source: Confederation of Finnish Construction Industries RT)

very low in the entire market over the short term. Higher

interest rates have led to higher return requirements, which

have in turn had a negative impact on start-ups in a variety

of business premises segments. However, demand is much

more polarised than in the housing market. The public

sector is continuing to make investments, and there is also

demand from industry. In the investor market, well-located

logistics projects are still in demand, and there is also some

demand in the office user market due to the changes

brought about by hybrid working models. However,

investors remain cautious and a more substantial decline in

interest rates will probably be required before the real

estate investment market can recover.

Value creation

SRV’s operations have significant and lasting impacts on

the surrounding society. The greatest impact comes from

the buildings and infrastructure that SRV builds, as they

will last for decades if not centuries. Sustainable design

and implementation therefore have a fundamental impact

on mitigating and adapting to climate change.

SRV serves customers in matters such as the choice

of construction site, site development, management of

land use, specifying space needs, project budgeting and

acquiring funding.

SRV’s management system

SRV’s management system describes how we work at SRV.

SRV’s goal is to be a sought-after partner with whom

meaningful, value-creating projects can be implemented

more extensively within our society.

Our value creation model is built around our

management system, and describes the key operators and

our company’s own position in the value chain. It is based

on interviews with customers, investors, financiers,

decision-makers and influencers.

The value creation model takes into account all kinds

of capital (social, financial, human, intellectual and natural)

and presents a broad range of inputs, outputs and impacts

to our stakeholders.

The way in which SRV creates value for its

stakeholders is encapsulated in our customer promise –

“By listening, we build wisely” – and how we put it into

practice. The promise includes “I always ask first”, which

describes our principle of listening to the needs of our

stakeholders. We are continuously providing internal

training on how to work in accordance with our customer

promise, and we measure our success in this area with

customer satisfaction surveys.

Our capital

Capital management is an essential element of project value

formation. The most important types of capital at SRV are

social, financial, human, intellectual and natural capital.

The key areas of our social capital are personnel,

stakeholder relationships with cities, investors and the

local environment, our employer branding and

partnerships, and ethical principles.

Our financial capital consists of our own and external

financing, plus our holdings. In the context of financial

capital, manufactured capital refers to the capital created

by people.

With respect to human capital, the following aspects

are particularly important: customer expertise, interaction,

design and zoning expertise, management of the supplier

pool and management expertise. The most important

types of intellectual capital are our management system,

the SRV Network Register (which we use to combat the

grey economy and promote occupational safety and

cooperation between authorities), and our references,

brand, corporate culture, concepts and operating models.

We utilise natural capital through, for example, land

use and natural raw materials.

Our output and impact

The positive impacts of SRV’s business are sustainable

living environments that can adapt to change, stand the

test of time, and retain their value.

A safe working environment is a prerequisite for our

business, and we cooperate with all parties in the value

chain to promote a good safety culture.

We offer long-term partnerships, and work with our

partners in accordance with our values and the Code of

Conduct.

SRV’s lifecycle-wise strategy takes a firm stand on the

role that business plays in mitigating and adapting to

climate change. In addition to reducing emissions from our

construction sites and own energy procurement, we are

committed to offsetting any resulting emissions with

climate action.

By listening, we build

wisely


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Value creation model


		6

Business Review

The SRV Group’s Corporate Executive Team is the chief

operating decision-maker of the Group as defined in IFRS

8 Operating Segments. The Corporate Executive Team

reviews business as a single operating segment. The new

segment structure was introduced as from 1 January 2023.

January–December 2023

The Group’s revenue declined by EUR 160.0 million to EUR

610.0 million (770.1 1–12/2022). Revenue from business

construction rose by EUR 81.6 million to EUR 508.9 million,

while revenue from housing construction was down EUR

217.9 million to EUR 101.1 million. The comparison figure for

revenue includes the effect of the dissolution of

construction profit margin eliminations amounting to EUR

14.5 million.

The Group’s operative operating profit decreased to

EUR 1.1 (18.9) million. Operative operating profit was

weakened by a significant decrease in the volume of

housing construction.

The Group’s operating profit was EUR -6.8 (-76.4)

million. Most of the company’s remaining business

operations in Russia were divested during the review

period. The divestment had a EUR -9.5 million impact on

operating profit, of which EUR -9.3 million consisted of the

recognition of translation differences in income. The

recognition of translation differences in income had no

effect on the Group’s shareholders’ equity or the key

figures in the balance sheet. The repayment of the loan

receivable written down in the 2022 financial year had an

impact of EUR 0.9 million on operating profit for the review

period.

The comparison figure for operating profit was

impacted by, for instance, substantial write-downs of

assets in Russia and the Fennovoima holding, the

dissolution of profit margin eliminations and changes in the

exchange rate of the rouble, which had a total impact of


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Personnel on 31 December 2023
	2023	2022
Group, total	771	874


Group Key Figures
EUR million	1-12/ 2023	1-12/ 2022	Change	Change, %
Revenue	610.0	770.1	-160.0	-20.8
Operative operating profit	1.1	18.9	-17.8	-94.4
Operative operating profit, %	0.2	2.5	-2.3
Operating profit	-6.8	-76.4	69.6
Operating profit, %	-111.4	-991.9	0.0
Profit before taxes	-15.7	-79.1	63.4
Net profit for the period	-15.1	-85.7	70.5
Net profit for the period, %	-2.5	-11.1	8.6
Earnings per share, EUR	-1.02	-6.62	5.60
Order backlog (unrecognised)	1,048.6	838.8	209.8	25.0
Equity ratio, %	34.4	36.3	-1.9
Equity ratio, %, excl. IFRS 16 1)	48.0	48.2	-0.2
Net interest-bearing debt	99.4	80.5	18.9	23.5
Net interest-bearing debt, excl. IFRS 16 1)	-6.3	-11.5	5.2	-45.1
Net gearing ratio, %	71.7	55.1	16.6
Net gearing ratio, %, excl. IFRS 16 1)	-4.3	-7.5	3.2

exchange rate of the rouble, which had a total impact of

EUR -92.5 million.

The Group's profit before taxes totalled EUR -15.7

(-79.1) million. Financial income and expenses largely

consist of EUR -2.6 (7.3) million in rouble exchange rate

losses with no cash flow impact and EUR -5.6 (-4.5) million

in interest expenses from IFRS 16 leases. The comparison

figure was impacted by the aforementioned write-downs of

Russian assets, EUR -92.5 million, write-downs of

shareholder loans used to finance Russian associated

companies, EUR -41.7 million, and EUR 38.6 million in

financing arrangements made in 2022.

The Group's earnings per share were EUR -1.02

(-6.62).

Cash flow from operating activities was EUR 1.6 (-10.1)

million and cash flow from investment activities was EUR

-1.7 (2.1) million.

Revenue (EUR million)

Cash flow from operating activities was impacted by the

negative result for the review period and project-specific

seasonal fluctuations. EUR 15.7 million in repayments on

the VAT payment arrangement had a negative impact on

cash flow from operating activities in the comparison

period.

At period-end, the Group’s order backlog stood at

EUR 1,048.6 (838.8) million. The sold share of the order

backlog was 92.6 (89.2) per cent. New agreements valued

at EUR 781.4 (624.6) million were signed in January–

December. The most significant new business construction

projects were the first implementation phase of the Laakso

Joint Hospital in Helsinki, a large Kerto timber mill for

Metsä Wood in Äänekoski, the Horisontti office skyscraper

in Kalasatama, Helsinki, an annex to the National Museum

of Finland in Helsinki, the multipurpose Sammontalo

Operative operating profit (EUR million)

Building in Lappeenranta, the Okmetic factory building in

Vantaa, and the Inkeroinen multipurpose building in

Kouvola. New housing construction projects included a

housing portfolio consisting of two residential buildings for

a housing fund managed by eQ and a 101-unit apartment

building in Verkkosaari for the City of Helsinki’s Housing

Production (ATT).

In addition, SRV has won projects valued at about EUR

715 million that have not yet been entered into the order

backlog. These include the next phases of the Laakso Joint

Hospital in Helsinki and the Turku Railyard project. Most of

the revenue from projects is generated by contracts

carried out under low-risk project management or alliance

models.


		8

Business and infrastructure construction

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 and project management projects are

characterised by very close cooperation with the client.

The development and implementation phases overlap and

the projects employ an “open book” model. The financial

risk and benefit are shared with the client as agreed.

In lifecycle projects, SRV is responsible for both the

construction of the building and the property’s

maintenance for an agreed service period. Lifecycle

projects and most other contracts are implemented as

turnkey contracts in which SRV is responsible for the

design and implementation of the project, typically for a

fixed total price.

A business development project is based on in-house

project development: SRV solves the end-user’s premises

requirements and sells the property to an investor before

commencing construction. SRV typically bears the

financial risks of the project and reaps the benefits.

SRV's infrastructure construction consists of

infrastructure solutions for the urban environment. In

cooperative projects, Infrastructure operates

independently with SRV’s other units or partners using an

“open book” model. The company carries out

infrastructure contracting both in its own development

projects and using a turnkey contracting model, either as

the prime contractor or a subcontractor. SRV’s

infrastructure construction includes different kinds of work

such as rock construction, earthworks and foundation

engineering, road construction and demanding concrete

construction.

Order backlog for business and infrastructure

construction (EUR million)

Change in the order backlog, business construction: 36.9%


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The largest ongoing business construction projects
Project name	Location	Project type	Completion level, %	Completion (estimate)
DEVELOPMENT PROJECTS
Horisontti	Helsinki	Office	50	Q2/2025
Wood City Office II	Helsinki	Office	66	Q2/2024

BUSINESS PREMISES
Laakso Joint Hospital	Helsinki	Public	8	2030
HUS Jorvi Hospital	Espoo	Public	17	Q4/2025
Oulu Main Police Station and Oulu Prison	Oulu	Public	35	Q4/2025
Kerto timber mill for Metsä Wood	Äänekoski	Retail	20	Q3/2025
Vantaa Main Police Station and Vantaa Prison	Vantaa	Public	48	Q3/2024
An annex to the National Museum of Finland	Helsinki	Public	10	Q2/2026
Wintteri Uusikaupunki	Uusikaupunki	Retail	60	Q1/2025
Sammontalo	Lappeenranta	Public	23	Q2/2025
Okmetic	Vantaa	Retail	47	Q1/2025
*Situation at 31st of December 2023

January–December 2023

Revenue from the business construction grew to EUR

508.9 (427.3) million and the order backlog rose to EUR

936.6 (684.0) million. Revenue growth was seen in the

project management and alliance contracts in particular,

and also to a lesser extent in the development contracts,

which were favourably impacted by the start-up of the

Horisontti office tower in Kalasatama. The growth of the

order backlog, which began in the third quarter of the

previous year, continued during the review period.

Business and infrastructure projects under construction

The most significant business and infrastructure projects

currently under construction include the first

implementation phase of Laakso Joint Hospital, a new

ward building at Jorvi Hospital for HUS, business premises

for Senate Properties in Helsinki, Vantaa and Oulu, a large

Kerto timber mill in Äänekoski for Metsä Wood, the

Horisontti office skyscraper in Kalasatama, Helsinki, a

Wood City office, an annex to the National Museum of

Finland in Helsinki, the Wintteri education and wellbeing

centre in Uusikaupunki, Sammontalo in Lappeenranta, the

Inkeroinen multipurpose building in Kouvola, premises for

the National Repository Library in Kuopio, and demanding

foundation engineering works in the Greater Helsinki Area.

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 the Northern Deck in Tampere and, in

the Greater Helsinki Area, Tower A (aka Pohjola Building)

on Lapinmäentie, the Pressi office and logistics area in

Vantaankoski, and the metro centre in Kivenlahti.

Completed business and infrastructure projects

In January–December, SRV completed a multipurpose hall

for Rauma Marine Constructions at Rauma shipyard, the

basic renovation of Jorvi Hospital’s operating theatres for

HUS, the Terminal 2 expansion and alteration project at

Helsinki Airport, a warehouse and logistics building in the

Lieto district of Turku, a new hydropower plant for

Koskienergia Oy in Kuhankoski, the Helsinki Upper

Secondary School of Languages in Myllypuro, the Helsinki

School of Natural Sciences in Kumpula, a new event centre

in Kotka, basic renovation contracts for the Finnish

National Theatre and Lahti City Hall, the new Lamminrahka

school centre in Kangasala, the Cultural Barracks in central

Helsinki, and Pääskyvuori School in Turku.

Housing construction

In accordance with SRV’s strategy, the company’s housing

construction consists of residential development projects

and developer-contracted housing projects in Finland’s

strongest growth centres, and particularly in the Helsinki

Metropolitan Area. In addition, SRV selectively carries out

housing construction projects for public and private sector

clients.

A developer-contracted project is based on in-house

project development: SRV designs, builds and sells

residential units to either consumers or small investors.

SRV bears the sales and construction risks, and also reaps

the financial benefits. A project is recognised as income on

completion, in accordance with the sales percentage.

A residential development project is also based on in-

house project development, but is sold to an investor

before the construction begins. SRV typically bears the

financial risk of the project and reaps the benefits, and the

project is recognised as income according to the degree of

completion.

Other contracts are mainly competitive or negotiated

contracts for private or public housing developers.

Contracts are typically carried out as turnkey or fixed-

price contracts. SRV is the main contractor, and will be

responsible for either construction or both design and

construction.

Order backlog unrecognised as income, housing

construction (EUR million)

Change in the order backlog, Housing construction:-27.7 %


		10

January-December 2023

Revenue from housing construction declined to EUR 101.1

(319.0) million. Revenue decreased in both development

and developer-contracted projects. 7 (196) developer-

contracted residential units were recognised as income

during the review period. The order backlog for housing

construction stood at EUR 111.9 (154.7) million. The new

projects launched during the review period included a 101-

unit apartment building in Verkkosaari, Helsinki for the City

of Helsinki’s Housing Production (ATT) and a housing

portfolio consisting of two residential buildings for a

housing fund managed by eQ: the residential building

Hippoksenkatu 44 located in Kissanmaa, Tampere, and

Asunto Oy Espoon Anna Sahlsténinkatu 15, located in

Perkkaa, Espoo. The residential tower Visio in Kalasatama,

which is a development project, was completed in

December.

Housing under construction

At the end of December, SRV had a total of 239 (1,360)

residential units under construction in Finland, located in

growth centres. There were 0 (85) developer-contracted

residential units under construction. At the end of

December, a total of 138 (1,170) units were under

construction for investors in Espoo and Tampere. A total of

101 (105) units were under construction with competitive

and negotiated contracts.

Completed and sold residential units, developer

contracting

In January, 23 residential units were completed in

Aviapolis, Vantaa; they were recognised in unsold

completed residential units when investor sales were

cancelled after extensive negotiations. In December, 62

apartments were completed in As Oy Helsingin Kokardi in

Pasila, Helsinki. At the end of December, a total of 99 (23)

completed units remained unsold. 7 (32) developer-

contracted residential units were sold during January–

December.

Residential units recognised as income

In January–December, 7 (196) developer-contracted

residential units and parking spaces were recognised as

income, generating total revenue of EUR 5.9 (48.4) million.

Developer-contracted residential units are only recognised

as income on completion, and only to the extent that they

have been sold, after an average construction period of

about 18 months.

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, Kaitaa, Vermonniitty, Säterinkallio and

Keilaniemi in Espoo and Lapinmäentie and Jätkäsaari in

Helsinki as well as in Turku, Tampere and Oulu.


		11


		12


Housing construction
Units	1-12/ 2023	1-12/ 2022	Change, units
Housing sales	246	272	-26
developer contracting	7	32	-25
sold to investors	239	240	-1
Developer contracting			0
start-ups	0	85	-85
completed	85	210	-125
recognised as income	7	196	-189
completed and unsold	99	23	76
Under construction	239	1,360	-1,121
contracts	0	0	0
negotiated contracts	101	105	-4
sold to investors	138	1,170	-1,032
developer contracting	0	85	-85
-sold	0	2	-2
-unsold	0	83	-83
-sold, %	0.0	2.4
-unsold, %	0.0	97.6


Order backlog, housing construction
EUR million	2023	2022	Change	Change, %
Development contracts and negotiated contracts	80.8	74.6	6.1	8.2
Under construction, sold	0.0	0.8	-0.8	-100.0
Under construction, unsold	0.0	73.9	-73.9	-100.0
Completed and unsold developer contracting	31.1	5.4	25.7	475.2
Housing construction, total	111.9	154.7	-42.8	-27.7


Largest ongoing housing projects, investor projects and housing contracting
Project name	Location	Developer	Completion level, %'	Completion (estimate)
Anna Sahlsténinkatu 15	Espoo	eQ	40	Q4/2024
Hippoksenkatu 44	Tampere	eQ	66	Q2/2024
Verkkosaarenkatu	Helsinki	HEKA	11	Q2/2025
*Situation at 31st of December .2023

Russian business operations and other

holdings

In April 2022, SRV wrote down the balance sheet values of

practically all of its shopping centres and other holdings in

Russia and its holding in Fennovoima.

In November 2022, SRV and its Finnish co-investors

sold their holdings in Jupiter Realty 1 B.V., the company

that owns the Okhta Mall shopping centre in St Petersburg,

to the Cyprus-based property investor Geomare

Investments Limited.

In August 2023, SRV divested the share capital of its

subsidiary SRV Russia Oy to the Cypriot real estate

investment company Geomare Investments Limited. The

sold assets also include SRV’s Russian subsidiaries and

associated companies and SRV’s remaining plot holdings

in Russia, which are owned by these companies, as well as

a minority interest in the 4Daily shopping centre located

close to Moscow. The personnel responsible for SRV’s

business operations in Russia were also transferred in the

transaction. The sales price of SRV Russia Oy was about

EUR 4 million, which corresponded to the remaining

balance sheet value of the company’s operations in Russia.

However, translation differences of EUR -9.3 million arising

from old foreign exchange rate losses were recognised in

income in connection with the transaction. The recognition

of these translation differences did not have an impact on

total shareholders’ equity or the key figures in the balance

sheet.

After this transaction, SRV’s only remaining asset in

Russia is a 50 per cent holding in the Pearl Plaza shopping

centre in St Petersburg. The other owner of the shopping

centre is the Chinese company Shanghai Industrial

Investment (Holdings) Co. Ltd. SRV is actively continuing

negotiations with its partner with the aim of selling its

holding in Pearl Plaza as well.

SRV owns 5 per cent of Tampere Arena and has an

8.33 per cent holding in other Tampere Central Deck and

Arena projects.


		13

Stakeholder cooperation


		14

Stakeholder cooperation

SRV’s business has significant social impacts. We regularly

work with a variety of stakeholders to better understand

their needs and views. Our most important stakeholders

are our customers, personnel, shareholders, investors and

partners, and society and the media. Both SRV’s key

stakeholders and the description of our cooperation were

updated in 2023.

We maintain open and continuous dialogue with our

stakeholders in the manner required by the stakeholder

and business function in question. SRV also involves its

stakeholders in the development of business operations,

such as by inviting them to participate in design in the early

phase of a project. We regularly monitor the success of our

stakeholder cooperation using several key indicators.

Our investors and shareholders regularly receive

reliable and up-to-date information about the company’s

position. We organised a Capital Markets Day for analysts,

investors, other capital market representatives and media

representatives in November 2023. At the event, we

presented SRV’s revised strategy and updated the long-

term objectives for 2024–2027, and also described recent

business developments and SRV’s position in the

construction market. The Annual General Meeting was

held in March 2023.

SRV’s customer experience is a strong theme in our

strategy alongside lifecycle wisdom. Our customer promise

– “By listening, we build wisely” – combines our lifecycle-

wise strategy with an operating model based on asking and

listening. We regularly conduct customer satisfaction

surveys in all of our business areas at key stages of the

customer journey. We received more than 220 items of

feedback during 2023. In 2023, we focused on

strengthening the internal awareness of our customer

promise within SRV with the aim of including it as a

guideline in everything we do. Our success in this area was


		15

reflected in our improved B2B Net Promoter Score in

particular, which at 61 per cent exceeded its target.

We organised regular events for our own personnel

during the year. Webcasts on topical issues were also

produced for personnel. We monitored the workplace

atmosphere with a quarterly personnel survey, and it

remained at an excellent level (4.1/5.0). Occupational

safety also improved. We provide annual training to ensure

that our personnel are familiar with SRV’s Code of

Conduct.

We listen to our customers extensively and, since

2021, have offered both city residents and sector

operators the opportunity to join a digital forum called

Trailblazers, so that as many people as possible can

influence the kind of future we are building. In 2023, our

Trailblazers increased in number to 1,166 and provided us

with feedback on green modules for balconies, the

importance of sustainable materials and desirable home

features, such as cooling.

SRV’s Youth Panel started up in 2020, and its

members consist of young people with an interest in urban

development and future construction. The Youth Panel

convened four times in 2023, and focused on the spatial

design of buildings.

We provide the media with a comprehensive and up-

to-date picture of our company through regular

communications in the form of interim reports, investor

news, stock exchange releases and press releases. We also

answer weekly inquiries and interview requests from the

media. SRV also proactively offers article ideas and visits

to our construction sites. Last year, we organised several

media events for editorial offices in the financial, urban and

construction sectors. We also launched a new company

website in 2023.

Stakeholder engagement is essential for the

company’s success. We regularly provide information

about SRV’s business activities, operating environment

and operating principles so that our various stakeholders

can form a correct and justified picture of our company.

We paid special attention to stakeholder views in 2023 as

part of our double materiality analysis of sustainability.


		16

Stakeholders’ views

were included in the

2023 double

materiality

assessment

Strategy implementation

SRV’s strategy: Towards a lifecycle-wise

reality

The aims of SRV’s 2021–2023 strategy were: mitigating

climate change, the wellbeing of users and residents of the

premises, sustainable income from real estate properties

over their entire lifecycle, excellent customer experience,

and ensuring SRV’s long-term competitive advantage and

profitable growth.

This strategy has responded to the major challenges

in our operating environment – accelerating climate

change and continuing urban growth, high-density

development and digitalisation. Our aim was to listen to our

customers and other stakeholders, and carry out lifecycle-

wise construction so that sustainable construction will

create security for years and generations to come. SRV’s

strategy was based on developing the built environment so

that the entire lifecycle is taken into account. We call this

concept “lifecycle wisdom”. It means that we always

optimise users’ wellbeing and the environmental footprint

and costs of a building over the long term.

The strategic spearhead programme Value Through

Lifecycle-wise Construction guided SRV’s strategic

development. Our strategy also included three other

strategic programmes during the strategy period:

• Streamlining operations throughout the construction

chain

• Best customer experience in the commercial premises

market

• Increasing profitability in the housing construction

Strategic development programmes 2023

In 2023, we developed the company in line with our

strategic programmes.

Spearhead programme: Value through lifecycle-wise

construction

SRV continued to systematically develop its lifecycle-wise

approach in 2023. We took a lifecycle-wise approach to

construction from the perspective of the environment,

people and economic value. During the year, we continued

to achieve zero-emissions on all of our construction sites,

develop our lifecycle-wise concepts, implement projects

with a lifecycle-wise approach, and report in accordance

with the taxonomy system.

In 2023, in accordance with our lifecycle-wise

strategy, we designed buildings with improved

environmental performance and developed new lifecycle-

wise features. Our 2023 development projects revolved

around lifecycle-wise energy and cooling solutions, carbon

footprint reduction and low-carbon materials, the wellbeing

of users and solutions to support sustainable everyday life,

the optimal implementation of environmental certificates

and ambitious certification targets. During the year, our

projects resulted in achievements such as the

standardisation of solar panels and cooling solutions in

housing production. New lifecycle-wise solutions included

the smart optimisation of indoor conditions, demand

response, and energy reserves for business premises in

particular.

Our lifecycle-wise buildings are in good locations,

close to smooth transport connections and services –

SRV’s development projects are environmentally certified,

EU Taxonomy compliant and energy class A compliant,

and they use renewable sources of energy whenever

possible. Energy consumption and carbon footprint are

optimised through careful design, smart energy solutions

and sustainable materials choices.

We have continued to introduce even more natural

and nature-based solutions into the built environment, and

have developed our landscaping concepts by listening to

our customers.

Safeguarding economic value is also an integral

aspect of lifecycle wisdom. During 2023, we have applied

for externally verified environmental certificates for SRV’s

projects, integrated renewable energy into our buildings,

and optimised energy consumption during occupancy with

the aid of demand response. By optimising energy use, we

have managed to lower the energy consumption by up to

20 per cent during a building’s occupancy. Studies show

that integrated renewable energy increases the value of a

building by 4 per cent. The value of a lifecycle-wise,

environmentally certified building is approximately 8–12

per cent higher. The occupancy rate of lifecycle-wise

properties is also about 8 per cent higher. (Sources: JLL

Global Research – Return on Sustainability (2022) and

CBRE – The Value of Sustainable Building Features

(2023))

SRV’s construction sites have been net-zero emission

sites/aimed to be net-zero emission sites since the

beginning of 2022. Emissions from construction sites have

continued to decrease, and emissions from energy

consumption and fuels in 2023 decreased by

approximately 50%. This is a significant reduction in

emissions considering that in the previous year emissions

were reduced by more than 70%. The greatest factors that

have contributed to reducing emissions are improving

energy efficiency, changing over to emission-free

electricity and heat, increasing the number of electric work

machines, and using biofuels to power the other work

machines. As we have not yet been able to eliminate all of

our emissions, in 2023 we planted 16,700 trees which will

absorb 10,000 tons of carbon dioxide.


		17

Streamlining operations throughout the construction

chain

In order to improve operational efficiency, we have

invested in ensuring a high degree of control in our projects

and creating value for all parties. Knowledge-based

management enables agile responses and interventions in

our changing operating environment. This is strongly

supported by real-time situational awareness in both our

projects and internal operations. Our management system

was further developed in 2023.

Lean principles were used to improve situational

awareness on construction sites. For example, LastPlanner

scheduling was introduced to employees at the Wood City

construction site in Jätkäsaari, Helsinki. It provides

everyone with a common overview of the situation and an

effective way of harnessing different parties’ expertise. We

have also focused on developing situational awareness in

the Jorvi new ward building project and Laakso Joint

Hospital project.

Best customer experience in the business premises

market

SRV is committed to its customer promise: By listening, we

build wisely. During 2023, SRV continued to engage in

systematic efforts to strengthen its customer experience

and root the customer promise in the day-to-day work of

the company’s employees. Internal awareness of the

customer promise rose to an excellent level during the

year.

For example, SRV implemented the Helsinki Upper

Secondary School of Languages as a lifecycle project –

and completed it in May, three months ahead of the original

schedule. Its design solutions focused on energy efficiency

and the local production of renewable energy using heat

pumps and solar panels. According to the client,

cooperation with SRV’s employees was extremely smooth

during the project – they listened to the customer’s wishes

and communicated openly. SRV is responsible for the

property design, implementation, maintenance and

servicing for 20 years and is continuing its efforts to

maintain an excellent customer experience in this project.

The renovation of the Finnish National Theatre’s Small

Stage was completed on schedule in August, and the NPS

(customer satisfaction) for the handover phase was a

perfect 100. SRV received particular praise for the

professional skills of its personnel, cost management,

flexibility, smooth cooperation and good customer service.

Increasing profitability in housing construction

We continued to develop the cost-competitiveness of

housing production on many fronts during 2023. Profitable

growth development projects were implemented according

to plan and their 2023 components were completed on

schedule.

These development measures have significantly

increased the efficiency of SRV’s project implementation

and ensured good performance. SRV was highly

successful in achieving its budgeted margins, even in a

challenging and unpredictable market. 97.5 per cent of

projects had achieved their budgeted margins at the end of

the third quarter. Projects have managed to stick to their

budgeted margins throughout the entire process, from the

start-up decision all the way to completion. Project quality,

occupational safety, sustainability and customer

satisfaction have also been high.

Visio in Kalasatama, Helsinki and Keravan

Aleksinniitty, Vantaan Pekko and Tikkurilan Kolmas were

all completed this year. The properties were all handed

over with zero errors and the three first projects were

implemented in an exemplary manner without any

accidents. Customer satisfaction was also high in these

projects. Favourable developments were also seen in the

B2B NPS, which measures client satisfaction in SRV’s

housing production as a whole, and it reached an excellent

level during 2023. SRV received positive feedback about a

number of things, such as construction quality control and

schedule management, cooperation and site organisation,

and the management of on-site occupational safety.

As part of its efforts to improve profitability and

develop cost-competitiveness, SRV decided to expand its

portfolio to competitive contracting. To succeed in

competitive contracting, one must ensure efficient

procurement, smart solutions and a streamlined process.

SRV won several competitive contracts during the year.

The company also harnesses lessons learned from

competitive contracting in its development projects to

improve profitability in housing construction.

SRV’s revised strategy 2024-2027

In November 2023, SRV published its revised strategy and

updated long-term financial objectives for 2024–2027.

Read more on our website at https://www.srv.fi/en/

strategy.


		18

Economic development

Outlook for 2024

During 2024, SRV's revenue and result will be affected by

several factors in addition to general economic trends,

such as: the margin of SRV’s order backlog and its

development; the start-up of new contracts and

development projects; geopolitical risks, including related

direct and indirect effects, such as material costs and the

availability of materials and labour; and changes in

demand. Higher interest rates and the reduced availability

of financing are having a negative impact on demand for

housing and business premises among consumers and

investors, and thus pose uncertainty with respect to the

estimated start-ups of new projects.

In 2024, revenue will mainly consist of relatively low-

margin – yet also low-risk – cooperative contracting and, to

a lesser extent, of development projects sold to investors

as well as housing construction competition and

negotiation contracting. Developer-contracted housing

production will account for only a small percentage of

revenue, as no developer-contracted housing projects are

scheduled for completion during the year.

• Full-year consolidated revenue for 2024 is expected to

grow compared to 2023 (revenue in 2023: EUR 610.0

million).

• Operative operating profit is expected to improve on

2023 (operative operating profit in 2023: EUR 1.1 million).

Financial objectives

From the beginning of 2024, the company’s operations will

be guided by the following long-term financial objectives

that it aims to achieve by the end of 2027:

• Operative operating profit of at least EUR 50 million

• Revenue > EUR 900 million

• The objective is to distribute a dividend equalling 30-50

per cent of the annual result, while taking into account

the outlook and capital needs of the company.


		19

Group key figures


IFRS, EUR million	1-12/2023	1-12/2022	Change	Change, %
Revenue	610.0	770.1	-160.0	-20.8
Operative operating profit	1.1	18.9	-17.8	-94.4
Operative operating profit, %	0.2	2.5	-2.3
Operating profit	-6.8	-76.4	69.6
Operating profit, %	-1.1	-9.9	8.8
Profit before taxes	-15.7	-79.1	63.4
Net profit for the period	-15.1	-85.7	70.5
Net profit for the period, %	-2.5	-11.1	8.6
Order backlog (unrecognised)	1,048.6	838.8	209.8	25.0
New agreeements	781.4	624.6	156.8	25.1
Financing reserves	78.6	65.9	12.7	19.3

Group key figures


IFRS, EUR million	2023	2022	Change	Change, %
Equity ratio, %	34.4	36.3	-1.9
Equity ratio, %, excl. IFRS 16 1)	48.0	48.2	-0.2
Net interest-bearing debt	99.4	80.5	18.9	23.5
Net interest-bearing debt, excl. IFRS 16 1)	-6.3	-11.5	5.2
Net gearing ratio, %	71.7	55.1	16.6
Net gearing ratio, %, excl. IFRS 16 1)	-4.3	-7.5	3.2
Return on investment, % 4)	-2.6	-10.1	7.5
Capital employed	277.7	272.0	5.7	2.1
Capital employed excl. IFRS16	179.7	186.4	-6.8	-3.6
Return on equity, %	-10.6	-55.0	44.4
Earnings per share, EUR	-1.02	-6.62	5.6
Share price at the end of the period, EUR	4.08	3.80	0.3	7.4
Number of shares outstanding at the end of the period	16.9	16.9	0.0	0.0

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


		20


	REVENUE 610.0 EUR MILLION OPERATIVE OPERATING PROFIT 1.1 EUR MILLION ORDER BACKLOG, 31 December 2023 1,048.6 EUR MILLION EQUITY RATIO (EXCLUDING IFRS 16) 48.0%

Revenue (EUR million)

Change from 2022: -20.8%

Equity ratio (%)

Change from 2022 : -1.9 percentage points

Operative operating profit and operating profit (EUR

million)

1 SRV revised the definition of operative operating profit in order to improve

comparability and transparency in reporting in 2021. Operative operating

profit differs from the IFRS definition of operating profit in that it eliminates

the calculated currency exchange differences included in financial items in

Russian operations and their potential hedging impacts, as well as other items

affecting comparability.

Order backlog (unrecognised) (EUR million)

Change from 2022: 25.0%


		21

Financing and financial position

Financial income and expenses amounted to EUR -9.0

(-2.7) million in January–December. Net financial expenses

included EUR 2.3 (1.4) million in dividend and interest

income, exchange rate differences amounting to EUR -2.6

(1.5) 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 -1.1 (8.2) million, and interest

expenses of EUR -1.1 (-5.7) million, of which EUR 0.7 (1.0)

million was capitalised as of the beginning of the year. In

addition, financial expenses included EUR -5.6 (-4.5)

million in interest on lease agreement debts under IFRS 16

and EUR -1.5 (-7.1) million in other financial expenses.

The equity ratio was 34.4 (36.3) and gearing was 71.7

(55.1) per cent. Excluding the impact of IFRS 16, the equity

ratio was 48.0 (48.2) per cent and gearing was -4.3 (-7.5)

per cent.

Capital employed stood at EUR 277.7 (272.0) million

and the return on investment was -2.6 (-10.1) at the end of

the review period. Excluding the impact of IFRS 16, capital

employed amounted to EUR 179.7 (186.4) million.

Net interest-bearing debt totalled EUR 99.4 (80.5)

million at the end of the review period. Net interest-bearing

debt saw year-on-year growth of EUR 18.9 million.

Excluding the impact of IFRS 16, net interest-bearing debt

totalled EUR -6.3 (-11.5) million, representing a increase of

EUR 5.2 million on the comparison period. Housing

corporation loans accounted for EUR 17.1 (7.4) million of the

interest-bearing debt.

On 26 April, with the syndicate banks, the company

agreed on and implemented the replacement of the earlier

EUR 30 million committed revolving credit facility, EUR 40

million committed project financing facility and EUR 63

million non-committed project financing facility with a new

EUR 40 million committed revolving credit facility. The

earlier EUR 40 million committed project financing facility

and EUR 63 million non-committed project financing

facility are being discontinued, and going forward project

financing will be negotiated bilaterally with banks in

accordance with normal market practices.

The interest margin of the new revolving credit facility

is tied to three of SRV’s key sustainability objectives:

carbon dioxide emissions from the operations of the

company and its partner network and the lost time injury

frequency (LTIF). The new committed revolving credit

facility is valid until April 2025 and includes a one-year

extension option.

EUR 10 million of the company's new EUR 40 million

committed revolving credit facility had been allocated as a

committed overdraft facility by the end of the review

period, and it remained unused at the end of the period. Of

the remaining EUR 30 million, EUR 1 million was in use and

EUR 29.0 million was unused.

The company has EUR 21.1 million and EUR 36.0

million convertible hybrid bonds resulting from the

financing arrangement implemented in June 2022. The

coupon interest rate for these equity-like hybrid bonds is

4.875 percent per annum and they have no maturity date.

The bonds are unsecured and rank subordinate to other

debt obligations. Convertibility of the hybrid bonds is

structured such that the hybrid bond terms include a

special right, as per the Companies Act, to convert the

bonds into shares if the company does not redeem them

before June 30, 2026. The hybrid bonds are recorded as


		22


IFRS, EUR million	1-12/2023	1-12/2022	Change	Change, %
Equity ratio %	34.4	36.3	-1.9
Equity ratio excl. IFRS16, % 1)	48.0	48.2	-0.2
Net gearing ratio, %	71.7	55.1	16.6
Net gearing ratio excl. IFRS16, %1)	-4.3	-7.5	3.2
Shareholders' equity	138.7	146.2	-7.5	-5.1
Capital employed	277.7	272.0	5.7	2.1
Net interest-bearing debt	99.4	80.5	18.9	23.5
Net interest-bearing debt excl. IFRS161)	-6.3	-11.5	5.2
Interest-bearing debt	139.0	125.8	13.2	10.5
Of wich short-term	4.5	12.4	-7.9	-63.8
Of which long-term	134.5	113.4	21.1	18.6

Interest-bearing debt, excl. IFRS 16 1)	33.3	33.8	-0.5	-1.6
Cash and cash equivalents	39.6	45.3	-5.7	-12.6
Unused committed revolving credit facilities and overdraft facilities	39.0	20.0	19.0	95.1
Unused project loans that can be drawn immediately	0.0	0.6	-0.6
1 The figure has been adjusted to remove the impacts of IFRS 16

equity in the balance sheet at the assumed market value

(60% of nominal value) at the time of recognition, and their

value in equity on the balance sheet as of December 31,

2023, was EUR 33,5 million.

At the end of the period, the Group’s financing

reserves totalled EUR 78.6 million (65.9), consisting of an

undrawn committed revolving credit facility of EUR 29.0

million, an unused committed overdraft facility of EUR 10

million, cash and cash equivalents of EUR 39.6 million, and

undrawn committed project financing amounting to EUR

0.0 million. Financing reserves were affected by EUR 0.0

(-8.0) million in cash flow from operating activities and

investments, EUR -5.7 (-15.3) million in cash flow from

financing activities, and an increase of EUR 10 million in the

committed revolving credit facility from EUR 30 million to

EUR 40 million.

The financial covenants of SRV’s financing

agreements are equity ratio, gearing, minimum operating

margin, minimum liquidity, and certain other restrictions.

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 deviations from

traditional covenant calculation methods. The main

covenants of the financing agreements are presented in

note 29 to the Financial statement.

SRV's investment commitments totalled EUR 19.6

(19.6) million at the end of the review period, and consisted

of investments in Fennovoima and the Tampere Central

Deck and Arena project. SRV was exposed to changes in

the exchange rate of the rouble through its Russian

subsidiaries, associated companies and joint ventures. The

currency risk position has decreased considerably as a

result of write-downs of Russian holdings in 2022 and

divestments in August 2023. The change in translation

differences that impacted the comprehensive result and

shareholders’ equity totalled EUR 10.0 (-4.3) million, of

which EUR 9.3 million consisted of translation differences

that were recognised in income in conjunction with the

divestment of SRV Russia Oy. Translation differences

recognised in equity totalled EUR -4.9 (-14.9) million at the

end of the review period.


		23

Sustainability report 2023

Sustainability management and governance

model

Sustainability management

Our sustainability framework is built on nine of the United

Nations’ Sustainable Development Goals (SDGs), a

commitment to reaching the Paris Agreement’s 1.5°C

target, and the 2050 net-zero target. SRV also supports

the International Labour Organisation’s (ILO) Conventions

and Recommendations.

SRV’s Board of Directors regularly discusses

sustainability issues and decides on the company’s long-

term goals. SRV’s Corporate Executive Team is

responsible for the company’s sustainability efforts, which

are led by the Senior Vice President, Development. The

following sections provide more detailed descriptions of

our management practices in different areas of

sustainability. Governing, managerial and supervisory

bodies regularly monitor how SRV’s sustainability work is

progressing. ESG matters go to the Audit Committee and

Board of Directors as part of the approval process for

interim and annual reports. The Corporate Executive Team

monitors progress on a monthly basis and gives its opinion

on any required action. The roles of governing, managerial

and supervisory bodies are described in more detail in the

Corporate Governance Statement published in

conjunction with the Annual Report.

Sustainability is integrated into our management

system, which is based on the ISO 9001 quality

management system, the ISO 14001 environmental

management system, and the ISO 45001 occupational

health and safety management system. It includes

management processes, support processes and core

business processes. Our management system is certified

by Kiwa Inspecta and covers 100 per cent of our personnel.

ESG matters have also been included in the 2023 incentive

plan.

Our Code of Conduct defines the principles by which

SRV makes decisions and acts under all circumstances.

SRV also requires third parties, such as subcontractors

and other partners, to commit to its Code of Conduct.

In 2023, a sustainability policy was drawn up to steer

the company’s sustainability work. Practical instructions

round out and specify the guidelines laid out in the Code of

Conduct and the company’s policies.

Changes in the operating environment highlight

sustainability

Sustainability now has a greater impact on the price and

availability of funding, and ESG (Environment, Social and

Governance) and EU Taxonomy reporting is becoming

more important. Sustainable development is also being

reflected in the national regulations. In the draft bill for the

new Zoning and Construction Act, carbon footprint

calculation has been added to the regulatory framework.

Significant progress was made in our sustainability

work during 2023. We have recognised that our human

rights risks primarily lie in subcontracting chains, and have

therefore strengthened our due diligence process with

regard to selecting and assessing suppliers. We introduced

an additional process to enable us to more thoroughly

verify that our subcontractors’ foreign employees have the

right to work and that their terms and conditions of

employment are in order. The Due diligence process is

explained in more detail in the good governance section.

To strengthen our climate action, we committed to

operating in accordance with the Science Based Targets

Initiative. We joined the most demanding target, which

requires the achievement of a long-term carbon-neutral

goal by 2050 in addition to short-term climate targets.

Alongside various other actors, SRV is actively

involved in developing transparency in reporting and

dialogue with the authorities. Some examples of this are

the Taxonomy, Sustainable Construction and

Occupational Safety groups coordinated by the

Confederation of Finnish Construction Industries RT and

Green Building Council Finland’s (FiGBC) expert networks.

SRV is also involved in industry development via close

cooperation with other industry actors.


		24

Sustainability reporting, double materiality and the

sustainability programme

The Annual Report covers SRV’s material aspects for 2023

in accordance with the sustainability programme. Our

reporting takes into account both the societal impacts of

SRV’s business and our stakeholders’ views. The impacts

of our business on society and stakeholders are described

in the value creation model, and we have used them as a

basis for our materiality work.

A double materiality assessment was carried out by

taking into account both material impacts and their

financial materiality. In accordance with this approach, we

assessed sustainability factors on the basis of their

significance to SRV’s business and stakeholders, their

impact on the economy, the environment and society, and

the magnitude of these impacts. The table shows the

results of our double materiality analysis. The material

topics have been taken into account in our sustainability

policy and will also be added to our sustainability

programme in the future.

In accordance with the requirements of the

Accounting Act, a report on HR issues, social

responsibility, human rights, environmental and climate

issues, bribery and corruption and other required

information is provided in the Report of the Board of

Directors. In 2023, we have reported according to Global

Reporting Initiative (GRI) report.

SRV also regularly assesses the significant risks and

opportunities in its operating environment as part of its risk

management process. We have committed to reporting in

accordance with the recommendations of the Task Force

on Climate-related Financial Disclosures (TCFD) and Task

Force for Nature-related Financial Disclosures (TNFD). A

TCFD- and TNFD-compliant assessment of our climate

and nature-related risks can be found in the “Risks and risk

management” section of the Annual Report.

Our ESG-based sustainability programme is based on

SRV’s materiality assessment, which is regularly updated

on the basis of an employee survey and discussions with

stakeholders. We have identified several megatrends to

which our material themes are linked: denser cities,

accelerating climate change and increasing digitalization.

Our strategic sustainability targets take the entire value

chain and construction lifecycle into account. The targets

and achievements of our sustainability programme in

2023, including its long-term objectives, are presented in

the table.


	Sustainability targets 2023
	Green revenue to account for 80 per cent of our revenue from development projects Accident frequency rate*: less than 10 Our employee NPS will rise by 10 per cent on 2022 Code of conduct training 100 per cent of personnel will complete online All of our suppliers will go through the ESG criteria during the selection phase
	Actual 2023
	Green revenue accounted for 67.3 per cent of our entire project portfolio and 100 per cent of our development projects Accident frequency rate: 10,0 Our employee NPS rose by 3 per cent to an excellent 4.1/5.0 Code of conduct training 80 per cent of personnel completed online 88 per cent of active suppliers went through our ESG criteria during the selection phase
	Long-term objectives
	We are committed to the Science Based Targets Initiative Achieving carbon neutrality by 2050 We are committed to a vision of Zero Accidents
	*Lost Time Incident Frequency rate, SRV and subcontractors


		25


Double materiality assessment:		Material topics:
Background information: • Strategy and business plan • Group sustainability specialists • Personnel engagement • Involving customers, partners and other stakeholders Identifying impacts, risks and opportunities: 1. Financial materiality • ESG topics that represent financially significant risks or opportunities in either the long or short term 2. Material impacts • ESG topics in which SRV’s operations have significant positive or negative impacts on people, society or the environment	E	• Mitigating climate change • Adapting to climate change • Energy • Biodiversity • Impacts on the condition and size of ecosystems
	S	• The circular economy and resource efficiency • Working conditions (own workforce) • Equal treatment and opportunities (own workforce) • Other labour rights (own workforce) • Working conditions (value chain employees) • Equal treatment and opportunities (value chain employees) • Other labour rights (value chain employees)
	G	• A responsible corporate culture • Protecting whistleblowers • Relations with goods suppliers and service providers, including payment practices • Bribery and corruption

Environmental responsibility

SRV’s environmental efforts are based on a commitment

to legislative compliance, environmental protection,

business development, and the continuous improvement of

standards in accordance with the ISO 14001 environmental

system.

Environmental management

SRV’s most significant environmental impacts are caused

by construction waste, energy consumption, and changes

in land usage.

Due to the climatic conditions, most of the energy is

used on heating, which therefore holds the greatest

potential for reducing emissions from construction.

Promoting waste sorting and the circular economy are two

of the main objectives of SRV’s environmental action.

SRV’s most significant indirect environmental impacts

arise during the manufacture of building materials and the

use – and eventual demolition – of the final product (that is,

buildings and infrastructure).

Construction has impacts on the surrounding

environment not only during the construction process

itself, but also indirectly by creating new long-term

environments. Through its project development and

lifecycle wisdom concept, SRV has the opportunity to

promote the design of healthy and pleasant communities

that are sustainable for both people and the environment.

SRV’s sustainability policy steers both its own and its

partners’ efforts towards environmentally friendly, low-

emission solutions.

The general operating principles for managing

environmental issues are described in our environmental

management manual and guidelines for environmental

action. SRV’s Code of Conduct and Construction Contract

Programme specify what we require of our partners and

subcontractors. Our procurement policy also takes a stand

on environmental responsibility.

In 2023, SRV used three general environmental

certification systems (the international LEED and BreeAm

systems and the Finnish RTS system). Three of our

development projects were environmentally certified.

The impacts of various alternatives on the lifecycle of

a building were compared using lifecycle assessments

(LCA), not only in lifecycle projects and sites using

certification systems, but also in developer-contracted

housing projects and lifecycle-wise projects.

There was no major environmental damage in 2023,

and all reported deviations were low-risk in nature.

Climate change

Our emission intensity decreased over 80 percent

compared to the 31 December 2021 baseline and over 40

percent during 2023. The greatest factors that have

contributed to reducing emissions are using emission-free

electricity and heat, increasing the quantity of electric

machinery, and using biofuels to power the other

machinery. As we have not yet been able to eliminate all

emissions, we compensate for the remaining emissions by

planting an equivalent number of trees. In 2023 we planted

trees equivalent to 1,847 tCO2 of emissions. In 2023, in

cooperation with istutapuu.fi, we planted 16,700 trees

which will absorb 10,000 tons of carbon dioxide.

In 2023, in accordance with our lifecycle-wise

strategy, we designed buildings with improved

environmental performance and developed new lifecycle-

wise features. Development projects revolved around

lifecycle-wise energy and cooling solutions, carbon

footprint reduction and low-carbon materials, the well-

being of users and solutions to support sustainable

everyday life, and the optimal implementation of

environmental certificates. Solar panels and cooling are

now standard in our housing production. We have also

created new lifecycle-wise solutions, such as demand

response, extended warranties and the smart optimization

of indoor conditions.

SRV manages environmental data with an

environmental reporting system that both projects and

partners use to record their monthly environmental data.

More detailed information about environmental reporting is

presented in the sustainability appendix.

Biodiversity

Biodiversity is a concept that also extends to the built

environment and its yards and gardens. As an urban

constructor, we have identified the creation of diverse

urban nature as an important opportunity to exert a

positive influence, and have therefore made biodiversity-

boosting yards and green roofs an integral element of our

lifecycle-wise concept. By increasing biodiversity in a

dense urban environment, we can have a positive influence

on the well-being of both nature and people.

Our biodiversity targets guide our business. We follow

a mitigation hierarchy to manage impacts that reduce

biodiversity. In practice, SRV primarily seeks to avoid

adverse environmental impacts altogether in the built

environment. If this is not feasible, the alternatives are

harm minimization, rehabilitation or restoration. The last

option is to offset adverse impacts, that is, to carry out

protection and remediation measures. SRV always applies

this hierarchy on a case-by-case basis, with the local

ecosystem and its natural values as the baseline.

We have yard design guidelines to steer our

environmental design. We use a broad variety of species

and varieties in our plantings, and avoid uniform mass

plantings. For example, more than 50 different species are

planted at our model sites.

We engage in stakeholder cooperation to enhance

biodiversity. In 2023, we asked our Trailblazers about yard

design. Their responses highlighted the importance of yard


		26

design in supporting biodiversity and creating pleasant

surroundings.

We started drawing up SRV’s biodiversity roadmap in

2023, with the goal of identifying the direct impacts of our

own activities and our impact on the value chain.

Circular economy and resource consumption

The circular economy primarily revolves around longevity,

adaptability, repairability and material recycling. By

steering both procurement and design, we are able to

influence material choices and technical solutions so as to

enable successful procurement. We launched projects to

utilise waste streams in collaboration with our partners. We

study opportunities for harnessing the circular economy on

a project-by-project basis. For example, in 2023 SRV

made investments in wood reuse, and wood recycling

points have been set up in conjunction with waste

management. Our environmental management system

monitors soil and rock quantities.

The resources that we use to provide services and

outputs are described in our value creation model. We

gather information about green materials and work with

our suppliers to promote their use. Procurement

alternatives are also compared from an environmental

perspective.

Reducing waste volumes and sorting waste on site are

two of our key environmental goals. The sorting-at-source

rate is the best waste management indicator of the

progress being made on construction sites, and the target

is at least 70 per cent in projects. The rate for construction

waste was 83 per cent in 2023. The recovery and recycling

rates are the waste stream averages reported by our waste

management partners. The key figures for construction

waste are illustrated in the graphs.

Construction waste sorting rate: 1(%)

1 Proportion of waste sorted at Finnish construction sites. Reported amounts

do not include demolition waste or surplus soil.

Waste reclamation rate (%)

1 On Finnish construction sites. Reported amounts do not include demolition

waste or removed soil and rock.

Construction waste (1,000 tons)

Energy consumption (%)


		27

Energy consumption


Energy type	Compa rison year 2021, MWh	Compar ison year 2022, MWh	2023, MWh	%- share	% 2023/ 2022
Fuels from non- renewable sources	28,212	9,159	4,686	16.9	51.2
Fuels from renewable sources	702	3,708	6,098	21.9	164.4
Fuels, total (Scope 1)	28,914	12,867	10,783	38.8	83.8
Electricity produced by nuclear power	N/A	7,537	7,806	28.1	103.6
Other non-renewable electricity	23,504	2,519	1,358	4.9	53.9
Renewable electricity	N/A	N/A	3,644	13.1	N/A
District heating	30,399	8,955	2,179	7.8	24.3
District heating from renewable sources	N/A	N/A	2,008	7.2	N/A
District cooling from non-renewable sources	301	1,073	21	0.1	1.9
District cooling from renewable sources	NA	NA	0	0.0	0.0
Scope 2 total	54,204	12,547	17,015	61.2	135.6
Fossils / renewable total	N/A	21 706 / 3 708	8243 / 11 749	29,7 / 42,3	38,0/ 316,8
Energy consumption, total (scope1 and scope 2)	83,118	25,414	27,798	100.0	109.4
Energy intensity compared to net sales (Scope 1 and 2 MWh/Net sales MEUR)	89	43	46	N/A	106.0

Greenhouse gas emissions


	Energy type	Comparison year 2021, tCO2e	Comparison year 2022, tCO2e	2023, tCO2	% 2023/2022
Scope 1	Fuels from non-renewable sources	6,720	2,304	1,137	49.4
Scope 1	Fuels from renewable sources	19	97	0	0.3
Scope 1 total		6,739	2,401	1,138	47.4
Scope 2	Electricity produced by nuclear power	N/A	0	0	0
Scope 2	Electricity produced with non-renewable production methods	5,453	202	162	80.0
	District heating produced with non-renewable production methods	4,499	1,352	473	35.0
	Non-renewable district cooling	45	162	1	0.5
Scope 2 total		9,997	1,716	636	37.1
Scope 2 location based total		N/A	N/A	1,648	N/A
Scope 1 + 2 fossils total		16,717	4,020	1,773	44.1
Scope 1 + 2 renewable total		19	97	0	0.3
Scope 1 + 2 total		16,736	4,117	1,774	43.1
	Energy type			Comparison year 2023, tCO2
Scope 3 significant	1. Purchased goods and services	N/A	N/A	331,987	N/A
	3. Fuel- and energy-related activities not included in Scope 1 or Scope 2	N/A	N/A	822	N/A
	5. Waste generated in operations	N/A	N/A	352	N/A
	6. Business travel	N/A	N/A	690	N/A
	11. Use of sold products	N/A	N/A	90,870	N/A
Scope 3 total		N/A	N/A	424,721	N/A
Total (Scope 1 + Scope 2 + Scope 3)		N/A	N/A	426,494	N/A
Emission intensity (Scope 1,2)		18	5	3	60.0
Emission intensity (Scope 1,2,3)		N/A	N/A	699	N/A
Emission intensity (Scope 3)		N/A	N/A	696	N/A
Biogenic emissions		179	945	813	86.0
In the calculation of biofuel emissions, lifetime emissions were previously used. In the calculation of 2023, a coefficient of 0 was otherwise used to evaluate the emissions during operation, except for the non-CO2 emission coefficient reported by the supplier for heating fuels.
The calculation principle for Scope 1, 2 and 3 emission intensity is (tCO2 e/revenue MEUR) and the calculation formula for energy intensity is (MWh/revenue MEUR). The emission intensity calculated with revenue corrected by the construction cost index is 3 (Scope 1, 2), in the reference year 2022.


		28

SRV’s EU Taxonomy reporting

The EU Taxonomy is a classification system for

sustainable finance. The taxonomy consists of a directive

and the regulatory technical standards issued on the basis

of the directive. Our Corporate Social Responsibility

Report contains information about taxonomy-aligned

revenue, capital expenditure and operating expenses in

tabular format in accordance with EU guidelines. The

taxonomy criteria for our projects are reviewed in

accordance with our management system as part of design

management, procurement and on-site operations.

Minimum social safeguards for the EU Taxonomy

Our business operates in accordance with the minimum

social protection requirements. We are committed to the

UN Guiding Principles on Business and Human Rights, the

ILO Convention, and international human rights legislation.

Our Code of Conduct, along with our company’s policies,

principles and processes, steer our operations with

respect to human rights and workers’ rights.

SRV has a confidential Ethics Channel that enables

SRV employees and stakeholders to report cases in which

people may have acted illegally or contrary to SRV’s values

or Code of Conduct. SRV’s Ethics Channel is operated and

managed by an independent service provider. SRV’s

suppliers must also meet our sustainability requirements.

Audits support our human rights work, and we use them to

trace, identify and prevent potential risks related to our

supply chain. Measures to prevent corruption are

described in more detail in the Good Governance section.

We operate in accordance with national regulations in

matters relating to taxation and competition law.


		29



	SRV's taxonomy-eligible activity is related to the construction of new buildings, building repair and infrastructure construction, and it accounts for more than 90% of our turnover. Compliance with the taxonomy means that the activity contributes significantly to the achievement of at least one EU environmental goal and does not cause significant harm to the other five environmental goals. SRV reports on its activities in accordance with the criteria related to climate change mitigation. 67,3 % was taxonomy-aligned of taxonomy-eligible turnover.

EU Taxonomy reporting tables

2023

Substantial contribution criteria

DNSH criteria (“Does Not Significantly Harm”)

Economic Activities

Code(s)

Turnover

Proportion of

turnover, year 2023

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum Safeguards

Proportion of

Taxonomy-aligned

(A.1.) or -eligible (A.2.)

turnover, year 2022

Category enabling

activity

Category transitional

activity

MEUR

Y; N; N/

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities

(Taxonomy-aligned)

Construction of new houses and business

premises, renovations, infrastructure

construction, energy and life cycle services and

rental or management of own or leased

properties

7.1, 7.2,

6.13-6.17

, 7.3-7.6,

7,7

378.7

67.30%

100.00%

53.6

Turnover of environmentally sustainable

activities (Taxonomy-aligned) (A.1)

378.8

67.30%

100.00%

53.6

Of which enabling

0.0

—%

Of which transitional

0.0

—%

A.2. Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities)

EL; N/

Activities, that do not include

construction.

2.9

0.52%

Turnover of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

2.9

0.52%

A. Turnover of Taxonomy-eligible activities

(A1.+A.2)

561.9

92.11%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities

48.1

7.89%

TOTAL

610.0

100.00%


		30

2023

Substantial contribution criteria

DNSH criteria (“Does Not Significantly Harm”)

Economic Activities

Code(s)

CapEx

Proportion of CapEx,

year 2023

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum Safeguards

Proportion of

Taxonomy-aligned

(A.1.) or -eligible (A.2.)

turnover, year 2022

Category enabling

activity

Category transitional

activity

MEUR

Y; N; N/

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities

(Taxonomy-aligned)

Increase in tangible and intangible assets and

right-of-use assets during the past fiscal year

7.1, 7.2,

6.13-6.17,

7.3-7.6,

7,7

2.5

55.56%

100.00%

55.0

CapEx of environmentally sustainable

activities (Taxonomy-aligned) (A.1)

2.5

55.00%

100.00%

55.0

Of which enabling

0.0

Of which transitional

0.0

A.2. Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities)

EL; N/

General administrative systems

1.3

28.89%

CapEx of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

1.3

28.89%

A. CapEx of Taxonomy-eligible activities (A1.

+A.2)

4.5

100.00%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities

0.0

—%

TOTAL

4.5

100.00%


		31

2023

Substantial contribution criteria

DNSH criteria (“Does Not Significantly Harm”)

Economic Activities

Code(s)

OpEx

Proportion of OpEx,

year 2023

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Climate Change

Mitigation

Climate Change

Adaptation

Water

Pollution

Circular Economy

Biodiversity

Minimum Safeguards

Proportion of

Taxonomy-aligned

(A.1.) or -eligible (A.2.)

turnover, year 2022

Category enabling

activity

Category transitional

activity

MEUR

Y; N; N/

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1 Environmentally sustainable activities

(Taxonomy-aligned)

Expenses and product development costs for

tangible and intangible assets and right-of-use

assets that have not been capitalized

7.1, 7.2,

6.13-6.17,

7.3-7.6,

7,7

0.6

100.00%

100%

OpEx of environmentally sustainable

activities (Taxonomy-aligned) (A.1)

0.6

100.00%

100.0

Of which enabling

0.0

—%

Of which transitional

0.0

—%

A.2. Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities)

EL; N/

Costs, that serve taxonomy-eligible turnover

0.0

—%

OpEx of Taxonomy-eligible but not

environmentally sustainable activities (not

Taxonomy-aligned activities) (A.2)

0.0

—%

A. OpEx of Taxonomy-eligible activities (A1.

+A.2)

0.6

100.00%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities

0.0

—%

TOTAL

0.6

100.00%


		32

Social responsibility

The impacts of SRV’s social responsibility

The impacts of SRV’s social responsibility are largely

related to the well-being of the company’s personnel, and

thereby to minimizing personnel turnover. Social

responsibility also extends to our products and services,

which are reported on in the Environmental Responsibility

and Good Governance sections. We are committed to

respecting and promoting internationally identified

freedoms and human rights: UN SDGs (United Nations

Sustainable Development Goals), ILO (International Labour

Organization) Universal Declaration of Human Rights.

Our approach to social responsibility

SRV’s culture is built on its shared values, strategy,

customer promise and operating method. Our values –

sustainability, enthusiasm, profitability, bold in

development and open in cooperation – guide our

operations. Our approach describes desired behavior –

how we get things done at SRV. Our HR management

practices are described in our HR policy and its

supplementary principles. All of our personnel are covered

by an ISO-certified management system.

Measures and progress in social responsibility during

2023 (own personnel)

A good workplace atmosphere and excellent leadership

are the cornerstones of personnel wellbeing at SRV, and

are supported by proactive occupational health and safety

efforts. We want to offer versatile career paths to

professionals with a broad range of backgrounds.

Every year, we conduct an extensive personnel survey

covering workload, employee satisfaction and wellbeing at

work. This is supplemented by lighter pulse surveys on a

quarterly basis. The eNPS from SRV’s personnel work

motivation survey rose by 18% in 2023. Personnel work

motivation was excellent during 2023 (4.1 / 5.0).

SRV aims to be a safe, equal workplace with a good

community spirit. We train our personnel and make sure

they have the necessary qualifications. Supervisor

coaching has focused on employment contracts and

developing supervisory skills. The number of training days

per person in Finland was 0.7.

We regularly measure customer satisfaction with a

Net Promoter Score (NPS). Our B2C NPS for 2023 was -6,

while our B2B NPS exceeded our target at 61. Customers

also rated how well we conducted our business in

accordance with our customer promise – 6.7/10 B2C and

8.4/10 B2B.

We want to encourage young people to enter the

construction industry, and we therefore offer them a broad

range of jobs every year. In summer 2023, a total of 66

trainees worked at SRV in a variety of positions all across

Finland. An onboarding event was organized for the

trainees during the summer. Most of the trainees also

continued to work at SRV after the summer season.

In 2023, SRV also reviewed its sponsorship and

donation guidelines, which aim to find long-term

sponsorships and partnerships that fit the company’s

strategy, values, sustainability targets and brand image

goals.

Since 2021, SRV has been collaborating with the

Finnish Olympic Committee’s Lasten liike programme,

which aims to get kids moving. This cooperation supports

hobbies for children during the school day, and particularly

the training of instructors for children’s hobbies. It is also

part of our lifecycle-wise thinking, as it supports children’s

futures.

We promote equality and diversity

SRV employed an average of 778 (926) people in January–

December 2023. The most important key figures relating

to personnel can be found in the table and graphs below.

SRV’s employees have employment contracts, and we

require that personnel working for our subcontractors and

labor hire agencies also have employment contracts. 75.4

percent of our personnel are covered by collective

agreements. It is only senior salaried employees that do not

have their own collective agreement.

All personnel attend regular annual and performance

discussions. SRV has elected personnel representatives

who meet at least four times a year. SRV actively supports

well-being at work and maintaining working capacity, and

the company provides comprehensive occupational

healthcare. Our sickness absence rate was 1.8 per cent in

2023.

Personnel 2023 (persons)

Personnel, 31 Dec 2023


		33

Age and gender distribution

Everyone at SRV who meets the requirements of their

duties is treated equally regardless of gender or gender

identity, language, religion, nationality or ethnic origin,

opinions, family relations, age, union or political affiliations,

and health. We do not accept practices that violate human

rights, such as labor exploitation.

In 2023, SRV conducted a pay comparison study,

which indicated that there are no significant pay gaps

between women and men. For SRV, an adequate salary

means compensation for work that guarantees a

reasonable standard of living.

3 cases of suspected discrimination or harassment

were reported during the reporting period. All of these

cases have been handled in accordance with SRV’s

process, which is described in more detail in the Good

Governance section. No serious human rights violations

came to light during 2023.

SRV promotes diversity within the organization by

highlighting examples of equality in communications and

internal training. We promote equality by organizing special

support for employees who do not speak Finnish,

highlighting gender equality and equal pay in the

recruitment process, and examining the working conditions

of older people.

Developing our safety culture and safety management

A healthy and safe working environment is the foundation

for everything we do at SRV. We want to continuously

develop our safety culture, in which safety is an integral

aspect of a normal working day. SRV participates in the

Finnish Institute of Occupational Health’s Vision Zero

Forum, and has committed to its target of Zero Accidents.

SRV: aspects of occupational health and safety

Statistics on accidents at work indicate that the

construction sector is the most dangerous sector. This is

why we must ensure that health and safety measures are

implemented extremely well. SRV has a safety programme

that we employ in a goal-oriented manner to ensure a safe

working environment and reduce the number of work-

related accidents leading to absences. Through our efforts

to promote health and safety at our shared workplaces, we

promote the health and well-being not only of our own

personnel, but also of our partners’ personnel. Everyone

should feel safe on our construction sites.

The buildings we build have a long-term health impact

on their users, and this requires us to engage in special

planning, choose good construction solutions, and make

wise choices with regard to technical building services. A

built environment that supports well-being makes

everyday life more pleasant, supports employment, and is

also sustainable from an environmental perspective.

Factors that increase wellbeing include clean indoor air, a

comfortable temperature and good lighting.

Occupational safety

culture is measured

when no one is

watching.


		34


	2023	2022	2021
Age distribution, all employees*
34 or under (%)	236	286	302
35-51 (%)	342	340	330
52 or over (%)	194	217	237
Average age (years)	42	42	42
Gender distribution
All employess (share of women %, share of men %)	Women 20%, men 80%	In Finland women 22%, men 78%. Internationally women 35%, men 65%	In Finland women 21%, men 79%. Internationally women 35%, men 65%
Corporate executive team (share of women %, share of men	Women 40%, men 60%	Women 36%, men 64%	Women 25%, men 75%
Board of Directors (share of women %, share of men %)	Women 20% men 80%	Women 20%, men 80%	Women 20%, men 80%
*In Finland 31.12.2023

Our approach

Our company’s occupational safety is developed as part of

SRV’s ISO 45001 management system and HSEQ

activities. SRV’s health and safety work is guided by our

sustainability policy, which includes general principles for

safety management. We use management system

processes to make sure that our construction sites are

safe. SRV has a Code of Conduct, a Construction Contract

Programme for partners and onboarding practices to

ensure that we conduct our business correctly.

Measures and progress in occupational health and safety

during 2023

Our goal-oriented safety efforts continued in line with our

updated 2023 guidelines towards our goal of Zero

Accidents. Our main occupational safety themes for 2023

were caring about and intervening in the neglect of

occupational safety. We also developed safety

management in general using the principles of continuous

improvement.

SRV’s management is committed to cultivating a good

occupational safety culture whose key hallmarks are

openness and the courage to point out any shortcomings.

Management actively participates in discussions on

everyday safety in order to engage the entire organization

with these targets. As a result of our safety work, we

managed to reach the targets set for 2023. Senior

management regularly tours construction sites.

Management conducted a total of just under 200 safety

reviews during 2023. Management also actively

participates in discussions about everyday onsite safety.

SRV’s long-term occupational safety efforts are

evidenced in the prizes awarded by the Confederation of

Finnish Construction Industries (RT) to two of SRV’s

ongoing construction sites in its nationwide “Safety starts

with me” competition in 2023: the Wintteri multipurpose

building and a Wood City office building.


		35

Risk management competence development was part

of our strategy in 2023. This has been reflected in many

concrete occupational safety measures, such as regular

safety briefings, safety management training, occupational

safety card training, and safety audits. As part of our goal-

oriented safety work, we raised the requirements for

personal protective equipment in sites 2023 by adding cut-

resistant gloves and safety footwear with ankle supports.

This goal-oriented safety work has paid off, as evidenced

by a lost time incident frequency rate (LTIF) of 10.0 in 2023

(13.8).

Making and processing high-quality safety

observations is an established practice at SRV. Safety

observations are an important tool for routine safety

management, and more than 13,000 of them were received

in 2023.

We held an occupational safety day for key

subcontractors in collaboration with procurement and

safety experts, as we also want them to succeed in their

safety work.

Occupational safety


	2023	2022	2021
Lost-time injury frequency SRV personnel and subcontractors (LTIF, rolling 12 months)*	10.0	13,8	14,4
Lost-time injury frequency SRV personnel and subcontractors (LTIF, rolling 12 months), old calculation principles**	9,0	12,5	12,8
Lost-time injuries SRV personnel and subcontractors (number of)	44	71	94
Lost-time injuries, serious SRV personnel and subcontractors (number of)	6	7	12
Lost-time injuries leading to death, SRV personnel and subcontractors (number of)	0	0	0
Weekly risk assessment TR- measurements, average, SRV sites (%)	96,3	96,1	96,3
Weekly risk assessment MVR- measurement, average, SRV sites (%)	96,4	95,4	96,7
Weekly risk assessment measurements performed, number of	1,297	2,409	2,271
Safety observations, number of	13,243	13,024	14,466
Frequency of safety observations, number of	2,620	2,271	1,984
Correctness of TR and MVR- measurement use, % difference site vs. safety team	2,7	4,5	4,9

*The lost time injury frequency calculation will be done in accordance with the GRI starting

in 2023. The figures for 2021-2022 have been corrected. The working hours of the

subcontractors come in accordance with the realized stamps without holiday correction.

For SRV's own personnel we have used 144,5 working hours, with 30 days of vacation time

taken into account.

**SRV's old calculation principles now take into account the correct holiday correction,

which is why the lost time injury frequency has changed from announced in the stock

exchange bulletin on February 1st, 2024 (8.7)


		36

Measures and progress in social responsibility during

2023 (value chain employees)

SRV is committed to promoting human rights and

preventing labour exploitation. We adhere to our Code of

Conduct and are aware of our due diligence obligations.

We are committed to avoiding negative impacts on people

in our value chain and to intervene if they occur. It is the

duty of every SRV employee to take these impacts into

account.

Key themes and measures to promote human rights:

1. Respecting our own rights and those of SRV’s suppliers

by providing decent working conditions

2. Protecting communities and habitats by developing a

sustainable built environment

3. Promoting ethical practices within the sector by

proactively combating the grey economy, labour

exploitation and other unethical activities

We follow the same sustainability principles for both

employees in our value chain and SRV’s in-house

personnel. We address all concerns raised by employees in

our value chain and, in accordance with due diligence,

investigate all concerns regarding working conditions and

other employee rights or suspected cases of abuse or

misconduct.

All of SRV’s partners must comply with the Code of

Conduct in their own operations and ensure that their own

subcontractors also comply with it. We also require full

commitment to SRV’s sustainability programme.

The company seeks to even more effectively prevent

labor exploitation and activities that violate the Code of

Conduct. In order to ensure that the selected actions steer

our operations and value chain, we continuously improve

our due diligence process to identify, prevent and mitigate

any adverse impacts on human rights. If we detect

suspected violations, we cooperate with a variety of parties

and authorities to rectify the situation.

In 2023, SRV introduced an additional reporting

process to verify even more comprehensively that its

subcontractors’ foreign workers have the right to work,

that their terms and conditions of employment are

appropriate, and that the employees understand their

rights and obligations under current Finnish legislation. We

require a company representative’s signature as evidence

of the company’s commitment to realizing employee rights

for all third-country nationals and ensuring that they have

the necessary qualifications.

More information about the sustainability work

concerning employees in the value chain can be found in

the Good Governance section.

Good Governance

The impacts of SRV’s good governance

Good governance emphasizes good management, ethical

practices and the development of sustainable operations.

We enhance our operating methods by listening to our

stakeholders and measuring the performance and

effectiveness of our management system. We encourage

our employees to innovate and share ethical and

sustainable practices. We are developing our compliance

function, and our personnel are also being trained in line

with the principles of continuous improvement. We

promote the realization of human rights and fair

competition, and actively work to prevent labor

exploitation, bribery, corruption and the grey economy. In

addition to this, at the core of our operations is the holistic

nurturing of occupational safety and health. By providing

employment and paying taxes, we make a positive impact

on both society and the economy.

Our approach

The President & CEO and SRV’s Corporate Executive

Team are responsible for compliance with ethical

practices at a strategic level, while business units hold this

responsibility at an operational level. Our management

and ethical practices are described in our management

system, with which all employees are required to comply. It

is supplemented by policies and guidelines that specify

and document our guiding principles and practical

procedures. We require our subcontractors and suppliers

to comply with equivalent ethical principles as strongly as

from ourselves. These principles are enshrined in our

Supplier Code of Conduct, commitment to which is a

necessary condition before starting work.

Measures and progress in good governance during 2023

All personnel are required to complete Code of Conduct

training once a year, and 80% of personnel did so. We

provide our partners with instructions in our agreements

and construction contract programmes. The Code of

Conduct contains principles for preventing bribery and

corruption in which we state that we neither offer nor

accept bribes. Anti-corruption practices are an

unconditional requirement of our business. Subcontractors

and other partners are required to have zero tolerance for

corruption.

We take any suspected misconduct seriously. At SRV,

all incidents that violate our Code of Conduct (such as

suspected discrimination or harassment, bribery and

corruption, or violations of the law) can be reported via

SRV’s Ethics Channel. This channel is also open to people

outside SRV. We also encourage our personnel to report

their findings to their supervisor or the SRV Group legal

department. These reports can be made either under your

own name or anonymously, and are processed

confidentially by an independent service provider. SRV

complies with the procedures laid down in the

Whistleblowing Act, which states that whistleblowers

should not be subject to adverse consequences or

retaliation for making a report or making information public

within the conditions laid down in law.


		37

During 2023, a total of 12 reports of suspected violations

were made to the ethics channel and a total of 2 reports to

the security system. Of the notifications, 3 concerned

suspicions of discrimination and harassment. No

suspected cases of bribery or corruption were brought to

our attention.

As part of our sustainability management, we have

long been developing operating methods to combat the

grey economy and ensure the manageability, transparency

and legality of our operating chain. Ensuring that human

rights are realised, and that labor is not exploited in the

supply chain, is also crucial for society. Which is why SRV

supports equality in the labour market, and plays its part in

preventing labour market segregation and inequality. We

also make sure that labour rights are realized and that

foreign employees also know their rights and

responsibilities.

SRV employs a considerable number of its own

personnel and contractors. Since 2021, we have required

third-country nationals to have a residence permit issued

in Finland in order to combat the grey economy and

prevent labour exploitation. Since December 2021, SRV

has not approved people working on its construction sites

with a commission agreement through an invoicing service,

such as “light entrepreneurship” without a business ID.

There are no established legal or born practices

surrounding light entrepreneurship at societal level, which

means that it poses significant and serious risks related to

the grey economy.

Sustainability assessment as a prerequisite for

procurement decisions

SRV wants to offer its customers and other stakeholders

high-quality construction that is also responsible and

sustainable. Which is why we pay particular attention to the

sustainability of our supply chain. We want to continuously

improve supplier cooperation and knowledge, and develop

competence and understanding of the role played by

procurement as an enabler of responsible operations.

Enhancing the management of our supplier and

contractor network was a key goal for procurement in

2023. SRV adheres to official procurement procedures in

the management of its supplier relationships, and the SRV

Network Register is an element of this. SRV’s register

contains about 3,300 active contractors / suppliers. After

Russia invaded Ukraine in 2022, SRV decided not to

purchase any materials from Russia.

Before making any purchasing decisions, we make

sure that we know our suppliers and use our contract

programme to ensure that they are committed to the same

principles as us. SRV’s supplier network registration

process includes some sustainability-related questions. A

sustainability assessment is issued to all contractors on

the basis of their answers to the contractors we use. Our

goal is, that 100 per cent of our active suppliers complete

the sustainability survey. We already reached 88 per cent

in 2023.

The contract programme presents our contractual

payment terms. The contract price is paid to the

contractor per work phase, according to the installment

table based on the progress of work or the unit price list.

The basis of payment is always agreed separately for each

subcontract in the contractor agreement.

Audits enable us to ensure that our suppliers meet the

requirements of an SRV partner, and that we can develop

industry practices together. Through this, we are also able

to deepen the knowledge of our partners, from their

methods of operation to possible new offerings and

capacities. Our procurement function audited over 80

suppliers or contractors during 2023.

Continuous efforts to combat to grey economy

SRV holds anti-grey economy days on its Finnish

construction sites four times a year. These events seek to

minimise socially harmful phenomena associated with the

grey economy, such as the exploitation of foreign labour.

During our 2023 anti-grey economy days, construction

sites checked that our contractual partners and their

subcontractors had met all the necessary conditions for

both the company and its employees to work on our

construction site. About 67 per cent of all personnel were

checked.


		38


Key indicators related to good governance
	2023	2022	2021
Ethical guidelines
People who have completed ethical guideline online course (%)	80	42	N/A
Reports of harassment and discrimination (number)	14	8	7
Own personnel and partners
SRV construction sites (number)	60	76	82
Subcontractors worked in SRV construction sites (number)	3,290	3,770	3,613
Personnel worked in SRV construction sites (persons)	18,031	23,102	25,301
Separate access permits issued at SRV's construction sites	24,830	32,488	37,572
Nationalities
Share of Finns among those who worked on construction sites (%)	76	73	71
The share of personnel from other countries in the construction sites (%)*	24	27	29
Nationalities (number)	89	106	111
Collected taxes paid and indirectly paid taxes in Finland
Payroll taxes (million euros)	17.0	17.0	16.6
VAT, net** (million euros)	68.4	81.2	124.8
Corporate income tax (million euros)	0.0	0.0	0.0
Other taxes (million euros)	1.7	2.3	1.4
Taxes paid (million euros)	87.1	100.5	142.8
* After Finland, the most common citizenships were Estonia, Latvia, Russia and Poland
** The figures exclude shares of joint and associated companies

Only a few individual instructions were issued during

inspections of SRV’s construction sites carried out by the

authorities in the areas of occupational health and safety,

foreign workers and the Contractor’s Liability Act in 2023.

These were put into practice at the required level as soon

as the deviation was detected.

We are committed to acting responsibly with regard to

taxation, and pay our taxes and tax-like charges in

accordance with local legislation. A significant proportion

of tax-like charges consist of salary-related taxes and VAT

on goods and services. SRV also pays other taxes, such as

income tax, transfer tax, and property tax. The company

also has considerable impact as an indirect taxpayer –

SRV also generates indirect revenue for the State from the

income tax and social security payments paid via

subcontracting and hired labour.

SRV proactively cooperates with the authorities to

ensure that internal transactions within both the Group and

construction projects are properly handled with respect to

tax legislation.


		39

Changes in the Corporate Executive Team

The Corporate Executive Team assists the President &

CEO in operational planning, line management, and

decision-making. The team also prepares matters to be

dealt with by the company's Board of Directors, and

handles matters concerning business operations and

operational control and development. The duties of the

Group’s Corporate Executive Team are based on the

Company’s management system, and the Group’s

Corporate Executive Team has no authority grounded in

law or the Company’s Articles of Association.

Changes in SRV’s Corporate Executive Team in 2023

Construction engineer Hannu Lokka (age 59) assumed his

position as SRV’s Executive Vice President, Strategic

Project Development and a member of the Corporate

Executive Team as of 16 January 2023 when his

predecessor Timo Nieminen retired.

On 24 May 2023, SRV announced that Henri Sulankivi,

Senior Vice President, Regional Units and a member of the

Corporate Executive Team, had decided to leave the

company. On 24 July 2023, Tero Karislahti, MSc. (Tech.),

was appointed as SRV Group Plc’s Senior Vice President,

Regional Units and a member of the Corporate Executive

Team, effective no later than 1 July 2024. Karislahti started

in his position on February 1, 2024. Until then, Hannu Lokka,

SRV's Executive Vice President, Strategic Project

Development, and a member of the Corporate Executive

Team, was responsible for the Regional Units.

On 20 December 2023, SRV announced that Jussi

Tuisku, Senior Vice President, Russia and Estonia, would

be leaving the company’s Corporate Executive Team as of

22 December 2023.

Risks and risk management

SRV has published a Corporate Governance Statement,

which includes a general description of the company’s risk

management systems, as a separate report from the

Annual Report. The report is available on the company’s

website.

Strategic risks

Market risks

SRV’s most significant strategic market risks are linked to

delayed recovery in consumer demand for housing and

investor demand for housing and business premises. This

is a consequence of increased return requirements from

investors as a result of rising interest rates, and the

increased costs and continued weak availability of

financing for customers.

In order to reduce market risks, the company

continued to bolster its activities to identify commercial

opportunities, manage customer relationships and sales,

and enhance the customer experience. In projects, the aim

is to make outlays on public integrated project deliveries.

SRV is seeking to put a stronger focus on private

development projects in the business premises sector;

while in the housing business area, projects will be

distributed more evenly among different sectors of housing

construction.

Strategic climate risks

We have utilised the reporting recommendations of the

Task Force on Climate-related Financial Disclosures

(TCFD) and Task Force on Nature-related Financial

Disclosures (TNFD) when assessing the impacts of climate

change and biodiversity. Our environmental management

model is described in the Sustainability management

section. SRV’s strategy, which emphasises lifecycle

wisdom, is strongly linked to combating climate change,

boosting biodiversity in the built environment, and

supporting customers in a changing operating

environment. This work is supported by SRV’s climate

roadmap, which extends to 2030. In the Annual Report, we

have deepened our description of risks related to climate

change and biodiversity by describing more concrete

measures and their impacts in our non-financial reporting.

We estimated the business impacts of two climate

scenarios. We determined that a temperature increase of

1.5 degrees would increase the transition risks related to

markets, reputation, politics and technology. Of the

measures we take to manage these risks, the most

important involve reducing emissions and preparing for

potential increases in taxes and operating costs. Ignoring

biodiversity is considered to be a significant risk, as climate

change and nature loss accelerate each other and have a

deteriorating effect on both general wellbeing and the living

conditions of animals and species. This is why we have

continued to introduce even more natural and nature-

based solutions into the built environment during 2023.

Personnel risks

The availability of labour is good and SRV was highly

successful at balancing resources during the year by

means of internal transfers between different business

functions. In spite of the market situation, a key personnel

risk is posed by attracting and eliciting commitment from

project personnel with demanding references for business

premises and other key personnel. Good management,

corporate culture and competitive overall remuneration

are considered to be key draws for the company.

Accordingly, SRV has designated corporate culture,

expertise and people as its strategic theme for 2024-2027.

Supervisors are coached to give feedback and bring up

issues. We take care of their coping at work and provide

training in employment contracts together with the

Confederation of Finnish Construction Industries RT. A

competence survey has identified the critical roles and

experts in business construction in particular. A variety of

communal events have brought our employees together.


		40

Our good team spirit is evident from our eNPS of 20 and

personnel work motivation score of 4.1/5.

Financial risks

Financing and credit risks

SRV’s developer-contracted construction ties up capital.

The availability and price of financing are important for the

company's business. Although the availability of financing

and certain guarantees for the company has improved, the

availability of financing for developer contracting projects

remains somewhat limited and the terms and conditions

have tightened due to the market situation.

Liquidity and refinancing risks may have an effect on

the Group's financial results, cash flow and the

implementation of the Group’s developer contracting

projects if the Group is unable to ensure sufficient

financing for its operations. In addition to cash assets and

undrawn committed housing corporation loans, SRV’s

financing reserves consist of an undrawn committed

revolving credit facility and an unused committed

overdraft facility. Individual receivables may also be sold

within the limits allowed for the purpose of liquidity

management, as necessary.

Negative changes in SRV’s earnings trend may impact

on the fulfilment of the covenants of the revolving credit

facility and thereby on the usability of the facility and the

company’s financing reserves. The company actively

monitors the development of the covenant situation and, if

necessary, seeks to negotiate on financing terms with the

creditor banks.

In order to manage financial risks, financing for

developer contracting projects is ensured through sales of

projects, project-specific credit facilities and the use of

SRV’s general financing reserves. The financing situation

of projects is assessed at different decision points and the

company only starts up projects for which financing has

been secured. New projects are only launched when there

is sufficient demand.

General interest rates remained high during 2023.

SRV is monitoring the interest rates connected to its

liabilities, and seeks to hedge interest rate risks through

interest derivatives and by choosing the interest type and

interest period. In July 2015, SRV signed two interest rate

swaps with total capital of EUR 100 million. They will

mature in 2025. In addition to its interest rate risk position,

SRV can also use interest derivatives to partly hedge

against the impact of interest rate changes on its business.

Due to the nature of SRV's operations, the unit sizes of

projects and sales invoices are relatively large. For this

reason, the company’s receivables from individual

customers may be subject to credit risks. The company

seeks to manage credit risks by means of assessing the

solvency of customers, security arrangements, prudently

drafting payment installment tables and proactively

keeping track of receivables. The Group's commercial

counterparties are mainly listed companies or major real

estate companies or institutional investment companies.

Historically, the amount of credit losses has been very low.

In the first quarter of 2022, SRV suspended the

construction of the Torihotelli contract in Oulu due to the

payment difficulties of the client. In June 2022, SRV filed

an application to declare the client bankrupt. As a result,

the District Court of Oulu declared the company

developing the hotel, Kiinteistö Oy Oulun Torihotelli,

bankrupt in August 2022. The assets of the bankruptcy

estate are being liquidated. The company has also initiated

steps to liquidate its non-property collateral. At the end of

December, SRV had about EUR 16.0 million in trade

receivables due from this contract, secured by a mortgage

on the property under construction and pledges on certain

other assets. Trade receivables in the Torihotelli contract

involve credit loss risks.


		41

Operational risks

Project management risks

SRV seeks to implement profitable contracting projects for

developer customers and to develop profitable developer

contracting and property projects together with its

partners. In addition to resource risks, the most significant

project management risks concern the operations of

customers and the authorities, contract management, site

planning, the implementation of procurement, the

management of schedules, quality, costs, safety and

environmental issues, and the marketing and sale of sites.

SRV seeks to manage project management risks by

investing in the development of management-enhancing

systems and its own customer-focused, flexible and

networked operating model. The company has a

management system that steers its operations, as well as

several ongoing development projects aimed at

standardising and systematising operative risk

management and handling to increase their efficacy.

Subcontracting risks

Partner network management involves risks related to

matters such as quality, costs, schedule, safety, the grey

economy. labor-related exploitation, human rights and

environmental issues. To manage subcontractor risks, the

backgrounds, technical competences and financial

capacities of key companies working in projects are

assessed, and phase-by-phase working plans are drawn up

before the work begins. In addition to the implementation

of the working plans, SRV constantly monitors the

development of procurement costs and reacts rapidly to

deviations. In addition, we audit selected suppliers in

accordance with the annual audit program. The means of

managing the risks related to the subcontracting network

are described in more detail in the section on good

governance.

Procurement management and documentation are

handled with SRV’s procurement system and in-house

network register.

The materialization of any significant geopolitical

tensions would pose problems to global production chains,

thereby affecting material availability and raising their

prices. Proactive procurement is employed to manage any

material availability issues and the impact of inflation on

projects.

Operational sustainability risks

Occupational safety risks and accidents are major

operational sustainability risks. Occupational safety and

human rights risks involve serious accidents at work,

labour exploitation, working conditions, corruption and the

grey economy. Addressing neglect of occupational safety

was the main theme of 2023. In addition, the management

and monitoring of overall safety has been developed to

obtain an even more accurate and better picture of the

situation. At the same time, on-site training and own

observations of occupational safety have been developed.

SRV requires the realisation of human rights. Human

rights risks largely concern labour exploitation, working

conditions, corruption and the grey economy. Measures

taken in 2023 to avoid human rights risks have been

described in the good governance section in particular.

Contractual risks

Incomplete or unclear contract terms and deficient

contract management may give rise to ambiguities

concerning the responsibilities and obligations of the

parties and disputes that weaken project profitability. In

particular, additional and modification work implemented

during projects is subject to the risk of divergent

interpretations.

In order to avoid contractual risks, SRV’s key

agreements are drafted on the basis of legal expertise and

contract models adapted to the company’s operations. In

addition, the company constantly maintains the knowledge

of responsible persons on different contract terms and the

content of contracts with guidance and the necessary

training. Contract practices are developed constantly.

Risks of large and demanding projects

Construction projects involve a variety of risks in the

project development, construction and in-service phases,

and their circumstances develop and change constantly.

Large-scale development projects that tie up a great deal

of capital over a long period of time are particularly

exposed to changes and thereby to risks. The key factor in

risk management is the careful selection of projects. We

also proactively manage our risks by diversifying our

portfolio geographically, by intended use and contract

type, and by limiting the amount of capital tied up in

projects.

In large and demanding projects, the company

manages the risks involved in each phase by carrying out

thorough risk analyses and adhering to the project

process, decision-making processes and operating system

defined by the company. Major and risky projects are

always under the special supervision of the company’s

management. New practices have been introduced in

project selection and risk management, and are being

further expanded and systematised.

Other risks

Russian country-specific risks

In November 2022, SRV and its Finnish co-investors sold

their holdings in Jupiter Realty 1 B.V., the company that

owns the Okhta Mall shopping centre in St Petersburg, to

the Cyprus-based property investor Geomare Investments

Limited. In August 2023, SRV divested the share capital of

its subsidiary SRV Russia Oy to the Cypriot real estate

investment company Geomare Investments Limited. The


		42

sold assets also include SRV’s Russian subsidiaries and

associated companies and SRV’s remaining plot holdings

in Russia, which are owned by these companies, as well as

a minority interest in the 4Daily shopping centre located

close to Moscow. After these transactions, SRV’s only

remaining asset in Russia is a 50 per cent holding in the

Pearl Plaza shopping centre in St Petersburg. The other

owner of the shopping centre is the Chinese company

Shanghai Industrial Investment (Holdings) Co. Ltd. SRV is

actively continuing negotiations with its partner with the

aim of selling its holding in Pearl Plaza as well.

Due to sanctions and the tightening economic

situation, SRV’s risks in Russia still arise from managing the

operations of the remaining co-owned shopping centre and

its profitability; fulfilling the covenant terms of the loan

agreements of the company that owns the shopping

centre; and divesting the assets in a strict and tightening

sanction environment. The company is focusing on the

careful management of the remaining shopping centre,

whose day-to-day management and leasing is handled by a

contractual real estate manager and, at the same time, is

continuing to actively engage in negotiations with a view to

selling its remaining assets in Russia.

Risks related to investments in Fennovoima

In April 2022, SRV wrote down the balance sheet values of

its holdings in Fennovoima. After this write-down, the

investment commitment to Voimaosakeyhtiö SF amounts

to a maximum of EUR 18.7 million. That said, the realisation

of this investment commitment involves significant

uncertainty due to the suspension of the Hanhikivi 1

project. Fennovoima has canceled the construction permit

application for the Hanhikivi 1 nuclear power plant.

Cyber, information security and continuity risks

The functionality and security of information systems play

a key role in the company’s business operations. The

growing threat posed by cybercrime, personnel

misconduct, and system replacements and modernisation

are risk factors that can result in the interruption of

operations, reputational damage and significant financial

losses. Cyberattacks and hacking of telecommunications,

IT systems and the functionality of other infrastructure are

on the rise, which might cause disruptions in the operations

of SRV and its customers and implementation partners.

With respect to cyber and information security risks, SRV

enhances its information security culture by maintaining

and communicating its information security policy and

guidelines as well as information security-related

practices. SRV monitors external threats and constantly

keeps track of how the situation develops. Other means of

risk management include automatic virus scans of systems

and issuing separate warnings about major information

security threats.

Corporate governance and the decisions of

the Annual General Meeting

General Meetings

SRV held one General Meeting in 2023. The company’s

Annual General Meeting (AGM) was held on 27 March 2023

in Espoo. The Annual General Meeting approved all the

proposals made by the Board of Directors to the General

Meeting. The Annual General Meeting adopted SRV Group

Plc’s financial statements, including the consolidated

financial statements, and discharged the Board of

Directors and the President & CEO from liability for the

financial period 1 January–31 December 2022, approved

the 2022 Remuneration Report on the company’s

governing bodies and approved all proposals made by the

shareholders' nomination committee and the Board of

Directors to the Annual General Meeting.

The presentations of members of the Board of

Directors and the minutes and decisions of the Annual

General Meeting, including details, are available on the

company’s Internet site at www.srv.fi/en/investors.

Dividend payment

In accordance with the proposal of the Board of Directors,

the Annual General Meeting decided that no dividend

would be paid for the financial year 2022.

The Members and Chair of the Board of Directors and

remuneration

The Annual General Meeting confirmed the number of

members of the Board of Directors as five. Timo Kokkila,

MSc. (Eng.), Tomi Yli-Kyyny, MSc. (Eng.), Hannu Leinonen,

MSc. (Eng.), and Heli Iisakka, MSc. (Econ.) were re-elected

to the Board of Directors. Matti Ahokas, 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 confirmed that the following annual fees would be

paid to the members of the Board: Board Chair EUR

72,000, Vice Chair EUR 48,000, Board member EUR

36,000, and Chair of the Audit Committee EUR 48,000, if

he/she does not simultaneously act as Chair or Vice Chair

of the Board of Directors. In addition, a EUR 700 fee was

decided to pay to each member per Board and committee

meeting. Travel expenses arising from performing the

duties of a member of the Board of Directors was also

reimbursed according to company’s travel policy.

The aforementioned annual fees will be paid in SRV

Group Plc’s shares and in cash, with approximately 40 per

cent of the remuneration paid in shares. After the transfer

of shares, the remaining amount is to be paid in cash. The

company will acquire the shares in the name and on behalf

of the Board members. The company is responsible for the

costs arising from the acquisition of the shares. The shares

were decided to be acquire for the Board members within

two weeks from the publishing of the interim report for the

first quarter of 2023, or as soon as it is possible in

accordance with applicable legislation.


		43

At its meeting after the AGM, the Board of Directors

elected a Vice Chair of the Board, Tomi Kokkila, from

among its members. Heli Iisakka was elected as Chair of

the Audit Committee, and Hannu Leinonen and Matti

Ahokas as members. Tomi Yli-Kyyny was elected as Chair

of the HR and Nomination Committee1, 2and Hannu

Leinonen and Timo Kokkila as members.

Board authorisations

The Annual General Meeting authorised the Board of

Directors to decide on the acquisition of the company’s

own shares using the company’s unrestricted equity as

proposed by the Board of Directors. The Board of

Directors was authorised to acquire a maximum of

1,700,000 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 Annual General Meeting also authorised the

Board of Directors to decide on a share issue and granting

of special rights as proposed by the Board of Directors.

Based on this authorisation, the Board of Directors may

decide on the issuance of a maximum of 1,700,000 new

shares or the reissuance of shares held by the company

and/or granting of other special rights entitling to shares as

referred to in Chapter 1, Section 10 of the Finnish

Companies Act either for consideration or free of

consideration in one or several instalments. The Board of

Directors may also decide on a share issue without

payment to the company itself in one or more instalments.

The authorisations are valid until 30 June 2024 and

cancel the authorisation to decide on a share issue and on

the issue of special rights granted by the Extraordinary

General Meeting on 30 May 2022 to the Board of Directors.

Auditor and remuneration

PricewaterhouseCoopers Oy, a firm of authorised public

accountants, was elected as auditor of the company for a

term until the close of the Annual General Meeting of 2024.

PricewaterhouseCoopers Oy has announced that Markku

Katajisto, Authorised Public Accountant, will serve as the

responsible auditor. The auditors’ remuneration was

confirmed as payable on the basis of an approved invoice.

Share-based incentive plans

On 1 February 2023, the Board of Directors of SRV Group

Plc resolved to discontinue the President & CEO's share-

based incentive plan for the years 2019-2026 and the long-

term incentive plan for the years 2021-2025. The Board

concluded that keeping the incentive plans in place could

no longer be justified in view of the financial arrangements

made by the company to strengthen the balance sheet in

2022 and the effect of these arrangements on, among

other things, the number of shares in the company. No

remunerations are paid for the discontinued plans.

On 28 March 2023, SRV’s Board of Directors decided

to establish the new Performance Share Plan 2023 for the

Group’s key employees (President & CEO, Corporate

Executive Team and other key employees) and the new

cash-based incentive plan (key personnel excl. the

President & CEO). The purpose of these incentive plans is

to align the objectives of shareholders and key personnel in

order to increase the company's value over the long term,

and to commit key employees to the company.

Descriptions of the company’s share-based incentive

plans are available on the company’s website at https://

www.srv.fi/en/investors/cg/remuneration.

Shares and shareholder

SRV Group Plc’s share capital is EUR 3.1 million. The share

has no nominal value and the number of shares

outstanding is 16,982,343. The company has one class of

shares.

The closing price at Nasdaq Helsinki on 31 December

2023 was EUR 4.08 (EUR 3.80 on 31 December 2022). The

highest share price during the reporting period was EUR

4.69 and the lowest EUR 3.15. On 31 December 2023, SRV

had a market capitalisation of EUR 69.1 million (EUR 64.4

million on 31 December 2022), excluding the Group’s

treasury shares. 1.9 million shares were traded during the

review period with a trade volume of EUR 7.4 million.

At the end of December 2023, the Group held 44,533

treasury shares (0.3 per cent of the total number of shares

and combined number of votes).

At the end of December, SRV had 10,249 registered

shareholders (11,152 on 31 December 2022).

Proposal for the distribution of profits

The parent company’s distributable funds on 31 December

2023 were EUR 89,230,737.79, of which net profit for the

financial year was EUR 10,065,238.74. The Board of

Directors proposes to the General Meeting that no

dividend be paid for the 2023 financial year.

Events after the period

On 3 January 2024, SRV announced that change

negotiations would be launched with a view to adjusting the

company’s costs to the ongoing challenging market

situation. On February 13, 2024, SRV announced that it had

completed the change negotiations.

Annual General Meeting 2024

The Annual General Meeting of SRV Group Plc is

scheduled for Monday 25 March 2024 at 4 pm. The Board

of Directors will convene the Annual General Meeting

separately at a later date.


		44

2 1 The name of the committee was changed to Personnel and Remuneration committee from 1 January 2024 on.

Shares and shareholders

Share price development and trading

SRV Group Plc’s share is quoted on Nasdaq Helsinki.

Trading in SRV Group Plc’s shares began on the main list

on 15 June 2007. The highest price quoted in 2023 was

EUR 4.69 and the lowest EUR 3.15. The average price in

2023 was EUR 3.90.

The closing price at the end of the year was EUR 4.08,

and the market capitalisation of outstanding shares was

EUR 69.11 million, excluding the Group’s treasury shares.

1.89 million shares were traded with a trade volume of EUR

7.4 million.

SRV Group Plc’s share capital is EUR 3.1 million. The

share has no nominal value and the number of shares

outstanding is 16,982,343. The company has one class of

shares. At the end of December 2023 , SRV Group Plc held

44,533 treasury shares (0.3 per cent of the total number of

shares and combined number of votes).

Board authorisations

Current Board authorisations for the acquisition of

treasury shares and the issue of shares and/or special

rights as per Chapter 10 Section 1 of the Limited Liability

Companies Act are presented in the Board authorisations

section of the Report of the Board of Directors.

Management’s share ownership

On 31 December 2023, a total of 319 380 shares,

representing 2 per cent of the company’s shares and votes,

were in the direct ownership of members of SRV Group

Plc’s Board of Directors, the President & CEO. Member of

the board Timo Kokkila owns SRV shares directly and

through his controlling entity Havu Capital Oy.

Shareholders, 31 December 2023


Shareholders	Number of shares	Holding and voting rights, %
As Pontos Baltic	2,877,709	17.0
Keskinäinen Eläkevakuutusyhtiö Ilmarinen	1,942,246	11.4
Kolpi Investments Oy	1,446,353	8.5
Havu Capital Oy	957,562	5.6
OP-Henkivakuutus Oy	770,027	4.5
Lareale Investments Oy	654,055	3.9
Tungelin Investments Oy	654,055	3.9
Keskinäinen Työeläkevakuutusyhtiö Varma	483,611	2.9
Pohjola Vakuutus Oy	394,650	2.3
Nordea Henkivakuutus Suomi Oy	382,510	2.3
Mandatum Henkivakuutusosakeyhtiö	267,325	1.6
Ålandsbanken Euro High Yield	225,000	1.3
Ehj Capital Oy	149,199	0.9
Valtion Eläkerahasto	142,344	0.8
Sipola Saku	141,434	0.8
Nieminen Timo	140,659	0.8
Kokkila Tuomas	137,061	0.8
Kokkila Lauri	137,061	0.8
Tenendum Oy	121,847	0.7
Gripenberg Gerda Margareta Lindsay Db	80,000	0.5
20 largest shareholders	12,104,708	71.3

Nominee registerations	200,864
Other	4,833,102	28.7
Total number of shares	16,937,810

Breakdown of share ownership by number

of shares held on 31 December 2023


Number of shares	Number of shareholders	% of sharehold ers	Number of shares	% of shares
1-100	6,802	66.37	185,288	1.1
101-500	2,296	22.40	523,573	3.1
501-1000	517	5.04	373,212	2.2
1001-5000	447	4.36	938,090	5.5
5001-10 000	60	0.59	419,229	2.5
10 001 - 50 000	97	0.95	1,781,475	10.5
50 001 - 100 000	10	0.10	633,473	3.7
100 001 - 500 000	13	0.13	2,825,996	16.6
500 001 -	7	0.07	9,302,007	54.8
Total	10,249	100%	16,982,343	100.0
of which nominee registrations	8		200,864	1.2

Breakdown of share ownership


	% of shares
Corporations	30.3
Financial and insurance institutions	13.0
Public institutions	15.6
Households	21.5
Non-profit organisations	1.1
Non-Finnish shareholders	18.5
Total	100.0


		45

FINANCIAL INDICATORS OF THE GROUP


		2023	2022	2021	2020	2019
Revenue	EUR million	610.0	770.1	932.6	975.5	1,060.9
Operative operating profit 1)	EUR million	1.1	18.9	5.3	5.8	-96.8
Operative operating profit, % revenue	%	0.2	2.5	0.6	0.6	-9.1
Operation profit	EUR million	-6.8	-76.4	-1.7	1.5	-93.0
Operation profit, % revenue	%	-1.1	-9.9	-0.2	0.2	-8.8
Operation profit, excl. IFRS16 1)	EUR million	-10.8	-79.6	-6.9	-2.7	-94.3
Operation profit, % revenue excl. IFRS16 1)	%	-1.8	-10.3	-0.7	-0.3	-8.8
Profit before taxes	EUR million	-15.7	-79.1	-20.3	-28.0	-122.4
Profit before taxes, % of revenue	%	-2.6	-10.3	-2.2	-2.9	-11.5
Net profit attributable to equity holders of the parent company	EUR million	-15.1	-85.7	-19.9	-22.8	-104.4

Return on equity, %	%	-10.6	-55.0	-11.5	-14.1	-50.6
Return on investment, %	%	-2.6	-10.1	-0.6	-0.8	-15.2
Return on investment % excl. IFRS16 1)	%	-6.2	-14.9	-2.1	-2.0	-17.5
Capital employed	EUR million	277.7	272.0	403.0	566.8	625.3
Capital employed excl. IFRS16 1)	EUR million	179.7	186.4	319.4	436.0	479.4

Equity ratio %	%	34.4	36.3	27.4	22.6	21.2
Equity ratio excl. IFRS16, % 1)	%	48.0	48.2	32.8	27.8	26.4
Net interest-bearing debt	EUR million	99.4	80.5	170.0	289.1	422.0
Net interest-bearing debt excl. IFRS16 1)	EUR million	-6.3	-11.5	81.0	152.9	271.9
Net gearing ratio, %	%	71.7	55.1	103.0	159.7	240.3
Net gearing ratio excl. IFRS16, % 1)	%	-4.3	-7.5	47.5	82.1	151.2
Order backlog 2)	EUR million	1,048.6	838.8	872.3	1,153.4	1,344.2
New agreements	EUR million	781.4	624.6	588.6	707.1	487.6
Personnel on average		778	948	959	991	1,080


		2023	2022	2021	2020	2019
Earnings per share 3)	EUR	-1.0	-6.6	-2.3	-4.3	-42.5
Earnings per share (diluted) 3)	EUR	-1.0	-6.6	-2.3	-4.3	-42.5
Equity per share 3)	EUR	8.2	8.6	17.6	19.7	68.7
Equity per share (excluding hybrid bond) 3)	EUR	6.2	6.7	15.9	18.0	36.6
Dividend per share 3)	EUR	0.0	0.0	0.0	0.0	0.0
Dividend payout ratio, % 3)	%	neg.	neg.	neg.	neg.	neg.
Dividend yield, % 3)	%	0.0	0.0	0.0	0.0	0.0
Price per earnings ratio (P/E-ratio)		neg.	neg.	neg.	neg.	neg.
Share price development
Share price at the end of the period	EUR	4.08	3.80	0.53	0.59	1.36
Average share price	EUR	3.90	9.17	0.61	0.60	1.36
Lowest share price	EUR	3.15	3.19	0.45	0.45	1.25
Highest share price	EUR	4.69	16.12	0.81	1.10	2.19
Market capitalisation at the end of the period	EUR million	69.1	64.4	138.9	154.7	98.1
Trading volume 3)	1,000	1,893	25,033	45,701	45,524	14,412
Trading volume, % 3)	%	11.2	189.2	17.4	26.2	20.0
Weighted average number of shares outstanding 3)	1,000	16,938	13,231	9,398	6,234	2586
Weighted average number of shares outstanding (diluted) 3)	1,000	16,938	13,231	9,398	6,235	2586
Number of shares outstanding at the end of the period 3)	1,000	16,938	16,938	9,398	9,398	2586

Effect of currency exchange fluctuations	EUR million	-2.6	7.3	1.5	-4.4	3.8

1) Alternative performance measures used in 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 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 picture of the Group’s operations when

comparing the reported period to earlier periods. In accordance with

IFRS, the currency exchange rate gains and losses of associated companies

as well as income and expenses from hedging 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 results of associated

companies”. Income and expenses from currency hedging are included

above operating profit on the line “other operating expenses”.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.

2) At the end of the period

3) On 4 July 2022, SRV Group Plc executed a reverse share split. The reverse

share split and related redemption of shares were executed so that each 40

shares of SRV was merged into one share.The key figures for the comparison

periods have been adjusted. The right issue factor used was 1.4339. Share

price development has not been adjusted.


		46

CALCULATION OF KEY FIGURES


Return on equity, %	=	100 x	Total comprehensive income for the period
			Total equity, average
Capital employed			Total assets – non-interest bearing debt – deferred tax liabilities – provisions
Capital employed, excl. IFRS16			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
			Invested capital, average
Return on investment, % excl. IFRS16		100 x	Operating profit + interest and other financial income (incl. exchange rate gains and losses)
			Capital employed excl. IFRS16, average
Equity ratio, %		100 x	Total equity
			Total assets – advances received
Equity ratio,% excl. IFRS16		100 x	Total equity – IFRS16 depreciations, leases and interest and financial expenses recoqnised in income statement - IFRS16 Retained earnings
			Total assets – advances received – IFRS16 depreciations, leases and interest and financial expenses recoqnised in income statement
Net interest-bearing debt			Interest-bearing debt – cash and cash equivalents
Net interest-bearing debt excl. IFRS16			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. IFRS16		100 x	Interest-bearing debt - interest-bearing lease liabilities – cash and cash equivalents
			Total equity – IFRS16 depreciations, leases, interest and financial expenses recoqnized in income statement


		47


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
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


		48

CONSOLIDATED

FINANCIAL

STATEMENTS


		49

Consolidated Financial Statement

Consolidated Income Statement


EUR 1,000	Note	2023	2022
Revenue	3	610,030	770,078
Other operating income	4	288	589
Change in inventories of finished goods and work in progress		2,338	-88,445
Use of materials and services		-527,967	-600,560
Employee benefit expenses	7	-66,214	-74,342
Share of profits of associated and joint venture companies	16	1,197	-1,260
Depreciation	6	-5,742	-5,147
Impairments of investments	6	-8,879	-65,030
Other operating expenses	5	-11,843	-12,271
Operating profit		-6,793	-76,388
Financial income	9	2,290	52,743
Financial expenses	9	-11,231	-55,437
Financial income and expenses, total		-8,941	-2,694
Profit before taxes		-15,734	-79,081
Income taxes	10	620	-6,580
Net profit for the period		-15,114	-85,662

Attributable to
Equity holders of the parent company		-15,114	-85,662
Non-Controlling interests		0	0

Earnings per share attributable to equity holders of the parent company, euros	11	-1.02	-6.62
Earnings per share attributable to equity holders of the parent company, euros	11	-1.02	-6.62

Statement of Comprehensive Income


EUR 1,000	Note	2023	2022
Net profit for the financial year		-15,114	-85,662

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		10,094	-3,999
Share of other comprehensive income of associated and joint ventures companies	16	-93	7,208
Other comprehensive income for the year, net of tax		10,001	3,209

The share of comprehensive income attributable to equity holders of the parent company		10,001	3,209
Non-controlling interests in comprehensive income		0	0

Total comprehensive income for the year		-5,113	-82,453

Total comprehensive income attributable to:
Equity holders of the parent company		-5,113	-82,453
Non-Controlling interests		0	0


		50

Consolidated Balance Sheet


EUR 1,000	Note	2023	2023
ASSETS

Non-current assets
Property, plant and equipment	13	5,453	4,114
Property, plant and equipment, right -of-use asset	13	7,640	8,840
Goodwill	14	1,734	1,734
Other intangible assets	14	672	699
Shares in associated companies and joint ventures	16	3,780	2,120
Other financial assets	15, 17	7,802	7,751
Receivables	15, 18	7,050	14,243
Deferred tax assets	19	36,751	37,458
Non-current assets, total		70,883	76,959

Current assets
Inventories	20	157,370	162,842
Inventories, right -of-use assets	20	88,488	75,119
Trade and other receivables	15, 22	81,984	88,254
Loan receivables from associated companies and joint ventures	15, 21	274	5
Current tax receivables		0	10
Cash and cash equivalents	23	39,595	45,309
Current assets, total		367,711	371,538
ASSETS, TOTAL		438,594	448,497


EUR 1,000	Note	2023	2022
EQUITY AND LIABILITIES

Equity attributable to equity holders of the parent company
Share capital	25	3,063	3,063
Invested free equity fund	25	303,559	303,559
Translation differences	25	-4,947	-14,948
Hybrid bond	25	33,529	33,529
Retained earnings		-196,529	-179,019

Equity attributable to equity holders of the parent company, total		138,675	146,184
Non-controlling interests		0	0
Total equity		138,675	146,184
Non-current liabilities
Deferred tax liabilities	19	236	1,138
Provisions	26.0	10,352	12,196
Interest-bearing liabilities excl. lease liabilities	15, 27	31,386	23,828
Interest-bearing lease liabilities	27	103,118	89,545
Other liabilities	15, 28	3,098	6,252
Non-current liabilities, total		148,191	132,959
Current liabilities
Trade and other payables	15, 28	138,415	148,022
Current tax payables (based on profit for the review period)		9	958
Provisions	26	8,800	7,932
Interest-bearing liabilities excl. lease liabilities	15, 27	1,902	10,000
Interest-bearing lease liabilities	27	2,604	2,442
Current liabilities, total		151,728	169,354

Liabilities, total		299,919	302,313
EQUITY AND LIABILITIES, total		438,594	448,497


		51

Consolidated Statement of Changes in Equity


	Equity attributable to equity holders of the parent company
EUR 1,000	Share capital	Invested free equity fund	Translation differences	Hybrid bond	Retained earnings	Total	Non-controlling interests	Equity, total
Equity, total, 1 Jan 2022	3,063	264,680	-18,156	15,360	-99,891	165,056	0	165,056
Net profit for the financial year	0	0	0	0	-85,662	-85,662	0	-85,662

Other comprehensive income items (with the tax effect)
Foreign currency translation differences for foreign operations	0	0	-3,999	0	0	-3,999	0	-3,999
Share of other comprehensive income of associated companies and joint ventures	0	0	7,208	0	0	7,208	0	7,208
Other financial assets	0	0	0	0	0	0	0	0
Other comprehensive income total	0	0	3,209	0	0	3,209	0	3,209

Comprehensive income for the review period	0	0	3,209	0	-85,662	-82,453	0	-82,453
Transactions with the owners
Purchase of own shares	0	0	0	0	-729	-729	0	-729
Share based incentive plan	0	0	0	0	752	752	0	752
Directed issue and write-down of hybrid loan	0	6,822	0	-15,360	8,538	0	0	0
Right issue	0	34,806	0	0	0	34,806	0	34,806
Costs related to share issue excl. taxes	0	-2,749	0	0	0	-2,749	0	-2,749
Conversion of notes	0	0	0	34,265	0	34,265	0	34,265
Costs related to notes' conversion	0	0	0	-736	0	-736	0	-736
Hybrid bond interest with tax effect	0	0	0	0	-2,030	-2,030	0	-2,030
Transactions with the owners, total	0	38,878	0	18,169	6,531	63,579	0	63,579
Equity, total, 31 Dec. 2022	3,063	303,559	-14,948	33,529	-179,019	146,184	0	146,184


		52


	Equity attributable to equity holders of the parent company
EUR 1,000	Share capital	Invested free equity fund	Translation differences	Hybrid bond	Retained earnings	Total	Non-controlling interests	Equity, total
Equity, total, 1 Jan 2023	3,063	303,559	-14,948	33,529	-179,019	146,184	0	146,184
Net profit for the financial year	0	0	0	0	-15,114	-15,114	0	-15,114

Other comprehensive income items (with the tax effect)
Foreign currency translation differences for foreign operations	0	0	10,094	0	0	10,094	0	10,094
Share of other comprehensive income of associated companies and joint ventures	0	0	-93	0	0	-93	0	-93
Other financial assets	0	0	0	0	0	0	0	0
Other comprehensive income total	0	0	10,001	0	0	10,001	0	10,001
								0
Comprehensive income for the review period	0	0	10,001	0	-15,114	-5,113	0	-5,113
Transactions with the owners
Purchase of own shares	0	0	0	0	-96	-96	0	-96
Share based incentive plan	0	0	0	0	-73	-73	0	-73
Hybrid bond interest with tax effect	0	0	0	0	-2,227	-2,227	0	-2,227
Transactions with the owners, total	0	0	0	0	-2,396	-2,396	0	-2,396
Equity, total, 31 Dec. 2023	3,063	303,559	-4,947	33,529	-196,529	138,675	0	138,675


		53

Consolidated Cash Flow Statement


1 000 euroa	2023	2022
Cash flows from operating activities
Cash receipts from customers	615,812	805,413
Cash receipts from other operating income	288	614
Cash paid to suppliers and employees	-606,557	-802,540
Net cash before interests and taxes	9,543	3,488
Interests received and other financial income	992	365
Interests paid and other expenses from financial costs	-8,740	-13,709
Income taxes paid or received	-146	-255
Cash flows from operating activities	1,649	-10,112

Cash flow from investing activities
Purchase of tangible and intangible assets	-2,923	-2,478
Sale of tangible and intangible assets	253	516
Purchase of investments	-1,831	-101
Proceeds from sale of investments	1,108	0
Subsidiary shares sold	1,819	0
Investments in associated companies and joint ventures	-80	-26
Associated companies and joint ventures sold	0	4,171
Loans granted	-274	0
Proceeds from repayments of loans	242	0
Net cash used in investing activities	-1,686	2,082

Cash flows from operating and investing activities in total	-37	-8,029


EUR 1,000	2023	2022
Cash flow from financing activities
Gross cash from share issue	0	32,056
Proceeds from loans	0	1,000
Repayment of loans	-10,000	-31,745
Hybrid bond costs	0	-737
Hybrid bond interests	-2,784	-2,029
Change in housing corporation loans	9,784	-10,737
Purchase of own shares	-96	-729
Repayment of lease liabilities	-2,581	-2,374
Net cash flow from financing activities	-5,677	-15,294

Net change in cash and cash equivalents	-5,714	-23,324

Cash and cash equivalents at the beginning of period	45,309	68,009
Effect of exchange rate changes in cash and cash equivalents	0	623
Cash and cash equivalents at the end of period	39,595	45,309


		54

Notes to the Consolidated Financial Statements, IFRS

Description of operations

SRV Group Plc and its subsidiaries (SRV Group) comprise

one of Finland’s leading project management contractors

that builds and develops commercial and business

premises, housing as well as industrial and logistics

projects mostly in Finland. The main company is SRV

Construction Ltd. Construction encompasses housing

construction, business construction, technical units and

procurement, as well as internal services in Finland.

SRV has no assets held for sale according to IFRS 5

during the review period. In an investor news bulletin

published on 2 August 2023, SRV announced that it had

divested the majority of its remaining holdings in Russia.

After this transaction, SRV’s only remaining asset in Russia

is a 50 per cent holding in the Pearl Plaza shopping centre.

SRV is actively continuing negotiations with its partner with

the aim of selling its holding in Pearl Plaza as well. There is

exceptionally high uncertainty in the market, which makes

it difficult to estimate the exact timing and probability of

divesting these assets.

The Group’s parent company, SRV Group Plc (the

Company) is a Finnish public limited company,that is

domiciled in Espoo, Finland. The Company’s registered

address is Tarvonsalmenkatu 15, 02601 Espoo.

The Company’s Board of Directors approved these

consolidated financial statements on 27 February 2024.

Accounting policies

The consolidated financial statements have been prepared

on 31 December 2023 in accordance with IFRS (IFRS

Accounting Standards). IFRS Accounting Standards refer

to the standards and their interpretations issued and

approved for application within the EU in accordance with

the procedure prescribed in EU regulation (EC)

1606/2002.

The financial statements are presented in thousands

of euros unless otherwise stated. The consolidated

financial statements have been prepared based on a

historical cost basis, except for financial assets and

liabilities at fair value through income statement, financial

assets and liabilities measured at fair value through income

statement and derivative contracts measured at fair value

as well as share-based payments which are measured at

fair value.

Following standards, interpretations and amendments

have been applied beginning from 1 January 2023:

Amendments to IAS 12 Income Taxes:

Deferred Tax related to Assets and

Liabilities arising from a Single

Transaction

IAS 12 specifies how a company accounts for income tax,

including deferred tax, which represents tax payable or

recoverable in the future. In specified circumstances,

companies are exempt from recognising deferred tax when

they recognise assets or liabilities for the first time.

Previously, there had been some uncertainty about

whether the exemption applied to transactions such as

leases and decommissioning obligations — transactions

for which companies recognise both an asset and a liability.

The amendments clarify that the exemption does not apply

and that companies are required to recognise deferred tax

on such transactions. The aim of the amendments is to

reduce diversity in the reporting of deferred tax on leases

and decommissioning obligations.

Amendments to IAS 1

Presentation of

Financial Statements,

IFRS Practice Statement 2 and IAS 8

Accounting Policies, Changes in Accounting

Policies and Errors: Disclosure of

Accounting policies and Definition of

Accounting Estimates

The IASB amended IAS 1 to require companies to

disclose their material accounting policy information

rather than their significant accounting policies ( (being

information that, when considered together with other

information included in an entity’s financial statements,

can reasonably be expected to influence decisions that

the primary users of general purpose financial

statements make on the basis of those financial

statements) and explain how to identify when accounting

policy information is material. Further, the amendment to

IAS 1 clarifies that immaterial accounting policy

information need not be disclosed. However, if it is

disclosed, it should not obscure material accounting policy

information. The amendment to IAS 8 clarifies how

companies should distinguish changes in accounting

policies from changes in accounting estimates. The

distinction is important, because changes in accounting

estimates are applied prospectively to future transactions

and other future events, but changes in accounting policies

are generally applied retrospectively to past transactions

and other past events as well as the current period.

Amendment to IAS 12 - OECD Pillar Two

Rules

In December 2021, the Organisation for Economic Co-


		55

operation and Development (OECD) released the Pillar

Two model rules (the Global Anti-Base Erosion Proposal,

or ‘GloBE’) to reform international corporate taxation.

Large multinational enterprises within the scope of the

rules are required to calculate their GloBE effective tax

rate for each jurisdiction where they operate. They will be

liable to pay a top-up tax for the difference between their

GloBE effective tax rate per jurisdiction and the 15%

minimum rate. In May 2023, the IASB made narrow-scope

amendments to IAS 12 which provide a temporary relief

from the requirement to recognise and disclose deferred

taxes arising from enacted or substantively enacted tax

law that implements the Pillar Two model rules, including

tax law that implements qualified domestic minimum top-

up taxes described in those rules. The amendments also

require affected companies to disclose:

• the fact that they have applied the exception to

recognising and disclosing information about deferred

tax assets and liabilities related to Pillar Two income

taxes

• their current tax expense (if any) related to the Pillar

Two income taxes, and

• during the period between the legislation being enacted

or substantially enacted and the legislation becoming

effective, known or reasonably estimable information

that would help users of financial statements to

understand an entity’s exposure to Pillar Two income

taxes arising from that legislation. If this information is

not known or reasonably estimable, entities are instead

required to disclose a statement to that effect and

information about their progress in assessing the

exposure. 3

Use of estimates

The preparation of financial statements in accordance with

IFRS requires the Group’s management to make certain

estimates and exercise judgement in applying accounting

policies The estimates and assumptions have an effect on

balance sheet assets and liabilities as well as on revenues,

expenses and contingent liabilities for the reporting

revenue recognition of construction contracts, in the

measurement of current assets, in the measurement of

warranty and other provisions, in the valuation of

investments in associates and joint ventures, in the

recognition of current income tax assets and liabilities, and

the measurement of assets held for sale.

Assets recognised as revenue over time are

controlled by the customer, and the revenue and expenses

of these customer projects are recognised as revenue and

expenses based on percentage of completion, when the

outcome of the project can be reliably estimated.

Percentage of completion is determined by calculating for

each project the share of expenses accrued by the

balance sheet date relative to total expenses estimated for

each project. The amount corresponding to the

percentage of completion is recognised as revenue. When

it is probable that total costs necessary to complete a

project will exceed total revenue obtained from the project,

the expected loss is recognised immediately as an

expense.

Development and developer-contracted projects may

includes variable considerations that may result, for

example, from delay penalties and lease liabilities.

Recognition of revenue is deferred for the estimated rental

liability and this estimated share of project revenue is

recognised as an advance received. Rental security

deposits reduce project-related advances received.

Uncertainties associated with signed lease agreements are

taken into account in recognition of revenue.

The Group carries out an annual impairment testing of

goodwill and intangible assets having an indefinite useful

life. The recoverable amounts of cash-generating units

have been defined on the basis of value in use calculations.

The preparation of these calculations requires use of

estimates. Warranty provisions and 10-year warranty

provisions are recorded when the amount of the provision

can be estimated reliably. The recorded amount is the best

estimate of the expected cost that will be required to meet

the claim as of the balance sheet date. The estimate

concerning probability of costs is based on previous similar

events and previous experience and it requires judgement

from the Group management.

When preparing the financial statements the Group

estimates the net realisable value of current assets and the

possible consequent need for write down. Estimates of net

realisable value are based on the most reliable evidence

available at the time the estimates are made as to the

amount the inventories are expected to realise. Assessing

the need for impairment of inventory items may require

management to make estimates of matters such as the

future costs of development and construction, the future

income and expenses accruing from the item, the market

return requirement at the time of realisation and the sale

value of the item.

The Group assesses the value of these investments in

connection with financial statements and when there are

indications of impairment. Based on an assessment of the

value of the associated companies and joint ventures that

own completed properties, a valuation calculation is

prepared for properties. For significant investments, the

Group obtains external property assessments, if

necessary. The determination of the present value of

investments is subject to assessment because present

value calculations include, for example, future rental

income, rental discounts given, turn-over based rental


		56

3 The amendments were endorsed by the EU on 9 November 2023.

income, occupancy rate, the running costs of the property

and the required return (yield).

When preparing the financial statements the Group

especially estimates if there is a need for recognition of

deferred taxes. The Group prepares an estimate about the

probability of the profits of group companies against which

the unused tax losses or unused tax credits can be used.

Consolidated Financial Statements

Subsidiaries

The consolidated financial statements comprise all such

companies that belong to parent company SRV Yhtiöt Oyj

where the Group has authority. The Group has authority in

a company if the Group, by being involved in it, is

susceptible to or entitled to its changing revenue, and is

capable of exerting an impact on the revenue concerned

by applying its authority in a manner that affects the

company concerned. The subsidiaries will be combined

within the consolidated financial statements from the day

that authority is transferred to the Group, and the

combination will end on the day when this authority ceases.

The balance sheet items of self-sufficient construction

projects are comprised within the consolidated financial

statements.

The financial statements of the SRV Group have been

consolidated using the purchase method. Acquisition cost

is determined by taking into account funds given as

consideration and measured at fair value, and liabilities

assumed, as well as the direct costs of an acquisition.

Acquired and identifiable assets and liabilities are

measured at fair value at the acquisition date, irrespective

of the size of any non-controlling interests. The amount by

which the cost exceeds the fair value of Group’s share of

the net identifiable assets acquired is recorded as goodwill.

If the acquisition cost is less than the fair value of the

acquired subsidiary’s net assets, this difference is

recorded directly to the income statement.

The accounting policies of subsidiaries have been

changed as necessary to correspond the Group’s

accounting policies.

Intra-group transactions, receivables and liabilities as

well as unrealised gains on intra-group transactions are

eliminated in the consolidated financial statements.

Unrealised losses are eliminated if the loss is not caused by

impairment.

The group recognizes non-controlling interests in an

acquired entity either at fair value or at the non-controlling

interest’s proportionate share of the acquired entity’s net

identifiable assets.

The group recognizes non-controlling interests in an

acquired entity either at fair value or at the non-controlling

interest’s proportionate share of the acquired entity’s net

identifiable assets.

Non-controlling interests has been presented

separately after Net profit for the period and in Total

equity. Losses applicable to non-controlling interests in a

subsidiary are allocated to non-controlling interests, even

if doing so causes the non-controlling interests to have a

negative balance.

Changes in the ownership share of the parent

company in the subsidiary that do not lead to the loss of

authority are treated as business operations affecting

equity. When the authority of the Group ceases, the

remaining ownership share is valuated to the fair value of

authority on the loss date, and the change in book value is

entered as effect on income. This fair value functions as an

original book value when the remaining share is later

treated as an associated company, joint venture or as

financial assets. In addition, amounts entered previously

into other comprehensive income-based items respective

to the enterprise concerned will be treated as if the Group

had directly transferred the assets and liabilities

connected with them. This may mean that amounts

entered previously into other comprehensive income-

based items will be transferred as effect on income.

Associated companies and Joint ventures

Associated companies are all enterprises in which the

Group has considerable influence, but no authority. This is

generally based on share ownership that generates 20–

50% of the voting rights.

A joint arrangement is an arrangement in which two or

more parties have joint control. Joint control is the jointly

agreed sharing of control of an arrangement, which exists

only when decisions about the relevant activities require

the unanimous consent of the parties sharing control. A

joint arrangement is either a joint operation or a joint

venture. A joint venture is an arrangement whereby the

parties that have joint control of the arrangement have

rights to the net assets of the arrangement, whereas in a

joint operation the parties that have joint control of the

arrangement have rights to the assets, and obligations for

the liabilities, relating to arrangement. The Group has

applied the IFRS 11 standard to all joint arrangements.

According to IFRS 11, the joint arrangements are classified

as joint operations or joint ventures in compliance with the

investors' contractual rights and obligations. The Group

has assessed the character of its joint arrangements and

has determined that they are joint ventures.

The associated companies and joint ventures are

combined in the consolidated financial statements by

using the capital share method. If the Group's share of

associated company and joint venture losses exceeds the

book value of the investment, the investment will be

entered into the balance sheet with a value of zero, and the

losses exceeding book value will be combined, unless the

Group is not obligated to fulfil the obligations of the

associated company and joint venture. Associated

company and joint venture investment contains the

goodwill that has been generated from its acquisition. Non-

realized profits and losses between the Group and


		57

associated companies and joint ventures are eliminated in

accordance with the Group's ownership share. Non-

realized losses are not eliminated if the transaction

suggests a reduction in value of the transferred asset. The

Group’s ownership share from the share of financial year

results from an associated company and joint venture is

presented before business profit. The Group’s share of the

comprehensive income items of associated companies

and joint ventures is presented, however, in consolidated

comprehensive income. These arise particularly from the

Group’s share of the translation differences of associated

companies and joint ventures operating in foreign

currency.

The financial statement formulation principles

observed by an associated company and joint venture

have been amended as required to comply with the

principles the Group observes. In accordance with the

Group’s accounting principles, Group management judges

the depreciation period for the finished asset as beginning

after a period of two years, when the probability of sale,

occupancy rate and other important criteria will be

evaluated. Depreciation entries on asset items must begin

no later than three years after the completion of the asset

item.

Foreign currency transactions

Functional and presentation currency

Items of each group company included in the consolidated

financial statements are measured using the currency that

best reflects the economic substance of the underlying

events and circumstances relevant to Group Company

(the functional currency). The functional currency of a

group company may therefore differ from the currency

used in its country of location. The consolidated financial

statements are presented in euros, which is the parent

company's functional currency.

Group companies

The income statements of those subsidiaries whose

functional currency is not Euro are translated into euros

using the average monthly rate. The balance sheets of

subsidiaries are translated into euros using the rates at the

balance sheet date. The translation differences arising

from the use of different exchange rates are recorded in

Translation differences under equity. In so far as the loans

between the group companies are considered part of net

investment in foreign subsidiaries, the currency exchange

differences are recorded in Translation differences. When

a foreign subsidiary is sold, the cumulative translation

differences are recognised in the income statement as part

of the capital gain or loss.

Transactions and balance sheet items

Transactions denominated in foreign currency are

recorded using the exchange rate on the date of the

transaction. Monetary foreign currency items in the

balance sheet are measured using the exchange rate at the

closing date. Non-monetary items denominated in foreign

currency are measured using the exchange rate on date of

the transaction. Exchange rate gains and losses on

business operations are included in corresponding items

above operating profit. Exchange rate differences of

financing items are included in financial income and

expenses.

Income recognition

Construction contracts

Revenue is recognized when a customer obtains control of

a good or service. A customer obtains control when it has

the ability to direct the use of and obtain the benefits from

the good or service. The Group’s sales revenues consist of

various types of residential and commercial projects as

well as other sales. The revenue recognition practice is

described in more detail in Note 3.

A share equivalent to SRV’s own holding is eliminated

from the margin of construction carried out for associated

companies and joint ventures. This elimination is

recognised as a reduction in revenue and is entered into

the balance sheet under Advances received. The margin is

realised when the holding is sold to an external party.

Order backlog

A construction project is included in the order backlog

when the construction contract of the project has been

signed or the decision to start construction has been made,

and the contract agreement has been signed in developer

contracting projects. In developer-contracted projects, the

order backlog includes the plot in addition to consists of

the share of the projects not yet recognised as revenue

(including the plot). The order backlog also includes

completed and unsold housing and business properties.

The value of the order backlog is the expected amount of

revenue to be recognised for projects.

Borrowing costs

Borrowing costs in projects that are implemented for

clients outside the Group are recognised as expenses in

the period in which they are incurred. In developer

contracted housing projects, part of the interest on

borrowing costs is activated during the construction period

(this is described in the section of the accounting policies

covering inventories) and is recognised as an expense

when the project is sold. These interest expenses are

entered as project expenses above operating profit. In

developer contracting of business premises, interest

expenses are activated on the basis of management’s

estimates, as the sales prices of projects are not always

known in advance.


		58

Research and development expenditure

SRV Group does not have any actual research and

development expenses. The Group has business-related

project development costs, and the treatment of these is

described in the section of the accounting policies

covering inventories.

IFRS 16 Leases

According to the standard, all leases, except those subject

to special exemptions under the standard, are recognised

in the balance sheet. For all leases, a right-of-use asset (the

right to use the leased asset) is recognised as an asset in

the balance sheet and a financial liability representing the

obligation to make lease payments is recognised in

liabilities. In the income statement lease expenses are

presented in depreciation and in financial expenses line. In

the cash flow statement, lease payments are presented in

the item ‘interest paid and other expenses from financial

costs’ and the items ‘proceeds from loans’ and ‘repayment

of lease liabilities’ under the cash flow from financing

activities.

Group leasing activities and their

accounting treatment

Land leases form the most significant proportion of the

right-of-use assets on SRV Group’s balance sheet. Land

leases are usually long-term and are typically made on

behalf of a real estate company being established. When

the real estate company is sold and its management is

transferred to the buyer, the lease and its obligations

transfer to the buyer of the property. In addition to land

leases, other significant leases include, for example, leases

for the company’s fixed operating locations, and leases for

site equipment and vehicles. Leases for offices are

generally made initially for a fixed term. The duration of the

fixed term is generally 5 to 10 years, after which the lease

continues for an indefinite period with 6-12 months’ notice

of termination. Leases for site equipment are generally

made for an indefinite period with no specific notice of

termination. Equipment is typically leased for 1 month to 12

months. Leases for vehicles are made for fixed terms and

their duration is generally 24 months.

In its reporting, the company applies two exemptions

included in the standard that relate to short-term leases

and to leases where the underlying asset is of low value.

Leases whose lease term is no more than 12 months and

indefinite leases whose notice of termination is less than 12

months are considered to be short-term leases. The most

significant short-term leases are mainly for site equipment.

Low-value assets mainly include IT equipment and small

items of office furniture. In addition, some minor leases, for

example for vehicles and IT equipment are treated as a

group according to the bundling principle.

At the commencement of the contract, the lease

liability is valued at the present value of the lease

payments payable over the lease term. In determining the

present value of lease payments, an estimate of the lease

term is required in some circumstances. Such situations,

for example, relate to leases that have options to extend or

terminate the lease. Such an option is taken into account in

determining the lease term if it is reasonably certain that

the option will be exercised. The lease liability also includes

the amount to be paid on the basis of any residual value

guarantee and the possible exercise price of a purchase

option, if it is reasonably certain that the option will be

exercised. There may also be penalty payments for

terminating the lease. Such penalties are included in the

amount of the lease liability if it is considered during the

lease term that the Group will exercise this option. Lease

payments are discounted at the interest rate implicit in the

lease if the interest rate is readily determinable, otherwise

the interest rate on the lessee’s incremental borrowing rate

is used. Under IFRS 16, the lessee’s incremental borrowing

rate is the rate of interest that the lessee would have to pay

to borrow, over a similar term and with similar security, the

funds necessary to obtain an asset of a similar value to the

right-of-use asset in a similar economic environment. Land

leases account for more than 90% of SRV Group’s right-of-

use assets, and the interest rate implicit in the leases is

always used as their discount rate. For other leases, the

rate implicit in the lease is primarily used and, alternatively,

the incremental borrowing rate. The incremental borrowing

rate is an estimate of what the company would have to pay

to borrow, over a similar term and with similar security, the

funds necessary to obtain an asset of a similar value to the

right-of-use asset in a similar economic environment.

The acquisition cost of a right-of-use asset consists of

the liability initially measured under the lease, any lease

payments paid by the commencement date of the lease,

any initial direct costs incurred by the lessee and the costs

of restoration to the original condition. Any incentives

received are deducted from the acquisition cost of the

underlying asset.

Subsequent measurement of the right-of-use asset is

based on the acquisition cost model, whereby the right-of-

use asset is measured at acquisition cost less depreciation

and impairment. Depreciation is recognised on a straight-

line basis over the lease term. If the lease transfers the

ownership of the underlying asset to the lessee by the end

of the lease term or if the acquisition cost of the underlying

item takes into account that the lessee will exercise the

option to purchase, the underlying asset is amortised over

its useful life.

The Group is exposed to possible increases in

variable rents based on an index or price that are not taken

into account in the lease liability until they occur. When

changes in rents based on an index or price occur, the

lease liability is reassessed and adjusted against the right-

of-use asset. The rents paid are allocated to capital and

financial expenses. Financial expenses are recognised

through profit and loss over the lease term, such that the


		59

interest rate of the outstanding liability is the same in each

period.

Accounting principle for plot leases

Land leases form the most significant proportion of the

right-of-use assets on SRV Group’s balance sheet. The

plot lease agreements are typically long-term agreements.

The leased plots are initially measured according to

measurement requirements of IFRS 16. The SRV Group

presents right-of-use assets related to leased plots as

inventories, because plots directly owned by the Group are

presented as inventories and the same principle is also

applied in the presentation of right-of-use assets. From the

beginning of construction, the depreciations of the leased

plots are recognised as part of the cost of the construction

project. The interest expense on the lease liability

presented in balance sheet liabilities is capitalised as part

of the cost of the construction project. When the Group

enters a plot lease agreement related to self-developed

residential construction, the right-of-use asset of the plot

lease agreement is recognised in inventories and the lease

liability in the statement of financial position. The plot

lease agreement will be recognised from inventories and

the change in inventories. The lease liability of finished self-

developed residential construction is adjusted by lease

liability of sold apartments. The lease liability of completed

unsold apartments is presented as a lease liability in the

statement of financial position.

Accounting principle for premises leases

The SRV Group presents right-of-use assets related to

premises in balance sheet non-current assets and in

financial liabilities in respect of the obligation to make

lease payments in liabilities. The most significant premise

lease in the SRV Group is the lease for the company’s head

office.

Accounting principle for site equipment leases

Leases for site equipment are almost without exception

typically leases with an indefinite lease term. Such leases

generally entitle the company to decide to terminate the

contract for each leased item at its chosen time. Site

equipment is generally leased to the site for a special work

stage, in which case the lease term is usually for less than

12 months. Due to the short lease terms and flexible

termination conditions, the exemption for short-term

leases under IFRS 16 is generally applied to site equipment

leases. If, however, a site equipment lease is made for a

fixed term, and the lease is not low value, the lease is

subject to the same accounting principle as described

above for premises leases.

Accounting principle for office equipment leases

Leases for IT equipment typically concern office IT

equipment such as printers, multifunction devices and

computers. The exemption for low-value asset items is

applied to these assets. Leases for IT equipment also

include contracts that cannot be considered to be low

value and short term. Such agreements include, for

example, IT server leases. The same accounting principle

as described above for premises leases is applied to such

leases, but so that the asset items are treated as a single

entity in accordance with the bundling principle. IT

equipment lease terms are typically 24 or 48 months long.

Accounting principle for leased vehicles

Leases of leased vehicles are subject to the same

accounting principle as described above for premises

leases, but so that the asset items are treated as a single

entity in accordance with the bundling principle. Leases for

leased vehicles are typically 24 months long.

Property, plant and equipment

Property, plant and equipment is entered into the

consolidated balance sheet at acquisition cost less

accumulated depreciation and any accumulated

impairment losses. Acquisition cost includes the expenses

directly related to acquiring the asset. Assets are subject

to straight-line depreciation over the estimated useful

financial life of the asset. Land and water areas are not

depreciated because the useful financial life of these

assets cannot be determined. Depreciation is recognised

as an expense over the estimated useful financial life of an

asset as follows:

• Buildings: 40–60 years

•Production machinery and equipment: 3–10 years

•Office fittings: 3–10 years

•IT equipment: 3–5 years

•Vehicles and rolling stock: 5 years

•Other tangible assets: 5–10 years

The carrying amounts and economic lives of property,

plant and equipment are estimated and values adjusted as

needed. The Group estimates at every balance sheet date

if there is a need for impairment. If the carrying amount of

an asset item exceeds the estimated recoverable amount,

the carrying amount is lowered to correspond the

recoverable amount. When controlling interest is lost in

current asset company in a transaction carried out, its

remaining holding is measured at fair value. Capital gains

and losses on property, plant and equipment are included

in the income statement, other operating income or other

operating expenses.

Goodwill and Intangible assets

Intangible assets which have a limited useful life are valued

at historical cost and amortized over their estimated

economic life (3–5 years). Intangible assets which have an

unlimited useful life are tested yearly for impairment.

Goodwill is the excess of the cost of the business

combination over the fair value of the Group’s share of

acquired net assets. Goodwill is subject to an annual


		60

impairment test. For this purpose, goodwill has been

allocated to cash-generating units. Goodwill is measured at

historical cost less impairment. Impairment is expensed

directly to the income statement. Assets which are

depreciated or amortized are always tested for impairment

when events or changes in circumstances indicate the

carrying amount may not be recovered. Impairment is

recorded through profit and loss to the extent that the

carrying amount of the asset item exceeds the recoverable

amount. The recoverable amount is the higher of the

following: the fair value of the asset item less selling costs

or its value in use.

Financial assets and liabilities

The Group classifies its financial assets and liabilities in the

following groups:

Financial assets: Financial assets at amortised cost or

at fair value through profit or loss,

Financial liabilities: Financial liabilities recognised at

fair value through profit or loss, or at amortised cost using

the effective interest rate method.

The Group measures financial assets at amortised

cost when the objective of the business model is to hold

the assets and collect all the contractual cash flows, and

when the contractual cash flows of the instrument consist

only of payments of principal and interest. All other

financial assets are recognised and measured in the Group

at fair value through profit or loss.

A Group entity records financial assets and liabilities

in its balance sheet when – and only when – it becomes a

party to the contractual terms and conditions of the

instrument. When an entity recognises a financial asset for

the first time, it must classify financial assets and financial

liabilities into the categories specified above. A Group

entity derecognises a financial asset item from the balance

sheet when the contractual rights to the cash flows from

the financial asset cease to exist or when it transfers the

financial asset to another party and a significant part of the

risks and benefits of ownership have been transferred to

the other party.

A financial liability is derecognised from the balance

sheet when the obligation specified in the contract has

been discharged, cancelled or expired.

Financial assets are long-term when their maturity is

over 12 months and short-term when the remaining

maturity is less than 12 months. Other financial assets are

included in long-term financial assets unless there is an

intention to relinquish the investment within 12 months of

the balance sheet date. Financial liabilities are classified as

short-term if their maturity is under 12 months or if the

Group does not have the absolute right to repay them at

least 12 months after the end of the reporting period.

Otherwise they are classified as long-term.

Derivative instruments

The Group designates derivative instruments at the time of

entering into the contract as either cash flow hedges of

business or financing cash flows or as hedges of

investments in foreign entities. Derivatives are entered into

for hedging purposes and on their basis the receivables

and liabilities in the balance sheet are small. Contracts

concluded with the counterparties of derivative

instruments are based on the ISDA Master Agreement.

According to the terms of the arrangements, if certain

events occur (such as payment default), the net receivable

or liability position of an individual counterparty in the

same currency is designated as a liability and all related

arrangements are terminated. As SRV does not have a

legally enforceable offsetting right at the closing date, said

amounts have not been deducted from each other in the

balance sheet.

Group’s Treasury unit is responsible for the hedge

transactions according to the policy approved by the

Board of Directors.

During the fiscal year 2023 and 2022 there were no

hedges qualifying for IFRS hedge accounting.

Items recognised at fair value through profit or loss

The derivative instruments used by the Group are

classified at fair value through profit or loss. Derivatives are

initially recognised in the balance sheet at fair value on the

transaction day and thereafter measured at fair value on

each balance sheet date. The fair value of interest rate

swaps is usually zero at the original time of recognition.

Changes in fair values of interest rate swaps are

recognised in the income statement under other financial

income and expenses and in the balance sheet under

financial assets or liabilities. Foreign exchange option

premiums are considered to amount to the fair value at the

time of acquisition.

Changes in the fair values of foreign exchange forward

contracts and options are recognised in the income

statement under other financial income and expenses,

because they are used primarily to hedge against currency

rate gains and losses included in the share of associated

companies’ income.

Other financial assets may include both quoted and

non-quoted shares and they are measured at fair value

through profit or loss. The fair value of the investment is

determined on the basis of the investment’s bid price. In

the event that there are no quoted bid prices for the other

financial assets, the Group will apply various valuation

methods to their valuation. These are, for example, recent

transactions between independent interests, discounted

cash flows, or other similar types of instrument valuations.

Measured at amortised cost

Financial assets measured at amortised cost are trade

receivables, other receivables and loan receivables from

associated companies. Financial assets measured at

amortised cost are initially measured at fair value less

transaction costs. After the initial recognition, they are


		61

recognised at amortised cost. Interest is recognised in the

income statement over the maturity of the loan using the

effective interest method.

Impairment

In the recognition of expected credit losses, the Group

applies an approach according to which all trade

receivables and contractual assets are reviewed

separately and expected credit losses recognised over the

entire applicable duration. The project customers are

mainly large, well-known companies with solid finances.

If there is no information on the customer's solvency,

the information is checked from public trade and credit

information registers, with a security deposit required if

necessary. For international commercial premises

projects, more detailed customer background checks are

carried out for new customers.

Due to the business model and customer profile

described in the previous paragraph, the Group has not

incurred any material credit losses over the last few years,

and no material credit losses are expected regarding the

items included in the balance sheet at closing date.

Loan receivables from associated companies and

joint ventures are tested for impairment using a three-

stage model.

1. The Group’s management first reviews the expected

cash flows for the loan receivables from associated

companies and joint ventures together with the

associated company investments and regularly

assesses whether the credit risk related to the

receivables has increased significantly after they were

initially recorded. If the credit risk associated with a

receivable is deemed to be low or if the credit risk has

not significantly increased after it was initially recorded,

the receivable is included in Stage 1 and the impairment

is measured based on an estimate of the probability of

credit losses occurring within 12 months.

2. If it is discovered that the credit risk concerning a loan

receivable has increased significantly, the loan

receivables are transferred to Stage 2, in which case the

associated likelihood of loss is assessed over the entire

lifetime. In this case, the credit loss is recorded for the

entire lifetime of the loan receivable and calculated by

comparing future estimated cash flows for the entire

lifetime with contractual cash flows. At closing date, the

balance sheet included no loan receivables included in

Stage 2.

3. If the loan receivables are found to be impaired as a

result of a credit risk, they are transferred to Stage 3

Cash and cash equivalents

Cash and cash equivalents consist of cash, current bank

deposits as well as other current liquid investments with a

maturity not exceeding three months. Bank overdrafts are

included in current liabilities in the balance sheet.

Non-current assets held for sale

Non-current assets are classified as held for sale if their

carrying amount will be recovered principally through a

sale transaction rather than through continuing use and a

sale is considered highly probable. They are measured at

the lower of their carrying amount and fair value less costs

to sell.

An impairment loss is recognised for any initial or

subsequent write-down of the asset to fair value less costs

to sell. A gain is recognised for any subsequent increases in

fair value less costs to sell of an asset, but not in excess of

any cumulative impairment loss previously recognised. A

gain or loss not previously recognised by the date of the

sale of the noncurrent asset is recognised at the date of

derecognition.

Non-current assets are not depreciated or amortised

while they are classified as held for sale. Interest and other

expenses attributable to the liabilities related to non-

current assets classified as held for sale continue to be

recognised.

Non-current assets classified as held for sale are

presented separately from the other assets in the balance

sheet. The liabilities related to non-current assets

classified as held for sale are presented separately from

other liabilities in the balance sheet.

Hybrid bonds

The hybrid bonds (equity loans) do not have maturity dates

at which the holder of the loan can demand repayment of

the loan. The hybrid bonds are unsecured and

subordinated to the Company’s other debt instruments but

senior to other equity instruments. However, the hybrid

bonds do not confer shareholders’ rights to bondholders.

Financial liabilities measured at amortised cost

Financial liabilities measured at amortised cost are initially

recognised at fair value. Transaction costs have been

included in the original carrying amount of the financial

liabilities. Interest is recognised in the income statement

over the maturity of the loan using the effective interest

method. Financial liabilities are recognised under non-

current and current liabilities and they can be interest-

bearing or non-interest-bearing.

The liability for repaying the principal and interest on

company loans is transferred to the buyer of the apartment

at apartment assignment. Regardless of whether the

project is completed or not, but not yet assigned to the

buyer, the principal and interest for the share of liabilities is

presented in full in SRV’s consolidated balance sheet,

calculated until the due date of the loan. Interest and

principal are removed from the table only when control is

assigned.

Inventories

The costing of raw materials and consumables is

measured using a weighted average cost method.


		62

The balance sheet item “Work in progress” comprises

the cost of construction work and plot for uncompleted

construction projects not yet expensed. The acquisition

costs included in the Work in progress are raw materials,

direct cost of labour, other direct costs, indirect costs of

purchase and construction as well as borrowing costs in

certain cases. In SRV’s developer-contracted housing

projects, part of interest expenses on borrowing is

capitalized during the construction period in current assets

in accordance with the Group’s capitalization rate. During

the reporting period, SRV changed its capitalization

practice such that, with respect to developer-contracted

housing projects, interest expenses on borrowing are

capitalized primarily using the project-specific financing

cost. If the proportion of project-specific financing is not

significant, the Group’s capitalization rate is used in

capitalizing interest expenses.

The balance sheet item “Land areas and plot-owning

companies” comprises costs of development stage

projects. The costs that are considered to increase the

value of land areas and plot-owning companies are

capitalised.

The balance sheet item “Shares in completed housing

corporations and real-estate companies” comprises

unsold completed projects.

The balance sheet item “Advance payments”

comprises advance payments in connection with the

inventories.

The balance sheet item “Other inventories” comprises

share capitals from projects of which the decision to start

construction has not yet been made and the property

bought for resale.

Inventories are valued at the lower of cost and net

realisable value. In ordinary business, net realisable value is

the estimated selling price which is obtainable, less the

estimated costs incurred in bringing the product to its

present condition and selling expenses. The net realisable

value of land areas and plot-owning companies is based on

their expected use.

The net realisable value of land areas and plot-owning

companies part of the net realisable value of the entire

project. Land areas and plot-owning companies are

impaired only if it is forecast that the project as a whole will

result in a loss.

If it is expected that a land area or plot-owning

company will be realised by sale, the net realisable value is

based on the estimated market price. The net realisable

value of work in progress and completed housing

corporations and real-estate companies is based on their

selling price at the expected time of sale.

Rental costs remitted to an external party can be

activated to book value for the asset assigned to rent; such

as, e.g. the rental agency's fees. Sales and marketing costs

are not activated costs.

In preparing the asset, the activated rental costs

should be entered as expenditure along with the average

duration of the rental agreements. The margin generated

from rental services sold by the associated company and

joint venture should be eliminated in relation to the

ownership share.

Expenses arising from construction plans for plots

managed mainly by SRV and classified as current assets

are deemed eligible for activation when they can be

reliably to have a positive impact on the value of the plot or

project. These expenses can be capitalised before a

decision is made on the launch of construction.

Income taxes

Tax expense in the income statement comprises current

taxes and deferred taxes. Current tax is calculated based

on the taxable income for the financial period using the

statutory tax rate that is force in each country at the

balance sheet date (and local tax legislation). Taxes are

recognised in the income statement, other than those

related to items of other comprehensive income or items

directly recognised as equity. Taxes are adjusted for any

taxes for previous periods. Deferred tax assets or liabilities

are recognised on temporary differences arising between

the tax bases of assets and liabilities and their carrying

amounts in the consolidated financial statements. The

deferred tax asset is recognized for unused losses and all

temporary differences.

Deferred taxes are not recognised in connection with

investments made in subsidiaries when the Group can

control the timing of the reversal of the temporary

difference, and the temporary difference will probably not

be reverse in the foreseeable future. A tax asset is

recognised to the extent when it is probable that the asset

can be utilised against future taxable income. If a Group

company has made a loss in the immediate past then, of

the taxable loss, an imputed tax asset is recognised only up

to the amount where the company has sufficient taxable

temporary differences or other convincing evidence of the

ability to utilise the taxable loss.

Employee benefits

Pension liabilities

Group companies have various pension plans in

accordance with the local regulations and practices of

each country of operation. Pension plans are funded

through contributions paid to insurance companies based

on paid salaries and wages. The Group has only defined

contribution plans. The payments in connection with

Group’s defined contribution plans are recognised in the

income statement in the period which they relate to.

Share-based payment

The Group applies IFRS 2 Share-based Payment standard

on its share-based incentive schemes. Share-based

incentive scheme share settled transaction are valued at

fair value by using the share price at the time of granting


		63

and paid in cash are valued at fair value in every interim

and annual closing. Changes in value are recognised in the

income statement over their effective period. The share-

based payments of the Group are cash or share settled

transactions.

Provisions

A provision is recognised when the company has a legal or

constructive obligation as a result of a past event, the

payment obligation is probable and the amount of

obligation can be reliably estimated.

If compensation can be received from a third party

for a part of the obligation, the compensation is recognised

as a separate item when it is virtually certain that the

compensation will be received. A provision is recognised

for a loss-making contract when the costs required to meet

the obligations exceed the benefits received from the

contract.

SRV and its subsidiaries are reengaged in several

legal proceedings which relate to ordinary business or to

other processes. The result of these legal proceedings and

processes is difficult to predict. In case of litigation a

provision is recognised in the financial statements

according to the mentioned accounting policies when there

is a legal or constructive obligation against third-party,

payment obligation is probable and the amount of an

obligation can be reliably estimated.

Warranty provisions comprise the costs resulting

from the repair of completed projects if the warranty

period is still in effect at the balance sheet date. A warranty

provision the amount of provision is based on prior

experience of the materialisation of warranty expenses. It

is expected that warranty provisions are used during the

two years from the completion of the project.

The level of the construction industry’s 10-year

warranty provision is based on index-adjusted historical

information or the estimated total costs of certain

individual projects. It is expected that a 10-year provision

will be used over the ten years following the completion of

the project.

Dividends

The dividend pay-out proposed by the Board of Directors

to the Annual General Meeting is recognised in the

financial statements when the company’s shareholders

have approved the relevant resolution at the Annual

General Meeting.


		64

1 Segment information

Segment information has been presented in accordance with IFRS 8 and following the

accounting principles of the consolidated financial statements and the Group’s

management and organizational structure.

Operating segments

SRV Yhtiöt reports its business operations in one segment. The segment structure has

been changed in 1 January 2023 due to internal reorganisation and that going forward

the company will report its operations as a single segment. SRV’s Investments segment

primarily consisted of operations related to its holdings in Russia, which SRV wrote down

almost in their entirety in spring 2022 and divested in August 2023.. The chief operating

decision maker as defined in IFRS 8 is the Group’s CEO with the Group’s Corporate

Executive Team, which reviews SRV’s business as a single operating segment, which also

comprises the reportable segment.

Operating segment information

Segment information is reported in a manner consistent with internal reporting to the Chief

Operating Decision Maker (CODM, as per IFRS 8). The CODM is the Group President &

CEO, who is assisted decision-making by the Corporate Executive Team. Internal

management reporting is consistent with segment reporting.

In the financial year 2023, the Group had two significant customers under the IFRS 8

definition. The most significant customer accounted for approximately 22% of the Group’s

revenue. In the financial year 2022, the Group had not significant customers under the

IFRS 8 definition.

2 Acquisitions and disposals

In August 2023, SRV divested the share capital of its subsidiary SRV Russia Ltd. The sold

assets also included SRV’s Russian subsidiaries and associated companies and SRV’s

remaining plot holdings in Russia, which are owned by these companies, as well as a

minority interest in the 4Daily shopping center located close to Moscow. The personnel

responsible for SRV’s business operations in Russia were also transferred in the

transaction. In 2022 SRV has written down the balance sheet values of practically all of its

Russian assets.The sales price of SRV Russia Oy was about EUR 4 million, which

corresponded to the remaining balance sheet value of the company’s operations in Russia.

Translation differences of EUR -9.5 million arising from old foreign exchange rate losses

were recognised in income in connection with the transaction. In December 2023, SRV

divested the share capital of Estonian subsidiary Mare KV Invest Ou. A net result of sale

was -0.3 million. Impact of disposals is described also in Note 6.

Impact of disposals on Group’s assets and liabilities


EUR 1,000	2023
Assets, total	6,045
Liabilities, total	1,437
Sold net assets, total	4,608
Sales prices	4,397
Translation difference	-9,258
Transaction fees	-242
Net result from sales	-9,711

Cash flow from sales


EUR 1,000	2023
Sales prices	4,397
Cash and cash equivalents of divested operations	-2,336
Transaction fees	-242
Cash flow from sales	1,819

The company did not acquired any operations during financial year.


		65

3 Sales revenue from customer contracts


EUR 1,000	2023	2022

Revenue	610,030	770,078
Business construction	508,918	451,033
Housing construction	101,112	319,044

Attributable to
Revenue recognition at a point in time	8,315	63,809
Revenue recognition over time	601,714	706,269
Total	610,030	770,078

Sales revenue for the following SRV project types is recognised at a

point in time:

Developer-contracted residential project and commercial project.

Sales revenue for the following SRV project types is recognised over

time:

Fixed-price contract, project management contract, turnkey contract (overall

responsibility for the construction), alliance contract, residential development project,

commercial development project, life-cycle project and shopping centre management.


EUR 1,000	2023	2022

Assets and liabilities based on customer contracts:

The Group’s trade receivables and trade payables are mainly based on customer contracts. The Group’s balance sheet includes the gross amount due related to customer contracts and other short-term advance payments.

Gross amount due based on customer contracts	14,784	10,929
Advance payments related to customer contracts	35,568	46,223

Changes in assets and liabilities based on customer contracts are caused by project-

specific seasonal fluctuations and timing between project billing and the measured

progress of the project. At the end of the reporting period, if the project billing is less than

the revenue recognised based on the measured progress of the project, the difference is

presented in the statement of financial position as a contract asset in the gross amount

due based on customer contracts. At the end of the reporting period, if the project billing

exceeds the revenue recognised based on the measured progress of the project, the

difference is presented in the line item advance payment related to customer contracts.


EUR 1,000	2023	2022

Sales revenue recognised related to liabilities based on customer contracts

Sales revenue recognised that was included in contract-based liabilities at the beginning of the period	46,223	73,606
Sales revenue recognised for performance obligations fulfilled in earlier periods	10,929	8,090

Customer contract performance obligations and significant

judgment-based solutions

The Group’s most common project types are: project management contract, turnkey

contract (overall responsibility for the construction), alliance contract, fixed-price

contract, lifecycle project, residential development project, commercial development

project, developer-contracted residential project and commercial project.

In SRV’s contractor agreements and development projects, the management tasks

and structural engineering work of a construction or renovation project management

contact concerning a property owned by the customer have typically been agreed with the

customer. Contract projects may include a number of different work stages and tasks.

These mainly, however, form a single integrated entity that is handled as one performance

obligation. Revenue is recognised separately for each performance obligation. The

transaction price can include variable amounts such as possible penalties and bonus

payments based on performance.The performance obligation based on contract is

fulfilled after the hand-over of the project. A project billing is normally based on the

payment installments table and normally it follows the measured progress of the project.

In developer-contracted projects, buyers of apartments may be offered a parking

space, maintenance charge benefits or a removal service. In that case, the parking space

and removal service are considered to be separate performance obligations. Typically,

these are handed over and recognised as revenue at the same time as the apartment


		66

itself. Any possible consideration exemptions are equivalent to discounts and these are

taken into account as an adjustment to the selling price.

The Group’s contract projects include variable considerations resulting, for example,

from penalties or from undershooting or overshooting the target price. Group

management monitors and assesses variable considerations at the end of each reporting

period. The transaction price used in revenue recognition is based on the most likely

estimate. Of the estimated amount of variable consideration, only that portion is included

in the transaction price and revenue only recognised up to an amount such that it is highly

likely that no significant reversal will have to be made to the amount of accrued recognised

sales revenue.

Development and developer-contracted projects also include variable considerations

that may result, for example, from delay penalties and lease liabilities. Recognition of

revenue is deferred for the estimated rental liability and this estimated share of project

revenue is recognised as an advance received. Rental security deposits reduce project-

related advances received. Uncertainties associated with signed lease agreements are

taken into account in recognition of revenue.

Assets recognised as revenue over time are controlled by the customer, and the

revenue and expenses of these customer projects are recognised as revenue and

expenses based on percentage of completion, when the outcome of the project can be

reliably estimated. Percentage of completion is determined by calculating for each project

the share of expenses accrued by the balance sheet date relative to total expenses

estimated for each project. The amount corresponding to the percentage of completion is

recognised as revenue. When it is probable that total costs necessary to complete a

project will exceed total revenue obtained from the project, the expected loss is

recognised immediately as an expense. If the expenses and recorded profits arising from a

customer project exceed the amount of progress billings, the difference is disclosed in the

balance sheet item “trade and other receivables”. If expenses and recorded profits arising

from a customer project are less than the amount of progress billings, the difference is

disclosed in the balance sheet items “trade and other payables”. Tables of payments are

used in customer billing, and terms of payment for contracts typical for the industry are

agreed.

Customer projects recognised as revenue at a point in time are recognised after

control of the asset has been transferred and at the earliest after the completion of the

project. The share of revenue and expenses corresponding to the percentage of sale at

the time of completion is recognised as revenue for the projects.

Development and developer-contracted projects may include a separate financing

component. A significant financing component may arise in factoring projects in which the

factoring costs are charged from the client On average, the construction time in Group

factoring and developer contracting projects is less than two years, in which case the

average financing period is less than a year. In these, the Group will apply the “practical

expedient” for periods of less than a year as set out in IFRS 15.63. The Group can also have

projects with an average financing period of more than one year. In such projects, the

treatment procedure for a substantial financing component is applied and the item

recognised as a reduction in revenue and an adjustment of interest income on financial

items.

Customer project warranty provisions comprise the costs resulting from the repair of

completed projects if the warranty period is still in effect at the balance sheet date. A

warranty provision is recognised at the time of the project handover, and the amount of

provision is based on prior experience of the materialisation of warranty expenses. It is

expected that warranty provisions will be used during the two years following the

completion of the project. The level of the construction industry’s 10-year warranty

provision is based on index-adjusted historical information or the estimated total costs of

certain individual projects. It is expected that a 10-year provision will be used over the ten

years following the completion of the project.

The plots of development projects are recognised as revenue over time. .


EUR 1,000

Transaction price allocated to the remaining performance obligations of customer contracts		Within 1 year	Within 2 years	Within 3 years	Within 4 years
		60%	27%	13%	0%
The aggregate amount of the transaction price allocated to long-term customer project contracts that are partly or completely unfulfilled	971,316	580,213	265,222	125,881	0

In practice, the table reflects the amount of order backlog sold and its recognition as revenue in future years.

Assets from obtaining or fulfilling customer contracts

Sales commissions may be associated with projects recognised as revenue over time.

Expenses arising from obtaining these contracts are capitalised in project costs and

recognised as an expense over the term of the contract.

During the reporting period and in the comparison period, the Group did not have any

related assets.


		67

4 Other operating income


EUR 1,000	2023	2022
Equipment and intangible assets	186	276
Rental income	102	244
Other income	—	69
Total	288	589

5 Other operating expenses


EUR 1,000	2023	2022
Equipment and intangible assets	286	46
Rental expenses	371	231
Voluntary indirect personnel expenses	1,245	1,635
Car and travel expenses	728	747
Entertainment and marketing	1,010	1,162
Communications and IT	3,408	3,484
Other external services	1,333	1,638
Other fixed expenses	3,462	3,328
Total	11,843	12,271

Auditing fees


EUR 1,000	2023	2022
Audit, PricewaterhouseCoopers Oy	253	302
Audit, others	29	0
Auditors' statements	0	0
Tax services	12	0
Other services	0	364
Total	293	666

PricewaterhouseCoopers Oy has provided non-audit services to the entities of SRV

Group in total of 12 thousand euros during financial year 2023 (364 thousand). The Finnish

Patent and Registration Office Auditor Oversight has granted to PricewaterhouseCoopers

Oy upon its request an exemption from the maximum amount of fees for non-audit

services referred to in Chapter 5, section 4 of the Finnish Auditing Act (1141/2015) in the

financial year 2022.

6 Depreciation and impairments


EUR 1,000	2023	2022
Depreciation, excluding Right-of-use asset
Intangible assets
Other intangible assets	216	229

Property, plant and equipment
Buildings and structures	10	3
Machinery and equipment	1,342	1,086
Other tangible assets	26	48
	1,594	1,365
Depreciation, Right-of-use asset
Land areas	2,091	1,748
Buildings and structures	1,355	1,361
Machinery and equipment	703	673
	4,149	3,782

Depreciations	5,742	5,147


Impairments and their reversals	8,879	65,030

Impairments and reversals


EUR 1,000	2023	2022
Write-downs of Russia holdings and JV shares	-1,197	-45,851
Write-down of Fennovoima	0	-13,319
Write-down of Tampere Arena project and its reversal	976	-2,396
Selling of Okhta Mall shopping centre	0	4,332
Translation difference of Okhta Mall shopping centre	0	-7,796
Selling of SRV Russia Ltd	-9,477	0
Repayment of the laon receivable written down in 2022	920	0
Other write-downs	-100	0
Total	-8,879	-65,030


		68

In 2022 SRV has written down the balance sheet values of practically all of its

shopping centres and other holdings in Russia and its holding in Fennovoima. Impairments

amounted to EUR -133.7 million, of which EUR -92.0 million impacted on operating profit

and EUR -41.7 million on financial expenses. After the write downs and change in the

exchange rate of the rouble, the total value of SRV’s holdings in Russia is EUR 3.0 on 31

December 2022.

In August 2023, SRV divested the share capital of its subsidiary SRV Russia Oy to the

Cypriot real estate investment company Geomare Investments Limited. The sold assets

also include SRV’s Russian subsidiaries and associated companies and SRV’s remaining

plot holdings in Russia, which are owned by these companies, as well as a minority interest

in the 4Daily shopping centre. The personnel responsible for SRV’s business operations in

Russia were also transferred in the transaction. The sales price of SRV Russia Oy was

about EUR 4 million, which corresponded to the remaining balance sheet value of the

company’s operations in Russia. Translation differences of EUR -9.3 million arising from

old foreign exchange rate losses were recognised in connection with the transaction. The

impact of the sale was recognised as reversal because of the write-off made in 2022.

Impact of the sale is reported also in Note 2.

After this transaction, SRV’s only remaining asset in Russia is a 50 per cent holding in

the Pearl Plaza shopping centre, which has been valued at zero.The shopping centre has

been consolidated using the equity method. Their balance sheet value is compared to its

cash flow statement value in order to test for potential impairment. SRV's investment in

shopping centre consists of equity investments in associated companies and loans

granted to them. Furthermore, the companies that own the shopping centre have

preferred debt with local banks.

The calculation parameters are essential for the final result of the valuation

calculation. The key parameters are inflation, growth in consumer demand, forecasts of

the trend in rental income and the weighted average cost of capital, which correlates with

the local risk-free interest level. The values of the calculation parameters have not

changed significantly in 2023. In the prevailing exceptional circumstances, the estimation

of the used parameters involves extremely high uncertainty, and the situation is not

expected to be rectified in the near future. Using the available sources of information, the

company has sought to establish an overview of the parameters that is as accurate as

possible.

The risk of the interruption of the nuclear power plant project Fennovoima have risen

significantly due to Russia’s war against Ukraine. Due to these reasons, SRV’s holding in

Fennovoima was written off in its entirety in 2022. SRV still has an EUR 18.7 million

investment ommitment in the nuclear power plant project, which is subject to significant

uncertainty after Fennovoima announced on 2 May 2022 that it had terminated the plant

delivery agreement with the RAOS Project and on May 2022 cancelled its building permit

application for the Hanhikivi 1 nuclear power plant.

7 Employee-benefit expenses


EUR 1,000	2023	2022
Wages and salaries 1)	55,704	60,931
Pension expenses - defined contribution plans 2)	8,806	10,253
Share-based incentive scheme	-401	790
Other indirect personnel expenses	2,104	2,367
Total	66,214	74,342

1Information on management’s compensation as well as employee benefits is disclosed in Section Related party

transactions.

2SRV Group has only defined contribution plans in connection with the pensions.

Old share-based incentive schemes have been discontinued and new share-based incentive schemes have been

established in 2023.


Average number of personnel	2023	2022
Total	778	948


		69

Share-based incentive schemes


Grant year	2019	2021	2021	2022	2023	2023	Total
Reward principle	Employment	Set targets	Set targets	Set targets	Set targets	Set targets

Original exercise price	1.62	0	0	0
Dividend and right issue adjusted exercise price 31.12.2	0.55	0	0	0
Subscription period	2021-2026	2021-2023	2021-2022	2022-2024	2023-2024	2023-2025
Total amount	25,000	110,000	110,000	110,000	133,500	260,000

Share incentives 1.1.2022	25,000	110,000	110,000	0	0	0	245,000
Additions	0	0	0	110,000	0	0	110,000
Share incentives used	0	6,875	24,063	0	0	0	30,938
Share incentives returned or expired	0	0	13,750	0	0	0	13,750
Share incentives 31.12.2022	25,000	103,125	72,187	110,000	0	0	310,312

Share incentives 1.1.2023	25,000	103,125	72,187	110,000	0	0	310,312
Additions	0	0	0	0	133,500	260,000	393,500
Share incentives used	0	0	-24,063	0	0	0	-24,063
Share incentives returned or expired	-25,000	-103,125	-48,124	-110,000	0	0	-286,249
Share incentives 31.12.2023	0	0	0	0	133,500	260,000	393,500

Expenses recognised in group 2022, EUR 1,000	-44	-310	-118	-317	0	0	-789
Expenses recognised in group 2023, EUR 1,000*	71	310	18	302	-60	-73	569

Shares granted based on incentives, 2022	0	0	0	0	0	0	0
Shares granted based on incentives, 2023	0	0	0	0	0	0	0

*The company has executed a reverse share split 4 July 2022 and each forty (40) shares of the Company were

merged into one (1) share. Share incentive figures have been adjusted.

1. The Board of Directors of SRV Group Plc has made the decision for a share-based incentive scheme for the

President & CEO for 2019–2026. Under the scheme, Saku Sipola has been given 600,000 acquisition rights,

entitling him to acquire the number of SRV Group Plc’s shares corresponding to the acquisition rights at EUR 1.62

per share. Under the scheme, new shares or treasury shares in the possession of the company can be issued. The

company’s Board of Directors will make a decision on the manner of implementation separately each time. Under

the terms of the scheme, the acquired shares are subject to a transfer restriction, which is valid for two years from

the acquisition of the shares. The acquisition rights can be exercised in three two-year long exercise periods, the first

of which begins on 1 March 2021 and ends on 28 February 2023, the second begins on 1 September 2022 and ends

on 31 August 2024, and the third begins on 1 September 2024 and ends on 31 August 2026. During each exercise

period, the acquisition rights holder is entitled to exercise 200,000 acquisition rights. The total recognised IFRS cost

of the incentive scheme 2019–2026 is approximately EUR 0.3 million. On 17 December 2020, the Board of Directors

of SRV Group Plc decided on changes to the share-based incentive scheme of President and CEO Saku Sipola. The

changes concern the number of acquisition rights, the subscription price of the acquisition rights and the periods

during which the acquisition rights can be exercised. The purpose of the changes is to ensure that the incentive

effect of the scheme remains at its previous level by taking into account the changes in the number of the company’s

shares caused by SRV’s 2020 rights issues. The incentive effect of the scheme is based on the value increase of

SRV Group Plc’s shares. As a result of the changes, Sipola has the right to acquire 1,000,000 shares at a

subscription price of EUR 0.55 per share. The basis for determining the subscription price is the volume-weighted

average price of SRV’s share on Nasdaq Helsinki in continuous trading from 1 August to 30 November 2020. After

the changes, the acquisition rights can be exercised in the following three periods: the first begins on 1 March 2022

and ends on 28 February 2023, the second begins on 1 March 2023 and ends on 31 August 2024, and the third

begins on 1 September 2024 and ends on 31 August 2026. During the first and second exercise periods, the

acquisition rights holder is entitled to exercise 300,000 acquisition rights and during the third period 400,000

acquisition rights.

2. On 29 March 2021, the Board of Directors resolved to establish a new share-based Long-Term incentive plan. The

Long-Term Incentive Plan arrangement has three three-year performance periods, which begin yearly during

2021-2023. The calendar years are 2021–2023, 2022–2024 and 2023–2025. The Board of Directors of the

Company will resolve on the plan’s key persons and performance criteria at the beginning of each performance

period. Approximately 30 key persons belong to the first performance period 2021-2023, including President and

CEO Saku Sipola and members of the Company’s management. The potential reward from the performance period


		70

2021–2023 will be based on the Group’s Total Shareholder Return (TSR) in relation to a separately selected

reference group, the level of the company’s indebtedness and the increase in share price. The rewards to be paid on

the basis of the performance period 2021-2023 correspond to the value of an approximate maximum total of

4,400,000 SRV Group Plc’s shares (gross amount, of which the proportion to be paid as withholding tax will be

deducted). The potential reward will be paid in 2024 in SRV Group Plc’s shares (net amount) and the company will

account for the withholding tax to tax authorities on behalf of the key persons. The potential share reward to the

President and CEO is subject to transfer restriction, which requires the shares to be held for two years from their

reward.

3. On 29 March 2021, the Board of Directors of SRV Group Plc resolved on a two-year One-off Long-Term Incentive

Plan to enable the prolonging of the Long-Term Incentive Plan performance period to three years. The One-off

Long-Term Incentive Plan arrangement has one two-year performance period, calendar years 2021–2022.

Approximately 30 key persons belong to the target group of the plan, including President and CEO Saku Sipola and

members of the Company’s management. The potential reward from the performance period 2021-2022 will be

based on the Group’s operative cash flow and the Group’s Total Shareholder Return (TSR) during the two-year

period. The rewards to be paid on the basis of the performance period 2021-2022 correspond to the value of an

approximate maximum total of 4,400,000 SRV Group Plc’s shares (gross amount, of which the proportion to be

paid as withholding tax will be deducted). The potential reward will be paid in 2023 in SRV Group Plc’s shares (net

amount) and the company will account for the withholding tax to tax authorities on behalf of the key persons. The

potential share reward to the President and CEO is subject to transfer restriction, which requires the shares to be

held for two years from their reward.

4. The Board of Directors has confirmed 1 February 2023 the remuneration to be paid to the individuals covered by

the one-off long-term incentive plan for the years 2021–2022 in respect of the 2021–2022 performance period. The

remuneration was based on the group’s operative cash flow and the company’s total shareholder return (TSR) over

a two-year period. Changes in the company’s number of shares resulting from SRV's reverse share split on 4 July

2022 have been taken into account in calculating the amounts of remuneration in accordance with the terms and

conditions of the incentive plan.The Board has also resolved, in accordance with the terms of the incentive plan, to

pay the entirety of the remuneration due to the individuals covered by the plan in cash. The total amount of

remuneration to be paid is EUR 155,547.

5. The Board of Directors has resolved on 1 February 2023 to discontinue the President & CEO's share-based

incentive plan for the years 2019-2026 and the company’s long-term incentive plan for the years 2021-2025. . The

Board concluded that keeping the incentive plans in place can no longer be justified in view of the financial measures

the company made in 2022 to strengthen its balance sheet and the effect of these arrangements on, among other

things, the number of shares in the company. As a result of the discontinuations, share acquisition rights under the

President & CEO's share-based incentive plan for 2019-2026 have been cancelled and no remuneration will be paid

out from the currently ongoing performance periods 2021-2023 and 2022-2024 to the approximately 30 key

members of personnel covered by the long-term incentive plan for 2021-2025, including the President & CEO.

6. The Board of Directors of SRV Group Plc has decided on 28 March 2023 to establish a new share-based incentive

plan for the group’s key employees. The Performance Share Plan 2023 consists of four performance periods

covering the financial years 2023–2024, 2023–2025, 2024–2026 and 2025–2027. The Board of Directors will

decide annually on the commencement and details of the performance periods. n the plan, the target group is given

an opportunity to earn SRV Group Plc shares based on the achievement of the targets set for the performance

periods. The potential reward based on the plan will be paid partly in SRV Group Plc shares and partly in cash after

the end of the performance period. . The cash proportion of the reward is intended to cover taxes and statutory

social security contributions arising from the reward to the participant. Rewards from the performance period

2023–2024 are based on the value of the order backlog and structure of the order backlog, taking into account the

threshold condition based on the operative operating profit. Rewards from the performance period 2023–2025 are

based on the operative operating profit, repayment of the hybrid bond and the share of lifecycle-wise construction in

the total order backlog of developer-contracted, development and lifecycle projects.A Corporate Executive Team

member is obliged to hold 50 per cent of the net shares paid to them until the value of their total shareholding in the

company corresponds to 50 per cent of their annual gross salary. Correspondingly, the President and CEO of the

company is obliged to hold 50 per cent of the net shares paid to them until the value of their shareholding in the

company corresponds to their annual gross salary. The shareholding amount must be held as long as the

membership in the Corporate Executive Team or the position as the President and CEO continues.The value of the

gross rewards to be paid from the performance periods commencing in 2023 will correspond to an approximate

maximum total of 450 000 SRV Group Plc shares, including the cash proportion. Approximately 25 persons,

including the President and CEO of the company and other Corporate Executive Team members, belong to the

target groups of the performance periods. Upon reward payment, share price will be capped at a maximum of 20

euros.

7. The Board of Directors of SRV Group Plc has decided on 28 March 2023 to establish a new cash-based reward plan

for the group’s key employees.In the cash-based reward plan, the target group has an opportunity to earn a euro-

denominated cash reward. The final value of the cash reward is determined by a person's euro-dominated allocation

as well as by the percentage change in value of the company share measured during the performance periods

lasting between 12 and 36 months. Performance periods can start during financial years 2023–2024. The maximum

baseline reward amount to be allocated to the participants is 275 000 euros. In share price performance, a

maximum of 100 per cent appreciation will be taken into account for the reward determination. Of the earned gross

reward, a maximum of 50 per cent share can be paid in shares on the basis of a separate decision.In general, no

reward based on the plans will be paid if the participant’s employment or director contract terminates before the

reward payment.


		71

8 Research and development expenses

SRV Group does not have any actual research and development expenses. The Group has

business-related project development costs, and the treatment of these is described in

the section of the accounting policies covering inventories.

9 Financial income and expenses


EUR 1,000	2023	2023
Financial income
Interest income from associated and joint venture companies	0	233
Interest income from the other receivables	2,276	1,119
Foreign exchange gains	0	1,504
Financial assets and liabilities at fair value	0	9,978
Other financial income 1)	13	39,909
Total	2,289	52,743

Financial expenses, excluding Lease Liabilities
Expenses for financial liabilities at amortised cost	-379	-4,647
Financial assets and liabilities at fair value	-563	0
Foreign exchange losses	-2,641	0
Other financial expenses 2)	-2,045	-46,261
Financial expenses, Lease Liabilities
Interests expenses	-5,603	-4,529
Total	-11,231	-55,437

Financial income and expenses, total	-8,942	-2,694

1. In 2022, EUR 34.3 million of the hybrid and convertible bonds with a nominal value of EUR 57.1 million were recognised

in the balance sheet as equity instruments and the difference between their nominal value and carrying amount, EUR

22.8 million, was recognised as other financial income.

2. Other financial expenses in 2022 include impairment losses of EUR 41.7 million on financial assets of associated

companies and joint ventures.

10 Income taxes

Income taxes in the income statement


EUR 1,000	2023	2022
Current taxes	-141	-234
Taxes for previous financial years	0	16
Other taxes	-62	-82
Deferred taxes, Right-of-use asset	321	265
Deferred taxes	502	-6,545
Total	620	-6,580
Effective income tax rate	-3.9%	8.3%

The income taxes in the consolidated income statement differ from the statutory income

tax rate in Finland (20 percent in 2023 and in 2022) as follows:

Income tax reconciliation


EUR 1,000	2023	2022
Profit / loss before taxes	-15,734	-79,081
Income taxes at statutory tax rate in Finland	3,147	15,816
Differing tax rates of foreign subsidiaries	5	2
Tax exempt income	152	2,764
Non-deductible expenses	-2,320	-25,197
Unrecognized and reversed tax losses	-363	19
Taxes for previous financial years	0	16
Share of profits of associated and joint venture companies	0	0
Adjustments	0	0
Income taxes	620	-6,580

Income taxes recognised in other items in comprehensive income were not material.


		72

The income tax credited directly to equity


EUR 1,000	2023	2022
Hybrid Bond interests tax	567	300
Total	567	300

In December 2021 OECD introduced the Global Anti-Base Erosion (GloBE) Rules. SRV

Group is in the process of assessing its exposure to the OECD Pillar Two legislation for

when it comes into effect. Based on the impact assessment, no material top-up taxes are

expected to arise because SRV Group is not operating in low-tax jurisdictions.

11 Earnings per share


EUR 1,000	2023	2022
Profit/loss for the year attributable to equity holders of the parent	-15,114	-85,662
Profit/loss for the year attributable to Hybrid Bond investors	-2,227	-1,921
Profit/loss for the calculate the earnings per share	-17,341	-87,582


Number of shares	2023	2022
Weighted average number of shares outstanding, (1 000 )	16,938	13,231
Weighted average number of shares outstanding (diluted), (1 000)	16,938	13,231
Earnings per share attributable to equity holders of the parent company, eur per share *	-1.02	-6.62
Earnings per share attributable to equity holders of the parent company (diluted), eur per share *	-1.02	-6.62

* Per-share key figures for the comparison period 2022 have been restated using the new total number of shares

following the reverse share split (reverse split), in accordance with the decision made by the EGM on 30 May 2022.

Stock adjustment ratio is 1.4339.

In the financial statement bulletin for 2023 published on February 1, 2024 the presented Earnings per share -0.89

euros per share was incorrect. The corrected Earnings per share is -1.02 euros per share.

12 Dividend per share

Dividends were not paid in 2023 and 2022.

13 Property, plant and equipment

Tangible assets, excluding Right-of-use asset

2023


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Historical cost, 1 Jan.	41	10,273	21,536	890	32,740
Increases	0	54	2,727	27	2,808
Decreases	0	0	0	-94	-94
Transfer	0	0	0	0	0
Foreign exchange differences	0	0	0	0	0
Historical cost, 31 Dec.	41	10,327	24,263	823	35,454


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Accumulated depreciation and impairments, 1 Jan.	0	-10,115	-17,771	-738	-28,624
Depreciation	0	-10	-1,342	-26	-1,378
Accumulated depreciations of decreases	0	0	1	0	1
Writedowns	0	0	0	0	0
Foreign exchange differences	0	0	0	0	0
Transfer	0	0	0	0	0
Accumulated depreciation and impairments, 31 Dec.	0	-10,125	-19,111	-764	-30,001

Carrying amount, 31 Dec.	41	202	5,152	59	5,454


		73

Tangible assets, Right-of-use asset

2023


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Historical cost, 1 Jan.	0	12,535	4,648	0	17,183
Increases	0	305	739	0	1,044
Decreases	0	0	-187	0	-187
Transfer	0	0	0	0	0
Foreign exchange differences	0	0	0	0	0
Historical cost, 31 Dec.	0	12,840	5,200	0	18,040


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Accumulated depreciation and impairments, 1 Jan.	0	-5,420	-2,921	0	-8,341
Depreciation	0	-1,356	-703	0	-2,059
Accumulated depreciations of decreases	0	0	0	0	0
Writedowns	0	0	0	0	0
Foreign exchange differences	0	0	0	0	0
Transfer	0	0	0	0	0
Accumulated depreciation and impairments, 31 Dec.	0	-6,776	-3,624	0	-10,400

Carrying amount, 31 Dec.	0	6,064	1,576	0	7,640

Tangible assets, excluding Right-of-use asset

2022


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Historical cost, 1 Jan.	41	10,273	19,860	859	31,034
Increases	0	0	2,880	90	2,970
Decreases	0	0	-1,254	-66	-1,318
Transfer	0	0	0	0	0
Foreign exchange differences	0	0	50	6	56
Historical cost, 31 Dec.	41	10,273	21,536	890	32,740


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Accumulated depreciation and impairments, 1 Jan.	0	-10,112	-16,647	-684	-27,443
Depreciation	0	-3	-1,086	-48	-1,136
Accumulated depreciations of decreases	0	0	0	0	0
Writedowns	0	0	0	0	0
Foreign exchange differences	0	0	-38	-6	-44
Transfer	0	0	0	0	0
Accumulated depreciation and impairments, 31 Dec.	0	-10,115	-17,771	-738	-28,624

Carrying amount, 31 Dec.	41	158	3,765	151	4,114


		74

Tangible assets, Right-of-use asset

2022


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Historical cost, 1 Jan.	0	12,100	3,733	0	15,834
Increases	0	426	1,058	0	1,484
Decreases	0	0	-151	0	-151
Transfer	0	0	0	0	0
Foreign exchange differences	0	9	7	0	16
Historical cost, 31 Dec.	0	12,535	4,648	0	17,183


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Accumulated depreciation and impairments, 1 Jan.	0	-4,051	-2,244	0	-6,295
Depreciation	0	-1,361	-673	0	-2,034
Accumulated depreciations of decreases	0	0	0	0	0
Writedowns	0	0	0	0	0
Transfer	0	0	0	0	0
Foreign exchange differences	0	-8	-4	0	-12
Accumulated depreciation and impairments, 31 Dec.	0	-5,420	-2,921	0	-8,341

Carrying amount, 31 Dec.	0	7,114	1,727	0	8,841

14 Goodwill and other intangible assest

2023


EUR 1,000	Intangible rights	Goodwill	Other capitalised expenditure	Total

Historical cost, 1 Jan.	907	1,734	4,206	6,848
Foreign exchange differences	0	0	0	0
Increases	0	0	190	190
Decreases	0	0	0	0
Historical cost, 31 Dec.	907	1,734	4,396	7,038

Accumulated amortisation, 1 Jan.	-658	0	-3,759	-4,416
Amortisation	0	0	-216	-216
Accumulated depreciations of decreases	0	0	0	0
Accumulated amortisation, 31 Dec.	-658	0	-3,974	-4,633

Carrying amount, 31 Dec.	250	1,734	422	2,406

2022


EUR 1,000	Intangible rights	Goodwill	Other capitalised expenditure	Total

Historical cost, 1 Jan.	907	1,734	4,147	6,788
Foreign exchange differences	0	0	1	1
Increases	0	0	76	76
Decreases	0	0	-17	-17
Historical cost, 31 Dec.	907	1,734	4,206	6,848

Accumulated amortisation, 1 Jan.	-649	0	-3,536	-4,186
Amortisation	0	0	-229	-229
Accumulated depreciations of decreases	-8	0	7	-1
Accumulated amortisation, 31 Dec.	-658	0	-3,759	-4,416

Carrying amount, 31 Dec.	250	1,734	449	2,434


		75

Impairment test

The recoverable amount of cash-generating units is based on value-in-use calculation

model in which cash flows are based on base year figures and on business units' growing

cash flows for the next five years' strategy period.

In the impairment test of goodwill performed in December 2023, a growth factor of 2 per

cent was used and it does not exceed the actual long-term growth of the business. The

main factors in the impairment test are the operating profit margin and the discount factor.

The discount factor used is the latest weighted average cost of capital (WACC) before

taxes. In the value-in-use calculation a WACC of 9.9 per cent was used. The calculation

parameters of WACC are risk-free interest rate, market risk and company specific

premium, industry specific beta, the cost of liabilities and equity ratio.

The recoverable amount exceeded the carrying amounts significantly in all cash-

generating units with goodwill. According to the impairment tests there was no need for

impairments.

Sensitivity analysis

The performed sensitivity analysis does not cause impairments for cash-generating units

when using moderate changes in default factors.


		76

15 Financial assets and liabilities by measurement categories

2023


EUR 1,000	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	Note
Non-current financial asset
Long-term interest bearing receivables	0	7,050	7,050	7,050	18
Long-term receivables	0	0	0	0	17, 18
Loan receivables from associated companies and joint ventures	0	0	0	0	21
Derivative instruments	3,512	0	3,512	3,512	31
Other financial assets	7,802	0	7,802	7,802	17

Current financial assets
Accounts receivables	0	51,675	51,675	51,675	22, 29
Other interest bearing receivables	0	6	6	6	22
Loan receivables from associated companies and joint ventures	0	274	274	274	21
Cash and cash equivalents	0	39,595	39,595	39,595	23
Total	11,314	98,599	109,913	109,913

Non-current financial liabilities
Interest bearing liabilities	0	31,386	31,386	31,386	27
Derivative instruments	0	0	0	0	28
Other non-current liabilities	0	3,098	3,098	3,098	28

Current financial liabilities
Interest bearing liabilities	0	1,902	1,902	1,902	27
Accounts payables	0	38,524	38,524	38,524	28
Total	0	74,910	74,910	74,910


		77

2022


EUR 1,000	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	Note
Non-current financial asset
Long-term interest bearing receivables	0	14,243	14,243	14,243	18
Long-term receivables	0	0	0	0	17
Loan receivables from associated companies and joint ventures	0	0	0	0	21
Derivative instruments	4,075	0	4,075	4,075	31
Other financial assets	7,752	0	7,752	7,752	17

Current financial assets
Accounts receivables	0	28,675	28,675	28,675	22, 29
Other interest bearing receivables	0	7	7	7	22
Loan receivables from associated companies and joint ventures	0	5	5	5	21
Cash and cash equivalents	0	45,309	45,309	45,309	23
Total	11,827	88,239	100,065	100,065

Non-current financial liabilities
Interest bearing liabilities	0	23,828	23,828	23,828	27
Derivative instruments	0	0	0	0	28
Other non-current liabilities	0	6,252	6,252	6,252	28

Current financial liabilities
Interest bearing liabilities	0	10,000	10,000	10,000	27
Accounts payables	0	43026	43026	43026	28
Total	0	83,107	83,107	83,107

Carrying amounts do not differ substantially from Fair value, excluding bonds.

Counterparty price quotations are used to determine the fair value of derivatives. These price quotations are based on predominant market circumstances and generally accepted

pricing models


		78

16 Shares in associated and joint venture

companies

Shares in associated and joint venture companies


EUR 1,000	2023	2022
Shares in associated companies	1,857	985
Shares in joint venture companies	1,923	1,134
Total	3,780	2,119

Shares in associated and joint venture companies are investments into construction

projects together with other investors. In 2022 SRV has written down the balance sheet

values of shares in associated and joint venture companies in Russia. Shares in

associated and joint venture companies EUR 3,780 (2,119) thousand are investments into

construction projects located in Finland.

SRV has not had any substantial associated company or joint venture company in the

financial year 2023 and 2022. SRV and its Finnish co-investors sold their holdings in

Jupiter Realty 1 B.V. in November 2022. With a transaction completed on 1 August 2023,

SRV sold the share capital of its subsidiary SRV Russia Oy. The sold assets also included a

Netherlands joint venture company Promenad Invest B.V. and its Russian joint venture

company OOO MMSG. After this transaction, SRV’s only remaining asset in Russia is a 50

per cent holding in the Pearl Plaza shopping centre in St Petersburg. Share of profits of

Pearl Plaza has been written off in the Group’s income statement and balance sheet.

Share of profits of associated and joint venture companies


EUR 1,000	2023	2022
Associated companies	25	-4,289
Joint venture companies	1,081	3,029
Total	1,106	-1,260

Other comprehensive income


EUR 1,000	2023	2022
Associated companies	-93	0
Joint venture companies	0	7,207
Total	-93	7,207

17 Other financial assets and long-term receivables

Other financial assets may include quoted or unquoted shares. The valuation methods and

the fair value hierarchy of the available-for-sale financial assests are presented in note 29.


EUR 1,000	2023	2022
Opening balance at 1 Jan.	7,751	24,728
Increases	33	100
Changes in fair value	18	-17,067
Decreases	0	-10
Closing balance, 31 Dec.	7,802	7,751

Non-current	7,802	7,751
Current	0	0

Unquoted shares	7,802	7,751
Long-term receivables	0	0

18 Receivables


EUR 1,000	2023	2022
Non-current receivables
Long-term receivables	2,650	9,280
Long-term interest bearing receivables	4,400	4,963
Total	7,050	14,243


		79

19 Deferred tax assets and liabilities

2023


EUR 1,000	1 Jan.	Recognised in the income statement	Recognised in comprehensive income	Recognised in equity	Acquisitions and disposals of business	Exchange rate difference	31 Dec.
Deferred tax assets
Tax losses	34,733	141			-1,281		33,593
Financial assets at fair value through profit and loss	151	-151					0
Accrual differences in developer contracting	-136	136					0
Undeductible depreciations in taxation	1,105	32					1,137
Other temporary differences	0	97					97
Right-of-use assets deferred tax receivables	1,606	321					1,927
Total	37,458	577	0	0	-1,281	0	36,754

Deferred tax liabilities
Borrowing costs	947	86			-807		227
Cumulative depreciation differences	-33	42					9
Other temporary differences	225				-225		0
Total	1,139	128	0	0	-1,032	0	236
Net deferred taxes	36,319	449	0	0	-249	0	36,518


		80

2022


EUR 1,000	1 Jan.	Recognised in the income statement	Recognised in comprehensive income	Recognised in equity	Acquisitions and disposals of business	Exchange rate difference	31 Dec.
Deferred tax assets
Tax losses	37,238	-2,021					35,217
Financial assets at fair value through profit and loss	151	—					151
Accrual differences in developer contracting	37	-174					-136
Undeductible depreciations in taxation	1,001	104					1,105
Other temporary differences	2,472	-3,382				427	-484
Right-of-use assets deferred tax receivables	1,349	257					1,606
Total	42,249	-5,217	—	—	—	427	37,458

Deferred tax liabilities
Borrowing costs	879	68					947
Cumulative depreciation differences	-33	—					-33
Other temporary differences	160	65					225
Tax liabilities	10	930					940
Total	1,006	1,063	—	—	—	—	1,139
Net deferred taxes	41,243	-6,280	—	—	—	427	36,319


		81

The Group's accumulated losses for which no deferred tax assets have been recognised

on 31 December 2023 were EUR 589 thousand (EUR 5,299 thousand) because realisation

of the tax benefit is not considered probable.

Deferred tax assets have been recognised for right-of-use EUR 1,927 thousand (EUR 1,606

thousand).

The deferred tax liability has been recognised in the consolidated financial statements in

connection with the undistributed profits of subsidiaries whose income tax is determined

on the basis of profit distribution. The deferred tax liability has not been recognised when

the group is able to control the timing of profit distribution and the distribution is not

probable at the balance sheet date.

On 31 December 2023, the amount recognised as deferred tax assets in the SRV

balance sheet was EUR 36,754 thousand. The majority of SRV's deferred tax assets

relate to tax loss carry forwards. Tax losses have arisen from the transfer of ownership of

REDI shopping centre and the loss-making contracts of REDI shopping centre, REDI

Lighthouse and Tampere Deck and Arena. Deferred tax assets are recognised only up to

the amount where the company has sufficient taxable temporary differences or other

convincing evidence of the ability to utilise the taxable losses. The losses have arisen for

individual identifiable reasons, which are not expected to repeat. Based on the taxable

income forecasts the Company has drawn up, SRV is able to utilise the losses fully by

2029. Assumptions about the generation of future taxable income include the

management's estimates of the future cash flows including the amount of future net sales,

operating costs and finance costs. Assumptions about of future taxable income are based

on company’s objectives in the long run. SRV's ability to generate taxable income

depends also on factors related to the general economy, finance, competitiveness and

regulations beyond SRV's control, thus these estimates and assumption are subject to

uncertainty. If a group company has made a loss in the immediate past, then a deferred tax

asset from tax losses is recognised only up to the amount where SRV has sufficient

taxable temporary differences or other convincing evidence of the ability to utilise the

taxable loss. As at 31 December 2022, the deferred tax assets recognised on the balance

sheet are also subject to the losses being assessed in taxation so that they may be

generally deducted from the future taxable income of SRV.

Thus these estimates and assumptions are subject to risk and uncertainty, and it is

possible that changes in circumstances will alter expectations, which may impact the

amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet

and the amount of deferred tax assets not yet recognised from the tax losses and the

amount of temporary differences. The tax loss carry-forwards will generally expire within

10 years from the date

of their creation. The majority of SRV's tax loss carry-forwards will expire in 2028–

2029. If the taxable income of SRV would be lower than expected and not all deferred tax

assets could be utilised, the value of the deferred tax assets in the company's balance

sheet would be reduced which could have a material negative effect on the company’s

result and financial position.

20 Inventories


EUR 1,000	2023	2022
Inventories excluding Right-of-use assets	157,370	162,842
Work in progress	55,414	79,589
Land areas and plot-owning companies	71,857	75,423
Shares in completed housing corporations and real estate companies	27,217	4,795
Advance payments	896	897
Other inventories	1,985	2,139
Inventories, Right-of-use asset	88,488	75,119
Inventories, total	245,858	237,962

With respect to developer-contracted housing projects, interest expenses on borrowing

are capitalised primarily using the project-specific financing cost. If the proportion of

project-specific financing is not significant, the Group’s capitalisation rate is used in

capitalising interest expenses. Capitalisation rate used was 5.0% on average. During

the financial year capitalised interests the amount of which was EUR 675 thousand (2022:

EUR 129 thousand) was included in the value of work in progress.

The carrying amount of completed inventories used as security for loans in 2023

amounted to EUR 25,463 thousand (EUR 3,373 thousand) and the carrying amount of

inventories under construction in 2023 was EUR 54,158 thousand (EUR 79,093 thousand).

During the financial year 2023 there were no impairment losses in shares in

completed housing companies or to plot assets. During the financial year 2022

impairments to plot assets in Russia totalled EUR 37.1 million and in Estonia EUR 6.5

million.


		82

Inventories, right-of-use assets


EUR 1,000	2023	2022
Carrying amount, 1 Jan	75,119	72,723
Increases including the effect of index changes	16,608	8,901
Decreases	-1,149	-4,236
Period depreciations	-2,091	-2,268
Carrying amount, 31 Dec	88,488	75,119

21 Loan receivables from associated companies

and joint ventures


EUR 1,000	2023	2022
Long term loan receivables from associated companies 1 Jan	0	40,490
Increases	0	0
Decreases	0	0
Writedown	0	-40,490
Writedown, level 3 1)	0	0
Foreign exchange difference	0	0
Total	0	0

Long term loan receivables from joint ventures 1 Jan	0	0
Increases	0	0
Decreases	0	0
Total	0	0

Short term loan receivables from joint ventures 1 Jan	0	0
Increases	274	0
Decreases	0	0
Total	274	0

1Loan receivables fromRussian associated companies and joint ventures have been valuated at zero in 2022.

In 2023, a short-term loan receivable from joint ventures is a receivable from Runoratsun

Pysäköinti.

22 Accounts receivables and other receivables


	Carrying amount	Carrying amount
EUR 1,000	2023	2022
Accounts receivables	51,675	28,675
Loan receivables	6	7
Gross amount due from customers related to construction contracts	14,784	10,929
Accrued income and prepaid expenses	13,999	46,810
Other receivables	1,520	1,833
Total	81,984	88,254

Interest bearing receivables	6	7
Non-interest bearing receivables	81,978	88,247
Total	81,984	88,254

Carrying amount does not substantially differ from fair value. In 2023, the Group’s

accounts receivables were on average EUR 40 million. The accounts receivables are non-

interest bearing and they are normally about 21 days of age.

More information about credit risks in note 29.

23 Cash and cash equivalents


EUR 1,000	2023	2022
Cash and cash equivalents	39,595	45,309
Total	39,595	45,309

24 Assets held for sale

SRV Group had no assets held for sale in year-end 2023 or 2022.


		83

25 Equity


EUR 1,000	Number of shares
1 Jan. 2022	262,154,780
Purchase of treasury shares	-1,112,480
The directed share issue	68,220,000
Rights issue	348,056,400
Total	677,318,700
After reverse split 4 July 2022	16,932,965
Transfer of treasury shares	4,845
31 December 2022	16,937,810

1 Jan. 2023	16,937,810
Purchase of treasury shares	-23,182
The directed share issue	0
Rights issue	0
Total	16,914,628
Transfer of treasury shares	23,182
31 December 2023	16,937,810

Shares and share capital

On 31 December 2023, the total number of SRV Group Plc's shares outstanding was

16,937,810 and the share capital amounted to EUR 3,062,520 . The share has no nominal

value and the total number of shares is 16,982,343 . At the end of December there were

44,533 own shares in the Group´s possession.

Rights issue

SRV executed rights issue during the financial year 2022 resulting in 348,056,400 new

shares. The Offer Shares were registered with the Trade Register maintained by the

Finnish Patent and Registration Office on 28 June 2022. SRV executed a reverse share

split on 4 July 2022 to the effect that each forty shares of the company was merged into

one share. Share-specific figures of 2022 have been adjusted accordingly.

Invested free equity fund

Invested free equity fund consists of the net proceeds from the Offering of SRV Group Plc

reduced by the cost related to the share issue as well as received and cancelled SRV

shares.

Translation difference

Translation difference comprises the differences of the translation of financial statements

of the foreign subsidiaries to the functional currency of the parent company.

Hybrid bond

In June 2022, the terms and conditions of the EUR 45.0 million hybrid bonds the company

issued on 22 March 2016 (with a principal of EUR 11.8 million) and the EUR 58.4 million

hybrid bonds the company issued on 23 May 2019 (with a principal of EUR 3.6 million) were

amended in a written procedure so that 55 per cent of the principal of the notes was

written down and the remainder was converted into shares in a directed share issue with a

subscription price of EUR 0.10 per share. 98.3 per cent of the outstanding principal of the

hybrid bonds issued on 22 March 2016 and 100 per cent of the outstanding principal of the

hybrid bonds issued on 23 May 2019 were used to subscribe for shares in

the directed issue. The unconverted nominal value of the hybrid bonds was written down

entirely.

In June 2022, the company’s EUR 100 million senior unsecured callable fixed-rate

notes (of which EUR 21.1 million was outstanding on 31 Dec. 2022) and EUR 75 million

senior unsecured callable fixed-rate notes (of which EUR 36.0 million was outstanding on

31 Dec. 2023) were converted into hybrid and convertible bonds by means of a written

procedure. Conversion into convertible bonds was executed by amending the terms and

conditions of the notes with the inclusion of a special right to convert the notes into shares

pursuant to the Companies Act if the company does not redeem them before 30 June

2026.

Hybrid bonds have an annual coupon rate of 4.875 per cent.The hybrid bond has no

maturity dates at which the holder of the loan can demand repayment of the loan. The

hybrid bond is unsecured and subordinated to other debt instruments. The hybrid bonds

do not confer shareholders’ rights to bondholders.

The hybrid bonds are recorded as equity in the balance sheet at the assumed market

value (60% of nominal value) at the time of recognition, and their value in equity on the

balance sheet as of December 31, 2023, was EUR 33.5 million.


		84

26 Provisions

2023


EUR 1,000	Warranty provisions	10-year warranty	Other provisions for construction contracts	Other provisions	Total
1 Jan.	11,034	9,074	20	0	20,128
Currency exchange differences	0	0	0	0	0
Increase in provisions	3,648	76	0	0	3,724
Provisions used	-3,655	-1,022	-20	0	-4,697
Reversals of unused provisions	0	0	0	0	0
31 Dec.	11,027	8,128	0	0	19,155

Non-current	4,666	5,689	—	—	10,355
Current	6,361	2,438	—	—	8,800
Total	11,027	8,128	—	—	19,154

2022


EUR 1,000	Warranty provisions	10-year warranty	Other provisions for construction contracts	Other provisions	Total
1 Jan.	14,971	9,311	25	0	24,307
Currency exchange differences	28	0	0	0	28
Increase in provisions	5,560	225	17	0	5,802
Provisions used	-9,524	-463	-21	0	-10,008
Reversals of unused provisions	0	0	0	0	0
31 Dec.	11,034	9,073	21	0	20,128

Non-current	5,824	6,352	20	—	12,196
Current	5,210	2,722	—	—	7,932
Total	11,034	9,074	20	—	20,127

Other provisions for construction contracts include a warranty for potential disputes and

other provisions for construction contracts. The level of the construction industry’s 10-

year warranty provision is based on index-adjusted historical information or the estimated

total costs of certain individual projects


		85

27 Interest-bearing liabilities

Interest-bearing liabilities, excluding lease liabilities


	Carrying amount	Fair value	Carrying amount	Fair value
EUR 1,000	2023	2023	2022	2022
Non-current
Loans from financial institutions	0	0	1,845	1,845
Bonds	0	0	0	0
Housing corporation loans	17,128	17,128	7,401	7,401
Other debt	14,259	14,259	14,583	14,583
Total	31,386	31,386	23,828	23,828


Current
Loans from financial institutions	1,845	1,845	10,000	10,000
Commercial papers	0	0	0	0
Bonds	0	0	0	0
Housing corporation loans	56	56	0	0
Total	1,902	1,902	10,000	10,000

Carrying amounts do not differ substantially from Fair value.

Interest-bearing lease liabilities

2023


EUR 1,000	Land-Areas	Buildings and structures	Machinery and equipment	Others	Total
Non-current	96,655	5,523	940	0	103,118
Current	639	1,260	705	0	2,604
Total	97,294	6,783	1,645	0	105,722

Interest-bearing lease liabilities

2022


EUR 1,000	Land-Areas	Buildings and structures	Machinery and equipment	Others	Total
Non-current	81,903	6,549	1,093	0	89,545
Current	488	1,228	726	0	2,442
Total	82,391	7,777	1,819	0	91,987

In addition to the above-mentioned lease liabilities, the Group has committed to enter into

a lease agreement for the two Keilaniemi plots when the City of Espoo transfers the

management of the plots to new buyers and building permits have been granted. By

agreement, the transfer of management took place for the first plot on 31 December 2022,

and for the second plot it will take place at the earliest at the end of November, 2024. The

lease liability for the plots will be recognised in the consolidated balance sheet in

accordance with IFRS 16 Leases when the lease agreement has been signed when starting

the construction. Before the transfer of management, the company will pay compensation

to a plot fund for use of capital. Payment of the transaction price of the plots will be phased

to years 2023–2026. Additional information on changes to interest bearing liabilities can

be found in 29 Financial risk management.


		86

28 Other liabilities


	Carrying amount	Carrying amount
EUR 1,000	2023	2022
Non-current
Derivative liabilities	0	0
Subordinated loan	0	0
Other liabilities	3,098	6,252
Total	3,098	6,252

Current
Accounts payables	38,524	43,026
Advance payments related to construction contracts	35,568	46,223
Other advance payments	0	15
Other current liabilities	34,412	19,923
Accrued expenses and prepaid income	29,910	38,835
Total	138,415	148,022

Accrued expenses and prepaid income
Wages and salaries and related expenses	11,458	11,753
Interest and other financial liabilities	175	247
Periodisations of project expenses	17,862	23,917
Other	415	2,919
Total	29,910	38,835

29 Financial risk management

SRV Group is exposed to a number of financial risks in its business operations. The most

significant financial risks are related to interest rate-, liquidity- and credit risk. The

management of the Group’s financial risks is centralised in the Group’s finance

department. The management of financial risks is implemented in accordance with the

financial policies approved by the Board of Directors. The financial policy is reviewed

annually and updated as required to reflect changes in the marketplace. The objective of

the Group’s financial risk management is to reduce the uncertainty that changes in the

financial markets cause for the Group’s result and financial position.

Interest-rate Risks

The cash flows and fair values of the Group’s interest-bearing debts and receivables are

susceptible to changes in interest rates. Interest rate risk is composed primarily of the

short- and long-term loans connected with the financing of business operations. The

Group’s financing is divided into general financing and project-specific financing.

Construction period financing is typically either refinanced, transferred to the buyer or

paid off at the time of completion. The Group can assume long-term debt at both variable

and fixed interest rates. The weighted average interest rate of the entire loan portfolio at

31 December 2023 was 6.6% (2022: 5.6%) and including interest rate derivatives -8.2 %

(2022: 6.6 %). Euribor is primarily the reference rate of variable interest loans.

Interest rate risk is monitored and measured from the perspective of the income

statement by means of gap analysis. Interest rate risk is managed by adjusting the ratio of

variable and fixed interest debt in the loan portfolio. There were no fixed-interest loans at

the closing date (2022: no fixed-interest loans). Interest rate risk is also managed by

interest period selection and by derivatives. SRV Group Plc entered into two interest rate

swap contracts totalling EUR 100 million in 2015. Swapping of interest started in July 2016

and both contracts mature in 2025. Interest rate derivatives are used to hedge against

changes in market interest rates, and changes in the fair value of interest rate derivatives

are recognised in financial income and expenses for the financial period during which they

occur. The fair values for derivatives correspond to the prices that the Group would be

required to pay or would receive if it were to exit the derivative contracts. Counterparty

price quotations are used to determine the fair value of interest rate derivatives. These

quotations are based on prevailing market circumstances and generally accepted pricing

models. Hedge accounting has not been applied to the interest rate derivatives used. The

effect on profit and loss of the fair valuation of interest rate derivatives would have been

EUR 1.2 million (2022: EUR 2.4 million) in the event of a one percentage point increase in

interest rates. If interest rates decrease by one percentage point, the effect on profit and

loss would have been EUR -1.2 million (2022: EUR -2.5 million). A general change in the

level of interest rates also has a direct impact on the investment decisions of the Group’s

customers and thereby cash flows from Group operating activities.

The accompanying sensitivity analysis under IFRS 7 contains variable interest rate

financial liabilities and receivables in which there is an interest rate fixing during the next 12

months, in accordance with the closing balance sheet. The sensitivity analysis also

includes interest rate swap contracts


		87


2023						2022
EUR 1,000	Interest risk position	Average interest rate	Average maturity, months	Interest rate sensitivity, EUR 1) Financial expenses and income		Interest risk position	Interest rate sensitivity, million EUR
				-1%	+1%		-1%	+1%
Debt, floating rate	-19,029	6.10%	4	90	-90	-19,246	132	-184
Derivatives	100,000	4.07%	3	-729	729	100,000	-729	729
Fair value change of derivatives	100,000			-1,202	1,175	100,000	-2,468	2,395
Total				-1,841	1,814		-3,066	2,940

1 Effect of one percentage point in market interest rates on the Group's interest expenses and income during the next 12 months. All other variables assumed unchanged


		88

Currency Risks

The currency risk has decreased substantially in 2023 due to the divestment of Russia Oy

and its Russian subsidiaries. On the closing date, SRV Group has only euro-denominated

subsidiaries. On the closing date, the Group had no foreign exchange option contracts for

hedging against currency risk (2022: no foreign exchange option contract).

Sensitivity to currency fluctuation

The currency risk has decreased substantially in 2022 due to the write-downs and in 2023

due to divestment of the Russian assets.The change in translation differences that

impacted the comprehensive result and shareholders’ equity totalled EUR 10.0 (-4.3)

million, of which mainly consisted of translation differences that were recognised in

income in conjunction with the divestment of SRV Russia Oy.

The currency exchange rate gains with no cash flow impact amounted to EUR -2.6 (7.3)

million in financial income and expenses which are due primarily to the strengthening of

rouble exchange rate before divestment in August 2023.

Liquidity and Refinancing risk

Liquidity and refinancing risk may have an impact on the Group’s result, cash flow and the

implementation of developer contracting projects if the Group is unable to secure

sufficient financing for its operations. Group management monitors the level of financing

continuously and takes the necessary measures to ensure sufficient financing.

The Group’s main sources of financing are project-specific loans and a committed

revolving credit facility. Financing for developer contracting projects is secured by the

sales process, project loans and use of the company’s general financial reserves. As a rule,

the Group mainly starts projects whose financing has been secured. When seen necessary

, the sale of individual receivables may be used to manage liquidity within the scope of the

available limit. Receivables are transferred with risks and rewards and are not subject to

repurchase obligations and are therefore derecognised in full. The arrangement carries

the risk that the counterparty to the arrangement may terminate the receivable

arrangement unilaterally, whereby receivables can no longer be sold

On 26 April, with the syndicate banks, the company agreed on and implemented the

replacement of the earlier EUR 30 million committed revolving credit facility, EUR 40

million committed project financing facility and EUR 63 million non-committed project

financing facility with a new EUR 40 million committed revolving credit facility. The earlier

EUR 40 million committed project financing facility and EUR 63 million non-committed

project financing facility are being discontinued, and going forward project financing will be

negotiated bilaterally with banks in accordance with normal market practices.

The interest margin of the new revolving credit facility is tied to three of SRV’s key

sustainability objectives: carbon dioxide emissions from the operations of the company

and its partner network and the lost time injury frequency (LTIF). The new committed

revolving credit facility is valid until April 2025 and includes a one-year extension option.

EUR 10 million of the company's new EUR 40 million committed revolving credit facility

had been allocated as a committed overdraft facility by the end of the review period, and it

remained unused at the end of the period. Of the remaining EUR 30 million, EUR 1 million

was in use and EUR 29.0 million was unused.

Financial covenants of SRV’s financing agreements are equity ratio, gearing, minimum

operating margin, minimum liquidity, and certain other restrictions. 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 deviations from traditional

covenant calculation methods. Minimum liquidity consists of cash and deposits held in

syndicated banks, from which account payables that are overdue by more than 10 days

have been deducted, unused part of committed revolving credit facility, committed

overdraft and committed project financing.. The covenant levels of these financing

agreements are determined according to each loan agreement and on the basis of the

accounting principles specified in the agreements, and there are cross-default terms in the

agreements.

Of the covenants, equity ratio and gearing were reported quarterly and half-yearly

during the financial year. Minimum liquidity is reported according to the situation on the

last day of each month. In the event of a violation of the regularly reported covenants, the

creditor has the right to demand immediate repayment of the debts. The covenants and

their levels at the closing date are presented in the capital structure management section

of Note 29.

The maturity distribution below presents the contractual payment of the Group’s

financial liabilities at the closing date. Payments include interest payments, repayments of

principal and other contractual payments. The maturity table does not show the estimated

future payments of the hybrid bonds on equity terms presented in equity. Further


		89

information on the hybrid bonds is given in Note 25 Equity and in the accounting principles

of the financial statements.At the end of the reporting period, the Group’s financing

reserves totalled EUR 78,6 million (2022: EUR 65.9 million) and consisted of EUR 0.0

million (2022: EUR 0,6 million) in unwithdrawn project loans, an undrawn committed

revolving credit facility EUR 29.0 million (2022: EUR 20.0 million), unused committed

overdraft limit EUR million 10,0 (2022: EUR 0,0 million) and EUR 39,6 million (2022: EUR

45.3 million) in cash and cash equivalents. At the balance sheet date, SRV's remaining

purchase price receivables for developer-contracted housing and commercial premises

under construction in Finland amounted to EUR 0.0 million (2022: EUR 0.35 million), with

the amount of financing for developer-contracted projects not withdrawn amounting to

EUR 0,0 million (2022: EUR 7.9million). SRV estimates that EUR 0,0 million (2022: EUR

7,8million) will be used for the completion of developer-contracted projects. The sources

of financing are described in table format under the maturity table.


		90

Financial liabilities, excluding lease liabilities


2023			Maturity
EUR 1,000	Carrying amount	Contractual liability1)	2024	2025	2026	2027	later
Bonds	—	—	—	—	—	—	—
Loans from financial institutions	1,845	3,037	2,777	260	—	—	—
Housing loans 2)	17,184	30,486	833	1,388	1,371	1,657	25,237
Commercial Papers	—	—	—	—	—	—	—
Other liabilities	14,259	14,259	—	—	—	—	14,259
Other non-interest bearing liabilities	9,062	9,062	5,963	3,098	—	—	—
Derivative liabilities	3,512	—	—	—	—	—	—
Accounts payables	38,524	38,524	38,524	—	—	—	—

Total	84,386	95,368	48,097	4,746	1,371	1,657	39,496

Financial liabilities, lease liabilities


2023			Maturity
EUR 1,000	Carrying amount	Contractual liability1)	2024	2025	2026	2027	later
Lease liabilities	105,722	257	7,910	7,558	6,954	6,917	227,655

1 Includes all contractual payments, e.g. interest and commitment fees.

2 The liability for payment of principal and interest of housing corporation loans is transferred to the buyer at the time of sale. Loan and interest payment liability is noted for the full contractual amount until the completion of the property and

thereafter in proportion of the sales rate.


		91

Financial liabilities, excluding lease liabilities


2022			Maturity
EUR 1,000	Carrying amount	Contractual liability1)	2023	2024	2025	2026	later
Bonds	—	—	—	—	—	—	—
Loans from financial institutions	11,845	13,714	11,392	2,322	—	—	—
Housing loans 2)	7,401	11,961	256	333	371	407	10,593
Commercial Papers	—	—	—	—	—	—	—
Other liabilities	14,583	14,583	—	—	—	—	14,583
Other non-interest bearing liabilities	9,740	9,740	3,488	2,475	3,098	—	679
Derivative liabilities	—	—	—	—	—	—	—
Accounts payables	43,026	43,026	43,026	—	—	—	—

Total	86,595	93,024	58,162	5,130	3,469	407	25,855

Financial liabilities, lease liabilities


2022			Maturity
EUR 1,000	Carrying amount	Contractual liability1)	2023	2024	2025	2026	later
Lease liabilities	91,986	220,851	7,033	6,773	6,103	6,008	194,934

1 Includes all contractual payments, e.g. interest and commitment fees

thereafter in proportion of the sales rate.


		92

Liquidity reserves


EUR 1,000	31.12.2023	31.12.2022
Committed credit facility	29,011	20,000
Committed overdraft facility	10,000	0
Undrawn housing loans and loans from financial institutions	0	563
Cash and cash equivalents	39,595	45,309
Total	78,606	65,871

Credit risk

he Group is exposed to credit risk related to accounts receivable, amounts due from long-

term project customers, associated company and joint venture loan receivables, cash

investments, and receivables based on derivative transactions. Credit risk is managed in

accordance with credit policy principles. Project customers are mainly large, well-known

and financially sound companies. If no information is available on the customer’s solvency,

a check is made of general trade and credit information records, and collateral requested,

if necessary. With regard to international business projects, more detailed customer

background checks are made if the customer is not already known. The creditworthiness

of home buyers is not checked, but the ownership of an apartment is not transferred to the

customer until the purchase price has been paid in full. In transactions made for unfinished

apartments, the buyer has the option under the Housing Transactions Act to cancel the

transaction prior to the handover of the apartment, but damages are payable for the

cancellation. Similarly, a construction company may cancel a transaction if the buyer fails

to make the agreed payments.

Deposits and derivatives

The Group does not have any significant investment activities. Investments relate to daily

cash management and are mainly short-term bank deposits with the Group’s main banks.

The Group Treasury unit is responsible for managing investment and derivative

instrument counterparty risks in accordance with the Group financing policy approved by

the Board of Directors. Derivatives are made for hedging purposes and the balance sheet

receivables based on them are small. Agreements made with counterparties to derivative

contracts are based on the ISDA Convention. Under the terms and conditions of

arrangements, the net asset or liability position of an individual counterparty in the same

currency is considered should certain events (such as payment default) occur to be a

liability and all arrangements related to it are terminated. As SRV does not, at the closing

date, have a legally enforceable right of set-off, these amounts have not been

deducted from the balance sheet. The credit risk associated with both deposits and

derivatives is considered to be low.

Accounts receivable and amounts due based on customer projects

Business units are responsible for the credit risk related to amounts due and accounts

receivable based on customer projects, in accordance with the Group credit policy. Group

credit policy defines the requirements for the credit decision process, terms of sale, and

debt collection. The Group’s commercial counterparties are mainly listed companies or

major real estate or institutional investment companies. In the housing business, the

counterparties are mainly private individuals. In apartment sales, the customer gains

control of the apartment when all of the purchase price items have been paid. The same

Group credit policy principles are applied to tenant selection as in commercial projects.

The Group applies the simplified approach for the recognition of expected credit losses,

according to which lifetime expected losses are recognised for all accounts receivable and

contract-based assets. Overall, the company has not had major material losses on these items due

to the business model and customer profile mentioned above. However, one business premises

project under construction in Finland involves high credit loss risks related to trade receivables: In

the first quarter of 2022, SRV suspended the construction of the Torihotelli contract in Oulu due to

the payment difficulties of the client. On 27 June 2022, SRV filed an application to declare the client

bankrupt. As a result, the District Court of Oulu declared the company developing the hotel,

Kiinteistö Oy Oulun Torihotelli, bankrupt on 26 August 2022. The assets of the bankruptcy estate

are being liquidated. Receivables in the Torihotelli contract involve credit loss risks. At the end of

December, SRV had about EUR 16.0 million in receivables due from Kiinteistö Oy Oulun Torihotelli,

secured by a mortgage on the property under construction and pledges on certain other assets. The

company has also initiated steps to liquidate its non-property collateral

Competition for new orders in the construction industry is intense, which may affect

the volume and profitability of SRV’s new order backlog. Contracts concerning

construction have significant value. The terms and conditions of an agreement require the

parties to achieve the agreed upon targets within a specified timetable and to adhere to

the agreed upon operating practices. In particular, execution of additional and alteration

work may involve financial risks. Contract receivables may involve additional and

alteration work involving customer complaints or disputes concerning the payment

obligations of the customer. If an agreement cannot be reached on payment obligations

during the final financial review, the company may have to enter into legal proceedings

against the customer. The outcomes of legal proceedings involve uncertainties. It is also

impossible to assess precisely the time required by court procedures in dispute cases. For

additional and alteration work in contracts recognised as revenue over time, only the


		93

portion likely to be invoiced is recognised, in accordance with IFRS 15 Revenue from

Contracts with Customers. Items subject to a significant risk of impairment and which the

company does not expect to receive are not taken into account in the contract invoicing

forecast

Overdue accounts receivables


EUR 1,000	2023	2022
Undue accounts receivables	48,380	26,096
1-30 days past due	2,692	1,313
31-60 days past due	0	280
61-90 days past due	0	25
91-180 days past due	124	10
181-360 day past due	104	246
Over 361 days past due	376	1,246
Total	51,676	29,215

There were no past due receivables in other group financial assets. Credit loss provisions

are not included in accounts receivables, because SRV Group does not have any

substantial credit losses.

Loan receivables from associated companies and joint ventures

Loan receivables from associated companies and joint ventures are tested for impairment

using a three-stage model. In the financial year 2022, SRV Group has written off all the

loan receivables from Russian associated companies and joint venture

1. Loans receivable from associated companies and joint ventures are assessed for

impairment using a three-stage model. Group management first examines the expected

cash flows of loan receivables from associated companies and joint ventures as a whole

together with associated company investments and regularly assesses whether the

credit risk of the receivables has increased significantly since initial recognition. If the

credit risk of a receivable is considered to be low or its credit risk has not increased

significantly since initial recognition, the receivable is included in stage 1 and the

impairment is calculated based on an assessment of the probability of credit losses

occurring within 12 months.

2. If it is considered that the credit risk associated with receivables has increased

significantly, the receivables are transferred to stage 2, in which case the probability of

the loss associated with them is assessed over their lifetime, and on this basis the

estimated future cash flows are compared with contractual cash flows. In that case, the

expected credit losses on the loan receivable over its lifetime are recognised. .

3. If loan receivables are found to be impaired due to credit risk, they are transferred to

stage 3.

Long- and short-term loan receivables from associated companies

and joint ventures


EUR 1,000	Stage 1	Stage 2	Stage 3	Total
31.12.2023
Long term loan receivables	0	0	0	0
Short term loan receivables	274	0	0	274

31.12.2022
Long term loan receivables	0	0	0	0
Short term loan receivables	0	0	0	0

Fair value hierarchy of financial assets and liabilities

Financial assets at fair value through profit or loss

On 31 December 2023, the Group had interest rate swaps recognised at fair value through

profit or loss.

Derivative financial instruments at fair value through profit or loss


EUR 1,000	Stage 1	Stage 2	Stage 3	Total
31.12.2023
Derivative financial assets	0	3,512	0	3,512
Derivative financial liabilities	0	0	0	0

31.12.2022
Derivative financial assets	0	4,075	0	4,075
Derivative financial liabilities	0	0	0	0


		94

Other financial assets at fair value through profit or loss


EUR 1,000	Stage 1	Stage 2	Stage 3	Total
31.12.2023
Unlisted shares	0	667	8,478	9,145
Long-term receivables	0	0	0	0

31.12.2022
Unlisted shares	0	658	8,427	9,085
Long-term receivables	0	0	0	0

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 on amortised cost, quotations

provided by brokers and market valuation

reports.

Unlisted shares and investments consist mainly of shares purchased for leisure

facilities used by SRV’s employees (level 2) as well as shares in investments in and related

to real estate funds and projects (level 3).Assets recognised in level 3 consist mainly of

investment in Tampere Deck and Arena EUR 7.0 million (2022: EUR 7.0 million), in addition

to including investments in and related to real estate funds and projects

The table below presents movements in level 3 instruments for

2023


EUR 1,000	Unquoted shares and holdings
Opening balance at 1.1.2023	8,427
Increases	33
Decreases	0
Gains and losses recognised in profit or loss	18
Closing balance, 31.12.2023	8,478

The table below presents movements in level 3 instruments for

2022


EUR 1,000	Unquoted shares and holdings
Opening balance at 1.1.2022	24,100
Increases
Decreases	-3
Gains and losses recognised in profit or loss	-15,670
Closing balance, 31.12.2022	8,427

Capital risk management

Through effective capital structure management, the Group ensures that it is able to

support to its businesses and can grow shareholder value for investors. The Group does

not have a public credit rating issued by a credit rating agency. The capital structure of the

Group is reviewed by the Board of Directors of SRV on a regular basis. To maintain the

capital structure, the Group can balance the payment of dividends as well as issue new

shares or hybrid bonds. Additionally, the Group can adjust its business operations and use

of capital to maintain the capital structure. The Group monitors its capital on the basis of

consolidated equity ratio and gearing ratio. Total equity consists of equity attributable to

owners of the parent company and to non-controlling interests as well as a hybrid bond.

The Group’s loans are subject to covenants that are described in the section Management

of liquidity and refinancing risks” (see above). These covenants are calculated in

accordance with the terms and conditions of each loan agreement, and are based on

either FAS or IFRS figures. The table below describes the key covenants that must

be reported for the loan agreements that were in use by the Group at the end of the

financial period 2023, and their levels on 31 December 2023 and 31 December 2022. The

covenant levels for all loan agreements were met on 31 December 2023.


Loan agreement covenants	Covenant value	12/31/2023	12/31/2022
Percentage of completion equity ratio, RCF %1	>30 per cent	48%	48%
Minimum liquidity	≤70 per cent	-4%	-8%
Gearing %1	>EUR 25 million at the period end	74.1	-
EBIDTA 2)3)	>EUR 3-15 million, depending on testing period	9.2	24.1

1 Excluding IFRS 16 impact


		95

30 Operating leases, commitments and contingent

liabilities


EUR 1,000	2023	2022
Collateral given for own liabilities
Real-estate mortgages given	19,029	9,246

Other commitments
Investment commitments given	19,586	19,586
Landarea commitments	242	7,973

The Group has guaranteed obligations of its subsidiaries. The total amount of these

guarantees was EUR 210.4 million (EUR 223.1 million)

The cost of rental agreements not included in lease liabilities


EUR 1,000	2023	2022
Cost related to short-term leases	-20,193	-22,470
The cost of low-value assets	-23	-41
Cost related to variable leases that are not includes in lease liabilities	-730	-775
Total	-20,946	-23,286

The cost of rental agreements not included in lease liabilities contains mainly costs related

to site equipments (short-term lease)

Cash flow of lease liabilities


EUR 1,000	2023	2022
Total	-8,151	-7,034

Cash flow of lease liabilities is presented under the item ‘Interest paid and other expenses

from financial costs’, and the items ‘proceeds from loans and repayment of lease liabilities'

under cash flow from financing activities, instead of the item ‘cash paid to suppliers and

employees’ under cash flow from operating activities.

31 Fair and nominal values of derivative

instruments


EUR 1,000	2023		2022
Fair values of derivative instruments1	Positive	Negative	Positive	Negative
Foreign exchange forward contracts and options	0	0	0	0
Interest rate swap	3,512	0	4,075	0
Total	3,512	0	4,075	0


EUR 1,000
Nominal values of derivative instruments	2023	2022
Foreign exchange forward contracts and options	0	0
Interest rate swap	100,000	100,000
Total	100,000	100,000

The fair values of derivative instruments are based on the price quotations of the counterparties.


		96

32 Reconciliation of debts reported in financing

activities


	Long term		Short term
EUR 1,000	Interest- bearing liabilities	Hybrid bond	Interest- bearing liabilities	Total
Debt 1.1.2022	215,514	15,360	22,464	253,338
Proceeds from loans	1,000	0	0	1,000
Repayment of loans	-21,553	0	-10,192	-31,745
Transfer long term/short term debts	-170	0	170	0
Change in Lease Liabilities	2,972	0	0	2,972
Proceeds from Hybrid bond	0	0	0	0
Repayment of hybrid bond	0	0	0	0
Change in housing corporation loans	-10,737	0	0	-10,737
Net change in short-term loans	0	0	0	0
Other interest bearing debts	0	0	0	0

Change in debt, non cash:				0
Efective interest	0	0	0	0
Other non-cash changes	-73,653	18,169	0	-55,484
Debt 31.12.2022	113,373	33,529	12,442	159,344
Proceeds from loans	0	0	0	0
Repayment of loans	0	0	-10,000	-10,000
Transfer long term/short term debts	-1,845	0	1,845	0
New Lease Liabilities and redefinition of Lease Liabilities	17,512	0	106	17,618
Liabilities of sold developer-contracted apartments	-259	0	0	-259
Repayments of Lease Liabilities	-1,076	0	0	-1,076
Interests of Lease Liabilities	-2,581	0	0	-2,581
Proceeds from Hybrid bond	0	0	0	0
Repayment of hybrid bond	0	0	0	0
Change in housing corporation loans	9,728	0	56	9,784
Net change in short-term loans	0	0	0	0
Other interest bearing debts	-347	0	0	-347

Change in debt, non cash:	0	0	0	0
Efective interest	0	0	0	0
Other non-cash changes	0	0	0	0
Debt 31.12.2023	134,505	33,529	4,449	172,483

33 Subsidiaries


Name	Domicile	Group's holding, %	Group's voting right, %
Shares in subsidiaries
SRV Rakennus Oy	Espoo	100%	100%
SRV Ream Oy	Helsinki	100%	100%
SRV Asumisen Palvelut Oy	Espoo	100%	100%
SRV Joensuu Oy	Joensuu	100%	100%
SRV Infra Oy	Kerava	100%	100%
SRV Voima Oy	Espoo	100%	100%
SRV Ehituse AS	Tallinna	100%	100%
International RE Oy	Espoo	100%	100%
SRV Russia Oy*	Espoo	—%	—%

The list does not include project companies.

*SRV Yhtiöt Ltd sold the share capital of its subsidiary SRV Russia Oy in August, 2023.

The subsidiary has been consolidated until June 2023.


		97

34 Related party transactions

2023


EUR 1,000	Salaries and compensations	Selling of goods and services	Purchase of goods and services	Interest income	Receivables	Liabilities
Management and the Board of Directors	3,313	0	0	0		0
Joint ventures	0	0	0	0		0
Associated companies	0	613	0	0	274	0
Other related parties	0	0	0	0		0
Total	3,313	613	0	0	274	0

2022


EUR 1,000	Salaries and compensations	Selling of goods and services	Purchase of goods and services	Interest income	Receivables	Liabilities
Management and the Board of Directors	3,410	0	0	0	0	0
Joint ventures	0	1,356	0	0	0	0
Associated companies	0	1,469	0	0	0	0
Other related parties	0		0	0	0	0
Total	3,410	2,824	0	0	0	0

The related parties of the Group include the parent company, subsidiaries and associated

companies as well as joint ventures. The related parties also include the Board of Directors

and the Corporate Executive Team.Other related parties include transactions carried out

with other companies under the control of the Group's management or with companies

under the control of minority shareholders. Goods and services are sold to related parties

at market price. Subsidiaries included in related parties are listed above in note 33

Subsidiaries. Subsidiaries are included in the consolidated financial statements and

therefore the transactions between Group companies are not included in note 34 Related

party transactions.

Itemisation of management salaries and employment-based

benefits


EUR 1,000	2023	2022
Management salaries and other short-term employment-based benefits	3206	2975
Post-employment benefits, statutory pensions	770	710
Post-employment benefits, voluntary additional pensions	0	0
Benefits paid upon termination	107	0
Total	4083	3685

The statutory occupational pension insurance of the company's employees is handled

through Ilmarinen. Pension payments are made on the basis of the statutory pension

percentage, 23.85 (23.85%).

Salaries and compensations of CEO & Board of Directors


EUR 1,000	2023	2022
Sipola Saku, President and CEO	596	631
Nieminen Timo, Deputy CEO until 30 Nov 2022		224

Members of the Board
Yli-Kyyny Tomi, Chairman	88	115
Kokkila Timo, Vice Chairman	63	86
Leinonen Hannu	58	76
Leppänen Heikki, until 27 March 2023	7	72
Iisakka Heli	65	87
Ahokas Matti, from 27 March 2023	44	0
Members of the Board, total	325	435

In the 2023 financial year, the remuneration paid to members of the Board consisted of an

annual fee approved by the Annual General Meeting plus attendance-based meeting fees.

In accordance with the Annual General meetings’s resolution, the annual fee was paid in

both SRV shares and in cash, with about 40 per cent being paid in shares. The total

amount of the fees paid in cash and SRV shares is presented in the table above.

The CEO's period of notice is 6 months. If SRV Group Plc terminates the contract, the

period of notice is twelve months. The 2023 paid statutory occupational pension

insurance of the President and CEO and Deputy CEO was EUR 142 thousand (EUR 204

thousand in 2022).


		98

35 Events after the period end

On 3 January 2024, SRV announced that change negotiations would be launched with a

view to adjusting the company’s costs to the ongoing challenging market situation. On

February 13, 2024, SRV announced that it had completed the change negotiations.


		99

Parent company's financial statements, FAS

Income statement of the parent company


EUR 1,000	Note	2023	2022

Revenue	1	8,572	9,460
Other operating income		1	3
Personnel costs	3	-6,499	-6,155
Indirect personnel costs	3
Pension costs		-1,031	-1,043
Other indirect personnel costs		-208	-208
Depreciation and impairments	4	-267	-266
Other operating expenses	5	-7,058	-11,102
Operating profit/ loss		-6,489	-9,311
Financial income and expenses		7,875	-15,262
Impairments of assets and their reversal		3,947	-210,245
Profit before appropriations and taxes		5,333	-234,818
Appropriations	7	3,000	12,000
Income taxes	8	1,733	-782
Net profit for the financial year		10,065	-223,600

Balance sheet of the parent company


EUR 1,000	Liite	2023	2022
ASSETS
Non-current assets
Intangible assets	9	672	699
Property, plant and equipment	9	584	389
Investments
Shares in group companies	10	201,793	201,288
Other financial assets	10	1,003	1,906
Non-current assets, total		204,052	204,282
Current assets
Inventories		3	3
Long-term receivables	12	19,355	29,190
Short-term receivables	13	20,402	19,235
Cash and cash equivalents		38522	40488
Current assets, total		78,281	88,916
ASSETS, TOTAL		282,333	293,198

EQUITY AND LIABILITIES
Equity
Share capital	14	3,063	3,063
Invested free equity fund	14	310,219	310,219
Retained earnings	14	-231,054	-7,358
Net profit for the financial year	14	10,065	-223,600
Equity, total		92,293	82,324

Liabilities
Non-current liabilities	17.0	57,339	57,967
Current liabilities	18	132,701	152,907
Liabilities, total		190,040	210,874
EQUITY AND LIABILITIES, TOTAL		282,333	293,198


		100

Cash flow statement of the parent company


EUR 1,000	2023	2022
Cash flows from operating activities
Cash receipts from customers	8,497	9,440
Cash receipts from other operating income	4,047	40
Cash paid to suppliers and employees	-14,721	-50,220
Net cash before interests and taxes	-2,177	-40,740
Interests received and other financial income	1,090	99
Interests paid and other expenses from financial costs	-4,781	-8,091
Income taxes paid	-62	0
Cash flow from operating activities	-5,930	-48,732

Cash flow from investing activities
Purchase of tangible and intangible assets	-435	-104
Purchase of investments	-521	-95,195
Subsidiary shares sold	3,947	0
Loans granted for subsidiaries	-15,558	0
Loans granted for others	0	-30,211
Proceeds from repayments of subsidiary loans	22,994	1,618
Dividends received	500	0
Net cash used in investing activities	10,927	-123,892


EUR 1,000	2023	2022
Cash flow from financing activities
Net cash from share issue	0	34,806
Proceeds from loans	50	0
Repayment of loans	-10,000	-30,695
Group contributions received	12,000	0
Hybrid bond costs	0	-735
Hybrid bond intrests	-2,784	-2,029
Purchase of own shares	-96	-729
Change in group accounts	-6,132	154,354
Net cash from financing activities	-6,963	154,972

Net change in cash and cash equivalents	-1,966	-17,652

Cash and cash equivalents at the beginning of financial year	40,488	58,141
Effect of exchange rate changes in cash and cash equivalents	0	0
Cash and cash equivalents at the end of financial year	38,522	40,488


		101

Notes to parent company financial statements

Basic data

SRV Plc (reg 1707186-8) is a Finnish company founded in accordance with the Finnish law

and based in Espoo, Tarvonsalmenkatu 15, 02600 Espoo, Finland.

Parent company's financial statements and the comparable information

The parent company's financial statements are prepared in accordance with the

principles of Finnish accounting legislation. The financial statements are prepared for 12

months in the financial period January 1 – December 31, 2023.

ACCOUNTING PRINCIPLES

Non-Current assets

Tangible and intangible asset are recognised on the balance sheet at historical cost less

depreciation according to plan and impairment. Depreciation according to plan is

calculated as straight-line depreciation on the basis of the estimated economic life of

tangible and intangible assets. The depreciation periods are as follow:

Other intangible rights, 3–5 years

• Buildings and structures, 40–60 years

• Machinery and equipment, 3–10 years

• IT programmes, 3–5 years

Investments are stated at the original purchase cost less accumulated impairment if the

future income from the investment is probably going to be smaller compared to purchase

price. No depreciation is booked on land and water areas and intangible rights.

Development costs are recognised as annual costs during the year they arise.

Items denominated in foreign currency

Foreign currency business transactions are recognised at the exchange rate of

transaction date.

Pensions

The statutory pension security in the parent company is provided by an external pension

insurance company.

Taxes

The taxes in the income statement include the taxes for the financial year and adjustments

for previous periods. The defferred tax liability and receivable is calculated from the

temporary difference in bookkeeping versus taxation using the confirmed tax rate for the

coming fiscal years. Defferred tax receivables are recorded in the balance sheet and

detailed in the note 12.

The valuation of financial instruments

Financial instruments have been valued as of 1 January 2015 at fair value in accordance

with the Chapter 5 Section 2(a) of Finnish Accounting Act. The fair value of derivatives is

estimated based on the present value of future cash flows using market prices on the

closing date. The change in fair value of the interest rate swaps are recognised in

interest income and expenses in the income statement and the the cumulative change in

fair values is recognised in the accrued income and expenses at the balance sheet.

Hedging instruments are booked in the income statement in financial expenses and in

balance sheet in accrued expenses.Currency forward deal premium cost are recongnised

in financial expenses at transaction date.

Commitments

The parent company has given absolute guarantees on behalf of group companies. The

guarantees are related to construction projects.


		102

Notes to parent company financial statements

1 Revenue


EUR 1,000	2023	2022
Group services	8,485	9,388
Rent income	46	37
Other revenues	41	35
Total	8,572	9,460

2 Other income


EUR 1,000	2023	2022
Other income	1	3

3 Information concerning personnel


	2023	2022
Number of personnel on average
Office employees	69	65

4 Depreciation and impairments


EUR 1,000	2023	2022
Depreciation and impairments
Depreciation on Goodwill	216	221
Depreciation on Intangible assets	10	10
Depreciation on Buildings and Structures	41	35
Total	267	266

5 Other operating expenses


EUR 1,000	2023	2022
Rents	1,294	1,083
Voluntary indirect personnel expenses	526	593
Car and travel expenses	213	180
Entertainment and marketing expenses	755	1,066
Communication and IT expenses	1,837	2,072
Other external services	1,073	3,421
Operating and maintenance costs	214	162
Other fixed expenses	1,146	2,525
Total	7,058	11,102

Auditing fees included in other operating expense


EUR 1,000	2023	2022
Auditing	156	343
Statements	0	0
Tax advisory services	0	0
Other services	0	404
Total	156	747


		103

6 Financial income and expenses


EUR 1,000	2023	2022
Dividend income
From group companies	500	0
Total	500	0

Interest and other financial income
From group companies	329	3,083
From other	1,753	17,164
Fair value impact of interest rate swap contracts	0	9,978
Total	2,082	30,225

Interest expenses
Interest expenses to group companies	-2,982	-1,804
Interest expenses to others	-3,003	0
Total	-5,985	-8,839

Other financial expenses
To others
Fair value impact of interest rate swap contracts	-563	0
Impairment and reversing from non-current investments	3,947	-210,245
Reversing from credit loss	13,352	0
Other financial expenses	-1,511	-36,649
Total	15,225	-246,894

Financial income and expenses total	11,822	-225,507

7 Appropriations


EUR 1,000	2023	2022
Appropriations
Group contributions, received	3,000	12,000
Total	3,000	12,000

8 Income taxes


EUR 1,000	2023	2022
Income taxes
Change in deferred taxes	1,795	-782
Total	1,733	-782


		104

Notes to balance sheet

9 Changes in non-current assets

Intangible assets

2023


EUR 1,000	Intangible assets	Other intangible expenditures	Total
Historical cost 1. Jan	715	2,525	3,241
Increase	0	189	189
Historical cost 31. Dec	715	2,714	3,430

Accumulated depreciation and impairments, 1 Jan.	-465	-2,076	-2,541
Depreciation	0	-216	-216
Accumulated depreciation and impairments, 31 Dec.	-465	-2,292	-2,757

Carrying amount, 31 Dec.	250	422	672

2022


EUR 1,000	Intangible assets	Other intangible expenditures	Total
Historical cost 1. Jan	715	2,421	3,137
Increase	0	104	104
Historical cost 31. Dec	715	2,525	3,241

Accumulated depreciation and impairments, 1 Jan.	-465	-1,855	-2,321
Depreciation	0	-221	-221
Accumulated depreciation and impairments, 31 Dec.	-465	-2,076	-2,542

Carrying amount, 31 Dec.	250	449	699

Tangible assets 2023


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Total
Historical cost 1. Jan	41	437	2,029	2,507
Increase	0	0	246	246
Historical cost 31. Dec	41	437	2,275	2,754

Accumulated depreciation and impairments, 1 Jan.	0	-136	-1,983	-2,119
Depreciation	0	-10	-40	-50
Accumulated depreciation and impairments, 31 Dec.	0	-146	-2,023	-2,169

Carrying amount, 31 Dec.	41	291	252	584

2022


EUR 1,000	Land and water areas	Buildings and structures	Machinery and equipment	Total
Historical cost 1. Jan	41	437	2,029	2,507
Historical cost 31. Dec	41	437	2,029	2,507

Accumulated depreciation and impairments, 1 Jan.	0	-125	-1,948	-2,074
Depreciation	0	-10	-35	-45
Accumulated depreciation and impairments, 31 Dec.	0	-135	-1,983	-2,119

Carrying amount, 31 Dec.	41	302	46	388


		105

10 Investments

2023


EUR 1,000	Shares in subsidiaries	Other shares and holdings	Total
Carrying amount, 1 Jan.	201,286	1,907	203,193
Increases	507	17	524
Decreases	0	-920	-920
Carrying amountt, 31 Dec.	201,793	1,003	202,796

In 2022, SRV has written down the balance sheet values of subsidiaries SRV Russia Oy,

SRV Ehituse AS and SRV Voima Oy. SRV Yhtiöt Ltd. sold the share capital of its subsidiary

SRV Russia Oy in 2023. The divestment had a EUR 3,947 thousand impact because the

shares were valued as zero.

Other shares and holding consist mainly of shares of unlisted companies.

Decrease of EUR -920 thousand is a repayment of subordinated debt.

2022


EUR 1,000	Shares in subsidiaries	Other shares and holdings	Total
Carrying amount, 1 Jan.	316,301	1,944	318,245
Increases	95,230	15	95,245
Decreases	0	-53	-53
Impairments	-210,245	0	-210,245
Carrying amountt, 31 Dec.	201,286	1,907	203,193

11 Subsidiary companies


	Domicile	2023	2022
SRV Rakennus Oy	Espoo	100	100
SRV Infra Oy	Kerava	100	100
SRV Voima Oy	Espoo	100	100
SRV Russia Oy	Espoo	0	0
SRV Ehituse AS	Tallinna	100	100
SRV Joensuu Oy	Joensuu	100	100
SRV Ream Oy	Helsinki	100	100
International RE Oy	Espoo	100	100

The share capital of SRV Russia Oy has been sold in 2023.


		106

12 Long-term and short-term receivables


EUR 1,000	2023	2022
Long-term receivables

From Group companies
Loan receivables	2,700	9,400

From others
Other receivbales	1,200	5,200
Deferred tax receivable	15,455	14,590
Long-term recaivables Total	16,655	19,790

Short-term receivables

From Group companies
Accounts receivable	44	46
Loan receivables	12,858	0
Other receivables	0	3,076
Accrued receivables	3,003	12,000
Total	15,906	15,122

From others
Accounts receivable	6	6
Other receivables	0	9
Accrued receivables	4,490	4,099
Total	4,496	4,113

Short-term receivables, total	20,402	19,235

13 Accrued receivables


EUR 1,000	2023	2022
Accrued receivables:
Appropriations	3,000	12,000
Fair value of currency forward	3,512	4,075
Other	978	24
Total	7,490	16,099

14 Changes in equity


EUR 1,000	2023	2022
Share capital 1.1.	3,063	3,063
Share capital 31.12.	3,063	3,063

Share premium reserve 1.1.	310,219	268,592
Share Issue	0	41,628
Share premium reserve 31.12.	310,219	310,219

Retained earnings 1.1.	-230,958	-15,167
Transfer between items	0	8,394
Purchase/sell of own shares	-96	-585
Retained earnings 31.12.	-231,054	-7,358

Net profit for the financial year	10,065	-223,600

Unrestricted shareholders' equity total	89,231	79,261

Equity 31.12.	92,293	82,324

15 Calculation on the distributable equity


EUR 1,000	2023	2022
Share premium reserve	310,219	310,219
Retained earnings	-231,054	-7,358
Net profit for the financial year	10,065	-223,600
Total	89,231	79,261


		107

16 Provisions

The company did not have other provisions during the financial year or the comparison

period.

17 Long-term liabilities


EUR 1,000	2023	2022
To other companies
Hybrid Bond	57,109	57,109
Other loans	0	679
Total	57,109	57,787

To Group Companies
Other loans	230	180

Long-term liabilities total	57,339	57,967

18 Short-term liabilities


EUR 1,000	2023	2022
To Group Companies
Accounts payables	0	1
Accrued expenses	0	0
Other liabilities	128,714	137,913
Total	128,714	137,913

To other companies
Loans from financial institutions	0	10,000
Accounts payable	420	627
Accrued expenses	3,137	3,947
Other loans	431	420
Total	3,988	14,994

Short term liabilities total	132,701	152,907

19 Accrued liabilities


EUR 1,000	2023	2022
Accrued liabilities

Salaries including social costs	1,621	1,377
Interest and other financial expenses	1,516	1,588
Taxes	0	930
Other	38	52
Total	3,175	3,947

20 Derivative financial instruments

By means of interest rate swap contracts, protection is sought from market interest rate

changes during the financial year. Interest rate swap contracts mature during the financial

year 2025

Derivative financial instruments:


EUR 1,000	2023	2022
Derivative financial instruments:
Interest rate swaps
- Fair value positive	3,512	4,075
- Fair value negative	0	0
- Nominal value of underlying instruments	100,000	100,000

Fair value hierarchy of financial instruments:

Fair value hierarchy of financial instruments is described in note 29 in SRV Group notes.

21 Risk management

The Group has a systematic and structured approach to risk management across

business operations and processes. There are no separate or individual risk management

policies or procedures for the Parent company. Risk management is described in the

Report of the Board of Directors and in note 29 in Consolidated Financial Statement.


		108

22 Leasing and other rent agreements


EUR 1,000	2023	2022
Leasing liabilities
Payable in less than a year	118	64
Payable later	135	41
Total	254	105

Rental lease liabilities
Payable in less than a year	1,259	1,337
Payable later	21,193	7,180
Total	22,452	8,516

23 Other liabilities


EUR 1,000	2023	2022
Other liabilities
Guarantee obligations given on behalf of Group companies	210,372	233,074
Investment commitments	19,586	19,586
Corporate cards, amount in use	6

Other liabilities

The company has a credit facility of EUR 7,500 thousand which is unused at the period

end.

Through its subsidiary SRV Voima Oy, SRV has a holding in Voimaosakeyhtiö SF, the main

owner of Fennovoima, which had prepared the Hanhikivi 1 nuclear power plant project.

SRV has also made an investment commitment to Voimaosakeyhtiö SF concerning the

construction of the nuclear power plant. SRV has the same rights and oblig tions as other

Voimaosakeyhtiö SF shareholders. In May 2022, Fennovoima announced that it had

terminated the Hanhikivi 1 nuclear power plant delivery agreement made with Rosatom

and cancelled the construction permit application for the plant project. Due to the higher

project risk, SRV’s holding in Fennovoima was written down in its entirety in 2022. After

this write down, the investment commitment to Voimaosakeyhtiö SF amounts to a

maximum of EUR 18.7 million. That said, the realisation of this investment commitment

involves significant uncertainty due to the status of the Hanhikivi 1 project.

Credit facility