SRV Group Plc reported consolidated earnings results for the first quarter ended March 31, 2016. For the quarter, the company reported revenue was EUR 143.8 million against EUR 172.9 million a year ago. Revenue saw a year-on-year decrease due to the recognition of income from the REDI shopping centre. In January-March 2015, quarrying and other infrastructure work completed at the REDI site prior to the official start-up decision was recognised in revenue in accordance with the level of completion. In addition, revenue was affected by growth in the share of operations accounted for by low-margin business contracting and the fact that sales to investors fell short of the figures for early 2015. The Group's operating profit was EUR 0.0 (2.5) million. The operating profit was affected by growth in the proportion of low-margin business premises contracting, the low number of housing units recognised as income, and the lower earnings contribution of Russia associated companies. SRV's fixed costs also saw a year- on-year increase in January-March 2016 due to numerous development projects. The Group's loss before taxes was EUR 5.5 million against profit before taxes of EUR 3.3 million. In addition to the low number of residences recognised as income, the result was weakened by a EUR 4.3 million fair value revaluation of a 10-year interest rate hedge. The Group's loss per share was EUR 0.11 against earnings per share of EUR 0.05 a year ago. Earnings per share were weakened by the cost of repaying the hybrid bond. Operating profit and its relative level are reduced by the elimination of a share equivalent to SRV's ownership from the profit margins of three shopping centre projects that are under construction (Okhta Mall, 4Daily and REDI), which will be recognised as income only when the investment is sold. Negative return on equity was 6.8% against return on equity of 4.9% a year ago. At the end of the first quarter, interest-bearing liabilities amounted to EUR 370.0 million against EUR 242.9 million a year ago. Net interest-bearing debt saw year-on-year growth of EUR 18.7 million. Net cash out flow was EUR 34.5 million against EUR 15.1 million a year ago. Net cash flow from operating activities was negatively impacted by the increase in incomplete housing construction and plot acquisitions in Finland. Net interest-bearing debt was EUR 247.2 million against EUR 228.5 million a year ago. Net loss for the period attributable to equity holders of the parent was EUR 4.7 million against net profit for the period attributable to equity holders of the parent of EUR 2.8 million a year ago. Purchase of property, plant and equipment was EUR 1.9 million against EUR 0.4 million a year ago. Purchase of intangible assets was EUR 0.1 million.

The outlook for earnings in 2016 remains unchanged. Full-year revenue for 2016 is expected to grow and operating profit to improve compared with 2015 (revenue EUR 719 million and operating profit EUR 24.4 million 12/2015). Due to the completion schedules of SRV's developer-contracted housing projects, a significant proportion of the company's operating profit will be made in the second half of the year. Due to growth of interest-bearing debt, financing expenses increased compared with 2015.