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Financing and financial position

At the end of the review period, the Group’s financing reserves totalled EUR 155.1 million with the Group’s cash assets amounting to EUR 21.8 million, and open-ended account limits and committed undrawn financing reserves and loans to EUR 133.3 million. In addition, EUR 18.5 million of the EUR 100 million commercial paper programme remains unused.

In June, SRV signed a long-term, binding liquidity arrangement of EUR 100 million with a Nordic banking syndicate. This replaces the syndicated credit limit agreement of 2014. The same banking syndicate is also arranging the new liquidity arrangement. The new loan arrangement matures on 16 June 2020. 26 October 2017 at 8:30 am 23 (27) Q3 SRV's financing agreements contain standard covenants. The financial covenants are equity ratio (also based on percentage of completion), gearing, liquidity, and the interest coverage ratio. The interest coverage ratio is the ratio of the Group’s operating margin (EBITDA) to its net financial expenses. The interest cover ratio is tested only if and when new loan financing is withdrawn; the covenant does not prevent the refinancing of existing sources of financing.

Net interest-bearing debt totalled EUR 338.7 (285.0) million at the end of the review period. Net interestbearing debt saw year-on-year growth of EUR 53.7 million. Housing corporation loans account for EUR 82.0 (54.2) million of the interest-bearing debt. Cash flow from operating activities was EUR -76.6 (-54.5) million and net cash flow from investing activities was EUR -5.6 (-8.9) million. In particular, plot acquisitions and an increase in incomplete housing in Finland had an unfavourable impact on net cash flow from operating activities. The cash flow from financing activities for the comparison period was impacted by the renewal of the hybrid loan in 2016 and the withdrawal of a new EUR 100 million bond.

Net financial expenses since the beginning of year totalled EUR -10.4 (-14.5) million. Net financial expenses were greatly reduced by the positive fair value revaluation of a ten-year interest rate hedge by EUR 2.0 million (-7.8) and the capitalisation of interest on incomplete production. When the 10-year interest level rises from its current level, a positive change in fair value will be recognised in the income statement, and vice versa. EUR 1.3 (1.4) million in interest expenses have been capitalised in accordance with IAS 23 since the beginning of the year.

SRV's investment commitments totalled EUR 33.3 (56.9) million, and mainly consisted of investments in Fennovoima’s Hanhikivi-1 project and the REDI project.

The operating currency for SRV's property companies in Russia was changed from the euro to the rouble during 2016. This means that subsidiaries and associated companies that operate in the Russian property business and have previously been using the euro will now use the rouble as their operating currency. This accounting change makes SRV more susceptible to fluctuations in the rouble exchange rate through translation differences. The weakening rouble led to translation differences of EUR -5.9 (5.2) million, which impacted both shareholders' equity and the comprehensive result for the period. In addition to currency exchange rate losses of EUR -1.9 (0.5) million in financial income and expenses, the Group also entered similarly derived currency exchange rate losses of EUR 8.4 (0.5) million with no cash flow impact under the profit accounted for by associated companies, which are due primarily to the conversion of currencydenominated loans to roubles. Currency exchange rate losses were increased by EUR 0.4 million (EUR 0.0 million) in hedging expenses.

Q3/2017 Interim Report
Published 26 October 2017