Financing and Financial Position
SRV carried out the comprehensive restructuring of financing as planned in June during the first half of 2022 due to the impairments of assets in Russia and the holding in Fennovoima as a result of Russia’s war against Ukraine and the related economic sanctions. The reorganisation of financing has been described in more detail in SRV’s half-year report for January–June 2022.
Net interest-bearing debt totalled EUR 86.4 million (170.0 12/2021) at the end of the review period. Net interest-bearing debt saw a year-on-year decrease of EUR 83.6 million. Excluding the impact of IFRS 16, net interest-bearing debt totalled EUR -8.2 million (81.0 12/2021), representing a decrease of EUR 89.2 million on the comparison period. Housing corporation loans accounted for EUR 7.1 million (18.1 12/2021) of the interest-bearing debt.
At the end of the review period, the company’s equity ratio (excluding the impact of IFRS 16) was 48.6 per cent (32.8 12/2021) and gearing (excluding the impact of IFRS 16) was -5.4 per cent (47.5 12/2021). The equity ratio calculated as per the covenants of financing agreements was 48.6 per cent, as the covenant calculation took into account the recognition of income from developer-contracted projects on the basis of percentage of completion. At the end of the review period, EUR 10 million of the company’s EUR 30 million revolving credit facility was withdrawn and EUR 20 million was unused. EUR 35.8 million of the company’s EUR 40.0 million committed project financing facility was unused at the end of the review period. In addition, the company’s EUR 63.0 million non-committed project financing facility was entirely unused at the end of the review period. As part of the aforementioned restructuring of financing, the due date of the revolving credit facility and project financing facility was extended to April 2024.
At the end of the period, the Group’s financing reserves totalled EUR 61.8 million (100.1 12/2021), consisting of the unused revolving credit facility (EUR 20.0 million) and cash and cash equivalents (EUR 41.8 million). Financing reserves were affected by EUR -12.7 million (14.0 9/2021) in cash flow from operating activities and investments, EUR -15.0 (-60.2) million in cash flow from financing activities, and a decrease in undrawn project loans.
The financial covenants of SRV’s financing agreements are equity ratio, gearing, minimum operating margin, minimum cash, 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 11 to the interim report.
SRV’s investment commitments totalled EUR 19.7 million (19.7 12/2021) at the end of September, and consisted of investments in Fennovoima and the Tampere Central Deck and Arena project.
SRV is exposed to changes in the exchange rate of the rouble through its Russian subsidiaries, associated companies and joint ventures. The strengthening rouble led to translation differences of EUR -6.0 million (4.4 1–9/2021), which impacted both shareholders’ equity and the comprehensive result for the period. In addition to currency exchange rate gains with no cash flow impact amounting to EUR 5.0 (1.9) million in financial income and expenses, the Group also entered similarly derived currency exchange rate gains of EUR 10.1 (1.3) million with no cash flow impact under the profit accounted for by associated companies, which are due primarily to the conversion of currency-denominated loans to roubles and the stronger rouble exchange rate. The total impact on equity before the recognition of impairment was EUR 9.1 million. As a result of write-downs of Russian holdings, the currency risk position has decreased considerably. The remaining position is presented in note 12 to the interim report.
Due to its holdings in Russia, the company has accumulated translation differences totalling EUR -24.2 million directly in equity through the comprehensive income statement. The negative translation difference accrued upon disposal of the holdings will later be recognised as an expense in the income statement with an impact on operating profit, but without an effect on the total amount of equity or operative operating profit.
Interim report 1-9/2022, 27 October 2022