Source January-December 2023 Interim Report, published on 1 February 2024:
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.
Financial income and expenses amounted to EUR -2.5 (-3.8) million in October–December. Net financial expenses included EUR 0.9 (0.4) million in dividend and interest income, exchange rate differences amounting to EUR 0.0 (-3.5) 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 -1.6 (0.8) million, and interest expenses of EUR -0.3 (-0.3) million, of which EUR 0.0 (0.2) million was capitalised. In addition, financial expenses included EUR -1.4 (-1.1) million in interest on lease agreement debts under IFRS 16 and EUR 0.0 (-0.1) 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 the equity-like hybrid bonds is 4.875 percent per annum. The equity-like bonds have no maturity date, 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 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 11 to the Financial statement release.
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.
Interim Report January – December 2023, 1 February 2024