Financing and Financial Position
Financial income and expenses amounted to EUR -2.5 (-42.8) million. Net financial expenses included EUR 0.4 (0.7) million in dividend and interest income, exchange rate differences amounting to EUR -1.0
(-1.2) 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 -0.1 (3.1) million, and interest expenses of EUR -0.2 (-2.1) million, of which EUR 0.2 (0.3) million was capitalised as of the beginning of the year. In addition, financial expenses included EUR -1.4 (-1.1) million in interest on lease agreement debts under IFRS 16 and EUR -0.4 (-0.8) million in other financial expenses.
SRV’s equity ratio was 35.0 (6.4) and gearing was 82.2 (784.4) per cent. Excluding the impact of IFRS 16, the equity ratio was 49.2 (9.7) per cent and gearing was 4.1 (343.2) per cent.
Capital employed stood at EUR 292.9 (261.4) million and the return on investment was -3.6 (-103.9) at the end of the review period. Excluding the impact of IFRS 16, capital employed amounted to EUR 188.3 (179.4) million.
Net interest-bearing debt totalled EUR 117.4 (197.7) million at the end of the review period. Net interest-bearing debt saw a year-on-year decrease of EUR 80.3 million. Excluding the impact of IFRS 16, net interest-bearing debt totalled EUR 6.1 (110.1) million, representing a decrease of EUR 104.0 million on the comparison period. Housing corporation loans accounted for EUR 12.3 (21.2) million of the interest-bearing debt.
At the end of the review period, EUR 10 million of the company’s EUR 30 million committed revolving credit facility was withdrawn and EUR 20 million was unused.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. The revolving credit facility and project financing facility mature in April 2024.
At the end of the period, the Group’s financing reserves totalled EUR 52.6 (57.2) million, consisting of the unused revolving credit facility (EUR 20.0 million) and cash and cash equivalents (EUR 32.6 million). Financing reserves were affected by EUR -16.8 (-25.8) million in cash flow from operating activities and investments as well as EUR 4.2 (-4.5) million in cash flow from financing activities.
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.
On 26 April, after the end of the review period, the company agreed with the syndicate banks on the replacement of the current 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 EUR 40 million committed revolving credit facility. The current 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 covenants of the agreement are equity ratio, gearing, minimum operating margin, minimum liquidity, and certain other restrictions. 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 accident frequency rate (LTIF). The new committed revolving credit facility is valid until April 2025 and includes a one-year extension option.
SRV’s investment commitments totalled EUR 19.6 (19.7) million at the end of the review period, 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. As a result of write-downs of Russian holdings in 2022, the currency risk position has decreased considerably. Translation differences of EUR 0.1 (-3.8) million impacted both shareholders’ equity and the comprehensive result for the period. Translation differences recognised in equity totalled EUR -14.8 (-21.9) million.
January-March 2023 Interim Report, 27 April 2023