Financial position at the end of December 2017

Caverion’s cash and cash equivalents amounted to EUR 29.2 (47.7) million at the end of December. In addition, Caverion has undrawn revolving credit facilities amounting to EUR 100.0 million and undrawn overdraft facilities amounting to EUR 19.0 million.

The Group’s interest-bearing loans and borrowings amounted to EUR 93.2 (193.3) million at the end of December and the average interest rate after hedges was 2.53 percent. Approximately 75 percent of the loans have been raised from banks and other financial institutions, approximately 5 percent directly from the money markets and approximately 17 percent from insurance companies. A total of EUR 35.5 million of the interest-bearing loans and borrowings will fall due during the next 12 months. The Group’s net debt amounted to EUR 64.0 (145.5) million at the end of December.

On June 9, 2017 Caverion Corporation issued a EUR 100 million hybrid bond, an instrument subordinated to the company's other debt obligations and treated as equity in the IFRS financial statements. The hybrid bond does not confer to its holders the rights of a shareholder and does not dilute the holdings of current shareholders. The coupon of the hybrid bond is 4.625 per cent per annum until June 16, 2020. The hybrid bond does not have a maturity date but the issuer is entitled to redeem the hybrid for the first time on June 16, 2020, and subsequently, on each coupon interest payment date. If the hybrid bond is not redeemed on June 16, 2020, there will be a step-up of 500 basis points in the coupon. The hybrid bond strengthened Caverion Group’s capital structure and financial position. At the end of December, the Group’s gearing was 24.4 (78.7) percent and equity ratio 27.9 (18.7) percent.

Caverion’s external loans are subject to a financial covenant based on the ratio of the Group’s net debt to EBITDA. Caverion and its core banks agreed on changes in the loan documentation in connection with the hybrid transaction in June. The project write-downs made in 2017 burdened the company’s EBITDA and the financial covenant level in 2017. Caverion concluded amendments with its lending parties related to the maximum level of the financial covenant and confirmed the EBITDA calculation principles related to the Group’s financial covenant in 2017. In December, it was agreed with the core banks that the covenant maximum level is not tested at the end of December 2017. Financial covenant shall not exceed 3.5:1 after the end of December 2017. At the end of December, the Group’s Net debt to EBITDA was 2.9x according to the confirmed calculation principles.

Debt maturity

Sources of funds in the loan portfolio
Interest rate type (after hedges)

Net debt (EURm)

Gross debt to net debt

Liquidity reserve

Cash flow and working capital

The Group’s free cash flow improved in the fourth quarter and amounted to EUR 82.0 (28.0) million in October-December. In January-December, the Group’s free cash flow was negative although improving from last year. Free cash flow amounted to EUR -8.5 (-72.1) million in January-December. Free cash flow was impacted by the increase in working capital in risk projects. Free cash flow was improved by the lower level of investments compared to last year. The Group’s operating cash flow before financial and tax items amounted to EUR -8.7 (-22.4) million in January–December. 

The Group’s working capital was 6.1 (-2.6) million at the end of December. Working capital decreased from EUR 75.7 million at the end of the third quarter, as the amount of POC receivables decreased from EUR 321.1 million at the end of September 2017 to EUR 249.7 million at the end of December. Trade receivables amounted to EUR 347.3 (378.2) million at the end of December. At the end of the year, working capital was still tied by certain risk projects mainly in divisions Industrial Solutions and Germany.