Financial Risk Management

Financials and Funding

Financial Risk Management

The goal of financial risk management at Technopolis is to secure sufficient funding for its operations at competitive terms, and to mitigate the negative impact of interest rate and foreign exchange rate fluctuations on the Group’s earnings, financial position and cash flow.

The general guidelines of the financial risk management are set out in the Group’s Treasury Policy, approved by the Board of Directors. To mitigate financial risks, Technopolis uses diversified sources of funding, makes use of a variety of financing instruments and maturities, and maintains sufficient committed credit facilities. In addition, Technopolis uses derivative instruments to hedge against the negative impact of interest rate and foreign exchange rate fluctuations. Selected key indicators of the financial risk management are regularly reported to Technopolis’ Audit Committee and the Board of Directors.

On June 30, 2018, the Group’s interest-bearing liabilities amounted to EUR 892.3 (887.4) million. The average capital-weighted loan maturity was 4.2 (4.8). A total of 52.0% (64.7%) of the Group’s interest-bearing liabilities were either interest rate hedged or fixed-rate loans. Group’s interest fixing period was 4.2 (4.7) years, including forward starting hedges in 2019–2021. A one percentage point increase in market rates would cause a EUR 1.5 (2.2) million increase in interest costs per annum.

The Group is exposed to foreign exchange rate fluctuations in the Norwegian krone, the Russian ruble and the Swedish krona. The direct impact of changes in exchange rates on the Group’s operating profit, balance sheet, and equity ratio as of June 30, 2018 are presented below.

Foreign currency % change against the Euro Transaction difference effect Translation difference effectTotal effect on the Group’s equity Equity ratio
RUB -10
RUB +10
0.0
0.0
-6.7
8.2
-6.7
8.2
40.3%
40.8%
NOK -10
NOK +10
-2.1
2.6
-8.4
10.2
-10.5
12.8
40.2%
41.0%
SEK -10
SEK +10
0.0
0.0
-4.6
5.6
-4.6
5.6
40.4%
40.7%

At the end of the review period, the Russian subsidiary had equity of RUB 5.4 billion, the Norwegian subsidiaries’ equity totaled NOK 873.7 million, and the Swedish subsidiaries’ equity was SEK 531.2 million.

More information on the latest interim report and in the Financial Statements 2017 (Note 22).

Last updated 23.8.2018