Note 28 - Financial risk management
At year-end 2018, Ramboll had a financial position with a net debt position of DKK 701 million (2017: net cash position of DKK 81 million), a new committed credit facility of DKK 2,500 million expiring November 2023 and a DKK 50 million overdraft facility. Ramboll also has access to bank funding via short-term money market loans. The money market facility amount is not committed but is based on the banks' interest in money market loans within the exact period. The Group has been operating comfortably within its financial covenants in 2018.
Interest rate risk
The Group’s debt to credit institutions amounts to DKK 1,400 million (2017: DKK 350 million). The interest rate risk policy is to hedge between 30-70% of all Group debt. Hedging maturity between 2 and 10 years.
Due to strong operational cash flow, Group expects to be net debt-free late in 2020. The interest rate risk in this period is covered by fixing the interest on loan drawdowns under committed credit facility for the period, matching the expected operational cash flows.
The Group’s transaction currency risk exposure is limited by the fact that payments received and made in each country are primarily performed in the same local currency. However, Ramboll is contracting international projects in which payments are received and made in different currencies. Ramboll’s policy for hedging currency risk is to secure significant amounts in foreign currencies through hedging transactions. In addition to the transaction risk related to international projects, the Group is exposed to risk relating to translation of income statements and equity of foreign subsidiaries into DKK, and intercompany items such as loans, royalties, Group service fees and interest payments between entities with different functional currencies. Currently, currency exposure on foreign investments and intercompany loans are not hedged.
The Group also has a currency risk to the extent that borrowings and interest payments are not denominated in the same currencies as the Group’s operating income. Most of the external loans are in DKK to reflect the group’s main cash flows. Operating cash is being held mainly in DKK, EUR, SEK, GBP, NOK and USD accounts. Currencies are collected in cash pools to minimise the overall cost.
Ramboll aims to limit credit risks by assessing clients on all major contracts and by requiring payments in advance on projects when possible.
Forth Design Joint Venture I/S, Copenhagen, Denmark, 37%. Joint Venturet Rambøll Atkins, Copenhagen, Denmark, 50%. Rådgivergruppen DNU I/S, Aarhus, Denmark, 17%. Rambøll - Arup - Tec Joint Venture I/S, Copenhagen, Denmark, 50%. Rambøll - Atkins - Emch + Berger - Parsons Joint Venture, Copenhagen, Denmark, 34%. Rambøll - Halcrow - Consilier Joint Venture, Romania, 24%. Rambøll C.F.Møller, Denmark, 50%. Rambøll Arup Nordhavn JV, Denmark, 59%. Rådgivergruppen USK I/S, Denmark, 28%. Ring 3 Light Rail I/S, Denmark, 80%. The Alliance JV, Denmark, 25%. Ramboll A/S and Fichtner W&T Joint Venture, Uganda, 77%. Groupement Ramboll Danmark A/S - Urbaconsulting - Sépia - Conseils, Senegal, 53%. Delegation of The European Union to The people’s Republic of China and Mongolia, China, 85%. Rambøll-Sweco ANS, Oslo, Denmark, 50%.
After Danish Financial Statements Act §5(1), the above-mentioned Joint Ventures have omitted to present an annual report and instead submit an exemption statement in pursuance of Danish Financial Statements Act §146(1).