Residential development is a capital-intensive business, and in Bonava’s balance sheet there are assets in the form of land and ongoing housing projects that require financing. On several of Bonava’s markets, most payments are not received until the homes are handed over to customers. This imposes requirements on how we handle the Group’s liquidity, financing and financial risks. Bonava’s operations are financed in local currency with internal loans from Bonava’s Finance Department.
Bonava’s main source of liquidity is operating cash flow and borrowing from external creditors. The Group’s financial risks are regulated by a Finance Policy and are managed centrally, largely by utilising different financial instruments. More information about the financial risk management can be found in the annual report.
Seasonal variations impact indebtedness
Bonava’s operations exhibit significant seasonal variations, which is also reflected in its borrowing. In the first three quarters of the year, borrowing usually increases as many projects are started and that there are many housing units in production. In the fourth quarter, many housing units are handed over to customers, generating substantial cash flows which are used to reduce debt.
See financial data for quaterly and annual information on balance sheet and cash flow.