Chapters
Annual Report 2019

23. Borrowings

Accounting Policy

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred, and subsequently recognized at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated Income Statement during the term of the borrowing using the effective interest method. Borrowings are derecognized when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Group has an unconditional right to postpone settlement of the liability for, or the liability is due to be settled at least 12 months after the balance sheet date.

Borrowings of the Group are as follows:

in thousands of EUR

31 December 2019

31 December 2018

Non-current

Bank and other borrowings

385,817

362,492

385,817

362,492

Current

Bank overdrafts

28,658

66,638

Commercial paper

453,000

418,000

Bank and other borrowings

35,672

30,213

517,330

514,851

Total borrowings

903,147

877,343

Bank facilities

In July 2019, the Group has successfully refinanced the Revolving Credit Facility of €1.2 billion with a group of their close relationship banks. The new facility has a maturity till July 2024 and can be extended two times by one year at the end of the first and second anniversary (5 + 1 + 1). The new Facility has the same size and similar terms to the previous facility that would have matured in 2021. In addition, a sustainability feature has been added to the facility, whereby the margins are linked to the Group’s sustainability performance. The interest rate on the drawings consists of the margin and the applicable rate (i.e. for a loan in euros, the EURIBOR), however the applicable rate can never be below zero percent. In addition to the revolving credit facility, the Group has uncommitted bilateral overdraft and money market facilities for a total of €375 million.

At the end of 2019 the Group also had multiple bank guarantee facilities for a total amount of €58.1 million (2018: €67.6 million).

Commercial paper

GrandVision has a commercial paper program under which it can issue commercial paper up to the value of €500 million. As of 31 December 2019, the amounts outstanding under the commercial paper program totalled €453 million (2018: €418 million) and have maturity dates of less than 12 months.

Movements in liabilities from financing activities are as follows:

in thousands of EUR

Bank borrowings

Commercial paper

Other borrowings

Interest derivatives

Total

At 1 January 2018

433,923

398,800

3,918

3,220

839,861

Changes from financing cash flows

Proceeds from borrowings

186,397

19,200

-

-

205,597

Repayments of borrowings

- 232,374

-

- 357

-

- 232,731

Interest swap payments

-

-

-

- 2,752

- 2,752

Interest

- 2,642

1,010

-

-

- 1,632

Other movements

-

Acquisitions

426

-

-

-

426

Amortization/interest accrual

2,703

- 1,010

266

2,752

4,711

Exchange differences

298

-

147

-

445

Other comprehensive income (before tax)

-

-

-

2,213

2,213

At December 2018

388,731

418,000

3,974

5,433

816,138

Non-current

359,137

-

3,355

2,605

365,097

Current

29,594

418,000

619

2,828

451,041

At December 2018

388,731

418,000

3,974

5,433

816,138

At 1 January 2019

388,731

418,000

3,974

5,433

816,138

Changes from financing cash flows

-

Proceeds from borrowings

167,899

35,000

297

-

203,196

Repayments of borrowings

- 141,152

-

- 19

-

- 141,171

Interest swap payments

-

-

- 3,126

- 3,126

Interest

- 1,921

952

-

-

- 969

Other movements

-

Acquisitions

345

-

-

-

345

Amortization/interest accrual

2,612

- 952

277

3,170

5,107

Exchange differences

208

-

238

-

446

Other comprehensive income (before tax)

-

-

-

5,761

5,761

At December 2019

416,722

453,000

4,767

11,238

885,727

Non-current

381,987

-

3,830

7,935

393,752

Current

34,735

453,000

937

3,303

491,975

At December 2019

416,722

453,000

4,767

11,238

885,727

The interest on commercial paper relates to the effect of negative effective interest rates. Interest paid in the consolidated Cash Flow Statement also includes commitment and utilization fees related to bank borrowings, interest paid related to overdraft and cash pool facility.

Movements in lease liabilities are disclosed in note 12.

The maturity of the borrowings of the Group is as follows:

in thousands of EUR

Within 1 year

1-2 years

2-5 years

Total

At 31 December 2019

Borrowings

64,330

3,477

382,340

450,147

Commercial paper

453,000

-

-

453,000

517,330

3,477

382,340

903,147

At 31 December 2018

Borrowings

96,851

247

362,245

459,343

Commercial paper

418,000

-

-

418,000

514,851

247

362,245

877,343

The fair value of the borrowings is approximately equal to the carrying amounts since these loans have a floating interest rate.

The weighted average effective interest rates of the borrowings and the related hedges under the revolving credit facility, the commercial paper program and the bilateral overdraft and money market facilities at 31 December 2019 were 0.70% (2018: 0.70%)

Interest rates on variable-rate borrowings are mainly EURIBOR-based, increased by a certain margin. The margin is determined based on the leverage ratio (note 3.1.3) and can be further adjusted based on the yearly sustainability performance of the Group.

The Group has the following undrawn borrowing facilities:

in thousands of EUR

31 December 2019

31 December 2018

- Expiring within one year

369,683

380,442

- Expiring beyond one year

815,000

840,000

1,184,683

1,220,442