Chapters
Annual Report 2020

22. 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 2020

31 December 2019

Non-current

Bank and other borrowings

326,206

385,817

326,206

385,817

Current

Bank overdrafts

2,577

28,658

Commercial paper

345,000

453,000

Bank and other borrowings

2,448

35,672

350,025

517,330

Total borrowings

676,231

903,147

Bank facilities

The Group has a committed Revolving Credit Facility (RCF) of €1.2 billion with maturity in July 2024, that can be extended two times by one year at the end of the first and second anniversary (5 + 1 + 1). 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, a sustainability feature has been added to the facility, whereby the margins are linked to the Group’s sustainability performance.

GrandVision also has a committed additional Liquidity Facility of €400 million, which will be available in the event that the RCF is fully drawn. The term is one year, with maturity in June 2021 with an additional year available at GrandVision's discretion. Under this facility the Group is restricted to pay a dividend to external shareholders upon consent from the banks.

In addition to the committed facilities, the Group has uncommitted bilateral overdraft and money market facilities for a total of €329 million (2019: €375 million).

At the end of 2020 the Group also had multiple bank guarantee facilities for a total amount of €70.1 million (2019: €58.1 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 2020, the amounts outstanding under the commercial paper program totaled €345 million (2019: €453 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 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 31 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 31 December 2019

416,722

453,000

4,767

11,238

885,727

At 1 January 2020

416,722

453,000

4,767

11,238

885,727

Changes from financing cash flows

Proceeds from borrowings

601,764

-

79

-

601,843

Repayments of borrowings

- 695,989

- 108,000

- 332

-

- 804,321

Interest swap payments

-

-

-

- 3,218

- 3,218

Interest

- 3,412

302

-

-

- 3,110

Other movements

-

-

-

-

-

Amortization/interest accrual

5,705

- 302

182

3,213

8,798

Exchange differences

- 330

-

- 502

-

- 832

Other comprehensive income (before tax)

-

-

-

83

83

At 31 December 2020

324,460

345,000

4,194

11,316

684,970

Non-current

322,833

-

3,373

8,174

334,380

Current

1,627

345,000

821

3,142

350,590

At 31 December 2020

324,460

345,000

4,194

11,316

684,970

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 2020

Borrowings

5,025

3,204

323,002

331,231

Commercial paper

345,000

-

-

345,000

350,025

3,204

323,002

676,231

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

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 for 2020 were 1.44% (2019: 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 2020

31 December 2019

- Expiring within one year

872,889

369,683

- Expiring beyond one year

875,000

815,000

1,747,889

1,184,683