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 |