Chapters
Annual Report 2018

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.

Finance leases

Lease contracts whereby the risks and rewards associated with the ownership lie wholly or primarily with the lessee are classified as finance leases. The minimum lease payments are recognized partly as finance costs and partly as settlement of the outstanding liability. The finance costs are charged to each period in the total lease period so as to produce a constant, regular interest rate on the outstanding balance of the liability. The interest element is charged to the consolidated Income Statement over the lease period and recognized as finance costs.

The corresponding rental obligations, net of finance costs, 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 2018

31 December 2017

Non-current

Bank and other borrowings

362,492

376,616

Financial leases

461

584

362,953

377,200

Current

Bank overdrafts

66,638

152,443

Commercial paper

418,000

398,800

Bank and other borrowings

30,213

61,225

Financial leases

411

477

515,262

612,945

Total borrowings

878,215

990,145

Bank facilities

The Group has a revolving credit facility of €1,200 million with a maturity date of 17 September 2021. 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 €380 million.

At the end of 2018 the Group also has multiple bank guarantee facilities for a total amount of €67.6 million (2017: €68.4 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 2018 the amounts outstanding under the commercial paper program totalled €418 million (2017: €398.8 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

Financial
leases

Commercial
paper

Other
borrowings

Interest
derivatives

Total

At 1 January 2017

442,776

1,984

342,000

1,287

4,243

792,290

Changes from financing cash flows

Proceeds from borrowings

321,682

172

56,800

2,693

-

381,347

Repayments of borrowings

- 329,137

- 884

-

- 285

-

- 330,306

Interest swap payments

-

-

-

-

- 2,056

- 2,056

Interest

- 2,829

- 63

496

-

-

- 2,396

Other movements

Acquisitions

12,974

-

-

321

-

13,295

Amortization/interest accrual

3,608

63

- 496

239

2,067

5,481

Exchange differences

- 15,150

- 211

-

- 337

-

- 15,698

Other comprehensive income (before tax)

-

-

-

-

- 1,034

- 1,034

At December 2017

433,923

1,061

398,800

3,918

3,220

840,922

Non-current

373,678

584

-

2,938

3,135

380,335

Current

60,245

477

398,800

980

85

460,587

At December 2017

433,923

1,061

398,800

3,918

3,220

840,922

At 1 January 2018

433,923

1,061

398,800

3,918

3,220

840,922

Changes from financing cash flows

Proceeds from borrowings

186,397

342

19,200

-

-

205,939

Repayments of borrowings

- 232,374

- 570

-

- 357

- 233,301

Interest swap payments

-

-

-

-

- 2,752

- 2,752

Interest

- 2,642

- 47

1,010

-

-

- 1,679

Other movements

Acquisitions

426

-

-

-

-

426

Amortization/interest accrual

2,703

47

- 1,010

266

2,752

4,758

Exchange differences

298

39

-

147

-

484

Other comprehensive income (before tax)

-

-

-

-

2,213

2,213

At December 2018

388,731

872

418,000

3,974

5,433

817,010

Non-current

359,137

461

-

3,355

2,605

365,558

Current

29,594

411

418,000

619

2,828

451,452

At December 2018

388,731

872

418,000

3,974

5,433

817,010

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 cashpool facility.

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 2018

Borrowings

96,851

247

362,245

459,343

Commercial paper

418,000

-

-

418,000

Financial leases

411

230

231

872

515,262

477

362,476

878,215

At 31 December 2017

Borrowings

213,668

216

376,400

590,284

Commercial paper

398,800

-

-

398,800

Financial leases

477

322

262

1,061

612,945

538

376,662

990,145

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 balance sheet date were as follows:

2018

2017

Group borrowings

0.70%

0.89%

Interest rates on variable-rate borrowings are mainly EURIBOR-based, increased by a certain margin. The margin is determined based on the interest cover and the leverage ratio (note 3.1.3).

The Group has the following undrawn borrowing facilities:

in thousands of EUR

31 December 2018

31 December 2017

- Expiring within one year

380,442

265,558

- Expiring beyond one year

840,000

824,965

1,220,442

1,090,523

Finance lease commitments

The finance lease commitments fall due as follows:

in thousands of EUR

31 December 2018

31 December 2017

Payment

Interest

Principal

Payment

Interest

Principal

Within 1 year

448

37

411

508

31

477

1 - 2 years

257

27

230

340

18

322

2 - 5 years

255

24

231

280

18

262

After 5 years

-

-

-

-

-

-

Total

960

88

872

1,128

67

1,061