Chapters
Annual Report 2020

4.3 Financial position

Summarized balance sheet

in millions of EUR

2020

2019

Property, plant and equipment

484

533

Right-of-use assets

1,323

1,443

Intangible assets

1,410

1,561

Other non-current assets

146

146

Non-current assets

3,362

3,683

Inventories

310

356

Other current assets

325

342

Cash and cash equivalents

155

163

Current assets

791

861

Total assets

4,154

4,544

Total equity

1,155

1,264

Borrowings

326

386

Lease liabilities

958

1,037

Other non-current liabilities

229

235

Non-current liabilities

1,513

1,659

Borrowings

350

517

Lease liabilities

357

373

Trade and other payables

681

660

Other current liabilities

98

71

Current liabilities

1,486

1,621

Total equity and liabilities

4,154

4,544

Cash flows and liquidity

GrandVision’s liquidity requirements primarily relate to investments in existing and new stores. They also relate to our global capabilities, the payment of interest, and the need to fund our working capital requirements and acquisitions. We primarily rely on cash flows from operating activities to finance our operations. In addition, we use different financing sources like a Revolving Credit Facility, the Commercial Paper Program and various bilateral overdraft and money market facilities.

Cash flows

The following table shows the primary components of our cash flows.

Cash flow components

in millions of EUR

2020

2019

Net cash from operating activities

754

877

Net cash used in investing activities

- 162

- 362

Net cash used in financing activities

- 573

- 446

Inflow/(outflow) in cash and cash equivalents

19

70

Cash and cash equivalents at beginning of year

134

72

Inflow/(outflow) in cash and cash equivalents

19

70

Exchange gains/(losses) on cash and cash equivalents

- 1

- 7

Cash and cash equivalents at end of period

153

134

Net cash from operating activities decreased to EUR 754 million in 2020, compared to EUR 877 million in 2019. Improvements in working capital due to lower levels of inventories compared with the year-end 2019 were partially offset by the profit reduction because of the COVID-19 pandemic.

Net working capital continues to benefit from the business recovery as well as from key strategic initiatives such as investments in our manufacturing sites, the Showroom model now present in France, Finland, Denmark, Sweden, Germany and the U.K., the implementation of a S&OP platform in 15 countries, and the rollout of the global product catalog.

Net cash used in investing activities increased from EUR -362 million in 2019 to EUR -162 million in 2020. This was mainly driven by the absence of any significant acquisitions during 2020 and lower capital expenditure.

During 2020, we maintained a continued focus on cash discipline while adopting a flexible capital-allocation strategic approach. The majority of capital expenditure went towards the optimization of the store network.

Net cash used in financing activities was an outflow of EUR 573 million in 2020 compared to an outflow of EUR 446 million in 2019.

Capital expenditure

in millions of EUR

2020

2019

Capital expenditure (not related to acquisitions)

152

198

Store capital expenditure

97

127

Non-store capital expenditure

55

70

Capital expenditure unrelated to acquisitions decreased to EUR 152 million (4.4% of revenue) in 2020, compared with EUR 198 million (4.9% of revenue) in 2019. The majority of capital expenditure was dedicated to optimizing our store network.

Store capital expenditure decreased from EUR 127 million in 2019, to EUR 97 million in 2020 due to the re-scheduling of non-critical refurbishments during the COVID-19 pandemic. Capital expenditures made during the year included, for example, investments in automated eye measurement equipment, as well as security and protective material to enable our stores to quickly resume operations in compliance with COVID-19 health and safety protocols. The lower store capital expenditure also reflects that fewer GrandVision store openings took place in 2020.

Non-store capital expenditure decreased to EUR 55 million in 2020 compared to EUR 70 million in 2019. The strategic investments were focused on continuing the rollout of our omnichannel platform, which has been key for the operational continuity in 2020, as well as investments in building a leading end-to-end Product Value Chain.

Free cash flow and cash conversion

2020

2019

Free cash flow (€ million)

258

296

Cash conversion (%)

76.5%

54.6%

Free cash flow decreased to EUR 258 million in 2020, compared to EUR 296 million in 2019, mainly reflecting progress on working capital resulting from improved operational efficiencies in our operations leading to inventory reduction and lower capital expenditure. These partly offset the lower after-tax earnings compared with the prior year.

Cash conversion, calculated as Free Cash Flow divided by EBITDA, increased from 54.6% in 2019 to 76.5% in 2020.

Financial indebtedness

Throughout 2020, GrandVision maintained a financial position with sufficient liquidity to fund our strategy and pursue our growth ambitions. In addition to utilizing our own cash flow, we drew on various financing sources, like our Revolving Credit Facility (RCF), the Commercial Paper Program and various bilateral credit facilities.

On 22 June, 2020, GrandVision obtained an additional liquidity facility of EUR 400 million, which will be available in the event that the RCF is fully drawn. The term is one year with an additional year available at GrandVision's discretion. In addition, and as a result of the active dialog with its relationship banks, GrandVision reached an agreement to amend the RCF, obtaining relief from the financial covenant tests in 2020.

The next financial covenant test will be performed on amended terms at the end of 1Q 2021, with an additional test on amended terms at the end of each quarter in 2021. The new covenants provide the banking group with sufficient comfort while giving GrandVision operational and financial flexibility with the further COVID-19 pandemic-related developments.

Net debt and leverage

GrandVision aims to maintain a leverage ratio (net debt over EBITDA-covenants for the last 12 months) of equal to or less than 2.0, excluding the impact of any borrowings associated with, and any adjusted EBITDA amounts attributable to any major acquisitions.

In order to monitor the financial covenants, we use the following definitions of net debt and EBITDA-covenants: Net debt consists of GrandVision's borrowings, derivatives and cash and cash equivalents, excluding lease liabilities. EBITDA-covenants are calculated as adjusted EBITDA less depreciation of right-of-use assets and net financial result on lease liabilities and receivables (following the application of IFRS 16 as of 1 January, 2019).

This table shows GrandVision’s net debt, as well as our net debt leverage as of 31 December, 2020:

Borrowings

in millions of EUR
(unless stated otherwise)

2020

2019

Total borrowings

676

903

Cash and cash equivalents

- 155

- 163

Derivatives (liabilities)

19

14

Derivatives (assets)

- 1

- 2

Net debt

539

753

EBITDA - covenants

401

605

Net debt leverage (times)

1.3

1.2

At year-end 2020, our net debt decreased from EUR 753 million in 2019 to EUR 539 million in 2020, with strong cash flow generation, and the fact that a dividend for the fiscal year 2019 was not paid in 2020. There were no large acquisitions in the year.

The net debt leverage ratio as of year-end 2020 was 1.3x, compared to 1.2x at the end of 2019.