8.9.1.1
Borrowings

Borrowings can be specified as follows:

 

          2019   2018
  Currency Nominal interest rate Year of maturity Face value Carrying amount Face value Carrying amount
        € x 1,000 € x 1,000 € x 1,000 € x 1,000
Term loan EUR 1.6% 2024 60,000 58,820 85,000 83,750
Term loan (Schuldschein) EUR 3.8% 2024 15,000 14,900 15,000 14,850
Revolving credit facilities - Part I EUR variable   116,558 116,558 46,050 46,050
Borrowings under Group financing agreement       191,558 190,278 146,050 144,650
Other bank loans (secured) EUR 1.4% 2027 1,574 1,574 1,800 1,800
Revolving credit facilities - Part II EUR mixed   10,115 10,115 3,144 3,144
Total borrowings       203,248 201,968 150,994 149,594

 

Other borrowings

In December 2016 Accell Group entered into a financing agreement for its Lapierre Experience Centre, which is a secured loan (mortgage) of € 1.6 million as per 31 December 2019. Furthermore Accell Group has maintained its Turkish revolving credit facilities since 2017, which qualify as carve-out and permitted financial indebtedness in the Group financing agreement (€ 10.1 million).

Borrowings under Group financing agreement

In 2017, Accell Group entered into a financing agreement with a syndicate of six banks for the financing of the group. The banks participating in the syndicate are ABN AMRO Bank, BNP Paribas, Deutsche Bank, HSBC, ING Bank and Rabobank. The financing is unsecured and at 31 December 2019 consisted of € 75 million in term loans (after a voluntary repayment of € 25 million in the first quarter of 2019) and a revolving credit facility of € 275 million (working capital financing), of which € 100 million in seasonal facility from December to July, for an initial period of five years. An optional (uncommitted) accordion facility for the sum of € 150 million forms part of the existing financing agreement.

At the start of 2019 Accell Group exercised the second extension option extending the financing agreement by another 12 months to March 2024. The initial extension option was exercised in 2018.

Terms and conditions

The terms and conditions of the Group financing agreement are as follows:

The financial ratios in the financing agreement are:

  • Term loan leverage ratio;
  • Solvency ratio.

In addition, a 'borrowing reference' applies, which is a dynamic limit on working capital financing.

Accell Group complied with the terms and conditions of the financial ratios at 31 December 2019, at 31 December 2018 as well as for all interim test dates.

Term loan leverage ratio

The term loan leverage is determined by dividing the designated outstanding loans under the financing agreement by normalized EBITDA. The term loan leverage ratio may not exceed 2.5 (tested on a quarterly basis over the previous twelve months).

The 'designated loans outstanding under the financing agreement' include the outstanding amounts under the € 75 million term loan (including Schuldschein) and the working capital financing insofar as used for the acquisition of companies (excluding acquired working capital). The latter is permitted with the approval of the bank syndicate.

EBITDA is the result from operating activities (EBIT) plus the amount of the amortization and depreciations on assets and the share in the result of non-consolidated participating interests. Normalized EBITDA is, with respect to a certain period, the EBITDA in that period adjusted for:

• EBITDA of acquired companies during the relevant period for the part of that period prior to the time of acquisition;
• EBITDA attributable to a group company (or any part of Accell Group) sold during the relevant period for the part prior to the date of sale;
• On the instructions of Accell Group, exceptional costs incurred in the relevant period including reorganization costs, impairment losses on fixed assets or costs associated with the sale of assets related to discontinued operations.

Solvency ratio

The solvency ratio is determined by net assets divided by balance sheet total, both adjusted for intangible assets and related deferred taxes. Solvency ratio may not be less than or equal to 25% (tested on a half-yearly basis over the previous twelve months).

Borrowing reference

The borrowing reference states that the net debt, after deduction of the outstanding amounts under the € 75 million term loan (including Schuldschein) and the working capital financing used for approved acquisitions, may not exceed the lowest of:

a. The sum of:
i. The highest of 50% of the carrying amount of the qualifying inventories minus the total trade creditors of Accell Group and zero; and
ii. 65% of the carrying amount of the qualifying trade debtors;
b. The revolving credit facility made available under the financing agreement.

Reconciliation of movements of borrowings to cash flows arising from financing activities 2019

  Revolving credit facilities Term loans Other bank loans Total
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Balance at 1 January 2019 49,194 98,600 1,800 149,595
         
Changes in financing cash flows:        
Proceeds from loans and borrowings 134,090 - - 134,090
Transaction costs related to loans and borrowings - -175 - -175
Repayment of borrowings -55,000 -25,000 -201 -80,201
Total changes from financing cash flows 79,090 -25,175 -201 53,713
The effect of changes in foreign exchange rates -1,610 - -6 -1,616
Other changes liability-related:        
Changes as a result of the sale of subsidiaries - - -18 -18
Interest expenses minus interest paid - 295 - 295
Total liability-related other changes 77,480 -24,880 -226 52,374
Total equity-related other changes - - - -
Balance at 31 December 2019 126,674 73,720 1,574 201,968

 

Reconciliation of movements of borrowings to cash flows arising from financing activities 2018

  Revolving credit facilities Term loans Other bank loans Total
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Balance at 1 January 2018 40,000 98,471 2,070 138,471
         
Changes in financing cash flows:        
Proceeds from loans and borrowings 93,629 - - 93,629
Transaction costs related to loans and borrowings - -192 - -192
Repayment of borrowings -85,469 - -308 -85,777
Total changes from financing cash flows 8,160 -192 -308 7,659
The effect of changes in foreign exchange rates 1,034 - 3 1,037
Other changes liability-related:        
Changes as a result of business combinations - - 35 35
Change in bank overdrafts - - - -
Interest expenses minus interest paid - 321 - 321
Total liability-related other changes 9,194 129 -270 9,053
Total equity-related other changes - - - -
Balance at 31 December 2018 49,194 98,600 1,800 149,594

 

Accounting policy

Borrowings are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these borrowings are measured at amortized cost using the effective interest method. Revolving credit facilities, bank overdrafts and cash and cash equivalents are initially recognized at fair value and subsequently at amortized cost.