23. Loans and borrowings
The Group’s loans and borrowings consist of senior unsecured Euro-denominated notes, senior unsecured credit facilities, an unsecured US Dollar term loan and two unsecured Euro Schuldscheindarlehen (“SSD”, a private German debt placement). The senior unsecured credit facilities consist of a Euro-denominated term loan and two committed Euro revolving credit facilities. In addition, the Group has access to local credit facilities in various locations. Liabilities under lease contracts where the Group is the lessee are also included in loans and borrowings.
Composition of loans and borrowings
The table below shows the carrying amount of the Group’s loans and borrowings.
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Senior unsecured notes |
|
549.5 |
|
– |
Unsecured SSD |
|
85.5 |
|
– |
Unsecured credit facility |
|
– |
|
100.0 |
Local credit lines |
|
89.7 |
|
112.1 |
Lease liabilities |
|
52.0 |
|
52.3 |
Current loans and borrowings |
|
776.7 |
|
264.4 |
Senior unsecured notes |
|
– |
|
548.5 |
Senior unsecured Euro term loan |
|
49.7 |
|
548.1 |
Unsecured US Dollar term loan |
|
259.5 |
|
243.8 |
Unsecured SSDs |
|
1,011.9 |
|
648.2 |
Unsecured committed revolving credit facilities |
|
100.0 |
|
– |
Local credit lines |
|
3.5 |
|
– |
Lease liabilities |
|
269.8 |
|
198.8 |
Non-current loans and borrowings |
|
1,694.4 |
|
2,187.4 |
Total loans and borrowings |
|
2,471.1 |
|
2,451.8 |
Overview of recent financing transactions
On May 8, 2024, the Group issued six tranches of a total of €450 million unsecured Schuldscheindarlehen (“SSD”, a private German debt placement) with maturities of four, five and seven years at both fixed and variable interest rates. The two largest tranches are due in 2028 and 2029.
On June 28, 2024, the Group accessed new senior unsecured credit facilities consisting of a five-year €50 million term loan and two committed Euro revolving credit facilities in the total amount of €500 million. The interest rates are variable.
The proceeds from the SSD and the new term loan, together with available cash, were used on June 28, 2024 to prepay, without premium or penalty, the Group’s €550 million term loan from 2020 that was due in June 2025. In connection with this, the related €300 million committed multi-currency revolving credit facility was terminated.
On September 18, 2024, the Group repaid the €100.0 million draw-down of an unsecured credit facility that was used to repay a bridge loan facility in the last quarter of 2023 (see below), using available cash.
On June 20, 2023, the Group repaid €450 million of senior unsecured notes that were due in June 2023. To finance the repayment, the Group used available cash and €350 million from an unsecured bridge loan facility that was accessed on June 16, 2023. The bridge loan facility was repaid in the last quarter of 2023, using available cash and €100.0 million from an unsecured credit facility.
Additional loans and borrowings details
The table below provides an overview of the main terms of the Group’s long-term financing (excluding lease liabilities) as of December 31, 2024. Additional details about these loans and borrowings and more short-term financing solutions are provided below the table.
|
|
Principal amount |
|
Maturity date |
|
Interest rate |
|---|---|---|---|---|---|---|
Notes |
|
€550 million |
|
June 2025 |
|
Fixed 2.125% |
US Dollar term loan |
|
$270 million |
|
July 2027 |
|
Variable |
Euro term loan |
|
€50 million |
|
June 2029 |
|
Variable |
Euro revolving credit facilities |
|
€500 million |
|
June 2029 |
|
Variable |
SSD tranches 1–3 |
|
€557.5 million |
|
June 2025–June 2029 |
|
Variable |
SSD tranches 4–6 |
|
€92.5 million |
|
June 2025–June 2029 |
|
Fixed 2.79%–3.66% |
SSD tranches 7–8 |
|
€38.0 million |
|
May 2028–May 2029 |
|
Fixed 4.24%–4.31% |
SSD tranches 9–12 |
|
€412.0 million |
|
May 2028–May 2031 |
|
Variable |
The Group’s issue of senior unsecured notes of €550 million is from June 2020. The notes are traded on the Global Exchange Market of Euronext Dublin. The Group has signed a €550 million unsecured bridge loan facility agreement. The facility can be accessed until June 2025, when the €550 million of notes is due for repayment.
The Group’s unsecured credit facility from July 2022 consists of one US Dollar-denominated term loan. The Group has entered into an interest rate swap, maturing in July 2025, to hedge the interest rate cash flow exposure relating to the US Dollar term loan (see also notes 26 and 32).
The Group’s senior unsecured credit facilities from June 2024 consist of one Euro-denominated term loan and two committed Euro revolving credit facilities. The total amount available under these new revolving credit facilities was €398.4 million as of December 31, 2024 (€299.5 million as of December 31, 2023 under the committed multi-currency revolving credit facility that was terminated in June 2024) due to €1.6 million in letters of credits that were outstanding under an ancillary facility (€0.5 million as of December 31, 2023) and draw-downs of €100.0 million to cover cash requirements in the current year (nil as of December 31, 2023). The draw-downs as of December 31, 2024 are expected to be repaid within one year. See also note 26. For the Euro term loan, the interest rate for the second half of 2025 has been fixed with a forward interest rate agreement (see also notes 26 and 32).
Six tranches of a total of €650 million unsecured Schuldscheindarlehen (“SSD”, a private German debt placement) were issued by the Group in June 2022. In May 2024, the Group issued another six tranches of a total of €450 million unsecured SSD. The largest SSD tranche of €423.5 million from the 2022 issue is due in June 2027. Of the SSDs issued in May 2024, €282.0 million is due in May 2029. The first interest rate reset in 2025 for the SSD tranches at variable interest rates has been fixed with forward interest rate agreements (see also notes 26 and 32).
The Group also has access to local credit facilities in various locations. As of December 31, 2024, €93.2 million of unsecured unguaranteed local credit lines had been used to cover mainly local working capital needs (€112.1 million as of December 31, 2023).
The margins on the Group’s variable interest rate loans are generally subject to adjustments based on the Group’s net leverage (as defined in the respective credit agreements) and, in one case, subject to adjustments based on the achievement of certain annual sustainability-linked targets (with reference to the Group’s EcoVadis score). Interest is generally paid on a semi-annual basis.
The obligations under the notes, the new senior unsecured credit facilities, the US Dollar term loan and the two SSDs are guaranteed by the Company on a stand-alone basis.
Under the credit agreements for the Group’s new senior unsecured credit facilities and the US Dollar term loan, the Group is required not to exceed a net leverage ratio of 4.0x (4.0x also in respect of the senior unsecured revolving credit facilities that were terminated in June 2024). If the Group would not comply with these covenants, the borrowings would become repayable on demand. The Group was in compliance with all covenants and there were no events of default as of December 31, 2024 and December 31, 2023. Accordingly, these borrowings are classified as non-current liabilities. The Group expects to comply with the covenants for at least 12 months after the reporting date. The covenants are tested on an annual and semi-annual basis. See also the section “Net debt and net leverage” in note 22.
Lease liabilities
A maturity analysis of the Group’s lease liabilities (relating mainly to office buildings, production-related buildings and equipment, warehouses and cars) is provided below.
|
|
Carrying amount of |
|
Interest |
|
Contractual undiscounted |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In € million) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Less than 1 year |
|
52.0 |
|
52.3 |
|
21.2 |
|
16.1 |
|
73.2 |
|
68.4 |
Between 1 and 5 years |
|
118.4 |
|
111.7 |
|
69.7 |
|
40.5 |
|
188.1 |
|
152.2 |
More than 5 years |
|
151.4 |
|
87.1 |
|
146.0 |
|
48.6 |
|
297.4 |
|
135.7 |
|
|
321.8 |
|
251.1 |
|
236.9 |
|
105.2 |
|
558.7 |
|
356.3 |
Note 13 includes information about lease contracts to which the Group has committed but where the lease has not yet commenced.
Changes in liabilities arising from financing activities
The following two tables present changes in liabilities arising from financing activities.
|
|
Jan. 1, |
|
Cash flows from/(used in): |
|
Net effect of early repayment of loans |
|
Non-cash movements |
|
Effect of movements in exchange rates |
|
Dec. 31, |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In € million) |
|
|
Financing activities |
|
Operating activities |
|
|
|
|
|||||||||
Principal amount1 |
|
2,206.4 |
|
(73.5) |
|
– |
|
– |
|
– |
|
20.2 |
|
2,153.1 |
||||
Transaction costs |
|
(5.2) |
|
– |
|
(1.8) |
|
0.9 |
|
2.4 |
|
(0.1) |
|
(3.8) |
||||
Original issue discount |
|
(0.5) |
|
– |
|
– |
|
0.3 |
|
0.2 |
|
– |
|
– |
||||
Loans and borrowings, excl. lease liabilities |
|
2,200.7 |
|
(73.5) |
|
(1.8) |
|
1.2 |
|
2.6 |
|
20.1 |
|
2,149.3 |
||||
Lease liabilities |
|
251.1 |
|
(51.7) |
|
– |
|
– |
|
122.8 |
|
(0.4) |
|
321.8 |
||||
Total loans and borrowings |
|
2,451.8 |
|
(125.2) |
|
(1.8) |
|
1.2 |
|
125.4 |
|
19.7 |
|
2,471.1 |
||||
Capitalized cost for revolving credit facility |
|
(0.5) |
|
(2.6) |
|
– |
|
0.4 |
|
0.2 |
|
– |
|
(2.5) |
||||
Interest: Accrued/(paid) |
|
8.2 |
|
– |
|
(135.1) |
|
– |
|
134.7 |
|
0.2 |
|
8.0 |
||||
|
|
2,459.5 |
|
(127.8) |
|
(136.9) |
|
1.6 |
|
260.3 |
|
19.9 |
|
2,476.6 |
||||
Derivative (assets)/liabilities from financing activities |
|
(6.6) |
|
– |
|
– |
|
– |
|
3.6 |
|
(0.3) |
|
(3.3) |
||||
Total (assets)/liabilities from financing activities and cash/non-cash changes |
|
2,452.9 |
|
(127.8) |
|
(136.9) |
|
1.6 |
|
263.9 |
|
19.6 |
|
2,473.3 |
||||
|
||||||||||||||||||
|
|
Jan. 1, |
|
Cash flows from/(used in): |
|
Non-cash movements |
|
Effect of movements in exchange rates |
|
Dec. 31, |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In € million) |
|
|
Financing activities |
|
Operating activities |
|
|
|
||||||||
Principal amount1 |
|
2,453.2 |
|
(236.1) |
|
– |
|
– |
|
(10.7) |
|
2,206.4 |
||||
Transaction costs |
|
(8.6) |
|
(1.1) |
|
– |
|
4.5 |
|
– |
|
(5.2) |
||||
Original issue discount |
|
(0.8) |
|
– |
|
– |
|
0.3 |
|
– |
|
(0.5) |
||||
Loans and borrowings, excl. lease liabilities |
|
2,443.8 |
|
(237.2) |
|
– |
|
4.8 |
|
(10.7) |
|
2,200.7 |
||||
Lease liabilities |
|
230.9 |
|
(47.2) |
|
– |
|
65.6 |
|
1.8 |
|
251.1 |
||||
Total loans and borrowings |
|
2,674.7 |
|
(284.4) |
|
– |
|
70.4 |
|
(8.9) |
|
2,451.8 |
||||
Capitalized cost for revolving credit facility |
|
(0.8) |
|
– |
|
– |
|
0.3 |
|
– |
|
(0.5) |
||||
Interest: Accrued/(paid) |
|
8.5 |
|
– |
|
(124.9) |
|
124.7 |
|
(0.1) |
|
8.2 |
||||
|
|
2,682.4 |
|
(284.4) |
|
(124.9) |
|
195.4 |
|
(9.0) |
|
2,459.5 |
||||
Derivative (assets)/liabilities from financing activities |
|
(8.9) |
|
– |
|
– |
|
2.0 |
|
0.3 |
|
(6.6) |
||||
Total (assets)/liabilities from financing activities and cash/non-cash changes |
|
2,673.5 |
|
(284.4) |
|
(124.9) |
|
197.4 |
|
(8.7) |
|
2,452.9 |
||||
|
||||||||||||||||
Accounting policy
Loans and borrowings (excluding lease liabilities) are initially recognized at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method. Loans and other borrowings are classified as current or non-current liabilities depending on whether the Group has a right to defer settlement at the reporting date for at least twelve months after the reporting period. The right to defer must also have substance. The classification of liabilities as current or non-current is not impacted by the Group’s intentions or expectations about whether it will exercise a right to defer settlement or will choose to settle early.
The accounting for a change to the cash flows of a financial liability measured at amortized cost (such as the Group’s notes, SSDs and term loans) depends on the nature of the change. If a floating-rate debt instrument is modified to change its interest rate, the modification is regarded as a repricing to the new market interest rate, which is accounted for prospectively by adjusting the effective interest over the remaining life of the debt instrument. A floating-rate instrument is one whose original contractual terms contain a provision such that the cash flows will (or might) be reset to reflect movements in market interest rates. If a change in cash flows arises due to renegotiation or other modifications (including modifications that do not reflect movements in market interest rates), and the renegotiation or modification does not result in the derecognition of the financial liability, the gross carrying amount is recalculated and any gain or loss recognized in profit or loss as part of the net finance expense. If a renegotiation or modification represents a settlement of the original debt, it is accounted for as being extinguished.
A financial liability (or a part of it) is derecognized when it is extinguished, i.e. when the contractual obligations are discharged, cancelled, expired or replaced by a new liability with substantially modified terms. The difference between the carrying amount of the financial liability (or part of a financial liability) extinguished and the consideration paid is recognized in profit or loss as part of the net finance expense. Any costs or fees incurred are recognized as part of the gain or loss on extinguishment.
Lease liabilities
The Group’s lease liabilities are initially measured at the present value of the lease payments outstanding as of the lease commencement date, discounted at the interest rate implicit in the lease or, if that rate cannot be determined (which is normally the case), at the incremental borrowing rate. Lease payments included in the measurement of the lease liabilities include fixed lease payments and variable lease payments that depend on an index. Other variable lease payments are recognized in profit or loss. The Group does not separate non-lease components from lease components in its lease contracts. Extension, termination and purchase options that, at the lease commencement date, are reasonably certain to be exercised are considered when assessing the lease term and/or measuring the lease liability.
Subsequent to initial recognition, the lease liabilities are measured by increasing the carrying amount to reflect interest on the lease liability (applying the effective interest method); reducing the carrying amount to reflect lease payments made; and remeasuring the carrying amount to reflect any contract modifications or reassessments relating to, for example, changed future lease payments linked to changes in an index and changes in the assessment of whether an extension, termination or purchase option will be exercised. When a lease liability is remeasured, the corresponding adjustment is generally made to the carrying amount of the related right-ofuse asset (see note 13).