The groups essentially have access to the following debt capital funds currently available:
|in million €||31 Dec. 2018||31 Dec. 2017||Maturity|
|Syndicated loan||2,000.0||1,500.0||3 December 2023 |
3 December 2025
|Promissory note loan||1,000.0||0.0||28 February 2021 |
to 28 February 2028
|Promissory note loan||175.0||175.0||2 September 2024|
Under an agreement dated 3 December 2018, REWE International Finance B.V. agreed a syndicated loan with a volume of 2,000.0 million euros, which matures in December 2023 and can be renewed twice, in each case by one year. This loan agreement replaces the existing syndicated loan of 1,500.0 million euros. As at 31 December 2018, the syndicated loan had not been drawn down (previous year: drawdown of 650.0 million euros). In addition, a promissory note loan was issued in the financial year. The total volume of the transaction amounted to 1,000.0 million euros and comprises various maturity tranches of three to ten years.
As at the balance sheet date there were three bilateral credit lines totalling 275.0 million euros (previous year: four bilateral credit lines totalling 350.0 million euros) with different maturities. 204.0 million euros of the lines of credit were drawn down by the balance sheet date (previous year: 62.6 million euros).
Internal cash pooling is aimed at reducing the amount of debt financing and at optimising cash and capital investments. Cash pooling allows the use of individual companies' excess liquidity in the groups for internal financing.
The 428.2-million-euro increase in net debt in 2018 as compared to 2017 was due primarily to an increase in liabilities to banks and liabilities from other loans, which increased in part due to raising a promissory note loan. This was offset by the repayment of the line of credit, which had been drawn down from the syndicated loan as at 31 December 2017.
|in million €||31 Dec. 2018||31 Dec. 2017|
|Cash and cash equivalents||-639.2||-653.4|
- * Included under other financial liabilities.
Total assets increased in the financial year by 1,354.0 million euros to 20,860.4 million euros.
In 2018, the REWE Group invested 1,793.7 million euros (previous year: 1,856.3 million euros) in intangible assets, property, plant and equipment and in investment property. The capital expenditures related primarily to the expansion and modernisation of the existing store network and the warehouse locations and production companies. There were also additions from acquisitions, which resulted primarily from the first-time consolidation of UAB Palink, Vilnius, Lithuania. Reductions in non-current assets were primarily caused by disposals, impairments, depreciation and amortisation.
Internally generated intangible assets in use amounting to 77.8 million euros are reported in the financial year (previous year: 89.7 million euros). There are also internally generated intangible assets still in development. The internally generated intangible assets primarily concern software products. In addition, research and development costs amounting to 64.4 million euros were incurred (previous year: 70.4 million euros) that were recognised as expenses.
The change in other non-current assets was due to the increase in other assets (73.3 million euros) and companies accounted for using the equity method (17.2 million euros), which was partly offset by the decreases in financial assets (48.7 million euros) and deferred tax assets (28.9 million euros ). The change in non-current other assets was attributable primarily to a change in the presentation of shares in associates and shares in affiliated companies, which are not included in the consolidated financial statements for reasons of immateriality in connection with the application of IFRS 9 Financial Instruments, and which were previously reported under other financial assets. Deferred assets also increased, primarily due to construction cost subsidies.
The decrease in non-current other financial assets was due mainly to the reclassification of shares in associates and shares in affiliated companies (which are not included in the consolidated financial statements for reasons of immateriality) to non-current other assets in connection with the first-time application of IFRS 9 Financial Instruments. This decrease was partly offset by an increase in other loans and loans to associates.
Inventories increased primarily due to an increase in finished goods and merchandise in the Retail International and Retail Germany business segments. The increase in inventory in the Retail International business segment is due in part to the first-time consolidation of UAB Palink, Vilnius, Lithuania; the increase in the Retail Germany business segment is attributable to the expansion of the warehouse locations. Prepayments also increased, primarily in the Travel and Tourism business segment: in particular in the Central Europe division, prepayments to service providers rose by 34.9 million euros, due mainly to a higher volume of bookings.
The increase in other current assets is primarily attributable to the rise in other financial assets (375.6 million euros), trade receivables (138.2 million euros) and current income tax assets (58.4 million euros). The increase in other financial assets resulted mainly from the increase in trade payables with debit balances in the Retail Germany business segment. Trade receivables from associates increased in relation to the balance sheet date, in particular in the Retail Germany business segment. This was partly offset by cash and cash equivalents (-14.2 million euros) and other current assets (-11.6 million euros). Under other current assets, the increase in deferred assets was partly offset by the decrease in receivables from other taxes. Please see note 4 "Performance indicators" with respect to the change in cash and cash equivalents.
Long-term assets held for sale also decreased (72.8 million euros) due primarily to the reclassification of UAB Palink, Vilnius, Lithuania, which had been reported as an operation held for sale as at 31 December 2017. In April 2018, shares in associates were reclassified. This was offset by the classification of real estate as assets held for sale in the Retail International business segment.
The balance sheet shows equity of 6,541.9 million euros as at 31 December 2018 (previous year: 6,174.6 million euros), which corresponds to an equity ratio of 31.4 per cent (previous year: 31.7 per cent). The return on equity of continuing operations was 7.0 per cent (previous year: 5.9 per cent).
Retained earnings increased by 427.2 million euros to 6,479.0 million euros. Substantial components of this increase were the net income generated for the financial year attributable to the shareholders of the parent in the amount of 429.3 million euros (previous year: 342.3 million euros). The 22.6-million-euro decrease in other reserves to -99.0 million euros resulted primarily from the change in the reserve for currency translation differences, the reserve for financial instruments measured at fair value through other comprehensive income, and the reserve for deferred taxes. This was offset by the reserves for cash flow hedges. Non-controlling interests decreased from 37.3 million euros to 110.1 million euros due in part to changes in the scope of consolidation.
The change in non-current liabilities is due primarily to the increase in non-current other financial liabilities (+895.5 million euros) and other non-current liabilities (+14.4 million euros). The increase in other non-current financial liabilities is attributable mainly to the raising of a promissory loan note amounting to 1.0 billion euros. This was offset by the change in other non-current provisions (-150.9 million euros). Under that item, provisions were recognised for contingent losses from onerous contracts in the Retail Germany business segment.
The increase in current liabilities was due primarily to the increase in current trade payables (688.3 million euros), other current liabilities (83.4 million euros) and current employee benefits (31.2 million euros). Trade payables increased in particular in the Retail Germany and Retail International business segments; this was attributable to the increase in ordinary activities, changes due to reporting date effects and in the Retail International business segment on account of the first-time consolidation of UAB Palink, Vilnius, Lithuania. Other current liabilities increased as a result of higher prepayments received on account of orders, which was due primarily to a change in the payment terms and conditions. This concerned almost exclusively the Travel and Tourism business segment. In the Retail Germany business, the increase in other current liabilities was attributable to the rise in liabilities from customer loyalty programmes, which was due mainly to the introduction of the "PAYBACK" programme at Penny Germany. Current employee benefits increased due in part to higher liabilities from employee benefits, severance payments and holiday provisions; this was partly offset by the change in liabilities from annual bonus payments.
Other current financial liabilities (-493.3 million euros), other current provisions (-69.2 million euros), current income tax liabilities (-10.9 million euros) and liabilities from the non-current assets held for sale and disposal groups (-3.5 million euros) had an offsetting effect. The decrease in other current financial liabilities is attributable primarily to the 650.0 million euros drawn down under the syndicated loan as at 31 December 2017; the line of credit had not been drawn down as at the current reporting date. Other current provisions decreased due to factors including the decline in provisions for expected losses from onerous contracts.
In addition, there were contingent liabilities of 497.2 million euros as at the balance sheet date (previous year: 225.2 million euros) which were attributable mainly to payment guarantees to financial institutions. Furthermore, other financial obligations to service providers amounting to 394.0 million euros (previous year: 686.1 million euros) were recorded in the Travel and Tourism business segment.
Significant events after the end of the reporting period are described under note 43 "Events after the Balance Sheet Date" in the notes to the Combined Financial Statements.