Interim / Quarterly Report • Jul 23, 2020
Interim / Quarterly Report
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|---|---|
| DECLARATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT |
2 |
| INTERIM BUSINESS REPORT | 3 - 16 |
| CONSOLIDATED INTERIM FINANCIAL STATEMENTS | 17 - 60 |
| STATUTORY AUDITORS' REPORT ON THE INTERIM FINANCIAL INFORMATION | 61 - 63 |
I declare that, to the best of my knowledge, the condensed interim consolidated financial statements of Compagnie Plastic Omnium SE for the past six months have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and results of both the Company and all consolidated companies, and that the interim business report herewith presents a true picture of major events occurring during the six months of the fiscal year, of their incidence on financial statements and of the major transactions between related parties, and that it describes the main risks and uncertainties for the remaining six months of the year.
Levallois, July 22, 2020
Laurent Favre Chief Executive Officer
In September 2019 the Group announced changes in its governance with effect from January 1, 2020. At the proposal of Laurent Burelle, in order to continue the Group's long-term growth by seizing the opportunities associated with the transformation of the automotive market, the Board of Directors of Compagnie Plastic Omnium SE decided to put in place a new management team and change the governance structure.
Laurent Burelle, Chairman and Chief Executive Officer since July 2001, became Chairman of the Group's Board of Directors with effect from January 1, 2020. Laurent Favre was appointed Chief Executive Officer and director. At the proposal of Laurent Favre, Félicie Burelle was appointed Managing Director, reporting to the CEO.
Furthermore, as of January 1, 2020, Stéphane Noël and Christian Kopp were appointed Chief Executive Officer of Intelligent Exterior Systems and Chief Executive Officer of Clean Energy Systems, respectively.
Faced with the Covid-19 pandemic, Plastic Omnium has implemented all measures to protect the Group's 32,000 employees, ensure its business continuity in close collaboration with its customers and preserve the strength of its financial structure.
The Group's first priority is the health of its employees. At all of its sites worldwide, Plastic Omnium has implemented systematic measures to avoid contact between employees and reduce the risk of contamination.
Strictly complying with the measures taken by the authorities in each country where the Company operates and in response to carmakers' production line shutdowns, Plastic Omnium has been forced to close production facilities:
The Group's plants then gradually re-opened with reduced utilization rates. On June 24, 2020, all 131 plants had resumed activity.
Developments in the situation have been and continue to be managed daily, on a site-by-site basis.
Agile and efficient, the Plastic Omnium Group has taken the necessary actions to adapt with maximum flexibility:
Expecting an already significant drop in automotive production even before the Covid-19 pandemic, the Group set up an extremely efficient organization to reduce its costs, control its investments, optimize its working capital requirement and preserve its cash generation. This organization currently makes it possible to act very quickly to strengthen all of these measures:
The teams are fully committed. The measures put in place are rapid and efficient. The Group's financial structure is very solid.
Numerous new programs for 100% electric vehicles are coming on stream. In recent months, Plastic Omnium has had many commercial successes with the new 100% electric range of its regular customers, in particular:
The Group is also positioning itself among 100% electric players:
In terms of hybrid vehicles, Plastic Omnium has won:
In the area of hydrogen storage solutions, Plastic Omnium obtained certification for its 700-bar vessel at the end of 2019 and certification for its 350-bar vessel in the first quarter of 2020. The Group also won its first contract to develop vessel s with a German customer.
Plastic Omnium is positioning itself as the leader in low-carbon hydrogen mobility in trucks and passenger vehicles. The Group expects that by 2030 hydrogen will represent a market of 2 million vehicles and is targeting 25% market share in the energy storage segment and 10% in the energy production segment by 2030.
In April, Plastic Omnium created the Covid-19 ACT FOR ALLTM solidarity fund, to enable each of its sites, in line with the situation on the ground locally, to help and support populations impacted by the coronavirus health crisis. With a budget of €1 million, it is intended to support recognized local associations. Priority has been given to helping medical personnel and vulnerable people. In total, 113 causes in 23 countries have been supported to date.
Convinced that diversity in business leads to success and high performance, Plastic Omnium set the target of having 25% of management roles held by women by 2025. Training and awareness-raising initiatives for senior managers and the creation of the Women@PO network, designed to promote gender diversity and women's careers within the Group, support this commitment.
The Group currently has 47% women on the Board of Directors, 27% on the Executive Committee, and 14% women managers.
This policy was recognized in March 2020 by the Wave (Women and Vehicles in Europe) association, which awarded Plastic Omnium the Trophy for Best Progress in France 2017-2020 for the percentage of women in the Executive Committee, the TOP 100 and the overall workforce.
In June 2020, Plastic Omnium was also awarded first place in the 2019 Awards for the number of women in governance bodies in SBF 120 automotive industry companies in the ranking established by the Secretary of State responsible for Gender Equality (25th place in the overall rankings, up 20 places compared to the 2018 ranking).
Plastic Omnium's objective is to reach carbon neutrality in 2050.
The Group is currently working on a methodology and budget related to a medium-term carbon neutrality target on scopes 1, 2 and 3 (upstream). The organization will be strengthened accordingly.
Plastic Omnium in 20th place among patent filers at INPI in 2019 and 7th place in the automotive industry
INPI (The French National Institute of Industrial Property) published its annual ranking of the 50 leading patent filers, with Plastic Omnium in 20th place in the overall ranking, moving up 8 places compared to the 2018 ranking. In the automotive industry sector, Plastic Omnium ranked 7th among the leading patent filers.
These awards attest to the Group's proactive innovation strategy to develop the clean and connected car of tomorrow, capitalizing on its 26 global R&D centers located as close as possible to its 93 customers. The Company thus recently signed strategic partnerships for body parts connectivity and approved hydrogen fuel tanks, winning the first contracts in this area and confirming Plastic Omnium as a major player in the energy transition.
Aware of its responsibilities to all of its stakeholders, the Board of Directors of Compagnie Plastic Omnium SE met by conference call on March 31, 2020 and unanimously decided to reduce the proposed dividend for 2019 by 34% to €0.49 per share, versus €0.74 per share as initially proposed. This was approved at the Compagnie Plastic Omnium SE Shareholders' Meeting, held in camera on April 23, 2020.
Plastic Omnium had a strong start to 2020. In the first quarter of 2020, despite a 22% drop in automotive production, the Group's revenue stood at €2.1 billion, a level comparable to that of the first quarter of 2019. Net profit was positive.
In the second quarter of 2020, the Group faced a slump of 46% in worldwide automotive production, which reduced its revenue to €1.1 billion, led to significant operating losses despite rapidly implemented savings plans and generated high working capital requirements.
Given the slump in volumes due to the Covid-19 pandemic and an assumption of slow recovery in worldwide automotive production, which in the medium term is set to remain significantly below pre-crisis forecasts, the Group wrote off €267 million in tangible and intangible assets.
| | Free cash-flow: | -€572 million -€157 million, before -€415 in change in WCR |
||||
|---|---|---|---|---|---|---|
| | Net debt: | €1,410 million, representing 78% of shareholders' equity and 2.1 times EBITDA |
||||
| | Liquidities: | €1.9 billion at June 30, 2020 |
* vs a 33.8% drop in worldwide automotive production in the first half of 2020
| In € millions | 1st half 2019 |
1st half 2020 | Change |
|---|---|---|---|
| Economic revenue | 4,611 | 3,233 | -29.9 % |
| Consolidated revenue | 4,268 | 2,962 | -30.6 % |
| Operating margin as % of consolidated revenue |
281 6.6% |
-116 -3.9% |
-€397m -10.5 pts |
| Net profit - Group share, excluding impairments of assets net of tax |
155 | -179 | -€334m |
| Net result - Group share | 155 | -404 | -€559m |
| EBITDA as % of consolidated revenue |
511 12.0% |
171 5.8% |
-€340m -6.2 pts |
| Investments | 308 | 226 | -€82m |
| Free cash-flow | 30 | -572 | -€602m |
| Net debt at June 30 Net debt/equity Net debt/EBITDA |
1,021 54% 1.1x |
1,410 78% 2.1x |
+€389m |
| In € millions by business |
1st half 2019 |
1st half 2020 | Change | Change LFL* |
|---|---|---|---|---|
| Plastic Omnium Industries | 3,458 | 2,395 | -30.8% | -30.7% |
| Plastic Omnium Modules | 1,153 | 838 | -27.3% | -25.7% |
| Economic revenue | 4,611 | 3,233 | -29.9% | -29.5% |
| Joint ventures | 343 | 271 | -20.8% | -19.2% |
| Plastic Omnium Industries | 3,207 | 2,203 | -31.3% | -31.4% |
| Plastic Omnium Modules | 1,061 | 759 | -28.4% | -26.9% |
| Consolidated revenue | 4,268 | 2,962 | -30.6% | -30.3% |
*Like-for-like: constant scope and exchange rates
Over the first six months of 2020, worldwide automotive production fell by 14.7 million vehicles (a 33.8% decline), dropping from 43.6 million vehicles in the first half of 2019 to 28.8 million vehicles in the first half of 2020.
In this context, economic revenue for Compagnie Plastic Omnium SE stands at at €3,233 million, down 29.9% compared to the first half of 2019 (-29.5% like-for-like). Outperformance compared to worldwide automotive production is 4.3 points, of which 3.1 points for Plastic Omnium Industries and 8.1 points for Plastic Omnium Modules.
Consolidated revenue for Compagnie Plastic Omnium SE was €2,962 million in the first half of 2020, down 30.6% (-30.3% like-for-like). Outperformance compared to worldwide automotive production was 3.5 points.
The drop in production in the first quarter of 2020 (-22.4%), mainly impacted by China (-49%), accelerated during the second quarter (-45.6%) in line with the spread of the Covid-19 pandemic in Europe and the Americas and the sudden shutdown of related automotive production lines.
In this market, Plastic Omnium generated economic revenue of €2,137 million in the first quarter of 2020, comparable to the first quarter of 2019, with a 19.6 point outperformance over worldwide automotive production.
The Group, which generated 84% of its revenue in Europe and the Americas, was heavily impacted in the second quarter of 2020, with economic revenue of €1,097 million, a 52.7% drop.
| In € millions and as a % of revenue By region |
Q1 2019 | Q1 2020 | Change LFL* | Change in automotive production |
Outperformance |
|---|---|---|---|---|---|
| Europe | 1,206 | 1,182 | -2.2% | -18.1% | 15.9 pts |
| North America | 599 | 648 | +5.8% | -11.0% | 16.8 pts |
| Asia | 371 | 258 | -30.0% | -29.9% | -0.1 pts |
| of which China | 185 | 121 | -34.0% | -46.4% | 12.4 pts |
| South America | 37 | 24 | -18.9% | -16.8% | -2.1 pts |
| Africa | 23 | 25 | +11.7% | +13.7% | -2 pts |
| Economic revenue | 2,236 | 2,137 | -4.8% | -22.4% | 17.6 pts |
| Joint ventures | 161 | 108 | -32.0% | ||
| Consolidated revenue | 2,075 | 2,029 | -2.7% | -22.4% | 19.7 pts |
| In € millions and % of revenue By region |
Q2 2019 | Q2 2020 | Change LFL* | Change in automotive production |
Outperformance |
|---|---|---|---|---|---|
| Europe | 1,239 | 563 | -54.3% | -62.8% | 8.5 pts |
| North America | 712 | 205 | -69.6% | -69.2% | -0.4 pt |
| Asia | 357 | 310 | -11.7% | -25.3% | 13.6 pts |
| of which China | 200 | 214 | +8.9% | +6.2% | 2.7 pts |
| South America | 44 | 6 | -77.3% | -81.5% | 4.2 pts |
| Africa | 23 | 13 | -33.4% | -38.5% | 5.1 pts |
| Economic revenue | 2,375 | 1,096 | -52.7% | -45.6% | -7.1 pts |
| Joint ventures | 181 | 164 | -7.9% | ||
| Consolidated revenue | 2,193 | 933 | -56.4% | -45.6% | -10.8 pts |
*Like-for-like: constant scope and exchange rates
| COMPAGNIE PLASTIC OMNIUM SE – 2020 Interim Financial Report |
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| ------------------------------------------------------------- |
| In € millions and % of revenue By region |
1st half 2019 |
1st half 2020 |
Change LFL* | Change in automotive production |
Outperformance |
|---|---|---|---|---|---|
| Europe | 2,445 | 1,745 | -28.6% | -40.3% | +11.7pts |
| North America | 1,311 | 852 | -35.1% | -40.2% | +5.1pts |
| Asia | 728 | 567 | -21.0% | -27.7% | +6.7pts |
| of which China | 385 | 336 | -11.8% | -21.3% | +9.5pts |
| South America | 82 | 30 | -50.6% | -50.8% | +0.2pt |
| Africa | 45 | 38 | -10.9% | -12.7% | +1.8pts |
| Economic revenue | 4,611 | 3,233 | -29.5% | -33.8% | +4.3 pts |
| Joint ventures | 343 | 271 | -19.2% | ||
| Consolidated revenue | 4,268 | 2,962 | -30.3% | -33.8% | +3.5 pts |
*Like-for-like: constant scope and exchange rates
In Europe, which represents 54% of Group economic revenue, automotive production was hit by total production stoppages among OEMs between mid-March and the beginning of May. It finished the first half of 2020 down 40.3%, with Q2 down 62.8%. In this context, revenue for Plastic Omnium stood at €1,745 million, down 28.6%, resulting in outperformance of 11.7 points. It continues to benefit from the success of the SCR emissions control system and the expansion of its range of modules.
In North America, which accounts for 26% of Group economic revenue, automotive production shut down completely between late March and mid-May. It finished thefirst half of 2020 down 40.2%, with Q2 down 69.2%. In this context, revenue for Plastic Omnium stood at €852 million, down 35.1% on a like-for-like basis, resulting in outperformance of 5.1 points, thanks to the ramp-up of new American and Mexican plants.
China, which accounts for 10% of Group economic revenue, was the first country hit by Covid-19 and by production stoppages among carmakers starting in late January. Automotive production fell 46.4% in Q1 2020, following which it rose 6.2% in Q2, based on favorable prior-year comparatives. It was down 21.3% on a like-for-like basis over the first half of the year. In this context, revenue for Plastic Omnium stood at €336 million, down 11.8%, resulting in outperformance of 9.5 points, thanks to the strength of its order book.
In Asia excluding China, which accounts for 8% of Group economic revenue, activity was down 31.4% on a like-for-like basis, in a market that was down 33.9%.
Expecting a significant drop in automotive production in 2020, the Group implemented cost reduction and industrial footprint flexibility plans since the end of 2019. Learning from the business shutdown in China during the first quarter, these plans were strengthened to deal with the production shutdowns in the rest of the world from mid-March. They were rolled out extremely quickly and managed daily, site by site.
o The Group's payroll, which represented 15% of revenue in 2019, dropped 40% during the shutdown thanks to:
The Group has ensured the protection of its employees by supplementing, country by country, the legal provisions through agreements with trade unions (particularly in France, Germany and Spain) or through unilateral actions in countries without employee representation, such as the United States and Mexico.
Furthermore, the compensation of Group's executives was reduced by 15% during the business shutdown (-20% for members of the Executive Committee and -25% for executive directors) and the annual compensation of directors was reduced, at their initiative, by 15%.
o Production costs and overheads, representing 6% of revenue in 2019, dropped 30% over the period. All non-essential expense commitments have been cancelled.
In total, over the first half of the year, the Group reduced personnel expenses by 14%, for savings of €94 million. Production costs and overheads have been reduced by 23 million. All costs will continue to decline significantly in the second half.
In the first half of 2020, the Group's operating result stood at -€116 million and represented -3.9% of consolidated revenue, of which -€106 million for Plastic Omnium Industries (-4.8% of revenue) and -€11 million for Plastic Omnium Modules (-1.4% of revenue).
In addition, the ongoing action plan for the Greer plant in the United States is expected to restore operating breakeven in 2021 as announced.
The Group recorded €313 million of non-current expenses in the first half of 2020. These include €267 million in impairment of tangible and intangible assets, given the slump in volumes due to the Covid-19 pandemic and an assumption of slow recovery in worldwide automotive production, which in the medium term will remain significantly below pre-crisis forecasts.
The net financial loss stood at -€35 million at June 30, 2020 versus a loss of -€37 million at June 30, 2019.
In the first half of 2020, the Group recorded tax income of €47 million versus an expense of €56 million in the first half of 2019 (effective rate of 28%) mainly related to the impact of deferred taxes.
At June 30, 2020, the net profit - Group share, excluding asset impairments net of taxes, amounted to a loss of -€179 million. After these impairments, it was -€404 million.
EBITDA stood at €171 million in the first half of 2020 (i.e. 5.8% of consolidated revenue) versus €511 million and 12.0% of consolidated revenue in the first semester of 2019.
In the first half of 2020, the Group invested €226 million versus €308 million, i.e. a drop of 27% and €82 million. These investments will be further reduced and will represent a decline of around 30% over the year compared to the €512 million invested in 2019. They will amount to less than 6% of consolidated revenue in 2020.
The working capital requirement deteriorated by €415 million due to the slump in business in Europe and North America in the second quarter. This caused:
At June 30, 2020, free cash-flow stood at -€572 million.
Net debt stood at €1,410 million at June 30, 2020, versus €1,021 million at June 30, 2019 and €739 million at December 31, 2019
The Group's net debt represents 78% of shareholders' equity and 2.1x EBITDA.
On May 29, 2020, the Group repaid, as expected, a €500-million bond. It also obtained new five-year credit lines from banking partners for €560 million.
In the first half of 2020, the Group paid €71 million in dividends on its 2019 results (dividend of €0.49 per share, down 34% from the €0.74 dividend paid in the previous year and initially proposed).
The Group had €1.9 billion of liquidity at June 30, 2020, including:
Based on production assumptions of 64 million vehicles in 2020 and 70 million vehicles in 2021 (compared with 86 million vehicles in 2019), the Group is continuing to rationalize its industrial footprint and is accelerating the reduction in indirect production costs and overheads:
The Group is continuing to review additional measures to size its production capacities and costs to the moderate recovery in worldwide automotive production weighted by an estimated 5 points of outperformance in the coming years.
Plastic Omnium has also initiated a transformation plan, called Omega, whose objective is to:
Related party transactions correspond to transactions with Sofiparc, Burelle SA and Burelle Participations. Some of the contracts between the Group and these companies were amended during the first half of 2020.
Specifically, from January 1, 2020, Compagnie Plastic Omnium SE no longer has an agreement with Burelle Group companies for the compensation of its Chairman of the Board of Directors. This is now paid directly by Plastic Omnium Group, following approval by the Board of Directors and the Shareholders' Meeting, whereas its payment was previously governed by an agreement whereby Burelle SA rebilled a majority share of the Senior management services to Compagnie Plastic Omnium SE. Mr. Laurent Burelle ceased to occupy the position of Chief Executive Officer of Compagnie Plastic Omnium SE on January 1, 2020.
The compensation of senior managers and corporate officers has been modified compared to December 31, 2018.
On the one hand, the executive directors have changed. Mr. Laurent Favre and Mrs. Félicie Burelle respectively became Chief Executive Officer and Managing Director of Compagnie Plastic Omnium SE, from January 1, 2020. At the same date, Mr. Laurent Burelle ceased to occupy the position of Chief Executive Officer, while Mr. Jean-Michel Szczerba ceased his functions as Chief Operating Officer on September 24, 2019.
Corporate officer compensation during the first half of 2020 was paid in accordance with the decision by the Board of Directors of Compagnie Plastic Omnium SE on December 13, 2019, as set out on p 82 et seq. of Compagnie Plastic Omnium SE's 2019 Universal Registration Document.
Fixed compensation for Mr. Laurent Favre, Chief Executive Officer since January 1, 2020
The Board of Directors set the gross amount of the Chief Executive Officer's annual fixed compensation at €900,000. Moreover, strictly as compensation for the loss of variable compensation received by Mr. Laurent Favre in his previous positions, an exceptional bonus in the amount of €400,000 gross would be paid to him in August 2020, subject to a presence condition.
The Chief Executive Officer also benefits from standard benefits in kind (company car, annual medical check-up, sports club membership, life insurance plan in accordance with Group policy). Mr. Laurent Favre also benefits from tax assistance, assistance with relocation and moving expenses up to a maximum of 40,000 euros, as well as payment of the rent for his main residence if rent is paid on two properties at the same time, for a maximum period of eight months.
Fixed compensation for Mrs. Félicie Burelle, Managing Director since January 1, 2020
Félicie Burelle receives annual fixed compensation of €500,000 gross. Mrs. Félicie Burelle, Managing Director, also benefits from standard benefits in kind (company car, annual medical check-up, sports club membership, life insurance plan in accordance with Group policy).
With regard to variable compensation, at its meeting of December 13, 2019, the Board of Directors of Compagnie Plastic Omnium SE, acting on the recommendation of the Compensation Committee and the Appointments Committee, decided on the following items:
The annual bonus is defined in such a way as to align the executive officer's compensation with the Group's annual performance and to promote the implementation of its strategy year after year. The Board of Directors wishes to encourage the executive corporate officer to both maximize performance in each fiscal year and to ensure that it is regularly repeated year after year. The annual bonus may reach 100% of the annual fixed compensation if the objectives defined by the Board are met, i.e. €900,000. However, for fiscal year 2020, Mr. Laurent Favre's bonus is guaranteed at 50% of the maximum defined above. In application of Article L. 225-100 of the French Commercial Code, the payment of the annual bonus is subject to approval from the Annual Shareholders' Meeting called to approve the financial statements for the 2020 fiscal year.
Allocation of free shares to Mr. Laurent Favre, Chief Executive Officer since January 1, 2020
In accordance with Article L. 225-197-1 of the French Commercial Code and the authorization of the Combined Shareholders' Meeting of April 26, 2018, the Board of Directors decided to implement a new Performance Share Award Plan. The allocation decided for Mr. Laurent Favre, Chief Executive Officer, shall comply with the AFEP-MEDEF Code recommendations of January 2020 and, in particular, the recommendation on the value of the shares allocated: the value of the allocation (estimated using IFRS) should represent approximately 50% of the corporate executive officer's total compensation, without exceeding 60%.
Mr. Laurent Favre would also be required to hold in registered form until the termination of his duties 50% of the shares that would be freely granted to him at the end of the vesting period. The allocation of performance shares to Mr. Laurent Favre in respect of fiscal year 2020 is capped at a number of shares whose value should not exceed €400,000. The vesting of these shares is subject to the fulfillment of performance conditions which would be noted at the end of a vesting period of four years from the grant date. Half of the number of shares vested would depend on the growth in net earnings per share (excluding treasury shares); and the other half on the change in cumulative free cash-flow, at constant consolidation scope. The calculation would be based on the average of the four full years of the vesting period. The first full year taken into account for the assessment of the performance conditions for this grant would be 2020.
Variable compensation for Mrs. Félicie Burelle, Managing Director since January 1, 2020
Mrs. Félicie Burelle's annual bonus may reach 100% of her annual fixed compensation if she achieves the objectives defined in chapter 3.1.2.4 of the 2019 Universal Registration Document, i.e. €500.000 gross. For the 2020 fiscal year, the maximum bonus will be limited to 50% of the gross annual fixed compensation.
Pursuant to Article L. 225-100 of the French Commercial Code, payment of the annual variable compensation will be subject to the approval of the Shareholders' Meeting called to approve the financial statements for fiscal year 2020.
Allocation of performance shares to Mrs. Félicie Burelle, Managing Director since January 1, 2020
The Board of Directors has decided to implement a new Performance Share Plan under the authorization requested from the Combined Shareholders' Meeting of April 26, 2018. The allocation to Mrs. Félicie Burelle, Managing Director, shall comply with the AFEP-MEDEF Code recommendations of January 2020 and in particular the recommendation relating to the value of the shares allocated: the value of the grant (estimated under IFRS), should represent approximately 50% of the executive corporate officer's total compensation, without exceeding 60%.
Mrs. Félicie Burelle would also be required to hold in registered form until the termination of her duties 50% of the shares that would be freely granted to her at the end of the vesting period.
The allocation of performance shares to Mrs. Félicie Burelle in respect of fiscal year 2020 would be capped at a number of shares whose value should not exceed €250,000.
The vesting of these shares is subject to the fulfillment of performance conditions which would be noted at the end of a vesting period of four years from the grant date.
Half of the number of shares vested would depend on the growth in net earnings per share (excluding treasury shares); and the other half on the change in cumulative free cash-flow, at constant consolidation scope. The first full year taken into account for the assessment of the performance conditions for this grant would be 2020.
In the context of a general recovery in activity, worldwide automotive production remains difficult to predict due to changes in the global health and economic situation.
In the second half of 2020, Plastic Omnium has assumed a 15% drop in worldwide automotive production.
Over 2020 as a whole, worldwide automotive production is now expected to be 64 million vehicles. This assumption does not take account of a possible second wave of Covid-19.
In these market conditions, the Group will continue to lower its breakeven point. In the second half of 2020, it anticipates:
Over 2020 as a whole, and depending on the pace of recovery in each key automotive market and the effect of different national and regional measures to support the automotive sector, the Group anticipates:
For 2021, Plastic Omnium assumes a slow recovery in worldwide automotive production with 70 million vehicles, compared with 86 million in 2019 and 64 million in 2020. This management assumption, which is well below the 76 million vehicles for 2021 projected by the main forecasting institutes, will be used to resize the Group's cost structure.
In this context, the Group is set to outperform worldwide automotive production by at least 5 points. Thanks to this growth combined with the initial effects of the new plan to generate annual savings of €240 million by the end of 2022, Plastic Omnium will significantly improve its results and cash generation over the period.
The main risk factors for Compagnie Plastic Omnium SE remain those identified in the 2019 Universal Registration Document.
Economic revenue reflects the Group's operational and managerial reality. It corresponds to the consolidated revenue plus the revenue of the Group's joint ventures at the Group's percentage interest: BPO (50%) and YFPO (50%) for Plastic Omnium Industries and SHB Automotive Modules (Samlip) (33%) for Plastic Omnium Modules.
Consolidated revenue does not include the share of joint ventures, which are consolidated using the equity method, in implementation of IFRS 10-11-12.
The operating margin includes the share of the results of companies which have been consolidated using the equity method, and the amortization of intangible assets acquired, before other operating income and expenses.
EBITDA corresponds to the operating margin plus the share of profit of associates and joint ventures, before depreciation and operating provisions.
Free cash-flow corresponds to the operating cash-flow, less tangible and intangible investments net of disposals, taxes and net interest paid +/- change in working capital requirements (cash surplus from operations).
Net debt includes all long-term borrowings, short-term loans and bank overdrafts less loans, marketable debt instruments and other non-current financial assets, and cash and cash equivalents.
Like-for-like: constant scope and exchange rates:
a. the currency effect is calculated by applying the exchange rate of the previous period to the revenue of the current period. In the first half of 2020, it is a positive €19.5 million on economic revenue and €13.5 million on consolidated revenue;
AT JUNE 30, 2020
In the context of its financial communication, the Group uses financial indicators based on aggregates taken from the consolidated financial statements prepared in accordance with IFRS, as adopted in the European Union.
As indicated in Note 3.1 of the consolidated financial statements at June 30, 2020, on segment information, the Group uses the notion of "economic revenue" for its operational management, which corresponds to the consolidated revenue of the Group and its joint ventures at their percentage stake: Yanfeng Plastic Omnium, the Chinese leader in exterior body parts, SHB Automotive modules, the leading Korean front-end module company and BPO, a major player in the Turkish exterior equipment market.
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Economic revenue | 3,233,086 | 4,610,965 |
| Including revenue from joint ventures at the Group's percentage stake | 271,351 | 342,713 |
| Consolidated revenue | 2,961,735 | 4,268,252 |
| In thousands of euros | |||
|---|---|---|---|
| Notes | June 30, 2020 | December 31, 2019 | |
| ASSETS | |||
| Goodwill | 5.1.1 | 1,018,247 | 1,017,830 |
| Other intangible assets | 5.1.2 | 592,603 | 724,745 |
| Property, plant and equipment | 5.1.3 | 1,734,107 | 1,958,919 |
| Investment property | 30 | 30 | |
| Equity method and non-consolidated investments | 5.1.4 | 184,872 | 195,129 |
| Non-current financial assets(1) | 5.1.5 | 70,819 | 70,958 |
| Deferred tax assets | 161,994 | 106,108 | |
| TOTAL NON-CURRENT ASSETS | 3,762,672 | 4,073,719 | |
| Inventories | 5.1.6 | 728,252 | 735,846 |
| Finance receivables(1) | 5.1.7 | 8,710 | 13,100 |
| Trade receivables | 5.1.8 | 784,305 | 818,799 |
| Other receivables | 5.1.8 | 332,409 | 328,757 |
| Other financial assets and financial receivables(1) | 5.1.7 | 175 | 55,127 |
| Hedging instruments(1) | 5.2.5 | 6,531 | 5,027 |
| Cash and cash equivalents(1) | 5.1.9 | 631,010 | 1,142,953 |
| TOTAL CURRENT ASSETS | 2,491,392 | 3,099,609 | |
| Assets held for sale | 750 | 750 | |
| TOTAL ASSETS | 6,254,814 | 7,174,078 | |
| EQUITY AND LIABILITIES | |||
| Capital | 5.2.1.1 | 8,914 | 8,914 |
| Treasury stock | -66,440 | -54,071 | |
| Additional paid-in capital | 17,389 | 17,389 | |
| Consolidated reserves | 2,175,113 | 2,014,390 | |
| Net income for the period | -403,512 | 258,197 | |
| EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
1,731,464 | 2,244,819 | |
| Attributable to non-controlling interests | 64,185 | 98,774 | |
| TOTAL EQUITY | 1,795,649 | 2,343,593 | |
| Non-current borrowings(1) | 5.2.4.7 | 1,310,194 | 1,334,713 |
| Provisions for pensions and other post-employment benefits | 118,501 | 107,670 | |
| Provisions | 5.2.3 | 42,946 | 29,970 |
| Non-current government grants | 9,356 | 3,769 | |
| Deferred tax liabilities | 68,442 | 54,859 | |
| TOTAL NON-CURRENT LIABILITIES | 1,549,439 | 1,530,981 | |
| Bank overdrafts(1) | 5.1.9.2 | 7,852 | 9,875 |
| Current borrowings and financial debt(1) | 5.2.4.7 | 809,281 | 678,762 |
| Hedging instruments(1) | 5.2.5 | 41 | 3,268 |
| Provisions for liabilities and charges | 5.2.3 | 70,212 | 70,362 |
| Grants | - | 4,207 | |
| Trade payables | 5.2.6.1 | 1,013,408 | 1,518,204 |
| Other operating liabilities | 5.2.6.2 | 1,008,932 | 1,014,826 |
| TOTAL CURRENT LIABILITIES | 2,909,726 | 3,299,504 | |
| TOTAL EQUITY AND LIABILITIES | 6,254,814 | 7,174,078 |
(1) Components of net financial debt. Net financial debt stands at € 1410.1 million at June 30, 2020 compared with €739.5 million at December 31, 2019 (see Note 5.2.4.7).
| In thousands of euros | Notes | First-half 2020 |
% | First-half 2019 |
% |
|---|---|---|---|---|---|
| Consolidated sales (revenue) | 2,961,735 | 100.0% | 4,268,252 | 100.0% | |
| Cost of goods and services sold | 4.2 | -2,797,094 | -94.4% | -3,728,693 | -87.4% |
| Gross profit | 164,641 | 5.6% | 539,559 | 12.6% | |
| Research and Development costs | 4.1 - 4.2 | -141,952 | -4.8% | -121,523 | -2.8% |
| Selling costs | 4.2 | -16,905 | -0.6% | -19,207 | -0.4% |
| Administrative expenses | 4.2 | -117,857 | -4.0% | -124,776 | -2.9% |
| Operating margin before amortization of intangible assets acquired in business combinations and before share of profit of associates and joint ventures |
-112,073 | -3.8% | 274,052 | 6.4% | |
| Amortization of intangible assets acquired in business combinations | 4.3 | -13,366 | -0.5% | -13,583 | -0.3% |
| Share of profit/loss of associates and joint ventures | 4.4 | 9,272 | 0.3% | 20,524 | 0.5% |
| Operating margin | -116,168 | -3.9% | 280,993 | 6.6% | |
| Other operating income | 4.5 | 4,493 | 0.2% | 22,409 | 0.5% |
| Other operating expenses | 4.5 | -317,826 | -10.7% | -47,364 | -1.1% |
| Borrowing costs | 4.6 | -32,775 | -1.1% | -37,472 | -0.9% |
| Other financial income and expenses | 4.6 | -2,509 | -0.1% | 527 | 0.0% |
| Profit from continuing operations before income tax and after share of profits of associates and joint ventures |
-464,785 | -15.7% | 219,093 | 5.1% | |
| Income tax | 4.7 | 46,931 | 1.6% | -55,599 | -1.3% |
| Net income | -417,855 | -14.1% | 163,494 | 3.8% | |
| Net profit attributable to non-controlling interests | 4.8 | -14,343 | -0.5% | 8,488 | 0.2% |
| Net profit attributable to owners of the parent company | -403,512 | -13.6% | 155,006 | 3.6% | |
| Earnings per share attributable to owners of the parent company | 4.9 | ||||
| Basic earnings per share (in euros)(1) | -2.77 | 1.06 | |||
| Diluted earnings per share (in euros)(2) | -2.77 | 1.06 |
(1) Basic earnings per share are calculated using the weighted average number of ordinary shares outstanding, less the average number of shares held in treasury stock.
(2) Diluted earnings per share take into consideration the average number of treasury shares deducted from equity and shares which might be issued under stock option programs.
| In thousands of euros | First-half 2020 | First-half 2019 | ||||
|---|---|---|---|---|---|---|
| Total | Gross | Tax | Total | Gross | Tax | |
| Net profit for the period attributable to owners of the parent (1) | -403,512 | -447,385 | 43,873 | 155,006 | 207,440 | -52,434 |
| Reclassified to the income statement | -21,057 | -20,333 | -724 | 6,351 | 6,516 | -165 |
| Reclassified in the period | 130 | 130 | - | 175 | 191 | -16 |
| Exchange differences on translating foreign operations - reclassified to the income statement |
- | - | - | - | - | - |
| Cash flow hedges - Interest rate instruments reclassified to the income statement |
130 | 130 | - | 175 | 191 | -16 |
| Reclassified at a later date | -21,187 | -20,463 | -724 | 6,176 | 6,325 | -149 |
| Exchange differences on translating foreign operations | -23,268 | -23,268 | - | 5,850 | 5,850 | - |
| Cash flow hedges | 2,081 | 2,805 | -724 | 326 | 475 | -149 |
| Gains/(losses) for the period - Interest rate instruments Gains/(losses) for the period – Exchange rate instruments |
- 2,081 |
- 2,805 |
- -724 |
- 326 |
- 475 |
- -149 |
| Cannot be reclassified to the income statement at a later date | -5,886 | -8,237 | 2,351 | 1,435 | -857 | 2,292 |
| Actuarial gains/(losses) recognized in equity | -8,148 | -10,499 | 2,351 | -5,737 | -8,029 | 2,292 |
| Adjustment for change in fair value of long-term investments in equity instruments and funds |
-752 | -752 | - | 7,172 | 7,172 | - |
| Revaluation of assets and liabilities due to hyperinflation in Argentina |
3,015 | 3,015 | - | - | - | - |
| Profit/loss from continuing activities recognized directly in equity | -26,943 | -28,570 | 1,627 | 7,786 | 5,659 | 2,127 |
| Comprehensive income attributable to owners of the parent(2) | -430,455 | -475,955 | 45,500 | 162,792 | 213,099 | -50,307 |
| Net profit for the period attributable to non-controlling interests | -14,343 | -17,401 | 3,058 | 8,488 | 11,653 | -3,165 |
| Reclassified to the income statement | -3,696 | -3,696 | - | 1,451 | 1,451 | - |
| Reclassified at a later date | -3,696 | -3,696 | - | 1,451 | 1,451 | - |
| Exchange differences on translating foreign operations | -3,696 | -3,696 | - | 1,451 | 1,451 | - |
| Other comprehensive income | -3,696 | -3,696 | - | 1,451 | 1,451 | - |
| Comprehensive income attributable to non-controlling interests | -18,039 | -21,097 | 3,058 | 9,939 | 13,104 | -3,165 |
| Total comprehensive income | -448,494 | -497,052 | 48,558 | 172,731 | 226,203 | -53,472 |
(1) Net profit for the period attributable to owners of the parent amounted to -€242,269 thousand at June 30, 2020 compared with €92,632 thousand at June 30, 2019.
(2) Net comprehensive income for the period attributable to owners of the parent amounted to -€258,447 thousand at June 30, 2020 compared with €97,284 thousand at June 30, 2019.
In thousands of euros In thousand units for the number of shares
Number of shares Capital Additional paid-in capital Treasury stock Other reserves (1) Translation adjustment Net profit for the period Total equity Attributable to owners of the parent Attributable to noncontrolling interests Equity at December 31, 2018 148,566 8,914 17,389 -49,850 1,617,609 (1) -41,497 533,296 2,085,861 96,138 2,181,999 1st application of IFRS 16 - - - 1st application of IFRIC 23 -2,500 -2,500 -2,500 Equity at January 1, 2019 148,566 8,914 17,389 -49,850 1,615,109 (1) -41,497 533,296 2,083,361 96,138 2,179,499 Appropriation of net profit at December 31, 2018 - - - - 533,296 - -533,296 - - - Net profit at June 30, 2019 - - - - - - 155,006 155,006 8,488 163,494 Other comprehensive income - - - - -660 8,446 - 7,786 1,451 9,237 Exchange differences on translating foreign operations - - - - -2,596 8,446 - 5,850 1,451 7,301 Actuarial gains/(losses) recognized in equity - - - - -5,737 - - -5,737 - -5,737 Cash flow hedges - Interest rate instruments - - - - 175 - - 175 - 175 Cash flow hedges - Currency instruments - - - - 326 - - 326 - 326 Change in the fair value adjustment of long-term investments in equity instruments and funds - - - - 7,172 - - 7,172 - 7,172 Revaluation of assets and liabilities due to hyperinflation in Argentina - - - - - - - - - - Comprehensive income - - - - 532,636 8,446 -378,290 162,792 9,939 172,731 Treasury stock transactions - - - -4,380 -877 - - -5,257 - -5,257 Dividends paid by Compagnie Plastic Omnium - - - - -108,168 - - -108,168 - -108,168 Dividends paid by other Group companies - - - - - - - - -15,121 -15,121 Stock option costs - - - - 1,141 - - 1,141 - 1,141 Deferred tax on stock option and share purchase plans - - - - 43 - - 43 - 43 Equity at June 30, 2019 148,566 8,914 17,389 -54,230 2,039,884 (1) -33,051 155,006 2,133,911 90,955 2,224,865 Net profit of the second-half 2019 - - - - - - 103,191 103,191 9,285 112,476 Other comprehensive income - - - - 3,115 2,666 - 5,781 331 6,112 Exchange differences on translating foreign operations - - - - -1,512 2,666 - 1,154 414 1,568 Actuarial gains/(losses) recognized in equity - - - - -6,457 - - -6,457 -83 -6,540 Cash flow hedges - Interest rate instruments - - - - 127 - - 127 - 127 Cash flow hedges - Currency instruments - - - - -1,152 - - -1,152 - -1,152 Change in the fair value adjustment of long-term investments in equity instruments and funds - - - - 3,118 - - 3,118 - 3,118 Revaluation of assets and liabilities due to hyperinflation in Argentina - - - - 8,991 - - 8,991 - 8,991 Comprehensive income - - - - 3,115 2,666 103,191 108,972 9,616 118,588 Treasury stock transactions - - - 159 1,092 - - 1,251 - 1,251 Dividends paid by other Group companies - - - - - - - - -1,799 -1,799 Stock option costs - - - - 1,351 - - 1,351 - 1,351 Deferred tax on stock option and share purchase plan - - - - -665 - - -665 - -665 Equity at December 31, 2019 148,566 8,914 17,389 -54,071 2,044,775 (1) -30,385 258,197 2,244,819 98,774 2,343,593 Appropriation of net profit at December 31, 2019 - - - - 258,197 - -258,197 - - - Net profit at June 30, 2020 - - - - - - -403,512 -403,512 -14,343 -417,855 Other comprehensive income - - - - -3,002 -23,941 - -26,943 -3,696 -30,639 Exchange differences on translating foreign operations - - - - 673 -23,941 - -23,268 -3,696 -26,964 Actuarial gains/(losses) recognized in equity - - - - -8,148 - - -8,148 - -8,148 Cash flow hedges - Interest rate instruments - - - - 130 - - 130 - 130 Cash flow hedges - Currency instruments - - - - 2,081 - - 2,081 - 2,081 Change in the fair value adjustment of long-term investments in equity instruments and in funds - - - - -752 - - -752 - -752 Revaluation of assets and liabilities due to hyperinflation in Argentina - - - - 3,015 - - 3,015 - 3,015 Comprehensive income - - - - 255,195 -23,941 -661,709 -430,455 -18,039 -448,494 Treasury stock transactions - - - -12,369 -636 - - -13,005 - -13,005 Dividends paid by Compagnie Plastic Omnium(2) - - - - -71,221 - - -71,221 - -71,221 Dividends paid by other Group companies - - - - - - - - -16,550 -16,550 Stock option costs - - - - 1,212 - - 1,212 - 1,212 Deferred tax on stock option and share purchase plans - - - - 114 - - 114 - 114 Equity at June 30, 2020 148,566 8,914 17,389 -66,440 2,229,440 (1) -54,326 -403,512 1,731,464 64,185 1,795,649
(1) See Note 5.2.1.2 for breakdown of "Other reserves".
(2) The dividend per share distributed on June 30, 2020 by Compagnie Plastic Omnium in respect of the 2019 fiscal year is €0.49 compared with €0.74 on June 30, 2019 in respect of the 2018 fiscal year (see Note 5.2.2 on dividends voted and paid).
Shareholders' equity
| In thousands of euros | Notes | First-half 2020 | 2019 | First-half 2019 |
|---|---|---|---|---|
| I - CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net income | 3.1.1 | -417,855 | 275,970 | 163,494 |
| Dividends received from associates and joint ventures | 15,085 | 31,567 | 19,011 | |
| Non-cash items | 528,107 | 602,553 | 281,669 | |
| Share of profit/(loss) of associates and joint ventures | 4.4 | -9,272 | -36,454 | -18,609 |
| Stock option plan expense Other adjustments |
1,212 -747 |
2,492 6,581 |
1,141 -4,811 |
|
| Depreciation and provisions for impairment of fixed assets | 338,705 | 297,498 | 140,763 | |
| Amortization and provisions for impairment of intangible assets Changes in provisions |
197,330 15,065 |
200,431 -7,238 |
95,685 -20,764 |
|
| Net (gains)/losses on disposals of non-current assets | 728 | -17,924 | 191 | |
| Operating grants recognized in the income statement Current and deferred taxes |
4.7.1 | -415 -46,931 |
-991 89,860 |
-480 55,602 |
| Interest expense | 32,434 | 68,298 | 32,952 | |
| CASH GENERATED BY OPERATIONS (A) | 125,338 | 910,090 | 464,174 | |
| Change in inventories and work-in-progress – net | -8,856 | 7,937 | -71,139 | |
| Change in trade receivables – net | 26,460 | 36,513 | -111,434 | |
| Change in trade payables Change in other operating assets and liabilities - net |
-393,060 -39,087 |
-99,549 38,381 |
121,888 7,925 |
|
| CHANGE IN WORKING CAPITAL REQUIREMENTS (B) | -414,544 | -16,718 | -52,760 | |
| TAXES PAID (C) | -13,330 | -95,849 | -30,383 | |
| Interest paid | -46,341 | -74,166 | -44,547 | |
| Interest received NET FINANCIAL INTEREST PAID (D) |
3,189 -43,152 |
6,230 -67,936 |
1,587 -42,960 |
|
| NET CASH GENERATED BY OPERATING ACTIVITIES (A+B+C+D) | -345,687 | 729,586 | 338,071 | |
| II – CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Acquisitions of property, plant and equipment | 3.1.3 | -116,096 | -333,697 | -167,050 |
| Acquisitions of intangible assets | 3.1.3 | -70,201 | -199,798 | -102,957 |
| Disposals of property, plant and equipment Disposals of intangible assets |
856 823 |
134,397 6,644 |
2,901 4,265 |
|
| Net change in advances to suppliers of fixed assets | -43,139 | 10,839 | -45,385 | |
| Investment grants received | 1,828 | -1,415 | 441 | |
| NET CASH USED IN OPERATIONS-RELATED INVESTING ACTIVITIES (E) | -225,929 | -383,031 | -307,786 | |
| FREE CASH FLOW (A + B + C + D + E) | -571,616 | 346,555 | 30,286 | |
| Acquisitions of shares in subsidiaries and associates, investments in associates and joint ventures, and related investments |
- | 23 | - | |
| Acquisitions of non-consolidated equity instruments Acquisitions of long-term investments in equity instruments and funds |
- -4,957 |
-320 -26,307 |
-309 -9,885 |
|
| Disposals of long-term investments in listed equity instruments and funds | - | 8,485 | 8,485 | |
| NET CASH FROM FINANCIAL TRANSACTIONS (F) | -4,957 | -18,119 | -1,709 | |
| NET CASH FROM INVESTING ACTIVITIES (E+F) | -230,886 | -401,150 | -309,495 | |
| III - CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Purchases/sales of treasury stock | -13,005 | -4,006 | -5,257 | |
| Dividends paid by Compagnie Plastic Omnium to Burelle SA Dividends paid to other shareholders(1) |
-42,788 -44,983 |
-64,619 -58,917 |
-64,619 -58,672 |
|
| Increase in financial debt | 930,787 | 267,939 | 204,996 | |
| Repayment of financial debt | -753,127 | -247,049 | -222,565 | |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (G) | 76,884 | -106,652 | -146,118 | |
| Assets held for sale (and discontinued operations) (H) Effect of exchange rate changes (I) |
- -10,228 |
- -358 |
- 2,061 |
|
| NET CHANGE IN CASH AND CASH EQUIVALENTS (A + B + C + D + E + F + G + H + I) |
-509,920 | 221,426 | -115,479 | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 5.1.9.2 - 5.2.4.7 | 1,133,078 | 911,652 | 911,652 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 5.1.9.2 - 5.2.4.7 | 623,158 | 1,133,078 | 796,174 |
(1) During the first-half 2020, the €28,433 thousand in dividends paid to other shareholders (compared with €43,549 thousand in 2019) by Compagnie Plastic Omnium SE, brought the total dividends paid by Compagnie Plastic Omnium SE to €71,221 thousand (compared with €108,169 thousand in 2019). See Note 5.2.2 "Dividends voted and paid by Compagnie Plastic Omnium".
The condensed consolidated financial statements of the Plastic Omnium Group for the six months ended June 30, 2020 were approved by the Board of Directors on July 22, 2020.
Compagnie Plastic Omnium, a company governed by French law, was set up in 1946. The bylaws set its duration until April 24, 2112. It is registered in the Lyon Trade and Companies Register under number 955 512 611 and its registered office is at 19, boulevard Jules Carteret, 69007 Lyon, France.
Compagnie Plastic Omnium became a European company following a decision of the Shareholders' Meeting of April 25, 2019. From this decision, the generic term designating the company is: Compagnie Plastic Omnium SE.
The terms "Compagnie Plastic Omnium", "the Group" and "the Plastic Omnium Group" refer to the group of companies comprising Compagnie Plastic Omnium SE and its consolidated subsidiaries.
The Plastic Omnium Group is a global leader in the transformation of plastic materials for the automotive market for body parts, storage systems and fuel supply systems ("Industries" segment) and front-end modules ("Modules" segment).
The Group has organized its business into two operating segments:
oIntelligent Exterior Systems (IES), dedicated to complex and intelligent body systems;
oClean Energy Systems (CES), dedicated to clean energy storage systems and emission reduction systems.
Modules: module design, development and assembly (HBPO).
Plastic Omnium Group shares have been traded on the Paris Stock Exchange since 1965. The Group has been traded on Eurolist subfund A since January 17, 2013 and is listed on the SBF 120 and the CAC Mid 60 indices. The main shareholder is Burelle SA, which held 58.78% of the Group (60.04% excluding treasury stock) with a voting rights at 72.75 % at June 30, 2020 .
The unit of measurement used in the Notes to the consolidated financial statements is thousand euros, unless otherwise indicated.
The Group's condensed consolidated financial statements for the six months ended June 30, 2020 have been prepared in accordance with IAS 34 "Interim Financial Reporting".
These condensed half-yearly consolidated financial statements do not include all the information required for annual financial statements and should be read in conjunction with the consolidated financial statements at December 31, 2019.
The accounting policies used are those applied by the Group at December 31, 2019 and described in Note 1 "Accounting policies, accounting rules and principles" of the 2019 consolidated financial statements.
The Group has not early applied any standards, interpretations and amendments that are not mandatory at January 1, 2020.
The Group applied the accounting principles described in the consolidated financial statements at December 31, 2019 without any change.
The tax expense (current and deferred) for the period is determined based on the estimated annual tax rate, applied to profit before tax for the period excluding significant non-recurring items.
See Note 2.1.3 the "Deferred tax assets" on the consequences linked to the Covid-19 crisis.
The change in interest rates during the first half of 2020 led the Group to reassess its employee benefits obligations in the United States. The rates used at June 30, 2020 in the main zones are respectively:
The half-year expense for post-employment benefits corresponds to half of the budgeted net expense for the 2020 fiscal year, determined on the basis of the actuarial data and assumptions used at December 31, 2019, after taking into account, where applicable, special events such as plan changes.
At June 30, 2020, the Group has identified signs of impairment due to the fall in activity, the decline in profitability over the period and the less favorable outlook following the Covid-19 crisis. The Group has carried out impairment tests on goodwill, tangible and intangible assets (see Note 2.1.2 "Asset impairment tests").
In preparing its financial statements, the Plastic Omnium Group uses estimates and assumptions to assess some of its assets, liabilities, income, expenses and commitments. These estimates and assumptions, which are reviewed periodically by Senior Management, may lead to a material adjustment to the carrying amount of assets and liabilities. At June 30, 2020, they mainly concerned:
deferred taxes;
impairment tests on goodwill, intangible and tangible assets
The tests performed by the Group as part of the preparation of the consolidated financial statements at June 30, 2020, given the indications of impairment, are based on the value in use, the latter being calculated as the present value of future cash flows. These tests involve assumptions about future operating cash flows and discount rates. The assumptions that could have a significant impact on the financial statements relate in particular to discount rates and growth rates (see Note 2.1.2 "Asset impairment tests"). Sensivity tests were performed on the basis of the two key aggregates of Revenue and Operating Margin.
provisions:
oretirement commitments and other employee benefits; and
oother provisions (workforce adjustment, litigation, customer guarantees, legal and tax risks, etc.);
leases (IFRS 16):
The use of the discount rate in determining the right of use and the lease liability for the leased property.
The Covid-19 crisis, which emerged in January 2020 in China and March 2020 in the rest of the world, led to the sudden shutdown of the Group's plants and Research and Development centers, which gained momentum as its customers, the automotive manufacturers, shut their production lines. A specific Note is dedicated to the impacts and uncertainties related to this crisis: see Note 2.1 "Management by the Group of the Covid-19 crisis and the impacts on the Group's financial statements".
The impact of the Covid-19 crisis on the global automotive industry in terms of vehicle volume during the first-half of 2020 compared to the first-half of 2019 is presented below:
| In thousands of vehicles | Source: IHS (1) | First-half 2020 | First-half 2019 | Change | % |
|---|---|---|---|---|---|
| Vehicle production forecasts | 28,850 | 43,560 | -14,710 | -33.8% |
(1) IHS: "IHS Markit", an American company specialized in economic information, which publishes trends and forecasts, particularly for the automotive sector. July 2020 publication.
Forecast of the global automotive market in the second half of 2020 compared to the same period last year is presented below:
| Source: IHS (1) In thousands of vehicles |
Second-half 2020 | Second-half 2019 | Change | % |
|---|---|---|---|---|
| Vehicle production forecasts | 37,890 | 42,430 | -4,540 | -10.7% |
(1) IHS: "IHS Markit", an American company specialized in economic information, which publishes trends and forecasts, particularly for the automotive sector. July 2020 publication.
The Group was obliged to close production centers in strict compliance with the provisions taken by the authorities of each country where the Group operates and in line with the automotive manufacturers' production line shutdowns:
The impacts directly linked to Covid-19 are described in the following Notes.
The table below shows the change in activity in the Group's plants and Research and Development centers, which explains in particular the Group's performance over the first-half of 2020.
| In units | March 31, 2020 | April 30, 2020 | May 31, 2020 | June 30, 2020 | ||||
|---|---|---|---|---|---|---|---|---|
| Number of plants | Under opera tion |
Shut down |
Under opera tion |
Shut down |
Under opera tion |
Shut down |
Under opera tion |
Shut down |
| Group Total | 131 | 131 | 131 | 131 | ||||
| By geographic area | 50 | 81 | 50 | 81 | 120 | 11 | 131 | - |
| Europe and Africa | 14 | 44 | 14 | 44 | 56 | 2 | 58 | |
| Asia | 36 | 10 | 36 | 10 | 45 | 1 | 46 | |
| North America | - | 21 | - | 21 | 14 | 7 | 21 | |
| South America | - | 6 | - | 6 | 5 | 1 | 6 |
The ramp-up of plants when they reopened was gradual. The highly variable average production rate at the end of June is presented below:
| Production capacity used in % | |||
|---|---|---|---|
| June 30, 2020 | Intelligent Exterior Clean Energy Systems Systems Division Division |
Modules Division | |
| Europe and Africa | 68% 53% |
95% | |
| Asia | 70% - 83% 54% - 68% |
100% | |
| North America | 78% | 62% | |
| South America | 24% | 25% | 91% |
Indicators of impairment were identified in the first half-year in connection with the global Covid-19 pandemic:
In this context and in application of IAS 36 "Impairment of assets", impairment tests were carried out to verify that intangible and tangible assets, including assets in progress, are recognized at a value not exceeding their recoverable value.
Thus, the following assets were tested:
The procedures for carrying out the tests during the first half-year 2020 were identical to those used in previous years, taking into account the following elements, however:
In this context, the Group relied on the following elements:
The main operational assumptions used in the impairment tests were approved by Senior management for the closing accounts at June, 30, 2020.
The tests carried out led to the recognition of the following impairments:
These impairments are mainly the result of the significant reduction in volumes given the Covid-19 crisis and the assumption of a global automotive market that will remain well below pre-crisis forecasts in the coming years and consequently will not provide satisfactory plant utilization rates.
In accordance with the Group's accounting principles, these impairments are recognized in "Other operating expenses" (see Note 4.5).
The tests carried out indicate that there is no impairment of goodwill. Sensitivity tests were performed on the basis of the two key aggregates of Revenue and Operating Margin. These tests show that a downward revision of annual revenue by 5% would have no impact on the results of the tests; a deterioration of 5% in the HBPO Operating Margin, and of 5% in the Industries Operating Margin would also have no impact.
The Group's tax position has been analyzed taking into account the estimated effects of the Covid-19 crisis on future results.
In accordance with the Group's accounting principles, "Tax credits and deferred tax assets on tax loss carryforwards and temporary differences are only recognized when the probability of their utilization within a relatively short period of time is proven" (please refer to Note 1.9 "Income Tax" to the consolidated financial statements of December, 31, 2019). Thus, taking into account significantly lower future results, deferred tax assets impairment amounted to -€80.4 million for the half-year.
Impacts over the first-half of 2020 are explained in Note 4.7 "Income tax".
From March, as the Covid-19 crisis was recognized as a pandemic (which emerged in January 2020 in China), the Group gradually closed all of its production sites as its automotive manufacturer customers shut down their own sites.
Protective measures have led the Group to favor remote working (home office) whenever possible and essential, and to set up part-time activity in strict compliance with the legislation and the provisions taken by the authorities of each country where the Group is established.
As of June 30, 2020, State aid received amounted to €18.1 million recorded as a reduction in personnel costs.
The Group has implemented very strict health measures ranging from protective equipment for employees, hydroalcoholic gels, temperature-taking equipment, regular disinfection of premises, floor markings and the displaying of instructions, etc.
Moreover, two production lines, one in France and one in Mexico, have been dedicated for the production of masks for all Group employees since May 2020.
Total additional costs resulting from the crisis (excluding IT network extensions for organizing remote working, providing laptops, etc.) are estimated at €6.7 million recognized in operating expenses at the operating margin level.
As part of its Corporate Social Responsibility (CSR) policy Act for AllTM, the Group has committed to an amount of €1 million to help charities in favor of the elderly, isolated people, medical staff and all occupations engaged on the front line facing Covid-19.
The Group has drawn down €587 million on existing credit lines and, at the same time, negotiated additional credit lines with its banking partners for an amount of €560 million over the six-month period.
See Notes 5.1.9 "Cash and cash equivalents", 5.2.4.6 "Undrawn medium-term credit lines" and 5.2.4.7 "Reconciliation of gross and net financial debt".
During the first-half of 2020, the Group issued "Neu-CP" maturing in less than one year to European investors, amounted to €99.5 million as of June 30.
The characteristics of these issuances are provided in Note 5.2.4.5 "Short-term borrowings: issuance of "Negotiable European commercial paper" (Neu-CP)".
See also Note 5.2.4.7 "Reconciliation of gross and net financial debt".
On May 29, 2020, Compagnie Plastic Omnium SE reimbursed the €500 million bond issued without covenant or rating on May 21, 2013 to European investors.
See Notes 5.2.4.2 "Borrowings: private placement notes and bonds" and 5.2.4.7 "Reconciliation of gross and net financial debt".
The last negotiable medium-term bond (NMTN), subscribed on February 24, 2015 by Compagnie Plastic Omnium SE, matured in the first-half of 2020.
Compagnie Plastic Omnium SE also sold its investments in UCITS (Undertaking for Collective Investment in Transferable Securities) with a nominal value of €50 million subscribed in 2017.
See Notes 5.2.4.4 "Loans, negotiable debt securities and other financial assets" and 5.2.4.7 "Reconciliation of gross and net financial debt".
On June, 3, 2020, Plastic Omnium Group sold its equity investment in PO-CellTech, a start-up focusing on fuel cells and supercapacitors, to its partner, the Israeli company ELBIT Systems.
PO-CellTech was recognized in the Group's financial statements using the equity method, respectively in "Share of profit/loss of associates and joint ventures" and "Investments in associates and joint ventures" in the income statement and balance sheet (see Notes 4.4 and 5.1.4).
The transaction had no impact on the net income of the period.
On April 6, 2020, Compagnie Plastic Omnium SE signed a Settlement agreement related to the sale by Compagnie Plastic Omnium SE of the Environment Division (which became Sulo SAS) on December 18, 2018 to the consortium "Latour Capital / Bpifrance (Public investment bank)".
As such, over the first-half of 2020, an amount of €0.4 million, fully provisioned in the accounts at December 31, 2019, was paid to the buyer.
During the first-half of 2020, as co-sponsor and member of the advisory investment committee, Compagnie Plastic Omnium SE paid AP Ventures, a London-based venture capital firm specializing in hydrogen and fuel cells, a total of €1.1 million (equivalent to \$1.2 million).
Compagnie Plastic Omnium SE committed to invest \$30 million over the life of the fund. The Group's payment amounted to €2.6 million (equivalent to \$2.8 million) at June 30, 2020 (see Note 5.1.5.1 "Long-term investments in equities and funds").
The United Kingdom left the European Union (EU) on January 31, 2020 following the referendum of June 23, 2016 and is not asking for any extension of the transition period.
During the first-half of 2020, effects of the Covid-19 crisis are combined with those potentially linked to Brexit. The Group's vigilance remains high on its British subsidiaries, "Plastic Omnium Automotive Ltd" and "HBPO UK Ltd", whose business is mainly domestic.
The fluctuations of the pound sterling as well as the activity carried out in the United Kingdom are presented below.
The exchange rate of the pound sterling during the last three years has changed as follows (closing rates):
June 30, 2019: 1 euro is exchanged for 0.897 pound; December 31, 2019: 1 euro is exchanged for 0.851 pound; June 30, 2020: 1 euro is exchanged for 0.912 pound.
The combined revenue and results of these two companies over the last two half-years represent respectively:
| June 2019 | June 2020 | |
|---|---|---|
| As a percentage of Group revenue | 5.43% | 4.39% |
| As a percentage of Group operating margin | 5.20% | 5.30% |
| As a percentage of Group net income | 6.45% | 1.38% |
The economic crisis in Argentina continues and is combined with the effects of the Covid-19 crisis.
The Argentine peso exchange rate has dropped by 17.8% since December 31, 2019.
At June 30, 2020, the assets of the three subsidiaries Plastic Omnium Auto Inergy Argentina SA (Clean Energy Systems), Plastic Omnium Argentina and Plastic Omnium Automotive Argentina (Intelligent Exterior Systems) were revalued. The impacts related to hyperinflation on the main income statement aggregates and recognized over the firsthalf of 2020 are as follows:
| First-half 2020 | |
|---|---|
| Impact on the Group's revenue | +€467 thousand |
| Impact on the Group's operating margin | -€432 thousand |
| Impact on the Group's financial income | -€1,301 thousand |
| Impact on the Group's other operating expense | -€964 thousand |
| Impact on the Group's tax expense | -€159 thousand |
| Impact on the Group's net income | -€2,856 thousand |
The Group uses the concept "Economic revenue" for its operational management, which corresponds to the consolidated revenue of the Group and its joint ventures at their percentage stake: Yanfeng Plastic Omnium, the Chinese leader in exterior body parts, SHB Automotive modules, the leading Korean front-end module company and BPO, a major player in the Turkish market for exterior equipment.
The Group organizes its Automotive businesses into two operating segments (see Note on "Group Presentation"): "Industries" and "Modules".
The columns in the tables below show the amounts by segment. The "Unallocated items" column groups together intersegment eliminations and amounts that are not allocated to a specific segment (in particular, holding company activity) allowing for the reconciliation of segment data with the Group's financial statements. Financial results, taxes and the share of profit/(loss) of associates are monitored at Group level and are not allocated to segments. Transactions between segments are carried out on an arm's length basis.
| First-half 2020 | ||||
|---|---|---|---|---|
| In thousands of euros | Industries | Modules | Unallocated items (2) |
Total |
| Economic revenue (1) | 2,394,829 | 838,257 | - | 3,233,086 |
| Including revenue from joint ventures consolidated at the Group's percentage stake | 193,242 | 78,109 | - | 271,351 |
| External sales to third parties | 2,201,587 | 760,148 | - | 2,961,735 |
| Inter-segment sales | (1,043) | 1,043 | - | - |
| Consolidated revenue | 2,200,544 | 761,191 | - | 2,961,735 |
| % of segment revenue - Total | 74.3% | 25.7% | - | 100.0% |
| Operating margin before amortization of intangible assets acquired and before share of profit/(loss) of associates and joint ventures |
(109,600) | (2,473) | - | (112,073) |
| % of segment revenue | -5.0% | -0.3% | - | -3.8% |
| Amortization of intangible assets acquired | (4,593) | (8,773) | - | (13,366) |
| Share of profit/(loss) of associates and joint ventures | 8,609 | 663 | - | 9,272 |
| Operating margin | (105,585) | (10,583) | - | (116,168) |
| % of segment revenue | -4.8% | -1.4% | - | -3.9% |
| Other operating income | 3,338 | 1,155 | - | 4,493 |
| Other operating expenses | (273,284) | (44,542) | - | (317,826) |
| % of segment revenue | -12.3% | -5.7% | - | -10.6% |
| Financing costs | (32,775) | |||
| Other financial income and expenses | (2,509) | |||
| Profit/(loss) from continuing operations before income tax and after share in | (464,785) | |||
| associates and joint ventures Income tax |
46,931 | |||
| Net income | (417,855) | |||
| First-half 2019 | ||||
| In thousands of euros | Industries | Modules | Unallocated items (2) |
Total |
| Economic revenue (1) | 3,458,252 | 1,152,713 | - | 4,610,965 |
| Including revenue from joint ventures consolidated at the Group's percentage stake | 250,711 | 92,002 | - | 342,713 |
| External sales to third parties | ||||
| Inter-segment sales | 3,207,541 (987) |
1,060,711 987 |
- - |
4,268,252 - |
| Consolidated revenue | ||||
| % of segment revenue - Total | 3,206,554 75.1% |
1,061,698 24.9% |
- - |
4,268,252 100.0% |
| Operating margin before amortization of intangible assets acquired and before share of profit/(loss) of associates and joint ventures |
239,295 | 34,757 | - | 274,052 |
| % of segment revenue | 7.5% | 3.3% | - | 6.4% |
| Amortization of intangible assets acquired Share of profit/(loss) of associates and joint ventures |
(4,805) 19,467 |
-8,778 1,057 |
- - |
(13,583) 20,524 |
| Operating margin | ||||
| % of segment revenue | 253,957 7.9% |
27,036 2.5% |
- - |
280,993 6.6% |
| Other operating income | 20,362 | 2,047 | - | 22,409 |
| Other operating expenses | (45,229) | (2,135) | - | (47,364) |
| % of segment revenue | -0.8% | - | - | -0.6% |
| Financing costs | (37,472) | |||
| Other financial income and expenses | 527 | |||
| Profit/(loss) from continuing operations before income tax and after share in | 219,093 | |||
| associates and joint ventures Income tax |
(55,599) |
(1) Economic revenue corresponds to revenue of the Group and its joint ventures consolidated at their percentage of ownership.
(2) "Unallocated items" corresponds to intra-group eliminations and amounts that are not allocated to a specific segment (for example, holding company activities). This column is included to enable segment information to be reconciled with the consolidated financial statements.
| June 30, 2020 | ||||||
|---|---|---|---|---|---|---|
| In thousands of euros | ||||||
| Net amounts | Industries | Modules | Unallocated items | Total | ||
| Goodwill | 493,452 | 524,795 | - | 1,018,247 | ||
| Intangible assets | 465,268 | 122,190 | 5,145 | 592,603 | ||
| Property, plant and equipment | 1,558,169 | 145,872 | 30,066 | 1,734,107 | ||
| Investment property | - | - | 30 | 30 | ||
| Inventories | 658,826 | 69,426 | - | 728,252 | ||
| Trade receivables | 590,638 | 191,823 | 1,845 | 784,305 | ||
| Other receivables | 267,081 | 21,116 | 44,212 | 332,409 | ||
| Finance receivables (C ) (1) | 8,710 | - | - | 8,710 | ||
| Current accounts and other financial assets (D) | -1,541,932 | 2,976 | 1,549,653 | 10,697 | ||
| Long-term investments in equity instruments and funds - FMEA 2 (F) | 2,695 | - | 57,602 | 60,297 | ||
| Hedging instruments (E ) | - | - | 6,531 | 6,531 | ||
| Net cash and cash equivalents (A) (2) | 193,108 | 45,563 | 384,487 | 623,158 | ||
| Segment assets | 2,696,015 | 1,123,761 | 2,079,571 | 5,899,346 | ||
| Borrowings and financial debt (B) | 250,540 | 151,722 | 1,717,254 | 2,119,516 | ||
| Segment liabilities | 250,540 | 151,722 | 1,717,254 | 2,119,516 | ||
| a Segment net financial debt = (B - A - C- D - E - F) (3) |
1,587,959 | 103,183 | -281,019 | 1,410,123 | ||
| December 31, 2019 | ||||||
| Industries | Modules | Unallocated items | Total | |||
| Goodwill | 493,035 | 524,795 | - | 1,017,830 | ||
| Intangible assets | 550,467 | 168,357 | 5,921 | 724,745 | ||
| Property, plant and equipment | 1,792,295 | 133,857 | 32,767 | 1,958,919 | ||
| Investment property | - | - | 30 | 30 | ||
| Inventories | 674,341 | 61,505 | - | 735,846 | ||
| Trade receivables | 682,714 | 132,230 | 3,855 | 818,799 | ||
| Other receivables | 239,765 | 31,565 | 57,427 | 328,757 | ||
| Finance receivables (C ) (1) | 13,100 | - | - | 13,100 | ||
| Current accounts and other financial assets (D) | -1,101,226 | 3,103 | 1,167,906 | 69,783 | ||
| Long-term investments in equity instruments and funds - FMEA 2 (F) | 142 | - | 56,160 | 56,302 | ||
| Hedging instruments (E ) | - | - | 5,027 | 5,027 | ||
| Net cash and cash equivalents (A) (2) | 124,545 | 64,711 | 943,822 | 1,133,078 | ||
| Total segment assets | 3,469,178 | 1,120,123 | 2,272,915 | 6,862,215 | ||
| Borrowings and financial debt (B) | 334,313 | 50,018 | 1,632,412 | 2,016,742 | ||
| Segment liabilities | 334,313 | 50,018 | 1,632,412 | 2,016,742 |
(1) At June 30, 2020, ''Finance receivables'' amounted to €8,710 thousand vs. €13,100 thousand at December 31, 2019.
(2) Net cash and cash equivalents as reported in the Statement of Cash Flows. See also 5.1.9.2 "Net cash and cash equivalents at end of period".
(3) See Notes 5.2.4.1 "Definition of debt instruments within the Group" and 5.2.4.7 "Reconciliation of gross and net debt".
| First-half 2020 In thousands of euros |
Industries | Modules | Unallocated items |
Total |
|---|---|---|---|---|
| Acquisitions of intangible assets | 62,236 | 7,585 | 380 | 70,201 |
| Capital expenditure including acquisitions of investment property | 103,154 | 12,417 | 525 | 116,096 |
| First-half 2019 | Industries | Modules | Unallocated | Total |
| In thousands of euros Acquisitions of intangible assets |
90,489 | 11,383 | items 1,085 |
102,957 |
The information given in the following tables corresponds to the revenue generated by the subsidiaries in the sales regions or countries as indicated below:
| First-half 2020 | First-half 2019 | ||||
|---|---|---|---|---|---|
| In thousands of euros | Totals | % | In thousands of euros | Totals | % |
| France | 214,250 | 6.6% | France | 378,655 | 8.2% |
| North America | 852,285 | 26.4% | North America | 1,310,608 | 28.4% |
| Europe excluding France | 1,530,597 | 47.3% | Europe excluding France | 2,066,669 | 44.8% |
| South America | 30,253 | 0.9% | South America | 81,789 | 1.8% |
| Africa | 38,254 | 1.2% | Africa | 45,348 | 1.0% |
| Asia | 567,444 | 17.6% | Asia | 727,896 | 15.8% |
| Economic revenue | 3,233,086 | 100% | Economic revenue | 4,610,965 | 100% |
| Including revenue from joint ventures at the Group's percentage stake |
271,351 | Including revenue from joint ventures at the Group's percentage stake |
342,713 | ||
| Consolidated revenue | 2,961,735 | Consolidated revenue | 4,268,252 |
| Group's percentage stake | 342,713 | ||||
|---|---|---|---|---|---|
3.1.4.2. Information for the top ten contributing countries
| First-half 2020 | First-half 2019 | |||||
|---|---|---|---|---|---|---|
| In thousands of euros | Totals | % | In thousands of euros | Totals | % | |
| Germany | 566,382 | 17.5% | Germany | 743,570 | 16.1% | |
| United States | 439,243 | 13.6% | United States | 666,707 | 14.5% | |
| Mexico | 368,861 | 11.4% | Mexico | 575,901 | 12.5% | |
| China | 335,731 | 10.4% | China | 384,628 | 8.3% | |
| Spain | 282,153 | 8.7% | France | 378,655 | 8.2% | |
| France | 214,250 | 6.6% | Spain | 352,162 | 7.6% | |
| Slovakia | 188,299 | 5.8% | Slovakia | 257,431 | 5.6% | |
| United Kingdom | 148,497 | 4.6% | United Kingdom | 244,625 | 5.3% | |
| Korea | 128,546 | 4.0% | Korea | 161,269 | 3.5% | |
| Hungary | 110,631 | 3.4% | Hungary | 143,919 | 3.1% | |
| Other | 450,494 | 14.0% | Other | 702,098 | 15.3% | |
| Economic revenue | 3,233,086 | 100% | Economic revenue | 4,610,965 | 100% | |
| Including revenue from joint ventures at the Group's percentage stake |
271,351 | Including revenue from joint ventures at the Group's percentage stake |
342,713 | |||
| Consolidated revenue | 2,961,735 | Consolidated revenue | 4,268,252 |
| Group's percentage stake | 342,713 | ||
|---|---|---|---|
| First-half 2020 | First-half 2019 | ||||
|---|---|---|---|---|---|
| Automotive manufacturers | Totals | Automotive manufacturers Totals |
|||
| In thousands of euros | Totals | % of total automotive revenue |
In thousands of euros | Totals | % of total automotive revenue |
| Volkswagen-Porsche | 830,190 | 25.7% | Volkswagen-Porsche | 1,223,507 | 26.5% |
| PSA Peugeot Citroën | 343,173 | 10.6% | PSA Peugeot Citroën | 465,476 | 10.1% |
| Daimler | 323,002 | 10.0% | General Motors | 428,254 | 9.3% |
| General Motors | 283,861 | 8.8% | BMW | 379,247 | 8.2% |
| BMW | 281,976 | 8.7% | Daimler | 370,559 | 8.0% |
| Total – main manufacturers | 2,062,201 | 63.8% | Total – main manufacturers | 2,867,043 | 62.2% |
| Other automotive manufacturers | 1,170,885 | 36.2% | Other automotive manufacturers | 1,743,922 | 37.8% |
| Total economic revenue | 3,233,086 | 100.0% | Total economic revenue | 4,610,965 | 100% |
| Including revenue from joint ventures at the Group's percentage stake |
271,351 | Including revenue from joint ventures at the Group's percentage stake |
342,713 | ||
| Total consolidated revenue | 2,961,735 | Total consolidated revenue | 4,268,252 |
| automotive revenue | In thousands of euros | Totals | % of total automotive revenue |
|
|---|---|---|---|---|
| Including revenue from joint ventures at the Group's percentage stake |
342,713 | |||
Over a six-month period impacted by the Covid-19 crisis with the sudden and large-scale shutdown of most of the Group's plants worldwide, the entire income statement was impacted by the sharp decrease in automotive activity.
The impairment of assets and the restructuring costs have been recorded in the "Other operating income and expenses" item (see Note 2.1 "Management by the Group of the Covid-19 crisis and the impacts on the Group's financial statements") in accordance with the Group's accounting principles.
The percentage of Research and Development costs is expressed in relation to the amount of revenue.
| In thousands of euros | First-half 2020 | % | First-half 2019 | % |
|---|---|---|---|---|
| Research and Development costs after developments sold | -122,715 | -4.1% | -148,762 | -3.5% |
| Capitalized development costs | 67,601 | 2.3% | 96,901 | 2.3% |
| Depreciation of capitalized development costs | -91,907 | -3.1% | -76,595 | -1.8% |
| Research tax credit | 4,846 | 0.2% | 6,394 | 0.1% |
| Other (including grants and contributions received) | 223 | - | 539 | - |
| Research and Development costs | -141,952 | -4.8% | -121,523 | -2.8% |
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Cost of goods and services sold includes: | ||
| Raw materials (purchases and changes in inventory) (1) | -2,114,210 | -3,039,071 |
| Direct production outsourcing | -6,752 | -7,428 |
| Utilities and fluids | -41,008 | -56,200 |
| Employee benefits expenses | -337,943 | -384,172 |
| Other production costs | -145,036 | -122,196 |
| Depreciation and amortization | -146,500 | -125,674 |
| Provisions | -5,645 | 6,048 |
| Total | -2,797,094 | -3,728,693 |
| Research and Development costs include: | ||
| Employee benefits expenses | -98,268 | -113,569 |
| Depreciation, amortization and provisions | -101,970 | -84,843 |
| Other | 58,286 | 76,889 |
| Total | -141,952 | -121,523 |
| Selling costs include: | ||
| Employee benefits expenses | -12,363 | -13,298 |
| Depreciation, amortization and provisions | -1,650 | -326 |
| Other | -2,892 | -5,583 |
| Total | -16,905 | -19,207 |
| Administrative costs include: | ||
| Employee benefits expenses | -75,785 | -79,207 |
| Other administrative expenses | -32,729 | -36,055 |
| Depreciation and amortization | -9,433 | -9,840 |
| Provisions | 91 | 326 |
| Total | -117,857 | -124,776 |
(1) Including charges and reversals of provisions for inventories amounting to :
· -€10,241 thousand at June 30, 2020;
· -€4,560 thousand at June 30, 2019.
This item corresponds mainly to:
As part of impairment tests of assets following the decline in activity due to the Covid-19 crisis (see Note 2.1.2 "Asset impairment tests"), the Group recognized impairments on HBPO customer contracts at June 30, 2020 for -€32 million (see Note 4.5 "Other operating income and expenses").
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Amortization of brands | -273 | -276 |
| Amortization of contractual customer relationships | -13,093 | -13,307 |
| Total amortization of intangible assets acquired | -13,366 | -13,583 |
The associates Chengdu Faway Yanfeng Plastic Omnium and Dongfeng Plastic Omnium Automotive Exterior are included in the YFPO joint ventures.
Share of profit/(loss) of associates and joint ventures breaks down as follows (please refer to Note 5.1.4 for "Nonconsolidated interests and investments in associates and joint ventures accounted for by the equity method" in the Balance Sheet):
| In thousands of euros | First-half 2020 % Interest |
First-half 2019 % Interest |
First-half 2020 |
First-half 2019 |
|---|---|---|---|---|
| HBPO - SHB Automotive Modules | 33.34% | 33.34% | 652 | 1,049 |
| HICOM HBPO Sdn Bhd | 26.66% | 26.66% | 11 | 8 |
| JV Yanfeng Plastic Omnium and its subsidiaries - joint venture | 49.95% | 49.95% | 5,942 | 15,745 |
| B.P.O. AS - joint venture | 49.98% | 49.98% | 2,667 | 3,844 |
| PO-CellTech (1) | 23.00% | 23.00% | - | -122 |
| Total share of profit/(loss) of associates and joint ventures | 9,272 | 20,524 |
(1) The Group sold its equity investment in PO-CellTech on June 3, 2020. See Note 2.2.2.1 under the "Significant events of the period".
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Pre-start-up costs at new plants | -1,072 | -8,584 |
| Reorganization costs(1) | -15,567 | -14,094 |
| Impairment of non-current assets (2) | -262,014 | -1,635 |
| Impairment and write-offs on current assets | -5,142 | - |
| Impairment of investments and financial receivables (net) | -328 | - |
| Provisions for charges and litigation(3) | -11,722 | -3,094 |
| Foreign exchange gains and losses on operating activities (4) | -12,652 | -4,080 |
| Argentina hyperinflation | -964 | - |
| Results of long-term investments in equity instruments and funds | 1,621 | 841 |
| Retirement pension plan: change in plan | - | 13,375 |
| Gains/losses on disposals of non-current assets | -776 | -187 |
| Other (5) | -4,718 | -7,496 |
| Total operating income and expenses | -313,333 | -24,955 |
| - of which total income | 4,493 | 22,409 |
| - of which total expenses | -317,826 | -47,364 |
Reorganization costs relate primarily to significant restructuring in the « Industries » segment in Germany and the United States.
Impairment of non-current assets mainly relates to production and project assets by segment as follows:
The details of the assets impaired during the first-half of 2020 following the Covid-19 crisis are provided in Note 2.1.2 "Asset impairment tests".
This item mainly includes provisions for quality disputes with several automotive manufacturers unrelated to the Covid-19 crisis and to labor disputes.
Almost all of the foreign exchange losses are mostly related to fluctuations in the US dollar and the Mexican peso.
Non-material amounts taken individually.
Refer to the consolidated financial statements at first-half 2019 for details of operations in the last fiscal year.
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Finance costs | -26,357 | -30,580 |
| Interest on lease liabilities(1) | -3,922 | -4,519 |
| Financing fees and commissions | -2,496 | -2,373 |
| Borrowing costs | -32,775 | -37,472 |
| Exchange gains or losses on financing activities | -131 | -1,164 |
| Gains or losses on interest rate and currency hedges(2) | 1,796 | 2,648 |
| Interest on post-employment benefit obligations | -791 | -1,179 |
| Other (3) | -3,383 | 222 |
| Other financial income and expenses | -2,509 | 527 |
| Total | -35,284 | -36,945 |
(1) See Notes 5.1.3 "Property, plant and equipment" and 5.2.4.7 "Reconciliation of gross and net financial debt".
(2) The Group no longer has any interest rate instrument contracts. This item includes an amount of -€130 thousand corresponding to the amortization of the balance on the 2018 bond loan (see the Statement of Changes in equity) and income of +€1,926 thousand corresponding to the impact of currency hedges.
See Note 5.2.5.1.2 "Impact of unsettled foreign exchange hedges on income and equity".
(3) During the first-half of 2020, this item includes in particular:
See Note 5.2.4.4 "Loans, negotiable debt securities and other financial assets";
In view of the significant decrease expected in future results, the tax income of the period takes into account both the non-recognition of deferred tax assets on some entities'losses during the period, and the impairment of part of the stock of deferred tax assets recognized at January 1, 2020 and part of those relating to activity in the first six months of 2020.
The income tax expense breaks down as follows:
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| Current taxes on continuing activities | 3,186 | -59,275 |
| Current income tax income/(expense) | 5,465 | -55,793 |
| Tax expense/(income) on non-recurring items | -2,279 | -3,482 |
| Deferred taxes on continuing activities | 43,745 | 3,676 |
| Deferred tax income/(expense) on timing differences arising or reversed during the period | 46,530 | 4,786 |
| Expense/(income) resulting from changes in tax rates or the introduction of new taxes | -2,785 | -1,110 |
| Income tax income (expense) on continuing activities recorded in the consolidated income statement | 46,931 | -55,599 |
Analysis of the income tax expense includes the following:
| In thousands of euros | First-half 2020 | First-half 2019 | |||
|---|---|---|---|---|---|
| Totals | % (1) | Totals | % (1) | ||
| Consolidated loss (profit) on continuing activities before tax and share of profit/(loss) of associates and joint ventures (A) |
-474,056 | 198,569 | |||
| Tax rate applicable in France (B) | 32.02% | 32.20% | |||
| Theoretical tax income (expense) (C) = (A) x (-B) | 151,793 | -63,939 | |||
| Difference between the theoretical tax expense and the current and deferred tax expense excluding tax assessed on net interim profit on continuing activities (D) |
-104,862 | 22.1% | 8,340 | 4.2% | |
| Tax credits | 3,176 | -0.7% | 19,565 | 9.9% | |
| Permanent differences between accounting profits and taxable profits | -4,779 | 1.0% | -5,851 | -2.9% | |
| Change in unrecognized deferred taxes | -80,392 | 17.0% | -8,202 | -4.1% | |
| Impact on deferred tax of a tax rate change | -2,276 | 0.5% | -1,110 | -0.6% | |
| Impact of differences in foreign tax rates | -22,972 | 4.8% | 13,755 | 6.9% | |
| Contribution to Value Added | -3,529 | 0.7% | -2,959 | -1.5% | |
| Other impacts | 5,910 | -1.2% | -6,858 | -3.5% | |
| Total current and deferred tax income (expense) on continuing activities (E) = (C) + (D) |
46,931 | -55,599 | |||
| Effective tax rate (ETR) on continuing activities (E)/(A) | 9.9% 28.0% |
(1) Percentage expressed in relation to the consolidated profit on continuing activities before tax and share of profit/(loss) of associates and joint ventures (C)
The Group's effective tax rate in first half 2020 was 9.9% (28.0% for first half 2019).
In the first half of 2020, the Group recognized tax income of €46.9 million for a theoretical tax of €151.8 million, based on a tax rate of 32.02%.
During the first half of 2019, the tax recognized was an expense of €55.6 million for a theoretical tax of €63.9 million, based on a tax rate of 32.20%.
The difference between the tax recognized and the theoretical tax mainly reflects:
€3.2 million in specific tax reductions or credits mainly in North America, Asia and France (€19.6 million for first half 2019);
a -€23.0 million impact from lower tax rates, mainly in Asia (China, Thailand), the United-States and Europe (excluding France and Belgium) (€13.8 million for first half 2019). The difference between the tax rate in France and countries with lower tax rates has a favorable effect in a profit situation and an opposite effect in a loss situation. Over the period, the losses linked to the collapse in activity due to the Covid-19 crisis had an unfavorable impact on the ETR;
a -€80.4 million effect of losses or other assets generated in the year but not recognized, net of those previously not activated but used or recognized in the year (-€8.2 million for first half 2019) - Please refer to Note 2.1.3 "Deferred tax assets" in "Significant events of the period"; and
-€4.8 million in permanent differences between accounting profits and taxable profits (-€5.8 million for first half 2019 mainly due to taxable dividends).
The net profit attributable to non-controlling interests corresponds to the share of minority interests in the profit/loss of fully consolidated entities controlled by the Group. It breaks down as follows:
| In thousands of euros | First-half 2020 | First-half 2019 |
|---|---|---|
| HBPO GmbH and its subsidiaries | -15,686 | 5,859 |
| Beijing Plastic Omnium Inergy Auto Inergy Co. Ltd | -157 | 796 |
| Plastic Omnium Auto Inergy Manufacturing India Pvt Ltd | -13 | 300 |
| DSK Plastic Omnium Inergy | 1,558 | 1,547 |
| DSK Plastic Omnium BV | -45 | -14 |
| Total attributable to non-controlling interests | -14,343 | 8,488 |
| Net profit attributable to owners of the parent | First-half 2020 | First-half 2019 |
|---|---|---|
| Basic earnings per share (in euros) | -2.77 | 1.06 |
| Diluted earnings per share (in euros) | -2.77 | 1.06 |
| Weighted average number of ordinary shares outstanding at end of period | 148,566,107 | 148,566,107 |
| - Treasury stock | -2,910,190 | -2,398,486 |
| Weighted average number of ordinary shares, undiluted | 145,655,917 | 146,167,621 |
| - Impact of dilutive instruments (stock options) | 22,813 | 69,001 |
| Weighted average number of ordinary shares, diluted | 145,678,730 | 146,236,622 |
| Weighted average price of the Plastic Omnium share during the period | ||
| - Weighted average share price | 18.94 | 23.79 |
At June 30, 2020, indications of impairment due to the consequences of the Covid-19 crisis led the Group to perform impairment tests on the basis of the assumptions detailed under "Significant events of the period" in Note 2.1.2 "Asset impairment tests".
The tests performed at the level of the cash-generating units (CGU) or groups of cash-generating units (the "Industries" and "Modules" business segments) did not lead to the recognition of any impairment of goodwill. As a reminder, the rate assumptions were:
| GOODWILL In thousands of euros |
Gross Value | Impairment | Net value |
|---|---|---|---|
| Goodwill at January 1, 2019 | 1,015,730 | - | 1,015,730 |
| Translation differences | 2,100 | - | 2,100 |
| Goodwill at December 31, 2019 | 1,017,830 | - | 1,017,830 |
| Translation differences | 417 | - | 417 |
| Goodwill at June 30, 2020 | 1,018,247 | - | 1,018,247 |
Impairment tests on assets following the impact of the Covid-19 crisis led to the recognition of impairment of intangible assets during the period (see Notes 2.1.2 "Asset impairment tests" and 4.5 "Other operating income and expenses").
| In thousands of euros | Patents and brands |
Software | Development assets |
Customer contracts |
Other | Total |
|---|---|---|---|---|---|---|
| Carrying amount published at December 31, 2019 | 12,466 | 21,300 | 579,031 | 111,946 | 2 | 724,745 |
| Capitalized development | - | - | 67,601 | - | - | 67,601 |
| Increases | 54 | 1,118 | 1,428 | - | - | 2,600 |
| Disposals - net | - | -2 | -821 | - | - | -823 |
| Other reclassifications | - | 1,216 | -5 | - | - | 1,211 |
| Amortization for the period | -2,076 | -5,112 | -91,907 | -13,093 | - | -112,188 |
| Impairments recognized and reversed(1) | - | -36 | -53,106 | -32,000 | - | -85,142 |
| Translation adjustment | -18 | -288 | -5,118 | 25 | - | -5,399 |
| Carrying amount at June 30, 2020 | 10,426 | 18,196 | 497,101 | 66,878 | 2 | 592,603 |
(1) During the period, this item mainly concerns impairment recognized, following the indications of impairment losses linked to the Covid-19 crisis. Please refer to Notes 2.1.2 "Asset impairment tests" and 4.5 "Other operating income and expenses".
Property, plant and equipment corresponds to tangible assets owned but also, since January 1, 2019, to rights-of-use related to leases of tangible assets following the application of IFRS 16 "Leases".
Impairment tests on assets following the impact of the Covid-19 crisis led to the recognition of impairment of tangible assets over the period (see Notes 2.1.2 "Asset impairment tests" and 4.5 "Other operating income and expenses").
| In thousands of euros | Land | Buildings | Tech. eq. & tool. |
Property, plant and equipment under construction |
Other property, plant and equipment |
Total |
|---|---|---|---|---|---|---|
| Carrying amount at December 31, 2019: Property, plant and equipment in full ownership |
101,258 | 566,150 | 638,016 | 179,579 | 247,200 | 1,732,204 |
| Acquisitions(1) | 288 | 9,052 | 16,326 | 77,077 | 13,354 | 116,096 |
| Disposals | - | -139 | -706 | - | -612 | -1,457 |
| Other reclassifications | 32 | 6,008 | 57,423 | -65,535 | 1,297 | -775 |
| Impairments and reversals(2) | -2,906 | -36,766 | -103,687 | -1,621 | -10,606 | -155,586 |
| Depreciation for the period | -783 | -16,684 | -69,707 | - | -46,085 | -133,259 |
| Translation adjustment | -1,463 | -6,438 | -8,316 | -1,760 | -2,386 | -20,363 |
| Property, plant and equipment in full ownership: Carrying amount at June 30, 2020 (A) |
96,426 | 521,182 | 529,349 | 187,740 | 202,162 | 1,536,859 |
| Carrying amount at December 31, 2019: Lease right-of-use assets |
1,917 | 186,923 | 22,904 | - | 14,972 | 226,715 |
|---|---|---|---|---|---|---|
| Acquisitions | - | 23,450 | 2,507 | - | 3,071 | 29,028 |
| Decrease(3) | - | -8,012 | -39 | - | -193 | -8,244 |
| Depreciation for the period | -217 | -18,507 | -4,551 | - | -3,848 | -27,123 |
| Impairments and reversals(2) | -775 | -11,110 | -7,349 | - | -1,589 | -20,823 |
| Translation adjustment | -37 | -1,486 | -523 | - | -262 | -2,307 |
| Right-of-use assets for leases: Carrying amount at June 30, 2020 (B) |
888 | 171,259 | 12,949 | - | 12,151 | 197,247 |
|--|
(1)-(3) This amount includes the exercise of the "Adrian" site option by the Clean Energy Systems Division in the United States. The Group has acquired the site.
Non-consolidated securities relate to shell companies, non-significant dormant companies and small stakes (Tactotek OY) for which changes in value are recognized in the income statement (IFRS 9 "Financial instruments").
Investments in associates and joint ventures correspond to investments by the Group in the following companies:
| In thousands of euros | 2020 % interest |
2019 % interest |
June 30, 2020 | December 31, 2019 |
|---|---|---|---|---|
| HBPO - SHB Automotive Modules(1) | 33.34% | 33.34% | 13,896 | 16,346 |
| HICOM HBPO Sdn Bhd(1) | 26.66% | 26.66% | 551 | 559 |
| JV Yanfeng Plastic Omnium and its subsidiaries - joint venture(2) | 49.95% | 49.95% | 155,897 | 164,683 |
| B.P.O. AS - joint venture | 49.98% | 49.98% | 14,329 | 13,342 |
| PO-CellTech (3) | - | 23.00% | - | - |
| Total investments in associates and joint ventures | 184,673 | 194,930 | ||
| Equity investments in Tactotek OY (4) | - | - | ||
| Other non-consolidated equity investments | 199 | 199 | ||
| Total non-consolidated equity investments | 199 | 199 | ||
| Total investments consolidated by the equity method and non consolidated equity instruments |
184,872 | 195,129 |
(1) This relates to HBPO's two joint ventures.
(2) The Yanfeng Plastic Omnium sub-group had three new entities in 2019: Ningde, Daquing (activity not yet started) and Yangkang Rugao following an acquisition.
(3) The Group sold its equity investment in PO-CellTech on June 3, 2020. See Note 2.2.2.1 in "Significant events of the period".
(4) The equity stake in the Finnish company Tactotek OY was fully impaired at the end of 2019.
(2) During the period, these items mainly cover impairment recorded following indications of impairment losses linked to the Covid-19 crisis. Please refer to Notes 2.1.2 "Asset impairment tests" and 4.5 "Other operating income and expenses".
The financial assets recognized under this item correspond to long-term investments in equities and funds as well as other assets such as deposits and surety bonds grouped as follows:
| In thousands of euros | June 30, 2020 | December 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Subscribed amounts |
Non-called up amounts |
Net | Subscribed amounts |
Non-called up amounts |
Net | |
| Financial investments in the FMEA 2 fund and AP Ventures (1) - (3) |
- | - | 3,228 | - | - | 2,330 |
| Financial investments in listed securities(1) | - | - | 52,591 | - | - | 50,530 |
| Investment in the venture capital company Aster(1) - (2) | 20,000 | -15,636 | 4,364 | 20,000 | -16,700 | 3,300 |
| Other | - | - | 114 | - | - | 142 |
| Long-term investments in equities and funds | 60,297 | 56,302 |
(1) Financial investments in the FMEA 2 fund and investments in shares in listed companies are listed under long-term financial receivables in Note 5.2.4.7 "Reconciliation of gross and net financial debt".
(2) Payment of €1.1 million during the period.
(3) The total financing of the Group in AP Ventures, a venture capital fund dedicated to hydrogen, amounted to \$2.8 million as of June, 30, 2020 versus \$1.7 million at December, 31, 2019 . See Note 2.2.3 in "Significant events of the period".
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Loans | 1,693 | 1,807 |
| Deposits and surety bonds | 8,829 | 12,849 |
| Other non-current assets and financial receivables (see Note 5.2.4.7) | 10,522 | 14,656 |
| Finance receivables related to Automotive contracts | - | - |
| Non-current financial receivables (see Note 5.2.4.7) | - | - |
| Total | 10,522 | 14,656 |
Deposits and surety bonds mainly concern deposits relating to leased offices and assignment of receivables programs.
Despite the drop in sales due to the Covid-19 crisis, the inventory level remained under control thanks to the closure of most plants.
| In thousands of euros | June 30, 2020 | December 31, 2019 | |
|---|---|---|---|
| Raw materials and supplies | |||
| At cost (gross) | 209,664 | 213,190 | |
| Net realizable value | 190,052 | 197,729 | |
| Molds, tooling and engineering | |||
| At cost (gross) | 394,938 | 381,744 | |
| Net realizable value | 386,212 | 375,797 | |
| Maintenance inventories | |||
| At cost (gross) | 75,744 | 72,142 | |
| Net realizable value | 62,413 | 59,655 | |
| Goods | |||
| At cost (gross) | 1,625 | 2,008 | |
| Net realizable value | 1,227 | 1,664 | |
| Semi-finished products | |||
| At cost (gross) | 56,099 | 62,765 | |
| Net realizable value | 52,079 | 59,637 | |
| Finished products | |||
| At cost (gross) | 41,708 | 45,282 | |
| Net realizable value | 36,269 | 41,364 | |
| Total net | 728,252 | 735,846 |
| In thousands of euros | June 30, 2020 December 31, 2019 |
|
|---|---|---|
| Carrying amount |
||
| Current financial receivables (see Note 5.2.4.7) | 8,710 | 13,100 |
| of which Customer receivables | 8,710 | 13,100 |
| Other current financial assets and financial receivables (see Note 5.2.4.7) | 175 | 55,127 |
| of which Current accounts | 7 | 2 |
| of which Negotiable debt securities(1) | - | 5,000 |
| of which UCITS (1) | - | 49,809 |
| of which Other | 168 | 316 |
| Total current financial receivables | 8,885 | 68,227 |
(1) The Group's last negotiable debt security matured during the first-half of 2020 and the UCITS investment was sold. See Notes 2.2.1.4 in "Significant events of the period" and 5.2.4.4 "Loans, negotiable debt securities and other financial assets".
Compagnie Plastic Omnium SE and some of its European and United States subsidiaries have set up several commercial receivables sale programs with French banks. These programs have an average maturity of more than two years.
These non-recourse programs transfer substantially all the risks and rewards of ownership to the buyer of the sold receivables; for these programs, only the non-material dilution risk is not transferred to the buyer.
Receivables sold under these programs, which are therefore no longer included in the balance sheet, totaled €220 million at June 30, 2020 versus €315 million at December 31, 2019. The sharp drop in the first-half of 2020 is directly linked to the decrease in activity (plant shutdowns and part-time activity) of the entities concerned following the Covid-19 crisis.
| June 30, 2020 | December 31, 2019 | |||||
|---|---|---|---|---|---|---|
| In thousands of euros | Gross value | Impairment | Carrying amount |
Gross value | Impairment | Carrying amount |
| Trade receivables | 788,933 | -4,628 | 784,305 | 823,843 | -5,044 | 818,799 |
The Group has not identified any significant non-provisioned customer risk over the two periods (see Note 6.2.1 "Customer risk").
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Sundry receivables | 96,869 | 88,560 |
| Prepayments to suppliers of tooling and prepaid development costs | 36,277 | 40,734 |
| Income tax receivables | 74,248 | 93,990 |
| Other tax receivables | 97,993 | 90,655 |
| Employee advances | 7,655 | 3,837 |
| Prepayments to suppliers of non-current assets | 19,367 | 10,980 |
| Other receivables | 332,409 | 328,757 |
| In thousands of currency units | June 30, 2020 | December 31, 2019 | |||||
|---|---|---|---|---|---|---|---|
| Local currency |
Euro | % | Local currency |
Euro | % | ||
| EUR USD CNY GBP Other |
Euro US dollar Chinese yuan Pound sterling Other currencies |
603,965 285,147 977,469 23,865 |
603,965 254,641 123,388 26,155 108,565 |
54% 23% 11% 2% 10% |
579,439 276,384 831,066 56,899 |
579,439 246,025 106,268 66,877 148,947 |
50% 21% 9% 6% 13% |
| Total | 1,116,714 | 100% | 1,147,556 | 100% | |||
| Of which: | ● Trade receivables ● Other receivables |
784,305 332,409 |
70% 30% |
818,799 328,757 |
71% 29% |
| In thousands of euros | June 30, 2020 | December 31, 2019 | June 30, 2019 |
|---|---|---|---|
| Cash at banks and in hand | 567,448 | 1,130,587 | 780,491 |
| Short-term deposits | 63,562 | 12,366 | 23,144 |
| Total cash and cash equivalents on the balance sheet | 631,010 | 1,142,953 | 803,635 |
Cash and cash equivalents break down as follows:
| In thousands of euros | June 30, 2020 | December 31, 2019 | June 30, 2019 |
|---|---|---|---|
| Cash and cash equivalents of the Group's captive reinsurance company | 12,132 | 18,000 | 33,721 |
| Cash and cash equivalents in countries with exchange controls (1) | 42,212 | 95,176 | 76,580 |
| Available cash | 576,666 | 1,029,777 | 693,334 |
| Total cash and cash equivalents on the balance sheet | 631,010 | 1,142,953 | 803,635 |
(1) "Countries with exchange controls" include Brazil, China, India, Chile, Argentina and South Korea.
The different categories of the above table are presented under current assets in the absence of any general restriction on these amounts.
Compared to December 31, 2019, the Group did not increase its use of bank overdrafts in the first-half of 2020.
| In thousands of euros | June 30, 2020 | December 31, 2019 | June 30, 2019 |
|---|---|---|---|
| Cash and cash equivalents | 631,010 | 1,142,953 | 803,635 |
| Short-term bank loans and overdrafts | -7,852 | -9,875 | -7,461 |
| Net cash and cash equivalents in the statement of cash flows | 623,158 | 1,133,078 | 796,174 |
| In euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Share capital at January 1 of the period | 8,913,966 | 8,913,966 |
| Capital reduction during the period | - | - |
| Share capital at end of period, made up of ordinary shares with a par value of €0.06 each over the two periods |
8,913,966 | 8,913,966 |
| Treasury stock | 187,271 | 143,310 |
| Total share capital net of treasury stock | 8,726,695 | 8,770,656 |
Shares registered on behalf of the same holder for at least two years have double voting rights.
Voting rights of the main shareholder Burelle SA over the reference periods:
| June 30, 2020 | December 31, 2019 | June 30, 2019 | |
|---|---|---|---|
| Voting rights of Burelle SA | 72.75% | 72.85% | 72.85% |
At June 30, 2020, the share capital of Compagnie Plastic Omnium remained unchanged compared to December 31, 2019. Treasury shares amounted to 3,121,189 own shares, i.e. 2.10% of the share capital, against 2,388,499, i.e. 1.61% of the share capital at December 31, 2019.
At December 31, 2019, the share capital of Compagnie Plastic Omnium, consisted of shares with a par value of €0.06 amounted to €8,913,966.42, including 2,388,499 treasury shares, i.e. 1.61% of the share capital, against 2,290,930, i.e. 1.54% of the share capital, at December 31, 2018.
5.2.1.2 Breakdown of "Other reserves" in the consolidated statement of changes in equity
| In thousands of euros | Actuarial gains/(losses) recognized in equity |
Cash flow hedges – interest rate instruments |
Cash flow hedges – currency instruments |
Fair value adjustments |
Retained earnings and other reserves |
Attributable to owners of the parent |
|---|---|---|---|---|---|---|
| December 31, 2018 | -50,026 | -1,856 | -1,281 | 18,604 | 1,652,168 | 1,617,609 |
| First-time application of IFRIC 23 | - | - | - | - | -2,500 | -2,500 |
| At January 1, 2019 | -50,026 | -1,856 | -1,281 | 18,604 | 1,649,668 | 1,615,109 |
| Movements in first-half 2019 | -5,737 | 175 | 326 | 7,172 | 422,839 | 424,775 |
| At June 30, 2019 | -55,763 | -1,681 | -955 | 25,776 | 2,072,507 | 2,039,884 |
| Movements in second-half 2019 | -6,457 | 127 | -1,152 | 3,118 | 9,255 | 4,891 |
| At December 31, 2019 | -62,220 | -1,554 | -2,107 | 28,894 | 2,081,762 | 2,044,775 |
| Movements in first-half 2020 | -8,148 | 130 | 2,081 | -752 | 191,354 | 184,665 |
| At June 30, 2020 | -70,368 | -1,424 | -26 | 28,142 | 2,273,116 | 2,229,440 |
5.2.1.3 Breakdown of "Changes in the scope of consolidation and reserves" in the "Consolidated statement of changes in equity"
No changes occurred in 2019 and first-half 2020.
| Amounts in thousands of euros Dividends per share in euros |
June 30, 2020 | December 31, 2019 | |||
|---|---|---|---|---|---|
| Number of shares in units | Number of shares Dividend in 2019 |
Number of shares in 2018 |
Dividend | ||
| Dividends per share (in euros) | (1) 0.49 |
(1) 0.74 |
|||
| Total number of shares outstanding at the end of the previous year | 148,566,107 | 148,566,107 | |||
| Total number of shares held in treasury on the ex-dividend date | (2) 3,216,987 |
(2) 2,392,281 |
|||
| Total number of shares held in treasury at year-end (for information) | (2) 2,388,499 |
(2) 2,290,930 |
|||
| Dividends on ordinary shares | 72,797 | 109,939 | |||
| Dividends on treasury stock (unpaid) | (2) -1,576 |
(2) -1,770 |
|||
| Total net dividends | 71,221 | 108,169 |
(1)During first-half 2020, Compagnie Plastic Omnium paid a dividend of €0.49 per share on the 2019 net profit, against €0.74 per share on the 2018 net profit during first-half 2019.
(2) At June 30, 2020: 2,388,499 treasury shares were taken into account at December 31, 2019 to determine the provisional total dividend. The number of treasury shares at the time of the dividend's payment during the first-half of 2020 amounted to 3,216,987 shares, increasing the dividends attached to these shares from €1,170 thousand to €1,576 thousand.
At December 31, 2019: 2,290,930 treasury shares were taken into account at December 31, 2018 to determine the provisional total dividend. The number of treasury shares at the time of the dividend's payment during the first-half of 2019 amounted to 2,392,281 shares, increasing the dividends attached to these shares from €1,695 thousand to €1,770 thousand.
| In thousands of euros | December 31, 2019 |
Allocations | Utilizations | Releases of surplus provisions |
Reclassifi cations |
Actuarial gains/(losses) |
Translation adjustment |
June 30, 2020 |
|---|---|---|---|---|---|---|---|---|
| Customer warranties | 33,974 | 9,802 | -5,979 | -535 | 371 | - | -194 | 37,439 |
| Reorganization plans | 31,015 | 6,243 | -4,256 | - | -338 | - | -52 | 32,612 |
| Provisions for taxes and tax risks |
804 | - | - | - | -371 | - | - | 433 |
| Contract risks | 20,113 | 7,480 | -6,576 | -252 | 204 | - | -96 | 20,873 |
| Provisions for claims and litigation(1) |
7,964 | 8,365 | -227 | -71 | 438 | - | -681 | 15,788 |
| Other | 6,460 | 571 | -633 | -1 | -304 | - | -82 | 6,011 |
| Provisions | 100,332 | 32,461 | -17,671 | -859 - | - | - | -1,105 | 113,158 |
| Provisions for pensions and other post employment benefits |
107,670 | 1,721 | -916 | - | - | 10,285 (2) | -259 | 118,501 |
| TOTAL | 208,002 | 34,182 | -18,587 | -859 | - | 10,285 | -1,364 | 231,659 |
(1) The increase in the period corresponds to operating disputes unrelated to the Covid-19 crisis and labor disputes.
(2) The change in the actuarial difference during the period is explained mainly by the decrease in the discount rate in the United States. It stood at 2.70% at June 30, 2020 versus 3.20% at December 31, 2019.
| In thousands of euros | December 31, 2018 |
Allocations | Utilizations | Releases of surplus provisions |
Reclassifi cations |
Actuarial gains/(losses) |
Translation adjustment |
December 31, 2019 |
|---|---|---|---|---|---|---|---|---|
| Customer warranties | 26,898 | 17,554 | -6,002 | -5,169 | 628 | - | 65 | 33,974 |
| Reorganization plans | 15,438 | 21,971 | -6,408 | - | 45 | - | -31 | 31,015 |
| Provisions for taxes and tax risks |
6,363 | 602 | -6,450 | - | 289 | - | - | 804 |
| Contract risks(1) | 29,654 | 9,123 | -14,747 | -4,417 | 416 | - | 84 | 20,113 |
| Provisions for claims and litigation |
4,277 | 4,520 | -435 | -230 | -19 | - | -149 | 7,964 |
| Other | 8,082 | 4,249 | -3,169 | -1,387 | -1,360 | - | 46 | 6,460 |
| Provisions | 90,712 | 58,019 | -37,211 | -11,203 | - | - | 15 | 100,332 |
| Provisions for pensions and other post employment benefits |
105,184 | 3,055 | -3,488 | -13,497 (2) | - | 15,532 (3) | 884 | 107,670 |
| TOTAL | 195,896 | 61,074 | -40,699 | -24,700 | - | 15,532 | 899 | 208,002 |
(1) The changes in 2019 concerned loss-making contracts in the "Industries" segment.
(2) The reversal of surplus provisions in 2019 was explained mainly by the transition to a defined-contribution pension plan of the US subsidiary Plastic Omnium Auto Inergy LLC (see Note 4.6 "Other operating income and expenses" to the consolidated financial statements at December, 31, 2019).
The change in actuarial gains and losses in 2019 was explained by the decrease in discount rates in 2019 from 1.6% to 0.75% for the euro zone and from 4.25% to 3.2% for the United States zone.
(3) Please refer to Note 5.2.5 "Provisions for pensions and other post-employment benefits" to the consolidated financial statements at December, 31, 2019.
Net debt is an important notion for the day-to-day management of Plastic Omnium's treasury cash. It is used to determine the Group's debit or credit position in relation to third parties and outside of the operating cycle. Net debt is determined as:
5.2.4.2 Borrowings: private placement notes and bonds
On May 29, 2020, Compagnie Plastic Omnium SE reimbursed the €500 million bond issued on May 21, 2013 to European investors. This bond issue was carried out without covenant or rating obligations.
See Note 2.2.1.3 in "Significant events of the period".
The main features of the bonds and private placements as at June 30, 2020 are summarized in the following table:
| June 30, 2020 | "Schuldscheindarlehen" private placement of 2016 |
Private placement bond issue of June 2017 |
"Schuldscheindarlehen" private placement of December 21, 2018 |
||
|---|---|---|---|---|---|
| Issue - Fixed rate | (in euros) | 300,000,000 | 500,000,000 | 300,000,000 | |
| Interest rate / annual coupon | 1.478% | 1.25% | 1.6320% | ||
| Features | International (Asian, German, Dutch, Swiss, Luxembourg, Belgian) and French investors |
European investors | International (German, Chinese, Belgian, Swiss, Austrian) and French investors |
||
| No covenant or rating obligations | |||||
| Maturity | June 17, 2023 | June 26, 2024 | December 21, 2025 |
During the first-half, Compagnie Plastic Omnium SE has drawn down €587 million on existing credit lines.
See Note 2.2.1.1 in "Other significant events of the period.
5.2.4.4 Loans, negotiable debt securities and other financial assets
During the first half of the year, the €5 million negotiable medium-term bond (NMTN) subscribed by the Group on February 24, 2015 matured.
In addition, the Group sold its investment in UCITS composed of bonds and medium-term cash, with a nominal value of €50 million.
See Note 2.2.1.4 "Maturity of NMTN and sale of investments in UCITS of Compagnie Plastic Omnium SE" in "Significant events of the period".
As of June 30, 2020, the Group no longer had any NMTN or UCITS in its financial investments.
Changes in the fair value of marketable securities that do not meet the criteria for classification as cash equivalents are recognized in financial income. The closing of these financial investments impacted the other financial expense of the period (Note 4.6) by -€1,506 thousand (including the reversal of impairment for -€197 thousand as recorded in the balance sheet at December 31, 2019).
5.2.4.5. Short-term borrowings: issuance of "Negotiable European commercial paper" (Neu-CP)
In addition, during the first-half of 2020, the Group issued "Negotiable European commercial paper" (Neu-CP), which features are presented in the table below:
| June 30, 2020 | Neu-CP during the first half of 2020 |
|
|---|---|---|
| Issuance - fixed rate | in euros | 99,500,000 |
| Features | European investors | |
| Maturity | Less than 1 year |
5.2.4.6 Undrawn medium-term credit lines
During the first-half of 2020, the Group negotiated additional credit lines and at June 30, 2020, had access to several confirmed bank lines of credit exceeding the Group's financing requirements.
At June 30, 2020, these confirmed bank lines of credit amounted to €1,960 million (including €90 million confirmed for HBPO) with an average maturity of five years, compared with €1,400 million (including €60 million confirmed for HBPO) at December 31, 2019.
| In thousands of euros | June 30, 2020 | December 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Total | Current portion |
Non-current portion |
Total | Current portion | Non-current portion |
|
| Finance lease liabilities | 222,322 | 49,638 | 172,684 | 228,565 | 56,582 | 171,983 |
| Bonds and bank loans | 1,897,153 | 759,643 | 1,137,510 | 1,784,909 | 622,180 | 1,162,729 |
| of which the 2018 "Schuldscheindarlehen" private placement |
301,543 | 2,649 | 298,894 | 298,960 | 135 | 298,825 |
| of which the bond issue in 2017 | 497,462 | 719 | 496,743 | 500,099 | 3,750 | 496,349 |
| of which the bond issue in 2013(1) | - | - | - | 508,110 | 508,110 | - |
| of which the 2016 "Schuldschein" private placement | 299,495 | 170 | 299,325 | 301,607 | 2,393 | 299,214 |
| of which Neu-CP(2) | 99,500 | 99,500 | - | - | - | - |
| of which bank lines of credit (3) | 699,153 | 656,605 | 42,548 | 176,133 | 107,792 | 68,341 |
| Current and non-current borrowings and other debt (+) | 2,119,475 | 809,281 | 1,310,194 | 2,013,475 | 678,762 | 1,334,713 |
| Hedging instruments - liabilities (+)(4) | 41 | 41 | 3,268 | 3,268 | ||
| Total borrowings (B) | 2,119,516 | 809,322 | 1,310,194 | 2,016,743 | 682,030 | 1,334,713 |
| (5) Long-term investments in equity instruments and funds (-) |
-60,297 | -60,297 | -56,302 | -56,302 | ||
| Other financial assets (-) | -19,232 | -8,710 | -10,522 | -27,756 | -13,100 | -14,656 |
| of which non-current financial receivables(6) of which finance receivables(6) (7) |
-10,522 -8,710 |
-8,710 | -10,522 - |
-14,656 -13,100 |
-13,100 | -14,656 - |
| (7) Other current financial assets and financial receivables (-) |
-175 | -175 | -55,127 | -55,127 | ||
| of which negotiable debt securities and UCITS (8) | - | - | -54,809 | -54,809 | ||
| (4) Hedging instruments - assets (-) |
-6,531 | -6,531 | -5,027 | -5,027 | ||
| Total financial receivables (C) | -86,235 | -15,416 | -70,819 | -144,212 | -73,254 | -70,958 |
| a | ||||||
| Gross debt (D) = (B) + (C) | 2,033,281 | 793,906 | 1,239,375 | 1,872,531 | 608,776 | 1,263,755 |
| (9) Cash and cash equivalents (-) |
631,010 | 631,010 | 1,142,953 | 1,142,953 | ||
| Short-term bank loans and overdrafts (+) | -7,852 | -7,852 | -9,875 | -9,875 | ||
| Net cash and cash equivalents as recorded in the statement of cash flows (A)(10) |
-623,158 | -623,158 | -1,133,078 | -1,133,078 | ||
| NET FINANCIAL DEBT (E) = (D) + (A) | 1,410,123 | 170,748 | 1,239,375 | 739,453 | -524,302 | 1,263,755 |
(1) See Note 5.2.4.2 "Bonds: private placement notes and bonds"
(2) See Note 5.2.4.5 "Short-term borrowings: issuance of "Negotiable European commercial paper" (Neu-CP)"
(3) See Notes 2.2.1.1 in the "Significant events of the period" , 5.2.4.3 "Bank loans" and 5.2.4.6 "Undrawn medium-term credit lines"
(4) See Note 5.2.5 "Interest rate and currency hedges"
(5) See Note 5.1.5.1 "Long-term investments in equity instruments and funds"
(6) See Note 5.1.5.2 "Other non-current financial assets"
(7) See Notes 5.1.7 "Current financial receivables" and 5.2.6.3 for the principal amount
(8) See Note 5.2.4.4 " Loans, negotiable debt securities and other financial assets: Maturity of the €5 million negotiable medium-term bond subscribed on February 24, 2015"
(9) See Note 5.1.9.1 "Gross cash and cash equivalents"
(10) See Note 5.1.9.2 "Net cash and cash equivalents at end of period"
The table below shows the gross financial debt after taking into account the swap transactions that allowed the conversion from euros into foreign currency.
| As a % of total debt | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Euro | 62% | 60% |
| US dollar | 28% | 28% |
| Chinese yuan | 6% | 6% |
| Pound sterling | 1% | 3% |
| Brazilian real | 1% | 1% |
| Indian rupee | 1% | 1% |
| Other currencies(1) | 1% | 1% |
| Total | 100% | 100% |
(1) "Other currencies" concerns various currencies, which taken individually account for less than 1% of total financial debt over the two periods.
| As a % of total debt | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Hedged variable rates | - | - |
| Unhedged variable rates | 12% | 6% |
| Fixed rates | 88% | 94% |
| Total | 100% | 100% |
The last interest rate swap contract signed by the Group expired in February 2019.
| June 30, 2020 | December 31, 2019 | ||||
|---|---|---|---|---|---|
| In thousands of euros | Assets | Liabilities | Assets | Liabilities | |
| Interest rate derivatives | - | - | - | - | |
| Exchange rate derivatives | 6,531 | 41 | 5,027 | -3,268 | |
| Total balance sheet | 6,531 | 41 | 5,027 | -3,268 |
The Group uses derivatives to hedge its exposure to currency risk.
At June 30, 2020, the fair value of the instruments implemented and thus recognized was €6,490 thousand of which €32 thousand was recognized in equity.
Changes in the fair value of other currency hedging instruments are recognized in net financial income.
| June 30, 2020 | December 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Fair value (in thousands of euros) |
Notional amount (in thousands of currency |
Medium term exchange rate |
Exchange rate at June 30, 2020 |
Fair value (in thousan ds of |
Notional amount (in thousands of currency |
Medium term exchange rate |
Exchange rate at December 31, 2019 |
|
| units) | Currency / Euro |
Currency / Euro |
euros) | units) | Currency / Euro |
Currency / Euro |
||
| Net sell position (net buy position if >0) | ||||||||
| USD / EUR - Forward exchange contract | -11 | -1,038 | 1.1395 | 1.1198 | -2,861 | -74,181 | 1.1805 | 1.1234 |
| JPY / EUR - Forward exchange contract | - | - | - | - | -88 | -329,595 | 126.0400 | 121.9400 |
| GBP / EUR - Forward exchange contract | +43 | -979 | 0.8802 | 0.9124 | - | - | - | - |
| USD / EUR - Forward currency swap | +5,586 | -726,800 | 1.1110 | 1.1198 | +5,001 | -416,300 | 1.1110 | 1.1234 |
| GBP / EUR - Forward currency swap | +103 | -13,300 | 0.9061 | 0.9124 | -39 | -24,000 | 0.8520 | 0.8508 |
| CHF / EUR - Forward currency swap | -24 | -8,250 | 1.0681 | 1.0651 | -39 | -7,240 | 1.0915 | 1.0854 |
| RUB / EUR - Forward currency swap | +29 | -76,500 | 77.4029 | 79.6300 | -20 | -48,000 | 7.8765 | 69.9563 |
| CNY / EUR - Forward currency swap | +609 | -438,000 | 7.9137 | 7.9219 | -72 | -238,000 | 7.9177 | 7.8205 |
| CNY / USD - Forward currency swap | +21 | +13,300 | 7.1180 | 7.0775 | -123 | -94,084 | 7.0740 | 6.9615 |
| JPY / EUR - Forward currency swap | +134 | -3,230,000 | 120.0588 | 120.6600 | - | - | - | - |
| TOTAL | +6,490 | +1,759 |
5.2.5.1.2. Impact of unsettled foreign exchange hedges on income and equity
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Impact of change in foreign exchange hedging portfolio on income (ineffective portion)(1) | 1,926 | 4,781 |
| Impact of change in foreign currency hedging portfolio on equity (effective portion) | 2,805 | -1,077 |
| Total | 4,731 | 3,704 |
(1) See "Gains or losses on interest rate and currency hedges" in Note 4.6 "Net financial income".
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Trade payables | 930,143 | 1,368,188 |
| Due to suppliers of fixed assets | 83,264 | 150,016 |
| Total | 1,013,408 | 1,518,204 |
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Employee benefits expense | 172,435 | 167,813 |
| Income taxes | 16,756 | 57,605 |
| Other taxes | 133,996 | 153,552 |
| Other payables | 301,443 | 282,921 |
| Customer prepayments - Deferred revenues | 384,302 | 352,936 |
| Total | 1,008,932 | 1,014,826 |
5.2.6.3. Trade payables and other operating liabilities by currency
| In thousands of currency units | Liabilities at June 30, 2020 | Liabilities at December 31, 2019 | |||||
|---|---|---|---|---|---|---|---|
| Local currency | Euro | % | Local currency |
Euro | % | ||
| EUR | Euro | 1,219,293 | 1,219,293 | 60% | 1,413,809 | 1,413,809 | 56% |
| USD | US dollar | 376,183 | 335,938 | 17% | 576,873 | 513,507 | 20% |
| GBP | Pound sterling | 118,580 | 129,961 | 6% | 127,186 | 149,490 | 6% |
| CNY | Chinese yuan | 1,126,525 | 142,204 | 7% | 1,422,557 | 181,901 | 7% |
| BRL | Brazilian real | 129,391 | 21,171 | 1% | 122,648 | 27,160 | 1% |
| Other | Other currencies | 173,773 | 9% | 247,163 | 10% | ||
| Total | 2,022,340 | 100% | 2,533,030 | 100% | |||
| Of which: | |||||||
| ● Trade payables | 1,013,408 | 50% | 1,518,204 | 60% | |||
| ● Other liabilities | 1,008,932 | 50% | 1,014,826 | 40% |
Compagnie Plastic Omnium has set up a global cash management system with its subsidiary Plastic Omnium Finance, which manages liquidity, currency and interest rate risks on behalf of all subsidiaries. The market risks strategy, which may result in entering balance sheet and off-balance sheet commitments, is approved every quarter by the Senior management.
The Group's objective is to have, at all times, sufficient financial resources to enable it to carry out its current business, fund the investments required for its development and also to respond to any exceptional events.
This goal is achieved through the use of capital markets, leading to capital and financial debt management.
As part of its capital management strategy, the Group compensates its shareholders primarily through the payment of dividends and may make adjustments in line with changes in economic conditions.
The capital structure may be adjusted by paying ordinary or special dividends, through share buybacks and cancellation of treasury stock, returning a portion of capital to shareholders or issuing new shares and/or securities giving rights to capital.
By a vote of the Compagnie Plastic Omnium SE Shareholders' Meeting on April 23, 2020, the dividend paid in 2020 based on 2019 results was reduced by 34%, i.e. an amount of €36 million.
Taking into account the uncertainties of the global Covid-19 crisis, starting in March 2020 the Group negotiated and obtained additional credit lines of €560 million to strengthen its liquidity. This anticipation enabled the Group to maintain the same credit line drawdown capacity it had at the year-end closing at December 31, 2019 (see Note 5.2.4.6 "Undrawn medium-term credit lines").
In addition, the Group issued €99.5 million euros under its "Negotiable European Commercial Paper" (Neu-CP) program at June 30, 2020.
Finally, the Group sold its investments in UCITS with a nominal value of €50 million in order to increase its liquidity (see Note 2.2.1.4 "Maturity of NMTM and disposal of investments in UCITS of Compagnie Plastic Omnium SE").
The Group uses the gearing ratio, corresponding to the ratio of consolidated net debt to equity, as an indicator of the Group's leverage. The Group includes in net debt all financial liabilities and commitments, other than operating payables, interest-bearing liabilities, less cash and cash equivalents and other non-operating financial assets, such as marketable securities and loans. At June 30, 2020 and December 31, 2019, the gearing ratio was as follows:
| In thousands of euros | June 30, 2020 | December 31, 2019 |
|---|---|---|
| Net financial debt(1) | 1,410,123 | 739,453 |
| Equity (including non-current grants) | 1,805,005 | 2,347,363 |
| Gearing ratio | 78.12% | 31.50% |
(1) See Note 5.2.4.7 "Reconciliation of gross and net financial debt".
None of the Group's bank loans or financial liabilities contains covenants providing for early repayment in the event of non-compliance with financial ratios.
Credit risk covers customer credit risk and bank counterparty risk.
At June 30, 2020, 5.7% of the Group's trade receivables were past due, versus 7.7% at December 31, 2019. Trade receivables break down as follows:
The change in the aged balance is consistent with the decrease in revenue in the first half-year. It shows regular payments from customers with a significant decrease in receivables past due for more than one year. The increasing portion corresponds to sales of less than a month and thus to current receivables.
| In thousands of euros | Total outstanding |
Not yet due | Due and past due |
Less than 1 month |
1-6 months |
6-12 months | More than 12 months |
|---|---|---|---|---|---|---|---|
| Industries | 590,637 | 546,218 | 44,419 | 16,701 | 19,737 | 6,007 | 1,973 |
| Modules | 191,823 | 191,281 | 542 | 177 | 366 | - | - |
| Unallocated items | 1,845 | 1,845 | - | - | - | - | - |
| Total | 784,305 | 739,344 | 44,961 | 16,878 | 20,103 | 6,007 | 1,973 |
| In thousands of euros | Total outstanding |
Not yet due | Due and past due |
Less than 1 month |
1-6 months |
6-12 months | More than 12 months |
|---|---|---|---|---|---|---|---|
| Industries | 682,714 | 624,178 | 58,536 | 28,004 | 18,957 | 6,983 | 4,592 |
| Modules | 132,230 | 127,714 | 4,517 | 793 | 3,724 | - | - |
| Unallocated items | 3,855 | 3,855 | - | - | - | - | - |
| Total | 818,799 | 755,747 | 63,053 | 28,797 | 22,681 | 6,983 | 4,592 |
The risk of non-recovery of trade receivables is low and involves only a non-material amount of receivables more than twelve months past due.
The Group invests its cash surplus with leading banks and/or in senior securities.
The Group must at all times have sufficient financial resources to finance the current business and the investments required to support its development, but also to withstand any exceptional events.
This objective is mainly achieved by using medium-term lines of credit with banking institutions but also by short-term bank resources.
The cash position of the Group is monitored daily for each business division and at central level, and a weekly summary report is submitted to the Group's Senior management.
| In thousands of euros | June 30, 2020 | Less than 1 year |
1 to 5 years | More than 5 years |
|---|---|---|---|---|
| Financial liabilities | ||||
| Non-current borrowings (1) | 1,365,638 | - | 1,028,952 | 336,686 |
| Bank overdrafts | 7,852 | 7,852 | - | - |
| Current borrowings (2) | 844,494 | 844,494 | - | - |
| Hedging instruments | 41 | 41 | - | - |
| Trade payables | 1,013,408 | 1,013,408 | - | - |
| Total financial liabilities | 3,231,433 | 1,865,795 | 1,028,952 | 336,686 |
(1) "Non-current borrowings" includes the amounts reported in the balance sheet and interest payable over the remaining life of the debt.
(2) "Current borrowings" includes the amounts reported in the balance sheet and interest due within one year.
| In thousands of euros | December 31, 2019 | Less than 1 year | 1 to 5 years | More than 5 years |
|---|---|---|---|---|
| Financial liabilities | ||||
| Non-current borrowings (1) | 1,403,692 | 82 | 1,036,967 | 366,644 |
| Bank overdrafts | 9,875 | 9,875 | - | - |
| Current borrowings (2) | 712,611 | 712,611 | - | - |
| Hedging instruments | 3,268 | 3,268 | - | - |
| Trade payables | 1,518,204 | 1,518,204 | - | - |
| Total financial liabilities | 3,647,650 | 2,244,040 | 1,036,967 | 366,644 |
(1) "Non-current borrowings" includes the amounts reported in the balance sheet and interest payable over the remaining life of the debt.
(2) "Current borrowings" includes the amounts reported in the balance sheet and interest due within one year.
Burelle SA holds 60.04% of Compagnie Plastic Omnium, after the cancellation of Compagnie Plastic Omnium's treasury stock (58.78% before cancellation of treasury stock), and fully consolidates Company Plastic Omnium SE.
Burelle SA - 19 Boulevard Jules Carteret 69342 Lyon Cedex 07
No event likely to have a material impact on the Group's business, financial position, earnings or assets and liabilities at June 30, 2020 has occurred since the closing date.
The only change to the consolidated scope since December 31, 2019 was the sale of the Group's investment in PO-CellTech.
This is a translation into English of the statutory auditors' review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group's halfyearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
Period from January 1st to June 30th, 2020
ERNST & YOUNG et Autres MAZARS
Tour First – TSA 14444 92037 Paris-La Défense Cedex S.A.S. à capital variable
Commissaire aux Comptes Membre de la compagnie régionale de Versailles
MAZARS
61, rue Henri Regnault 92075 Paris-La Défense Cedex S.A. au capital de € 8.320.000
Société Anonyme d'Expertise Comptable et de Commissariat aux Comptes à Directoire et Conseil de Surveillance
Compagnie Plastic Omnium SE Period from January 1st to June 30th, 2020
To the Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meeting and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code (Code monétaire et financier), we hereby report to you on:
These condensed half-yearly consolidated financial statements were prepared under the responsibility of the Board of Directors on July 22th, 2020 on the basis of the information available at that date in the evolving context of the crisis related to Covid-19 and of difficulties in assessing its impact and future prospects. Our role is to express a conclusion on these financial statements based on our review.
We conducted our review in accordance with professional standards applicable in France.
A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – standard of the IFRSs as adopted by the European Union applicable to interim financial information.
Without modifying our conclusion, we draw your attention to the matter set out in note 2.1 to the condensed half-yearly consolidated financial statements, which describes the management by the Group of the Covid-19 crisis and the impacts on the Group's financial statements.
We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review prepared on July 22th, 2020.
We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
Paris-La Défense, July 22th, 2020
The Statutory Auditors French original signed by
MAZARS ERNST & YOUNG et Autres
Juliette Decoux May Kassis-Morin
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