Quarterly Report • Nov 2, 2021
Quarterly Report
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ELO HALF-YEAR ACTIVITY REPORT
| 1. | Significant events during the first half of 2021 and main changes in the consolidation scope |
2 |
|---|---|---|
| 2. | Activities and results | 4 |
| 3. | Subsequent events | 6 |
| 4. | Management of risks and uncertainties in the first half of 2021 |
7 |
The number of points of sale operated by Auchan Retail changed as follows in the first half of 2021:
During the first half of 2021, there was no significant change in scope within the ELO group.
The first half of 2021 was marked by the following other significant events:
By decision of the General Meeting of Shareholders of March 11th, 2021, Auchan Holding changed its corporate name and is now called ELO, with all other legal characteristics of the company remaining unchanged.
This new name keeps the name Auchan for the direct link with the consumer.
In January 2021, ELO Group announced the gradual mutation of the retail business towards a decentralised organisation, making each country an autonomous company and the Group a federation of companies. Each country company is coordinated by a General Manager and organised around a two-person Chairman/Vice-Chairman team, along with a Board to support the General Manager. These adaptations aim to engage the Group in a dynamic that promotes the emergence of corporate projects by country and takes back commercial leadership in each of its markets.
Founded in 1976 as ELO's property management subsidiary, Immochan has transformed since 2016 to become a global property player. The company changed its name in June 2018 to become Ceetrus and move from a mainly commercial property activity to that of mixed use property developer. In January 2021, the Group undertook a change of name and structure to strengthen its position as a mixed use property developer. Ceetrus S.A. became New Immo Holding S.A. The property activities are managed by Ceetrus and the other activities by Nhood. The Group communicates its actions under a new brand "Nhood" underlined by a clear signature "New Living Mood".
This new identity is built around a conviction that real estate must not stand still in the face of future demographic and climate challenges. Through its mission to animate, regenerate and transform sites into new living zones, for better living together, Nhood is committed in a responsible manner and expresses its ambition to create useful and sustainable value for the market, for and with the inhabitants of the planet.
Nhood is also opening up to new real estate services and is giving itself the opportunity to act in the service of a wider potential of new clients. This creation marks the first milestone to make the new company an innovative leader in real estate and urban regeneration with a positive impact, for its existing sites and for new internal and external customers.
New Immo Holding S.A. and the companies included in the scope of consolidation held and managed assets in 10 countries as of June 30th, 2021.
New Immo Holding S.A. is controlled by ELO S.A..
The Board of Directors of ELO, on March 3rd, 2021, authorised a capital reduction carried out on the same day. In this way, 363 shares with a par value of €20 were cancelled, bringing the share capital of ELO to €575,978,980.
As part of the large social movements that took place between March 3rd and 7th, 2021, all stores in Senegal were closed between March 4th and 9th, 2021. 18 stores were partially or entirely ransacked and plundered. The stores have been reopened gradually as of March 11th, 2021.
The damage is estimated at €11 million including €5 million related to the value of the real estate assets whose net carrying amount is €4 million. The Group estimates that most of the losses will be covered by its insurance policies and recognised a future insurance income of €6 million on June 30th, 2021 corresponding to the inventories and operating losses.
Over the period from April 20th to June 10th, 2021, ELO carried out bond buybacks for a total amount of €200 million: €1 million of the January 2024 line, €14 million of the April 2025 line, €151 million of the January 2026 line and €34 million of the July 2027 line. The costs related to these early repurchases amount to €24 million and the future interest savings amount to €29 million.
The Covid-19 health crisis continued in 2021. The governments of the various European countries have continued to take restrictive measures to contain the spread of the coronavirus (Covid-19). Since January 1st, 2021, the average store closure duration is two months. All of our countries have been impacted by these various restrictive measures, such as the closure of non-essential businesses.
In a spirit of solidarity and support for its tenants, as in 2020, Nhood continued to take various measures:
P only invoice variable rents based on the revenue of the previous year following government decisions for the year 2021 in Portugal;
P grant reductions in rents and/or charges in other countries ;
The rent reductions granted without consideration by the Group in the first half of 2021 amounted to €15 million.
The effects of the health crisis continued during the first half of the 2021 financial year, in particular through curfews and the closure of so-called "non-essential" departments.
As of June 30th, 2021, Auchan Retail was present in 11 countries, where it operates 464 hypermarkets, 521 supermarkets, 516 convenience stores and 337 digital points of sale.
The consolidated store network as of June 30th, 2021, was as follows:
| Country | Hypermarkets | Supermarkets | Convenience stores | Digital |
|---|---|---|---|---|
| France | 119 | 241 | 10 | 183 |
| Spain | 61 | 64 | 49 | 75 |
| Portugal | 31 | 4 | 30 | 31 |
| Luxembourg | 2 | 1 | 4 | |
| Poland | 70 | 27 | 5 | |
| Hungary | 19 | 6 | 5 | |
| Romania | 31 | 8 | 407 | 32 |
| Ukraine | 17 | 7 | 6 | |
| Russia | 95 | 143 | ||
| Senegal | 1 | 19 | 14 | 1 |
| Taiwan | 18 | 1 | 1 | |
| TOTAL | 464 | 521 | 516 | 337 |
Including the franchised store network (271), the total number of points of sale as of June 30th, 2021 was 2,109.
Auchan Retail's revenue at the end of June 2021 amounted to €14.9 billion (down by 3.2% compared to 2020), including sales of goods to franchisees.
Auchan Retail's activities outside of France accounted for 47% of total revenue.
Auchan Retail's recurring operating income grew by 62% and stood at €160 million as of June 30th, 2021.
As of June 30th, 2021, the property management business of the Group comprising ELO and its subsidiaries included the management of 295 shopping centres (mainly shopping malls and retail parks), of which 243 owned or leased and 52 under management contracts, in 10 countries.
The revenue represented, at the end of June 2021, €263 million (+29%) of which 50.4% generated outside France.
The recurring operating income from the property management business decreased by €4 million to €(9) million.
The revenue of the consolidated entities amounted to €15.1 billion in the first half of 2021, down by 2.8% compared with the first half of 2020. The decline was 0.5% at constant exchange rates and scope.
By geographical area, 53% of the revenue was generated in France, 18% in Western Europe excluding France (Spain, Portugal, Luxembourg and Italy), 26% in Central and Eastern Europe (Poland, Hungary, Romania, Ukraine and Russia) and 3% in Asia and Africa (Taiwan and Senegal). In the first half of 2020, the geographic breakdown was 52%, 18%, 27% and 3%, respectively.
The gross margin increased by 0.7% to €3,692 million, and the margin rate came to 24.4% compared with 23.6% in the first half of 2020.
The current operating expenses (payroll costs, external expenses, depreciation/provisions, other operating income and expenses) were stable between the first half of 2021 and the first half of 2020.
The recurring operating income rose by 57.1% to €147 million. The EBITDA, i.e. recurring operating income excluding other recurring income and expenses and before amortisation, depreciation, impairment and provisions(1), increased by 10.1% to €757 million, from €687 million as of June 30th , 2020.
(1) Excluding allocations to and reversals of provisions and impairments, with the exception of allocations and reversals on inventory impairment.
The non-recurring items recorded under "Non-recurring income and expenses" include:
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Impairment of assets | (21) | |
| P of which impairment of property, plant and equipment and intangible assets | (21) | |
| Reorganisation costs - Renaissance (Auchan Retail) | 32 | (66) |
| Other | (29) | (22) |
| P of which Retail France: TASCOM | (17) | |
| P of which COVID-19: Employee bonus | (63) | |
| P including Auchan Retail Taiwan - Sub-lease contract | 45 | |
| P of which early exit penalty (Nhood Italy) | (10) | |
| P of which miscellaneous | (2) | (4) |
| TOTAL OTHER OPERATING INCOME AND EXPENSES | 3 | (109) |
The other financial income and expenses are an expense of €67 million, compared with an expense of €128 million in June 2020. The change is explained by the impact of hedges on intra-group loans as well as by currency effects associated with leases.
The loss of consolidated companies before tax amounted to €6 million (compared to a loss of €213 million in the first half of 2020).
The share of the net income of associates amounted to €8 million compared to €9 million as of June 30th, 2020.
The income tax expense for the first half of 2021 was €16 million, Corrected for tax adjustments, unrecognised tax losses and non-taxable items classified in Non-recurring income and expenses, the effective tax rate was 14% in the first half of 2021 compared with 26% in the first half of 2020.
The net loss amounted to €22 million as of June 30th, 2021, compared to a net profit of €106 million as of June 30th, 2020 (including the contribution of the operations sold, reclassified under IFRS 5 to the income statement)(1) .
The net income (group share) was €(24) million, compared with €(77) million in the first half of 2020 (including the contribution of the operations sold of Auchan Retail in China, reclassified under IFRS 5 to the income statement)(1) .
The cash flow from operations decreased by 65.4% to €331 million (€956 million in the first half of 2020, including the contribution of the operations sold, reclassified under IFRS 5 to the income statement)(1) .
The current investments excluding business combinations (acquisitions of intangible assets, property, plant and equipment and investment property) amounted to €222 million, compared with €185 million in the first half of 2020.
The breakdown of investments was 46% in France (38% as of June 30th, 2020), 31% in Western Europe excluding France (32% as of June 30th, 2020), 18% in Central and Eastern Europe (29% as of June 30th, 2020), and 5% in Asia and Africa (1% as of June 30th, 2020).
Equity amounted to €6,773 million as of June 30th, 2021, compared with €9,632 million as of June 30th, 2020 and €6,704 million as of December 31st, 2020.
The equity attributable to owners of the parent amounted to €6,568 million, up by €50 million compared with December 31st , 2020. The main changes were as follows (in €m):
On July 12th, 2021, ELO Group partially repaid €242 million of its Schuldschein loan out of an initial outstanding of €292 million.
On July 16th, 2021, as part of the optimisation of its asset management, Auchan Retail Logistique sold 11 logistics warehouses via a sale and leaseback transaction.
The overall transaction generated net income of €172.1 million, which will be recognised in Non-recurring income and expenses in the second half of this financial year
| 2021 interim income | (24) |
|---|---|
| Change in treasury shares | 10 |
| Transactions with non-controlling interests | 5 |
| Change in cash flow hedge reserves | 34 |
| Translation differences (mainly on Russian subsidiaries) |
29 |
| Other | (3) |
Non-controlling interests amounted to €205 million as of June 30th, 2021, compared with €3,576 million as of June 30th, 2020 and €186 million as of December 31st, 2020. The variation from June 30th, 2020 is due to the sale of the Retail activity in China in October 2020.
The net financial debt, amounted to €3,025 million as of June 30th, 2021, compared with €2,158 million as of December 31st,, reflecting a strong impact of seasonality. As of June 30th, 2021, the net financial debt stood at 44.6% of equity.
On July 20th, 2021, the Board of Directors of ELO has decided to propose to the Ordinary General Meeting of Shareholders held on August 24th, 2021, the distribution of a dividend of 750 M€, corresponding to € 26,12 per share. This exceptional dividend follows the sale of Oney Bank and Auchan Retail in China in 2019 and 2020.
During the usual course of their business, ELO and its subsidiaries are exposed to interest rate, foreign exchange, credit and liquidity risks, as described in section 3.2 of the 2020 management report.
The following comments in particular concern changes in liquidity risk.
In terms of off-balance sheet commitments, the amount of unused credit lines within ELO and its subsidiaries decreased by €366 million since January 1st, 2021, of which €280 million were bilateral credit lines on ELO and €86 million of overdraft and unconfirmed lines on subsidiaries. Nonetheless, the outstanding amount of the undrawn lines remained at a high level of €3.2 billion.
In 2021, following the disposal of the Retail activities in China in 2020, ELO reduced its bond debt through market buybacks and issued no new debt (€4.4 billion of EMTN outstanding as of 31 December 2020 compared to €3.9 billion as of June 30th, 2021).
In view of the existing financing, undrawn lines and available cash, ELO believes that all of the projected cash flows from the business are largely sufficient to cover future debt and dividend maturities.
There was no change in the assessment and management of risks as described in note 10.4 to the financial statements dated December 31st, 2020.
ELO and its subsidiaries remain exposed to the usual risks associated with their activities and to changes in the Covid-19 pandemic.
| Condensed half-year consolidated financial statements |
10 |
|---|---|
| Consolidated income statement | 10 |
| Consolidated statement of comprehensive income | 11 |
| Consolidated statement of balance sheet | 12 |
| Consolidated statement of cash flows | 15 |
| Consolidated statement of changes in equity (before appropriation of net income) |
16 |
| Notes to the condensed consolidated financial statements |
17 |
| (in €m) | Notes | June 30th, 2021 | June 30th, 2020(1) |
|---|---|---|---|
| Revenue | 4.2 | 15,110 | 15,545 |
| Cost of sales | 4.2 | (11,418) | (11,878) |
| Gross margin | 3,692 | 3,667 | |
| Payroll expenses | (2,009) | (2,075) | |
| External expenses | (952) | (936) | |
| Depreciation and amortisation | 4.3 | (518) | (532) |
| Provisions and impairment | 4.3 | (81) | (39) |
| Other recurring income and expenses | 4.3 | 14 | 10 |
| Recurring operating income | 147 | 93 | |
| Non-recurring income and expenses | 4.4 | 3 | (109) |
| Operating income | 150 | (15) | |
| Income from cash and cash equivalents | 6 | 3 | |
| Gross cost of financial debt | (95) | (73) | |
| Net cost of financial debt | 9.2 | (89) | (69) |
| Other financial income | 9.3 | 15 | 15 |
| Other financial expenses | 9.3 | (82) | (143) |
| Income before tax | (6) | (213) | |
| Share of net income of associates | 8 | 9 | |
| Income tax expense | 10 | (16) | 46 |
| Net income from continuing operations | (13) | (159) | |
| Net income from assets held for sale and discontinued operations(1) | (9) | 265 | |
| Net income | (22) | 106 | |
| P of which net income - group share | (24) | (77) | |
| P of which net income attributable to non-controlling interests | 1 | 183 | |
| Earnings per share from continuing operations - group share (in €) | |||
| P basic | 7.2 | (0.52) | (6.18) |
| P diluted | 7.2 | (0.52) | (6.17) |
| EBITDA | 4.3 | 757 | 687 |
The contributions relating to the Retail activity in China, sold on October 18th (1) , 2020, have been reclassified to the line item "Net income from assets held for sale and discontinued operations" as of June 30th, 2020..
The decisions of the IFRS Interpretation Committee (IFRS IC) published in December 2019 relating to the terms of leases falling within the scope of IFRS 16 did not have a significant impact on the income statement as of June 30th, 2020.
| June 30th , 2021 |
June 30th, 2020 | |||||
|---|---|---|---|---|---|---|
| (in €m) | Gross amount |
Income tax |
Net | Gross | amount Income tax | Net |
| Net income for the period | (22) | 106 | ||||
| Change in equity instruments at fair value through other comprehensive income |
2 | 2 | ||||
| Revaluation of net liabilities in respect of defined benefits plans |
(1) | 1 | (1) | |||
| TOTAL ITEMS THAT WILL NOT BE RECLASSIFIED TO NET INCOME |
(1) | 1 | (1) | 2 | 2 | |
| Exchange differences on translating foreign operations | 30 | 30 | (210) | (210) | ||
| Change in fair value | ||||||
| P cash flow hedge derivatives | 48 | (14) | 34 | (8) | 3 | (5) |
| TOTAL ITEMS THAT WILL BE RECLASSIFIED TO NET INCOME |
79 | (14) | 65 | (218) | 3 | (215) |
| OTHER COMPREHENSIVE INCOME | 79 | (14) | 65 | (216) | 3 | (213) |
| Total comprehensive income | 42 | (107) | ||||
| Attributable to: | ||||||
| P group share | 39 | (246) | ||||
| P non-controlling interests | 3 | 139 |
| December 31st , |
|||
|---|---|---|---|
| Assets (in €m) | Notes | June 30th , 2021 |
2020 restated(1) |
| Goodwill | 6.1 | 2,025 | 2,018 |
| Other intangible assets | 6.2 | 145 | 170 |
| Property, plant and equipment | 6.3 | 5,083 | 5,198 |
| Right-of-use assets | 6.4 | 1,314 | 1,343 |
| Investment property | 6.5 | 3,866 | 3,932 |
| Investments in associates | 3.3 | 533 | 524 |
| Non-current financial assets | 9.5 | 485 | 439 |
| Non-current derivative instruments | 9.4 | 64 | 94 |
| Deferred tax assets | 351 | 356 | |
| Other non-current assets | 48 | 39 | |
| Non-current assets | 13,913 | 14,114 | |
| Inventories | 2,365 | 2,296 | |
| Trade receivables | 489 | 442 | |
| Current tax assets | 126 | 132 | |
| Trade and other receivables | 1,611 | 1,461 | |
| Current financial assets | 738 | 205 | |
| Current derivative instruments | 9.4 | 37 | 58 |
| Cash and cash equivalents | 9.1 | 2,415 | 4,401 |
| Assets held for sale | 1 | 1 | |
| Current assets | 7,782 | 8,996 | |
| TOTAL ASSETS | 21,695 | 23,110 |
(1) Balance sheet reclassifications are detailled on next page.
| Equity and liabilities (in €m) | Notes | June 30th , 2021 |
December 31st , 2020 restated(1) |
|---|---|---|---|
| Share capital | 7.1.1 | 576 | 576 |
| Share premiums | 1,914 | 1,914 | |
| Reserves and net income - group share | 4,078 | 4,029 | |
| Equity - group share | 6,568 | 6,518 | |
| Non-controlling interests | 7.1.5 | 205 | 186 |
| Total equity | 6,773 | 6,704 | |
| Non-current provisions | 8.1 | 264 | 242 |
| Non-current borrowings and other financial liabilities | 9.6 | 5,729 | 6,054 |
| Non-current derivative instruments | 9.4 | 26 | 35 |
| Non-current lease liabilities | 1,327 | 1,387 | |
| Deferred tax liabilities | 80 | 113 | |
| Other non-current liabilities | 9.6 | 123 | 119 |
| Non-current liabilities | 7,549 | 7,949 | |
| Current provisions | 8.1 | 290 | 482 |
| Current borrowings and other financial liabilities | 9.6 | 560 | 840 |
| Current derivative instruments | 9.4 | 14 | 37 |
| Current lease liabilities | 292 | 294 | |
| Trade payables | 4,257 | 4,676 | |
| Current tax liabilities | 64 | 52 | |
| Other current liabilities | 1,895 | 2,075 | |
| Liabilities associated with assets classified as held for sale | |||
| Current liabilities | 7,373 | 8,456 | |
| TOTAL EQUITY AND LIABILITIES | 21,695 | 23,110 |
As of January 1 st (1) , 2021, the ELO Group reviewed the presentation of its financial statements in order to improve their legibility; the changes made are as follows:
2
The reconciliation with the balance sheet published on December 31st, 2020 is as follows:
| Assets (in €m) | December 31st, 2020 published |
Reclassification | December 31st 2020 restated |
|---|---|---|---|
| Goodwill | 2,018 | 2,018 | |
| Other intangible assets | 170 | 170 | |
| Property, plant and equipment | 6,541 | (1,343) | 5,198 |
| Right-of-use assets | 1,343 | 1,343 | |
| Investment property | 3,932 | 3,932 | |
| Investments in associates | 524 | 524 | |
| Non-current financial assets | 479 | (39) | 439 |
| Non-current derivative instruments | 94 | 94 | |
| Deferred tax assets | 356 | 356 | |
| Other non-current assets | 39 | 39 | |
| Non-current assets | 14,114 | 14,114 | |
| Inventories | 2,296 | 2,296 | |
| Trade receivables | 442 | 442 | |
| Current tax assets | 132 | 132 | |
| Trade and other receivables | 1,666 | (205) | 1,461 |
| Current financial assets | 205 | 205 | |
| Current derivative instruments | 58 | 58 | |
| Cash and cash equivalents | 4,401 | 4,401 | |
| Assets held for sale | 1 | 1 | |
| Current assets | 8,996 | 8,996 | |
| TOTAL ASSETS | 23,110 | 23,110 |
| Equity and liabilities (in €m) | December 31st, 2020 published |
Reclassification | December 31st, 2020 restated |
|---|---|---|---|
| Share capital | 576 | 576 | |
| Share premiums | 1,914 | 1,914 | |
| Reserves and net income - group share | 4,029 | 4,029 | |
| Equity - group share | 6,518 | 6,518 | |
| Non-controlling interests | 186 | 186 | |
| Total equity | 6,704 | 6,704 | |
| Non-current provisions | 242 | 242 | |
| Non-current borrowings and other financial liabilities | 5,902 | 152 | 6,054 |
| Non-current derivative instruments | 35 | 35 | |
| Non-current lease liabilities | 1,387 | 1,387 | |
| Deferred tax liabilities | 113 | 113 | |
| Other non-current liabilities | 1,658 | (1,539) | 119 |
| Non-current liabilities | 7,949 | 7,949 | |
| Current provisions | 482 | 482 | |
| Current borrowings and other financial liabilities | 840 | 840 | |
| Current derivative instruments | 37 | 37 | |
| Current lease liabilities | 294 | 294 | |
| Trade payables | 4,676 | 4,676 | |
| Current tax liabilities | 52 | 52 | |
| Other current liabilities | 2,368 | (293) | 2,075 |
| Liabilities associated with assets classified as held for sale | |||
| Current liabilities | 8,456 | 8,456 | |
| TOTAL EQUITY AND LIABILITIES | 23,110 | 23,110 |
| (in €m) Notes |
June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Consolidated net income (including non-controlling interests) | (22) | 106 |
| Share of net income of associates | (8) | (9) |
| Dividends received (non-consolidated investments) | (2) | |
| Net cost of financial debt and lease interests(1) | 151 | 143 |
| Income tax expense (including deferred taxes) | 16 | 59 |
| Net amortisation, depreciation, provisions and impairment expenses (other than on current assets) |
401 | 972 |
| Expenses and income related to share-based payments without cash consideration |
4 | |
| Capital gains and losses net of tax and badwill | (5) | 4 |
| Cash flows from operations before net cost of financial debt, lease interest and tax |
534 | 1,273 |
| Income tax paid | (52) | (174) |
| Interest paid and lease interest(1) | (157) | (179) |
| Other financial items | 5 | 36 |
| Cash flows from operations after net cost of financial debt and tax | 331 | 956 |
| Changes in working capital requirement | 12 (802) |
(573) |
| Net cash from (used in) operating activities | (471) | 384 |
| Disbursements related to acquisitions of property, plant and equipment, intangible assets and investment property |
(337) | (418) |
| Proceeds from disposals of property, plant and equipment, intangible assets and investment property |
61 | 17 |
| Disbursements related to shares in non-consolidated companies including investments in associates |
(11) | (10) |
| Proceeds from sales of shares in non-consolidated companies including investments in associates |
4 | |
| Disbursements related to business combinations net of cash acquired | (1) | |
| Dividends received (non-consolidated investments) | 3 | 4 |
| Changes in loans and advances granted | 12 (27) |
(36) |
| Net cash from (used in) investing activities | (312) | (439) |
| Purchases and sales of treasury shares | 9 | |
| Dividends paid during the financial year | 12 (2) |
(110) |
| Acquisitions and disposals of interests without change in control | 12 23 |
(3) |
| Payment of lease liabilities | (135) | (233) |
| Changes in net financial debt | 12 (1,100) |
210 |
| Net cash from (used in) financing activities | (1,205) | (136) |
| Effect of changes in foreign exchange rates(2) | (20) | 73 |
| Net increase (decrease) in cash and cash equivalents | (2,008) | (118) |
| Cash and cash equivalents at the beginning of period | 12 4,265 |
3,569 |
| Cash and cash equivalents at the end of period | 12 2,257 |
3,451 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (2,008) | (118) |
(1) Including financial interest under IFRS 16 for €59 million and included in other financial expenses (vs €103 million in June 2020). (2) Mainly impact of the rouble for €(16) million.
| (in €m) | Share capital |
Share premiums(1) |
Treasury shares(2) |
Currency translation reserves, financial instrument revaluation reserves and actuarial gains and losses(3) |
Reserves and conso lidated income |
Group share |
Non controlling interests |
Total |
|---|---|---|---|---|---|---|---|---|
| As of January 1st, 2020 | 578 | 1,914 | (136) | (733) | 4,683 | 6,305 | 3,548 | 9,853 |
| Net income for the period | (77) | (77) | 183 | 106 | ||||
| Total other comprehensive income | (169) | (169) | (44) | (213) | ||||
| Total comprehensive income for the period |
(169) | (77) | (246) | 138 | (107) | |||
| Capital reduction | (12) | (12) | (12) | |||||
| Treasury shares | 12 | 12 | 12 | |||||
| Dividend distributions | (110) | (110) | ||||||
| Changes in consolidation scope | (3) | (3) | 1 | (2) | ||||
| Changes in put options granted to non-controlling interests and repurchase commitments |
1 | 1 | 1 | |||||
| Other | (1) | (1) | (1) | (2) | ||||
| As of June 30th, 2020 | 578 | 1,902 | (124) | (902) | 4,602 | 6,056 | 3,576 | 9,632 |
| As of January 1st, 2021 | 576 | 1,914 | (143) | (1,077) | 5,249 | 6,518 | 186 | 6,704 |
| Net income for the period | (24) | (24) | 1 | (22) | ||||
| Total other comprehensive income | 62 | 62 | 2 | 64 | ||||
| Total comprehensive income for the period |
62 | (24) | 39 | 3 | 42 | |||
| Capital reduction |
Treasury shares 10 10 10 Dividend distributions (2) (2) Changes in consolidation scope 5 5 18 23
and repurchase commitments (1) (1) (0) (1) Other (2) (2) (0) (2) AS OF JUNE 30TH, 2021 576 1,914 (133) (1,015) 5,227 6,568 205 6,773
(1) The share premiums include the premiums paid for stock issued, mergers and other capital contributions.
(2) See note 7.1.3.
Changes in put options granted to non-controlling interests
(3) See note 7.1.4.
| Note 1 | Accounting policies | 18 |
|---|---|---|
| Note 2 | Significant events | 19 |
| Note 3 | Consolidation scope | 20 |
| Note 4 | Operating data | 21 |
| Note 5 | Operating segments | 22 |
| Note 6 | Intangible and tangible assets | 23 |
| Note 7 | Equity and earnings per share | 24 |
| Note 8 | Provisions and contingent liabilities | 26 |
| Note 9 | Financing and financial instruments | 26 |
| Note 10 | Income tax | 30 |
| Note 11 | Other | 30 |
| Note 12 | Details of certain items in the consolidated statement of cash flows |
31 |
| Note 13 | Subsequent event | 31 |
ELO S.A. condensed consolidated half-year financial statements were approved by the Board of Directors on August 24th, 2021.
The condensed consolidated financial statements are presented in euros and are rounded up or down to the closest million.
ELO S.A. condensed consolidated financial statements for the six months ended June 30th, 2021 have been prepared in accordance with the provisions of IAS 34 on interim financial reporting and the IFRS standards and interpretations published by the International Accounting Standards Board (IASB) as adopted by the European Union and mandatorily applicable as of January 1st, 2021.
These notes, therefore, do not include all the information required in the full annual financial statements and should be read in conjunction with ELO S.A. consolidated financial statements for the financial year ended December 31st, 2020.
Pursuant to IAS 34, the explanatory notes in these condensed financial statements aim to:
The accounting principles applied to the consolidated financial statements as of June 30th, 2021 are consistent with those used for the financial statements as of December 31st, 2020.
Interest Rate Benchmark Reform, phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
As of January 1st, 2021, the Group applies the amendments to IFRS 9, IAS 39, IFRS 4 and IFRS 7 in connection with "Phase 2" of the benchmark interest rate reform.
The Group has identified the contracts affected by the reform and is in the process of negotiating with its counterparties in order to contractually integrate these index changes.
The Group is not significantly impacted by this reform, and the application of these amendments has no significant impact on the Group's consolidated financial statements as of June 30th, 2021.
In addition, the IFRS IC published several final decisions during the first half of 2021, in particular on the treatment of configuration and customisation costs for software used as part of a SaaS (Software as a Service) contract and the allocation to periods of service of benefits relating to a specific defined benefit plan.
The ELO Group did not apply these decisions when preparing the condensed half-year consolidated financial statements for the period ended June 30th, 2021. The potential impacts are currently being analysed.
Amendments and standards adopted by the European Union, not early applied
The Group has not early adopted the following new standards or amendments that will become applicable:
as of January 1st P , 2022: amendments to IFRS 3 – Business Combinations, IAS 16 – Property, plant and equipment, IAS 37 – Provisions, Contingent Liabilities and Contingent Assets and Annual Improvements 2018-2020.
Amendments and standards not adopted by the European Union
P Amendments to IFRS 16 - Covid-19 Related Rent Concessions beyond 30 June 2021.
These amendments extend by one year the period of application of the amendment "Covid-19 Related Rent Concessions" published in May 2020 and thus make it possible to apply the simplification measures to rent reductions relating to payments due until June 30th, 2022 (up to June 30th, 2021 previously).
The preparation of the consolidated financial statements requires ELO S.A. Management to exercise its judgement to make estimates and assumptions that may affect the carrying amount of certain assets and liabilities, income and expenses and the information provided in the notes to the financial statements. The actual values may be different from current estimates.
When preparing the condensed half-year consolidated financial statements, the significant judgements made by Management in applying accounting policies and the main estimates were identical to those described in the consolidated financial statements for the financial year ended December 31st , 2020. Special attention was, however, given to the valuation of real estate assets, inventories and impairments.
An actuarial valuation is performed as part of the preparation of the condensed half-year financial statements when there are significant changes to plans and/or actuarial assumptions.
The first half of 2021 was marked by the following other significant events:
By decision of the General Meeting of Shareholders of March 11th, 2021, Auchan Holding changed its corporate name and is now called ELO, with all other legal characteristics of the company remaining unchanged.
This new name keeps the name Auchan for the direct link with the consumer.
In January 2021, ELO Group announced the gradual mutation of the retail business towards a decentralised organisation, making each country an autonomous company and the Group a federation of companies. Each country company is coordinated by a General Manager and organised around a two-person Chairman/Vice-Chairman team, along with a Board to support the General Manager. These adaptations aim to engage the Group in a dynamic that promotes the emergence of corporate projects by country and takes back commercial leadership in each of its markets.
Founded in 1976 as ELO's property management subsidiary, Immochan has transformed since 2016 to become a global property player. The company changed its name in June 2018 to become Ceetrus and move from a mainly commercial property activity to that of mixed use property developer. In January 2021, the Group undertook a change of name and structure to strengthen its position as a mixed use property developer. Ceetrus S.A. became New Immo Holding S.A. The property activities are managed by Ceetrus and the other activities by Nhood. The Group communicates its actions under a new brand "Nhood" underlined by a clear signature "New living mood" .
This new identity is built around a conviction that retail property must not stand still in the face of future demographic and climate challenges. Through its mission to animate, regenerate and transform sites into new living zones, for better living together, Nhood is committed in a responsible manner and expresses its ambition to create useful and sustainable value for the market, for and with the inhabitants of the planet.
Nhood is also opening up to new retail property services business lines and is giving itself the opportunity to act in the service of a wider potential of new clients. This creation marks the first milestone to make the new company an innovative leader in real estate and urban regeneration with a positive impact, for its existing sites and for new internal and external customers.
New Immo Holding S.A. and the companies included in the consolidation scope hold and manage assets in 10 countries as of June 30th, 2021.
New Immo Holding S.A. is controlled by ELO S.A.
On March 3rd, 2021, the Board of Directors of ELO authorised a capital reduction carried out on the same day. 363 shares with a par value of €20 were cancelled, taking the share capital of ELO to €575,978,980.
In the context of the large social movements that took place between March 3rd and 7th, 2021, all stores in Senegal were closed between March 4th and 9th, 2021. 18 stores were partially or entirely ransacked and plundered. The stores have been reopened gradually as of March 11th, 2021.
The damage is estimated at €11 million including €5 million related to the value of the real estate assets whose net carrying amount is €4 million. The Group estimates that most of the losses will be covered by its insurance policies and recognised a future insurance income of €6 million on June 30th, 2021 corresponding to the inventories and operating losses.
Over the period from April 20th to June 10th, 2021, ELO carried out bond buybacks for a total amount of €200 million: €1 million of the January 2024 line, €14 million of the April 2025 line, €151 million of the January 2026 line and €34 million of the July 2027 line. The costs related to these early repurchases amounts to €24 million and the future interest savings amount to €29 million.
The COVID-19 health crisis continued in 2021. The governments of the various European countries have continued to take restrictive measures to contain the spread of the coronavirus (COVID-19). Since January 1st, 2021, the average store closure duration is two months. All of our countries have been impacted by these various restrictive measures, such as the closure of non-essential businesses.
In a spirit of solidarity and support for tenants, as in 2020, Nhood continued to take various measures:
The rent reductions granted by the Group in the first half of 2021 amounted to €15 million.
The effects of the health crisis continued during the first half of the 2021 financial year, in particular through curfews and the closure of so-called "non-essential" departments.
ELO S.A., the holding company of the consolidated entities, is a French company with its registered office is located at 40 avenue de Flandre, Croix, France. ELO, through the companies included in the consolidation scope, operates in 11 countries and employs 160,606 people.
As of June 30th, 2021, ELO and its subsidiaries have two business lines:
There was no significant change in the consolidation scope during the first half of 2021.
The number of points of sale operated by Auchan Retail changed as follows in the first half of 2021:
On October 18th, 2020, Auchan Retail and its subsidiary Monicole sold their stake in A-RT Retail Holdings Limited (hereafter "A-RT", parent company of Sun Art Retail Group, a group listed in Hong Kong) to Alibaba.
In accordance with the criteria determined by IFRS 5, the contributions of A-RT and its subsidiaries have been classified in the income statement under the heading "Net income from assets held for sale and discontinued operations" in the comparative consolidated financial statements drawn up as of June 30th, 2020.
The change in the cash position of the sold Retail activities in China included in the Group's statement of cash flows at June 30th, 2020 breaks down as follows:
| (in €m) | June 30th, 2020 |
|---|---|
| Net cash from (used in) operating activities | 714 |
| Net cash from (used in) investing activities | (62) |
| Net cash from (used in) financing activities | (424) |
| Effect of changes in foreign exchange rates | (26) |
| Net increase (decrease) in cash and cash equivalents |
203 |
The line "Investments in associates" presented in the balance sheet includes the equity interest of 49.4% in Oney Bank (Oney Bank specialises in payment, financing and digital identification solutions) for €265 million of which €9 million of net income, and Nhood's investments in companies that own real estate assets in France and Europe (€242 million compared with €236 million as of December 31st, 2020).
The consolidated financial statements for the first and second half of the year are difficult to compare due to the seasonal nature of the business.
The seasonality of the revenue is rather low, although activity is more significant in the second half of the year, particularly in December.
While most operating expenses are spread over the year on a straight-line basis, the Group's operating income is higher in the second half due to the recognition of supplier rebates over this period.
The working capital resources also deteriorated sharply in the first half of the year due to significant supplier payments related to purchases made at the end of the previous year.
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Sales | 15,009 | 15,444 |
| Other revenue | 101 | 101 |
| Revenue | 15,110 | 15,545 |
| Purchases net of rebates, commercial cooperation services and ancillary and logistics costs |
11,465 | 11,726 |
| Change in inventories (net of impairment) | (47) | 152 |
| Cost of sales | 11,418 | 11,878 |
| Gross margin | 3,692 | 3,667 |
The EBITDA corresponds to Recurring operating income, excluding Other recurring income and expenses and excluding Depreciation and Amortisation and Provisions and impairment (including those recognised under payroll expenses and other external expenses).
Store pre-opening costs are recognised in operating expenses when they occur.
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Recurring operating income | 147 | 93 |
| P Other recurring income and expenses(1) |
(14) | (10) |
| P Depreciation and amortisation | 518 | 532 |
| P Provisions and impairment(2) |
81 | 39 |
| P Provisions recognised under payroll expenses and external expenses | (21) | (24) |
| P Depreciation and amortisation included in logistics costs deducted from gross margin | 46 | 57 |
| EBITDA | 757 | 687 |
(1) Including capital gains on disposals as well as reversals of impairment on assets sold for €17 million in 2021 and €3 million in 2020.
(2) Excluding provisions on inventories.
| (in €m) | June 30th, 2021 | June 30th, 2020 |
|---|---|---|
| Impairment of assets | (21) | |
| P of which impairment of property, plant and equipment and intangible assets | (21) | |
| Reorganisation costs – Renaissance (Auchan Retail) | 32 | (66) |
| Other | (29) | (22) |
| P of which Retail France: TASCOM | (17) | |
| P of which Covid-19: Employee bonus | (63) | |
| P including Auchan Retail Taiwan – Sub-lease contract | 45 | |
| P of which early exit penalty (Nhood Italy) | (10) | |
| P of which miscellaneous | (2) | (4) |
| TOTAL NON-RECURRING INCOME AND EXPENSES | 3 | (109) |
| Auchan Retail Real estate |
Holding companies and eliminations |
Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Segment revenue and income (in €m) | June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
| External revenue | 14,847 | 15,340 | 263 | 205 | 15,110 | 15,545 | ||
| Internal revenue | 4 | 2 | 2 | 3 | (6) | (5) | ||
| REVENUE | 14,851 | 15,342 | 265 | 208 | (6) | (5) | 15,110 | 15,545 |
| Depreciation and amortisation | 393 | 431 | 125 | 100 | 0 | 0 | 518 | 532 |
| Recurring operating income | 160 | 99 | (9) | (4) | (4) | (2) | 147 | 93 |
| Auchan Retail | Real estate Holdings & Eliminations |
Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Segment Assets and Liabilities (in €m) | June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
June 30th , 2021 |
June 30th , 2020 |
| SEGMENT ASSETS | 12,461 | 12,407 | 4,780 | 4,800 | 927 | 380 | 18,168 | 17,588 |
| SEGMENT LIABILITIES | 7,728 | 8,576 | 587 | 556 | 8 | 22 | 8,323 | 9,156 |
Total segment assets are reconciled to the total assets of ELO and its subsidiaries as follows:
| (in €m) | June 30th, 2021 | December 31st, 2020 |
|---|---|---|
| Goodwill | 2,025 | 2,018 |
| Other intangible assets | 145 | 170 |
| Property, plant and equipment | 5,083 | 5,198 |
| Right-of-use assets | 1,314 | 1,343 |
| Investment property | 3,866 | 3,932 |
| Non-current segment assets excluding tax and financial assets | 12,432 | 12,661 |
| Investments in associates | 533 | 524 |
| Inventories | 2,365 | 2,296 |
| Trade receivables | 489 | 442 |
| Trade and other receivables | 1,611 | 1,461 |
| Current financial assets | 738 | 205 |
| Segment assets | 18,168 | 17,588 |
| Other non-current financial assets | 485 | 439 |
| Other non-current assets | 48 | 39 |
| Non-current derivative instruments | 64 | 94 |
| Deferred tax assets | 351 | 356 |
| Current tax assets | 126 | 132 |
| Current derivative instruments | 37 | 58 |
| Cash and cash equivalents | 2,415 | 4,401 |
| Assets held for sale | 1 | 1 |
| TOTAL ASSETS | 21,695 | 23,110 |
Total segment liabilities are reconciled to l'impacthe total assets of ELO and its subsidiaries as follows:
| (in €m) | June 30th , 2021 |
December 31st, 2020 |
|---|---|---|
| Non-current provisions | 264 | 242 |
| Current provisions | 290 | 482 |
| Trade payables | 4,257 | 4,676 |
| Other current liabilities | 1,895 | 2,075 |
| Non-current lease liabilities | 1,327 | 1,387 |
| Current lease liabilities | 292 | 294 |
| Segment liabilities | 8,323 | 9,156 |
| Equity | 6,773 | 6,704 |
| Non-current borrowings and other financial liabilities | 5,729 | 6,054 |
| Non-current derivative instruments | 26 | 35 |
| Other non-current liabilities | 123 | 119 |
| Deferred tax liabilities | 80 | 113 |
| Current borrowings and other financial liabilities | 560 | 840 |
| Current derivative instruments | 14 | 37 |
| Current tax liabilities | 64 | 52 |
| TOTAL EQUITY AND LIABILITIES | 21,695 | 23,110 |
| (in €m) | June 30th , 2021 |
December 31st, 2020 |
|---|---|---|
| Goodwill | 2,025 | 2,018 |
| Other intangible assets | 145 | 170 |
| TOTAL INTANGIBLE ASSETS | 2,170 | 2,188 |
| (in €m) | June 30th , 2021 |
December 31st, 2020 |
|---|---|---|
| Gross carrying amount | 14,731 | 14,580 |
| Depreciation, amortisation and impairment | (9,648) | (9,382) |
| NET CARRYING AMOUNT | 5,083 | 5,198 |
During the first half of 2021, acquisitions were made for €142 million and disposals were made for €86 million. The effects of exchange rate variances were +€119 million, including +€77 million for Russia.
| (in €m) | June 30th , 2021 |
December 31st, 2020 |
|---|---|---|
| Gross carrying amount | 2,164 | 2,066 |
| Depreciation, amortisation and impairment | (850) | (723) |
| NET CARRYING AMOUNT | 1,314 | 1,343 |
The investment properties held by the Group mainly consist of shopping malls built near the stores.
| (in €m) | June 30th, 2021 | December 31st, 2020 |
|---|---|---|
| Gross value of investment property | 6,606 | 6,491 |
| Gross value of right-of-use assets of investment property | 175 | 203 |
| TOTAL GROSS VALUE | 6,781 | 6,694 |
| Depreciation and impairment of investment property | (2,845) | (2,712) |
| Depreciation and impairment of right-of-use of investment property | (62) | (50) |
| TOTAL DEPRECIATION AND IMPAIRMENT | (2,915) | (2,762) |
| NET CARRYING AMOUNT | 3,866 | 3,932 |
The change in the gross value of investment properties of €115 million is mainly due to acquisitions for €91 million, disposals for €36 million and foreign exchange effects for €32 million.
For Auchan Retail, cash-generating units for which an indicator of impairment was identified were tested for impairment. The tests conducted on the stores did not lead to the recognition of material impairment.
For Nhood, the real estate assets are appraised by independent experts on a half-yearly basis. All investment properties were valued as of June 30th, 2021. The Group believes that the fair values determined by the appraisers reasonably reflect the fair value of the portfolio. The valuation methods applied, described in the Group's consolidated financial statements dated December 31st, 2020, remain unchanged.
In total, across the entire scope, the impairment losses on property, plant and equipment and intangible assets recognised during the first half of 2021 amounted to €18 million, recognised under the current operating income in the Other recurring income and expenses aggregate.
As of June 30th, 2021, the majority of ELO S.A. share capital is held by Aumarché.
Employees owned 2.18% of the company's capital via mutual funds (FCPs) Valauchan and Valfrance, and via the companies included in the employee share ownership plans outside of France (Valauchan Sopaneer International, Valauchanrus Sopaneer S.C.A., Valespaña S.C.A., Valpoland S.C.A., Valhungary International S.C.A., Valportugal S.C.A., and Valrussie S.C.A.). Only companies included in the employee share ownership plans outside of France are fully consolidated.
As of June 30th, 2021, the share capital amounted to €575,978,980. It was split into 28,798,949 fully paid-up shares with a par value of €20 each.
As of June 30th, 2021, the total number of treasury shares held by ELO S.A. and its subsidiaries amounted to 383,756 shares (compared to 412,583 at the end of 2020). ELO S.A. owns 147,764 of ELO S.A. shares for a transaction cost of €45 million (including 966 shares for the purpose of covering ELO management free share allocation plans) and 235,992 shares are owned by Valauchan Sopaneer International, Valauchanrus Sopaneer S.C.A., Valportugal S.C.A., Valpoland S.C.A., Valhungary International S.C.A., Valespaña S.C.A. and Valrussie S.C.A. at an acquisition cost of €88 million, under the employee share ownership plans.
As of June 30th, 2021, the treasury shares held by ELO S.A. represented 0.5% of its share capital.
| (in €m) | Currency translation reserve |
Available-for-sale financial assets revaluation reserve |
Cash flow hedge reserve |
Net foreign investment hedge reserve |
Actuarial differences on defined-benefit plans |
Total |
|---|---|---|---|---|---|---|
| As of January 1st, 2020 | (649) | (34) | (11) | 2 | (40) | (733) |
| Change | (301) | (25) | (29) | 11 | (344) | |
| AS OF DECEMBER 31st, 2020 | (950) | (59) | (40) | 2 | (29) | (1,077) |
| As of January 1st, 2021 | (950) | (59) | (40) | 2 | (29) | (1,077) |
| Change | 29 | 34 | (1) | 62 | ||
| AS OF JUNE 30th, 2021 | (921) | (59) | (6) | 2 | (30) | (1,015) |
The non-controlling interests of €205 million are mainly comprised of interests in the capital of the subsidiary in Taiwan (Retail and Property Management activities) in the amount of €37 million (up by €4 million), and in Valauchan Sopaneer International, Valauchanrus Sopaneer S.C.A., Val Portugal S.C.A., Valpoland S.C.A., Valhungary International SCA, Valespaña S.C.A., and Valrussie S.C.A. in the amount of €151 million.
ELO S.A. did not pay any dividend in respect of the 2020 financial year.
2
ELO S.A. recognises a liability for its commitments to buy back shares from Valauchan and Valfrance. As of June 30th, 2021, the repurchase commitments amounted to €60 million.
| Basic earnings per share | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Weighted average number of outstanding shares | 28,379,280 | 28,518,569 |
| Net income - group share (in €m) | (24) | (77) |
| Per share (in €) | (0.83) | (2.70) |
| Net income from assets held for sale and discontinued operations - group share (in €m) | (9) | 99 |
| Per share (in €) | (0.31) | 3.48 |
| Net income from continuing operations - group share (in €m) | (15) | (176) |
| Per share (in €) | (0.52) | (6.18) |
| Diluted earnings per share | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Weighted average number of diluted shares | 28,379,280 | 28,523,179 |
| Net income - group share (in €m) | (24) | (77) |
| Per share (in €)(1) | (0.83) | (2.70) |
| Net income from assets held for sale and discontinued operations - group share (in €m) | (9) | 99 |
| Per share (in €)(1) | (0.31) | 3.47 |
| Net income from continuing operations - group share (in €m) | (15) | (176) |
| Per share (in €)(1) | (0.52) | (6.17) |
(1) Potentially dilutive shares are not taken into account as their conversion would reduce the loss per share.
| (in €m) | June 30th, 2021 | December 31st, 2020 |
|---|---|---|
| Non-current provisions | 264 | 242 |
| Current provisions | 290 | 482 |
| TOTAL | 554 | 724 |
Provisions decrease by €170 million, mainly due the change in the provision for Auchan Retail related to the Employment Protection Plan announced in September 2020. The change stands at €(157) million, including reclassification in social liabilities due tothe plan execution for €(131) million and €(26) million of unused reversals recognised in Non-recurring income and expenses.
Consolidated companies are involved in a certain number of lawsuits or disputes in the normal course of their business, including disputes with the tax authorities. Provisions have been set up for the resulting expenses considered probable by ELO and/or its subsidiaries as well as their external advisers.
To the best of the knowledge of ELO and its subsidiaries, there are no other exceptional events or litigation that could substantially affect the activity, results, assets or liabilities of ELO and/or its subsidiaries, which are not adequately covered by provisions at year-end.
| (in €m) | June 30th, 2021 | December 31st, 2020 |
|---|---|---|
| Borrowings and other financial liabilities(1) | 6,137 | 6,741 |
| P non-current | 5,599 | 5,902 |
| P current | 538 | 840 |
| Cash and cash equivalents | (2,415) | (4,401) |
| Derivative assets and liabilities qualifying as hedging instruments for an item of net financial debt |
(64) | (94) |
| Margin call assets on derivatives qualifying as hedging instruments | (1) | (2) |
| Net financial debt | 3,656 | 2,244 |
| Derivative assets and liabilities not qualifying as hedging instruments for an item of net financial debt |
3 | 14 |
| Other short-term investment assets | (635) | (100) |
| NET FINANCIAL DEBT | 3,025 | 2,158 |
(1) A number of margin call agreements have been implemented to reduce counterparty risk. The amounts relating to margin calls received (liabilities) or paid (assets) are included in the net financial debt. As of June 30th, 2021 they represented a liability of €25 million booked under Borrowings and other financial liabilities.
Following the reclassifications of presentation made in the balance sheet, the calculation of net financial debt has not been modified and therefore does not include liabilities related to put options granted to non-controlling interests, in the amount of €153 million as of June 30th, 2021.
The Group's net debt amounted to €3.0 billion as of June 30th, 2021. The Group's net debt is €0.9 billion higher than the one as of December 31st, 2020. The Group's net debt includes bonds issued by ELO for an amount of €4.7 billion (€5.2 billion as of December 31st, 2020).
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Income from cash and cash equivalents | 6 | 3 |
| Gross cost of financial debt: | (95) | (73) |
| P Interest expenses | (79) | (90) |
| P Hedging results | 8 | 22 |
| P Cost related to the repurchase of bonds | (24) | (5) |
| NET COST OF FINANCIAL DEBT | (89) | (68) |
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Disposals of other non-current financial assets, of which: | 3 | |
| P Income on disposals of other non-current financial assets | 4 | |
| P Expenses on disposals of other non-current financial assets | (1) | |
| Gains and losses on financial transactions not eligible for hedge accounting(1) | 2 | (29) |
| Income from equity interests | 2 | |
| Interest expenses related to IFRS 16 | (58) | (68) |
| Translation differences related to IFRS 16 | 5 | (31) |
| Other | (16) | (4) |
| OTHER FINANCIAL INCOME AND EXPENSES | (67) | (128) |
(1) Gains and losses on financial transactions not eligible for hedge accounting include in particular foreign exchange and other gains and losses on derivatives used to hedge foreign exchange and/or interest rate risks on intragroup loans, or to guarantee a given interest rate level for the global debt of ELO and the consolidated companies (macro-hedging swaps).
The financial assets and liabilities are stated in the financial statements in accordance with IFRS 9, IAS 32, IFRS 7 and IFRS 13.
IFRS 13 introduced a three-level hierarchy for fair value measurement disclosures.
Level 1: Fair value measured with reference to unadjusted quoted prices observed in active markets for identical assets or liabilities.
Level 2: Fair value measured with reference to inputs other than the quoted prices included in Level 1 that are observable for the asset or liability in question, either directly (in the form of a price) or indirectly (calculated based on a price).
Level 3: Fair value measured with reference to inputs that are not based on observable market data (unobservable inputs).
| June 30th, 2021 | December 31st, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Market value | Market value | |||||||
| IFRS 9 category (in €m) | Level 1 | Level 2 | Level 3 | Carrying amount |
Level 1 | Level 2 | Level 3 | Carrying amount |
| Assets at fair value through the income statement |
2,448 | 2,448 | 4,436 | 4,436 | ||||
| Non-current financial assets measured at fair value |
34 | 34 | 34 | 34 | ||||
| Cash and cash equivalents | 2,415 | 2,415 | 4,401 | 4,401 | ||||
| Debt instruments measured at fair value through other comprehensive income |
137 | 137 | 129 | 129 | ||||
| Equity investments | 137 | 137 | 129 | 129 | ||||
| Financial assets at amortised cost | 3,201 | 3,201 | 2,423 | 2,423 | ||||
| Non-current financial assets | 315 | 315 | 276 | 276 | ||||
| Other non-current assets (excluding equity investments) |
48 | 48 | 39 | 39 | ||||
| Trade receivables | 489 | 489 | 442 | 442 | ||||
| Trade and other receivables | 1,611 | 1,611 | 1,461 | 1,461 | ||||
| Current financial assets | 738 | 738 | 205 | 205 | ||||
| Liabilities measured at fair value | 4,396 | 9,787 | 14,183 | 4,765 | 10,643 | 15,444 | ||
| Bonds and private placements | 4,396 | 292 | 4,688 | 4,765 | 352 | 5,153 | ||
| Bank borrowings and other financial liabilities, various other financial liabilities including bank overdrafts |
1,602 | 1,602 | 1,741 | 1,741 | ||||
| Non-current lease liabilities | 1,327 | 1,327 | 1,387 | 1,387 | ||||
| Other non-current liabilities | 123 | 123 | 119 | 119 | ||||
| Current lease liabilities | 292 | 292 | 294 | 294 | ||||
| Trade payables | 4,257 | 4,257 | 4,676 | 4,676 | ||||
| Other current liabilities | 1,895 | 1,895 | 2,075 | 2,075 | ||||
| Derivatives, of which: | 61 | 61 | 80 | 80 | ||||
| Derivative instruments – assets | 101 | 101 | 152 | 152 | ||||
| Derivative instruments – liabilities | 40 | 40 | 72 | 72 |
Bonds and cash open-ended funds (SICAV) are valued using quoted market prices. These securities are now considered as Level-1 financial assets and liabilities.
ELO calculated the fair value of the finance lease debts and bank loans by discounting contractual flows using market interest rates, which are observable data. The derivatives are valued using commonly accepted valuation techniques based on observable interest rate and currency market data.
| (in €m) | June 30th, 2021 | December 31st, 2020 | |||
|---|---|---|---|---|---|
| Asset balance sheet item | IFRS 9 category | Non-current | Current | Non-current | Current |
| Non-current financial assets | Fair value assets through the income statement(1) |
34 | 34 | ||
| Debt instrument at fair value through other comprehensive income(2) |
137 | 129 | |||
| Financial assets at amortised cost(4) | 315 | 276 | |||
| Other non-current assets | Financial assets at amortised cost(4) | 48 | 39 | ||
| Trade receivables | Financial assets at amortised cost(3) | 489 | 442 | ||
| Trade and other receivables | Financial assets at amortised costs(4)(5)(6) | 1,611 | 1,461 | ||
| Current financial assets | Financial assets at amortised costs(1)(4)(5)(6) | 738 | 205 | ||
| Cash and cash equivalents | Fair value assets through the income statement(1) |
2,415 | 4,401 | ||
| OTHER FINANCIAL ASSETS (NET CARRYING AMOUNT) |
533 | 5,253 | 479 | 6,509 | |
| Impairment of other financial assets | (5) | (57) | (6) | (55) |
(1) The financial assets held for trading correspond to:
- for the non-current part, investments that are subject to restrictions on use by ELO for prudential or contractual reasons;
- for the current part, investments that are defined as cash and are included under "Cash and cash equivalents";
- for the current part, to other short-term investment assets included in the financial debt (see note 9.1).
(2) The available-for-sale financial assets comprise mainly shares in companies that are neither controlled nor under significant influence.
(3) The trade receivables include mainly receivables relating to franchise arrangements, and rent outstanding for the Property Management business line.
(4) The financial receivables include mainly security deposits.
(5) For the non-current part, interest-bearing or discounted receivables.
(6) The other current receivables include mainly tax and social security receivables and accrued income from suppliers.
| June 30th, 2021 | December 31st, 2020 | ||||
|---|---|---|---|---|---|
| (in €m) | Non-current | Current | Non-current | Current | |
| Bonds and private placements | 4,633 | 55 | 4,855 | 298 | |
| Bank borrowings and other financial liabilities | 943 | 211 | 1,024 | 149 | |
| Other financial liabilities | 23 | 89 | 23 | 215 | |
| Liabilities linked to put options on non-controlling interests | 130 | 22 | 152 | ||
| Margin calls – Liability | 26 | 41 | |||
| Bank overdrafts | 157 | 137 | |||
| TOTAL | 5,729 | 560 | 6,054 | 840 |
Accrued interest is recognised under Current borrowings and other financial liabilities.
Characteristics of new bond issues
There is no new bond that was issued during the first half of 2021.
As of June 30th, 2021, the current portion of this item mainly concerned commercial papers. The maturity schedule for this financing is as follows:
| (in €m) | June 30th | , 2021 | December 31st, 2020 | ||
|---|---|---|---|---|---|
| Issuing companies | Maturity | Nominal value |
Carrying amount |
Nominal value |
Carrying amount |
| ELO S.A. | less than one month | 50 | 50 | ||
| ELO S.A. | 1 to 3 months | 10 | 10 | ||
| ELO S.A. | 3 to 6 months | 20 | 20 | ||
| ELO S.A. | 6 months and over | 210 | 210 |
| (in €m) | June 30th , 2021 |
June 30th, 2020 |
|---|---|---|
| Income before tax | (6) | (213) |
| Income tax expense | 16 | (46) |
| EFFECTIVE TAX RATE (IN %) | (251) | 22 |
The difference between the effective rate and the theoretical rate (28.4%) is mainly due to non-capitalised tax losses and the recognition of tax adjustments in the first half of the financial year.
ELO S.A. granted a current account advance to its reference shareholder "Aumarché" on April 16th, 2021 for an amount of €375 million at an interest rate of 0%, maturing on September 30th, 2021. This amount is recorded under Current financial assets in the consolidated balance sheet.
Transactions with joint ventures and associates are carried out under market conditions. No significant commitments have been entered into with these companies.
There was no significant change in off-balance sheet commitments as of June 30th, 2021.
| (in €m) | June 30th, 2021 | June 30th, 2020 | ||
|---|---|---|---|---|
| Changes in working capital requirement: | (802) | (573) | ||
| P Inventories | (47) | 1,288 | ||
| P Trade receivables | (44) | 31 | ||
| P Trade payables | (432) | (1,522) | ||
| P Other assets and liabilities | (280) | (369) | ||
| Changes in loans and advances granted: | (27) | (36) | ||
| P Increase in loans and advances granted(1) |
(41) | (46) | ||
| P Decrease in loans and advances granted | 14 | 9 | ||
| Dividends paid during the financial year: | (2) | (110) | ||
| P Dividends paid to shareholders of the parent company | ||||
| P Dividends paid to non-controlling interests of consolidated companies |
(2) | (110) | ||
| Acquisitions and disposals of interests without change in control: |
23 | (3) | ||
| P Acquisitions | (11) | (11) | ||
| P Disposals | 33 | 8 | ||
| Net financial debt: | (1,100) | 210 | ||
| P Loans issued | 781 | 4,956 | ||
| P Repayments of loans (including finance leases) | (1,881) | (4,746) | ||
| Net cash and cash equivalents: | 2,257 | 3,451 | ||
| P Marketable securities with a maturity of less than 3 months | 830 | 1,499 | ||
| P Cash | 1,585 | 2,115 | ||
| P Bank overdrafts (see note 9.6) | (158) | (164) |
(1) In 2020, including €27 million in cash reclassified as restricted cash balances – new regulation on prepaid cards in China.
On July 12th, 2021, ELO Group partially repaid €242 million of its Schuldschein loan out of an initial outstanding of €292 million.
On July 16th, 2021, as part of the optimisation of its asset management, Auchan Retail Logistique sold 11 logistics warehouses via a sale and leaseback transaction.
The overall transaction generated net income of €172.1 million, which will be recognised in Non-recurring income and expenses in the second half of this financial year
On July 20th, 2021, the Board of Directors of ELO has decided to propose to the Ordinary General Meeting of Shareholders held on August 24th, 2021, the distribution of a dividend of 750 M€, corresponding to € 26,12 per share. This exceptional dividend follows the sale of Oney Bank and Auchan Retail in China in 2019 and 2020.
For the period from January 1st to June 30th, 2021
This is a free 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 half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
To the Shareholders,
ELO 40 avenue de Flandre 59170 Croix
In compliance with the assignment entrusted to us by your 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:
Due to the global crisis related to the Covid-19 pandemic, the condensed half-yearly consolidated financial statements of this period have been prepared and reviewed under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies' internal organization and the performance of our procedures.
These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. 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 half-yearly 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 half-yearly financial information.
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. We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
Neuilly-sur-Seine and Paris-la-Défense, August 24th, 2021, The Statutory Auditors
PricewaterhouseCoopers Audit
François Jaumain
KPMG Audit
Departement of KPMG S.A. Hervé Chopin
I certify that, to the best of my knowledge, that the condensed half-year consolidated financial statements as of June 30th, 2021 are prepared in accordance with applicable accounting standards and give a true and fair view of the portfolio, the financial position and results of the company and all consolidated companies, and that the attached half-year management report presents a true and fair view of the significant events that occurred during the first six months of the financial year and of their impact on the half-year financial statements, and of the main transactions between related parties, and presents a description of the main risks and uncertainties for the remaining six months of the financial year.
Edgard Bonte General Manager of ELO S.A.
This document is printed in compliance with ISO14001:2004 for an environmental management system.
August 2021
Cover photo credits: ©Rezel Apacionado_Unsplash DR Theatralisation_tomates_Auchan
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