COVIVIO
COVIVIO CONSOLIDATED ACCOUNTS
AS AT 31 DECEMBER 2019
COVIVIO
CONTENTS
COVIVIO
Financial Report at 31 December 2019
2
COVIVIO
3.1 CONSOLIDATED ACCOUNTS AS AT 31 DECEMBER 2019
3.1.1 STATEMENT OF FINANCIAL POSITION
Assets
€ thousand | Note | 31/12/19 | 31/12/18 | |||||||
3.2.5 | ||||||||||
INTANGIBLE ASSETS | 1.2 | |||||||||
Goodwill | 143,286 | 113,064 | ||||||||
Other intangible fixed assets | 23,471 | 59,138 | ||||||||
TANGIBLE FIXED ASSETS | 1.2 | |||||||||
Operating properties | 1,409,707 | 1,181,280 | ||||||||
Other tangible fixed assets | 41,855 | 35,443 | ||||||||
Fixed assets in progress | 37,880 | 24,952 | ||||||||
Investment properties | 1.3 | 20,837,882 | 20,139,338 | |||||||
Non-current financial Assets | 2.2 | 259,060 | 152,847 | |||||||
Investments in equity affiliates | 3.2 | 374,316 | 249,746 | |||||||
Deferred tax assets | 4 | 61,932 | 67,965 | |||||||
Long-term derivatives | 11.5 | 51,381 | 28,752 | |||||||
TOTAL NON-CURRENT ASSETS | 23,240,770 | 22,052,526 | ||||||||
Assets held for sale | 1.3 | 324,292 | 558,848 | |||||||
Loans and receivables | 5 | 27,752 | 6,469 | |||||||
Inventories and work-in-progress | 6.2 | 232,548 | 95,811 | |||||||
Short-term derivatives | 11.5 | 26,105 | 18,200 | |||||||
Trade receivables | 7 | 376,730 | 313,212 | |||||||
Tax receivables | 9,195 | 8,423 | ||||||||
Other receivables | 8 | 175,316 | 153,872 | |||||||
Prepaid expenses | 4,970 | 4,393 | ||||||||
Cash and cash equivalents | 9 | 1,302,084 | 1,172,450 | |||||||
TOTAL CURRENT ASSETS | 2,478,992 | 2,331,676 | ||||||||
TOTAL ASSETS | 25,719,762 | 24,384,202 | ||||||||
Financial Report at 31 December 2019
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COVIVIO
Liabilities
Note | 31/12/19 | 31/12/18 | ||||||||
3.2.5 | ||||||||||
Capital | 261,660 | 248,709 | ||||||||
Share premium account | 3,882,299 | 3,553,687 | ||||||||
Treasury shares | -15,255 | -18,628 | ||||||||
Consolidated reserves | 3,421,954 | 3,028,104 | ||||||||
Net income | 746,987 | 749,574 | ||||||||
TOTAL GROUP'S SHAREHOLDERS' EQUITY | 10 | 8,297,645 | 7,561,446 | |||||||
Non-controlling interests | 4,060,698 | 3,796,969 | ||||||||
TOTAL SHAREHOLDERS' EQUITY | 12,358,343 | 11,358,414 | ||||||||
Long-term borrowings | 11.2 | 9,071,820 | 9,216,624 | |||||||
Long-term rental liabilities | 11.6 | 255,295 | 163,281 | |||||||
Long-term derivatives | 11.5 | 287,319 | 155,945 | |||||||
Deferred tax liabilities | 4 | 983,566 | 844,005 | |||||||
Staff termination benefits | 12.2 | 56,364 | 49,248 | |||||||
Other long-term liabilities | 19,433 | 21,199 | ||||||||
TOTAL NON-CURRENT LIABILITIES | 10,673,797 | 10,450,302 | ||||||||
Liabilities held for sale | 0 | 0 | ||||||||
Trade payables | 140,670 | 129,990 | ||||||||
Trade payables on fixed assets | 88,142 | 83,189 | ||||||||
Short-term borrowings | 11.2 | 1,815,746 | 1,843,103 | |||||||
Short-term rental liabilities | 11.6 | 13,797 | 376 | |||||||
Short-term derivatives | 11.5 | 78,523 | 79,052 | |||||||
Security deposits | 5,483 | 5,557 | ||||||||
Advances and pre-payments received | 200,336 | 170,928 | ||||||||
Short-term provisions | 12.2 | 17,445 | 22,610 | |||||||
Current taxes | 41,054 | 32,598 | ||||||||
Other short-term liabilities | 13 | 211,837 | 149,624 | |||||||
Pre-booked income | 74,590 | 58,461 | ||||||||
TOTAL CURRENT LIABILITIES | 2,687,622 | 2,575,486 | ||||||||
TOTAL LIABILITIES | 25,719,762 | 24,384,202 | ||||||||
Financial Report at 31 December 2019
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COVIVIO
3.1.2 STATEMENT OF NET INCOME
€ thousand | Note | 31/12/2019 | 31/12/2018 |
3.2. | |||
Rental income | 6.2.1 | 961 320 | 955 891 |
Unrecovered rental costs | 6.2.2 | -37 007 | -31 945 |
Expenses on properties | 6.2.2 | -30 951 | -36 915 |
Net losses on unrecoverable receivables | 6.2.2 | -4 550 | -3 200 |
NET RENTAL INCOME | 888 813 | 883 831 | |
Revenues from hotel operating activity & Flex Office | 243 223 | 257 308 | |
Expenses of hotel operating activity & Flex Office | -168 170 | -181 477 | |
EBITDA from hotel operating activity & Flex Office | 6.2.3 | 75 053 | 75 831 |
Income from other activities | 6.2.3 | 16 825 | 4 792 |
Management and administration income | 23 018 | 20 042 | |
Business expenses | -5 648 | -6 140 | |
Overheads (1) | -127 409 | -128 393 | |
Development costs (not capitalised) | -1 819 | -585 | |
NET OPERATING COSTS | 6.2.4 | -111 859 | -115 076 |
Depreciation of operating assets | 6.2.5 | -65 004 | -60 120 |
Net change in provisions and other | 6.2.5 | 12 830 | 6 277 |
CURRENT OPERATING INCOME | 816 658 | 795 535 | |
Net income from inventory properties | -5 787 | -1 087 | |
Income from asset disposals | 6.3 | 1 066 | 97 423 |
Income from value adjustments | 6.4 | 1 003 634 | 620 693 |
Income from disposal of securities | 7 724 | 119 315 | |
Income from changes in scope | 6.5 | -22 255 | -160 006 |
OPERATING INCOME | 1 801 040 | 1 471 872 | |
Income from non-consolidated companies | 4 | 0 | |
Cost of net financial debt (2) | 6.6 | -210 166 | -202 453 |
The interest cost for rental liabilities | 5.11.6 | -13 526 | -4 594 |
Value adjustment on derivatives | 6.7 | -196 383 | -16 152 |
Discounting of liabilities and receivables (1) | 6.7 | -173 | -656 |
Exceptional depreciation of loan issue costs (2) | 6.7 | -10 646 | -11 251 |
Share in income of equity affiliates | 5.3.2 | 29 301 | 22 828 |
PRE-TAX NET INCOME | 1 399 450 | 1 259 594 | |
Deferred tax liabilities | 6.8.2 | -113 640 | -90 050 |
Corporate taxes | 6.8.2 | -23 995 | -26 081 |
NET INCOME FOR THE PERIOD | 1 261 815 | 1 143 462 | |
Net income from non-controlling interests | -514 828 | -393 888 | |
NET INCOME FOR THE PERIOD - GROUP SHARE | 746 987 | 749 574 | |
Group net income per share (€) | 7.2 | 8,76 | 9,99 |
Group diluted net income per share (€) | 7.2 | 8,61 | 9,22 |
- The free share expense included in the item Discounting of liabilities and receivables at 31 December 2018 in the amount of €8,802k is now included with personnel expenses under Overheads (€9,701 k as of 31 December 2019).
- €14,484 k in regular depreciation in the costs of debt issuance included in the item Depreciation of debt issuance costs at 31 December 2018 is now included in the line Cost of the net financial debt (€13,920 k at 31 December 2019).
Financial Report at 31 December 2019
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COVIVIO
3.1.3 STATEMENT OF COMPREHENSIVE INCOME
31/12/2019 | 31/12/2018 | |
NET INCOME FOR THE PERIOD | 1 261 815 | 1 143 462 |
Other items in the comprehensive income statement recognised | ||
directly in shareholders' equity and: |
- Destined for subsequent reclassification in the "Net income" section of the income statement
Actuarial losses on employee benefits | 0 | 0 |
Currency translation differences | 8 289 | -3 026 |
Change in the fair value of operating assets held in investments | 0 | 0 |
Effective portion of gains or losses on hedging instruments | 5 025 | -7 507 |
Tax on other items of comprehensive income | 0 | 0 |
- Not destined for subsequent reclassification in the "Net income" section | 0 | 0 |
OTHER ITEMS OF COMPREHENSIVE INCOME | 13 314 | -10 533 |
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 1 275 129 | 1 132 929 |
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE | ||
To the ow ners of the parent company | 762 052 | 744 124 |
To non-controlling interests | 513 077 | 388 805 |
* | ||
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 1 275 129 | 1 132 929 |
GROUP NET COMPREHENSIVE PER SHARE | 8,94 | 9,92 |
GROUP DILUTED NET INCOME (LOSS) PER SHARE | 8,78 | 9,16 |
Financial Report at 31 December 2019
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COVIVIO
3.1.4 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
The Covivio share capital was 87,219,906 shares issued and fully paid up each with a par value of €3, i.e. €261.7 million at 31 December 2019. Covivio holds 174,557 treasury shares.
Gains and | |||||||||||||||||||||||||||||
Share | Reserves | losses | Total Group | Non- | |||||||||||||||||||||||||
Treasury | recognised | ||||||||||||||||||||||||||||
€ thousand | Capital | premium | and retained | Shareholder | controlling | Total equity | |||||||||||||||||||||||
shares | directly in | ||||||||||||||||||||||||||||
account | earnings | s' equity | interests | ||||||||||||||||||||||||||
shareholders' | |||||||||||||||||||||||||||||
equity | |||||||||||||||||||||||||||||
Position at 31 December 2017 | 224 490 | 2 853 696 | -4 743 | 3 311 517 | -21 653 | 6 363 307 | 3 804 352 | 10 167 659 | |||||||||||||||||||||
Dividends distribution | -337 030 | -337 030 | -235 122 | -572 152 | |||||||||||||||||||||||||
Capital increase | 23 675 | 702 902 | 726 577 | 726 577 | |||||||||||||||||||||||||
Allocation to the legal reserve | 544 | -2 911 | 2 367 | 0 | 0 | ||||||||||||||||||||||||
Other | -13 885 | -461 | -14 346 | -280 | -14 626 | ||||||||||||||||||||||||
Total comprehensive income for the period | 749 574 | -5 450 | 744 124 | 388 805 | 1 132 929 | ||||||||||||||||||||||||
Of which currency transaction gains and losses | -1 280 | -1 280 | -1 746 | -3 026 | |||||||||||||||||||||||||
Of which effective portion of gains or losses on hedging instruments | -4 170 | -4 170 | -3 337 | -7 507 | |||||||||||||||||||||||||
Of which net income (loss) | 749 574 | 749 574 | 393 888 | 1 143 462 | |||||||||||||||||||||||||
Impact of change in shareholding/Capital increase | 71 056 | 71 056 | -160 786 | -89 730 | |||||||||||||||||||||||||
Shared-based payments | 7 757 | 7 757 | 7 757 | ||||||||||||||||||||||||||
Position at 31 December 2018 | 248 709 | 3 553 687 | -18 628 | 3 804 781 | -27 103 | 7 561 446 | 3 796 969 | 11 358 414 | |||||||||||||||||||||
Dividends distribution | -382 076 | -382 076 | -247 668 | -629 744 | |||||||||||||||||||||||||
Capital increase | 12 551 | 330 268 | 342 819 | 342 819 | |||||||||||||||||||||||||
Allocation to the legal reserve | -1 256 | 1 256 | 0 | 0 | |||||||||||||||||||||||||
Other | 400 | -400 | 3 373 | -3 753 | -380 | 76 | -304 | ||||||||||||||||||||||
Total comprehensive income for the period | 746 987 | 15 065 | 762 052 | 513 077 | 1 275 130 | ||||||||||||||||||||||||
Of which actuarial gains and losses on retirement benefits | 0 | 0 | |||||||||||||||||||||||||||
Of which currency transaction gains and losses | 5 503 | 5 503 | 2 786 | 8 289 | |||||||||||||||||||||||||
Of which effective portion of gains or losses on hedging instruments | 9 562 | 9 562 | -4 537 | 5 025 | |||||||||||||||||||||||||
Of which net income (loss) | 746 987 | 746 987 | 514 828 | 1 261 815 | |||||||||||||||||||||||||
Impact of change in shareholding/Capital increase | 5 656 | 5 656 | -1 756 | 3 900 | |||||||||||||||||||||||||
Shared-based payments | 8 129 | 8 129 | 8 129 | ||||||||||||||||||||||||||
Position at 31 December 2019 | 261 660 | 3 882 299 | -15 255 | 4 180 980 | -12 038 | 8 297 646 | 4 060 698 | 12 358 343 |
The dividend of €382 million was paid as €316 million in shares and €66 million in cash and was withheld from net income and charged to retained earnings.
During 2019, Covivio increased its share capital by almost €343 million through the issue of 3,885,719 shares following the payment of the dividend as shares, and the issue of 298,053 new shares following the conversion of 1,670,419 bonds and the allocation of 133,236 vested free shares.
Reserves correspond to parent company retained earnings and reserves, together with reserves from consolidation.
Changes in the number of shares during the period
Transaction | Shares | Treasury | Shares | |||||||
issued | shares | outstanding | ||||||||
Number of shares at 31 December 2018 | 82,902,898 | 222,461 | 82,680,437 | |||||||
Capital increase - delivery of free share plan | 133,236 | |||||||||
Capital increase - conversion of ORNANE-type bonds | 298,053 | |||||||||
Capital increase - dividend in shares | 3,885,719 | |||||||||
Treasury shares - liquidity agreement | -25,672 | |||||||||
Treasury shares - employee award | -22,232 | |||||||||
Number of shares at 31 December 2019 | 87,219,906 | 174,557 | 87,045,349 |
Change in non-controlling interests (+€263.7 million) was mainly due to the income for minority interests (+€513.1 million) and distributions during the period (-€247.6 million).
Financial Report at 31 December 2019
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COVIVIO
3.1.5 STATEMENT OF CASH FLOWS
(€K) | Note | 31-Dec-201931-Dec-2018 |
0
Net consolidated income (including minority interests)
Net depreciation and amortisation charges and provisions (1) (excluding those related to current assets)
Unrealised gains and losses relating to changes in fair value
Income and expenses calculated on stock options and related share-based payments Other calculated income and expenses
Gains or losses on disposals
Gains or losses from dilution - accretion
Share of income from companies accounted for under the equity method
Cash flow after tax and cost of net financial debt
Cost of net financial debt
Income tax expense (including deferred taxes)
Cash flow before tax and cost of net financial debt
Taxes paid
Change in w orking capital requirements on continuing operations (including employee benefits liabilities)
NET CASH FLOW GENERATED BY THE ACTIVITY
Impact of changes in the scope (2)
Disbursements related to acquisition of tangible and intangible fixed assets Proceeds relating to the disposal of tangible and intangible fixed assets Disbursements relating to acquisition of financial assets (non-consolidated securities) Proceeds relating to the disposal of financial assets (non-consolidated securities)
Dividends received (companies accounted for under the equity method, non-consolidated securities) Change in loans and advances granted
Investment grants received
Other cash flow from investment activities
NET CASH FLOW FROM INVESTMENT OPERATIONS
1 261 815 | 1 143 462 | ||||||
73 176 | 194 514 | ||||||
3.2.5.11.5 | -807 278 | -604 530 | |||||
& 3.2.6.4 | |||||||
9 701 | 8 802 | ||||||
17 100 | 23 421 | ||||||
-8 810 | -226 326 | ||||||
0 | -0 | ||||||
-29 301 | -22 828 | ||||||
516 502 | 516 515 | ||||||
3.2.6.6 & | 209 672 | 187 970 | |||||
3.2.6.7 | |||||||
3.2.6.8.2 | 137 635 | 116 132 | |||||
863 810 | 820 617 | ||||||
-14 496 | -17 375 | ||||||
3.2.5.7.2 | -75 876 | 81 069 | |||||
773 438 | 884 310 | ||||||
-246 910 | -475 832 | ||||||
3.2.5.1.2 | -674 244 | -991 339 | |||||
3.2.5.1.2 | 1 198 601 | 1 267 019 | |||||
-2 684 | -0 | ||||||
5 085 | 1 185 | ||||||
15 066 | 10 656 | ||||||
-54 528 | 71 227 | ||||||
0 | 0 | ||||||
3 220 | 11 218 | ||||||
243 607 | -105 866 |
Impact of changes in the scope | 0 | -97 543 | ||||||||
Amounts received from shareholders in connection w ith capital increases: | ||||||||||
Paid by parent company shareholders | 3.1.4 | 0 | 174 183 | |||||||
Paid by minority shareholders of consolidated companies | 22 254 | 0 | ||||||||
Purchases and sales of treasury shares | 2 544 | -15 675 | ||||||||
Dividends paid during the reporting period: | ||||||||||
Dividends paid to parent company shareholders | 3.1.4 | -66 426 | -337 030 | |||||||
Dividends paid to non-controlling interests of consolidated companies | 3.1.4 | -247 668 | -235 122 | |||||||
Proceeds related to new borrow ings | 3.2.5.11.2 | 1 612 701 | 2 427 876 | |||||||
Repayments of borrow ings (including finance lease agreements) | 3.2.5.11.2 | -1 935 543 | -2 507 114 | |||||||
Net interest paid (including finance lease agreements) | -216 191 | -208 220 | ||||||||
Other cash flow from financing activities | -75 547 | -68 958 | ||||||||
NET CASH FLOW FROM FINANCING OPERATIONS | -903 876 | -867 602 | ||||||||
Impact of changes in the exchange rate | 535 | -64 | ||||||||
Impact of changes in accounting policies | 0 | 0 | ||||||||
CHANGE IN NET CASH | 113 705 | -89 222 | ||||||||
Opening cash position | 1 167 517 | 1 256 739 | ||||||||
Closing cash position | 1 281 221 | 1 167 517 | ||||||||
Change in cash and cash equivalents | 113 705 | -89 222 |
31-Dec-2019 | 31-Dec-2018 | |||||||||
Gross cash (a) | 3.2.5.9.2 | 1 302 084 | 1 172 450 | |||||||
Debit balances and bank overdrafts from continuing operations (b) | 3.2.5.11.2 | -20 548 | -1 398 | |||||||
Net cash and cash equivalents (c) = (a) - (b) | 1 281 536 | 1 171 052 | ||||||||
Of which available net cash and cash equivalents | 1 281 221 | 1 167 517 | ||||||||
Of which unavailable net cash and cash equivalents | 315 | 3 535 | ||||||||
Gross debt (d) | 3.2.5.11.2 | 10 936 766 | 11 144 032 | |||||||
Amortisation of financing costs (e) | 3.2.5.11.2 | -69 749 | -85 703 | |||||||
Net debt (d) - (c) + ( e ) | 9 585 482 | 9 887 278 |
- Net depreciation and amortisation charges and provisions of €73.2 million mainly include €65 million in depreciation and amortisation of tangible and intangible fixed assets.
- The impact of changes in the scope of investing activities (section 39 of IAS 7) amounting to -€246.9 million mainly stem from Hotels Europe (-€215.5 million) and Germany Residential (-€31.5 million).
Financial Report at 31 December 2019
8
COVIVIO
3.2 NOTES TO THE CONSOLIDATED ACCOUNTS
3.2.1 GENERAL PRINCIPLES
3.2.1.1 Accounting standards
The consolidated accounts of the Covivio Group at 31 December 2019 were prepared in accordance with the international accounting standards and interpretations issued by the International Accounting Standards Board (IASB) and adopted by the European Union as of the preparation date. These standards include the IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) and their interpretations.
The financial statements were approved by the Board of Directors on 13 February 2020.
- Accounting principles and methods used
The accounting principles applied for the consolidated accounts as at 31 December 2019 are identical to those used for the consolidated accounts as at 31 December 2018, except for new standards and amendments whose application was mandatory on or after 1 January 2019 and which were not applied early by the Group.
The new standards subject to mandatory application on or after 1 January 2019 include:
-
IFRS 16 "Leases", adopted by the European Union on 31 October 2017; this standard supersedes IAS 17 "Leases", as well as the corresponding interpretations (IFRIC 4, SIC 15 and SIC 27). It sets out the principles applicable to the accounting, measurement and presentation of leases.
The information required as part of the transition to and first-time application of IFRS 16 are presented in section 3.2.1.2.
The following interpretations and amendments, which are mandatory as of 1 January 2019, did not have any impact on the Group's consolidated financial statements: - Amendment to IFRS 9 "Prepayment Features with Negative Compensation", adopted by the European Union on 22 March 2018; this amendment deals with instruments containing a prepayment clause when the exercise of this clause leads to a repayment of less than the amount of the principal and interest on the principal amount outstanding (negative compensation);
- IFRIC 23 "Uncertainty over Income Tax Treatments", adopted by the European Union on 23 October 2018; this interpretation clarifies the application of provisions of IAS 12 "Income Taxes" to the recognition and measurement where there is uncertainty on the income tax treatment;
- Amendments to IAS 28 "Investments in Associates and Joint Ventures", adopted by the European Union on 8 February 2019;
-
Annual improvements to IFRS (2015-2017 cycle), adopted by the European Union on 14 March
2019. These improvements amend IFRS 3 "Business Combinations", IFRS 11 "Partnerships", IAS 23 "Borrowing Costs" and IAS 12 "Income Taxes"; - Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement", adopted by the European Union on 13 March 2019. These limited amendments apply to changes, curtailment or settlement of defined-benefit plans.
The new amendments and standards adopted by the European Union whose application was not mandatory on 1 January 2019 and which are not being applied early by the Covivio Group are the following:
- Amendments to IAS 1 and IAS 8 "Definition of Material", adopted by the European Union on 29 November 2019. According to the IASB, the amendments will come into force on 1 January 2020.
Financial Report at 31 December 2019
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COVIVIO
- Amendments to IFRS 9, IAS 39 and IFRS 7 related to the interbank benchmark rate reform, published on 26 September 2019, adopted by the European Union on 15 January 2020; According to the IASB, the amendments will come into force on 1 January 2020.
New standards awaiting adoption by the European Union, whose application is possible as of 1 January 2019:
- Amendment to IFRS 3 "Definition of a Business", published on 22 October 2018; according to the IASB, the amendments will come into force on 1 January 2020;
- Amendments to IFRS 10 and IAS 28 "Sales or contributions of assets made between the Group and equity affiliates", published on 11 September 2014.
IFRS standards and amendments published by the IASB not authorised for financial years beginning on or after 1 January 2019:
- Amendments to References to the conceptual framework in IFRS Standards issued on 29 March 2018; these were adopted by the European Union on 29 November 2019. According to the IASB, the amendments will come into force on 1 January 2020;
- IFRS 17 "Insurance contracts", published on 18 May 2017; according to the IASB, the amendments will come into force on 1 January 2021. IFRS 17 lays out the principles as to the recognition, valuation, presentation and disclosures concerning insurance contracts within the scope of application of the standard. This standard has no impact on the financial statements.
3.2.1.2 First-time application of IFRS 16
The Covivio Group has chosen to apply IFRS 16 using the simplified retrospective method: comparative information is not restated and the cumulative impact of the first-time application of the standard is presented as an adjustment to shareholders' equity at 1 January 2019. In this case, no adjustments have been recorded in shareholders' equity at the date of first-time application.
Pursuant to section 5 of the standard, the Covivio Group has chosen not to restate leases with a residual term at the date of first-time application not exceeding 12 months and leases where the underlying asset has a low value.
The discount rate used to calculate the lease liability is the marginal interest rate on debt at the date of first-time application or at the lease commencement date. This rate is defined as the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the leased asset in a similar economic environment.
For leases with a residual term of more than 15 years (construction leases and long-term leases conferring ad rem rights), the rates used are obtained by adding a risk-free rate applicable to the currency and the term, a credit spread, a EUR/GBP rate for assets located in the United Kingdom and a surcharge applicable to real estate assets.
For leases with a residual term of less than 15 years at the date of first-time application, the discount rate used corresponds to the average interest rate on debt for the business segment in question at 31 December 2018 (i.e. 2.08% for the Hotels in Europe segment, 1.5% for Germany Residential and 1.53% for France Offices, Italy Offices and Corporate).
The average yield rate weighted for rental liabilities at 1 January 2019 is 4.20%.
The Group has used the following presentation in the Statement of financial position:
- right-of-useassets meeting the definition of investment properties under IAS 40, for which the Group applies the fair value model, are included under Investment properties;
- right-of-useassets that do not meet the definition of investment properties under IAS40, are included under the items where the corresponding underlying assets are presented if they belonged thereto, namely the items Operating properties and Other tangible fixed assets;
- rental liabilities are presented separately from other liabilities under Long-term rental liabilities and Short-term rental liabilities.
Financial Report at 31 December 2019
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The Group's leases are mainly leases for business premises, company vehicles, parking spaces, construction leases and long-term leases conferring ad rem rights.
Note that IAS 40 "Investment properties" already incorporated a restatement similar to IFRS 16 for construction leases described as finance leases. Accordingly, long-term leases conferring ad rem rights relating to acquisitions in the United Kingdom during the fiscal year had already been restated in the financial statements at 31 December 2018. The first-time application of IFRS 16 is consequently limited to leases other than long-term leases conferring ad rem rights.
The IAS 17 rental commitments at 31 December 2018 and rental debt recognised at 1 January 2019 are reconciled in the table below (in €K):
Operating lease commitments as tenant at 31 December 2018 | 81,801 | |
Contracts not accounted for under exemptions | - | 12,623 |
Unidentified contracts at 31 December 2018 | 98,989 | |
Undiscounted rental commitments under IFRS 16 at 1 January 2019 | 168,167 | |
Effect of discounting | - | 78,739 |
Discounted rental liabilities under IFRS 16 at 1 January 2019 | 89,428 | |
Rental liabilities recognised under IFRS 40 at 31 December 2018 | 163,657 | |
Rental liabilities under IFRS 16 at 1 January 2019 | 253,085 | |
The impact of the first-time application of IFRS 16 on Statement of financial position items at 31 December 2019 is presented in the following tables:
Total impact 1st application IFRS 16 | ||||||||||||||||||||||||||||||||
France | Hotels in | Germany | France | Corporate | ||||||||||||||||||||||||||||
K€ | Italy Offices | and not | Total 1st jan.-19 | 31/12/2018 | 31/12/2019 | |||||||||||||||||||||||||||
Offices | Europe | Residential | Residential | |||||||||||||||||||||||||||||
attributable | ||||||||||||||||||||||||||||||||
Tangible fixed assets | 8 339 | 3 505 | 29 034 | 601 | 21 | 35 907 | 77 407 | 0 | 65 838 | |||||||||||||||||||||||
Operating properties | 8 235 | 3 340 | 27 585 | 0 | 12 | 35 881 | 75 053 | 0 | 63 749 | |||||||||||||||||||||||
Other tangible fixed assets | 104 | 165 | 1 449 | 601 | 9 | 26 | 2 354 | 0 | 2 089 | |||||||||||||||||||||||
Investment properties | 0 | 0 | 12 035 | 0 | 0 | 0 | 12 035 | 163 660 | 202 636 | |||||||||||||||||||||||
TOTAL ASSETS | 8 339 | 3 505 | 41 069 | 601 | 21 | 35 907 | 89 442 | 163 660 | 268 474 |
Total impact 1st application IFRS 16 | ||||||||||||||||||||||||||||||||
France | Hotels in | Germany | France | Corporate | ||||||||||||||||||||||||||||
K€ | Italy Offices | and not | Total 1st jan.-19 | 31/12/2018 | 31/12/2019 | |||||||||||||||||||||||||||
Offices | Europe | Residential | Residential | |||||||||||||||||||||||||||||
attributable | ||||||||||||||||||||||||||||||||
Rental liabilities | 8,336 | 3,500 | 41,063 | 601 | 21 | 35,907 | 89,428 | 163,657 | 268,977 | |||||||||||||||||||||||
Long-term rental liabilities | 4,687 | 2,769 | 39,436 | 375 | 12 | 29,835 | 77,114 | 163,281 | 255,295 | |||||||||||||||||||||||
Short-term rental liabilities | 3,649 | 731 | 1,627 | 226 | 9 | 6,072 | 12,314 | 376 | 13,682 | |||||||||||||||||||||||
TOTAL LIABILITIES | 8,336 | 3,500 | 41,063 | 601 | 21 | 35,907 | 89,428 | 163,657 | 268,977 |
The impact of the first-time application of IFRS 16 on Statement of net income items at 31 December
2019 is presented in the following table:
K€ | 31/12/2019 |
Net change in provisions and other | 9 198 |
Expenses of hotel operating activity | 2 548 |
Net cost of operations | 6 375 |
Net operating costs | 5 062 |
Amortisation and depreciation of tangible assets | -12 699 |
Changes in FV of use rights/investment properties | 3 107 |
Interest cost for rental liabilities | -13 528 |
IFRS 16 impact on net income | 63 |
Financial Report at 31 December 2019
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COVIVIO
3.2.1.3 Estimates and judgements
The financial statements have been prepared in accordance with the historic cost convention, with the exception of investment properties and certain financial instruments, which were recognised in accordance with the fair value convention. In accordance with the conceptual framework for IFRS, preparation of the financial statements requires making estimates and using assumptions that affect the amounts shown in these financial statements.
The significant estimates made by the Covivio Group in preparing the financial statements mainly relate to:
- the valuations used for testing impairment, in particular assessing the recoverable value of goodwill and intangible fixed assets;
- measurement of the fair value of investment properties;
- assessment of the fair value of derivative financial instruments;
- measurement of provisions.
Due to the uncertainties inherent in any valuation process, the Covivio Group reviews its estimates based on regularly updated information. The future results of the transactions in question may differ from these estimates.
In addition to the use of estimates, Group management makes use of judgements to define the appropriate accounting treatment of certain business activities and transactions when the IFRS standards and interpretations in effect do not precisely address the accounting issues involved.
3.2.1.4 Operating segments
The operating segments of the Covivio Group are detailed in paragraph 3.2.8.1.
3.2.1.5 IFRS 7 - Reference table
Liquidity risk | § 3.2.2.2 |
Financial expense sensitivity | § 3.2.2.3 |
Credit risk | § 3.2.2.4 |
Market risk | § 3.2.2.6 |
Exchange rate risk | § 3.2.2.7 |
Sensitivity of the fair value of investment properties | § 3.2.5.1.3 |
Covenants | § 3.2.5.11.7 |
Financial Report at 31 December 2019
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3.2.2 FINANCIAL RISK MANAGEMENT
The operating and financial activities of the Company are exposed to the following risks:
3.2.2.1 Marketing risk for properties under development
The Group is involved in property development. As such, it is exposed to a number of different risks, particularly risks associated with construction costs, completion delays and the marketing of properties. These risks can be assessed in light of the schedule of properties under development (see § 3.2.5.1.5).
3.2.2.2 Liquidity risk
Liquidity risk is managed in the medium and long term with multi-year cash management plans and, in the short term, by using confirmed and undrawn lines of credit. At 31 December 2019, the Covivio Group's available cash and cash equivalents amounted to €2,963 million, including €1,505 million in usable unconditional credit lines, €1,302 million in investments and €156 million in unused overdraft facilities.
The graph below summarises the maturities of borrowings (in €M) existing as at 31 December 2019:
- 500
- 000
- 500
-
000
500
0
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 and over |
Interests
The maturities at 31 December 2019 in the graph above include €1,363.9 million in treasury bills.
The amount of interest payable until the maturity of the debt, estimated on the basis of the outstanding amount at 31 December 2019 and the average interest rate on debt, totalled €841 million.
Details of the debt maturities are provided in note 3.2.5.11.3, and a description of the banking covenants and accelerated payment clauses included in the loan agreements is presented in note 3.2.5.11.7.
Throughout 2019, the Group continued its policy of reducing the cost of its debt whilst extending the term, particularly by refinancing or renegotiating some of its debts following the merging of its French and Italian scopes.
- In 2019, Covivio raised or renegotiated €550 million in loans on improved financial and maturity terms, for example, €500 million via a 12-year green bond issued in September 2019, with a 1.125% coupon. At the same time, Covivio cancelled or redeemed early €817.5 million in credit lines, short and medium-term borrowings or bonds, mainly in Italy.
- Covivio Hotels raised, secured or renegotiated €577 million in long-term mortgage debt (average 9-year term) backed by Hotels in Spain, Germany and France, while repaying €400 million in medium-term mortgage financing.
- In Germany, Covivio Immobilien SE raised or renegotiated €529 million in loans with average terms of around 10 years.
Financial Report at 31 December 2019
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3.2.2.3 Interest rate risk
The Group's exposure to the risk of changes in market interest rates is linked to its floating rate and long-term financial debt.
To the extent possible, bank debt is primarily hedged via financial instruments (see § 3.2.5.11.5). At 31 December 2019, after taking interest rate swaps into account, approximately 96% of the Group's debt was hedged, and the bulk of the remainder was covered by interest rate caps, which resulted in the following sensitivity to changes in interest rates:
The impact of a 100 bps rate increase as at 31 December 2019 is a loss of €18,733k on the 2020 Group Share of net income.
The impact of a 50 bps rate increase as at 31 December 2019 is a loss of €8,622k on the 2020 Group Share of net income.
The impact of a 50 bps rate reduction as at 31 December 2019 is an increase of €8,356k on the 2020 Group Share of net income.
3.2.2.4 Financial counterparty risk
Given the Covivio Group's contractual relationships with its financial partners, the Company is exposed to counterparty risk. If any of its counterparties is not in a position to honour its commitments, the Group's income could suffer an adverse effect.
This risk primarily involves the hedging instruments subscribed by the Group and which would have to be replaced by a hedging transaction at the current market rate in the event of a default by the counterparty.
The counterparty risk is limited by the fact that Covivio group is a borrower, from a structural standpoint. The risk is therefore mainly restricted to the investments made by the Group and to its counterparties in derivative product transactions. The Company continually monitors its exposure to financial counterparty risk. The Company's policy is to deal only with top-tier counterparties, while diversifying its financial partners and its sources of funding.
Counterparty risk is included in the measurement of cash instruments. It totalled €5,275k in 2019.
3.2.2.5 Leasing counterparty risk
Covivio Group's rental income is subject to a certain degree of concentration, to the extent that the principal tenants (Orange, Telecom Italia, AccorHotels, IHG and B&B) generate most of the annual rental income.
It should be noted that in 2017 and 2018, the Group split the Telecom Italia portfolio and now only holds 51%. The Group also made significant investments in Spain and the United Kingdom, thus diversifying its hotel tenants.
Covivio group does not believe it is significantly exposed to the risk of insolvency, since its tenants are selected based on their creditworthiness and the economic prospects of their market segments. The operating and financial performance of the main tenants is regularly reviewed. In addition, tenants grant the Group financial guarantees when leases are signed.
The Group has not recorded any significant overdue payments.
3.2.2.6 Risks related to changes in the value of the portfolio
Changes in the fair value of investment properties are recognised in the income statement. Changes in property values can thus have a material impact on the operating performance of the Group.
Financial Report at 31 December 2019
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COVIVIO
In addition, part of the Company's operating income is generated by the sales plan, the income of which is equally dependent on property values and on the volume of possible transactions.
Rentals and property values are cyclical in nature, the duration of the cycles being variable but generally long-term. Different domestic markets have differing cycles that vary from each other in relation to specific economic and market conditions. Within each national market, prices also follow the cycle in different ways and with varying degrees of intensity, depending on the location and category of the assets.
The macroeconomic factors that have the greatest influence on property values and determine the various cyclical trends include the following:
- interest rates;
- the market liquidity and the availability of other profitable alternative investments;
- economic growth.
Low interest rates, abundant liquidity on the market and a lack of profitable alternative investments generally lead to an increase in property asset values.
Economic growth generally increases demand for leased space and paves the way for rent levels to rise, particularly in Offices. These two consequences lead to an increase in the price of real estate assets. Nevertheless, in the medium term, economic growth generally leads to an increase in inflation and then an increase in interest rates, expanding the availability of profitable alternative investments. Such factors exert downward pressure on property values.
The investment policy of Covivio group is to minimise the impact of the various stages of the cycle by choosing investments that:
- have long-term leases and high quality tenants, which soften the impact of a reduction in market rental income and the resulting decline in real estate prices;
- are located in major city centres;
- have low vacancy rates, in order to avoid the risk of having to re-let vacant space in an environment where demand may be limited.
The holding of real estate assets intended for leasing exposes the Covivio Group to the risk of fluctuation in the value of real estate assets and lease payments.
Despite the uncertainty created by the economic downturn, this exposure is limited to the extent that the rentals invoiced are derived from rental agreements, the term and diversification of which mitigate the effects of fluctuations in the rental market.
The sensitivity of the fair value of investment properties to changes in capitalisation rates is analysed in 3.2.5.1.3.
Financial Report at 31 December 2019
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COVIVIO
3.2.2.7 Exchange rate risk
The Group operates both in and outside the euro zone following acquisition of the hotel properties in the United Kingdom and in Poland. The Group wanted to hedge against certain currency fluctuations (GBP) by financing part of the acquisitions through a foreign currency loan and a currency swap.
Impact of a decrease in the GBP/EUR exchange rate on the shareholders' equity
5% decrease | 10% decrease | |||||
31/12/2019 | in GBP/EUR | in GBP/EUR | ||||
(M£) | exchange rate | exchange rate | ||||
(€M) | (€M) | |||||
Portfolio | 825 | -45.7 | -91.7 | |||
Debt | 400 | 22.3 | 44.5 | |||
Cross currency sw ap | 250 | 13.9 | 27.8 | |||
Impact on shareholders' equity | -9.6 | -19.3 |
(-) corresponds to a loss; (+) corresponds to a gain
3.2.2.8 Brexit risk
Notwithstanding the impact on real estate valuations relating to economic uncertainties, in the United Kingdom the Group is benefiting from the minimum guaranteed rental income over its whole portfolio limiting the impact of this risk on its financial position and profitability.
3.2.2.9 Risks related to changes in the value of shares and bonds
The Group is exposed to risks for two classes of shares (see § 3.2.5.2.2).
This risk primarily involves listed securities in companies consolidated according to the equity method, which are valued according to their value in use. Value in use is determined based on independent assessments of the real estate assets and financial instruments.
Furthermore, Covivio issued bonds (ORNANE type) valued at their fair value in the income statement at each reporting date for ORNANE France 2019 and by distinguishing a financial debt and amortised cost and a derivative value at fair value for ORNANE Italy 2021. The fair value corresponds to the bond's closing price, exposing the Group to changes in the bond's value. The specific features of the ORNANE are described in note 3.2.5.11.4. The France 2019 ORNANE was fully redeemed in early 2019.
Financial Report at 31 December 2019
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3.2.2.10 Tax environment
3.2.2.10.1 Changes in the French tax environment
The French tax environment has undergone changes in the corporate tax rate, which has been reduced to 31% (instead of 33.1/3%) from 1 January 2019 for companies with revenues not exceeding €250 million.
New rules to limit the deductibility of interest to 30% of fiscal EBITDA or €3 million, pursuant to the application of European provisions, could have an influence on the taxable income of Group companies.
3.2.2.10.2 Changes in the Italian tax environment
The Group has not observed any significant change in the Italian tax environment.
3.2.2.10.3 Changes in the German tax environment
The Group has not observed any significant change in the German tax environment.
3.2.2.10.4 Tax risks
Due to the complexity and bureaucracy characteristic of the environment in which the Covivio Group operates, the Group is exposed to tax risks. If our counsel believes that an adjustment presents a risk of reassessment, a provision is made. The list of the main ongoing proceedings includes the following:
-
Covivio Hotels' tax audit
Covivio Hotels' financial statements were audited for the 2010/2011 and 2012/2013/2014 fiscal years, which resulted in a reassessment proposal for the CVAE in the amount of €2.4 million and €2.2 million respectively. These reassessments were partially withdrawn by the tax administration in the first quarter of 2018 and refunds of €1.2 million and €1.1 million were obtained. The remaining balance of the reassessment of €1.2 million and €1.1 million is being contested before the Administrative Court following the court's two rulings against the Company. Based on the analysis by the company's legal counsel, these disputes were not provisioned as at 31 December 2019.
The financial statements of Covivio Hotels were also audited for the 2015 fiscal year which resulted in a reassessment proposal for corporate value-added tax (CVAE), on the same grounds as the previous reassessment proposals for €0.2 million. This proposal was contested at the Administrative Court and, based on the analysis by the Company's advisers, is not recognised in the accounts at 31 December 2019. - Foncière Otello tax audit (subsidiary of Covivio Hotels)
Foncière Otello's financial statements were audited for the 2011, 2012 and 2013 fiscal years, which resulted in a reassessment proposal for the CVAE in the amount of €0.5 million. This proposal is being contested before the Administrative Court following this court's ruling against the Company. Based on the analysis by the company's legal counsel, no provision has been recorded for this dispute as at 31 December 2019.
The financial statements of Foncière Otello were also audited for the 2014, 2015 and 2016 fiscal years, which resulted in a reassessment proposal for corporate value added tax (CVAE) in the amount of €0.2 million, on the same grounds as the previous reassessment proposal. This proposal is being contested in its entirety, and, based on analysis by the company's legal counsel, no provision was recorded to that effect as at 31 December 2019.
Financial Report at 31 December 2019
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COVIVIO
-
Tax audit of LHM Propco Lux (subsidiary of Covivio Hotels)
A company with assets in Germany is being audited for the 2015-2017 fiscal years, which remains ongoing at 31 December 2019. - Tax audits of Operating properties
Nice-M was audited for fiscal years 2015 and 2016, which resulted in a VAT reassessment in the amount of €31k, which is contested in part. This VAT reassessment has not been recognised at 31 December 2019.
Two German companies (Rock portfolio) are subject to a tax audit for the 2012 through 2015 financial years, concerning corporate tax and VAT.
Another tax audit relating to VAT for 2018 was begun in early 2019 and remains ongoing. - Tax audits of Germany Residential
Covivio Immobilien and all its subsidiaries were subject to a tax audit for financial years 2011 to 2016.
At 31 December 2019, the audit is still ongoing, with the exception of the Golddust portfolio which resulted in a reassessment of around €1 million as the level of interest rates on pre- existing partner loans on acquisition of the companies' securities was questioned. This reassessment, which resulted in a provision of €1.5 million, was accepted and was permanently closed at 31 December 2019. - Tax audits on Beni Stabili, which merged with Covivio Comit Fund tax dispute - Beni Stabili:
On 17 April 2012, following a court decision, the Italian tax administration refunded the debt borne by Beni Stabili for the Comit Fund dispute (principal: €58.2 million and interest: €2.3 million). In April 2012, the Tax Administration appealed this decision. The Court of Appeal ruled in favour of the Tax Administration on 18 December 2015.
The dispute with the tax authorities was settled with the payment of €55 million. The €56.2 million provision recorded in 2015 was reversed as at 31 December 2016.
However, Comit Fund and Beni Stabili have not entered into a joint agreement to definitively agree that they each will pay an equal share of this adjustment. Civil arbitration proceedings taken by Comit Fund confirmed that each party accepts to pay 50% of the cost of the dispute, in accordance with the payments made. In January 2019, Comit Fund appealed against the arbitration decision bringing the dispute to an end. In May 2019, an appeal was heard, resulting in a new hearing being scheduled for November 2019. Beni Stabili's management, supported by its advisers, believes there is little risk of having to repay Comit Fund, and no provision has therefore been made for this appeal as of 31 December 2019.
3.2.2.10.5 Deferred tax liabilities
Most of the Group's real estate companies have opted for the SIIC regime in France, and the SOCIMI regime in Spain. Beni Stabili, which opted for the SIIQ regime, changed its tax regime when it merged with Covivio at 31 December 2018 and the Covivio permanent establishment in Italy will be subject to real estate corporate tax of 20% as of 1 January 2019. The impact of deferred tax liabilities is therefore essentially present in Germany Residential and Italy Offices and linked to investments in Hotels in Europe for which the SIIC regime is not applicable (Germany, Spain, Belgium, Netherlands, Portugal, the United Kingdom and Poland). In the case of Spain, all Spanish companies have opted for the SOCIMI regime exemption. However, there are deferred tax liabilities related to assets held by the companies prior to opting for SOCIMI treatment.
Financial Report at 31 December 2019
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The deferred tax is mainly due to the recognition of the portfolio's fair value (German rate: 15.825%,
French rate: 25.83%). Please note that the hotel businesses are taxed at a rate of between 30.18% and 32.28% in Germany and that deferred tax liabilities for this business have also been recognised at this rate.
3.2.3 SCOPE OF CONSOLIDATION
3.2.3.1 Accounting principles applicable to the scope of consolidation
- Consolidated subsidiaries and structured entities - IFRS 10
These financial statements include the financial statements of Covivio and the financial statements of the entities (including structured entities) that it controls and its subsidiaries.
Covivio group has control when it:
- has power over the issuing entity;
- is exposed or is entitled to variable returns due to its ties with the issuing entity;
- has the ability to exercise its power in such as manner as to affect the amount of returns that it receives.
Covivio group must reassess whether it controls the issuing entity when facts and circumstances indicate that one or more of the three factors of control listed above have changed.
A structured entity is an entity structured in such a way that the voting rights or similar rights do not represent the determining factor in establishing control of the entity; this is particularly the case when the voting rights only involve administrative tasks and the relevant business activities are governed by contractual agreements.
If the Group does not hold a majority of the voting rights in an issuing entity in order to determine the power exercised over an entity, it analyses whether it has sufficient rights to unilaterally manage the issuing entity's relevant business activities. The Group takes into consideration any facts and circumstances when it evaluates whether the voting rights that it holds in the issuing entity are sufficient to confer power to the Group, including the following:
- the number of voting rights that the Group holds compared to the number of rights held respectively by the other holders of voting rights and their distribution;
- the potential voting rights held by the Group, other holders of voting rights or other parties;
- the rights under other contractual agreements;
- the other facts and circumstances, where applicable, which indicate that the Group has or does not have the actual ability to manage relevant business activities at the moment when decisions must be made, including voting patterns during previous shareholders' meetings.
Subsidiaries and structured entities are fully consolidated.
- Equity affiliates - IAS 28
An equity affiliate is an entity in which the Group has significant control. Significant control is the power to participate in decisions relating to the financial and operational policy of an issuing entity without, however, exercising control or joint control on these policies.
The results and the assets and liabilities of equity affiliates are recognised in these consolidated financial statements according to the equity method.
Financial Report at 31 December 2019
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COVIVIO
- Partnerships (joint control) - IFRS 11
Joint control means the contractual agreement to share the control exercised over a company, which only exists in the event where the decisions concerning relevant business activities require the unanimous consent of the parties sharing the control.
- Joint ventures
A joint venture is a partnership in which the parties which exercise joint control over the entity have rights to its net assets.
The results and the assets and liabilities of joint ventures are recognised in these consolidated financial statements according to the equity method.
- Joint operations
A joint operation is a partnership in which the parties exercising joint control over the operation have rights to the assets, and obligations for the liabilities relating to it. Those parties are called joint operators.
A joint operator must recognise the following items relating to its interest in the joint operation:
- its assets, including its proportionate share of assets held jointly, where applicable;
- its liabilities, including its proportionate share of liabilities undertaken jointly, where applicable;
- the income that it derived from the sale of its proportionate share in the yield generated by the joint operation;
- its proportionate share of income from the sale of the yield generated by the joint operation;
- the expenses that it has committed, including its proportionate share of expenses committed jointly, where applicable.
The joint operator accounts for the assets, liabilities, income and expenses pertaining to its interests in a joint operation in accordance with the IFRS that apply to these assets, liabilities, income and expenses.
No Group company is considered to constitute a joint operation.
3.2.3.2 Additions to the scope of consolidation
Additions to the scope of consolidation for each business are presented in the scope reporting table detailed by company at the start of each segment. The segments concerned are France Offices, Italy Offices, Hotels in Europe and Germany Residential.
3.2.3.3 Internal restructuring/Disposals
Removals from the scope of consolidation for each business are presented in the scope reporting table detailed by company at the end of each segment. The segments concerned are France Offices, Italy Offices, Hotels in Europe, Germany Residential and the Others sector.
3.2.3.4 Change in holding and/or in consolidation method
- Contributions of Covivio shares to SCI Ruhl - Impact on shareholding ratio
Covivio contributed all 100 shares that it held in Ruhl Côte d'Azur SCI, together with a receivable of €10.5 million. 2,365,503 new shares were issued in consideration for Covivio's contribution.
Covivio's investment in Covivio Hotels was thus increased from 42.30% to 43.22%.
Financial Report at 31 December 2019
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COVIVIO
- Repurchase of 25% of shares in Samoens - Impact on shareholding ratio
At the end of March 2019, Covivio Hotels proceeded with a capital increase through the creation of 613,244 new shares as compensation for 25% of shares in Samoens held by Caisse des Dépôts et Consignations. At 31 December 2019, Samoens was 50.10% directly held by Covivio Hotels, a Covivio subsidiary, compared with 25.10% at 31 December 2018.
Financial Report at 31 December 2019
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3.2.3.5 List of consolidated companies
Consolidation | Percentage | Percentage | |||||
97 companies in the France Offices segment | Country | method in | held in | ||||
held in 2019 | |||||||
2019 | 2018 | ||||||
Covivio | France | Parent | |||||
company | |||||||
N2 Batignolles Promo | France | FC | 50.00 | ||||
6 rue Fructidor | France | FC | 50.10 | ||||
Fructipromo | France | FC | 100.00 | ||||
Jean Jacques Bosc | France | FC | 100.00 | ||||
Terres Neuves | France | FC | 100.00 | ||||
André Lavignolle | France | FC | 100.00 | ||||
SCCV Chartres avenue de Sully | France | FC | 50.00 | ||||
SCI de la Louisiane | France | FC | 100.00 | ||||
SCCV Bobigny Le 9ème Art | France | FC | 60.00 | ||||
SCCV Fontenay sous Bois Rabelais | France | FC | 50.00 | ||||
Covivio Ravinelle | France | FC | 100.00 | 100.00 | |||
SCI Fédérimmo | France | FC | 60.00 | 60.00 | |||
EURL Fédération | France | FC | 100.00 | 100.00 | |||
SARL Foncière Margaux | France | FC | 100.00 | 100.00 | |||
Covivio 2 | France | FC | 100.00 | 100.00 | |||
Covivio 4 | France | FC | 75.00 | 75.00 | |||
Euromarseille 1 | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille 2 | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille BI | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille BH | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille PK | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille Invest | France | EM/JV | 50.00 | 50.00 | |||
Euromarseille H | France | EM/JV | 50.00 | 50.00 | |||
Covivio 7 | France | FC | 100.00 | 100.00 | |||
SCI Bureaux Cœur d'Orly | France | EM/JV | 50.00 | 50.00 | |||
SAS Cœur d'Orly Promotion | France | EM/JV | 50.00 | 50.00 | |||
Technical | France | FC | 100.00 | 100.00 | |||
Le Ponant 1986 | France | FC | 100.00 | 100.00 | |||
SCI Atlantis | France | FC | 100.00 | 100.00 | |||
Iméfa 127 | France | FC | 100.00 | 100.00 | |||
SNC Latécoère | France | FC | 50.10 | 50.10 | |||
SCI du 32 avenue P. Grenier | France | FC | 100.00 | 100.00 | |||
SCI du 40 rue JJ. Rousseau | France | FC | 100.00 | 100.00 | |||
SCI du 3 place A Chaussy | France | FC | 100.00 | 100.00 | |||
SARL BGA Transactions | France | FC | 100.00 | 100.00 | |||
SCI du 288 rue Duguesclin | France | FC | 100.00 | 100.00 | |||
SCI du 9 rue des Cuirassiers | France | FC | 50.10 | 50.10 | |||
SCI 35/37 rue Louis Guérin | France | FC | 100.00 | 100.00 | |||
SCI du 15 rue des Cuirassiers | France | FC | 50.10 | 50.10 | |||
SCI du 10B et 11 A 13 allée des Tanneurs | France | FC | 100.00 | 100.00 | |||
SCI du 8 rue M. Paul | France | FC | 100.00 | 100.00 | |||
SCI 1 rue de Chateaudun | France | FC | 100.00 | 100.00 | |||
SCI du 1630 Avenue de la Croix Rouge | France | FC | 100.00 | 100.00 | |||
SCI du 125 avenue du Brancolar | France | FC | 100.00 | 100.00 | |||
SARL du 106-110 rue des Troënes | France | FC | 100.00 | 100.00 | |||
SCI du 2 rue de L'Ill | France | FC | 100.00 | 100.00 | |||
SCI du 20 avenue Victor Hugo | France | FC | 100.00 | 100.00 | |||
SARL du 2 rue Saint Charles | France | FC | 100.00 | 100.00 | |||
SNC Télimob Paris | France | FC | 100.00 | 100.00 | |||
SNC Télimob Nord | France | FC | 100.00 | 100.00 | |||
SNC Télimob Rhône Alpes | France | FC | 100.00 | 100.00 | |||
SNC Télimob Sud Ouest | France | FC | 100.00 | 100.00 | |||
SNC Télimob Est | France | FC | 100.00 | 100.00 | |||
SNC Télimob Paca | France | FC | 100.00 | 100.00 | |||
SNC Télimob Ouest | France | FC | 100.00 | 100.00 | |||
SARL Télimob Paris | France | FC | 100.00 | 100.00 | |||
Pompidou | France | FC | 100.00 | 100.00 | |||
OPCI Office CB21 | France | FC | 75.00 | 75.00 | |||
11 place de l'Europe | France | FC | 50.09 | 50.09 | |||
Lenovilla | France | EM/JV | 50.10 | 50.10 | |||
Lenopromo | France | FC | 100.00 | 100.00 | |||
SCI Latécoère 2 | France | FC | 50.10 | 50.10 | |||
Meudon Saulnier | France | FC | 100.00 | 100.00 | |||
Charenton | France | FC | 100.00 | 100.00 | |||
Latepromo | France | FC | 100.00 | 100.00 | |||
SNC Promomurs | France | FC | 100.00 | 100.00 | |||
FDR Participation | France | FC | 100.00 | 100.00 | |||
SCI Avenue de la Marne | France | FC | 100.00 | 100.00 | |||
Omega B | France | FC | 100.00 | 100.00 | |||
SCI RUEL B2 | France | FC | 100.00 | 100.00 | |||
SCI Factor E | France | EM/EA | 34.69 | 34.69 | |||
SCI Orianz | France | EM/EA | 34.69 | 34.69 | |||
Financial Report at 31 December 2019
22
COVIVIO
Consolidatio | Percentag | Percentag | |||||||
Companies France Offices Segment | Country | n method in | e held in | e held in | |||||
2019 | 2019 | 2018 | |||||||
Wellio | France | FC | 100,00 | 100,00 | |||||
Le Clos de Chanteloup | France | FC | 100,00 | 100,00 | |||||
Bordeaux Lac | France | FC | 100,00 | 100,00 | |||||
Sully Chartres | France | FC | 100,00 | 100,00 | |||||
Sucy Parc | France | FC | 100,00 | 100,00 | |||||
Gambetta Le Raincy | France | FC | 100,00 | 100,00 | |||||
Orly Promo | France | FC | 100,00 | 100,00 | |||||
Silex Promo | France | FC | 100,00 | 100,00 | |||||
21 Rue Jean Goujon | France | FC | 100,00 | 100,00 | |||||
Villouvette Saint-Germain | France | FC | 100,00 | 100,00 | |||||
La Mérina Fréjus | France | FC | 100,00 | 100,00 | |||||
Normandie Niemen Bobigny | France | FC | 100,00 | 100,00 | |||||
Le Printemps Sartrouville | France | FC | 100,00 | 100,00 | |||||
Gaugin St Ouen L'Aumône | France | FC | 100,00 | 100,00 | |||||
Cité Numérique | France | FC | 100,00 | 100,00 | |||||
Danton Malakoff | France | FC | 100,00 | 100,00 | |||||
Meudon Bellevue | France | FC | 100,00 | 100,00 | |||||
N2 Batignolles | France | FC | 50,00 | 50,00 | |||||
Tours Coty | France | FC | 100,00 | 100,00 | |||||
Valence Victor Hugo | France | FC | 100,00 | 100,00 | |||||
Nantes Talensac | France | FC | 100,00 | 100,00 | |||||
Marignane Saint-Pierre | France | FC | 100,00 | 100,00 | |||||
Palmer Plage SNC | France | FC | 100,00 | 100,00 | |||||
Dual Center | France | FC | 100,00 | 100,00 | |||||
25-27 quai Félix Faure | France | Merger | - | 100,00 | |||||
SCI du 682 cours de la Libération | France | Merger | - | 100,00 | |||||
SNC Commerces Cœur d'Orly | France | merged | - | 50,00 | |||||
Palmer Montpellier | France | merged | - | 100,00 | |||||
SCI RUEIL B3 B4 | France | merged | - | 100,00 | |||||
The registered office of the parent company Covivio is located at 18 avenue François Mitterrand - 57000 Metz. The other fully consolidated subsidiaries in the France Offices segment have their registered office located at 10 and 30 avenue Kléber - 75116 Paris.
20 companies in the Italy Offices segment | Country | Consolidation | Percentage | Percentage | |||
method in 2019 | held in 2019 | held in 2018 | |||||
Covivio Attività Immobiliari 2 S.r.L. | Italy | FC | 100.00 | ||||
Covivio Attività Immobiliari 3 S.r.L. | Italy | FC | 100.00 | ||||
Beni Stabili 7 S.p.A. | Italy | FC | 100.00 | 100.00 | |||
Central Società di Investimento per Azioni a capitalo fisso Central SICAF S.p.A. | Italy | FC | 51.00 | 51.00 | |||
Beni Stabili Retail S.r.l. | Italy | FC | 55.00 | 55.00 | |||
Covivio Development S.p.A. | Italy | FC | 100.00 | 100.00 | |||
RGD Gestioni S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Real Estate Roma Olgiata S.r.L. | Italy | FC | 75.00 | 75.00 | |||
Covivio Immobiliare 9 SINQ S.p.A. | Italy | FC | 100.00 | 100.00 | |||
B.S. Engineering S.r.l. | Italy | FC | 100.00 | 100.00 | |||
Wellio Italy | Italy | FC | 100.00 | 100.00 | |||
Imser Securitisation S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Imser Securitisation 2 S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Revalo SpA | Italy | FC | 100.00 | 100.00 | |||
Real Estate Solution & Technology | Italy | EM | 30.00 | 30.00 | |||
Investire S.p.A. SGR | Italy | EM | 17.90 | 17.90 | |||
Attivita Commerciali Montenero S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Attivita Commerciali Beinasco S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Attivita Commerciali Vigevano S.r.L. | Italy | FC | 100.00 | 100.00 | |||
Covivio Attività Immobiliari 1 S.r.L. | Italy | FC | 100.00 | 100.00 | |||
RGD Ferrara 2013 S.r.L. | Italy | disposed of | - | 50.00 | |||
The registered office of the companies in the Italy Offices segment is located at 10 Carlo Ottavio Cornaggia, 20123 Milan.
Financial Report at 31 December 2019
23
COVIVIO
162 companies Hotels in Europe segment | Country | Consolidation | Percentage | Percentage |
method in 2019 | held in 2019 | held in 2018 | ||
SCA Covivio Hotels (Parent company) 100% controlled | France | FC | 43.22 | 42.30 |
Oxford Spires Ltd (Propco) | UK | FC | 43.22 | |
Oxford Thames Hotel Ltd (Propco) | UK | FC | 43.22 | |
Dresden Dev | Luxembourg | FC | 41.01 | |
Delta Hotel Amersfoort | Netherlands | FC | 43.22 | |
Opci Oteli | France | EM/EA | 13.46 | |
Orient SAS financial lease | France | EM/EA | 13.46 | |
Express SAS financial lease | France | EM/EA | 13.46 | |
Kombon | France | EM/EA | 14.41 | |
Jouron | Belgium | EM/EA | 14.41 | |
Foncière Gand Cathédrale | Belgium | EM/EA | 14.41 | |
Brussels Sainte Catherine REITs | Belgium | EM/EA | 14.41 | |
Foncière IGK | Belgium | EM/EA | 14.41 | |
Forsmint Investments | Poland | FC | 43.22 | |
Cerstook Investments | Poland | FC | 43.22 | |
Noxw ood lnvestments | Poland | FC | 43.22 | |
Redw en lnvestments | Poland | FC | 43.22 | |
Sardobal lnvestments | Poland | FC | 43.22 | |
Kilmainham Property Holding | Ireland | FC | 43.22 | |
Thommont Ltd | Ireland | FC | 43.22 | |
Honeypool | Ireland | FC | 43.22 | |
Ruhl Côte d'Azur | France | FC | 43.22 | 100.00 |
SARL Loire | France | FC | 43.22 | 42.30 |
Foncière Otello | France | FC | 43.22 | 42.30 |
Hôtel René Clair | France | FC | 43.22 | 42.30 |
Foncière Ulysse | France | FC | 43.22 | 42.30 |
Ulysse Belgique | Belgium | FC | 43.22 | 42.30 |
Ulysse Trefonds | Belgium | FC | 43.22 | 42.30 |
Foncière No Bruxelles Grand Place | Belgium | FC | 43.22 | 42.30 |
No Brussels Airport REITs | Belgium | FC | 43.22 | 42.30 |
Foncière No Bruges Centre | Belgium | FC | 43.22 | 42.30 |
Foncière Gand Centre | Belgium | FC | 43.22 | 42.30 |
Foncière Gand Opéra | Belgium | FC | 43.22 | 42.30 |
Foncière IB Bruxelles Grand-Place | Belgium | FC | 43.22 | 42.30 |
Foncière IB Bruxelles Aéroport | Belgium | FC | 43.22 | 42.30 |
Foncière IB Bruges Centre | Belgium | FC | 43.22 | 42.30 |
Foncière Antw erp Centre | Belgium | FC | 43.22 | 42.30 |
Foncière Bruxelles Expo Atomium | Belgium | FC | 43.22 | 42.30 |
Foncière Manon | France | FC | 43.22 | 42.30 |
Murdelux | Luxembourg | FC | 43.22 | 42.30 |
Portmurs | Portugal | FC | 43.22 | 42.30 |
Sunparks Oostduinkerke | Belgium | FC | 43.22 | 42.30 |
Foncière Vielsam | Belgium | FC | 43.22 | 42.30 |
Sunparks Trefonds | Belgium | FC | 43.22 | 42.30 |
Foncière Kempense Meren | Belgium | FC | 43.22 | 42.30 |
Iris Holding France | France | EM/EA | 8.60 | 8.42 |
Foncière Iris SAS | France | EM/EA | 8.60 | 8.42 |
Sables d'Olonne SAS | France | EM/EA | 8.60 | 8.42 |
OPCI Iris Invest 2010 | France | EM/EA | 8.60 | 8.42 |
Covivio Hotels Gestion Immobilière | France | FC | 43.22 | 42.30 |
Tulipe Holding Belgique | Belgium | EM/EA | 8.60 | 8.42 |
Iris Tréfonds | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Louvain Centre | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Liège | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Bruxelles Aéroport | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Bruxelles Sud | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Bruge Station | Belgium | EM/EA | 8.60 | 8.42 |
Narcisse Holding Belgique | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Bruxelles Tour Noire | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Louvain | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Malines | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Bruxelles Centre Gare | Belgium | EM/EA | 8.60 | 8.42 |
Foncière Namur | Belgium | EM/EA | 8.60 | 8.42 |
Iris investor Holding GmbH | Germany | EM/EA | 8.60 | 8.42 |
Iris General Partner GmbH | Germany | EM/EA | 4.32 | 4.23 |
Iris Berlin GmbH | Germany | EM/EA | 8.60 | 8.42 |
Iris Bochum & Essen | Germany | EM/EA | 8.60 | 8.42 |
Iris Frankfurt GmbH | Germany | EM/EA | 8.60 | 8.42 |
Iris Verw altungs GmbH & co KG | Germany | EM/EA | 8.60 | 8.42 |
Iris Nurnberg GmbH | Germany | EM/EA | 8.60 | 8.42 |
Iris Stuttgart GmbH | Germany | EM/EA | 8.60 | 8.42 |
B&B Invest Lux 1 | Germany | FC | 43.22 | 42.30 |
B&B Invest Lux 2 | Germany | FC | 43.22 | 42.30 |
B&B Invest Lux 3 | Germany | FC | 43.22 | 42.30 |
Campeli | France | EM/EA | 8.60 | 8.42 |
OPCI Camp Invest | France | EM/EA | 8.60 | 8.42 |
Dahlia | France | EM/EA | 8.64 | 8.46 |
Foncière B2 Hôtel Invest | France | FC | 21.70 | 21.24 |
OPCI B2 Hôtel Invest | France | FC | 21.70 | 21.24 |
Foncière B3 Hôtel Invest | France | FC | 21.70 | 21.24 |
B&B Invest Lux 4 | Germany | FC | 43.22 | 42.30 |
NH Amsterdam Center Hotel HLD | Netherlands | FC | 43.22 | 42.30 |
Hotel Amsterdam Centre Propco | Netherlands | FC | 43.22 | 42.30 |
Mo Lux 1 | Luxembourg | FC | 43.22 | 42.30 |
LHM Holding Lux SARL | Luxembourg | FC | 43.22 | 42.30 |
LHM ProCo Lux SARL | Germany | FC | 45.07 | 44.24 |
SCI Rosace | France | FC | 43.22 | 42.30 |
Mo Drelinden, Niederrad, Düsseldorf | Germany | FC | 40.62 | 39.77 |
Mo Berlin | Germany | FC | 40.62 | 39.77 |
Mo First Five | Germany | FC | 42.36 | 41.59 |
Ringer | Germany | FC | 43.22 | 42.30 |
B&B Invest Lux 5 | Germany | FC | 40.19 | 39.34 |
Financial Report at 31 December 2019
24
COVIVIO
Companies Hotels in Europe segment | Country | Consolidation | Percentage | Percentage | |||
method in 2019 | held in 2019 | held in 2018 | |||||
B&B Invest Lux 6 | Germany | FC | 40.19 | 39.34 | |||
SCI Hôtel Porte Dorée | France | FC | 43.22 | 42.30 | |||
FDM M Lux | Luxembourg | FC | 43.22 | 42.30 | |||
OPCO Rosace | France | FC | 43.22 | 42.30 | |||
Exco Hôtel | Belgium | FC | 43.22 | 42.30 | |||
Invest Hôtel | Belgium | FC | 43.22 | 42.30 | |||
H Invest Lux | Luxembourg | FC | 43.22 | 42.30 | |||
Hermitage Holdco | France | FC | 43.22 | 42.30 | |||
Samoens SAS | France | FC | 21.65 | 10.62 | |||
Foncière B4 Hôtel Invest | France | FC | 21.70 | 21.24 | |||
B&B Invest Espagne SLU | Spain | FC | 43.22 | 42.30 | |||
Rock-Lux | Luxembourg | FC | 43.22 | 42.30 | |||
Société Liloise Investissement Immobilier Hôtelier SA | France | FC | 43.22 | 42.30 | |||
Alliance et Compagnie SAS | France | FC | 43.22 | 42.30 | |||
Berlin I (Propco Westin Grand Berlin) | Germany | FC | 41.01 | 40.15 | |||
Opco Grand Hôtel Berlin Betriebs (Westin berlin) | Germany | FC | 41.01 | 40.15 | |||
Berlin II (Propco Park Inn Alexanderplatz) | Germany | FC | 41.01 | 40.15 | |||
Opco Hôtel Stadt Berlin Betriebs (Park-Inn) | Germany | FC | 41.01 | 40.15 | |||
Berlin III (Propco Mercure Potsdam) | Germany | FC | 41.01 | 40.15 | |||
Opco Hôtel Potsdam Betriebs (Mercure Potsdam) | Germany | FC | 41.01 | 40.15 | |||
Dresden II (Propco Ibis Hôtel Dresden) | Germany | FC | 41.01 | 40.15 | |||
Dresden III (Propco Ibis Hôtel Dresden) | Germany | FC | 41.01 | 40.15 | |||
Dresden IV (Propco Ibis Hôtel Dresden) | Germany | FC | 41.01 | 40.15 | |||
Opco BKL Hotelbetriebsgesellschaft (Dresden II to IV) | Germany | FC | 41.01 | 40.15 | |||
Dresden V (Propco Pullman New a Dresden) | Germany | FC | 41.01 | 40.15 | |||
Opco Hôtel New a Dresden Betriebs (Pullman) | Germany | FC | 41.01 | 40.15 | |||
Leipzig I (Propco Westin Leipzig) | Germany | FC | 41.01 | 40.15 | |||
Opco HotelgesellschaftGeberst, Betriebs (Westin Leipzig) | Germany | FC | 41.01 | 40.15 | |||
Leipzig II (Propco Radisson Blu Leipzig) | Germany | FC | 41.01 | 40.15 | |||
Opco Hôtel Deutschland Leipzig Betriebs (Radisson Blu) | Germany | FC | 41.01 | 40.15 | |||
Erfurt I (Propco Radisson Blu Erfurt) | Germany | FC | 41.01 | 40.15 | |||
Opco Hôtel Kosmos Erfurt (Radisson Blu) | Germany | FC | 41.01 | 40.15 | |||
Airport Garden Hotel NV | Belgium | FC | 43.22 | 42.30 | |||
H Invest Lux 2 | Luxembourg | FC | 43.22 | 42.30 | |||
Constance | France | FC | 43.22 | 42.30 | |||
Hotel Amsterdam Noord FDM | Netherlands | FC | 43.22 | 42.30 | |||
Hotel Amersfoort FDM | Netherlands | FC | 43.22 | 42.30 | |||
Constance Lux 1 | Luxembourg | FC | 43.22 | 42.30 | |||
Constance Lux 2 | Luxembourg | FC | 43.22 | 42.30 | |||
So Hospitality | France | FC | 43.22 | 42.30 | |||
Nice-M | France | FC | 43.22 | 42.30 | |||
Investment FDM Rocatiera | Spain | FC | 43.22 | 42.30 | |||
Bardiomar | Spain | FC | 43.22 | 42.30 | |||
Trade Center Hotel | Spain | FC | 43.22 | 42.30 | |||
Rock-Lux OPCO | Luxembourg | FC | 43.22 | 42.30 | |||
Blythsw ood Square Hotel Holdco | UK | FC | 43.22 | 42.30 | |||
George Hotel Investments Holdco | UK | FC | 43.22 | 42.30 | |||
Grand Central Hotel Company Holdco | UK | FC | 43.22 | 42.30 | |||
Grand Principal Birmingham Holdco | UK | FC | 43.22 | 42.30 | |||
Lagonda Leeds Holdco | UK | FC | 43.22 | 42.30 | |||
Lagonda Palace Holdco | UK | FC | 43.22 | 42.30 | |||
Lagonda Russell Holdco | UK | FC | 43.22 | 42.30 | |||
Lagonda York Holdco | UK | FC | 43.22 | 42.30 | |||
Oxford Spires Hotel Holdco | UK | FC | 43.22 | 42.30 | |||
Oxford Thames Holdco | UK | FC | 43.22 | 42.30 | |||
Roxburghe Investments Holdco | UK | FC | 43.22 | 42.30 | |||
The St David's Hotel Cardiff Holdco | UK | FC | 43.22 | 42.30 | |||
Wotton House Properties Holdco | UK | FC | 43.22 | 42.30 | |||
Blythsw ood Square Hotel Glasgow | UK | FC | 43.22 | 42.30 | |||
George Hotel Investments | UK | FC | 43.22 | 42.30 | |||
Grand Central Hotel Company | UK | FC | 43.22 | 42.30 | |||
Lagonda Leeds PropCo | UK | FC | 43.22 | 42.30 | |||
Lagonda Palace PropCo | UK | FC | 43.22 | 42.30 | |||
Lagonda Russell PropCo | UK | FC | 43.22 | 42.30 | |||
Lagonda York PropCo | UK | FC | 43.22 | 42.30 | |||
Roxburghe Investments PropCo | UK | FC | 43.22 | 42.30 | |||
The St David's Hotel Cardiff | UK | FC | 43.22 | 42.30 | |||
Wotton House Properties | UK | FC | 43.22 | 42.30 | |||
Roxburghe Investments Lux | Luxembourg | FC | 43.22 | 42.30 | |||
HEM Diesterlkade Amsterdam BV | Netherlands | FC | 43.22 | 42.30 | |||
Lambda Amsterdam BV | Netherlands | merged | - | 42.30 | |||
Spiegelrei HLD SA | Belgium | Liquidated | - | 42.30 | |||
Dresden I (Propco Westin Bellevue) | Germany | disposed of | - | 40.15 | |||
Opco Hôtel Bellevue Dresden Betriebs (Westein Bellevue) | Germany | disposed of | - | 40.15 | |||
Foncière Développement Tourisme | France | Merger | - | 21.19 | |||
The registered office of the parent company Covivio Hotels and its main fully consolidated French subsidiaries is located at 30 Avenue Kléber, 75116 Paris.
Financial Report at 31 December 2019
25
COVIVIO
121 companies in the German Residential segment | Country | Consolidation | Percentage | Percentage | |||
method in 2019 | held in 2019 | held in 2018 | |||||
Covivio Immobilien SE (Parent company) 99.74% controlled | Germany | FC | 61.70 | 61.70 | |||
Covivio Alexanderplatz | Luxembourg | FC | 100.00 | ||||
Covivio Rhenania 1 | Germany | FC | 65.57 | ||||
Covivio Rhenania 2 | Germany | FC | 65.57 | ||||
Covivio Prime Financing | Germany | FC | 61.70 | ||||
Küchenw elt Berlin GmbH | Germany | FC | 61.70 | ||||
Covivio Office Holding GmbH | Germany | FC | 100.00 | ||||
Covivio Office Berlin GmbH | Germany | FC | 100.00 | ||||
Rev Tino Schw ierzina Strasse 32 Gundbezitz | Germany | FC | 94.22 | ||||
Covivio Flohrstrasse 21 | Germany | FC | 100.00 | ||||
Realius Grundbesitz NRW | Germany | FC | 67.49 | ||||
Eiger Propco SPV | Germany | FC | 67.49 | ||||
Eiger II Propco | Germany | FC | 67.49 | ||||
Covivio Immobilien | Germany | FC | 61.70 | 61.70 | |||
Covivio Lux Residential | Germany | FC | 63.66 | 63.66 | |||
Covivio Valore 4 | Germany | FC | 63.74 | 63.74 | |||
Covivio Wohnen Verw altungs | Germany | FC | 61.70 | 61.70 | |||
Covivio Grundstücks | Germany | FC | 61.70 | 61.70 | |||
Covivio Grundvermögen | Germany | FC | 61.70 | 61.70 | |||
Covivio Wohnen Service | Germany | FC | 61.70 | 61.70 | |||
Covivio SE & CO KG 1 | Germany | FC | 61.70 | 61.70 | |||
Covivio SE & CO KG 2 | Germany | FC | 61.70 | 61.70 | |||
Covivio SE & CO KG 3 | Germany | FC | 61.70 | 61.70 | |||
Covivio SE & CO KG 4 | Germany | FC | 61.70 | 61.70 | |||
Covivio Zehnte GMBH | Germany | FC | 100.00 | 100.00 | |||
IW-FDL Beteiligungs GmbH & Co KG | Germany | FC | 100.00 | 100.00 | |||
Covivio Wohnen | Germany | FC | 61.70 | 61.70 | |||
Covivio Gesellschaft für Wohnen Datteln | Germany | FC | 64.00 | 64.00 | |||
Covivio Stadthaus | Germany | FC | 64.00 | 64.00 | |||
Covivio Wohnbau | Germany | FC | 67.83 | 67.83 | |||
Covivio Wohnungsgesellechaft GMBH Dümpten | Germany | FC | 67.83 | 67.83 | |||
Covivio Berolinum 2 | Germany | FC | 63.66 | 63.66 | |||
Covivio Berolinum 3 | Germany | FC | 63.66 | 63.65 | |||
Covivio Berolinum 1 | Germany | FC | 63.66 | 63.66 | |||
Covivio Remscheid | Germany | FC | 63.66 | 63.66 | |||
Covivio Valore 6 | Germany | FC | 63.74 | 63.74 | |||
Covivio Holding | Germany | FC | 100.00 | 100.00 | |||
Covivio Immobilien Se & Co KG Residential | Germany | FC | 61.70 | 61.70 | |||
Covivio Berlin 67 GmbH | Germany | FC | 64.00 | 64.00 | |||
Covivio Berlin 78 GmbH | Germany | FC | 64.00 | 64.00 | |||
Covivio Berlin 79 GmbH | Germany | FC | 64.00 | 64.00 | |||
Covivio Dresden GmbH | Germany | FC | 63.66 | 63.66 | |||
Covivio Berlin I SARL | Germany | FC | 63.66 | 63.66 | |||
Covivio Berlin V SARL | Germany | FC | 63.85 | 63.85 | |||
Covivio Berlin C GMBH | Germany | FC | 63.66 | 63.66 | |||
Covivio Dansk Holding Aps | Denmark | FC | 61.70 | 61.70 | |||
Covivio Dasnk L Aps | Germany | FC | 63.66 | 63.66 | |||
Covivio Berlin Prime | Germany | FC | 65.53 | 65.53 | |||
Berlin Prime Commercial | Germany | FC | 63.66 | 63.66 | |||
Acopio | Germany | FC | 100.00 | 100.00 | |||
Covivio Hamburg Holding ApS | Denmark | FC | 65.57 | 65.57 | |||
Covivio Hamburg 1 ApS | Germany | FC | 65.57 | 65.57 | |||
Covivio Hamburg 2 ApS | Germany | FC | 65.57 | 65.57 | |||
Covivio Hamburg 3 ApS | Germany | FC | 65.57 | 65.57 | |||
Covivio Hamburg 4 ApS | Germany | FC | 65.57 | 65.57 | |||
Covivio North ApS | Germany | FC | 65.57 | 65.57 | |||
Covivio Arian | Germany | FC | 65.53 | 65.53 | |||
Covivio Bennet | Germany | FC | 65.53 | 65.53 | |||
Covivio Marien-Carré | Germany | FC | 65.57 | 65.57 | |||
Covivio Berlin IV ApS | Denmark | FC | 61.70 | 61.70 | |||
Covivio Lux | Luxembourg | FC | 100.00 | 100.00 | |||
Covivio Berolina Verw altungs GmbH | Germany | FC | 63.66 | 63.66 | |||
Residenz Berolina GmbH & Co KG | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua IV GmbH | Germany | FC | 63.66 | 63.66 | |||
Real Property Versicherungsmakler | Germany | FC | 61.70 | 61.70 | |||
Covivio Quadrigua 15 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 45 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 36 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 46 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 40 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 47 | Germany | FC | 65.51 | 65.51 | |||
Covivio Quadrigua 48 | Germany | FC | 65.51 | 65.51 | |||
Covivio Fischerinsel | Germany | FC | 65.57 | 65.57 | |||
Covivio Berolina Fischenrinsel | Germany | FC | 65.57 | 65.57 | |||
Covivio Berlin Home | Germany | FC | 65.57 | 65.57 | |||
Amber Properties Sarl | Germany | FC | 65.53 | 65.53 | |||
Covivio Gettmore | Germany | FC | 65.53 | 65.53 | |||
Saturn Properties Sarl | Germany | FC | 65.53 | 65.53 | |||
Venus Properties Sarl | Germany | FC | 65.53 | 65.53 | |||
Covivio Vinetree | Germany | FC | 65.53 | 65.53 | |||
Acopio Facility | Germany | FC | 65.53 | 65.53 | |||
Covivio Development | Germany | FC | 61.70 | 61.70 | |||
Covivio Rehbergen | Germany | FC | 65.57 | 65.57 | |||
Covivio Handlesliegenschaften | Germany | FC | 65.57 | 65.57 | |||
Covivio Alexandrinenstrasse | Germany | FC | 65.57 | 65.57 | |||
Covivio Spree Wohnen 1 | Germany | FC | 65.53 | 65.53 | |||
Covivio Spree Wohnen 2 | Germany | FC | 65.53 | 65.53 | |||
Financial Report at 31 December 2019
26
COVIVIO
Companies in the German Residential segment | Country | Consolidation | Percentage | Percentage | |||
method in 2019 | held in 2019 | held in 2018 | |||||
Covivio Spree Wohnen 6 | Germany | FC | 65.53 | 65.53 | |||
Covivio Spree Wohnen 7 | Germany | FC | 65.53 | 65.53 | |||
Covivio Spree Wohnen 8 | Germany | FC | 65.53 | 65.53 | |||
Nordens Immobilien III | Germany | FC | 65.53 | 65.53 | |||
Montana-Portfolio | Germany | FC | 65.53 | 65.53 | |||
Covivio Cantianstrasse 18 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Konstanzer Str.54/Zahringerstr.28, 28a Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Mariend.Damm28/Markgrafenstr.17 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Markstrasse 3 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Schnellerstrasse 44 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Schnönw alder Str.69 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Schulstrasse 16/17.Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Sophie-Charlotten Strasse 31, 32 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Yorckstrasse 60 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Zelterstrasse 3 Grundbesitz | Germany | FC | 65.53 | 65.53 | |||
Covivio Zinshäuser Alpha | Germany | FC | 65.53 | 65.53 | |||
Covivio Zinshäuser Gamma | Germany | FC | 65.53 | 65.53 | |||
Second Ragland | Germany | FC | 65.53 | 65.53 | |||
Seed Portfollio 2 | Germany | FC | 65.53 | 65.53 | |||
Erz 1 | Germany | FC | 65.53 | 65.53 | |||
Covivio Berlin 9 | Germany | FC | 65.53 | 65.53 | |||
Erz 2 | Germany | FC | 65.53 | 65.53 | |||
Best Place Bestand | Germany | FC | 31.47 | 31.47 | |||
Covivio Berlin 8 | Germany | FC | 65.53 | 65.53 | |||
Covivio Selectimmo.de | Germany | FC | 65.57 | 65.57 | |||
Covivio Prenzlauer Promenade 49 Besitzgesellschaft | Germany | FC | 65.53 | 65.53 | |||
Mecau Bau | Germany | FC | 52.45 | 61.70 | |||
Covivio Blankenburger Str. | Germany | FC | 65.57 | 65.57 | |||
Covivio Immobilien Financing | Germany | FC | 65.53 | 65.53 | |||
Covivio Treskow allee 202 Entw icklungsgesellschaft | Germany | FC | 65.57 | 65.57 | |||
Covivio Alexanderplatz | Germany | FC | 100.00 | 100.00 | |||
Covivio Hathor Berlin | Germany | FC | 65.57 | 65.57 | |||
Covivio Hathor Deutschland | Germany | FC | 65.57 | 65.57 | |||
Covivio Hansastraße 253 | Germany | FC | 65.57 | 65.57 | |||
Sew oge Service- Und Wohnungsunternehmen | Germany | disposed of | - | 65.53 | |||
Seed Portfolio | Germany | merged | - | 60.43 | |||
The registered office of the parent company Covivio Immobilien SE is at Kleplerstrasse 110-112 - 45147 Essen.
16 companies in Other segment (France Residential, Car parks, | Consolidatio | Percentag | Percentag | ||||
Country | n method in | e held in | e held in | ||||
Services) | |||||||
2019 | 2019 | 2018 | |||||
4 companies in France Residential: | |||||||
Foncière Développement Logements (Parent company) 100 % controlled | France | FC | 100,00 | 100,00 | |||
Batisica | Luxembourg | FC | 100,00 | 100,00 | |||
Dulud | France | FC | 100,00 | 100,00 | |||
Iméfa 95 | France | FC | 100,00 | 100,00 | |||
Iméfa 71 | France | Merger | - | 100,00 | |||
24-26 rue Duranton | France | Merger | - | 100,00 | |||
Le Chesnay 1 | France | Merger | - | 100,00 | |||
Rueil 1 | France | Merger | - | 100,00 | |||
Saint Maurice 2 | France | Merger | - | 100,00 | |||
Suresnes 2 | France | Merger | - | 100,00 | |||
25 rue Gutenberg | France | Merger | - | 100,00 | |||
Iméfa 46 | France | Merger | - | 100,00 | |||
6 Car Park companies: | |||||||
Republique (Parent company) 100% controlled | France | FC | 100,00 | 100,00 | |||
Esplanade Belvédère II | France | FC | 100,00 | 100,00 | |||
Comédie | France | FC | 100,00 | 100,00 | |||
Gare | France | FC | 50,80 | 50,80 | |||
Gespar | France | FC | 50,00 | 50,00 | |||
Trinité | France | FC | 100,00 | 100,00 | |||
6 Services companies: | |||||||
Covivio Hotels Management | France | FC | 100,00 | 100,00 | |||
Covivio Property SNC | France | FC | 100,00 | 100,00 | |||
Covivio Développement | France | FC | 100,00 | 100,00 | |||
Covivio SGP | France | FC | 100,00 | 100,00 | |||
Covivio Proptech | France | FC | 100,00 | 100,00 | |||
Covivio Proptech Germany | Germany | FC | 100,00 | 100,00 | |||
FC: Full consolidation | |||||||
EM/EA: Equity Method - Affiliates | |||||||
EM/JV: Equity Method - Joint Ventures | |||||||
NC: Not Consolidated | |||||||
PC: Proportionate Consolidation | |||||||
Financial Report at 31 December 2019
27
COVIVIO
The registered office of the parent company Foncière Développement Logements and of all its fully consolidated French subsidiaries is located at 30 avenue Kléber - 75116 Paris.
There are 416 companies in the Group, including 366 fully consolidated companies and 50 equity affiliates.
3.2.3.6 Evaluation of control
Considering the rules of governance that grant Covivio powers giving it the ability to affect asset yields, the following companies are fully consolidated.
- SCI 11 place de l'Europe (consolidated structured entity)
As at 31 December 2019, SCI 11 place de l'Europe was 50.1% held by Covivio and fully consolidated. The partnership with the Crédit Agricole Assurances Group (49.9%) was established as of 2013 as part of the Campus Eiffage project in Vélizy.
- SNC Latécoère and Latécoère 2 (consolidated structured entities)
SCI Latécoère and Latécoère 2 are 50.1% held by Covivio at 31 December 2019 and fully consolidated. The partnership with the Crédit Agricole Assurances Group (49.9%) was established in 2012 and 2015 as part of the Dassault Systèmes Campus and Dassault Extension projects in Vélizy.
- SCIs of 9 and 15 rue des Cuirassiers (consolidated structured entities)
As at 31 December 2019, the SCIs of 9 and 15 rue des Cuirassiers were 50.1% held by Covivio and fully consolidated. The partnership with Assurances du Crédit Mutuel (49.9%) was created in early December 2017 as part of the Silex 1 and Silex 2 office projects in Lyon, Part-Dieu.
- SAS 6 rue Fructidor (consolidated structured entities)
On 29 October 2019 a partnership was signed by Covivio and Crédit Agricole Assurances with a view to sharing the Saint Ouen SO POP development project, held by the company 6 rue Fructidor. This company, the owner of a plot in St Ouen for the construction of a new office building (31,600m² in floor space for offices and services, 7 storeys, 249 parking spaces). The building permit was obtained on 20 May 2019 and construction is due to be finalised in the third quarter of 2021.
Construction work was completed on a building as part of a CPI signed on 29 October 2019 by Fructidor and Fructipromo.
As at 31 December 2019, the company 6 rue Fructidor was 50.1% held by Covivio and fully consolidated.
- SCI N2 Batignolles and SNC Batignolles Promo (consolidated structured entities)
SCI N2 Batignolles and SNC Batignolles Promo are 50% held by Covivio at 31 December 2019 and fully consolidated. The partnership with Assurances du Crédit Mutuel (50%) was established in 2018 as part of the N2 Batignolles development project.
- SAS Samoëns (consolidated structured entity)
As at 31 December 2019, SAS Samoëns was 50.10% held by Covivio Hotels and fully consolidated. The partnership with Assurances du Crédit Mutuel (49.9%) was established as of October 2016 as part of the project to develop a Club Med holiday village in Samoëns.
As manager of Samoëns, Covivio Hotels has the widest powers to act in the name and on behalf of the company in all circumstances, in keeping with its corporate purpose.
The partnership meets the criteria of a joint venture when the parties exercising joint control have rights to net assets of the partnership arrangement. The following companies are consolidated by the equity method.
Financial Report at 31 December 2019
28
COVIVIO
- SCI Lenovilla (joint venture)
As at 31 December 2019, Lenovilla was 50.09% held by Covivio and is consolidated according to the equity method. The partnership with the Crédit Agricole Assurances Group (49.91%) was established in January 2013 as part of the New Vélizy (Campus Thales) project. The shareholder agreement stipulates that decisions be made unanimously.
- SCI Cœur d'Orly Bureaux (joint venture)
SCI Cœur d'Orly Bureaux is 50% held by Covivio and 50% by Aéroports de Paris at 31 December 2019 and consolidated by the equity method. On 10 March 2008, the shareholders signed a memorandum of understanding, subsequently amended by a succession of deeds and by partnership agreements which set out the partners' rights and obligations with respect to SCI Cœur d'Orly Bureaux.
The ADP Group (as land developer and joint investor) and Covivio (as property developer and joint investor) signed the required deeds for the construction of the Belaïa office building at Cœur d'Orly, the business district of the Paris-Orly airport. The completion of this building is scheduled for the second half of 2020.
3.2.4 SIGNIFICANT EVENTS DURING THE PERIOD
Significant events during the period were as follows:
3.2.4.1 France Offices
- Disposals (€286 million - profit or loss on disposals net of fees: +€3 million) and assets under preliminary sale agreements (€55 million)
In 2019, Covivio sold assets for a sale price of €286 million, including the assets Charenton Coupole Nord and Sud (€54 million), Talence Libération (€7 million), Green Corner (€167 million), Roubaix Quatuor (€21 million) and Reims New Saint Charles (€21 million). These disposals resulted in net income of €3.3 million.
At 31 December 2019, the amount of assets under agreement totalled €55 million.
- Acquisitions (€79 million)
In 2019, Covivio acquired land in Velizy-Villacoublay for €13.1 million, for an extension to the Dassault Systèmes Campus through the construction of a new 27,600 m² building.
In June 2019, SCI Terres Neuves, a subsidiary of Covivio, acquired land in Bègles for €2.4 million for the extension to the Bordeaux Cité Numérique project.
In December 2019, SCI N2 Batignolles, a Covivio subsidiary, acquired lot N2 of the ZAC Clichy Batignolles for €64.2 million with a view to building a 15,900 m² property in partnership with Assurances du Crédit Mutuel.
- Development portfolio
The asset development programme is presented in note 3.2.5.1.5.
2019 was marked by the delivery of two development projects.
The 9,000 m² Hélios project in Villeneuve- d'Ascq was delivered in March 2019.
Certified HQE Excellent and compliant with RT 2012, this project comprises two buildings linked by a central hall that opens at one corner onto green space and a two-storey car park. It is let in full under a nine-year firm lease to IT-CE, an IT subsidiary of the Caisse d'Épargne Group.
Financial Report at 31 December 2019
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COVIVIO
In May 2019, the remaining 19,223 m² of the Bordeaux Cité Numérique project was delivered. The first 4000 m² of this project was delivered in July 2018.
This symbol of the "French Tech Bordeaux Métropole" label occupies the former postal sorting office in Bègles.
- Refinancing and redemption
On 27 May 2019, the bond maturing in 2021 was redeemed early (-€226.9 million).
In February, March and April 2019, Covivio converted 1,670,419 ORNANE-type bonds and redeemed 67,442 bonds on maturity, i.e. a €147.3 million reduction in the bond (par value of €84.73 per bond). The conversion of the bonds gave rise to the creation of 298,053 new Covivio shares, representing a capital increase of €27.2 million.
In September, Covivio issued its second Green Bond of €500 million, maturing in 2031 and offering a 1.125% coupon.
3.2.4.2 Italy Offices
- Disposals (€344 million - profit or loss on disposals net of fees: -€24 million) and assets under preliminary agreement (€100 million)
In 2019, non-strategic assets were sold for a total sale price of €343.9 million, including the Via Montebello property in Milan.
As at 31 December 2019, assets under preliminary agreement amounted to €100,2 million.
- Acquisitions (€39 million)
In January 2019, a plot of land was acquired in Milan for €14.7 million, a key part of the development project via Schievano/via Santander (The Sign D) in Milan.
In April 2019, a 75%-owned Italian subsidiary acquired a portfolio of real estate assets for €11.6 million.
In September 2019, an investment property was acquired in Livourne for €12.8 million.
- Renegotiation and repayment of debts
In May 2019, Covivio (formerly Beni Stabili) prepaid a loan with a nominal value of €195 million and a rate of 1.2%.
In the third quarter of 2019, a loan with a nominal value of €97 million and a rate of 1.2% was prepaid.
These two loans were renegotiated in the first quarter of 2019, resulting in a reduction in rate from 1.4% to 1.2%.
In September 2019, Covivio (formerly Beni Stabili) repaid early a loan with a nominal value of €86.
3.2.4.3 Hotels in Europe
- Disposals of assets (€396 million - profit or loss on disposals net of fees: +€13 million) and assets under preliminary agreement (€133 million)
Financial Report at 31 December 2019
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COVIVIO
In 2019, Covivio Hotels sold two portfolios of B&B assets it held in partnership in France, one of 58 hotels, for €265 million in June, and the other 30 hotels for €113 million in December as well as Novotel Lyon Part Dieu for €18 million.
At 31 December 2019, preliminary sale agreements totalled to €132.6 million, including 11 B&B assets in Germany for €114 million and four B&B assets in France for €5 million as well as an Accor asset for €12.6 million and a non-strategic asset for €1 million.
In 2019, Covivio Hotels also sold two companies that held and operated a hotel real estate (Westin Dresden) in Germany via a management contract with Westin, for net proceeds on disposal of €4.1 million.
- Acquisitions (securities: €322 million / assets: €24 million)
In February 2019, the last two hotels in the portfolio located in the United Kingdom were acquired for €84 million (Oxford Spires and Oxford Thames). These hotels were constructed on land leased for a firm residual term of 78 years, leading to the recognition of €15.7 million in rights-of-use under long-term leases conferring ad rem rights, in accordance with IFRS 16.
In March 2019, Covivio Hotels acquired the securities of a company holding an NH hotel in Amersfoort for €12.5 million.
On 1 July 2019, Covivio Hotels acquired Axa France's 32% share in a portfolio of hotel real estate for €171 million (including €8 million in deferred tax liabilities). It comprises 32 hotels leased to Accor, located in major French cities, and two hotels in Belgium.
In November 2019, Covivio Hotels acquired shares in companies with a Hilton Hotel in Dublin operated as Operating Properties for €54 million.
In the fourth quarter of 2019, three B&B hotels in Poland were acquired for €24 million.
- Development portfolio
2019 was marked by the delivery of four development projects: the Meininger Hotel in Munich, the B&B Hotel in Cergy, the Meininger Hotel Porte de Vincennes in Paris and the B&B Hotel Zimmerman in Lyon.
- Refinancing and redemption
In early 2019, Covivio Hotels repaid its German Operating Properties bank debt of €408 million in full. A new loan of €258 million was taken out for this portfolio in December 2019 to be drawn in early 2020.
In February 2019, Covivio Hotels made an additional drawdown of £31 million (€36 million) on the bank borrowings of £400 million with an 8-year term (£369 million already drawn down in 2018).
In June 2019, Covivio Hotels issued a €70 million loan for two German companies and two Dutch companies, with a term of 10 years.
In 2019, the disposal of B&B assets generated a partial repayment of the debt in the amount of €148 million.
3.2.4.4 Germany Residential
- Asset disposals (€73 million - income from disposals: +€11 million) and assets under preliminary sale agreements (€11 million)
Disposals worth €73 million were completed in 2019, mainly in Berlin.
Financial Report at 31 December 2019
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COVIVIO
At 31 December 2019, the amount of assets under agreement totalled €11 million (net of costs).
In the second quarter of 2019, Covivio Immobilien also sold 80% of Sewoge which held and operated a portfolio of assets in Berlin with €3 million in income from disposal.
- Acquisitions (securities: €145 million / assets: €93 million)
In 2019, Covivio Immobilien acquired holding companies for €145.2 million.
The Group also acquired a portfolio of directly held assets in Berlin for €92,7 million (including €83.5 million in assets for the promotion business). A deposit of €1 million had been paid in 2018.
3.2.4.5 Other (including France Residential)
- Asset disposals (€178 million net of costs) and assets under sales commitments (€26 million)
In France, Foncière Développement Logements continued its sales plan and completed disposals for a sale price of €178.3 million (net of costs).
At 31 December 2019, the amount of assets under agreement totalled €25.9 million.
3.2.5 NOTES TO THE STATEMENT OF FINANCIAL POSITION
3.2.5.1 Portfolio
3.2.5.1.1. Accounting principles applicable to tangible and intangible fixed assets
- Intangible assets
Identifiable intangible fixed assets are amortised on a straight-line basis over their expected useful lives. Intangible fixed assets acquired are recorded on the balance sheet at acquisition cost. They primarily include entry fees (and occupancy rights for car parks) and computer software.
Intangible fixed assets are amortised on a straight-line basis, as follows:
- Software: over a period of 1 to 3 years;
- Occupancy rights: 30 years.
Fixed assets in the concession segment - Concession activity
The Covivio Group applies IFRIC 12 in the consolidated financial statements for car parks that are the subject of service concession agreements. An analysis of the Group's concession agreements results in classifying agreements as intangible assets as the Group is paid directly by users for all car parks operated without a subsidy from public authorities. These concession assets are assessed at historical cost less accumulated depreciation and any impairment.
The Group no longer has any fully owned car parks and consequently there are no longer any tangible "Car park" assets, other than right-of-use assets related to leases under IFRS 16.
Financial Report at 31 December 2019
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COVIVIO
- Business combinations (IFRS 3) and goodwill from acquisitions
An entity must determine whether a transaction or event constitutes a business combination within the meaning of the definition of IFRS 3, which stipulates that a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return directly to investors in the form of dividends, lower costs or other economic advantages.
In this case, the acquisition cost is set at the fair value on the date of the exchange of the assets and liabilities and equity instruments issued for the purpose of acquiring the entity. Goodwill is recognised as an asset for the surplus of the acquisition cost on the portion of the buyer's interest in the fair value of the assets and liabilities acquired, net of any deferred taxes. Negative goodwill is recorded in the income statement.
To determine whether a transaction constitutes a business combination, the Group considers whether an integrated set of businesses is acquired in addition to real estate. The criteria the Group uses may be the number of assets and the existence of a process such as asset management or sales and marketing units.
Related acquisition costs are recognised in expense in accordance with IFRS 3 under "Income from changes in consolidation scope" in the income statement.
The prospective additional costs are appraised at fair value at the acquisition date. They are definitely appraised in the 12 months following the acquisition. The subsequent change of these additional costs is recorded in the income statement.
After its initial recognition, the goodwill is subject to an impairment test at least once a year. The impairment test consists in comparing the net book value of the intangible and tangible fixed assets and goodwill related to the valuation of the hotels as "Operating Properties" made by the real estate appraisers.
If the Group concludes that the transaction is not a business combination, then it recognises the transaction as an acquisition of assets and applies the standards appropriate to acquired assets.
- Investment properties (IAS 40)
Investment properties are real estate properties held for purposes of leasing within the context of operating leases or long-term capital appreciation (or both).
Investment properties represent the majority of the Group's portfolio. The buildings occupied or operated by the Covivio Group employees -own occupied buildings- are recognised under tangible fixed assets (office properties occupied by employees, spaces used for own Flex Office, hotel real estate managed by the Operating Properties business).
Under the option offered by IAS 40, investment properties are assessed at their fair value. Changes in fair value are recorded in the income statement. Investment property is not amortised.
Valuations are carried out in accordance with the Code of conduct applicable to SIICs, the Charter of property valuation expertise, the recommendations of the COB/CNCC working group chaired by Mr Barthès de Ruyter and the international plan in accordance with the International Valuation Standards Council (IVSC) and those of the Red Book 2014 of the Royal Institution of Chartered Surveyors (RICS).
The real estate portfolio directly held by the Group was appraised in full at 31 December 2019 by independent real estate experts including BNP Real Estate, JLL, CBRE, Cushman, CFE, MKG, VIF, REAG, Christie & CO and HVS.
Assets were estimated at values excluding and/or including duties, and rents at market value. Estimates were made using the comparative method, the rent capitalisation method and the discounted future cash flows method.
Financial Report at 31 December 2019
33
COVIVIO
The assets are recognised at their net market value.
- For France Offices and Italy Offices, the valuations are primarily performed according to two methods:
- The yield (or income capitalisation) method:
This approach consists of capitalising an annual income, which, in general, is rental income from occupied assets, with the possible impact of a reversion potential, and market rent for vacant assets, taking into account the time needed to find new tenants, any renovation work and other costs;
- The discounted cash flow (DCF) method:
This method consists of determining the useful value of an asset by discounting the forecast cash flows that it is likely to generate over a given time frame. The discount rate is determined on the basis of the risk-free rate plus a risk premium associated with the asset and defined by comparison with the discount rates applied to cash flows generated by similar assets.
- For Hotels in Europe, the methodology changes according to the type of assets:
- The rent capitalisation method is used for restaurants, garden centres and Club Med holiday villages;
- The DCF method is used for hotels (including the revenue forecasts determined by the appraiser) and Sunparks holiday villages.
- For Germany Residential, the fair value determined corresponds to:
- A block value for assets for which no sales strategy has been developed or which have not been marketed;
- An occupied retail value for assets on which at least one preliminary sale agreement has been made before the reporting date.
The evaluation method used was the discounted cash flow method.
The resulting values are also compared with the initial yield rate and the monetary values per square metre of comparable transactions and transactions carried out by the Group.
IFRS 13 "Fair Value Measurement" establishes a fair value hierarchy that categorises the inputs used in valuation techniques into three Levels:
- Level 1: the valuation refers to quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2: the valuation refers to valuation methods using inputs that are observable for the asset or liability, either directly or indirectly, in an active market;
- Level 3: the valuation refers to valuation methods using inputs that are unobservable in an active market.
The fair value measurement of investment properties requires the use of different valuation methods using unobservable or observable inputs to which some adjustments have been applied. Accordingly, the Group's portfolio is mainly categorised as Level 3 according to the IFRS 13 fair value hierarchy.
- Assets under development (IAS 40)
Assets under construction are recognised according to the general fair-value principle, except where it is not possible to determine this fair value on a reliable and ongoing basis. In such cases, the asset is carried at cost.
Financial Report at 31 December 2019
34
COVIVIO
As a result, development programmes and extensions or remodelling of existing assets that are not yet commissioned are recognised at their fair value and are treated as investment properties whenever the administrative and technical fair-value reliability criteria - i.e. administrative, technical and commercial criteria - are met.
In accordance with revised IAS 23, the borrowing cost during a period of construction and renovation is included in the cost of the assets. The capitalised amount is determined on the basis of fees paid for specific borrowings and, where applicable, for financing from general borrowings based on the weighted average rate of the particular debt.
- Right-of-use(IFRS 16)
In application of IFRS 16, when a movable or immovable asset is held under a lease, the lessee is required to recognise a right-of-use asset and a rental liability, at amortised cost.
Right-of-use assets are included in the items under which the corresponding underlying assets are presented, if they belonged thereto, namely the items Operating properties, Other tangible fixed assets and Investment properties.
The lessee depreciates the right-of-use on a straight-line basis over the term of the lease, except for rights relating to investment properties, which are measured at fair value.
- Tangible fixed assets (IAS 16)
Pursuant to the preferred method proposed by IAS 16, operating buildings (head offices and Flex Office business) and managed hotels under the Operating Properties business line (owner occupied buildings
- occupied or operated by Group employees) are carried at historical cost less accumulated depreciation and any potential impairment. They are amortised over their expected useful life according to a component-based approach.
The hotels operated as Operating Properties are depreciated according to their period of use:
Buildings | 50 to 60 years |
General installations and layout of the buildings | 10 to 30 years |
Equipment and furniture | 3 to 20 years |
If the appraisal values of the Operating Properties is less than the net book value, impairment is recognised, as a priority on the value of the fund, then on the value of the tangible fixed assets.
- Non-currentassets held for sale (IFRS 5)
In accordance with IFRS 5, when Covivio decides to dispose of an asset or group of assets, it classifies them as assets held for sale if:
- the asset or group of assets is available for immediate sale in its current condition, subject only to normal and customary conditions for the sale of such assets;
- its or their sale is likely within one year and marketing for the property has been initiated.
For the Covivio group, only assets corresponding to the above criteria or for which a sale commitment has been signed are classified as assets held for sale.
If a sale commitment exists on the account closing date, the price of the commitment net of expenses constitutes the fair value of the asset held for sale.
Financial Report at 31 December 2019
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3.2.5.1.2. Table of changes in fixed assets
Scope change | Disposal | Change in | ||||||||||||||||||||||||||||||
& change in | Increase | /Reversals | Change in | |||||||||||||||||||||||||||||
€ thousand | 31/12/2018 | Transfers | exchange | 31/12/2019 | ||||||||||||||||||||||||||||
accounting | /Charges | of | fair value | |||||||||||||||||||||||||||||
rate | ||||||||||||||||||||||||||||||||
method | provisions | |||||||||||||||||||||||||||||||
Goodw ill | 113 064 | -3 946 | -2 195 | 0 | 0 | 36 363 | (1) | 0 | 143 286 | |||||||||||||||||||||||
(2) | ||||||||||||||||||||||||||||||||
Intangible assets | 59 138 | 6 | 1 385 | -695 | 0 | -36 363 | 0 | 23 471 | ||||||||||||||||||||||||
Gross amounts | 125 599 | -145 | 5 212 | -1 674 | 0 | -36 371 | (1) | 0 | 92 621 | |||||||||||||||||||||||
Depreciation | -66 461 | 151 | -3 827 | 979 | 0 | 8 | 0 | -69 150 | ||||||||||||||||||||||||
Tangible fixed assets | 1 241 675 | 94 200 | -7 855 | -2 544 | 0 | 163 966 | 1 | 1 489 442 | ||||||||||||||||||||||||
Operating properties | 1 181 280 | 92 122 | -37 665 | 2 200 | 0 | 171 770 | 0 | 1 409 707 | ||||||||||||||||||||||||
Gross amounts | 1 454 651 | 56 471 | 13 267 | -4 000 | 0 | 178 060 | (3) | 0 | 1 698 449 | |||||||||||||||||||||||
Depreciation | -273 371 | 35 651 | -50 932 | 6 200 | 0 | -6 290 | 0 | -288 742 | ||||||||||||||||||||||||
Other tangible fixed assets | 35 443 | 2 078 | 4 077 | -247 | 0 | 504 | 0 | 41 855 | ||||||||||||||||||||||||
Gross amounts | 167 048 | -8 596 | 14 630 | -4 304 | 0 | 470 | 0 | 169 248 | ||||||||||||||||||||||||
Depreciation | -131 605 | 10 674 | -10 553 | 4 057 | 0 | 34 | 0 | -127 393 | ||||||||||||||||||||||||
Fixed assets in progress | 24 952 | 0 | 25 733 | -4 497 | 0 | -8 308 | 0 | 37 880 | ||||||||||||||||||||||||
Gross amounts | 24 952 | 0 | 25 733 | (4) | -4 497 | 0 | -8 308 | 0 | 37 880 | |||||||||||||||||||||||
Depreciation | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Investment properties | 20 139 338 | 239 467 | 666 355 | -362 849 | 986 116 | -885 832 | 55 286 | 20 837 882 | ||||||||||||||||||||||||
Operating properties | 19 269 751 | 239 467 | 262 280 | -362 849 | 726 346 | -685 976 | 55 286 | 19 504 306 | ||||||||||||||||||||||||
Properties under development | 869 587 | 0 | 404 075 | 0 | 259 770 | -199 856 | 0 | 1 333 576 | ||||||||||||||||||||||||
Assets held for sale | 558 848 | 0 | 1 654 | -890 201 | 17 519 | 636 472 | 0 | 324 292 | ||||||||||||||||||||||||
Assets held for sale | 558 848 | 0 | 1 654 | -890 201 | 17 519 | 636 472 | 0 | 324 292 | ||||||||||||||||||||||||
Total | 22 112 063 | 329 727 | 659 344 | -1 256 289 | 1 003 635 | -85 394 | 55 286 | 22 818 374 |
Changes in the scope of tangible and intangible fixed assets relate mainly to the disposal of the Westin Dresden asset (-€42.8 million), to the acquisition of the Hilton Hotel in Dublin (+€53.8 million) and to the change in the accounting method for the first-time application of IFRS 16 for €77.4 million (see 3.2.1.2).
The total of the transfer column (-€88.7 million) corresponds primarily to assets transferred as real estate development stock.
The hotels portfolio held as Operating Properties totalled €1,049.3 million at 31 December 2019. In accordance with IAS 16, they are recognised in the "Tangible fixed assets" line.
- The reclassification of €36.4 million corresponds to the business assets of the Hermitage portfolio, reclassified as goodwill.
- The "Intangible fixed assets" line includes in particular the car park concession assets and leases in the amount of €18 million.
- Of which transfer to operating properties of the future Covivio headquarters (+€133.9 million), Flex Office assets, Paris Gobelins (+€35.2 million) and Milan, via Dante (+€50.3 million) and transfer to investment properties of the Alexanderplatz plot (-€43.4 million).
- Of which work on German Residential assets (€10.9 million), Operating Property assets (€3.1 million) and the future Covivio headquarters (€6.7 million) and Paris Gobelins (€5.4 million).
Fixed assets in progress also include instalments paid on Office asset acquisitions in Italy (€0.4 million) and on Office asset acquisitions in France (€1 million).
The "Disbursements related to the acquisition of tangible and intangible fixed assets" line on the Statement of Cash Flows (€674.2 million) refers to increases in the table of changes in the portfolio excluding the effect of depreciation (€726.9 million), to increases in inventories of the estate agent and developer (+€8.3 million) adjusted for change in trade payables for fixed assets (-€7 million) and restatements for step rental schemes and rent exemptions (-€52.9 million).
The "Proceeds relating to the disposal of tangible and intangible fixed assets" line in the Statement of Cash Flows (€1,198.6 million) primarily corresponds to income from disposals as presented in section
Financial Report at 31 December 2019
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COVIVIO
3.2.6.3. Proceeds from the disposal of assets (€1,257.5 million), to the proceeds from the disposal of assets in inventory (€2 million) and restated for the change in receivables on asset disposals (-€60.8 million).
3.2.5.1.3. Investment properties
Scope | ||||||||||||||||||||||||||||
change & | Change in | Transfers | Change in | |||||||||||||||||||||||||
€ thousand | 31/12/2018 | change in | Increase | Disposal | and | exchange | 31/12/2019 | |||||||||||||||||||||
fair value | ||||||||||||||||||||||||||||
accounting | disposals | rate | ||||||||||||||||||||||||||
method | ||||||||||||||||||||||||||||
Investment properties | 20,139,338 | 239,467 | 666,355 | -362,849 | 986,116 | -885,832 | 55,286 | 20,837,882 | ||||||||||||||||||||
Operating properties | 19,269,751 | 239,467 | 262,280 | -362,849 | 726,346 | -685,976 | 55,286 | 19,504,306 | ||||||||||||||||||||
France Offices | 5,411,745 | -11,600 | 54,560 | 0 | 26,241 | -496,807 | 0 | 4,984,139 | ||||||||||||||||||||
Italy Offices | 3,602,273 | 0 | 39,925 | -362,849 | -9,854 | -89,630 | 0 | 3,179,865 | ||||||||||||||||||||
Hotels in Europe | 4,532,777 | 139,729 | 51,664 | 0 | 195,964 | -53,527 | 55,286 | 4,921,894 | ||||||||||||||||||||
Germany Residential | 5,722,956 | 111,338 | 116,131 | 0 | 513,995 | -46,012 | 0 | 6,418,408 | ||||||||||||||||||||
Properties under development | 869,587 | 0 | 404,075 | 0 | 259,770 | -199,856 | 0 | 1,333,576 | ||||||||||||||||||||
France Offices | 373,752 | 0 | 291,049 | 0 | 204,849 | -1,330 | 0 | 868,320 | ||||||||||||||||||||
Italy Offices | 380,502 | 0 | 88,963 | 0 | 16,101 | -106,297 | 0 | 379,269 | ||||||||||||||||||||
Hotels in Europe | 115,333 | 0 | 10,062 | 0 | 23,478 | -138,943 | 0 | 9,930 | ||||||||||||||||||||
Germany Residential | 0 | 0 | 14,001 | 0 | 15,342 | 46,714 | 0 | 76,057 | ||||||||||||||||||||
Assets held for sale | 558,848 | 0 | 1,654 | -890,201 | 17,519 | 636,472 | 0 | 324,292 | ||||||||||||||||||||
France Offices | 35,392 | 0 | -190 | -277,253 | -50 | 297,130 | 0 | 55,029 | ||||||||||||||||||||
Italy Offices | 43 | 0 | -3 | -43 | -15,864 | 116,072 | 0 | 100,205 | ||||||||||||||||||||
Hotels in Europe | 288,072 | 0 | 1,014 | -379,793 | 30,964 | 192,381 | 0 | 132,638 | ||||||||||||||||||||
Germany Residential | 29,664 | 0 | 450 | -53,852 | 3,365 | 30,889 | 0 | 10,516 | ||||||||||||||||||||
Other | 205,677 | 0 | 383 | -179,260 | -896 | 0 | 0 | 25,904 | ||||||||||||||||||||
Total | 20,698,186 | 239,467 | (1) | 668,009 | (1) | -1,253,050 | 1,003,635 | -249,360 | 55,286 | 21,162,174 |
- Details of the increases and changes in the scope of the investment properties and assets held for sale are shown in section 3.2.5.1.4.
The amounts in the "disposals" column correspond to the appraisal figures published on 31 December 2018.
Consolidated portfolio of assets at 31 December 2019 (in €M):
21,162
The Group has not identified the best use of an asset as being different from its current use. Consequently, the application of IFRS 13 did not lead to a modification of the assumptions used for the valuation of assets.
In accordance with IFRS 13, the tables below provide details of the ranges of unobservable inputs by business segment (Level 3) used by the real estate appraisers:
Financial Report at 31 December 2019
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- France Offices, Italy Offices and Hotels in Europe:
Yield rate | Yield rate | Discounted | ||||||||||||||||||
excluding | ||||||||||||||||||||
excluding | Discounted cash | cash flow rate | ||||||||||||||||||
Portfolio (€M) | duties | |||||||||||||||||||
duties (min.- | flow rate | (weighted | ||||||||||||||||||
(weighted | ||||||||||||||||||||
max.) | average) | |||||||||||||||||||
Grouping of similar assets | Level | average) | ||||||||||||||||||
Paris Centre West | Level 3 | 1 089 | 2.8% - 7.2% | 3,2% | 3.7% | - 7.0% | 5,0% | |||||||||||||
Paris North East | Level 3 | 412 | 3.6% - 4.2% | 5,1% | 4.0% | - 4.7% | 4,3% | |||||||||||||
Southern Paris | Level 3 | 713 | 3.1% - 5.7% | 4,7% | 3.7% | - 5.7% | 4,7% | |||||||||||||
Western Crescent | Level 3 | 1 590 | 3.6% - 7.7% | 4,8% | 3.7% | - 7.5% | 5,3% | |||||||||||||
Inner rim | Level 3 | 1 215 | 3.2% - 6.2% | 5,8% | 4.0% | - 7.7% | 5,7% | |||||||||||||
Outer rim | Level 3 | 54 | 4.6% - 13.1% | 9,6% | 4.2% | - 9.5% | 5,5% | |||||||||||||
Total Paris Regions | 5 073 | 2.8% - 13.1% | 3.7% - 9.5% | |||||||||||||||||
Major Regional Cities | Level 3 | 698 | 3.9% - 11.7% | 6,6% | 4.0% - 11.5% | 5,5% | ||||||||||||||
Regions | Level 3 | 137 | 6.4% - 14.3% | 9,4% | 4.2% - 12.2% | 9,0% | ||||||||||||||
Total Regions | 835 | 3.9% - 14.3% | 4.0% - 12.2% | |||||||||||||||||
Total France Offices | 5 907 | 2.8% - 14.3% | 3.7% - 12.2% | |||||||||||||||||
Milan | Level 3 | 1 887 | 2.7% - 6.3% | 4,6% | 4.5% - 6.4% | 5,2% | ||||||||||||||
Rome | Level 3 | 186 | 3.0% - 6.8% | 4,8% | 5.2% - 6.8% | 6,2% | ||||||||||||||
Other | Level 3 | 1 208 | 5.3% - 7.8% | 6,6% | 5.7% - 6.9% | 6,7% | ||||||||||||||
Total in operation | 3 280 | |||||||||||||||||||
Development portfolio | Level 3 | 379 | 6.3% - 9.0% | |||||||||||||||||
Total Italy Offices | 3 659 | |||||||||||||||||||
Hotels | Level 3 | 4 685 | 3.5% - 6.2% | 4,8% | 4.2% - 7.8% | 5,7% | ||||||||||||||
Retail | Level 3 | 166 | 6.4% - 8.0% | 7,6% | 5.6% - 8.4% | 7,3% | ||||||||||||||
Total in operation | 4 851 | |||||||||||||||||||
Development portfolio | Level 3 | 10 | 5,6% | 5,6% | ||||||||||||||||
Use rights | Level 3 | 203 | ||||||||||||||||||
Total Hotels in Europe | 5 064 |
- German Residential:
Yield rate (*) | ||||||||||||
Block valued | Discounted cash | Average value | ||||||||||
Grouping of similar assets | Level | Portfolio (€M) | Total portfolio | properties | flow rate | (€/m2) | ||||||
Duisburg | Level 3 | 267 | 3.9% - 4.7% | 3.0% - 4.7% | 4.9% - 5.7% | 1,298 | ||||||
Essen | Level 3 | 600 | 3.7% - 6.0% | 3.7% - 6.0% | 5.0% - 7.2% | 1,592 | ||||||
Mülheim | Level 3 | 187 | 4.0% - 5.1% | 4.0% - 5.1% | 5.0% - 6.1% | 1,431 | ||||||
Oberhausen | Level 3 | 165 | 4.3% - 6.2% | 4.3% - 6.2% | 5.3% - 7.2% | 1,130 | ||||||
Datteln | Level 3 | 123 | 3.6% - 5.0% | 3.6% - 5.0% | 4.6% - 6.0% | 1,079 | ||||||
Berlin | Level 3 | 3,707 | 1.9% - 4.8% | 1.9% - 4.8% | 3.9% - 6.9% | 2,852 | ||||||
Düsseldorf | Level 3 | 156 | 2.6% - 3.8% | 2.6% - 3.8% | 4.1% - 5.3% | 2,419 | ||||||
Dresden | Level 3 | 395 | 3.0% - 4.5% | 3.0% - 4.5% | 4.1% - 5.8% | 2,045 | ||||||
Leipzig | Level 3 | 198 | 3.4% - 4.6% | 3.4% - 4.6% | 4.9% - 6.1% | 1,540 | ||||||
Hamburg | Level 3 | 454 | 1.9% - 4.0% | 1.9% - 4.0% | 3.4% - 5.5% | 3,165 | ||||||
Other | Level 3 | 144 | 2.6% - 4.8% | 2.6% - 4.8% | 4.1% - 5.8% | 1,741 | ||||||
Total in operation | 6,395 | |||||||||||
Germany Offices | Level 3 | 110 | ||||||||||
Total German Residential | 6,505 |
(*) Yields rates:
German Residential: Potential yield rate assumed excluding taxes (actual rents/appraisal values excluding taxes)
Impact of changes in the yield rate on changes in the fair value of real estate assets, by operating segment
Yield** | Yield rate | Yield rate | ||||
€ million | -50 bps | +50 bps | ||||
France Offices* | 5,1% | 545,1 | -448,1 | |||
Italy Offices | 5,6% | 324,6 | -271,0 | |||
Hotels in Europe* | 5,3% | 535,2 | -438,2 | |||
Germany Residential | 4,0% | 905,5 | -706,5 | |||
Total * | 4,9% | 2 310,4 | -1 863,8 |
- including assets held by equity affiliates, excl. operating property assets.
- Yield on operating portfolio - excl. duties
- If the yield rate excluding taxes drops 50 bps (-0.5 points), the market value excluding taxes of the real estate assets will increase by €2,310 million.
- If the yield rate excluding taxes increases 50 bps (+0.5 points), the market value excluding taxes of the real estate assets will decrease by €1,863 million.
Financial Report at 31 December 2019
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COVIVIO
3.2.5.1.4. | Acquisitions and works | ||||||
Scope | |||||||
change & | |||||||
€ thousand | change in | Acquisitions | Works | Total increase | |||
accounting | |||||||
method | |||||||
Mercure Nice reclustering | -11.600 | ||||||
France Offices | -11.600 | 0 | 54.560 | 54.560 | |||
Asset "Palazzo Orlando" | 13.065 | ||||||
Italy Offices | 0 | 13.065 | 26.860 | 39.925 | |||
Mercure Nice reclustering | 11.600 | ||||||
Use rights on leases in the United Kingdom | 12.035 | 571 | |||||
Use rights for investment properties | 15.699 | ||||||
Investments in the United Kingdom (Oxford) | 87.874 | 812 | |||||
NH Amersfoort Hotel | 12.521 | ||||||
Plot in Dresden | 4.726 | ||||||
Ibis Annecy plot | 1.499 | ||||||
3 assets in Poland (B&B) | 23.517 | ||||||
Hotels in Europe | 128.129 | 31.125 | 20.539 | 51.664 | |||
Investments in Berlin | 73.056 | ||||||
Investments in Essen and Dortmund | 20.031 | ||||||
Investments in Dresden and Leipzig | 52.553 | ||||||
Disposals through equity investments | -33.932 | ||||||
Other | -370 | ||||||
Assets in Berlin | 5.853 | ||||||
Germany Residential | 111.338 | 5.853 | 110.278 | 116.131 | |||
TOTAL Operating properties | 227.867 | 50.043 | 212.237 | 262.280 | |||
Land for DS Campus extension | 13.138 | ||||||
Terres Neuves land | 2.372 | ||||||
N2 Batignolles land | 64.166 | ||||||
France Offices | 0 | 79.676 | 211.373 | 291.049 | |||
Plot of land in Milan, via Santander/via Schievano | 11.712 | ||||||
Italy Offices | 0 | 11.712 | 77.251 | 88.963 | |||
Hotels in Europe | 0 | 0 | 10.062 | 10.062 | |||
Other | 5.269 | ||||||
Germany Residential | 0 | 5.269 | 8.732 | 14.001 | |||
TOTAL Properties under development | 0 | 96.657 | 307.418 | 404.075 | |||
France Offices | -190 | -190 | |||||
Italy Offices | -3 | -3 | |||||
Hotels in Europe | 0 | 1.014 | 1.014 | ||||
Germany Residential | 450 | 450 | |||||
Other | 383 | 383 | |||||
Total Assets held for sale | 0 | 0 | 1.654 | 1.654 | |||
Total | 227.867 | 146.700 | 521.309 | 668.009 |
Almost €900 million in acquisitions and works, of which €404 million for properties under development.
Financial Report at 31 December 2019
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COVIVIO
3.2.5.1.5. Properties under development
Properties under development relate to building or redevelopment programmes that fall within the application of IAS 40 (revised).
Acquisitions | Capitalised | Change in | Transfers | |||||||||||||||||||||
31/12/2018 | and | 31/12/2019 | ||||||||||||||||||||||
and w orks | interest | fair value | ||||||||||||||||||||||
€ thousand | disposals | |||||||||||||||||||||||
Levallois Alis | 0 | 2 077 | 2 701 | 20 022 | 124 200 | 149 000 | ||||||||||||||||||
DS Campus extension | 0 | 14 248 | 4 353 | 18 601 | ||||||||||||||||||||
Terres Neuves | 0 | 2 452 | -22 | 2 430 | ||||||||||||||||||||
N2 Batignolles | 0 | 83 086 | 222 | -7 253 | 76 055 | |||||||||||||||||||
Lyon Silex 2nd tranche | 103 200 | 17 008 | 2 590 | 33 350 | -14 848 | 141 300 | ||||||||||||||||||
Lyon Silex 3rd tranche | 2 700 | 45 | 5 255 | 8 000 | ||||||||||||||||||||
Montrouge Flow | 49 700 | 26 697 | 1 357 | 46 746 | 124 500 | |||||||||||||||||||
Paris So Pop | 86 500 | 17 044 | 2 323 | 57 155 | -8 922 | 154 100 | ||||||||||||||||||
Châtillon Iro | 35 198 | 58 111 | 1 845 | 25 046 | 120 200 | |||||||||||||||||||
Meudon Opale | 31 644 | 594 | 106 | 32 344 | ||||||||||||||||||||
Montpellier Orange | 8 600 | 4 525 | 121 | 3 654 | 16 900 | |||||||||||||||||||
Montpellier Rie | 2 300 | 3 801 | 79 | 320 | 6 500 | |||||||||||||||||||
Montpellier Pompignane | 3 750 | 2 487 | -2 487 | 3 750 | ||||||||||||||||||||
Meudon Ducasse | 4 000 | 9 417 | 216 | 1 007 | 14 640 | |||||||||||||||||||
Paris Gobelins | 0 | 942 | 262 | 3 896 | -5 100 | 0 | ||||||||||||||||||
Meudon Canopée | 20 560 | 574 | 0 | -1 274 | -19 860 | 0 | ||||||||||||||||||
Cité Numérique | 4 600 | 33 456 | 139 | 5 105 | -43 300 | 0 | ||||||||||||||||||
Lezennes - Helios | 21 000 | 2 542 | 88 | 6 970 | -30 600 | 0 | ||||||||||||||||||
France Offices | 373 752 | 279 106 | 11 943 | 204 849 | -1 330 | 868 320 | ||||||||||||||||||
Milan, via Unione/via Torino | 0 | 41 | 94 | 1 765 | 33 400 | 35 300 | ||||||||||||||||||
Milan, via Schievano/via Santander | 0 | 11 856 | 454 | -11 | 3 001 | 15 300 | ||||||||||||||||||
Milan, piazza Duca d'Aosta | 0 | 2 997 | 117 | 4 026 | 6 930 | 14 070 | ||||||||||||||||||
Milan, via Dante | 43 400 | 7 086 | 1 242 | -51 728 | 0 | |||||||||||||||||||
Milan, Symbiosis area | 142 700 | 13 902 | 5 419 | 5 579 | -32 500 | 135 100 | ||||||||||||||||||
Turin Corso Ferrucci | 86 903 | 3 914 | 0 | -5 718 | 85 099 | |||||||||||||||||||
Milan, via Schievano | 45 799 | 36 612 | 2 022 | 9 967 | 94 400 | |||||||||||||||||||
Milan, via Principe Amedeo | 61 700 | 2 587 | 620 | 493 | -65 400 | 0 | ||||||||||||||||||
Italy Offices | 380 502 | 78 995 | 9 968 | 16 101 | -106 297 | 379 269 | ||||||||||||||||||
Meininger Porte de Vincennes | 48 393 | 1 460 | 782 | 11 790 | -62 425 | 0 | ||||||||||||||||||
Meininger Lyon Zimmermann | 13 409 | 3 663 | 328 | 3 078 | -20 478 | 0 | ||||||||||||||||||
B&B Cergy | 5 260 | 694 | 45 | 1 091 | -7 090 | 0 | ||||||||||||||||||
B&B Bagnolet | 6 240 | 2 282 | 113 | 1 295 | 9 930 | |||||||||||||||||||
Meininger Munich | 42 031 | 550 | 145 | 6 224 | -48 950 | 0 | ||||||||||||||||||
Hotels in Europe | 115 333 | 8 649 | 1 413 | 23 478 | -138 943 | 9 930 | ||||||||||||||||||
Alexanderplatz | 0 | 12 723 | 1 278 | 15 342 | 46 714 | 76 057 | ||||||||||||||||||
Germany Residential | 0 | 12 723 | 1 278 | 15 342 | 46 714 | 76 057 | ||||||||||||||||||
Total | 869 587 | 379 473 | 24 602 | 259 770 | -199 856 | 1 333 576 | ||||||||||||||||||
The column "transfers and disposals" includes in particular the transfer of Meudon Canopée to assets held for sale (-€19.9 million), the transfer of "advances and pre-payments" to France Offices (-€31 million) and the transfer of Milan, Symbiosis to "real estate development" (-€32.5 million) and of Milan, via Dante to Flex Office activity under Italy Offices (-€51.7 million).
Financial Report at 31 December 2019
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3.2.5.2 Financial assets
3.2.5.2.1. Accounting principles
- Other financial assets
Other financial assets consist of investment-fund holdings, which cannot be classified as cash or cash equivalents.
These securities are recognised upon acquisition at cost plus transaction costs. They are then recognised at fair value in the income statement on the reporting date. The fair value is arrived at on the basis of recognised valuation techniques (reference to recent transactions, Discounted Cash Flows, etc.). Some securities that cannot be reliably measured at fair value are recognised at acquisition cost.
Securities available for sale of listed and non-consolidated companies are recorded at their stock-market price with an offsetting entry in shareholders' equity in accordance with IFRS 9.
Dividends received are recognised when they have been approved by vote.
- Loans
At each reporting date, loans are recorded at their amortised cost. Moreover, impairment is recognised and recorded on the income statement when there is an objective indication of impairment as a result of an event occurring after the initial recognition of the asset.
3.2.5.2.2. Table of financial assets
Change in | Scope | Change in | ||||||||||||||
31/12/2018 | Increase | Decrease | Transfers | exchange | 31/12/2019 | |||||||||||
fair value | change | |||||||||||||||
€ thousand | rate | |||||||||||||||
Ordinary loans(1) | 101,027 | 55,974 | -16,206 | 0 | 0 | -10,223 | 0 | 130,572 | ||||||||
Total loans and current accounts | 101,027 | 55,974 | -16,206 | 0 | 0 | -10,223 | 0 | 130,572 | ||||||||
Advances and pre-payments on acquisition of | ||||||||||||||||
shares | 7,494 | 27,000 | -7,604 | 0 | 0 | 0 | 110 | 27,000 | ||||||||
Securities at historic cost | 28,288 | -1,972 | -452 | 0 | 3,128 | -527 | 0 | 28,465 | ||||||||
Dividends to be received | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
Subscribed capital not paid up | 20,040 | 0 | 0 | 0 | 0 | -20,040 | 0 | 0 | ||||||||
Total other financial assets(2) | 55,822 | 25,028 | -8,056 | 0 | 3,128 | -20,567 | 110 | 55,465 | ||||||||
Receivables on financial assets | 12,808 | 78,662 | -2,609 | 0 | 0 | 751 | 1 | 89,613 | ||||||||
Total receivables on financial assets | 12,808 | 78,662 | -2,609 | 0 | 0 | 751 | 1 | 89,613 | ||||||||
Total | 169,657 | 159,664 | -26,872 | 0 | 3,128 | -30,039 | 112 | 275,651 | ||||||||
Amortisations and provisions(3) | -16,810 | -168 | 387 | 0 | 0 | 0 | 0 | -16,591 | ||||||||
NET TOTAL | 152,847 | 159,496 | -26,485 | 0 | 3,128 | -30,039 | 112 | 259,060 | ||||||||
- Ordinary loans include receivables from equity investments in equity affiliates. The increase for the period is mainly due to the loan granted to the companies acquired in July 2019 that own
32 hotels in France and Belgium (+€53.7 million). - Total other financial assets are broken down as follows:
- Advances and deposits made to acquire securities in companies:
A deposit of €27 million was paid for the acquisition of a portfolio of hotels located in the city centres of major European cities (Rome, Florence, Venice, Budapest, Prague and Nice), see Section 3.2.9 Subsequent events.
-
Securities at historic cost:
The investments held by Covivio in Italy in real estate funds (€17 million) are valued at their historical cost. Potential impairments are recorded in the income statement. - Receivables on financial assets: The increase in receivables on financial assets mainly corresponds to receivables on disposals in Italy Offices (+€78.2 million). Indeed, the disposal of the Galleria Del Corso asset generated a receivable of €30 million maturing in 2021, and the disposal of the Chronos asset generated a receivable of €48.2 million maturing in December 2022.
Financial Report at 31 December 2019
41
COVIVIO
- Includes impairment losses on securities at historical cost held by Covivio in Italy (€11.4 million) and impairment losses on receivables for disposals of more than one year (€3.3 million) and for receivables related to financial assets (€1.9 million).
3.2.5.3 Investments in equity affiliates and joint ventures
3.2.5.3.1. Accounting principles
Investments in equity affiliates and joint ventures are recognised by the equity method. According to this method, the Group's investment in the equity affiliate or the joint venture is initially recognised at cost, increased or reduced by the changes, subsequent to the acquisition, in the share of the net assets of the affiliate. The goodwill related to an equity affiliate or joint venture is included in the book value of the investment, if it is not impaired. The share in the earnings for the period is shown in the line item "Share in income of equity affiliates".
The financial statements of associates and joint ventures are prepared for the same accounting period as for the parent company, and adjustments are made, where relevant, to adapt the accounting methods to those of the Covivio group.
3.2.5.3.2. Table of investments in equity affiliates and joint ventures
Of w hich | Of w hich | |||||||||||||||
distribution | ||||||||||||||||
€ thousand | % held | Operating segment | Country | 31/12/2018 | 31/12/2019 | Change | share of net | |||||||||
and change | ||||||||||||||||
income | ||||||||||||||||
in scope | ||||||||||||||||
SCI Factor E and SCI Orianz | 34.69% | France Offices | France | 11,002 | 13,968 | 2,966 | 2,966 | 0 | ||||||||
Lenovilla (New Vélizy) | 50.10% | France Offices | France | 68,557 | 60,291 | -8,266 | -3,256 | -5,010 | ||||||||
Euromarseille (Euromed) | 50.00% | France Offices | France | 43,008 | 49,880 | 6,872 | 5,871 | 1,001 | ||||||||
Cœur d'Orly (Askia and Belaïa) | 50.00% | France Offices(1) | France | 26,090 | 29,765 | 3,675 | 5,741 | -2,067 | ||||||||
Investire Immobiliare and others | Italy Offices | Italy | 17,191 | 13,879 | -3,312 | -2,380 | -932 | |||||||||
Iris Holding France | 19.90% | Hotels in Europe | Belgium, Germany | 15,501 | 19,256 | 3,756 | 4,386 | -630 | ||||||||
OPCI IRIS Invest 2010 | 19.90% | Hotels in Europe | France | 30,393 | 32,007 | 1,614 | 2,982 | -1,368 | ||||||||
OPCI Camp Invest | 19.90% | Hotels in Europe | France | 20,444 | 21,097 | 653 | 1,769 | -1,116 | ||||||||
Dahlia | 20.00% | Hotels in Europe | France | 17,559 | 20,012 | 2,453 | 3,177 | -725 | ||||||||
Phoenix | 31.15% | Hotels in Europe | France, Belgium | 0 | 114,159 | 114,159 | 8,044 | 106,115 | ||||||||
and 33.33% | ||||||||||||||||
Total | 249,746 | 374,316 | 124,570 | 29,301 | 95,269 | |||||||||||
(1) (including the Belaïa building under development) | ||||||||||||||||
The investments in equity affiliates at 31 December 2019 amounted to €374.3 million, compared with €249.7 million as at 31 December 2018, i.e. an increase of €124.6 million.
The change over the period is mainly due to the appropriation of 2018 net income (-€15.1 million), by the acquisition of hotel holding companies in France and Belgium (+€106.1 million), the increase in Euromed's capital (+€5 million) and net income for the period (+€29.3 million).
3.2.5.3.3. Breakdown of shareholdings in the main associates and joint ventures
SCI Factor E / | |||||||||
Ow nership | Cœur | Group | SCI Lenovilla | SCI Orianz | |||||
d'Orly | Euromed | (New velizy) | (Bordeaux | ||||||
Armagnac) | |||||||||
Covivio | 50.0% | 50.0% | 50.09% | 34.7% | |||||
Non-Group third parties | 50.0% | 50.0% | 49.91% | 65.3% | |||||
Crédit Agricole Assurances | 50.0% | 49.91% | |||||||
Aéroport de Paris | 50.0% | ||||||||
ANF Immobilier | 65.3% | ||||||||
Total | 100% | 100% | 100% | 100% | |||||
Financial Report at 31 December 2019
42
COVIVIO
Indirect ownership | Iris Holding | OPCI Iris | OPCI | SCI Dahlia | OPCI Oteli | Kombon | Jouron | ||||||||
France | Invest 2010 | Campinvest | (Phoenix) | (Phoenix) | (Phoenix) | ||||||||||
Covivio Hotels | 19,9% | 19,9% | 19,9% | 20,0% | 31,2% | 33,3% | 33,3% | ||||||||
Non-Group third parties | 80,1% | 80,1% | 80,1% | 80,0% | 68,9% | 66,7% | 66,7% | ||||||||
Sogecap | 31,2% | 33,3% | 33,3% | ||||||||||||
Caisse de dépôt et consignation | 37,7% | 33,3% | 33,3% | ||||||||||||
Crédit Agricole Assurances | 80,1% | 80,1% | 68,8% | 80,0% | |||||||||||
Pacifica | 11,3% | ||||||||||||||
Total | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
3.2.5.3.4. Key financial information on equity affiliates and joint ventures
Total non- | Total | |||||||||
current | ||||||||||
Total | Total non- | current | ||||||||
liabilities | Financial | Rental | Cost of net | Net income | ||||||
€ thousand | Asset name | balance | current | Cash | liabilities | |||||
excluding | payables | income | financial debt | consolidated | ||||||
sheet | assets | excluding | ||||||||
financial | ||||||||||
financial debt | ||||||||||
debt | ||||||||||
Cœur d'Orly (Askia and Belaïa)
Lenovilla (New Vélizy)
Euromarseille (Euromed)
SCI Factor E and SCI Orianz
Iris Holding France
OPCI IRIS Invest 2010
OPCI Camp Invest
Dahlia
OPCI Oteli, Jouron, Kombon
Cœur d'Orly | 138 084 | 129 587 | 3 412 | 613 | 5 352 | 78 828 | 4 014 | -757 | 10 759 |
New Velizy and | 279 926 | 274 913 | 4 849 | 0 | 136 | 159 438 | 11 890 | -2 182 | -6 500 |
extension | |||||||||
Euromed Center | 214 810 | 200 689 | 7 608 | 1 234 | 5 086 | 108 729 | 8 443 | 0 | 11 743 |
Bordeaux | 146 646 | 137 158 | 6 214 | 485 | 8 768 | 97 126 | 3 710 | -1 277 | 8 551 |
Armagnac | |||||||||
AccorHotels | 231 047 | 207 509 | 22 382 | 21 363 | 2 427 | 110 367 | 13 319 | -2 997 | 22 040 |
Hotels | |||||||||
AccorHotels | 274 991 | 253 188 | 21 484 | 2 648 | 235 | 111 269 | 17 309 | -2 059 | 14 984 |
Hotels | |||||||||
Campanile Hotels | 187 231 | 170 950 | 14 086 | 0 | 288 | 80 926 | 12 150 | -1 664 | 8 890 |
AccorHotels | 178 390 | 173 083 | 5 034 | 0 | 260 | 78 072 | 8 986 | -1 704 | 15 887 |
Hotels | |||||||||
AccorHotels | 572 603 | 551 363 | 15 908 | 23 498 | 7 134 | 184 373 | 30 311 | -3 454 | 90 288 |
Hotels | |||||||||
3.2.5.4 Deferred tax liabilities on the reporting date
Increases | Decreases | ||||||||||
Balance sheet | First time | Net income for | Shareholder's | Other changes | Net income for | Difference in | Change in | Removals from | Balance sheet | ||
as at 31 Dec 18 | consolidation | the scope of | as at 31 Dec 19 | ||||||||
€ thousand | the period | equity | and transfers | the period | rates | exchange rate | |||||
scope | consolidation | ||||||||||
DTA | |||||||||||
Losses carried forward | 53 600 | 17 | 8 692 | -2 254 | -16 | 60 039 | |||||
Fair value of properties | 6 784 | 3 908 | 48 836 | -9 082 | -102 | 94 | -1 207 | 49 231 | |||
Derivatives | 6 838 | 4 418 | -169 | 11 087 | |||||||
Temporary differences | 66 565 | -1 | 1 198 | 2 211 | -48 962 | -1 613 | -2 | 22 | -2 046 | 17 372 | |
133 787 | 137 729 | ||||||||||
DTA/DTL offset | -65 822 | -75 797 | |||||||||
TOTAL DTA | 67 965 | 16 | 18 216 | 2 211 | -126 | -13 118 | -120 | 116 | -3 253 | 61 932 | |
Increases | Decreases | ||||||||||
Balance sheet | First time | Net income for | Shareholder's | Other changes | Net income for | Difference in | Change in | Removals from | Balance sheet | ||
as at 31 Dec 18 | consolidation | the scope of | as at 31 Dec 19 | ||||||||
€ thousand | the period | equity | and transfers | the period | rates | exchange rate | |||||
scope | consolidation | ||||||||||
DTL | |||||||||||
Fair value of properties | 878 643 | 26 350 | 137 885 | -150 | -23 157 | -2 813 | 2 660 | -4 426 | 1 014 992 | ||
Derivatives | 1 807 | 20 | -28 | 1 799 | |||||||
Temporary differences | 29 377 | 4 331 | 10 596 | 24 | -1 572 | -217 | 33 | 42 572 | |||
909 827 | 1 059 363 | ||||||||||
DTA/DTL offset | -65 822 | -75 797 | |||||||||
TOTAL DTL | 844 005 | 30 681 | 148 501 | 0 | -126 | -24 757 | -3 030 | 2 693 | -4 426 | 983 566 | |
NET TOTAL | -776 040 | -30 665 | -130 285 | 2 211 | 0 | 11 639 | 2 910 | -2 577 | 1 173 | -921 634 | |
Total impact on the income statement: | -115 736 | Negative net bal | ance = liabilities | ||||||||
Of w hich DTA on the corporation tax line | -2 096 |
At 31 December 2019, the consolidated deferred tax position showed a deferred tax asset of €62 million (versus €68 million as at 31 December 2018) and a deferred tax liability of €983 million (versus €844 million as at 31 December 2018).
Financial Report at 31 December 2019
43
COVIVIO
The primary contributors to the net balance of deferred taxes are:
- Germany Residential: €644 million
- Hotels in Europe: €269.9 million.
- Italy Offices: €7.4 million
The increase in net deferred tax liabilities (+€145.6 million) is mainly due to acquisitions in the fiscal year (+€27 million) in the United Kingdom, in Dublin, in Amsterdam and in Germany, and to the impact of the deferred tax liabilities relating to increases in the appraisal values of on the portfolio (+€120 million).
The impact on income is detailed in paragraph 3.2.6.7.2.
In accordance with IAS 12, deferred tax assets and liabilities are offset for each tax entity when they involve taxes paid to the same tax authority.
The non-recognised tax loss carryforwards, calculated at the standard rate, amounted to €906 million as detailed below:
Non- | Non-recognised | ||
€ thousand | recognised | tax loss | |
DTA | carryforw ards | ||
France Offices | 98 402 | 285 778 | |
Italy Offices | 15 883 | 79 417 | |
Hotels in Europe | 37 025 | 120 631 | |
Germany Residential | 9 687 | 61 212 | |
Other | 116 773 | 359 099 | |
Total | 277 770 | 906 138 | |
3.2.5.5 Short-term loans
€ thousand | 31/12/2018 | Changes in | Increase | Decrease | Transfers | 31/12/2019 | ||||||||
scope | ||||||||||||||
Short-term loans | 6,469 | 0 | 7,789 | -6,420 | 19,914 | 27,752 | ||||||||
Total | 6,469 | 0 | 7,789 | -6,420 | 19,914 | 27,752 | ||||||||
Amortisations and provisions | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||
NET TOTAL | 6,469 | 0 | 7,789 | -6,420 | 19,914 | 27,752 | ||||||||
The change in short-term loans (+€21.2 million) primarily reflects the reclassification as short term of the loan granted to the equity affiliate Lenovilla (+€20 million) and the change in accrued interest not yet due (+€1.4 million).
3.2.5.6 Inventories and work-in-progress
3.2.5.6.1. Accounting principles applicable to inventories
Inventories are intended to be sold during the normal course of business. They are recorded at acquisition price and, as applicable, are depreciated in relation to the sale value (independent appraisal value).
Inventories are composed of two classification types: Property dealers (mainly in Italy, purchase/sale) and real estate development (housing and offices). They are assessed at cost.
Financial Report at 31 December 2019
44
COVIVIO
3.2.5.6.2. | Inventories and work-in-progress | ||||||||
€M - Consolidated data | 31 Dec 19 | 31 Dec 18 | Variation | ||||||
NET | NET | ||||||||
Real estate company trading properties | 28 833 | 79 255 | -50 422 | ||||||
France Offices | 273 | 0 | 273 | ||||||
Hotels in Europe | 2 261 | 2 236 | 25 | ||||||
Germany Residential | 96 | 48 | 48 | ||||||
Miscellaneous trading properties (raw materials, g | 2 630 | 2 284 | 346 | ||||||
Extension property Germany Residential | 13 745 | 0 | 13 745 | ||||||
France Offices | 20 290 | 13 880 | 6 410 | ||||||
Italy Offices | 34 016 | 0 | 34 016 | ||||||
Germany Residential | 133 034 | 392 | 132 642 | ||||||
Real estate trading properties | 201 085 | 14 272 | 186 813 | ||||||
Total inventories and w ork-in progress | 232 548 | 95 811 | 136 737 | ||||||
The balance sheet item "Inventories and work-in-progress" groups together inventories from trading activities in Italy Offices (€26.8 million), and assets dedicated to the real estate development business for €201.1 million.
3.2.5.7 Trade receivables
3.2.5.7.1. Accounting principles applicable to trade receivables and the receivables of hotels under operation
The trade receivables are mainly comprised of receivables from simple lease transactions and receivables of hotels under operation. These items are measured at amortised cost. In the event that the recoverable value is lower than the net book value, the Group may be required to account for an impairment charge through profit or loss.
- Receivables from operating lease transactions
For operating-lease receivables, a provision for impairment is made at the first non-payment. The impairment rates applied by Covivio group are as follows:
- No impairment provision is recorded for existing or vacated tenants whose receivables are less than three months overdue,
- 50% of the total amount of receivables for existing tenants whose receivables are between three and six months overdue,
- 100% of the total amount of receivables for existing tenants whose receivables are more than six months overdue,
- 100% of the total amount of receivables for vacated tenants whose receivables are more than three months overdue.
The receivables and theoretical impairments arising from the rules above are reviewed on a case- by-case basis in order to factor in any specific situations.
- Receivables of hotels under operation
Receivables of hotels under operation are impaired according to payment deadlines.
Financial Report at 31 December 2019
45
COVIVIO
The receivables and theoretical impairments arising from the rules above are reviewed on a case-by- case basis in order to factor in any specific situations.
3.2.5.7.2. Trade receivables
€ thousand | 31/12/19 | 31/12/18 | Variation | |||
Expenses to be reinvoiced to tenants | 151.537 | 146.705 | 4.832 | |||
Rent-free periods | 44.405 | 91.743 | -47.338 | |||
Trade receivables | 209.217 | 102.078 | 107.139 | |||
Total trade receivables | 405.159 | 340.526 | 64.633 | |||
Impairment of receivables | -28.429 | -27.314 | -1.115 | |||
Net total trade receivables | 376.730 | 313.212 | 63.518 |
The change in trade receivables (+€107.1 million) is primarily due to the increase in receivables relating to real estate development (of which housing reservations +€35.2 million). There is a similar increase under tax liabilities.
The line "Change in working capital requirements on continuing operations" on the Cash Flow Statement consists of:
€ thousand | 31-Dec-19 | 31-Dec-18 |
Impact of changes in inventories and work in progress | -81,726 | 85 | ||
Impact of changes in trade & other receivables | -122,323 | -74,715 | ||
Impact of changes in trade & other payables | 128,173 | 155,699 | ||
Change in w orking capital requirements on continuing operations (including employee benefits liabilities) | -75,876 | 81,069 | ||
The impact of changes in inventories and assets in progress (-€81.7 million) is primarily related to real estate development.
3.2.5.8 Other receivables
€ thousand | 31/12/19 | 31/12/18 | Variation | |||
Government receivables | 91.145 | 72.674 | 18.471 | |||
Other receivables | 63.622 | 43.340 | 20.282 | |||
Security deposits received (short-term) | 19.620 | 36.932 | -17.312 | |||
Current accounts | 929 | 925 | 4 | |||
Total | 175.316 | 153.872 | 21.444 |
- €91.1 million in government receivables comprise mainly VAT receivables. It should be noted that this item includes €3.2 million in government receivables following the payment of tax adjustments of which we dispute the validity (see Section 3.2.2.10.4).
-
The changes in receivables on disposals is mainly from the Italy Offices (-€16 million), Germany
Residential (-€3.2 million), Other (+€3.2 million) and Hotels in Europe (-€1.3 million) segments.
Financial Report at 31 December 2019
46
COVIVIO
3.2.5.9 Cash and cash equivalents (available and restricted)
3.2.5.9.1. Accounting principles applicable to cash and cash equivalents
Cash and cash equivalents include cash, short-term deposits, and money-market funds. These are short-term, highly liquid assets that are easily convertible into a known cash amount, and for which the risk of a change in value is negligible.
3.2.5.9.2. Table of cash and cash equivalents
€ thousand | 31/12/19 | 31/12/18 | |
Money-market securities available for sale | 626.477 | 509.261 | |
Cash at bank | 675.607 | 663.189 | |
Total | 1.302.084 | 1.172.450 |
At 31 December 2019, the portfolio of money-market securities available for sale consists mainly of Level 2 standard money-market collective investment vehicles (SICAV).
- Level 1 of the portfolio corresponds to instruments whose price is listed on an active market for an identical instrument.
- Level 2 corresponds to instruments whose fair value is determined using data other than the prices mentioned for Level 1 and observable directly or indirectly (i.e. price-related data).
Covivio holds no investments subject to capital risk.
3.2.5.10 Shareholders' equity
3.2.5.10.1. Accounting principles applicable to equity
- Treasury shares
If the Group buys back its own equity instruments (treasury shares), these are deducted from shareholders' equity. No profit or loss is recognised in the income statement when Group equity capital instruments are purchased, sold, issued or cancelled.
3.2.5.10.2. Statement of changes in shareholders' equity
The statement of changes in shareholders' equity and movements in the share capital are presented in note 3.1.4.
3.2.5.11 Statement of liabilities
3.2.5.11.1. Accounting principles applicable to debt
Financial liabilities include borrowings and other interest-bearing debt.
At initial recognition, financial liabilities are measured at fair value, minus the transaction costs directly attributable to the issue of the liability. They are then recognised at amortised cost based on the effective interest rate. The effective rate includes the nominal rate and actuarial amortisation of issue expenses and issue and redemption premiums.
Financial Report at 31 December 2019
47
COVIVIO
Financial liabilities of less than one year are posted under "Current financial liabilities".
Convertible bonds (ORNANE-type) issued by Covivio group are either (i) recognised at fair value in the income statement or (ii) recognised separately as a financial liability at amortised cost and an embedded derivative measured at fair value in the income statement.
For Covivio, the fair value is determined according to the closing bond price.
Group companies hold movable and real estate assets through leases. At the lease commencement date, the tenant measures the rental liability as the present value of rents owing not yet paid, using the implied interest rate for the lease, if this rate can be easily determined, or otherwise using the incremental borrowing rate. This debt is amortised as the contracts expire and give rise to the recognition of a financial expense.
Rental liabilities are shown on the long-term or short-term rental liabilities line in the balance sheet and financial expenses in the Interest costs for rental liabilities line item.
- Derivatives and hedging instruments
The Covivio group uses derivatives to hedge its floating rate debt against interest rate risk (hedging of future cash flows).
Derivative financial instruments are recorded on the balance sheet at fair value. The fair value is calculated using valuation techniques that use mathematical calculations based on recognised financial theories and parameters that incorporate the prices of market-traded instruments. This valuation is carried out by an external service provider.
The majority of the financial instruments in Italy Offices qualify for hedge accounting as defined by IFRS
9. In this case, changes in the fair value of the effective portion of the hedge are recognised net of tax in shareholders' equity until the hedged transaction occurs. The ineffective portion is recorded in the income statement.
All derivative instruments in the other segments are therefore recognised at their fair value, and changes are reflected in the income statement.
3.2.5.11.2. | Table of debt | |||||||||||||||||||||||||||
Changes in | Change in | Other | ||||||||||||||||||||||||||
€ thousand | 31/12/2018 | Increase | Decrease | exchange | 31/12/2019 | |||||||||||||||||||||||
scope | changes | |||||||||||||||||||||||||||
rate | ||||||||||||||||||||||||||||
Bank borrow ings | 6 351 129 | 940 811 | -1 463 733 | 42 421 | 22 091 | -2 | 5 892 716 | |||||||||||||||||||||
Finance lease borrow ing | 17 099 | 0 | -3 199 | 0 | 0 | 0 | 13 900 | |||||||||||||||||||||
Other borrow ings | 143 653 | 80 003 | -79 553 | 40 260 | 13 | -4 993 | 179 383 | |||||||||||||||||||||
Treasury bills | 1 271 400 | 92 500 | 0 | 0 | 0 | 0 | 1 363 900 | |||||||||||||||||||||
Securitised loans | 3 977 | 0 | 0 | 0 | 0 | 0 | 3 977 | |||||||||||||||||||||
Non-convertible bonds | 2 963 079 | 500 375 | -226 900 | 0 | 0 | 0 | 3 236 554 | |||||||||||||||||||||
Convertible bond issue(1) | 347 249 | 0 | -147 249 | 0 | 0 | 0 | 200 000 | |||||||||||||||||||||
Subtotal interest-bearing loans | 11 097 586 | 1 613 689 | -1 920 634 | 82 681 | 22 104 | -4 995 | 10 890 430 | |||||||||||||||||||||
Accrued interest | 46 446 | 54 723 | -54 849 | 0 | 16 | 0 | 46 336 | |||||||||||||||||||||
Deferral of loan expenses | -85 703 | 24 227 | -8 182 | 0 | 27 | -118 | -69 749 | |||||||||||||||||||||
Creditor banks | 1 398 | 0 | 0 | -245 | 3 | 19 392 | 20 548 | |||||||||||||||||||||
Total borrow ings (LT/ST) excl. Fair Value of Ornane-type bonds | 11 059 727 | 1 692 639 | -1 983 666 | 82 436 | 22 150 | 14 280 | 10 887 566 | |||||||||||||||||||||
of w hich Long-term | 9 216 624 | 9 071 820 | ||||||||||||||||||||||||||
of w hich Short-term | 1 843 103 | 1 815 746 | ||||||||||||||||||||||||||
Valuation of financial instruments | 169 242 | 0 | 0 | 0 | 0 | 115 678 | 284 920 | |||||||||||||||||||||
Convertible bond derivatives | 18 803 | 0 | 0 | 0 | 0 | -15 367 | 3 436 | |||||||||||||||||||||
Total derivatives | 188 045 | 0 | 0 | 0 | 0 | 100 311 | 288 356 | |||||||||||||||||||||
of w hich Assets | -46 952 | -77 486 | ||||||||||||||||||||||||||
of w hich Liabilities | 234 997 | 365 842 | ||||||||||||||||||||||||||
Total bank debt | 11 247 772 | 1 692 639 | -1 983 666 | 82 436 | 22 150 | 114 591 | 11 175 922 |
- Convertible bond movements are presented in 3.2.5.11.4 - Convertible bonds.
New financings taken out during the fiscal year are presented in 3.2.2.2 - Liquidity risk and in 3.2.5.11.3 - Bank borrowings.
Financial Report at 31 December 2019
48
COVIVIO
Debt by type as at 31 December 2019 in €M:
10,890
The "Proceeds related to new borrowings" line item of the statement of Cash Flows (+€1,612.7 million) refers mainly to:
- increases in interest-bearing borrowings (+€1,613.6 million)
- increases in rental liabilities (+€7.5 million)
- less new debt issuance costs (-€8.2 million).
The "Repayments of borrowings" line item of the Statement of Cash Flows (-€1,935.5 million) corresponds mainly to decreases in interest-bearing borrowings (-€1,920.6 million) and reductions in rental liabilities (-€14.9 million).
3.2.5.11.3. Bank borrowings
The table below outlines the characteristics of the borrowings taken out by Covivio group and the amount of the associated guarantees (principal amount over €100 million):
Financial Report at 31 December 2019
49
COVIVIO
Appraisal value | Outstanding | Nominal | |||||
Outstanding debt | debt | Date of | |||||
in € thousand | Debt | At 31 December | Initial | Maturity | |||
(> or < €100m) | as at 31 | signature | |||||
2019 (1) | |||||||
December 2019 | |||||||
France Offices | €280M (2015) and €145M (2015) - Tour CB21 and Carré | 29/07/15 | 280,000 and | 29/07/2025 and | |||
#REF! | 407 300 | and | |||||
Suffren | 145,000 | 30/11/2023 | |||||
01/12/15 | |||||||
€167.5M (2015) - DS Campus | #REF! | 157 869 | 23/03/15 | 167 500 | 20/04/23 | ||
€300M (2016) - Orange | #REF! | 300 000 | 18/02/16 | 300 000 | 30/06/28 | ||
> €100m | 2 251 500 | 865 169 | |||||
< €100m | 354 120 | 166 633 | |||||
Total France Offices | 2 605 620 | 1 031 802 | |||||
Italy Offices | €760M (2016) - Central | 643 709 | 15/09/16 | 652 732 | 14/09/24 | ||
> €100m | 1 414 296 | 643 709 | |||||
Total Italy Offices | 1 414 296 | 643 709 | |||||
Hotels in Europe | €447 M (2013) | 172 275 | 25/10/13 | 447 000 | 31/01/23 | ||
€255M (2012)- Mortgage bond | 186 553 | 14/11/12 | 255 000 | 16/11/21 | |||
€278M (2017) - Rocca | 220 085 | 29/03/17 | 277 188 | 29/03/25 | |||
€290M (2017) - OPCI B2 HI (B&B) | 126 566 | 10/05/17 | 290 000 | 10/05/24 | |||
£400M (2018)- Rocky | 467 965 | 24/07/18 | 475 145 | 24/07/26 | |||
€130M (2019) - Ref1 | 129 626 | 04/04/19 | 130 000 | 03/04/26 | |||
> €100m | 2 996 442 | 1 303 070 | |||||
< €100m | 1 363 704 | 519 320 | |||||
Total Hotels Europe | 4 360 145 | 1 822 390 | |||||
Germany Residential | Lyndon Immeo 01 | 107 957 | 12/12/11 | 140 000 | 29/01/27 | ||
Cornerstone | 149 823 | 01/10/14 | 136 737 | 30/06/25 | |||
Refinancing Wohnbau/Dümpten/Aurélia/Duomo | 108 828 | 20/01/15 | 150 000 | 30/01/25 | |||
Refinancing Amadeus/Herbstlaub/Valore/Valartis/Sunflow er | 147 940 | 28/10/15 | 176 842 | 30/04/26 | |||
Quadriga | 177 232 | 16/06/15 | 211 540 | 31/03/26 | |||
Golddust | 109 545 | 23/03/16 | 115 000 | 30/04/27 | |||
Lego | 170 103 | 24/06/16 | 195 003 | 30/09/24 | |||
Lyndon Immeo 02 | 169 885 | 26/01/17 | 230 000 | 14/03/22 | |||
Refinancing Indigo, Prime | 259 188 | 09/07/19 | 260 000 | 30/09/29 | |||
Refinancing KG1 | 125 000 | 20/09/19 | 125 000 | 30/09/29 | |||
> €100m | 3 911 707 | 1 525 501 | |||||
< €100m | 2 244 623 | 888 408 | |||||
Total German Residential | 6 156 331 | 2 413 909 | |||||
TOTAL | 14 536 392 | 5 911 809 | |||||
COLLATERALISED | |||||||
France Offices | Treasury bills BT/BMTN | 1 363 900 | |||||
€180M (2013) - Private investment | 180 000 | 20/03/13 | 180 000 | 30/04/20 | |||
€500M (2016)- Green bond | 500 000 | 20/05/16 | 500 000 | 20/05/26 | |||
€500M (2017)- Bonds | 595 000 | 21/06/17 | 500 000 | 21/06/27 | |||
€500M (2019)- Green bond | 500 000 | 17/09/19 | 500 000 | 17/09/31 | |||
> €100m | 3 138 900 | ||||||
Total France Offices | 3 651 151 | 3 138 900 | |||||
Italy Offices | €500M (2014)- Bonds | 125 000 | 30/03/15 | 125 000 | 30/03/22 | ||
€200M (2015) - Convertible bonds | 200 000 | 03/08/15 | 200 000 | 31/01/21 | |||
€300M (2017) - Bonds | 300 000 | 17/10/17 | 300 000 | 17/10/24 | |||
€300M (2018) - Bonds | 300 000 | 20/02/18 | 300 000 | 20/02/28 | |||
> €100m | 2 317 591 | 925 000 | |||||
< €100m | 3 977 | ||||||
Total Italy Offices | 2 317 591 | 928 977 | |||||
Hotels in Europe | €200M (2015) - Private investment | 200 000 | 29/05/15 | 200 000 | 29/05/23 | ||
€350M (2018) - Edinburgh | 350 000 | 24/09/18 | 350 000 | 24/09/25 | |||
> €100m | 550 000 | ||||||
< €100m | 181 429 | ||||||
Total Hotels Europe | 1 782 296 | 731 429 | |||||
Germany Residential | < €100m | Total German Residential | 361 884 | ||||
Other | < €100m | France Residential | 25 905 | 0 | |||
Car parks | 50 218 | 0 | |||||
Total Other | 76 123 | 0 | |||||
TOTAL | 8 189 044 | 4 799 306 | |||||
UNENCUMBERED | |||||||
Other payables | 179 315 | ||||||
Overall Total | 22 725 436 | 10 890 430 | |||||
(1) The portfolio includes the fair value of occupied assets but does not include real estate inventories (trading, development) and the share of fair value of consolidated assets accounted for | |||||||
by the equity method. | E |
The borrowings are valued after their initial recognition at cost, amortised based on the effective interest rate.
Financial Report at 31 December 2019
50
COVIVIO
Breakdown of borrowings at their nominal value according to the time left to maturity and by interest- rate type:
Deadline | Balance at | Maturity | Balance at 31 | |||||||
Balance as | 31 | December | ||||||||
in € thousand | less than 1 | from 2 to 5 | ||||||||
at 31/12/2019 | December | 2024 | ||||||||
year | years | |||||||||
2020 | (over 5 years) | |||||||||
Fixed-rate financial liabilities | 6,415,942 | 1,586,477 | 4,829,465 | 1,620,026 | 3,209,439 | |||||
France Offices - Bank borrow ings | 146,606 | 1,793 | 144,813 | 94,813 | 50,000 | |||||
France Offices - Others | 159,876 | 17,461 | 142,415 | 22,385 | 120,030 | |||||
Italy Offices - Bank borrow ings | 0 | 0 | 0 | 0 | 0 | |||||
Italy Offices - Convertible bonds* | 200,000 | 0 | 200,000 | 200,000 | 0 | |||||
Hotels in Europe - Bank borrow ings | 100,348 | 1,818 | 98,530 | 98,530 | 0 | |||||
Hotels in Europe - Others | 19,437 | 0 | 19,437 | 19,264 | 173 | |||||
German Residential - Bank borrow ings | 1,185,174 | 17,505 | 1,167,669 | 373,473 | 794,196 | |||||
Germany Residential - Others | 70 | 22 | 48 | 8 | 40 | |||||
Total borrow ings and convertible bonds | 1,811,512 | 38,600 | 1,772,912 | 808,473 | 964,439 | |||||
France Offices - Bonds | 1,775,000 | 180,000 | 1,595,000 | 0 | 1,595,000 | |||||
France Offices - Treasury bills | 1,363,900 | 1,363,900 | 0 | 0 | 0 | |||||
Italy Offices - Bonds | 725,000 | 0 | 725,000 | 425,000 | 300,000 | |||||
Italy Offices - Securitisation | 3,977 | 3,977 | 0 | 0 | 0 | |||||
Hotels in Europe - Bonds | 736,553 | 0 | 736,553 | 386,553 | 350,000 | |||||
Total debts represented by securities | 4,604,430 | 1,547,877 | 3,056,553 | 811,553 | 2,245,000 | |||||
Floating-rate financial liabilities | 4,474,489 | 173,643 | 4,300,846 | 1,660,609 | 2,640,237 | |||||
France Offices - Bank borrow ings | 885,196 | 94,021 | 791,175 | 254,075 | 537,100 | |||||
Italy Offices - Bank borrow ings | 643,709 | 10,420 | 633,289 | 633,289 | 0 | |||||
Hotels in Europe - Bank borrow ings | 1,716,917 | 20,362 | 1,696,555 | 530,698 | 1,165,857 | |||||
German Residential - Bank borrow ings | 1,228,667 | 48,840 | 1,179,827 | 242,547 | 937,280 | |||||
Total borrow ings and convertible bonds | 4,474,489 | 173,643 | 4,300,846 | 1,660,609 | 2,640,237 | |||||
France Offices - Treasury bills | 0 | 0 | 0 | 0 | ||||||
Total debts represented by securities | 0 | 0 | 0 | 0 | 0 | |||||
Total | 10,890,430 | 1,760,119 | 9,130,311 | 3,280,635 | 5,849,676 |
* The ORNANE bonds are presented at nominal value. Debt by operating segment as at 31 December 2019 in €M:
10,890
3.2.5.11.4. Convertible bonds France Offices:
The features of the convertible bond issue are as follows:
Ornane | ||
Features | France | |
Offices | ||
Issue date | 20-nov.-13 | |
Issue amount (€M) | 345 | |
Issue price (€) | 84,73 | |
Conversion rate | 1,14 | |
Nominal rate | 0,88% | |
Maturity | 1-avr.-19 | |
Number of convertible bonds issued | 4 071 757 | |
Number of convertible bonds as at 31 December 2018 | 1 737 861 | |
Number of bonds converted into Covivio shares | -1 670 419 | |
Number of bonds redeemed on 1 April 2019 | -67 442 | |
Number of convertible bonds at 31 December 2019 | 0 |
Financial Report at 31 December 2019
51
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Over the course of 2019, 1,670,419 bonds were converted and 67,442 bonds redeemed at maturity. Accordingly, the balance of 1,737,861 bonds outstanding at 31 December 2018 were redeemed for an amount of €147.3 million plus a conversion premium of €32 million (including €27.2 million through the issuance of shares and €4.8 million in cash).
Italy Offices:
The Italy Offices ORNANE-type bonds are hybrid instruments and are recognised as a Host contract (debt at amortised cost) and as an embedded derivative (financial instrument at fair value through the income statement).
At 31 December 2019, the Ornane derivative maturing in 2021 of Covivio in Italy was valued at €7.6 million.
The features of the convertible bond issue are as follows:
Features | Ornane | |
Italy Offices | ||
Issue date | août-15 | |
Issue amount (€M) | 200 | |
Issue price (€) | 100 | |
Conversion Price | 112,130 | |
Nominal rate | 0,875% | |
Maturity | février-21 | |
Number of convertible bonds issued | 2 000 000 | |
Number of convertible bonds as at 31 December 2018 | 2 000 000 | |
Number of convertible bonds as at 31 December 2019 | 2 000 000 | |
Number of potential shares | 1 783 647 |
3.2.5.11.5. Derivatives
Derivative instruments consist mainly of rate hedging instruments put in place as part of the Group's interest rate hedging policy.
Fair value of net derivative instruments:
Share premium | ||||||||||||||
Consolidation | account - | |||||||||||||
€ thousand | 31 Dec 18 | scope - change | Share premium | Impact on P&L | Impact on | 31 Dec 19 | ||||||||
Net | in integration | account | shareholders' equity | Net | ||||||||||
method | Restructuring | |||||||||||||
balances | ||||||||||||||
France Offices | -120 287 | 61 771 | -82 708 | -141 224 | ||||||||||
ORNANE-type bonds France Offices | -19 540 | 32 019 | -12 479 | |||||||||||
Italy Offices | -2 930 | -8 655 | -9 260 | -20 845 | ||||||||||
ORNANE-type bonds Italy Offices | 737 | -4 173 | -3 436 | |||||||||||
Hotels in Europe | -30 749 | 6 730 | -51 412 | -13 595 | -89 026 | |||||||||
Germany Residential | -15 276 | 4 123 | -22 672 | -33 825 | ||||||||||
TOTAL | -188 045 | 32 019 | 72 624 | -182 099 | -22 855 | -288 356 | ||||||||
Cash instruments | - Liabilities | -365 842 | ||||||||||||
Cash instruments | - Assets | 77 486 | ||||||||||||
The total impact of the value adjustments on the derivatives on the income statement was -€196.4 million.
It comprises mainly changes in the value of cash instruments (-€165.4 million) and changes in the value of ORNANE bonds (-€16.7 million), as well as the recycling through profit or loss of financial instruments eligible for hedge accounting in Italy Offices following the redemption of the underlying assets (-€14.3 million, with an offset of +€14.3 million in shareholders' equity). In accordance with IFRS 13, the fair values include the counterparty default risk (€5.3 million).
The impact on equity of -€13.6 million on the Hotels in Europe line corresponds to the change in the exchange rate of Cross Currency Swaps used to hedge our investments in the United Kingdoms
Financial Report at 31 December 2019
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The "Unrealised gains and losses relating to changes in fair value" line of the Statement of Cash Flows (-€807.3 million), which makes it possible to calculate cash flows, mainly incorporates the impact of changes in the value of cash instruments, ORNANE bonds and the transfer to income of financial instruments in Italy Offices that qualify for hedge accounting following the repayment of the underlying (+€196.3 million), and the change in the value of the portfolio (-€1,003.6 million).
Breakdown of hedging instruments by maturity of notional values
€ thousand | At | less than | from 1 to 5 | over | ||||||||||||
31/12/2019 | 1 year | years | 5 years | |||||||||||||
Fixed hedge | ||||||||||||||||
Fixed rate payer swap | 5.551.237 | -188.794 | 1.312.213 | 4.427.818 | ||||||||||||
Fixed rate receiver swap | 1.744.415 | -880.000 | 941.071 | 1.683.344 | ||||||||||||
Total SWAP | 3.806.822 | 691.206 | 371.142 | 2.744.474 | ||||||||||||
Optional hedge | ||||||||||||||||
CAP purchase | 603.085 | 47.320 | 437.810 | 117.955 | ||||||||||||
FLOOR purchase | 53.256 | 732 | 2.926 | 49.598 | ||||||||||||
FLOOR sale | 51.000 | 0 | 18.000 | 33.000 | ||||||||||||
Total | 8.002.993 | -1.020.742 | 2.712.020 | 6.311.715 |
Hedge balance as at 31 December 2019
€ thousand | Fixed rate | Floating rate | ||
Borrow ings and financial payables | 6,415,942 | 4,495,037 | ||
(including creditor banks) | ||||
Net financial liabilities before hedging | 6,415,942 | 4,495,037 | ||
Fixed hedge - Sw aps | -3,806,822 | |||
Optional hedge - Caps | -603,085 | |||
Total hedges | -4,409,907 | |||
Net financial liabilities after hedging | 6,415,942 | 85,130 | ||
3.2.5.11.6. Rental liabilities
The balance of rental liabilities as at 31 December 2019 stood at €269.1 million, up from €163.7 million at 31 December 2018, an increase of €105.4 million. This increase was mainly due to the recognition of a lease liability of €15.7 million on long-term leases conferring ad rem rights for two hotels acquired in the United Kingdom due to their indexation and their duration of more than one hundred years, and €89.4 million following the first-time application of IFRS 16 (mainly long-term leases conferring ad rem rights for assets not measured at fair value and car park leases).
At 31 December 2019, the interest expense relating to these rental liabilities was €13.5 million.
Breakdown of rental liabilities by maturity
€ thousand | At 31 Dec | less than | from 1 to 5 | from 5 to | over | |||||||
2019 | 1 year | years | 25 years | 25 years | ||||||||
Rental liabilities | 269,092 | 13,797 | 28,021 | 31,079 | 196,195 |
Financial Report at 31 December 2019
53
COVIVIO
3.2.5.11.7. Banking covenants
Excluding debts raised without recourse to the Group's real estate companies, the debts of Covivio and its subsidiaries generally include bank covenants (ICR and LTV) applying to the borrower's consolidated financial statements. If these covenants are breached, early debt repayment may be triggered. These covenants are established in Group Share for Covivio and for Covivio Hotels.
With respect to Covivio Immobilien (Germany Residential), for which almost all of the debt raised is "non-recourse" debt, portfolio financings do not contain any consolidated covenants.
The most restrictive consolidated LTV covenants amounted to 60% for Covivio and Covivio Hotels at 31 December 2019.
The most restrictive ICR consolidated covenants applicable to the REITs are as follows:
- for Covivio: 200%
- for Covivio Hotels: 200%
Concerning Covivio, corporate credit facilities usually include an asset-secured debt covenant (100% scope), the cap on which is set at 25% and which measures the ratio of secured debt (or debt with guarantees of any kind) to asset value.
Covivio Group's banking covenants were fully complied with at 31 December 2019, as they stood at 41.2% for Group Share LTV, 573% for Group Share ICR, and 4.6% for the asset-secured debt ratio.
No financing has an accelerated payment clause contingent on Covivio or Covivio Hotels' rating, which is currently BBB+, stable outlook (Standard & Poor's rating).
Consolidated LTV | Company | Scope | Threshold | Ratio | ||||||
€300M (2016) | - Orange | Covivio | France Offices | ≤ 60% | In compliance | |||||
€255M | (2012)- Mortgage bond | Covivio Hotels | Hotels in Europe | ≤ 65% | In compliance | |||||
€447M | (2013) | - REF II | Covivio Hotels | Hotels in Europe | < 60% | In compliance | ||||
€200M | (2015) | - Private investment | Covivio Hotels | Hotels in Europe | ≤ 60% | In compliance | ||||
€279 M (2017) - Roca | Covivio Hotels | Hotels in Europe | < 60% | In compliance | ||||||
£400M | (2018)- Rocky | Covivio Hotels | Hotels in Europe | < 60% | In compliance |
Consolidated ICR | Company | Scope | Threshold | Ratio | ||||||
€300M (2016) | - Orange | Covivio | France Offices | ≥ 200% | In compliance | |||||
€255M | (2012)- Mortgage bond | Covivio Hotels | Hotels in Europe | ≥ 200% | In compliance | |||||
€447M | (2013) | - REF II | Covivio Hotels | Hotels in Europe | > 200% | In compliance | ||||
€200M | (2015) | - Private investment | Covivio Hotels | Hotels in Europe | ≥ 200% | In compliance | ||||
€279 M (2017) - Roca | Covivio Hotels | Hotels in Europe | > 200% | In compliance | ||||||
£400M | (2018)- Rocky | Covivio Hotels | Hotels in Europe | > 200% | In compliance |
As part of the mortgage financing, these covenants, moreover, most often include specific covenants for the scopes financed. The purpose of these covenants, generally scope LTV, is mainly to limit the use of financing lines by correlating it with the value of the underlying assets provided as collateral.
3.2.5.12 Provisions for risks and charges
3.2.5.12.1. Accounting principles applicable to provisions for contingencies and losses
- Retirement commitments
The retirement commitments are recognised in accordance with revised IAS 19. Provisions are recorded on the balance sheet for the liabilities arising from defined benefits pension schemes for existing staff at the reporting date. They are calculated according to the projected credit units method based on valuations made at each reporting date. The past service cost corresponds to the benefits granted, either when the Company adopts a new defined benefits scheme, or when it changes the level of
Financial Report at 31 December 2019
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COVIVIO
benefits of an existing scheme. When new benefits are granted upon adoption of a new scheme or change in an existing scheme, the past service cost is immediately recognised in the income statement.
Conversely, when the adoption of a new scheme or change in an existing scheme gives rise to the vesting of benefits after its implementation date, the past service costs are recognised as an expense on a straight-line basis over the average remaining period until the benefits become fully vested. Actuarial gains and losses result from the effects of changes in actuarial assumptions and experience adjustments (differences between actuarial assumptions and what has actually occurred). The change in these actuarial gains and losses is recognised in "Other items" of comprehensive income. The expense recognised in operating income includes the cost of the services rendered during the year, amortisation of past service costs and the effects of any reduction or liquidation of the scheme; the cost of discounting is recognised in net financial income. The valuations are made taking into account the Collective Agreements applicable in each country and in keeping with the various local regulations. For each employee, the retirement age is the social security eligibility age.
3.2.5.12.2. Provisions
Change in | Reversal of provision | ||||||||||
€ thousand | 31/12/2018 | Scope | Charges | Transfer | actuarial | 31/12/2019 | |||||
change | gains and | Used | Unused | ||||||||
losses | |||||||||||
Other provisions for disputes | 2,818 | 0 | 465 | 0 | -316 | -240 | 2,727 | ||||
Provisions for guarantees | 0 | 0 | 0 | 0 | 0 | 0 | |||||
Provisions for taxes | 11,348 | -199 | 264 | -3,029 | -13 | -46 | 8,325 | ||||
Provisions for renovating sites | 2,566 | 0 | 0 | 0 | 0 | 0 | 2,566 | ||||
Other provisions | 5,878 | 0 | 270 | 0 | -1,974 | -347 | 3,827 | ||||
Sub-total provisions -current liabilities | 22,610 | -199 | 999 | -3,029 | 0 | -2,303 | -633 | 17,445 | |||
Provisions for retirement benefit | 47,975 | 0 | 1,982 | 1 | 6,844 | -1,770 | -114 | 54,918 | |||
Provisions for long-service aw ards | 1,273 | 0 | 183 | -2 | -8 | 1,446 | |||||
Sub-total provisions -Non-current liabilities | 49,248 | 0 | 2,165 | 1 | 6,844 | -1,772 | -122 | 56,364 | |||
Total provisions | 71,858 | -199 | 3,164 | -3,028 | 6,844 | -4,075 | -755 | 73,809 |
The provisions for litigation are broken down into €2.1 million for France Offices, €0.3 million for Italy Offices, €0.3 million for Hotels in Europe.
Provisions for taxes concern Hotels in Europe for €7.7 million (tax risks on the German portfolio of the Operating Properties business) and Italy Offices for €0.6 million.
The provision for retirement indemnities totalled €54,9 million as at 31 December 2019 (of which €51 million for Germany Residential).
The main actuarial assumptions used to estimate the commitments in France were as follows:
- Rate of pay increase: managers 4%, non-managers 3%
- Discount rate: 0.44% (TEC 10 n +50 bps).
The main actuarial assumptions used to estimate the commitments in Germany were as follows:
Assumptions used in calculating provisions for retirement benefit obligations in
Germany
Discount rate
Annual wage growth
Rate of social security charges
IMPACT OF PROVISIONS FOR RETIREMENT BENEFITS ON THE INCOME STATEMENT (in €K)
31/12/19 | 31/12/18 | |
2,1% | 2,1% | |
2,5% | 2,5% | |
1%/2% | 1%/2% |
Cost of services rendered during the year | -541 | -766 | ||
Financial cost | -872 | -896 | ||
Effects of plan reductions/settlements | 0 | -348 | ||
TOTAL IMPACT ON THE INCOME STATEMENT | -1.413 | -2.010 |
Financial Report at 31 December 2019
55
COVIVIO
3.2.5.13 Other short-term liabilities
€ thousand | 31/12/2019 | 31/12/2018 | Variation | |||
Social debt | 33,408 | 28,035 | 5,373 | |||
Tax payables | 136,365 | 56,148 | 80,217 | |||
Current accounts - liabilities | 173 | 169 | 5 | |||
Dividends to be paid | 44 | 40 | 4 | |||
Other payables | 41,847 | 65,030 | -23,184 | |||
Total | 211,837 | 149,624 | 62,214 |
- The change in tax liabilities of +€80 million is mainly linked to the VAT collected in relation to real estate development (+€61 million).
- The -€23.2 million change in other debt includes changes in advances received on asset disposals (+€14.9 million) and advances paid on work on assets under development (-€42 million) and notarial debts related to acquisitions (+€3.6 million).
3.2.5.14 Recognition of financial assets and liabilities
Amount given in the assessed | |||||||
Statement of Financial Position: | |||||||
Relevant item | 31/12/2019 | ||||||
Categories according to IFRS 9 | At the Fair | At the Fair | |||||
in the statement of financial position | Net | ||||||
value | |||||||
Amortised | value through | ||||||
through | |||||||
cost | shareholders' | ||||||
income | |||||||
equity | |||||||
statement | |||||||
Assets at amortised cost | Non-current financial Assets | 44 104 | 44 104 | ||||
Loans and receivables | Non-current financial Assets | 214 955 | 214 955 | ||||
Total non-current financial Assets | 259 060 | 259 060 | |||||
Loans and receivables | Trade receivables(1) | 332 325 | 332 325 | ||||
Assets at fair value through profit or loss | Derivatives at fair value through profit or loss | 77 486 | 77 486 | ||||
Assets at fair value through profit or loss | Cash and cash equivalents | 626 477 | 626 477 |
Fair Value
(in €K)
44 104
- 955
- 060
- 325
- 486
- 477
Total Financial Assets | 1 295 347 | 591 384 | 0 | 703 963 | 1 295 347 | ||||||
Liabilities at fair value through profit or loss | Ornane-type Bonds | 203 436 | 195 853 | 7 583 | 205 138 | ||||||
Liabilities at amortised cost | Financial payables | 10 690 430 | 10 690 430 | 10 837 882 | (2) | ||||||
Liabilities at fair value through profit or loss | Financial instruments (excluding ORNANE) | 362 406 | 8 155 | 354 251 | 362 406 | ||||||
Liabilities at amortised cost | Security deposits | 24 801 | 24 801 | 24 801 | |||||||
Liabilities at amortised cost | Trade payables | 228 811 | 228 811 | 228 811 | |||||||
Total financial liabilities | 11 509 885 | 11 139 896 | 8 155 | 361 834 | 11 659 039 | |
(1) | Excluding incentive | |||||
(2) | The difference betw een the net book value and the fair value of the fixed rate debt is €147,452k. | |||||
Breakdown of financial assets and liabilities at fair value:
The table below presents the financial instruments at fair value broken down by level:
- Level 1: financial instruments listed in an active market,
- Level 2: financial instruments whose fair value is evaluated through comparisons with observable market transactions on similar instruments or based on an evaluation method whose variables include only observable market data,
- Level 3: financial instruments whose fair value is determined entirely or partly by using an evaluation method using an estimate that is not based on market transaction prices on similar instruments.
€ thousand | Level 1 | Level 2 | Level 3 | Total | ||||||
Derivatives at fair value through profit or loss | 77,486 | 77,486 | ||||||||
Money-market securities available for sale | 626,477 | 626,477 | ||||||||
Total financial Assets | 0 | 703,963 | 0 | 703,963 | ||||||
Ornane | 205,138 | 205,138 | ||||||||
Derivatives at fair value through profit or loss | 362,406 | 362,406 | ||||||||
Total financial Liabilities | 205,138 | 362,406 | 0 | 567,544 | ||||||
Financial Report at 31 December 2019
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COVIVIO
3.2.6 NOTES TO THE STATEMENT OF NET INCOME
3.2.6.1 Accounting principles
- Rental income
According to the presentation of the income statement, rental income is treated as revenues. Revenues from hotels under management and Flex Office, car park receipts, property development, and services are now shown in specific lines of the statement of net income, after net rental income.
As a general rule, invoicing is quarterly. The rental income of investment properties is recognised on a straight-line basis over the term of the ongoing leases. Any benefits granted to tenants (rent-free periods, step rental leases) are amortised on a straight-line basis over the duration of the lease agreement, in compliance with IFRS 16, and offset against investment properties.
- Share-basedpayments (IFRS 2)
The application of IFRS 2 has resulted in the recognition of an expense for benefits granted to employees as share-based payments. This expense is recorded in income for the year under overheads.
Free shares are valued by Covivio at the date of their award according to a binomial valuation model. This model takes into account the features of the plan (price and exercise period), market data upon award (risk free rate, share price, volatility and expected dividends), and assumptions of beneficiary behaviour. The benefits thus granted are recognised as expenses over the vesting period, and offset by an increase in the consolidated reserves.
3.2.6.2 Operating income
3.2.6.2.1. Rental revenues
Rental income amounted to €961.3 million as at 31 December 2019, versus €955.9 million at 31 December 2018, up by €5.4 million.
€ thousand | 31/12/2019 | 31/12/2018 | Change | Change as a % | |||
in € thousand | |||||||
France Offices | 257.275 | 271.113 | -13.838 | -5,1% | |||
Italy Offices | 201.817 | 205.760 | -3.943 | -1,9% | |||
Total Offices rental income | 459.092 | 476.873 | -17.781 | -3,7% | |||
Hotels in Europe | 245.418 | 229.921 | 15.496 | 6,7% | |||
Germany Residential | 251.798 | 241.162 | 10.636 | 4,4% | |||
Other (including France | |||||||
Residential) | 5.012 | 7.935 | -2.923 | -36,8% | |||
Total rental income | 961.320 | 955.891 | 5.428 | 0,6% | |||
The rental income consists of rental and similar income (e.g. occupancy fees and entry rights) invoiced for investment properties during the period. Rent exemptions, step rental schemes and entry rights are spread out over the fixed term of the lease.
Financial Report at 31 December 2019
57
COVIVIO
The changes in rents by asset-type break down as follows:
- A decrease in rental income from France Offices (-5.1%), mainly due to the impact of asset disposals (-€11.7 million) and vacancies (-€11.8 million) fuelling the development pipeline, partially offset by the delivery of assets under development in 2018 and 2019 (+€6.5 million) and reletting/indexing (+€7.7 million),
- A decrease in rental income from Italy Offices (-1.9%) due to disposals (-€16.2 million), reduced by the impact of acquisitions (+€3.3 million) as well as deliveries (+€7.4 million),
- An increase in rental income from Hotels in Europe (+6.7%), mainly due to the impact of acquisitions (+€35.7 million), indexing (+€1.5 million) and deliveries of assets under development (+€3.9 million) minus the impact of disposals (-€26.1 million),
- An increase in rental income from Germany Residential (+4.4%) following acquisitions (+€9.7 million), and reletting/indexing (+€8.6 million), mitigated by disposals (-€7.9 million),
- A 36.8% decrease in the Other (France Residential) segment due to disposals and assets made vacant for their disposal.
Note that the tenant Accor accounts for 10% of total revenues.
Rental income for the year 2019 by Operating segment in €M:
Others
5 - 1%
France Offices
257 - 27%
Germany
Residential
252 - 26%
961
Hotels in Europe | |
245 - 26% | Italy offices |
202 - 21% |
3.2.6.2.2. | Property costs | |||||||||||
Change | Change as a | |||||||||||
€ thousand | 31/12/2019 | 31/12/2018 | ||||||||||
in € thousand | % | |||||||||||
Rental income | 961 320 | 955 891 | 5 428 | 0,6% | ||||||||
Rebillable expenses | -129 696 | -132 840 | 3 144 | -2,4% | ||||||||
Income from rebilling of expenses | 129 696 | 132 840 | -3 144 | -2,4% | ||||||||
Unrecovered rental costs | -37 007 | -31 945 | -5 062 | 15,8% | ||||||||
Expenses on properties | -30 951 | -36 915 | 5 965 | -16,2% | ||||||||
Net losses on unrecoverable receivables | -4 550 | -3 200 | -1 350 | 42,2% | ||||||||
Net rental income | 888 813 | 883 831 | 4 982 | 0,6% | ||||||||
Rate for property expenses | -7,5% | -7,5% | ||||||||||
- Unrecovered rental costs: These expenses correspond to charges on vacant premises.
Financial Report at 31 December 2019
58
COVIVIO
- Expenses on properties: these consist of rental expenses that are borne by the owner, expenses related to works and expenses related to property management.
- Net losses on unrecoverable receivables: these consist of losses on unrecoverable receivables and net provisions on doubtful receivables. The fiscal year 2019 was impacted by the bankruptcy of the tenant Sequana in our Office building located in Boulogne (€1.6 million in unpaid receivables written off).
3.2.6.2.3. EBITDA from hotel operating activity and Flex Office and Income from other activities
Change | Change as a | |||||||||||||
€ thousand | 31/12/2019 | 31/12/2018 | in € | |||||||||||
% | ||||||||||||||
thousand | ||||||||||||||
Revenues from hotel operating activity and Flex Office | 243,223 | 257,308 | -14,085 | -5.5% | ||||||||||
Operating expenses of hotel operating activity and Flex Office | -168,170 | -181,477 | 13,307 | -7.3% | ||||||||||
EBITDA from hotel operating activity and Flex Office | 75,053 | 75,831 | -778 | -1.0% | ||||||||||
Income from other activities | 47,650 | 29,213 | 18,437 | 63.1% | ||||||||||
Expenses of other activities | -30,825 | -24,421 | -6,404 | 26.2% | ||||||||||
Income from other activities | 16,825 | 4,792 | 12,033 | 251% |
- EBITDA from hotel operating activity and Flex Office consists of the EBITDA of the hotels under operation (+€69.9 million) and the income from Flex Office (+€5.1 million). The €6.8 million reduction in EBITDA from hotel operating activity is related to the disposal of the Westin Dresden and the period of works on the Nice Méridien. This decrease is offset by the ramp-up of Flex
Office activity, which is up by nearly €6 million compared to 2018. - Income from other activities rose by €12.0 million, primarily as a result of the increase in income from the property development business line in Germany (+€6.2 million) and in income from car parks (+€5.8 million). The rise in income from car parks reflects mainly the transfer of rental expenses (+€6.4 million) to depreciation and amortisation charges and interest costs for rental liabilities, following the application of IFRS 16.
3.2.6.2.4. Net cost of operations
These consist of head office expenses and operating costs net of revenues from management and administration activities.
Change | Change as a | |||||||
€ thousand | 31/12/2019 | 31/12/2018 | in € | |||||
% | ||||||||
thousand | ||||||||
Management and administration income | 23,018 | 20,042 | 2,976 | 14.8% | ||||
Business expenses | -5,648 | -6,140 | 492 | -8.0% | ||||
Overheads | -127,409 | -128,393 | 984 | -0.8% | ||||
Development costs (not capitalised) | -1,819 | -585 | -1,234 | N/A | ||||
Total Net operating costs | -111,859 | -115,076 | 3,217 | -2.8% | ||||
Net operating costs are down €3.2 million. They benefited from the €3.0 million increase in management revenue, driven by the property management activity for third parties, conducted by Revalo in Italy (+€1.0 million) and the billing of finder's fee commissions (+€3.9 million).
Overheads include staff costs, which are described under section 3.2.7.1.1.
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3.2.6.2.5. Depreciation of operating assets and net change in provisions and other
€ thousand | 31/12/2019 | 31/12/2018 | Change in € | |||
thousand | ||||||
Depreciation of operating assets | -65 004 | -60 120 | -4 884 | |||
Net change in provisions and other | 12 830 | 6 277 | 6 553 | |||
The €4.9 million increase in the Depreciation of operating assets item mainly reflects the impact of the depreciation of right-of-use assets for operating properties and other tangible fixed assets in accordance with IFRS 16 (-€12.7 million).
The Net change in provisions and other item includes the rebilling of long-term leases conferring ad rem rights to tenants (+€9.2 million in 2019 versus €3.7 million in 2018) when the rental expense is restated. Indeed, in order not to distort the property expense ratio and following the cancellation of the rental expense in accordance with IFRS 16, the income from rebilling to tenants is no longer presented in the line item "Expenses on properties" but as a net change in provisions and other.
3.2.6.3 Income from asset disposals
Change | Change as a | |||||||||||||
€ thousand | 31/12/2019 | 31/12/2018 | in € | |||||||||||
% | ||||||||||||||
thousand | ||||||||||||||
Income from asset disposals (1) | 1 257 471 | 1 291 901 | -34 430 | -2,7% | ||||||||||
Carrying value of investment properties sold (2) | -1 256 405 | -1 194 478 | -61 927 | 5,2% | ||||||||||
Income from asset disposals | 1 066 | 97 423 | -96 357 | -99% | ||||||||||
(1) Sale price net of disposal costs |
(2) Corresponds to the appraisal values published at 31 December 2018
It should be noted that 2018 shows a significant proceeds on disposal (+€97.4 million) due to the sale of Parisian assets used by the Group (owner occupied building), which were not recognised at fair value but at amortised cost.
3.2.6.4 Change in the fair value of assets
€ thousand | 31/12/2019 | 31/12/2018 | Change in € | |||||||
thousand | ||||||||||
France Offices | 231.040 | 110.643 | 120.397 | |||||||
Italy Offices | -9.617 | -43.666 | 34.049 | |||||||
Hotels in Europe | 250.405 | 100.425 | 149.980 | |||||||
Germany Residential | 532.702 | 459.215 | 73.487 | |||||||
Other (including France Residential) | -896 | -5.924 | 5.028 | |||||||
Total change in fair value of properties | 1.003.634 | 620.693 | 382.941 | |||||||
Half of the €1,004 million positive change in the fair value of properties relates to the Germany Residential portfolio for +€533 million (essentially assets located in Berlin), the other half comes from the France Offices and Hotels in Europe segments.
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3.2.6.5 Income from changes in scope
Income from changes in the scope corresponds mainly to the acquisition costs of consolidated equity investments, which, in accordance with IFRS 3 Business Combinations, must be recognised as expenses for the year.
At 31 December 2019, income from changes in the scope -€22,255k mainly concerns the segments Hotels in Europe for -€14,955k and German Residential for -€5,685k.
3.2.6.6 Cost of the net financial debt
€ thousand | 31/12/2019 | 31/12/2018 | Change | Change | |||||||
in € thousand | as a % | ||||||||||
Interest income on cash transactions | 15,487 | 21,429 | -5,942 | -27.7% | |||||||
Interest expense on financing operations | -168,143 | -172,663 | 4,519 | -2.6% | |||||||
Regular amortisations of loan issue costs | -13,920 | -14,484 | 564 | -3.9% | |||||||
Net expenses on hedges | -43,589 | -36,735 | -6,853 | 18.7% | |||||||
Cost of net debt | -210,166 | -202,453 | -7,712 | 3.8% | |||||||
Average annual rate of debt | 1.55% | 1.55% | |||||||||
Excluding costs to repurchase fixed-rate debt and penalties (€33.2 million at 31 December 2019 versus €12.2 million at 31 December 2018), the cost of debt declined by €13.3 million, under the effect of refinancings and restructured hedges.
3.2.6.7 Net financial income/(charges)
€ thousand | 31/12/2019 | 31/12/2018 | Change in € | Change as a | ||||
thousand | % | |||||||
Cost of net financial debt | -210,166 | -202,453 | -7,712 | 3.8% | ||||
Interest cost for rental liabilities | -13,526 | -4,594 | -8,932 | N/A | ||||
Changes in the fair value of financial instruments | -179,731 | -41,230 | -138,501 | |||||
Changes in the fair value of Ornane-type bonds | -16,652 | 25,078 | -41,730 | |||||
Changes in the fair value of financial instruments | -196,383 | -16,152 | -180,231 | N/A | ||||
Net financial expenses from discounting | -173 | -656 | 483 | |||||
Expenses from discounting liabilities and receivables | -173 | -656 | 483 | -73.6% | ||||
Exceptional amortisations of loan issue costs | -10,626 | -11,466 | 840 | -7.3% | ||||
Other | -20 | 215 | -235 | -109.4% | ||||
Exceptional amortisations of loan issue costs | -10,646 | -11,251 | 605 | -5.4% | ||||
Total financial income | -430,894 | -235,106 | -195,788 | 83.3% | ||||
The drop in interest rates impacted the fair value of financial instruments by nearly €200 million. As a result, financial income is a net expense of €430.9 million in 2019 versus €235.1 million in 2018.
3.2.6.8 Taxes payable and deferred tax liabilities
3.2.6.8.1 Accounting principles applicable to current and deferred taxes
- SIIC tax regime (French companies)
Opting for the SIIC tax regime involves the immediate liability for an exit tax at the reduced rate of 19% on unrealised capital gains relating to assets and securities of entities not subject to corporation tax. The exit tax is payable over four years, in four instalments, starting with the year the option is taken up.
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In return, the Company is exempted from income tax on the SIIC business and is subject to distribution obligations.
(1) Exemption of SIIC revenues
The revenues of the SIIC are exempt from taxes concerning:
- income from the leasing of assets,
- capital gains realised on asset disposals, investments in companies having opted for the tax treatment or companies not subject to corporation tax in the same business, as well as the rights under a lease contract and real estate rights under certain conditions,
- dividends of SIIC subsidiaries.
- Distribution obligations
The distribution obligations associated with exemption profits are the following:
- 95% of the earnings derived from asset leasing,
- 70% of the capital gains from disposals of assets and shares in subsidiaries having opted for the tax treatment or subsidiaries not subject to corporation tax with a SIIC corporate purpose for two years,
- 100% of dividends from subsidiaries that have opted for the tax treatment.
The Exit Tax liability is discounted on the basis of the initial payment schedule determined from the first day the relevant entities adopted SIIC status.
The liability initially recognised is discounted and an interest charge is applied at each closing, allowing the liability to reflect the net discounted value as at the closing date. The discount rate used is based on the yield curve, given the deferred payment.
At 31 December 2019, there are no exit tax liabilities on the balance sheet.
- Ordinary law regime and deferred taxes
Deferred taxes result from temporary differences in taxation or deduction and are calculated using the liability method, and on all temporary differences in the Company financial statements, or resulting from consolidation adjustments. The valuation of the deferred tax assets and liabilities must reflect the tax consequences that would result from the method by which the Company seeks to recover or settle the book value of its assets and liabilities at year-end. Deferred taxes are applicable to Covivio group entities that are not eligible for the SIIC tax regime.
A deferred tax asset is recognised in the case of deferrable tax losses in the likely event that the entity in question, not eligible for the SIIC regime, will have taxable future profits against which the tax losses may be offset.
In the case where a French company intends to opt directly or indirectly for SIIC tax treatment in the near future, an exception under the ordinary law regime is applied by anticipating the application of the reduced rate (exit tax) in the valuation of deferred taxes.
- SIIQ tax regime (Italian companies)
Following Beni Stabili's merger with Covivio, the tax arrangements for Covivio's permanent establishment in Italy changed after it left the SIIQ tax regime. It will be subject to the 20% tax on real estate companies from 2019.
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- SOCIMI tax regime (Spanish companies)
The Spanish companies held by Covivio Hotels opted for the SOCIMI tax regime, effective on 1 January 2017. Opting for SOCIMI does not trigger an exit tax upon making the option. However, the capital gains on the period outside of the SOCIMI regime during which assets were held are taxable when disposing of said assets.
The rental income from the leasing of assets and proceeds from disposals of assets held under the SOCIMI regime are exempt, provided 80% of rental profits and 50% of asset disposal profits are distributed. These capital gains are determined by allocating the taxable gains to the period outside the SOCIMI regime in a linear basis, over the total holding period.
3.2.6.8.2 Taxes and theoretical tax rate by geographical area
€ thousand | Taxes | Deferred tax | Total | Deferred | |||||||
payable | liabilities | tax rate | |||||||||
France | -738 | 9 371 | 8 633 | 25,83% | (1) | ||||||
Italy | -411 | -18 314 | -18 725 | 20,00% | (2) | ||||||
Germany | -18 404 | -107 736 | -126 140 | 15,83% | (3) | ||||||
Belgium | -1 491 | -1 415 | -2 906 | 25,00% | (4) | ||||||
Luxembourg | 263 | -5 349 | -5 086 | 30,00% | |||||||
UK | -1 896 | 12 789 | 10 893 | 17,00% | |||||||
Netherlands | -1 031 | -504 | -1 535 | 22,25% | (5) | ||||||
Portugal | -279 | -1 998 | -2 277 | 23,00% | |||||||
Spain | 0 | -478 | -478 | 25,00% | |||||||
Ireland | -8 | 0 | -8 | 32,00% | |||||||
Poland | 0 | -6 | -6 | 9,00% | |||||||
Total | -23 995 | -113 640 | -137 621 | ||||||||
(-) corresponds to a tax expense; (+) corresponds to a tax income
- In France, the tax rate for fiscal year 2019 is 32.02%. The tax rate will be 28.9% in 2020, 27.4% in 2021 and 25.83% from fiscal year 2022.
- Since the merger with Covivio and its exit from the SIIQ regime, Covivio in Italy has been subject to a 20% tax rate.
- In Germany, the tax rate on property goodwill is 15.83%, however, for companies in the hotel operations business line, tax rates vary between 30.18% and 32.28%.
- In Belgium, the tax rate used for 2019 is 29.58%. It will go down to 25% as of 2021.
- In the Netherlands, the tax rate for fiscal year 2019 is 24.3%. The tax rate will be 23.9% in 2020 and 22.25% from fiscal year 2021.
- In Ireland, the tax rate for fiscal year 2019 is 12.5% for operating activities, 25% for holding companies and 32% for capital gains on disposals.
The income tax payable on disposals amounts to €9.4 million, including €4.4 million for companies in the Operating Properties business line (Germany portfolio) and €5.6 million for the Germany Residential segment.
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Impact of deferred taxes on income
€ thousand | 31/12/2019 | 31/12/2018 | Variation | ||||
France Offices | 0 | 0 | 0 | ||||
Italy Offices | -18.314 | 11.316 | -29.630 | ||||
Hotels in Europe | -2.200 | -7.230 | 5.030 | ||||
Germany Residential | -93.117 | -94.145 | 1.028 | ||||
Other | -9 | 9 | -18 | ||||
Total | -113.640 | -90.050 | -23.590 | ||||
- In Italy Offices, the deferred tax expense mainly relates to an increase in the value of assets and SIINQ income that will become taxable when they are distributed to Covivio.
-
The deferred tax income from Hotels in Europe relates to the rise in appraisal values in the hotel segment abroad (-€11.6 million) offset by deferred tax income from the Operating Properties business line (+€9.4 million) following the reduction in tax rates in France (25.83% against
28.93%), - The deferred tax expense of Germany Residential mainly relates to an increase in the value of assets.
3.2.6.8.3 Tax proof
The management companies that opted for the SIIC/SOCIMI tax regime in previous years do not pay corporate income tax, except for those that also have a taxable business activity.
Net income before taxes and before income of equity affiliates is neutralised, including for their taxable activities and their transparent taxable subsidiaries.
Accordingly, the tax proof is required solely for taxable French and international companies.
Breakdow n of tax by taxable segment (in € thousand) | France (SIIC) | France | Foreign | 31/12/2019 | |
Spain (SOCIMI) | Common Law | Common Law | |||
Net income before tax, before income of equity affiliates | 529 191 | -2 733 | 843 691 | 1 370 149 | |
Income tax expense recorded | -15 803 | 5 453 | -127 286 | -137 635 | |
The actual tax expense recognised in the SIIC/SOCIMI tax segment includes deferred tax expenses of €18,314k in Italy.
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€ thousand | 31/12/2019 | |
Net Income before tax | 1 399 450 | |
Share of income from equity affiliates | -29 301 | |
Net income before tax, before income of equity affiliates | 1 370 149 | |
-of w hich SIIC/SOCIMI companies | 529 191 | |
-of w hich companies subject to tax | 840 958 | |
Theoritical tax rate of 32.02% | (a) | -269 299 |
Impact of rate differencials | 111 154 | |
Impact of tax credits and fixed tax rates | -254 | |
Impact of permanent differences | 37 209 | |
Changed to prior year losses w ithout DTA | 5 825 | |
Tax deficits w ithout DTA | -11 786 | |
Total tax impacts for the period | (b) | 142 148 |
Impact of tax audits and taxes on prior years | (c) | 5 321 |
Income tax expense recorded | (a)+(b)+(c) | -121 830 |
Overall effective tax rate | 14,49% |
3.2.7 OTHER INFORMATION
3.2.7.1 Personnel remuneration and benefits
3.2.7.1.1. Staff costs
At 31 December 2019, personnel expenses amounted to €159.3 million (compared with €149.0 million at 31 December 2018), breaking down as follows:
€ thousand | 31/12/2019 | 31-déc.-18 | ||||
EBITDA from hotel operating activity and Flex Office | -56 264 | -59 256 | ||||
Overheads | -82 259 | -78 491 | ||||
Income from asset disposals | -4 127 | -3 617 | ||||
TOTAL Personnel expenses in the statement of net income | -142 650 | -141 364 | ||||
Development projects | -16 642 | -7 656 | ||||
TOTAL Capitalised personnel expenses | -16 642 | -7 656 | ||||
TOTAL Personnel expenses | -159 292 | -149 020 | ||||
(1) including free shares charges | ||||||
Headcount
At 31 December 2019, the headcount of fully consolidated companies, excluding companies in the Operating Properties business line, was 965 compared with 896 at 31 December 2018.
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Headcount by country in number of employees:
965 | 896 |
The average headcount during 2019 was 937 employees.
The companies in the Operating Properties business line had an average headcount of 1,481 people. The increase compared with 31 December 2018 (1,467 employees) is mainly due to the acquisition of a hotel in Dublin, offset by the disposal of Westin Dresden on 29 March 2019.
3.2.7.1.2. Description of share-based payments
Covivio awarded free shares in 2019. The following assumptions were made for the free shares:
Corporate | Corporate | ||||||||||||
Employees - | officers - w ith | officers - w ith | |||||||||||
Plan of 20 February 2019 | w ithout | performance | performance | ||||||||||
performance | condition - | condition - | |||||||||||
condition | performance | internal Covivio | |||||||||||
scenario | target | ||||||||||||
Date aw arded | 20-févr.-19 | 20-févr.-19 | 20-févr.-19 | ||||||||||
Number of shares aw arded | 14 708 | 13 750 | 13 750 | ||||||||||
Share price on the date aw arded | 87,80 € | 87,80 € | 87,80 € | ||||||||||
Exercise period for rights | 3 years | 3 years | 3 years | ||||||||||
Cost of forfeiture of dividends | -14,18 € | -14,18 € | -14,18 € | ||||||||||
Actuarial value of the share net of dividends not collected during the | 73,62 € | 73,62 € | 73,62 € | ||||||||||
vesting period | |||||||||||||
Revenue-related discount: | |||||||||||||
In number of shares | 1 759 | 1 644 | 1 644 | ||||||||||
As percentage of share price on the date aw arded | 12% | 12% | 12% | ||||||||||
Value of the benefit per share | 63,12 € | 48,84 € | 47,34 € | ||||||||||
Group Plan - | Group plan - | Group plan - | |||||||||||
Employees and | Employees and | ||||||||||||
Employees and | |||||||||||||
Executives | Executives | ||||||||||||
Executives | |||||||||||||
Plan of 21 November 2019 | w ithout | w ithout | |||||||||||
w ithout | |||||||||||||
performance | performance | ||||||||||||
performance | |||||||||||||
conditions - | condition - | ||||||||||||
condition - Italy | |||||||||||||
France & Spain | Germany | ||||||||||||
Date aw arded | 21-nov.-19 | 21-nov.-19 | 21-nov.-19 | ||||||||||
Number of shares aw arded | 46 685 | 6 500 | 17 745 | ||||||||||
Share price on the date aw arded | 101,70 € | 101,70 € | 101,70 € | ||||||||||
Exercise period for rights | 3 years | 3 years | 3 years | ||||||||||
Cost of forfeiture of dividends | -14,42 € | -14,42 € | -14,42 € | ||||||||||
Actuarial value of the share net of dividends not collected during the | 87,28 € | 87,28 € | 87,28 € | ||||||||||
vesting period | |||||||||||||
Revenue-related discount: | |||||||||||||
In number of shares | 7 839 | 1 091 | 2 979 | ||||||||||
As percentage of share price on the date aw arded | 17% | 17% | 17% | ||||||||||
Value of the benefit per share | 70,20 € | 70,20 € | 70,20 € |
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In 2019, a total of 113,138 free shares were awarded (the number was unchanged at 31 December 2019 - No cancellations due to employee departures). As stated elsewhere, the corresponding expense is recognised in income over the entire vesting period.
The cost of the free share recognised at 31 December 2019 amounted to €8,129k, while the related social security contribution was €1,572k. These expenses are presented in the income statement on the "Overheads" line.
The cost of the free shares includes the impact of the 2015 plan for €15k, the 2016 plan for €1,198k, the 2017 plan for €2,752k, the 2018 plan for €3,242k, and the 2019 plan for €922k.
3.2.7.2 Earnings per share and diluted earnings per share
- Earnings per share (IAS 33)
Basic earnings per share are calculated by dividing the income attributable to holders of ordinary Covivio shares (the numerator) by the average weighted number of ordinary shares outstanding (the denominator) over the period.
To calculate the diluted earnings per share, the average number of shares outstanding is adjusted to reflect the conversion of all dilutive potential ordinary shares, including free shares being vested and convertible bonds (ORNANE) type.
The impact of the dilution is only taken into account if it is dilutive.
The dilutive effect is calculated using the treasury stock method. The number calculated using this method is added to the average number of shares outstanding and becomes the denominator. To calculate the diluted earnings, the income attributable to the holders of ordinary Covivio shares is adjusted by:
- all dividends or other items under potentially dilutive ordinary shares that were deducted to arrive at the income attributable to the holders of ordinary shares,
- interest recognised during the fiscal year to the potentially dilutive ordinary shares,
- any change in the income and expenses resulting from the conversion of the dilutive potential ordinary shares.
Group share in (€ thousand)
Interest on Ornane-type bonds
Changes in the fair value of Ornane-type bonds
Group share after conversion of the Ornane-type bonds (€ thousand)
Average number of undiluted shares
Impact of dilution - free shares(1)
Number of free shares(1)
Average number of shares diluted by free shares
Dilution impact of conversion of Italy 2021 Ornane-type bonds Conversion of Ornane-typebonds
Average number of diluted shares after conversion of Ornane-type bonds
Net profit (loss) per non-diluted share (€)
Impact of dilution - free shares (€)
Diluted earnings per share of free shares (€)
Diluted earnings per share of free shares and ornane-type bonds (€)
746 987
1 750
4 173
4 1 7 3 , 0 0
752 910
85 236 197
454 604
454 604
85 690 801
1 783 647
1 783 647
87 474 448
8,76
-0,05
8,72
8,61
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(1) The number of shares being vested is broken down according to the following plans:
2016 Plan | 45,000 |
2017 Plan | 97,733 |
2018 Plan | 198,733 |
2019 Plan | 113,138 |
Total | 454,604 |
In accordance with IAS 33 section 49 "Earnings per share", the impact from the dilution related to the conversion as at 1 January 2019 of the Italy Ornane-type bonds maturing in 2021 is taken into account, because the latter is dilutive.
3.2.7.3 | Off-balance sheet commitments | ||||||
3.2.7.3.1. | Commitments given | ||||||
✓ Fully consolidated companies | |||||||
Off-balance sheet commitments given (€million) | Deadline | 31/12/2019 | 31/12/2018 | ||||
Commitments related to consolidated companies | 574,1 | 80,0 | |||||
Commitments related to investments (1) | 573,3 | 78,2 | |||||
Commitments given for specific transactions | 0,0 | 0,0 | |||||
Commitments given for disposal of equity interests - Liabilities guarantees (2) | 2020 | 0,8 | 1,8 | ||||
Commitments related to financing | 5 911,8 | 6 470,9 | |||||
Financial guarantees given (CRD of pledged debt) | 5 911,8 | 6 470,9 | |||||
Commitments related to operating activities | 1 710,4 | 1 273,5 | |||||
Commitments given related to business development | 1129,3 | 466,6 | |||||
- Work commitments outstanding on assets under development (3) | 994,0 | 434,7 | |||||
- Purchase commitments | 5,0 | 0,0 | |||||
- Bank guaranties and other guaranties given | 130,3 | 31,9 | |||||
Commitments given related to the implementation of operating contracts | 256,7 | 248,0 | |||||
- Work commitments outstanding on investment properties (4) | 230,9 | 166,2 | |||||
- Other contractual commitments given in "rental income owed" | 2037 - 2051 | 25,8 | 81,8 | ||||
Commitments related to asset disposals | 324,3 | 558,8 | |||||
Preliminary sale agreements given | 324,3 | 558,8 |
- Investment commitments after deduction of deposits paid amounting to €27 million (see section 3.3.9 Subsequent events)
- Covivio granted liability guarantees in the context of Logistics asset disposals in the amount of €0.8 million maturing in 2020
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(3) Work commitments outstanding on assets under development:
Cost of works | Amounts of | Total works | Delivery | ||||||||||
€million | commitment | ||||||||||||
budgets signed | works recognised | date | |||||||||||
outstanding | |||||||||||||
Levallois Alis | 64,6 | 3,9 | 60,7 | 2022 | |||||||||
DS Campus extension | 126,8 | 0,4 | 126,3 | 2022 | |||||||||
N2 Batignolles | 89,7 | 11,2 | 78,6 | 2022 | |||||||||
Lyon Silex 2nd tranche | 135,3 | 68,0 | 67,2 | 2021 | |||||||||
Montrouge Flow | 89,8 | 42,4 | 47,4 | 2020 | |||||||||
Paris So Pop | 118,4 | 5,4 | 113,0 | 2021 | |||||||||
Chatillon Iro | 138,8 | 93,2 | 45,6 | 2020 | |||||||||
Meudon Opale | 129,3 | 14,0 | 115,3 | 2020-2021 | |||||||||
Montpellier Orange | 45,1 | 8,6 | 36,5 | 2021 | |||||||||
Montpellier Rie | 19,1 | 5,1 | 14,0 | 2021 | |||||||||
Meudon Ducasse | 19,5 | 11,5 | 8,0 | 2020 | |||||||||
Total France Offices | 976,4 | 263,7 | 712,7 | ||||||||||
Milan, via Schievano | 65,2 | 45,3 | 19,9 | 2020 | |||||||||
Milan, piazza Duca d'Aosta | 4,3 | 3,0 | 1,3 | 2020 | |||||||||
Milan, Symbiosis area | 224,7 | 15,0 | 209,7 | 2020-2022 | |||||||||
Turin, Corso Ferrucci | 31,7 | 20,4 | 11,3 | 2020 | |||||||||
Milan, via Unione / via Torino | 7,4 | 0,0 | 7,4 | 2021 | |||||||||
Via Santander / via Schievano | 30,8 | 0,1 | 30,6 | 2022 | |||||||||
Total Italy Offices | 364,2 | 83,9 | 280,3 | ||||||||||
B&B Lyon Bagnolet | 7,8 | 6,7 | 1,1 | 2 020 | |||||||||
Total Hotels in Europe | 7,8 | 6,7 | 1,1 | ||||||||||
Grand total | 1 348,4 | 354,3 | 994,0 |
(4) Work commitments outstanding on investment properties:
Cost of works | Amounts of | Total works | Delivery | |||||||
€million | commitment | |||||||||
budgets signed | works recognised | date | ||||||||
outstanding | ||||||||||
Commitments to works on lease or lease renewal | 32,6 | 28,1 | 4,5 | |||||||
Elevators modernization work | 11,0 | 8,7 | 2,3 | 2020 | ||||||
Jean Goujon | 45,1 | 11,1 | 34,0 | 2021 | ||||||
Paris Gobelins | 22,5 | 6,6 | 15,9 | 2020 | ||||||
Total France Offices | 111,2 | 54,4 | 56,8 | |||||||
Works on investment properties | 6,5 | 3,2 | 3,3 | 2020 | ||||||
Milan, via Dante (Flex Office) | 12,3 | 7,3 | 5,0 | 2020 | ||||||
Milan, Corso Italia | 24,2 | 0,0 | 24,2 | 2022 | ||||||
Total Italy Offices | 43,0 | 10,5 | 32,5 | |||||||
AccorHotels hotels | 10,3 | 6,9 | 3,4 | 2020 | ||||||
B&B Hotels | 57,5 | 56,4 | 1,1 | 2020 | ||||||
Total Hotels in Europe | 67,8 | 63,3 | 4,4 | |||||||
Projects Residential (mainly in Berlin) | 210,9 | 41,2 | 169,7 | 2020-2022 | ||||||
Total German Residential | 210,9 | 41,2 | 169,7 | |||||||
Grand total | 389,8 | 158,9 | 230,9 |
- Other commitments given related to consolidated companies
Other commitments:
- Under its SIIC status, the Group has specific obligations, as set out in Section 3.2.6.7.1
- Under the free share plans awarded (see Section 3.2.7.2), Covivio has undertaken to deliver (through acquisition or creation) 454,604 shares to the beneficiaries present at the end of the vesting period.
- The Central Facilities of the Sunparks asset were contributed to Foncière Vielsalm Loisirs, of which Covivio Hotels holds 35.7% of the share capital but only 2.7% of the voting rights with the possibility for Covivio Hotels to exercise a put option at the end of the 10th year.
- As part of the partnership with ACM VIE in the SCIs 9 and 15 rue des Cuirassiers (with the Silex properties), Covivio granted a guaranteed return dated 7 December 2017, which works as follows:
- 2.80% per year beginning 7 December 2017 and ending at the close of the Silex 2 incentive period, or sixteen (16) months after delivery, for up to a minimum of fifty-four (54) months from the signing of this guarantee.
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- This is after deducting any money paid by one of the SCIs to ACM VIE as a dividend (or interim dividend), repayment of premium, or interest during the guaranteed return period.
- In the event that subsequent to the end of the term of this guarantee, money is paid by the SCIs to ACM VIE, the partner would have to pay back these amounts to Covivio within ten (10) working days of their receipt.
- Companies consolidated by the equity method
Information is presented for the Group Share
Off-balance sheet commitments given (€million) | Deadline | 31/12/2019 | 31/12/2018 | |||
Commitments related to consolidated companies | 0.0 | 0.0 | ||||
Commitments related to investments | 0.0 | 0.0 | ||||
Commitments given for specific transactions | 0.0 | 0.0 | ||||
Commitments related to financing | 154.4 | 181.2 | ||||
Financial guarantees given | 154.4 | 181.2 | ||||
Commitments related to operating activities | 14.1 | 27.2 | ||||
Financial instruments concluded for the reception or delivery of non financial elements (contracts "ow n use") | 0.0 | 0.0 | ||||
Commitments related to operating activities | 14.1 | 25.9 | ||||
- Work commitments outstanding on assets under development (1) | 14.1 | 25.9 | ||||
- Bank guaranties and other guaranties given | 0.0 | 0.0 | ||||
Commitments given related to the implementation of operating contracts | 0.0 | 1.3 | ||||
- Work commitments outstanding on investment properties | 0.0 | 1.3 | ||||
- Exercise of finance lease options | 0.0 | 0.0 |
(1) Work commitments outstanding on assets under development:
Cost of works
€millionbudgets signed
Belaïa | 30.0 | |
Total France Offices | 30.0 | |
Grand Total | 30.0 |
Amounts of works recognised
15.8
15.8 |
15.8 |
Total works | Delivery | |
commitment | ||
date | ||
outstanding | ||
14.12020
3.2.7.3.2. Commitments received
✓ Fully consolidated companies
Off-balance sheet commitments given (€million) | Deadline | 31/12/2019 | 31/12/2018 | |||
Commitments related to consolidated companies | 0,0 | 2,0 | ||||
Other | 0,0 | 2,0 | ||||
Commitments related to financing | 1 517,3 | 1 973,4 | ||||
Financial guarantees received (authorised lines of credit not used) | 1 517,3 | 1 973,4 | ||||
Commitments related to operating activities | 5 951,7 | 5 541,7 | ||||
Other contractual commitments received related to the activity "Rent to be collected"(1) | 3 713,4 | 4 003,6 | ||||
Assets received in pledge, mortgage or collateral, as well as guarantees received | 684,8 | 369,9 | ||||
Other contractual commitments received related to activity | 2 020 | 4,3 | 8,5 | |||
Preliminary sale agreements received | 324,3 | 558,8 | ||||
Works commitment outstanding (fixed assets) = (3) + (4) commitments given | 1224,9 | 600,9 |
- Other contractual commitments received related to the "Rent to be collected" activity:
€million | France Offices | Italy Offices | Hotels in | Total | ||||
Europe | ||||||||
Under 1 year | 202.9 | 5.5 | 172.0 | 380.4 | ||||
1 to 5 years | 584.6 | 33.9 | 807.0 | 1,425.5 | ||||
Over 5 years | 159.3 | 35.2 | 1,712.9 | 1,907.4 | ||||
Total | 946.8 | 74.6 | 2,692.0 | 3,713.4 |
These are minimum payments to be received for non-cancellable operating leases.
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✓ Companies consolidated by the equity method
Information is presented for the Group Share.
Off-balance sheet commitments given (€million) | Deadline | 31/12/2019 | 31/12/2018 | |||
Commitments related to consolidated companies | 0.0 | 0.0 | ||||
Commitments given for specific transactions | 0.0 | 0.0 | ||||
Commitments related to financing | 8.8 | 0.0 | ||||
Commitments related to financing not specifically required by IFRS 7 | 0 | |||||
Financial guarantees received (authorised lines of credit not used) | 8.8 | 0.0 | ||||
Commitments related to operating activities | 54.5 | 36.7 | ||||
Assets received in pledge, mortgage or collateral, as w ell as guarantees received | 40.4 | 9.5 | ||||
Worls commitment outstanding (fixed assets) = (1) + (2) commitments given | 14.1 | 27.2 |
- Commitments on operating leases
General overview of the main provisions of simple operating lease agreements
France Offices
LEASE TYPES | France Offices | |||
Orange | Other offices | |||
Proposal for 6-month or 12- | Proposal for 6-month or 12- | |||
Conditions for renew al | month renew al | month renew al | ||
or purchase options | depending on the lease | depending on the lease | ||
before expiry of the lease | before expiry of the lease | |||
Indexing clauses | ILAT | ICC/ILAT | ||
Term | 3-6-9-12 years | 3-6-9-12 years | ||
The firm residual duration of leases of France Offices was 4.6 years, as at 31 December 2018.
Hotels in Europe
LEASE TYPES | AccorHotels Hotels | Sunparks | Club Med | ||
Proposal for renew al 9 | |||||
Proposal for renew al 18 | months before the expiration | ||||
Conditions for renew al | months before the expiration | Proposal for renew al 15 | of the term of validity. | ||
of the lease. The tenant has | months before lease expiry | Renew al on the same terms | |||
or purchase options | |||||
6 months to accept or refuse | for a 10-year term | as the existing lease - 15 | |||
the renew al. | years, of w hich 8 are fixed | ||||
and irrevocable. | |||||
In line w ith the change in the | In line w ith the value of the | ||||
Indexing clauses | Based on Hotel revenues | healthcare index published | |||
Eurostat CPI index | |||||
by Moniteur Belge | |||||
Term | 12 years firm | 15 years firm | 15 years firm | ||
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LEASE TYPES | Courtepaille restaurants | Jardiland | |
Renew able for a period of 9 | |||
years | |||
For the first renew al, the | |||
Renew al at the end of the | tenant commits to a fixed | ||
Conditions for renew al | lease w ith the same | and irreducible term of 6 | |
or purchase options | conditions and charges as | years | |
the initial lease | As of the second renew al, | ||
option for the tenant to give | |||
notice after second three- | |||
year period. | |||
Indexing clauses
Term
LEASE TYPES
In line w ith the change in the | In line w ith the change in the |
commercial rent index (ILC) | commercial rent index (ILC) |
Leases for 3-6-9 years | Leases for 6-12 years, 6-9- |
12 years or 12 years firm | |
B&B Hotels France | B&B Hotels Germany | B&B Hotels Spain |
Conditions for renew al
or purchase options
Indexing clauses
Term
Renew able tw ice for 12 years, then once for 9 years (w ith the option to terminate every 3 years)
In line w ith the change in the commercial rent index (ILC)
12 years firm
Tw o 5-year renew al options under the same conditions and charges
In line w ith the change in the German consumer price index (VPI)
20 years firm
Renew able tw ice for 15
years on the tenant's
request
100% of the Spanish CPI
15 years firm
LEASE TYPES
NH Hotel | Motel One Hotels | B&B Hotels Germany 2 |
Conditions for renew al
or purchase options
Indexing clauses
Renew al at expiration of the
lease
Four 10-year renew al
options
In line w ith the change in the consumer price index (CPI)
Tw o 5-year renew al options under the same conditions and charges
In line w ith the change in the German consumer price index (VPI)
Tw o 5-year extensions
possible on the tenant's request
100% of the German CPI
Term | 20 years firm | 20 years firm | 20 years firm | |
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LEASE TYPES | B&B Hotels Germany 3 | Hotels in the United | B&B Hotels Poland | |
Kingdom | ||||
Conditions for renewal | Tw o 5-year extensions | No option to renew or purchase No option to renew or purchase |
or purchase options | possible on the tenant's request |
Indexing clauses
Term
100% of the German CPI
20 years firm
100% of the English CPI | 100% of the Polish CPI |
25 years firm | 15 years firm |
LEASE TYPES | Bardiomar | Trade Center Hotel | Rocatierra | |
Conditions for renew al | N/A | N/A | N/A | |
or purchase options | ||||
Variable rent w ith minimum | Based on the Spanish CPI - | |||
Indexing clauses | guarantee Variable | Based on the Spanish CPI | Variable depending on | |
depending on revenue | revenue | |||
Term | 45 years firm | 20 years firm | 12 years firm | |
The firm residual duration of leases of Hotels in Europe was 13.7 years, versus 13.4 years at 31 December 2018.
3.2.7.4 Related-party transactions
The information mentioned below concerns the main related-parties, namely equity affiliates.
Details of related-party transactions (€K)
Type of | Operating | Net financial | Balance | ||
Partner | income/(char | Comments | |||
partner | income | sheet | |||
ges) | |||||
Cœur d'Orly | Equity affiliates | 657 | 0 | 554 | Monitoring of projects and investments, Loans, Asset and property fees |
Euromed | Equity affiliates | 539 | 0 | 28,596 | Loans, Asset and property fees |
Lenovilla | Equity affiliates | 353 | 0 | 24,763 | Loans, Asset and property fees |
SCI Factor E and SCI Orianz | Equity affiliates | 105 | 248 | 17,268 | Loans, Asset and property fees |
3.2.7.5 Compensation of Covivio executives
€ thousand | 31/12/2019 | 31/12/2018 | ||
Management | ||||
Short-term benefits (fixed/variable) | 3,171 | 2,611 | ||
Post-retirement benefits | ||||
Long-term benefits | ||||
Benefits in kind | 101 | 99 | ||
Compensation for termination of contract | ||||
Total | 3,272 | 2,710 | ||
Directors | ||||
Attendance fees | 512 | 596 |
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The variable portion does not include the free shares awarded. Moreover, 42,208 free shares were awarded to the senior executives of all Group subsidiaries in 2019 (including 27,500 shares awarded subject to performance conditions) and will be fully vested in 2022.
In case of involuntary departure, an indemnity will be awarded to the following senior executives:
- Christophe Kullmann (Chief Executive Officer)
- Olivier Estève and Dominique Ozanne (Deputy Chief Executive Officers).
This amount will be equal to 12 months of total remuneration (fixed salary and the annual variable portion), plus one month of additional remuneration per year of employment. The benefit of this indemnity will be subject to two performance conditions (change in NAV and achievement of the target performance of the annual bonus), see section 4.3.2.3.2.
3.2.7.6 Statutory Auditors' fees
€ thousand | Mazars | Ernst & Young and others | Others | |||||||||||||||
Amount | % | Amount | % | Amount | % | |||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||
Statutory Auditors, certification, | ||||||||||||||||||
audit of company and consolidated financial statements | 1 284 | 1 223 | 44% | 43% | 1 557 | 1 512 | 53% | 53% | 103 | 93 | 3% | 3% | ||||||
Issuer | 325 | 312 | 47% | 50% | 360 | 312 | 53% | 50% | ||||||||||
Fully consolidated affiliates | 882 | 905 | 45% | 46% | 1 027 | 1 045 | 52% | 54% | 70 | 69 | 4% | 3% | ||||||
Equity affiliates | 77 | 7 | 28% | 4% | 170 | 155 | 61% | 83% | 33 | 24 | 12% | 13% | ||||||
Services other than auditing (1) | 69 | 111 | 23% | 12% | 233 | 852 | 77% | 88% | 91 | 0 | ||||||||
Issuer | 20 | 5 | 20% | 7% | 81 | 65 | 80% | 93% | ||||||||||
Fully consolidated affiliates | 49 | 106 | 17% | 12% | 152 | 786 | 52% | 88% | 91 | |||||||||
Equity affiliates | 0 | 0 | N/A | N/A | 0 | 0 | N/A | N/A | ||||||||||
Total | 1 353 | 1 334 | 41% | 35% | 1 790 | 2 363 | 54% | 62% | 194 | 93 | 6% | 2% |
(1) Services other than auditing performed in 2019 relate to the CSR (€133k), and other operations (€260k).
3.2.8 SEGMENT REPORTING
3.2.8.1 Accounting principles as regards operating segments - IFRS 8
The Covivio group holds a wide range of real estate assets to collect rental income and benefit from appreciation in the assets held. Segment reporting is organised by asset type.
The operating segments are as follows:
- France Offices: office real estate assets located in France,
- Italy Offices: real estate office and retail assets located in Italy,
- Hotels in Europe: commercial buildings largely in the hotel segment and hotel operating properties held by Covivio Hotels,
- Germany Residential: real estate assets in Germany held by the Covivio Group through its subsidiary Covivio Immobilien SE,
These segments are reported on and analysed regularly by Group management in order to make decisions on what resources to allocate to the segment and to evaluate their performance.
The Other segment includes non-significant activities such as car park rentals and the France Residential business.
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3.2.8.2 Intangible assets
Other | ||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | Total | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Intangible fixed assets and goodw ill | 2,034 | 2,940 | 146,444 | 1,952 | 18,832 | 172,203 | ||
Net | 2,034 | 2,940 | 146,444 | 1,952 | 18,832 | 172,203 |
Other | ||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | Total | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Intangible fixed assets and goodw ill | 2,954 | 2,496 | 142,517 | 824 | 17,966 | 166,758 | ||
Net | 2,954 | 2,496 | 142,517 | 824 | 17,966 | 166,758 |
The column "Other" includes the intangible fixed assets held under concession (Public Service Delegations) of the remaining car park companies.
3.2.8.3 Tangible fixed assets
Other | |||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | Total | |||
Offices | Offices | Europe | Residential | France | |||||
Residential) | |||||||||
Operating properties | 146,468 | 17,452 | 1,011,948 | 5,412 | 0 | 1,181,280 | |||
Other fixed assets | 3,166 | 1,320 | 23,914 | 6,888 | 155 | 35,443 | |||
Fixed assets in progress | 8,456 | 5,625 | 4,710 | 6,161 | 0 | 24,952 | |||
Net | 158,090 | 24,397 | 1,040,572 | 18,461 | 155 | 1,241,675 | |||
Other | |||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | Total | |||
Offices | Offices | Europe | Residential | France | |||||
Residential) | |||||||||
Operating properties | 282,238 | 69,797 | 1,022,570 | 5,187 | 29,915 | 1,409,707 | |||
Other fixed assets | 4,899 | 1,441 | 24,296 | 10,993 | 226 | 41,855 | |||
Fixed assets in progress | 17,692 | 1,299 | 2,951 | 15,938 | 0 | 37,880 | |||
Net | 304,829 | 72,537 | 1,049,817 | 32,118 | 30,141 | 1,489,442 |
The increase (+€30 million) in Other mainly corresponds to the impact of the first-time application of IFRS 16 (€30 million net of depreciation in the period).
The increase (+€9.2 million) in Hotels in Europe includes the impact of the first-time application of IFRS 16 (+27.5 million net of depreciation in the period), the disposal of the Westin Dresden asset (-€38.9 million), the transfer of the Nice Méridien asset from the France Offices segment (+€32.2 million), the transfer of the Alexanderplatz land to investment properties (-€46.7 million), and the acquisition of the Hilton Hotel in Dublin (+53.8 million), after deduction of depreciation charges for the period.
The change in fixed assets in progress in Italy Offices (+€48.1 million) mainly relates to the reclassification of the building under development in Milan, via Dante, to operating properties (Flex Office business for €50.3 million).
The increase in France Offices (+€146.7 million) was mainly related to the reclassification and work on Covivio's future headquarters under Operating properties (+€140.6 million), the reclassification of the Paris Gobelins asset to operating property (Flex Office) for +€40.5 million and the reclassification of the Nice Méridien asset under Hotels in Europe (-€32.2 million).
3.2.8.4 Investment properties/Assets held for sale
Other | ||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | Total | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Investment properties | 5,411,745 | 3,602,273 | 4,532,777 | 5,722,956 | 0 | 19,269,751 | ||
Assets held for sale | 35,392 | 43 | 288,072 | 29,664 | 205,677 | 558,848 | ||
Properties under development | 373,752 | 380,502 | 115,333 | 0 | 0 | 869,587 | ||
TOTAL | 5,820,889 | 3,982,818 | 4,936,182 | 5,752,620 | 205,677 | 20,698,186 |
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Other | ||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | Total | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Investment properties | 4,984,139 | 3,179,865 | 4,921,894 | 6,418,408 | 0 | 19,504,306 | ||
Assets held for sale | 55,029 | 100,205 | 132,638 | 10,516 | 25,904 | 324,292 | ||
Properties under development | 868,320 | 379,269 | 9,930 | 76,057 | 0 | 1,333,576 | ||
TOTAL | 5,907,488 | 3,659,339 | 5,064,462 | 6,504,981 | 25,904 | 21,162,174 |
In France Offices, the change in investment properties (€4,984 million in 2019 as compared to €5,412 million in 2018) is due to the reclassification under Assets held for sale (-€277.2 million), the transfer of two new projects to Properties under development (-€128.6 million), the reclassification under Operating properties of the future Parisian head office on Rue Jean Goujon (-€134.3 million), the reclassification of the Paris Gobelins asset to operating property (-€26.8 million), the transfer of the Nice Méridien asset to Hotels in Europe (-€11.6 million) and the deliveries of assets under development (+€73.9 million: Lezennes Hélios and Bordeaux Cité du Numérique), the change in fair value (+€26.2 million) and the work done during the period (+€54.6 million).
In Italy Offices, the decrease (-€422.4 million) is mainly due to the reclassification under Assets held for sale (-€116.1 million), disposals (-€362.8 million), the acquisition of the Palazzo Orlando building (+€13.1 million), the change in fair value (-€9.8 million), the launch of two new projects under development (-€40.3 million), the delivery of an asset under development (+€65.4 million: Principe Amedeo) and construction work (+€26.8 million).
In Germany Residential, the total investment properties rose significantly (+€695.5 million), mainly due to changes in asset values (+€514 million), acquisitions net of disposals of asset-holding companies (+€111.3 million), construction work (+€110.3 million), reclassification as Assets held for sale (-€30.9 million) and acquisitions of assets (+€5.8 million).
In Hotels in Europe, the increase (+€389.1 million) is mainly due to the change in the fair value of assets (+€196 million), the delivery of four development projects (+€138.9 million), investments in the United Kingdom (+€88.7 million) and in Amsterdam (+€12.5 million), and acquisitions of buildings in Poland (+€23.5 million). It also corresponds to fluctuations in exchange rates (+€55.3 million), right-of-use assets on long-term leases conferring ad rem rights in the United Kingdom (+€12.6 million) and on properties (+€15.7 million), the transfer of the Mercure Nice asset from France Offices (+€11.6 million), construction work (+€20.5 million) and the effect of the reclassification into assets held for sale (-€192.4 million).
3.2.8.5 Financial Assets
Other | ||||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | Total | ||||
Offices | Offices | Europe | Residential | France | ||||||
Residential) | ||||||||||
Loans | 89,197 | 95 | 11,488 | 8 | 239 | 101,027 | ||||
Other financial assets | 651 | 5,915 | 27,735 | 10,300 | 4 | 44,605 | ||||
Receivables on financial assets | 0 | 6,727 | 0 | 488 | 0 | 7,215 | ||||
Sub-totalnon-current financial assets | 89,848 | 12,737 | 39,223 | 10,796 | 243 | 152,847 | ||||
Investments in equity affiliates | 148,658 | 17,191 | 83,896 | 0 | 0 | 249,746 | ||||
Total financial assets | 238,506 | 29,928 | 123,120 | 10,796 | 243 | 402,593 | ||||
Other | ||||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | Total | ||||
Offices | Offices | Europe | Residential | France | ||||||
Residential) | ||||||||||
Loans | 64,678 | 0 | 65,791 | 10 | 93 | 130,572 | ||||
Other financial assets | 652 | 5,610 | 27,200 | 8,928 | 1,714 | 44,104 | ||||
Receivables on financial assets | 0 | 83,824 | 58 | 501 | 0 | 84,383 | ||||
Sub-totalnon-current financial assets | 65,330 | 89,434 | 93,050 | 9,439 | 1,807 | 259,060 | ||||
Investments in equity affiliates | 153,905 | 13,879 | 206,531 | 0 | 0 | 374,316 | ||||
Total financial assets | 219,235 | 103,313 | 299,581 | 9,439 | 1,807 | 633,375 |
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The decrease in financial assets in France Offices reflects the transfer of the loan granted to Lenovilla to short-term loans (-€20 million), the increase in Euromed's capital (+€5 million), the appropriation of 2018 net income from equity associates (-€11.1 million) and income from equity associates (+€11.3 million).
Financial assets in the Italy Offices segment were up due to an increase in receivables on disposals (+€78.2 million: disposal of Galleria del Corso for €30 million, maturing in 2021, and Chronos for €48.2 million, maturing in December 2022).
The rise in financial assets in Hotels in Europe was due mainly to the increase in securities of equity affiliates (+€106.1 million) and loans (+€53.7 million) following the acquisition of hotel holding companies in France and Belgium (34 B&B hotels), the payment of a deposit (+€27 million) for an acquisition in progress (see Section 3.2.9. Subsequent events), the reduction in the subscribed and uncalled capital of Foncière Développement Tourisme (-€20 million) following the acquisition of all its shares.
3.2.8.6 Inventories and work-in-progress
Other | ||||||||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | Total | ||||||||
Offices | Offices | Europe | Residential | France | ||||||||||
Residential) | ||||||||||||||
Inventories and w ork-in-progress | 16,091 | 19,853 | 2,236 | 57,036 | 595 | 95,811 | ||||||||
TOTAL | 16,091 | 19,853 | 2,236 | 57,036 | 595 | 95,811 | ||||||||
Other | ||||||||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | Total | ||||||||
Offices | Offices | Europe | Residential | France | ||||||||||
Residential) | ||||||||||||||
Inventories and w ork-in-progress | 20,657 | 60,860 | 2,261 | 148,249 | 521 | 232,548 | ||||||||
TOTAL | 20,657 | 60,860 | 2,261 | 148,249 | 521 | 232,548 |
The change (+€4.6 million) in France Offices is due to the work carried out on Residential development assets.
The rise in inventories in Italy Offices relates mainly to the acquisition of trading assets in Rome (+€11.6 million) and to the transfer of the asset under development to the real estate development activity (SNAM +€32.5 million).
The increase in inventories in Residential Germany is related to asset acquisitions for which a programme of redevelopment for sale is due to be launched (+€65.9 million, including works) and an Office promotion programme (+€17.6 million).
3.2.8.7 Contribution to shareholders' equity
2018 - €K
Shareholders' equity Group Share before elimination of securities
Elimination of securities
Shareholders' equity Group Share
Minority interests
France | Other | |||
Hotels in | Germany | (including | ||
and Italy | TOTAL | |||
Europe | Residential | France | ||
Offices | ||||
Residential) | ||||
6,613,649 | 1,289,993 | 1,769,429 | 1,361,082 | 11,034,153 |
0 | -1,070,401 | -1,025,966 | -1,376,340 | -3,472,707 |
6,613,649 | 219,592 | 743,463 | -15,258 | 7,561,446 |
739,208 | 2,022,120 | 1,033,493 | 2,148 | 3,796,969 |
Shareholders' equity | 7,352,857 2,241,712 | 1,776,956 | -13,110 | 11,358,414 |
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2019 - €K
Shareholders' equity Group Share before elimination of securities
Elimination of securities
Shareholders' equity Group Share Minority interests
France | Other | |||
Hotels in | Germany | (including | ||
and Italy | TOTAL | |||
Europe | Residential | France | ||
Offices | ||||
Residential) | ||||
7,136,710 | 1,422,443 | 2,056,419 | 1,089,534 | 11,705,106 |
0 | -1,110,485 | -1,025,967 | -1,271,009 | -3,407,461 |
7,136,710 | 311,958 | 1,030,452 | -181,475 | 8,297,645 |
801,736 | 2,070,514 | 1,186,215 | 2,233 | 4,060,698 |
Shareholders' equity | 7,938,446 2,382,472 | 2,216,667 | -179,242 12,358,343 |
In France Offices, non-controlling interests in 2019 include €373.6 million in minority interests for the Italian establishment compared with €385.3 million at 31 December 2018.
3.2.8.8 | Borrowings | |||||||
Other | ||||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | TOTAL | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Total long-terminterest-bearing loans | 2,597,822 | 1,902,802 | 2,568,075 | 2,147,925 | 0 | 9,216,624 | ||
Total short-terminterest-bearing loans | 1,442,011 | 26,702 | 256,590 | 117,793 | 7 | 1,843,103 | ||
Total LT and ST loans | 4,039,833 | 1,929,504 | 2,824,665 | 2,265,718 | 7 | 11,059,727 | ||
Other | ||||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | TOTAL | ||
Offices | Offices | Europe | Residential | France | ||||
Residential) | ||||||||
Total long-terminterest-bearing loans | 2,653,027 | 1,546,847 | 2,533,765 | 2,338,181 | 0 | 9,071,820 | ||
Total short-terminterest-bearing loans | 1,675,299 | 25,825 | 49,051 | 65,563 | 8 | 1,815,746 | ||
Total LT and ST loans | 4,328,326 | 1,572,672 | 2,582,816 | 2,403,744 | 8 | 10,887,566 |
3.2.8.9 Derivatives
Other | ||||||
2018 - €K | France | Italy | Hotels in | Germany | (including | TOTAL |
Offices | Offices | Europe | Residential | France | ||
Residential) | ||||||
Financial instruments - Assets | 19,174 | 3,871 | 14,432 | 9,475 | -0 | 46,952 |
Financial instruments - Liabilities | 159,001 | 6,064 | 45,181 | 24,751 | 0 | 234,997 |
Net financial instruments | 139,827 | 2,193 | 30,749 | 15,276 | 0 | 188,045 |
Other | ||||||
2019 - €K | France | Italy | Hotels in | Germany | (including | TOTAL |
Offices | Offices | Europe | Residential | France | ||
Residential) | ||||||
Financial instruments - Assets | 52,519 | 4 | 16,849 | 8,114 | -0 | 77,486 |
Financial instruments - Liabilities | 193,742 | 24,285 | 105,875 | 41,939 | 0 | 365,842 |
Net financial instruments | 141,224 | 24,281 | 89,026 | 33,825 | 0 | 288,356 |
Financial Report at 31 December 2019
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3.2.8.10 Statement of net income by operating segments
In accordance with IFRS 12, paragraph B11, inter-segment transactions, in particular management fees, are indicated separately in this presentation.
France | Italy | Hotels in | Germany | Other (incl. | Intercos | |||
€ thousand - 2018 | France | Inter- | 31/12/2018 | |||||
Offices | Offices | Europe | Residential | |||||
Residential) | sector | |||||||
Rental income | 273,539 | 205,760 | 229,921 | 241,162 | 7,935 | -2,426 | 955,891 | |
Unrecovered rental costs | -8,459 | -17,381 | -2,434 | -1,844 | -1,840 | 13 | -31,945 | |
Expenses on properties | -7,833 | -14,820 | -3,650 | -18,110 | -1,211 | 8,709 | -36,915 | |
Net losses on unrecoverable receivables | -23 | -1,314 | -42 | -1,816 | -5 | 0 | -3,200 | |
NET RENTAL INCOME | 257,224 | 172,245 | 223,795 | 219,392 | 4,879 | 6,296 | 883,831 | |
0 | ||||||||
Revenues from hotel operating activity and Flex Office | 3,819 | 0 | 253,489 | 0 | 0 | 0 | 257,308 | |
Expenses of hotel operating activity& Flex Office | -4,712 | 0 | -176,765 | 0 | 0 | 0 | -181,477 | |
0 | ||||||||
EBITDA from hotel operating activity & Flex Office | -893 | 0 | 76,724 | 0 | 0 | 0 | 75,831 | |
Income from other activities | -33 | -1 | 13 | 660 | 4,166 | -13 | 4,792 | |
0 | ||||||||
Management and administration income | 14,849 | 4,759 | 8,310 | 5,959 | 9,617 | -23,452 | 20,042 | |
Business expenses | -2,218 | -884 | -7,054 | -1,300 | -224 | 5,540 | -6,140 | |
Overheads(1) | -37,792 | -24,744 | -21,092 | -41,717 | -14,687 | 11,639 | -128,393 | |
Development costs (not capitalised) | 13 | 0 | -92 | -415 | -92 | 1 | -585 | |
NET OPERATING COSTS | -25,148 | -20,869 | -19,928 | -37,473 | -5,386 | -6,272 | -115,076 | |
0 | ||||||||
Depreciation of operating assets | -9,351 | -1,038 | -44,336 | -1,691 | -3,704 | 0 | -60,120 | |
Net change in provisions and other | -802 | 1,025 | 4,383 | 85 | 1,597 | -11 | 6,277 | |
OPERATING INCOME | 220,997 | 151,362 | 240,651 | 180,973 | 1,552 | 0 | 795,535 | |
Net income from inventory properties | 73 | -1,758 | 0 | 596 | 2 | 0 | -1,087 | |
Income from asset disposals | 60,062 | 19,131 | 1,406 | 15,517 | 1,307 | 0 | 97,423 | |
Income from value adjustments | 110,643 | -43,666 | 100,425 | 459,215 | -5,924 | 0 | 620,693 | |
Income from disposal of securities | 0 | -580 | 119,705 | 190 | 0 | 0 | 119,315 | |
Income from changes in scope | -1,954 | -4,960 | -149,187 | -3,010 | -895 | 0 | -160,006 | |
OPERATING INCOME | 389,821 | 119,529 | 312,999 | 653,481 | -3,958 | 0 | 1,471,872 | |
Income from non-consolidated companies | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Cost of net financial debt (2) | -63,988 | -43,225 | -55,295 | -38,968 | -977 | -0 | -202,453 | |
The interest cost for rental liabilities | 0 | 0 | -4,594 | 0 | 0 | 0 | -4,594 | |
Value adjustment on derivatives | 1,621 | 4,024 | -12,780 | -9,017 | -0 | 0 | -16,152 | |
Discounting of liabilities and receivables(1) | -199 | 0 | -457 | 0 | 0 | 0 | -656 | |
Exceptional depreciation of loan issue costs (2) | -2,736 | -3,632 | -4,707 | -43 | -133 | 0 | -11,251 | |
Share in income of equity affiliates | 14,171 | -12 | 8,669 | 0 | 0 | 0 | 22,828 | |
PRE-TAX NET INCOME | 338,690 | 76,684 | 243,835 | 605,453 | -5,068 | 0 | 1,259,594 | |
Deferred tax liabilities | 0 | 11,316 | -7,230 | -94,145 | 9 | 0 | -90,050 | |
Corporate taxes | -1,734 | -2,203 | -9,424 | -12,356 | -364 | 0 | -26,081 | |
NET INCOME FOR THE PERIOD | 336,956 | 85,797 | 227,180 | 498,952 | -5,423 | 0 | 1,143,462 | |
Net income from non-controlling interests | -10,833 | -54,542 | -144,962 | -183,442 | -110 | 0 | -393,889 | |
NET INCOME FOR THE PERIOD - GROUP SHARE | 326,123 | 31,255 | 82,218 | 315,510 | -5,533 | 0 | 749,574 | |
- The free share expense previously included in the item Discounting of liabilities and receivables for €8,802 thousand (see 31 December 2018 report) is now included with personnel expenses under Overheads.
- The regular depreciation of loan issue costs previously included in Depreciation of loan issue costs (see 31 December 2018 report) for €14,484 thousand is now included in Cost of net financial debt.
The cost of net financial debt and adjustment to the value of Covivio's derivatives, which were presented under Other (including France Residential) at 31 December 2018, are now included under France Offices.
Net income Group share for the period from the France Offices business amounted to €326,123k (compared with €343,297k reported at 31 December 2018) while that of the Corporate business totalled -€5,533k (compared with -€22,707k at 31 December 2018).
Financial Report at 31 December 2019
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France | Italy | Hotels in | Germany | Other (incl. | Intercos | ||||
€ thousand - 2019 | France | Inter- | 31/12/2019 | ||||||
Offices | Offices | Europe | Residential | ||||||
Residential) | sector | ||||||||
Rental income | 257,409 | 201,817 | 245,418 | 251,798 | 5,012 | -134 | 961,320 | ||
Unrecovered rental costs | -9,313 | -20,516 | -2,426 | -3,332 | -1,374 | -46 | -37,007 | ||
Expenses on properties | -8,080 | -7,849 | -8,522 | -19,623 | -652 | 13,775 | -30,951 | ||
Net losses on unrecoverable receivables | -1,913 | -653 | 30 | -1,963 | -51 | 0 | -4,550 | ||
NET RENTAL INCOME | 238,103 | 172,799 | 234,501 | 226,880 | 2,935 | 13,595 | 888,813 | ||
0 | |||||||||
Revenues from hotel operating activity and Flex Office | 10,970 | 0 | 232,252 | 0 | 1 | 0 | 243,223 | ||
Expenses of hotel operating activity& Flex Office | -5,838 | 0 | -162,332 | 0 | 0 | 0 | -168,170 | ||
EBITDA from hotel operating activity & Flex Office | 5,132 | 0 | 69,920 | 0 | 1 | 0 | 75,053 | ||
Income from other activities | 1,219 | 0 | 29 | 5,920 | 9,657 | 0 | 16,825 | ||
0 | |||||||||
Management and administration income | 23,738 | 5,791 | 15,590 | 5,170 | 9,941 | -37,212 | 23,018 | ||
Business expenses | -1,838 | -1,040 | -6,026 | -1,293 | -89 | 4,638 | -5,648 | ||
Overheads | -38,058 | -21,173 | -21,010 | -44,214 | -14,300 | 11,346 | -127,409 | ||
Development costs (not capitalised) | -104 | 0 | -624 | -994 | -97 | 0 | -1,819 | ||
NET OPERATING COSTS | -16,262 | -16,422 | -12,071 | -41,331 | -4,545 | -21,228 | -111,859 | ||
0 | |||||||||
Depreciation of operating assets | -10,558 | -2,051 | -42,285 | -2,553 | -7,557 | 0 | -65,004 | ||
Net change in provisions and other | -29 | 1,815 | 24,291 | -15,139 | 1,821 | 71 | 12,830 | ||
OPERATING INCOME | 217,605 | 156,141 | 274,385 | 173,777 | 2,312 | -7,562 | 816,658 | ||
Net income from inventory properties | -751 | -5,624 | 0 | 436 | 152 | 0 | -5,787 | ||
Income from asset disposals | 3,302 | -23,748 | 4,123 | 11,124 | -1,297 | 7,562 | 1,066 | ||
Income from value adjustments | 231,040 | -9,617 | 250,405 | 532,702 | -896 | 0 | 1,003,634 | ||
Income from disposal of securities | 0 | 3 | 4,101 | 3,032 | 588 | 0 | 7,724 | ||
Income from changes in scope | -135 | -1,392 | -14,955 | -5,685 | -88 | 0 | -22,255 | ||
OPERATING INCOME | 451,061 | 115,763 | 518,059 | 715,386 | 771 | 0 | 1,801,040 | ||
0 | |||||||||
Income from non-consolidated companies | 4 | 0 | 0 | 0 | 0 | 0 | 4 | ||
Cost of net financial debt | -55,188 | -38,978 | -63,607 | -51,536 | -857 | 0 | -210,166 | ||
The interest cost for rental liabilities | -93 | -47 | -12,886 | -10 | -490 | 0 | -13,526 | ||
Value adjustment on derivatives | -86,705 | -35,594 | -51,412 | -22,672 | -0 | 0 | -196,383 | ||
Actualization/Updating of debt and receivables | -207 | 0 | 34 | 0 | 0 | 0 | -173 | ||
Exceptional amortisations of loan issue costs | -522 | -5,360 | -3,612 | -1,157 | 5 | 0 | -10,646 | ||
Share in income of equity affiliates | 11,323 | -2,380 | 20,359 | 0 | 0 | 0 | 29,301 | ||
PRE-TAX NET INCOME | 319,673 | 33,404 | 406,934 | 640,011 | -571 | 0 | 1,399,450 | ||
Deferred tax liabilities | 0 | -18,314 | -2,200 | -93,117 | -9 | 0 | -113,640 | ||
Corporate taxes | -191 | -411 | -12,808 | -10,033 | -552 | 0 | -23,995 | ||
NET INCOME FOR THE PERIOD | 319,482 | 14,679 | 391,925 | 536,861 | -1,132 | 0 | 1,261,815 | ||
Net income from non-controlling interests | -52,286 | -30,686 | -239,560 | -192,194 | -102 | 0 | -514,828 | ||
NET INCOME FOR THE PERIOD - GROUP SHARE | 267,196 | -16,007 | 152,365 | 344,667 | -1,235 | 0 | 746,987 | ||
Financial Report at 31 December 2019
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3.2.9 SUBSEQUENT EVENTS
- Hotels in Europe:
Covivio Hotels has signed an agreement for the acquisition of a portfolio of eight hotels, mainly five-star hotels located in the city centres of major European cities: Rome, Florence, Venice (two assets), Budapest (two assets), Prague and Nice.
This transaction will be carried out for a total amount of €573 million. A deposit of €27 million was paid in December 2019.
These hotels will be operated by NH Hotel Group, which has entered into long-term leases with a guaranteed minimum variable rent. The agreement is for an initial term of 16 years, extendible to 30 years at the request of NH Hotel Group.
- Germany Offices:
During the month of February 2020, Covivio launched a friendly takeover bid for the shares of the Group Godewind Immobilien, listed in Germany.
Godewind Immobilien owns a portfolio of 10 office assets in Germany for a value of approximately €1.2 billion. This 35%-secured acquisition will launch the offices business in Germany.
- Germany Residential:
On 30 January 2020, a draft law was passed providing for a rent cap in Berlin. This law is applicable with effect from February 2020. It consists of a 5-year freeze on rents and the introduction of a rental cap based on criteria of location, the age of buildings and the standard of apartments. Under its current terms, the law had no impact on appraisal values. For the Group, in 2020 the impact of the rental cap will be limited owing to the fact that rent from existing leases will not decrease until November 2020.
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3.3 Statutory auditors' report on the consolidated financial statements
Financial year ended 31 December 2019
To the shareholders of Covivio,
Opinion
In compliance with the engagement conferred on us by your general meetings, we have performed an audit of the accompanying consolidated financial statements of Covivio for the financial year ended 31 December 2019.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the entities included in the Group's scope of consolidation as at 31 December 2019, and of the results of their operations for the year then ended, in accordance with the IFRS accounting framework as adopted in the European Union.
The audit opinion thus formulated is consistent with the content of our report to the company's audit committee.
Basis for the audit opinion
- Audit framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our responsibilities by virtue of those professional standards are set out in the latter part of the present report under the heading "Responsibilities of the statutory auditors for the audit of the consolidated financial statements".
- Independence
We performed our audit engagement in compliance with the independence requirements applicable to us during the period from 1st January 2019 to the date of issue of our report; in particular, we performed no services prohibited under article 5, paragraph 1 of EU regulation n° 537/2014 or by virtue of France's Code de déontologie de la profession de commissaire aux comptes.
Observation
Without qualifying our opinion, we draw your attention to the note 3.2.1.2 "First application of IFRS 16" to the consolidated financial statements which describes the change in accounting policy resulting from the first application of the new standard IFRS 16 "Leases".
Justification of our assessments - Key audit matters
In accordance with the requirements of articles L823-9 and R823-7 of the French code of commercial law relating to the justification of our assessments, we bring to your attention the following key audit matters relating to the risks of material misstatement which, in our professional view, have presented the greatest significance for the audit of the accompanying consolidated financial statements, as well as the manner in which we have responded to those risks.
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These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report. We do not express any opinion on isolated elements of the consolidated financial statements.
- Valuation of investment property
Risk identified | Our response |
Given the activity engaged in by Covivio, the fair value of the Group's investment property amounted at 31 December 2019 to 81% of consolidated assets or €20.8 billion. In accordance with the option provided by IAS 40, the Group's investment property is recognised on the basis of its fair value with changes in fair value recognised in profit or loss. Investment property is not amortised.
Note 3.2.5.1.1. to the consolidated financial statements states that the Group's investment property is subject to valuation by independent professional property valuers.
Property valuation is a complex matter requiring the exercise of significant judgement by the Group's professional property valuers based on the data communicated by the Group's management.
Given the weight of the Group's investment property and the sensitivity of their valuation to the applicable assumptions requiring the exercise of judgement, we considered their valuation as a key audit matter.
We obtained an understanding of the Group's process of valuation of its investment property.
Our procedures also involved:
- Assessing the competence and independence of the Group's professional property valuers on the basis of the requirements for rotation and bases of remuneration defined by the Group;
- Obtaining an understanding of the Group's written instructions to their professional property valuers describing the nature of the services required and the scope and limitations of the applicable procedures with particular regard to the verification of the information provided by the Group;
- Assessing, on a test basis, the relevancy of the information provided by the entities' finance departments to the professional property valuers for the purpose of determining the fair value of their investment property, including rent schedules, other accounting data and capital expenditure budgets;
- Analysing the professional property valuers' valuation assumptions such as, in particular, the applicable yield rates, discount factors, estimated rents and market rental values, by comparison with the available market data;
- Interviewing certain professional property valuers in the presence of the Group's finance departments and assessing, by the inclusion of valuation specialists within our audit teams, the consistency and relevancy of the valuation approach applied and of the main associated instances of the exercise of professional judgement;
- Reconciling the resulting property valuations with the amounts included in the consolidated financial statements.
Specific verifications
We have also performed in accordance with professional standards applicable in France, the specific verifications required by French laws and regulations, on the information included in the Board of Directors' management report.
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We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
We attest that the non-financial statement provided for by article L. 225-102-1 of the French Commercial Code (Code de commerce) is included in the management report, it being specified that, in accordance with the provisions of article L. 823-10 of said Code, we have verified neither the fairness nor the compliance with the annual accounts of the information contained in this statement that will be covered by the report issued by an independent third party.
Information reflecting other legal and regulatory requirements
- Statutory audit appointments
We were appointed as statutory auditors of Covivio by your company's general meeting held on 22 May 2000 in the case of MAZARS and 24 april 2013 in the case of ERNST & YOUNG et Autres.
At 31 december 2019, MAZARS was in its twentieth year of engagement without interruption and ERNST & YOUNG et Autres in its seventh year.
Groupe PIA that became Conseil Audit & Synthèse (acquired by ERNST & YOUNG Audit in 2010) was the statutory auditor from 2007 to 2012.
Responsibilities of the Group's management, and of the persons involved in the Group's corporate governance, in respect of the consolidated financial statements
The Group's management is responsible for the preparation of consolidated financial statements presenting a true and fair view in accordance with the IFRS accounting framework as adopted in the European Union and for the implementation of the system of internal control it deems necessary for the preparation of consolidated financial statements free from material misstatement whether resulting from fraud or error.
When preparing the consolidated financial statements, it is incumbent on the Group's management to assess the company's capacity to continue to operate as a going concern, make any necessary disclosure in that respect and present the consolidated financial statements on a going concern basis unless there is an intention to liquidate the company or cease its business.
It is incumbent on the Group's audit committee to oversee the Group's financial reporting process and assess the effectiveness of its systems of internal control and risk management, and of any internal audit function, with regard to the preparation and processing of financial and accounting information.
The consolidated financial statements have been authorised for issuance by the company's Board of Directors.
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Responsibilities of the statutory auditors for the audit of the consolidated financial statements
- Audit purpose and audit approach
We are required to prepare a report on the consolidated financial statements. Our purpose is to obtain reasonable assurance about whether the consolidated financial statements, taken as a whole, are free from material misstatement. Reasonable assurance implies a significant level of assurance which nevertheless does not provide any guarantee that an audit performed in accordance with professional auditing standards will systematically enable the detection of any material misstatement. Misstatements may result from fraud or error and are considered to be material whenever it may reasonably be expected that, taken individually or in aggregate, they may influence the economic decisions taken by users of the financial statements on the basis of those financial statements.
As mentioned by article L823-10-1 of the French code of commercial law, our statutory audit engagement does not guarantee your company's viability or the quality of its management.
In the framework of an audit performed in accordance with professional standards applicable in France, the statutory auditor exercises professional judgement throughout the audit and:
- Identifies the risks of material misstatement in the consolidated financial statements, whether resulting from fraud or from error, defines and deploys audit procedures with regard to those risks and gathers the audit evidence deemed sufficient and appropriate to support the audit opinion. The risk of non-detection of a material misstatement attributable to a fraud is greater than that for a material misstatement attributable to error, since fraud may imply the existence of collusion, falsification, voluntary omission, false statements or bypassing of internal controls;
- Obtains an understanding of the internal controls relevant to the audit for the purpose of defining appropriate audit procedures but not with the intention of expressing an audit opinion on the effectiveness of the Group's system of internal control;
- Assesses the appropriateness of the Group's accounting policies, the reasonableness of management's estimates and the adequacy of the related additional disclosures provided in the consolidated financial statements;
- Assesses the appropriateness of management's application of the going concern convention as well as, based on the audit evidence collected, the existence of any material uncertainty with regard to events or circumstances liable to compromise the company's ability to continue to operate as a going concern. The assessment is based on the audit evidence collected up to the date of the audit report and it must be noted in that respect that subsequent circumstances or events may also compromise the company's ability to continue as a going concern. If the auditor concludes as to the existence of any material uncertainty, the attention of readers of the audit report is drawn to the information provided in that respect in the consolidated financial statements or, if such information is not provided or is not relevant, the auditor formulates a qualified audit opinion or a disclaimer of opinion;
- Assesses the overall presentation of the consolidated financial statements and judges whether the consolidated financial statements reflect the Group's transactions and underlying events in such a way as to provide a true and fair view;
- With regard to the financial information provided by the entities included in the Group's scope of consolidation, gathers the audit evidence deemed sufficient and appropriate for the expression of an audit opinion on the consolidated financial statements. The statutory auditor has overall responsibility for the direction, supervision and performance of the audit of the consolidated financial statements and for the audit opinion thereon.
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- Report to the audit committee
We remit to the audit committee a report which presents the scope of the audit procedures, the work programme implemented and the associated conclusions. We also inform the audit committee of any internal control weaknesses identified in respect of the procedures governing the preparation and processing of the Group's financial and accounting information.
The elements communicated in the report to the audit committee equally include the risks of material misstatement which, in our professional view, have presented the greatest significance for the audit of the accompanying consolidated financial statements and which as such constitute the key audit points we are required to describe in the present report.
We also provide the audit committee with the statement required by article 6 of EU regulation n° 537-2014 and confirming our independence in accordance with the requirements applicable in France as defined in particular by articles L822-10 to L822-14 of the French code of commercial law and by our profession's Code de déontologie de la profession de commissaire aux comptes. If appropriate, we discuss with the audit committee any risks threatening our independence and the corresponding safeguards applied.
Courbevoie and Paris-La Défense, February 27, 2020
The statutory auditors
MAZARS | ERNST & YOUNG et Autres |
Claire Gueydan | Anne Herbein |
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Covivio SA published this content on 06 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 March 2020 19:18:00 UTC