DEBT DETAIL AND EVOLUTION

LEVERAGE RATIO

 

January-September 2019 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

  December 2019 December 2018

Notes:

* Includes assets and liabilities defined as net financial debt plus commitments for El Salvador and Costa Rica, that are classified as non-current assets held for sale and liabilities associated with non-current assets held for sale.

- In December 2019, net financial debt includes a positive value of the derivatives portfolio for a net amount of €1,948m, €2,882m included as financial liabilities and €4,830m included as financial assets.

(1) Net financial debt calculation has been redefined in the first quarter of 2019 excluding the mark to market adjustment of the unmatured cash flow hedges associated to debt instruments. This change seeks to eliminate the asymmetry generated by the accounting valuation method of both financial instruments; the debt instrument valued at amortized cost and the derivative at market value. The change has been applied to all comparative periods. Also, following the entry into force of IFRS 16 since 1 January 2019, for comparison purposes, the net financial debt figure of December 2018 has been modified to exclude the lease liability of finance leases.

(2) For leverage ratio calculation purposes only (Net financial Debt / OIBDA), OIBDA is also adjusted in 2018 to reflect finance leases under IAS 17.

Non-current financial liabilities 43,288 45,334
Current financial liabilities 9,076 9,368
Gross Financial Debt 52,364 54,702
Cash and cash equivalents (6,042) (5,692)
Other assets included in "Other current financial assets" (3,118) (2,209)
Cash and other current financial assets included in "Non-current Assets Held for Sale" (24) (165)
Positive mark-to-market value of long-term derivative instruments (3,389) (2,776)
Other liabilities included in "Payables and other non-current liabilities" 401 800
Other liabilities included in "Payables and other current liabilities" 73 111
Other assets included in "Financial assets and other non-current assets" (904) (1,593)
Other assets included in "Receivables and other current assets" (813) (867)
Other assests included in “Tax receivables" (452) (568)
Financial liabilities included in "Liabilities associated with non-current assets held for sale 36 42
Finance Leases under IAS 17 (1) n.a (201)
Mark-to-market adjustment by cash flow hedging activities related to debt (1) (388) (510)
Net Financial Debt * (1) 37,744 41,074
Lease Liabilities 7,379 n.a.
Net Financial Debt including Lease liabilities 45,123 n.a.
Gross commitments related to employee benefits 6,711 5,916
Value of associated Long-term assets (75) (727)
Tax benefits (1,739) (1,390)
Net commitments related to employee benefits 4,897 3,846
Net financial debt plus commitments* 42,641 44,920
Net Financial Debt / OIBDA (2) 2.46x 2.62x

 

FINANCING ACTIVITY

In 2019, the financing activity of Telefónica amounted to €8,299m equivalent (without considering the refinancing of commercial paper and short-term bank loans) and focused on maintaining a solid liquidity position and refinancing and extending debt maturities (in an environment of low interest rates). Thus, as of the end of December, the Group has covered debt maturities for the next two years. The average debt life stood at 10.5 years (vs. 9.0 years in December 2018).

After the closing, in January, Telefónica Germany GmbH & Co. OHG signed a second financing tranche with the EIB (€150m with maximum maturity date in 2029).

In addition, Telefónica Europe, B.V., launched its first green issuance of Undated Deeply Subordinated Guaranteed Fixed Rate Reset Securities, with the subordinated guarantee of Telefónica, S.A., (€500m and subject to a call option excercisable from the 7.25 anniversary of the issuance date) and a tender offer for the purchase of two existing hybrid references. Telefónica Europe, B.V. accepted the purchase in an aggregate principal amount of €383m equivalent and exercised the early redemption option with respect to both instruments for a total amount of €112m equivalent. The latest transaction, together with the tender offer exercised in March 2019, implied extending the average years to call, from 4.0 (December 2018) to 4.7, and reducing the average coupon paid from 4.70% to 3.74%.

Also, in January, Telefónica Emisiones closed an issuance of Notes amounting to €1,000m, due on February 2030 and with an annual coupon of 0.664%.

In 2019, Telefónica Group obtained funding by means of extending payment terms with suppliers or the factoring firm where those had been discounted, for a total of €392m equivalent (€507m equivalent in January-December 2018).

Telefónica, S.A. and its holding companies continued their issuance activity under the Promissory Notes and Commercial Paper Programmes (Domestic and European), maintaining an outstanding notional balance of €1,465m at December.

At December, Telefónica maintained undrawn, committed credit lines with different credit institutions for an amount of €13,679m (€12,789m maturing in over twelve months) which, combined with the cash equivalents position and current financial assets, placed liquidity at €22,839m.

 

FINANCIAL DEBT

Total financial liabilities breakdown

Unaudited figures (Euros in millions)

  December 2019
  Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities (1) 94% 7% -1%
(1) Includes positive value of derivatives and other financial debt.

 

Net financial debt structure by currency

Unaudited figures (Euros in millions)

  December 2019
  EUR LATAM GBP USD
Net financial debt structure by currency 78% 11% 10% 1%

 

FINANCIAL EXPENSES

Net financial expenses in the fourth quarter totalled €440m vs. €380m in the same period of 2018, mostly driven by the impact from the adoption of IFRS 16. In January-December net financial expenses totalled €1,832m vs. €955m in 2018, due to the positive impacts on the financial statements associated with the favourable court ruling in Brazil in 2018 and the impact from the adoption of IFRS 16.

NOTE: For further information, please access the January – December 2019 Results Report

View Quarterly Report PDF document [3.9 MB]