Consolidated equity attributable to holders of the parent company rose from euro 6,853 million at December 31, 2018 to euro 7,392 million at December 31, 2019.
Net financial debt
| (in millions of euros) | 12/31/2019 | 12/31/2018 |
|---|---|---|
(in millions of euros) Financial debt (long- and short-term) | 12/31/2019 5,888 | 12/31/2018 2,874 |
(in millions of euros) Fair value of derivative hedging on the 2021 and 2024 Eurobonds (1) | 12/31/2019 112 | 12/31/2018 46 |
(in millions of euros) Fair value of derivative hedging on the 2025, 2028 and 2031 Eurobonds (1) | 12/31/2019 87 | 12/31/2018 0 |
(in millions of euros) Fair value of hedging derivatives on medium-term syndicated loan (1) | 12/31/2019 0 | 12/31/2018 (3) |
(in millions of euros) Fair value of derivatives hedging intra-group loans and borrowings (1) | 12/31/2019 39 | 12/31/2018 1 |
(in millions of euros) Total financial debt including market value of the associated derivatives | 12/31/2019 6,126 | 12/31/2018 2,918 |
(in millions of euros) Cash and cash equivalents | 12/31/2019 (3,413) | 12/31/2018 (3,206) |
(in millions of euros) Net financial debt | 12/31/2019 2,713 | 12/31/2018 (288) |
(in millions of euros) Net debt/equity (including minority interests) | 12/31/2019 0.37 | 12/31/2018 n/a (positive net cash) |
(1) Carried under “Other receivables and current assets” and/or under “Other debts and current liabilities” on the consolidated balance sheet.
Net debt totaled euro 2,713 million at December 31, 2019, after a net cash position of euro 288 million at December 31, 2018. The Group’s average net debt in 2019 was euro 2,375 million, versus euro 1,323 million in 2018.
The increase in the Group’s net debt is a result of the acquisition of Epsilon, largely financed by a bond issued in three tranches for a total amount of euro 2.25 billion. The Group’s gross debt was euro 6,126 million as at December 31, 2019, compared with euro 2,918 million as at December 31, 2018. This debt consisted of 91% long-term borrowings (see Note 22 to the consolidated financial statements in Chapter 6 for a detailed maturity schedule of Group debt).
The financial liabilities, after taking into account the interest rate swaps on the Eurobond and the medium-term syndicated loan, are essentially made up of fixed-rate borrowings (79% of the gross debt excluding debt related to long-term equity investments and commitments to buy-out non-controlling interests as at December 31, 2018) with an average rate recorded for 2019 of 3.1%. Debt breakdown by currency (after currency swaps) as at December 31, 2019 was as follows: euro 4,354 million denominated in euros, euro 1,430 million denominated or swapped in US dollars, and euro 104 million denominated in other currencies.
In December 2005, the Group established financial ratio targets meant to direct the Group’s financial policy on such matters as acquisitions and dividends. These ratios were updated in 2019 to reflect the impact of IFRS 16 applied early by the Group from 2018. The table below presents calculations for these ratios for 2018 and 2019 with the reminder of the optimal ratios as defined above:
| Optimal ratio post-IFRS 16 | December 31, 2019 | December 31, 2018 | |
|---|---|---|---|
(Average net financial debt + average lease liabilities)/operating margin before depreciation and amortization | Optimal ratio post-IFRS 16 < 2.2 | December 31, 2019 2.1 | December 31, 2018 1.6 |
(Net financial debt + lease liabilities)/equity | Optimal ratio post-IFRS 16 < 0.80 | December 31, 2019 0.71 | December 31, 2018 0.26 |
Interest coverage: operating margin before depreciation and amortization/(cost of net financial debt + interest on lease liabilities) | Optimal ratio post-IFRS 16 > 7 | December 31, 2019 24 | December 31, 2018 30 |
