Debt breakdown by currency (after currency swaps) as at December 31, 2020 was as follows: euro 4,216 million denominated in euros, euro 195 million denominated or swapped in US dollars, and euro 98 million denominated in other currencies.
In December 2005, the Groupe established financial ratio targets meant to direct the Groupe’s financial policy on such matters as acquisitions and dividends. These ratios were updated in 2019 to reflect the impact of IFRS 16 applied by the Groupe. The table below presents calculations for these ratios for 2019 and 2020 with the reminder of the optimal ratios as defined above:
Optimal ratio post-IFRS 16 | December 31, 2020 | December 31, 2019 | |
|---|---|---|---|
(Average net financial debt + average lease liabilities) / operating margin before depreciation and amortization | (Average net financial debt + average lease liabilities) / operating margin before depreciation and amortization Optimal ratio post-IFRS 16 <2.2 | (Average net financial debt + average lease liabilities) / operating margin before depreciation and amortization December 31, 2020 2.6 | (Average net financial debt + average lease liabilities) / operating margin before depreciation and amortization December 31, 2019 2.1 |
(Net financial debt + lease liabilities) / equity | (Net financial debt + lease liabilities) / equity Optimal ratio post-IFRS 16 <0.80 | (Net financial debt + lease liabilities) / equity December 31, 2020 0.41 | (Net financial debt + lease liabilities) / equity December 31, 2019 0.71 |
Interest coverage: operating margin before depreciation and amortization / (cost of net financial debt + interest on lease liabilities) | Interest coverage: operating margin before depreciation and amortization / (cost of net financial debt + interest on lease liabilities) Optimal ratio post-IFRS 16 >7 | Interest coverage: operating margin before depreciation and amortization / (cost of net financial debt + interest on lease liabilities) December 31, 2020 11 | Interest coverage: operating margin before depreciation and amortization / (cost of net financial debt + interest on lease liabilities) December 31, 2019 24 |
In order to manage its liquidity risk, Publicis has substantial cash and cash equivalents amounting to euro 3,700 million and confirmed unused credit lines amounting to euro 2,606 million as of December 31, 2020. The main component of these credit lines is a multi-currency syndicated facility in the amount of euro 2,000 million, renegotiated on June 28, 2019, maturing in 2024. In addition, during the financial year 2020, as a preventive measure to deal with the potential impact of the pandemic on liquidity, the Groupe drew down the entire facility in March, half of which was repaid in June and the other half in September.
These immediately available or almost immediately available amounts allow the Groupe to meet the Groupe’s general financing requirements, as well as pay its financial debt maturing in less than one year (including minority interest buyout commitments).
They only include standard credit default event clauses (liquidation, cessation of payment, default on the debt itself or on the repayment of another debt above a given threshold) which are generally applicable above a threshold of euro 25 million.
The Groupe has not established any credit derivatives to date.
Groupe cash management continued to benefit from the introduction of local centralized cash-pooling centers in the Groupe’s main markets. Since 2006, an international cash pooling structure has been implemented with the goal of pooling all cash for the Groupe as a whole.
Two financial companies established in Dublin since 2014 have been added to the Groupe to manage financial transactions and the short-term investing of subsidiaries’ liquidity. In 2017, one of these two companies, MMS Multi Euro Services DAC, became the lynchpin of the centralization of international cash pooling for the entire Groupe. The other company, MMS Ireland DAC, whose functional currency is the dollar, became the lynchpin of the centralization of cash pooling for most of the Groupe’s US entities.
The Groupe’s cash resources are, for the most part, centralized in Ireland. Cash resources not centralized in Ireland are, for the most part, held by subsidiaries in countries where funds can be freely transferred and centralized.
On April 16, 2019, S&P gave a rating of BBB+, stable outlook, given the negative implications of the Epsilon acquisition announcement.
On October 16, 2019, S&P downgraded Publicis’ rating from BBB+ to BBB with a stable outlook.
On April 17, 2019, Moody’s confirmed the Baa2 rating but changed the outlook from neutral to negative.
As regards the ratings of these agencies, there were no new elements during the 2020 financial year.
See also Notes 23 and 29 to the consolidated financial statements (Section 6.6 “Notes to the consolidated financial statements”).
As of December 31, 2020, and at the date of the closing of accounts, there were no rating triggers or financial covenants for short-term bank credit lines, syndicated loans, confirmed medium-term bilateral bank credit lines or bond debt likely to restrict the Groupe’s liquidity.
There are no legal or economic restrictions likely to limit or significantly restrict any transfers of funds to the parent company in the near future.
Given its cash position and its confirmed unused credit lines amounting to euro 6,306 million at December 31, 2020, the Groupe has the necessary liquidity to meet its operating requirements and investment plan over the next 12 months.
