Note 20: Net debt

Net debt

in € millions

Long-term borrow­ings

Short-term borrow­ings

Short-term invest­ments

Cash and cash equi­valents

Net debt

Net debt equivalents at January 1, 2018

2,300

973

(1,322)

1,951

Net cash from operating activities

(162)

(162)

Net cash from investing activities

 

207

207

Proceeds from borrowings

7

600

(607)

Borrowings repaid

(1,529)

1,529

Transfers from long-term to short-term

(526)

526

Investments in short-term investments

(5,541)

5,541

Repayments of short-term investments

80

(80)

Dividends

636

636

Movements bank overdrafts and short-term bank loans

33

(33)

Net cash from discontinued operations

(8,958)

(8,958)

Buy out of non-controlling interests

437

437

Changes in exchange rates

(9)

17

8

Other changes

18

5

1

(4)

20

Net debt at year-end 2018

1,799

599

(5,460)

(2,799)

(5,861)

Impact adoption IFRS 16

270

93

363

Net debt at January 1, 2019

2,069

692

(5,460)

(2,799)

(5,498)

Net cash from operating activities

(33)

(33)

Net cash from investing activities

102

102

Acquisitions

7

(16)

224

215

Unwind of discount and amortized cost

10

(1)

9

Proceeds from borrowings

3

7

(10)

Borrowings repaid

(623)

623

New/modification of lease contracts

34

18

52

Transfers from long-term to short-term

(86)

86

Movement bankoverdrafts and short-term bank loans

2

(2)

Investments in short-term investments

(2,325)

2,325

Repayments of short-term investments

7,663

(7,663)

Dividends

1,446

1,446

Capital repayments

2,000

2,000

Share repurchase

2,520

2,520

Net cash from discontinued operations

10

10

Changes in exchange rates

3

(6)

(15)

(18)

Other changes

2

(6)

1

(3)

Net debt at year-end 2019

2,042

169

(138)

(1,271)

802

Analysis of net debt by category

In € millions

2018

2019

Bonds issued

1,739

1,741

Lease liabilities

32

262

Other borrowings

28

39

Long-term borrowings

1,799

2,042

Current portion of long-term borrowings

511

3

Current portion of lease liabilities

5

90

Debt to credit institutions

67

61

Other

16

15

Short-term borrowings

599

169

Total borrowings

2,398

2,211

Short-term investments

(5,460)

(138)

Cash and cash equivalents

(2,799)

(1,271)

Net debt

(5,861)

802

AkzoNobel’s is mainly denominated in euro.

The part of long-term borrowings that is due within one year is presented under short-term borrowings. For details on the exposure to interest rate and foreign currency risk, see Note 26.

The average effective interest rate of the bonds outstanding at year-end 2019 was 1.9% (year-end 2018: 1.9%).

Bonds issued

In € millions

2018

2019

2 5/8% 2012/22 (€750 million)

746

747

1 3/4% 2014/24 (€500 million)

498

498

1 1/8% 2016/26 (€500 million)

495

496

Total

1,739

1,741

Long-term borrowings

We have a €1.8 billion multi-currency revolving credit facility which runs until 2022. This facility does not contain financial covenants or acceleration provisions that are based on adverse changes in ratings or material adverse change. At year-end 2019 and 2018, this facility has not been drawn.

The blended incremental borrowing rate applied to the lease liabilities at year-end 2019 was 2.2%.

At year-end 2019 and 2018, none of the borrowings was secured by collateral.

Aggregated maturities of long-term borrowings

In € millions

2021-2024

After 2024

Bonds issued

1,245

496

Lease liabilities

183

79

Other borrowings

14

25

Total

1,442

600

Short-term borrowings

In November 2019, a bond of €500 million matured.

We have US dollar and euro commercial paper programs in place, which can be used to the extent that the equivalent portion of the €1.8 billion multi-currency revolving credit facility is not used. We had no commercial paper outstanding at year-end 2019 and 2018.

Cash and cash equivalents

Deposits and money market funds within cash and cash equivalents almost entirely consist of time deposits immediately convertible into known amounts of cash and with a maturity of three months or less from the date of purchase and marketable securities that can be redeemed immediately when called.

At December 31, 2019, an amount of €21 million in cash and cash equivalents was restricted (2018: €8 million). Restricted cash is defined as cash that cannot be accessed centrally due to regulatory or contractual restrictions.

Cash and cash equivalents

In € millions

2018

2019

Cash on hand and in banks

896

1,031

Deposits and money market funds with a life up to three months

1,903

240

Included under cash and cash equivalents in the balance sheet

2,799

1,271

Debt to credit institutions

(67)

(61)

Total per statement of cash flows

2,732

1,210

Short-term investments

Short-term investments almost entirely consist of time deposits, money market funds and other marketable securities with a life time at investment date longer than three months but shorter than twelve months. For more information on credit risk management, see Note 26.

Short-term investments

In € millions

2018

2019

Short-term investments with life between three and 12 months

5,460

138

Total

5,460

138

Net debt

Defined as long-term borrowings plus short-term borrowings less cash and cash equivalents and short-term investments.