NOTE 3 SIGNIFICANT EVENTS
3.1 Impact of Covid-19
The Covid-19 health crisis has impacted the economies of the 46 countries where the Group operates. The measures taken to contain the spread of the virus have created substantial disruption for companies around the world, triggering an economic downturn. Following a gradual recovery across all regions where the Group operates, the economy once again began to slow down at the end of the third quarter of 2020.
During the lockdown periods, Edenred implemented homeworking for nearly 95% of its employees worldwide, with only limited use of short-time working arrangements in France and business continuity has been secured thanks to the increasingly digital nature of its solutions. Employee Benefits, Fleet & Mobility Solutions and Complementary Solutions are resilient and their operations were only partially impacted by the pandemic.
The Group has incurred specific expenses in connection with the Covid-19 epidemic, which represent a marginal amount at the Group level. They mainly concern equipment and measures to ensure compliance with health regulations, initiatives to support employees, affiliates and partners, and payroll costs not fully covered by government-subsidized relief measures. The Group has assessed the consequences of the Covid-19 epidemic on counterparty risk (see "Chapter 4 "Risk factors and management").
Following impairment tests performed on the Group’s goodwill and non-current assets, no impairment losses were recognized in respect of the Covid-19 health crisis. However, the Group did recognize goodwill impairment relating to the Colombia CGU for €1 million and to the equity-accounted Goodcard investment for €3 million. Consequently, no further impairment will be recognized on deferred tax assets on tax loss carryforwards due to the impacts of the Covid-19 health crisis. In addition, the statistical rates used to impair current assets of Group entities were reviewed and adjusted in the interests of prudence to take into account the economic uncertainty surrounding the coming months, more specifically due to government relief measures that artificially reduce the business default rate.
Thanks to an assertive collection policy, the Group has reduced trade receivables days. Although economic indicators show that business default rates have improved due to government support in most of the regions where the Group operates, the Group has increased the level of provisioning for trade receivables for certain high-risk regions.
On a like-for-like basis compared with 2019, the decline in business activity over the year had a negative 1.6% impact on operating revenue (or €26 million), a negative 11.9% impact on other revenue (or €7 million), and a negative 2% impact on total revenue (or €33 million). Accordingly, EBITDA declined by 4.6% (or €31 million) and EBIT by 7.6% (or €41 million) (see Note 4.2.1 “Segment information by indicator”).
With regard to cash flow, the total or partial economic shutdowns across the world prompted a decline in the use of Edenred solutions and more specifically in reimbursements to affiliates, which had a favorable impact on the seasonality of working capital, improving the Group’s net debt position. These atypical differences triggered by the crisis will be gradually reabsorbed as economic activity recovers in 2021.
3.2 Payment of the 2019 dividend
At the Combined General Meeting on May 7, 2020, Edenred shareholders approved the payment of a dividend of €0.70 per share in respect of 2019, with the option of receiving payment of the entire dividend in new shares.
The option for payment of the dividend in new shares, which ran from May 15 to May 29, 2020, led to the issuance of 3,378,494 new ordinary Edenred shares, representing 1.39% of the share capital, which were settled and admitted to trading on the Euronext Paris stock market on June 5, 2020.
The new shares carry dividend rights from January 1, 2020 and rank pari passu with existing ordinary Edenred shares. Following the issuance, the Company’s share capital comprised 246,583,351 shares.
The total dividend amounted to €170 million and included cash dividends of €60 million paid to Group shareholders on June 5, 2020.
3.3 €600 million bond issuance
On June 18, 2020, Edenred issued €600 million worth of nine-year bonds maturing on June 18, 2029 and paying a coupon of 1.375%. The bond issuance enabled the Group to strengthen its financial resources and extend the average maturity of its debt under favorable conditions.
3.4 Subsequent events
Extension of the maturity of the €750 million credit facility
At December 31, 2020, Edenred had a €750 million undrawn confirmed line of credit, expiring in February 2025. This facility will be used for general corporate purposes.
In January 2021, the maturity of the €750 million syndicated credit facility was extended by one year beyond its February 12, 2025 expiry date, following Edenred’s exercise of the maturity extension option granted in the facility agreement. By accepting this extension, all the participating banks reaffirmed their confidence in the Group. With the new five-year maturity, the facility will now be utilizable until February 2026.