5.1
Independent auditor's report

To: the General Meeting of Shareholders and the Supervisory Board of Accell Group N.V.

Report on the audit of the financial statements 2021
included in the annual report
 

Our opinion

In our opinion:

  • the accompanying consolidated financial statements give a true and fair view of the financial position of Accell Group N.V. as at 31 December 2021 and of its result and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
  • the accompanying company financial statements give a true and fair view of the financial position of Accell Group N.V. as at 31 December 2021 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

What we have audited

We have audited the financial statements 2021 of Accell Group N.V. (the Company) based in Heerenveen, The Netherlands. The financial statements include the consolidated financial statements and the company financial statements.

The consolidated financial statements comprise:

  • the consolidated balance sheet as at 31 December 2021;
  • the following consolidated statements for 2021: the income statement, the statement of comprehensive income, statement of cash flows and changes in equity; and
  • the notes comprising a summary of the significant accounting policies and other explanatory information.

The company financial statements comprise:

  • tthe company balance sheet as at 31 December 2021;
  • the company income statement for 2021; and
  • the notes comprising a summary of the accounting policies and other explanatory information.
     

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.

We are independent of Accell Group N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).

Our audit procedures were determined in the context of our audit of the financial statements as a whole. Our observations in respect of going concern, fraud and non-compliance with laws and regulations, climate and the key audit matters should be viewed in that context and not as separate opinions or conclusions.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Audit approach

Summary

Materiality

Based on our professional judgement we determined the materiality for the financial statements as a whole at EUR 4.0 million (2020: EUR 3.0 million). The materiality is determined with reference to profit before tax (4.4%). We consider profit before tax as the most appropriate benchmark because the company is a profit oriented company and the main stakeholders are primarily focused on profit. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons. 

We agreed with the Supervisory Board that misstatements identified during our audit in excess of EUR 200,000 would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Scope of the group audit

Accell Group N.V. is at the head of a group of components. The financial information of this group is included in the financial statements of Accell Group N.V.

Our group audit is mainly focused on components where account balances are of significant size, have significant risks of material misstatement to the group associated with them or are considered significant for other reasons.

We have:

  • performed full scope audit procedures (audit of the complete reporting package) on the financial information for the components in the Netherlands, Germany, France, the United Kingdom, Turkey, Spain and Hungary;
  • performed specified audit procedures related to inventory in Denmark and Finland;
  • performed specific audit procedures at group level aimed at amongst others deferred taxes, goodwill and other intangible assets and derivatives;
  • sent detailed instructions to all component auditors, including the significant areas that should be covered (which included the relevant risks of material misstatement) and set out the information required to be reported to the group auditor. We performed file reviews of components in the Netherlands, the United Kingdom, Turkey and Spain and held various telephone calls with the auditors of the components, to discuss the group audit, significant risks, audit approach and instructions, as well as the audit findings and observations reported to the group auditor.

In view of restrictions on the movement of people across borders, and also within significantly COVID-19 affected countries, the group audit team has considered making changes to the planned audit approach to evaluate the component auditors’ communications and the adequacy of their work. According to our original audit plan, we intended to visit the components in countries United Kingdom, Turkey and Spain to review selected component auditor documentation. Due to the aforementioned restrictions, this was not practicable in the current environment. As a result, we have requested those component auditors to provide us with access to audit workpapers to perform these evaluations. In addition, due to the inability to arrange in-person meetings with such component auditors, we have increased the use of alternative methods of communication with them, including through written instructions, exchange of emails and virtual meetings. During these meetings and email conversations, the audit approach, findings and observations reported to the group audit team were discussed in more detail.

By performing the procedures mentioned above at group components, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the financial statements.

For the residual population not in scope we performed analytical procedures in order to corroborate that our scoping remained appropriate throughout the audit.

The audit coverage as stated in the section summary can be further specified as follows:


 

Audit response to going concern - no significant going concern risks identified

As explained on page 180 of the financial statements the management board has performed its going concern assessment and has not identified any going concern risks. To assess the management board’s assessment, we have performed among other things, the following procedures:

  • we considered whether the management board’s assessment of the going concern risks includes all relevant information of which we are aware as a result of our audit;
  • we evaluated whether the management board’s assessment of going concern is adequately disclosed in the financial statements;
  • we analyzed the operating results forecast and the related cash flows compared to the previous financial year, developments in the business sector and any information of which we are aware as a result of our audit;
  • we analysed the company’s financial position as at year-end and compared it to the previous financial year in terms of indicators that could identify significant going concern risks.

The outcome of our risk assessment procedures did not give reason to perform additional audit procedures on management’s going concern assessment. 

Audit response to the risk of fraud and non-compliance with laws and regulations

In the chapter Governance and Compliance of the annual report the management board describes its procedures in respect of the risk of fraud and non-compliance with laws and regulations and the Supervisory Board reflects on this.

As part of our audit, we have gained insights into Accell Group N.V. and its business environment, and assessed the design and implementation of the Accell Group N.V.’s risk management in relation to fraud and non-compliance. Our procedures included, among other things, assessing the Accell Group N.V.’s code of conduct, whistleblowing procedures and its procedures to investigate indications of possible fraud and non-compliance. Furthermore, we performed relevant inquiries with management, the Supervisory Board and other relevant functions, such as Internal Audit and Legal Counsel. As part of our audit procedures, we:

  • evaluated the Code of conduct Committee reports on indications of possible fraud and non-compliance;
  • evaluated correspondence with supervisory authorities and regulators as well as legal confirmation letters.

In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to Accell Group N.V. and identified the following areas as those most likely to have a material indirect effect on the financial statements: 

  • consumer product law, including product safety and product liability claims (reflecting the nature of the Accell Group N.V.’s product base);
  • health and safety law (reflecting the nature of the Accell Group N.V.’s production and distribution processes);
  • anti-bribery and corruption laws and regulations (reflecting the Accell Group N.V.’s significant and geographically operations);
  • environmental law (reflecting environmental impact restrictions, waste and contamination related to the Accell Group N.V.’s production and distribution processes).

We, together with our forensics specialists, evaluated the fraud and non-compliance risk factors to consider whether those factors indicate a risk of material misstatement in the financial statements. 

Based on the above and on the auditing standards, we identified the following fraud risks that are relevant to our audit, including the relevant presumed risks laid down in the auditing standards, and responded as follows:

— Management override of controls (a presumed risk)


Risk:

  • Management is in a unique position to manipulate accounting records and prepare fraudulent financial statements by overriding controls that otherwise appear to be operating effectively.
  • Fraud risk relates to management override and alteration of financial results to meet external expectations, to maintain/increase current stock price and to realize contingent compensation.
  • The fraud risk relates to high-risk manual journal entries and significant accounts with high judgment for which management may rationalize unrealistic or unreliable assumptions in developing an estimate.

Responses:

  • Test of design and implementation and, depending on circumstances test the operating effectiveness of related controls over journal entries and post-closing adjustments.
  • Assess the appropriateness of changes compared to the prior year to the methods and underlying assumptions used to prepare accounting estimates.
  • Assess the appropriateness of the accounting for significant transactions that are outside the component’s normal course of business, or are otherwise unusual. We assessed the accounting for the buy-in of the pension plan at Raleigh UK, for details we refer to our key audit matter.
  • Search for fraudulent journal entries with characteristics that make them susceptible to fraud using KPMG data analytics and perform detailed testing on these journal entries based on supporting documentation.
  • We incorporated elements of unpredictability in our audit, including review of the declarations of Board Members.

— Revenue recognition (a presumed risk)


Risk:

We identified a risk of fraud related to manual adjustments to revenue, which presents an opportunity and/or incentive for management to inappropriately increase revenue in order to improve profitability.

Responses:

  • Test of design and implementation, and depending on circumstances, test the operating effectiveness of related controls.
  • Search for fraudulent manual journal entries to revenues.
  • Search for fictitious sales using KPMG data analytics to match sales invoices to related orders and dispatch notes at the transaction level, and investigate unmatched transactions as these could be an indication of a manual adjustment.
  • Assess whether credit notes issued after year-end are recognized in the correct period.

Our procedures to address the identified risks of fraud and related to non-compliance with laws and regulations did not result in a key audit matter. 

We communicated our risk assessment, audit responses and results to management and the Audit Committee of the Supervisory Board. Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are considered material for our audit.

Audit response to climate-related risks

The management board is responsible for preparing the financial statements in accordance with the applicable financial reporting framework, including considering whether the implications from climate-related risks and commitments have been appropriately accounted for and disclosed. 

The management board has performed its analysis of the impact of climate-related risks on the company’s business and operations going forward and on its accounting in the current financial statements as part of its regular risk management procedures. These risk management procedures are disclosed in chapter 'Risk Management' of the annual report.

The evaluation of the effectiveness of management’s strategy against internal or external goals set is not in scope of our audit of the financial statements. As part of our audit we consider potential effects of climate-related risks on the accounts and disclosures, including estimates and judgements in the current year’s financial statements to determine whether the financial statements are free from material misstatements. This includes discussion of the company’s strategy in relation to climate change with management and those charged with governance and inspecting minutes and external communications for significant climate related commitments, strategies and plans made by the management board. 

Our key audit matter

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matter to the Supervisory Board. The key audit matter is not a comprehensive reflection of all matters discussed.

Compared to last year the key audit matter with respect to the valuation of deferred tax asset related to the liquidation losses of Accell North America is no longer included as a key audit matter as this only applied to the 2020 financial statements.

 

Report on the other information included in the annual report


In addition to the financial statements and our auditor’s report thereon, the annual report contains other information.

Based on the following procedures performed, we conclude that the other information:

  • is consistent with the financial statements and does not contain material misstatements; and
  • contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and other information.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. 

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements. 

Board of management is responsible for the preparation of the other information, including the information as required by Part 9 of Book 2 of the Dutch Civil Code.
 

Report on other legal and regulatory requirements (and ESEF)

 

Engagement

We were engaged by the General Meeting of Shareholders as auditor of Accell Group N.V. on 26 April 2016, for the audit for the year 2016 and have operated as statutory auditor ever since that financial year.

No prohibited non-audit services

We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audits of public-interest entities.

European Single Electronic Format (ESEF)

Accell Group N.V. has prepared its annual report in ESEF. The requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (these requirements are hereinafter referred to as: the RTS on ESEF).

In our opinion, the annual report prepared in the XHTML format, including the partially tagged consolidated financial statements as included in the reporting package by Accell Group N.V., has been prepared in all material respects in accordance with the RTS on ESEF.

The Board of Management is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package, is in accordance with the RTS on ESEF.

Our procedures taking into consideration Alert 43 of NBA (the Netherlands Institute of Chartered Accountants), included amongst others:

  • obtaining an understanding of the entity's financial reporting process, including the preparation of the reporting package;
  • obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications as included in the RTS on ESEF;
  • examining the information related to the consolidated financial statements in the reporting package to determine whether all required taggings have been applied and whether these are in accordance with the RTS on ESEF.
     

Description of responsibilities regarding the financial statements


Responsibilities of the Board of Management and the Supervisory Board for the financial statements

The Board of Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Board of Management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In that respect the Board of Management, under supervision of the Supervisory Board is responsible for the prevention and detection of fraud and non-compliance with laws and regulations, including determining measures to resolve the consequences of it and to prevent recurrence.

As part of the preparation of the financial statements, the Board of Management is responsible for assessing the Company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the Board of Management should prepare the financial statements using the going concern basis of accounting unless the Board of Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements. 

The Supervisory Board is responsible for overseeing the Company’s financial reporting process.

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. 

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. 

A further description of our responsibilities for the audit of the financial statements is included in appendix of this auditor's report. This description forms part of our auditor’s report.

Groningen, 3 March 2022

KPMG Accountants N.V.
R.W. van Dijk RA

Appendix: 
Description of our responsibilities for the audit of the financial statements

 

Appendix

 

Description of our responsibilities for the audit of the financial statements

We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others:

  • identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the risk resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
  • obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Accell Group N.V.’s internal control;
  • evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Management
  • concluding on the appropriateness of the Board of Management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Accell Group N.V.’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern;
  • evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and
  • evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We are solely responsible for the opinion and therefore responsible to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the financial statements. In this respect we are also responsible for directing, supervising and performing the group audit. 

We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audits of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.

We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Supervisory Board we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.