4.6
6. Notes to the consolidated financial statements

For the financial year ended 31 December 2021.

6.1 General information

 

Accell Group N.V. (“Accell Group”) in Heerenveen, The Netherlands, is the holding company of a group of legal entities. An overview of the data required pursuant to articles 2:379 and 2:414 of the Dutch Civil Code is enclosed in note 19.3. Accell Group with its group of companies is internationally active in the design, development, production, marketing and sales of innovative and high-quality bicycles, bicycle parts and accessories.

6.2 Basis of preparation

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A | General

These consolidated financial statements:

  • have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRSs) and comply with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code;
  • have been prepared on a going concern basis;
  • were authorized for issue by the Board of Management on 3 March 2022;
  • have been prepared on a historical cost basis unless otherwise stated;
  • are presented in euros, which is Accell Group’s functional currency;
  • are rounded to the nearest thousand, unless otherwise indicated. Calculations in the tables are based on unrounded figures; as a result, rounding differences can occur.  

B | Use of estimates

In preparing these consolidated financial statements, Accell Group has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

 

Information about assumptions and estimations of uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 December 2021 is included in the following notes:

  • Note 8.2: trade and other receivables: measurement of discount accruals, bonus receivables and expected credit losses.
  • Note 10.3:  goodwill and other intangible assets impairment test: key assumptions underlying recoverable amounts, including the recoverability of development costs.
  • Note 11.1: recognition and measurement of provisions: key assumptions regarding the likelihood and magnitude of an outflow of resources.
  • Note 11.2:  measurement of defined benefit obligations: key actuarial assumptions.
  • Note 14: financial instruments - fair values.
  • Note 15.2: recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used.
  • Note 16.4: share-based payment estimates regarding the number of conditional shares that will vest (performance criteria and continuation of employment).

 

C | Changes in accounting policies

Accell Group applied for the first-time certain standards and amendments which are effective for annual periods beginning on or after 1 January 2021 (unless otherwise stated). The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Interest rate benchmark reform (IBOR) —Phase 2, which amends IFRS 9 Financial Instruments, IAS 39 Financial Instruments: recognition and measurement, IFRS 7 Financial Instruments: disclosures, IFRS 4 Insurance Contracts and IFRS 16 Leases. The amendments address issues that might affect financial reporting as a result of the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The amendments provide practical relief from certain requirements in the aforementioned standards. These amendments had no impact on the consolidated financial statements of Accell Group because the main IBOR exposure is Euribor which was subject to a reform in 2019 and is currently not expected to be replaced with an alternative rate. Reforms have made EURIBOR compliant with EU Benchmark Regulation and the rate can therefore continue to be used for existing and new contracts and instruments. Accell Group intends to use the practical expedients in future periods if they become applicable.

The Amendment to IFRS 16 Leases: COVID-19 Related rent concessions beyond 30 June 2021 applicable on or after 1 April 2021 which provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the pandemic had no impact on the consolidated financial statements, as Accell Group had no COVID-19 related rent concessions. Accell Group plans to apply the practical expedient if it becomes applicable within the allowed period of application.

 

Mandatory upcoming changes

Accell Group has not applied the following upcoming changes (effective for annual periods beginning on or after 1 January 2022) when preparing these consolidated financial statements: Amendments to IAS 37: Onerous contracts – costs of fulfilling a contract, Annual improvements 2018-2020, Amendment to IAS 16: Property, plant and equipment, proceeds before intended use, and Amendment to IFRS 3: Reference to the conceptual framework. Accell Group does not currently expect these changes to have any impact on its financial statements.

The implications of changes effective for annual reporting periods beginning on or after 1 January 2023 are under review but are expected to have an impact on the (presentation in) financial statements. These entail the following: Amendment to IAS 1: Classification of liabilities as current or non-current, Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies, Amendments to IAS 8: Definition of accounting estimates, Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction.

6.3 General accounting policies

 

This section describes Accell Group’s general accounting policies relating to the consolidated financial statements and notes as a whole. If an accounting policy relates specifically to a note (balance or transaction) it is presented within the relevant note. Accell Group has applied these accounting policies consistently to all periods presented in these consolidated financial statements, taking into account the accounting policy changes mentioned in note 6.2C.

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A | Basis of consolidation

The consolidated financial statements are prepared as a consolidation of the financial statements of Accell Group N.V. and its subsidiaries. Subsidiaries are entities controlled by Accell Group. Accell Group controls an entity when it has power over the investee, is exposed or has the right to variable returns from its involvement with that entity and has the ability to affect those returns through its power over the entity. Control is generally obtained by ownership of more than 50% of the voting rights.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by Accell Group.

When Accell Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, as well as any non-controlling interests and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. This fair value becomes the initial carrying amount for the purpose of subsequently accounting for the retained interest as an associate, joint venture or financial asset.

Upon consolidation, intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of Accell Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

 

B | Foreign currency


Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of group companies using the exchange rates at the transaction date.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured on a historical cost basis in a foreign currency are not translated again at a later stage.

Foreign currency differences are generally recognized in profit or loss, for working capital items in cost of materials and consumables and for financing activities in net finance costs. However, foreign currency differences arising from the translation of qualifying cash flow hedges, to the extent the hedges are effective, are recognized in other comprehensive income (OCI).

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into euro at the exchange rates on the reporting date. The income and expenses of foreign operations are translated into euro at the exchange rates on the dates of the transactions.

Foreign currency differences are recognized in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to non-controlling interests.

 

When a foreign operation is disposed of in its entirety or partially, such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If Accell Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When Accell Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

If the unwinding of a monetary balance, that is either collectable from or payable to a foreign operation is neither planned nor probable in the foreseeable future, the foreign currency differences of this monetary balance is considered part of the net investment in the foreign operation. Accordingly, these currency differences are included in other comprehensive income and recorded in the translation reserve.

Hedge of a net investment in a foreign operation

Accell Group does not apply hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and Accell Group’s functional currency (euro).

 

C | Off-setting financial instruments

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, Accell Group has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

D | Statement of cash flows

The statement of cash flows is prepared using the indirect method. Dividends paid are included in financing activities, together with the payment of the principal portion of lease liabilities. Dividends received are classified as investing activities. Interest paid and interest received are classified as operating activities.
Accell Group has centralized its cash management with the execution of payments in the operations by group companies. Cash management includes cash pools, cash and bank overdrafts and these are components of the item cash and bank overdrafts in the cash flow statement.