4.10
10. Non-current assets

10.1 Property, plant and equipment

  Land and buildings Machinery and equipment Under construction Total property, plant and equipment
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Cost
Balance at 1 January 2020 64,809 92,297 4,067 161,174
Investments 1,433 6,018 2,888 10,339
Divestments - -157 - -157
From / to under construction 4,204 439 -4,644 -
Currency translation differences -119 -193 1 -310
Balance at 1 January 2021 70,328 98,404 2,312 171,045
Investments 557 7,554 3,076 11,187
Divestments -2,826 -2,634 -8 -5,468
From / to under construction 1,143 2,813 -3,955 -
Reclassification 1) -174 -2,335 -34 -2,543
Currency translation differences 421 -316 -12 93
Balance at 31 December 2021 69,448 103,485 1,379 174,312
 
Accumulated depreciation
Balance at 1 January 2020 23,506 73,242 - 96,748
Depreciation 1,322 6,913 - 8,235
Divestments - -90 - -90
Balance at 1 January 2021 24,828 80,065 - 104,893
Depreciation 1,426 7,491 - 8,917
Divestments -1,391 -2,603 - -3,994
Reclassification 1) -218 -2,292 - -2,510
Currency translation differences 227 -224 - 3
Balance at 31 December 2021 24,871 82,438 - 107,309
 
Carrying amount
Balance at 1 January 2021 45,500 18,339 2,312 66,152
Balance at 31 December 2021 44,576 21,047 1,379 67,003

1) Reclassifications due to updating PPE administrations.

Land and buildings with a carrying amount of € 4.6 million at 31 December 2021 (2020: € 4.5 million) have been pledged as security; on the one hand, to the trustees of the UK pension fund to the amount of € 2.9 million (2020: € 2.8 million) and, on the other hand, as security for a bank loan to the amount of € 1.7 million (2020: € 1.7 million).

Property under construction at 31 December 2021 represents € 1.1 million for Accell Hunland (moulds) and € 0.2 million for Wiener Bike Parts (building). Those assets are not yet ready for use.

Accounting estimates and judgement

Estimates are required to determine the (remaining) useful lives of fixed assets. Useful lives are determined based on an asset’s age, the frequency of its use, repair and maintenance policy, technological changes in production and expected restructurings.

The expected residual value is estimated per asset item and is the higher of the expected sales prices or the scrap value. The residual value is estimated based on recent market transactions involving the sale of similar items or on its material scrap value.

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives as Accell Group believes that straight-line depreciation most closely reflects the expected consumption pattern of the future economic benefits embodied in the asset.

Accounting policy

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Any gain or loss on the disposal of an item of property, plant and equipment is recognized in profit or loss (depreciation). Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss. Land is not depreciated. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively if appropriate.

The estimated useful lives of property, plant and equipment are as follows:

Buildings 40 years        
Machinery and equipment 3 - 12 years        

 

Property, plant and equipment is derecognized when it is sold or scrapped. Gains on sales are presented in other income (see note 7.2) and losses on sales are included in depreciation (see note 7.5)

10.2 Right-of-use assets

  Buildings Machinery and equipment Other tangible fixed assets Total RoU assets
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Right-of-use assets at 1 January 2020 22,176 994 6,626 29,796
Additions 1,986 301 3,624 5,911
Depreciation for the period -6,006 -375 -3,378 -9,759
Reassessment of lease liabilities and lease modifications 3,165 -121 -494 2,550
Currency translation -340 -48 -53 -441
Right-of-use assets at 1 January 2021 20,981 751 6,326 28,058
Additions 7,845 230 2,814 10,889
Depreciation for the period -6,185 -276 -3,136 -9,598
Reassessment of lease liabilities and lease modifications 709 -52 -568 89
Currency translation -169 -29 -6 -204
Right-of-use assets at 31 December 2021 23,180 624 5,429 29,234

 

Lease liabilities are disclosed in note 9.1.3.

Accounting estimates and judgement

At the inception of a contract, Accell Group assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration. Accell Group has elected not to separate non-lease components and account for lease and non-lease components as a single lease component.

Right-of-use assets are depreciated to the earlier of the end of the useful life of the asset or the lease term using the straight-line method as Accell Group believes that this most closely reflects the expected consumption pattern of the future economic benefits. The lease term includes periods covered by an option to extend or to terminate early if Accell Group is reasonably certain to exercise that option.

Accounting policy

A right-of-use asset and a lease liability are recognized on the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made on or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset. The assets are depreciated over the lease term which currently varies from two to ten years. Right-of-use assets are tested for impairment. 

 

10.3 Goodwill and other intangible assets

  Goodwill Brands Customer lists and licenses Software and development cost Total intangible assets
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Cost
Balance at 1 January 2020 85,079 44,551 5,259 15,612 150,501
Investments - - - 1,298 1,298
Divestments - - - -2,672 -2,672
Currency translation differences - 122 -95 - 27
Balance at 1 January 2021 85,079 44,673 5,164 14,239 149,155
Investments - - - 1,281 1,281
Divestments - - - -1,102 -1,102
Reclassification - - - 34 34
Currency translation differences - 807 -76 -7 724
Balance at 31 December 2021 85,079 45,481 5,088 14,444 150,091
Accumulated depreciation
Balance at 1 January 2020 2,306 4,873 3,407 7,299 17,885
Amortization - 693 310 2,001 3,005
Divestments - - - -2,672 -2,672
Impairment - 300 - 3,636 3,936
Balance at 1 January 2021 2,306 5,866 3,717 10,265 22,154
Amortization - 693 296 1,750 2,740
Divestments - - - -1,082 -1,082
Impairment - -300 - - -300
Balance at 31 December 2021 2,306 6,260 4,013 10,934 23,512
Carrying amount
Balance at 1 January 2021 82,773 38,807 1,448 3,974 127,001
Balance at 31 December 2021 82,773 39,221 1,075 3,510 126,579

 

(A) Goodwill

Goodwill is tested for impairment annually or more frequently if there are indications of impairment losses. For the purposes of this test, goodwill is allocated to cash-generating units (CGU’s). Goodwill is allocated to the (group of) CGU’s that is expected to benefit from the business combination from which the goodwill arose. The CGU’s used in the assessment correspond with the operational segments and are Bikes and Parts.

The carrying amount of goodwill at segment level is divided as follows:

  2021 2020
  € x 1,000 € x 1,000
Bikes 65,411 65,411
Parts 17,362 17,362
Balance at 31 December 82,773 82,773

 

Goodwill impairment testing

The following main assumptions are used to determine the value-in-use of the segments Bikes and Parts and are based on expected developments in specific markets and countries and the forecasted impact for Accell Group:

  Bikes Bikes Parts Parts
  2021 2020 2021 2020
Expected average annual, organic turnover growth in the plan period 2022-2024 (2020: 2021-2023) 10,0% 13,6% 8,9% 9,0%
Expected average operating margin in the plan period 2022-2024 (2020: 2021-2023) 8,5% 8,3% 8,3% 6,0%

 

After the plan period 2022-2024, cash flows are extrapolated using a perpetual growth rate of 0.0% (2020: 0.0%) which is equal to the risk-free interest rate with a minimum of zero (2021 actual -0.3%). The cash flows are discounted using a post-tax weighted average cost of capital of 6.2% (2020: 7.2%). The discounting rate applied corresponds with a pre-tax weighted average cost of capital of 8.5% (2020: 9.8%). The impairment test in 2021 showed a substantial headroom in goodwill for both segments Bikes and Parts.

Sensitivity to changes in the main assumptions

Neither a 100 basis points adverse change in operating margin nor a 100 basis points higher discount rate resulted in a materially different outcome of the impairment test. Accell Group believes that any reasonably possible change in the main assumptions would not cause the carrying amount to exceed the recoverable amount of the cash-generating units Bikes or Parts.

Accounting estimates and judgements

The cash flow projections used in the value-in-use calculation for goodwill impairment testing contain various estimates and judgements (see table above). The robustness of the outcome of the goodwill impairment is tested via a sensitivity analysis on the main assumptions.

Accounting policy

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill is tested annually for impairment. Impairment losses are recognized in profit or loss and are not reversed. Upon the disposal of a cash generating unit, the carrying amount of the goodwill attributed to that cash generating unit is taken into account in the calculation of the book profit or loss.

(B) Brands

The brands recognized at 31 December 2021 are included in the operating segment Bikes and consist primarily of the Raleigh (€ 19.5 million), Babboe (€ 8.0 million) and Ghost (€ 9.4 million) brands. In addition, the Nishiki, Carraro and Van Nicholas brands are valued at a total amount of € 2.3 million. 

With the exception of the relatively young Babboe brand (2007), which has a definite useful life of 15 years, all brands have indefinite useful lives as there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for Accell Group. The brands with indefinite useful lives are positioned in the middle and upper segments and have a long history and tradition in the regional and international markets in which they operate.

For the annual impairment testing for brands with an indefinite life, Accell Group applied the impairment test for the cash generating unit Bikes (see section (A) Goodwill) to test if brands should be impaired (2020: the income approach). In 2021 the impairment of Van Nicolas in 2020 of € 0.3 million was reversed.

Accounting policy

A brand is a group of complementary assets such as trademarks (or service marks) and their related trade names, formulas, recipes and technological expertise. Accell Group recognizes a group of complementary intangible assets comprising a brand as a single asset if the individual fair value of the complementary assets is not reliably measurable. Brands, commonly arising on the acquisition of subsidiaries, are measured at cost less any accumulated depreciation and accumulated impairment losses. Brands can have an indefinite or definite useful life.

Brands with an indefinite useful life are tested annually for impairment, or more frequently if there are indications of impairment losses (same for a brand with definite life).

Brands with a definite useful life are amortized on a straight-line basis over the estimated useful life. Accell Group believes that straight-line depreciation most closely reflects the expected consumption pattern of the future economic benefits embodied in the brand. Amortization methods and useful lives are reviewed at each reporting date and adjusted if appropriate.

(C) Customer lists and licenses

The customer lists and licenses consist of the Turkish dealer network, an extension of a licensing agreement and Comet's customers. The useful life of these assets is estimated at 20 years, 10 years and 20 years respectively and have been amortized as from 2012, 2013 and 2015 onwards. There were no impairment losses in 2021.

Accounting estimates and judgements

Useful lives are determined based on the estimated remaining useful life of the customer relationships or the period of the contractual arrangements.

Accounting policy

Customer relationships and licenses that are acquired by Accell Group and have definite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated to write off the cost of these assets less their estimated residual values (nil) using the straight-line method over their estimated useful lives from the date they are available for use.

Amortization expenses and impairment losses are accounted for in the income statement within depreciation. Amortization methods and useful lives are reviewed at each reporting date and adjusted if appropriate.

An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(D) Software and development cost

These include capital expenditure on both software and development. In 2021, Accell Group invested € 1.1 million in software, primarily related to platforms and websites, and capitalized € 0.2 million of development costs related to cargo-bikes and e-bikes. 

Accounting estimates and judgements

Useful lives are determined based on the estimates regarding technical and commercial developments.

Accounting policy

Expenditure on research activities is recognized in profit or loss as incurred. Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and Accell Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, this expenditure is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses. 

Software is measured at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated to write off the cost of intangible assets less their estimated residual values (nil) using the straight-line method over their estimated useful lives from the date they are available for use.

Amortization is calculated to write off the cost of intangible assets less their estimated residual values (nil) using the straight-line method over their estimated useful lives from the date they are available for use. Amortization expenses and impairment losses are accounted for in the income statement within depreciation. Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Accounting estimates and judgements

The estimated useful lives are as follows:

Brands Indefinite or 15 years        
Customer lists 10 - 20 years        
Licenses 10 years        
Software 3 - 7 years        
Development costs 3 - 5 years        

 

10.4 Equity-accounted investees

    2021 2020
Equity-accounted investees
Atala SpA, Monza, Italy 1)   50% 50%
Raleigh SA (Pty) Ltd, Kensington, South Africa 2)   20% 20%
Urbanvision BV, Amersfoort, The Netherlands 3)   0% 28%

1) Atala SpA is a joint venture active in the development and sale of bicycles under its own brands.

2) Raleigh SA (Pty) Ltd is an associate that is active in the marketing and sale of bicycles.

3) Urbanvision BV was sold on 1 June 2021.

 

These associates and joint ventures are of strategic nature; the voting rights are equal to the percentage interest held.

The changes in the equity-accounted investees were as follows:

  2021 2020
  € x 1,000 € x 1,000
Balance at 1 January 6,433 5,469
Investments - -
Dividend -886 -
Net income 2,747 1,008
Remeasurement gain / (loss) on previously held equity interest - -
Fair value of equity interest held before the business combination - -
Currency translation differences - -44
Balance at 31 December 8,294 6,433

 

Summary of the financial data for the interests in equity accounted investees:

  Atala SpA Raleigh SA Urbanvision BV
  2021 2020 2021 2020 2021 2020
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Assets 39,982 32,607 2,769 3,263 n.a. 57
Liabilities 24,265 20,447 592 1,502 n.a. 53
Turnover 62,096 55,298 10,877 9,881 n.a. -
Net income 5,004 3,021 414 494 n.a. -1,901
             
Accell Group's share in net income 2,665 1,511 82 99 n.a. -602
Share of Accell Group 50% 50% 20% 20% 0% 28%

Accounting policy

Accell Group's interests in equity-accounted investees comprise interests in associates and a joint venture.

Associates are those entities in which Accell Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which Accell Group has joint control, whereby Accell Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. 

Interests in associates and the joint venture are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include Accell Group’s share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees, until the date on which significant influence or joint control ceases.

An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognized in profit or loss, and is reversed if there is a favourable change in the estimates used to determine the recoverable amount. 

10.5 Other financial assets

The other financial assets of € 1.8 million (2020: € 2.0 million) consist primarily of agreed upon postponed considerations of € 0.5 million (2020: € 0.8 million) to be received from the sale of the fitness business of Tunturi Oy (previously Tunturi Hellberg Oy) in 2017 and a postponed receivable with large bike business clients of € 0.8 million (2020: € 0.4 million).

Accounting estimates and judgements

On each reporting date the impairment of other financial assets is determined using the general impairment model of IFRS 9 which estimates the credit losses over 12 months. The credit losses over the lifetime of the asset are only determined in the event of a significant increase in credit risk (e.g. more than 30 days overdue, change in credit rating). Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

Accounting policies

Other financial assets are measured at fair value and subsequently at amortized cost less any impairment losses.