4.19
19. Notes to the company financial statements

A. General

The company financial statements are part of the 2021 financial statements of Accell Group N.V.

B. Basis of preparation

The company financial statements have been prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. To set the principles for the recognition and measurement of assets and liabilities and the determination of the result for its company financial statements, Accell Group makes use of the option provided in section 2:362(8) of the Dutch Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the company financial statements of Accell Group are the same as those applied for the consolidated EU-IFRS financial statements. See note 6 Notes to the consolidated financial statements for a description of these principles.

i. Measurement of participating interests

Participating interests in group companies are accounted for in the company financial statements according to the net equity value, with separate presentation of the goodwill component under intangible fixed assets.
Participations with a negative net asset value are valued at nil. If Accell Group N.V. guarantees the debts of the relevant participations, a provision is formed.

ii. Result of participating interests

The share in the result of participating interests consists of the share of Accell Group in the result of these participating interests. Results on transactions involving the transfer of assets and liabilities between Accell Group and its participating interests and mutually between participating interests themselves, are eliminated to the extent that they can be considered as not realized.

19.1 Goodwill

Changes in goodwill were as follows:

  2021 2020
  € x 1,000 € x 1,000
Cost
Balance at 1 January 10,502 10,502
Investments as a result of business combinations - -
Currency translation differences - -
Balance at 31 December 10,502 10,502
Accumulated impairments
Balance at 1 January - -
Impairments - -
Balance at 31 December - -
Carrying amount
Balance at 1 January 10,502 10,502
Balance at 31 December 10,502 10,502

19.2 Deferred tax assets

Deferred tax assets of € 23.8 million (2020: € 29.7 million) relate to a liquidation loss (see note 15.2 Deferred taxes of the consolidated financial statements).

19.3 Financial fixed assets

Changes in financial fixed assets were as follows:

    2021 2020
    € x 1,000 € x 1,000
Subsidiaries
Balance at 1 January   495,495 454,093
Profit of participating interests   72,575 46,627
Investments (divestments)   - 75,514
Received dividend participating interests   - -
Translation differences   2,904 -3,674
Actuarial gains and losses   -8,687 -666
Legal restructuring   - -568
Reclassification subsidiary to provision 1)   - -72,857
Repayments of semi-permanent loans   - -
Other movements   -10,051 -2,973
Balance at 31 December   552,236 495,495
Loans to group companies
Balance at 1 January   39,182 43,737
Loans provided   15,200 4,460
Loans repaid   -155 -9,015
Translation differences   - -
Balance at 31 December   54,227 39,182
Total financial fixed assets   606,463 534,677

 

1) This adjustment led to the negative net asset value presented
under provisions for Accell North America to be zero at 31 December 2020
due to the liquidation of this subsidiary on 27 October 2020. 

The long-term loans to group companies are provided as long-term financing and are interest-bearing with an interest rate of 2.7% from January until March and 3.1% from April until December (2020: 2.7%). 

The 2021 consolidated financial statements include Accell Group N.V., in Heerenveen, as well as the financial information of the following companies:

  Participation Percentage
Consolidated subsidiaries
Accell Asia Ltd (Taiwan Branch), Taipei, Taiwan 100%
Accell Asia Ltd, Hong Kong, People's Republic of China 100%
Accell Bisiklet Sanayi ve Ticaret A.S., Manisa, Turkey 100%
Accell Global B.V., Heerenveen, The Netherlands 100%
Accell Hunland Kft, Toszeg, Hungary 100%
Accell Nederland B.V., Heerenveen, The Netherlands 100%
Accell Suisse AG, Alpnach Dorf, Switzerland 100%
Babboe B.V., Amersfoort, The Netherlands 100%
Comet Distribuciones Commerciales S.L., Urnieta, Spain 100%
Cycles Lapierre S.A.S., Dijon, France 100%
E. Wiener Bike Parts GmbH, Sennfeld, Germany 100%
Ghost-Bikes GmbH, Waldsassen, Germany 100%
Raleigh UK Ltd, Nottingham, United Kingdom 100%
Swissbike Vertriebs GmbH, Alpnach Dorf, Switzerland 100%
Tunturi Oy Ltd, Turku, Finland 100%
Winora Staiger GmbH, Sennfeld, Germany 100%

 

Subsidiaries that are immaterial to the consolidated financial statements are not included in the overview above. A complete list of subsidiaries is filed with the Trade Register of the Chamber of Commerce in Leeuwarden, the Netherlands.

19.4 Shareholders' equity

The movements in shareholders’ equity in 2021 were as follows:

  Share capital Share premium Hedging reserve Translation reserve Other legal reserve Other reserve Unappropriated result Total equity
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Balance at 1 January 2021 268 42,314 -7,515 -17,288 4,290 289,055 64,829 375,953
Net profit - - - - - - 69,974 69,974
Other comprehensive income - - 15,387 2,904 - -8,687 - 9,603
Total comprehensive income - - 15,387 2,904 - -8,687 69,974 79,577
                 
Transfer to other reserve - - - - - 64,829 -64,829 -
Dividends paid - - - - - - - -
Share-based payments 0 -157 - - - 775 - 619
Other changes - - - - 1,868 -1,868 - -
Balance at 31 December 2021 268 42,157 7,872 -14,384 6,158 344,104 69,974 456,149


The movements in shareholders’ equity in 2020 were as follows:

  Share capital Share premium Hedging reserve Translation reserve Other legal reserve Other reserve Unappropriated result Total equity
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
Balance at 1 January 2020 268 42,314 -432 -12,607 2,615 288,232 2,804 323,195
Net profit - - - - - - 64,829 64,829
Other comprehensive income - - -7,083 -4,681 - -666 - -12,430
Total comprehensive income - - -7,083 -4,681 - -666 64,829 52,399
                 
Transfers to other reserves - - - - - 2,804 -2,804 -
Dividends paid - - - - - - - -
Share-based payments 0 -0 - - - 351 - 351
Other changes - - - - 1,675 -1,667 - 8
Balance at 31 December 2020 268 42,314 -7,515 -17,288 4,290 289,055 64,829 375,953

Accell Group has issued share options (note 16.4 Share-based payments of the consolidated financial statements).

Ordinary shares

At 31 December 2021, the authorized capital consists of 55,000,000 ordinary shares, 5,000,000 cumulative preference shares F and 60,000,000 cumulative preference shares B, each with a nominal value of € 0.01. Of these, 26,836,619 (2020: 26,805,031) ordinary shares have been issued and duly paid at 31 December 2021. As a result, the issued and paid-up share capital amounted to € 268,366 (2020: € 268,050).

Share premium reserve

The share premium is the income from the issuing of shares in so far as this exceeds the nominal value of the shares (above par income).

Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Translation reserve

The legal translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. The income statement 2020 includes a reclassification gain of € 1.3 million related to the liquidation of Accell North America (2021: nil). 

Other legal reserves

Other legal reserves consist of a legal reserve for participating interests and a legal reserve for capitalized development costs.

The legal reserve for participating interests, which amounted to € 5.5 million (2020: € 3.6 million), pertains to participating interests that are accounted for according to the equity accounting method. The reserve represents the difference between the participating interests’ retained profit and direct changes in equity, as determined on the basis of Accell Group’s accounting policies, and the share thereof that Accell Group may distribute. The legal reserve is determined on an individual basis.

In accordance with applicable legal provisions, a legal reserve for the carrying amount of € 0.7 million (2020: € 0.7 million) has been recognized for capitalized development in the Netherlands. 

Proposal for profit appropriation (Unappropriated result)

The Board of Management proposes to the General Meeting that the result after tax for 2021 of € 70.0 million (profit) should be allocated to the other reserves. The 2021 result after tax is presented as unappropriated profit in shareholders' equity.

Dividend

The existing reservation and dividend policy reads: Accell aims for a stable dividend policy aimed at making at least 40% of the net operating profit available to shareholders.

On 24 January 2022, Accell Group and Sprint BidCo B.V. (the "Offeror", an entity controlled by investment funds of KKR) jointly announced that they had reached conditional agreement on a recommended all-cash public offer by the Offeror for all issued and outstanding shares in Accell Group N.V. at an offer price of  € 58.00 (cum dividend) in cash per share. Cum dividend means that dividends with a record date prior to the settlement of the public offer will be deducted from the offer price of € 58.00 per share. For this reason, Accell Group will not propose a dividend payment in respect of the 2021 financial year to the General Meeting.

19.5 Receivables from and liabilities to group companies

The receivables from and liabilities to group companies are current receivables and current liabilities (no interest).

19.6 Loans to and from group companies

The short-term loans to and from group companies relate to current accounts arising from cash management within Accell Group N.V. The loans are interest-bearing (3-month EURIBOR plus margin, with an applicable floor of 0% regarding the 3-month EURIBOR).

19.7 Other financial instruments

See note 12 Derivatives and hedge accounting, note 13 Financial risk management and note 14 Fair values measurement of the consolidated financial statements for the note on other financial instruments; other financial instruments consist of forward exchange contracts (net financial asset) of €16.0 million (2020: net financial liability € 14.1 million) and interest rate swaps (financial liabilities) of € 0.9 million (2020: € 1.6 million), both used for hedging purposes.

19.8 Borrowings and revolving credit facility

See note 9 Net debt, note 13 Financial risk management and note 14 Fair value measurement of the consolidated financial statements for the note on borrowings of € 124.5 million (2020: € 183.2 million) and for the term and conditions of the revolving credit facility of € 40.0 million (2020: nil). The revolving credit facility amount presented in the consolidated financial statements also includes the Turkish subsidiary. For the note on Accell Group’s policies in respect of liquidity risk and market risk, consisting of currency risk and interest risk, see note 13 Financial risk management of the consolidated financial statements.

19.9 Net turnover

In 2021 the net turnover comprised charges to group companies with regard to management fees.

19.10 Personnel expenses

Personnel expenses pertain to the Board of Management and Supervisory Board. The remuneration of the Board of Management, including pension charges as referred to in Section 2: 383, subsection 1 of the Dutch Civil Code, charged in the financial year to Accell Group N.V. amounted to € 2.8 million (2020: € 1.8 million) and to € 0.3 million (2020: € 0.3 million) for the members of the Supervisory Board. For more details on the remuneration of the Board of Management and the Supervisory Board see note 16.5 Remuneration of the Board of Management and the Supervisory Board of the consolidated financial statements.

Personnel costs also include, amongst others, temporary personnel costs of € 619 thousand (2020: nil) and an amount of € 219 thousand (2020: € 121 thousand) for conditional shares for executives. For details on this conditional share plan, see note 16.4 Share-based payments of the consolidated financial statements.

19.11 Other expenses

Other expenses include IT costs, consultancy costs, audit costs and travel expenses.

19.12 Net finance cost

Financial income amounted to € 4.4 million (2020: € 11.7 million) and consists primarily of results from treasury activities for group companies and interest income related to loans to group companies. The financial expenses amounted to € 6.8 million (2020: € 11.0 million) and included interest expenses, bank fees and currency results on bank balances and overdrafts.

19.13 Contingent assets and liabilities

 
Several liability and guarantees

The legal entity Accell Group N.V. has issued declarations of joint and several liabilities for debts arising from the actions of Dutch consolidated participating interests. Notices to that effect have been filed with the Chamber of Commerce where the legal entity on whose behalf the notice of liability has been given is registered.

At 31 December 2021, Accell Group N.V. holds a group guarantee to the trustees of the UK defined benefit plan, whereby in the event of the bankruptcy of the UK subsidiary, Accell Group N.V. guarantees any deficits in the UK pension scheme up to a maximum of £ 8.7 million. In addition, Accell Group has provided a rental guarantee, whereby in the event of a bankruptcy of the Dutch subsidiary, Accell Group guarantees any rental income up to a maximum of € 1.4 million. The other contingent liabilities consist of a number of smaller customs guarantees, bank guarantees and rental guarantees totalling € 3.3 million.

In addition, declarations of joint and several liability have been issued for debts to suppliers arising from the purchase transactions of consolidated participating interests.

Earn-outs

In the Stock Purchase Agreement between Accell North America and Beeline Bikes Acquisition Company LLC is included an earn-out arrangement of 10% of the Operation Profit for each calendar year during the term 1 January 2021 till 31 December 2024.The earn-out for 2021 is nil.

In the Asset Purchase Agreement between (amongst others) Accell North America and Alta Cycling Group LLC is included an earn-out arrangement of 15% of the operating profit for each calendar year during the term 1 January 2022 till 31 December 2026, with a maximum amount of US$ 15 million.

Fiscal unity

The Company constitutes the fiscal unity ‘Accell Group N.V.’ with its subsidiaries for corporate income tax purposes and value added tax; the standard conditions prescribe that each of the companies is liable for the corporate income tax payable by all companies belonging to the fiscal unity.

19.14 Subsequent events

In November 2021, Accell Group received an initial unsolicited proposal for all the shares of Accell Group from a consortium led by KKR. The Accell Group Board of Management subsequently followed a thorough process which led to the announcement of a recommended cash offer for Accell Group at an offer price of € 58.00 per share on 24 January 2022. It is expected that we will discuss the offer with our shareholders at the Extraordinary General Meeting of shareholders (EGM) in Q2 2022.

 

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Supervisory Board

R. ter Haar, chairman
G. van de Weerdhof, vice-chairman
D. Jansen Heijtmajer
L. Volatier
E. van Wiechen

 

Board of Management

A.H. Anbeek, CEO
R.S. Baldew, CFO
F. Gamboni, CSCO 

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Heerenveen, 3 March 2022