Notes to the consolidated financial statements
For the financial year ended 31 December 2020.
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 4.20.3. 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.
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 with Section 2:362(9) of the Dutch Civil Code;
- were authorised for issue by the Board of Management on 4 March 2021;
- 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.
Accell Group has renamed some line items and reclassified and/or disaggregated line items in the consolidated statement of cash flows compared with 2019 to improve alignment with IFRS line items in the balance sheet:
|Statement of Cash flows||2019||Reclassification||2019 Adjusted|
|€ x 1,000||€ x 1,000||€ x 1,000|
|Loss on divestment of intangible assets (US business)||2,290||-2,290||-|
|Loss on divestments of property, plant and equipment (US business)||543||-543||-|
|Gain on sale of property, plant and equipment||-351||351||-|
|Gain on the sale of trademarks (Canada)||-14,341||14,341||-|
|Gain or loss on the sale of property, plant and equipment||-||192||192|
|Gain or loss on the sale of intangible assets||-||-12,051||-12,051|
|Cash flows from investing activities|
|Proceeds from sale of intangible assets||-||14,341||14,341|
|Proceeds from the sale of trademarks (Canada)||14,341||-14,341||-|
|Cash flows from financing activities|
|Proceeds from revolving credit facility||134,090||-134,090||-|
|Repayment of revolving credit facility||-55,000||55,000||-|
|Repayment of term loan and other loans||-25,201||25,201||-|
|Proceeds from borrowings||-||134,090||134,090|
|Repayment of borrowings||-||-80,201||-80,201|
In the consolidated statement of changes in equity, the separate line item stock dividend has been included in dividend paid.
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 recognised 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 2020 is included in the following notes:
Note 4.8.2: trade and other receivables: measurement of discount accruals, bonus receivables and expected credit losses.
Note 4.10.3: goodwill and other intangible assets impairment test: key assumptions underlying recoverable amounts, including the recoverability of development costs.
Note 4.11.1: recognition and measurement of provisions: key assumptions regarding the likelihood and magnitude of an outflow of resources.
Note4.11.3: measurement of defined benefit obligations: key actuarial assumptions.
Note 4.14: financial instruments - fair values.
Note 4.15.2: recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used.
Note 4.17.4: share-based payment estimates regarding the number of conditional shares that will vest (performance criteria and continuation of employment).
C | Changes in accounting policies
In 2019, Accell Group opted for the early adoption of amendments to IFRS 9, IAS 39 and IFRS 7 due to interest rate benchmark reform that are mandatory as of 1 January 2020. Accell Group applied the interest rate benchmark reform amendments retrospectively to hedging relationships that existed at 1 January 2020 or were designated thereafter and that are directly affected by interest rate benchmark reform. These amendments also apply to the gain or loss accumulated in the cash flow hedging reserve that existed at 1 January 2020. The details of the accounting policies for derivatives and hedge accounting are disclosed in note 4.12.
Other amendments that are mandatory as of 1 January 2020 (Amendments to References to the Conceptual Framework in IFRS Standards, Amendment to IFRS 3 Business Combinations, Amendments to IAS 1 and IAS 8: Definition of Material) had no impact on the consolidated financial statements.
The amendments to IFRS 16 COVID-19 Related Rent Concessions applicable to annual reporting periods beginning on or after 1 June 2020 (earlier application permitted) had no impact on the consolidated financial statements, as Accell Group had no COVID-19 related rent concessions.
Mandatory upcoming changes and early adoption
Accell Group has not applied the following upcoming changes (effective for annual periods beginning on or after 1 January 2021) when preparing these consolidated financial statements: 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. Accell Group does not currently expect these changes to have any impact on its financial statements. Nor does Accell Group expect the following other upcoming standards and interpretations to have any significant impact on its financial statements:
- Effective for annual reporting periods beginning on or after 1 January 2022: 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 and
- Effective for annual reporting periods beginning on or after 1 January 2023 Amendment to IAS 1: Classification of liabilities as current or non-current.
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 4.6.2C.
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 derecognises 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 recognised 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 unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of Accell Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised 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 recognised in profit or loss. However, foreign currency differences arising from the translation of qualifying cash flow hedges, to the extent the hedges are effective, are recognised in other comprehensive income (OCI).
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 recognised 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 centralised 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.