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 2020 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 2020 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 2020 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 2020 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:

  1. the consolidated statement of financial position as at 31 December 2020;
  2. the following consolidated statements for 2020: the income statement, the statements of comprehensive income, changes in equity and cash flows; and
  3. the notes comprising a summary of the significant accounting policies and other explanatory information.

The company financial statements comprise:

  1. the company balance sheet as 31 December 2020;
  2. the company profit and loss account for 2020; and
  3. 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). 

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 3 million (2019: EUR 2.75 million). The materiality is determined with reference to profit before tax from continuing operation (4.8%). We consider profit before tax from continuing operations as the most appropriate benchmark because the main stakeholders are primarily focused on profit before tax from continuing operations. 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 Board of Management and the Supervisory Board that misstatements that impact the income statement in excess of EUR 150,000 and classification misstatements in excess of EUR 750,000, which are identified during the audit, 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 mainly focused on significant components. Based on the size and/or risk profile of the group components or activities, we have performed full scope audit procedures (audit of the complete reporting package) on the financial information for the significant components in the Netherlands, Germany, France, the UK, Turkey and Hungary.

We performed specified audit procedures related to inventory in Spain, Sweden, Denmark and Finland. In addition, we have performed specific audit procedures at group level aimed at amongst others deferred taxes, goodwill and other intangible assets and derivatives. 

Overall, this has resulted in a coverage of 81% of the total revenue and 82% of the balance sheet total. The remaining 19% of the total revenue and 18% of the balance sheet total concern a number of reporting components, each accounting for less than 4.6% of the total revenue or balance sheet total. For these remaining components, we have performed a number of procedures, including analytical reviews, to corroborate that our scoping remained appropriate throughout the audit.

The group audit team provided detailed instructions to all component auditors who were part of the group audit, covering the significant audit areas, including the relevant risks of material misstatement and set out the information required to be reported back to the group audit team. 

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 Hungary, France, Germany and the Netherlands 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.

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


 

Our focus on the risk of fraud and non-compliance with laws and regulations

 

Our objectives

The objectives of our audit with respect to fraud and non-compliance with laws and regulations are:

With respect to fraud:

  • to identify and assess the risks of material misstatement of the financial statements due to fraud;
  • to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate audit responses;
  • to obtain a high (but not absolute) level of assurance that the financial statements, taken as a whole, are free from material misstatement, due to fraud; and
  • to respond appropriately to fraud or suspected fraud identified during the audit.
  • With respect to non-compliance with laws and regulations:
  • to identify and assess the risk of material misstatement of the financial statements due to non-compliance with laws and regulations; and
  • to obtain a high (but not absolute) level of assurance that the financial statements, taken as a whole, are free from material misstatement, whether due to fraud or error when considering the applicable legal and regulatory framework.

The primary responsibility for the prevention and detection of fraud and non-compliance with laws and regulations lies with the Board of Management, with oversight by the Supervisory Board. 

Our risk assessment

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption. We, together with our forensics specialists, evaluated the fraud risk factors to consider whether those factors indicated a risk of material misstatement due to fraud.

In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to the Company and we inquired with the Board of Management and the Audit Committee of the Supervisory Board as to whether the entity is in compliance with such laws and regulations and inspected correspondence, if any, with relevant regulatory authorities.

The potential effect of the identified laws and regulations on the financial statements varies considerably. 

Firstly, the Company is subject to laws and regulations that directly affect the financial statements, including taxation and financial reporting. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items and therefore no additional audit response is necessary.

Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have an indirect material effect on amounts recognized or disclosures provided in the financial statements, or both, for instance through the imposition of fines or litigation. We identified the following areas as those most likely have such an indirect effect, being: product quality, environmental, data privacy, labor and safety, anti-bribery and corruption laws and regulations.

In accordance with the auditing standard we evaluated the following fraud risks that are relevant to our audit:

  • revenue recognition, in relation to the overstatement of revenue, specifically on fraudulent (non-routine) journal entries (a presumed risk); 
  • management override of controls (a presumed risk).

We communicated the identified risks of fraud throughout our team and remained alert to any indications of fraud throughout the audit. This included communication from the group to component audit teams of relevant risks of fraud identified at group level. 

In all of our audits, we addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Board of Management that may represent a risk of material misstatement due to fraud. 

We communicated our risk assessment and audit response to the Board of Management and the Audit Committee of the Supervisory Board. Our audit procedures differ from a specific forensic fraud investigation, which investigation often has a more in-depth character.

Our response 

We performed the following audit procedures (not limited) to respond to the assessed risks: 

  • We evaluated the design and the implementation of internal controls that mitigate fraud risks. 
  • We performed data analysis of high-risk journal entries and evaluated key estimates and judgements for bias by the Company, including retrospective reviews of prior year's estimates. Where we identified instances of unexpected journal entries or other risks through our data analytics, we performed additional audit procedures to address each identified risk. These procedures also included testing of transactions back to source information.
  • With respect to the risk of fraud in revenue recognition we have performed a search for fraudulent (non-routine) journal entries impacting revenues. 
  • We incorporated elements of unpredictability in our audit. 
  • We considered the outcome of our other audit procedures and evaluated whether any findings or misstatements were indicative of fraud or non-compliance. If so, we re-evaluated our assessment of relevant risks and its resulting impact on our audit procedures.
  • We obtained audit evidence regarding compliance with the provisions of those laws and regulations generally recognized to have a direct effect on the determination of material amounts and disclosures in the financial statements.

Our audit is based on the procedures described in line with applicable auditing standards. 

We do note that our audit is not primarily designed to detect fraud and non-compliance with laws and regulations and that The Board of Management is responsible for such internal control as The Board of Management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to errors or fraud, including compliance with laws and regulations. 

The more distant non-compliance with indirect laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
 

Our key audit matters

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 matters to the Supervisory Board. The key audit matters are not a comprehensive reflection of all matters discussed.

These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Compared to last year the key audit matter with respect to the disposal of the US businesses is no longer included as a key audit matter as this only applied to the 2019 financial statements.
 


Description

For the deferred tax asset of EUR 29.7 million recorded per 31 December 2020 that relates to the liquidation losses of Accell North America Inc., the risk exists that future fiscal profits will not be sufficient to fully recover the deferred tax asset recognized. Refer to note 4.15.2 of the consolidated financial statements.

We identified the valuation of the deferred tax asset as a significant risk and key audit matter because of its significance to the consolidated financial statements and because of the significant management judgement and estimation required related to the availability of  sufficient future taxable profits in the Dutch fiscal unity.

Our response

  • Test of design and implementation and, if applicable, test the operating effectiveness of related controls.
  • Assess, challenge and test the appropriateness of the Board of Management’s assumptions and estimates in relation to deferred taxes asset.
  • Determine that the projections agree to the strategic plan, evaluate the historical accuracy of forecasts and analyse the sensitivities in the projections.
  • Evaluate whether the intended tax planning, if any, is feasible and economically reasonable.
  • Assess whether the tax disclosures are adequate based on EU-IFRS.
  • Involve a tax specialist in our team to assist us with our audit procedures.

Our observations

  • We have not identified formal controls relating to the valuation of the DTA.
  • We found management’s assumptions and estimates including, but not limited to, the future available fiscal profits to be within the reasonable range.
  • We note that management has not included tax planning opportunities in the measurement of the DTA given management’s expectation that sufficient taxable profits from regular operations are available.
  • We determined that the tax disclosures are based on EU-IFRS.
     

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.

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. 

the 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 are the auditor of Accell Group N.V. since 2016. We were re-engaged by the General Meeting of Shareholders as auditor of Accell Group N.V. on 22 April 2020 for the years 2020 and 2021. 

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 The Board of 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 tagging 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.

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 the appendix of this auditor's report. This description forms part of our auditor’s report.

Amstelveen, 4 March 2021 

KPMG Accountants N.V.

T. van der Heijden 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 Company’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 the Company’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.