Governance and compliance
Accell Group N.V. ("Accell Group" or "the Company") is a public limited liability Company (Naamloze Vennootschap) under Dutch law, that applies a two-tier board structure comprising a Board of Management, composed of managing directors, and a Supervisory Board, composed of supervisory directors. The Supervisory Board supervises the Board of Management and ensures that external experience and knowledge is embedded in the Company’s conduct. The two boards are independent of each other and are ultimately accountable to the General Meeting (“General Meeting”). Accell Group’s corporate governance is laid down in the Company’s articles of association and the Board of Management and Supervisory Board regulations, which can be found on our website.
Accell Group is active in a significant number of countries. Global trade and political developments affect the markets in which Accell Group operates. This may involve trade barriers in the form of protectionism or geopolitical and social tensions, but Accell Group’s results may also be affected by general economic conditions and the economic outlook of the countries in which the Company is active. Especially, the conditions in the Group’s key purchasing markets also play a major role in the Company’s results.
As a result, the Company is potentially exposed to numerous risks and trends. Accell Group has a system to identify, analyse, monitor, manage and control risks. The Company distinguishes between strategic, operational, compliance and financial risks. Strategic risks are related to Accell Group’s strategic choices, while operational risks are related to operational activities, compliance risks are related to applicable laws and regulations, and financial risks are related to financial markets and general market developments. For more detailed information on financial risks, see section 4.13 in the consolidated financial statements.
Risk events and trends in 2020
COVID-19 obviously has had a big impact, not only on our business but also with substantial economic and geopolitical implications. This has had an effect on Accell’ s results and risk profile. Disruption in our supply chain (with a side effect on delayed innovations) and shop closures in lockdown periods dominated the first half year of 2020. A strong recovery in sales has had a positive impact on Accell Group’s result. However given the overall uncertainty and volatility of COVID-19 especially with regards to the supply chain, the risk profile has increased.
The COVID-19 pandemic still causes a great deal of uncertainty though, both from a (short term) demand perspective (governments forcing the closure of bikes shops), as well as from a supply perspective (high global demand leading to longer lead times and higher pricing in combination with logistical disruptions).
Risk awareness and culture
Employees are aware of and responsible for risks while carrying out their day-to-day work. They must abide by the applicable general code of conduct and comply with all applicable laws and regulations and policies. Accell Group continuously enhances employee risk awareness through various initiatives, including targeted communications and training. The responsibility for implementing control measures is delegated to employees with responsibility for risk management in a specific area (for example, a process, a system, an asset, or information). Accell Group stimulates a culture in which weak areas in its risk management programmes or control measures are reported transparently and dealt with effectively.
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Governance (lines of defence)
The Board of Management has final responsibility for the effective control of risks. The risk control and compliance oversight functions established by management are the second line of defence, an independent assurance is the third line of defence (see table).
LINES OF DEFENCE
Management carries primary responsibility for daily risk management when performing business activities. In addition, management maintains a system of internal risk management and control system designed to deal with these risks.
Operational managers and the regional management teams and/or operating companies.
Supports management in overseeing, advising on, development, and monitoring of the effectiveness of risk management processes and systems. Furthermore, the second line sets the risk management framework, internal policies, and procedures.
Risk management and Internal Control, Financial Control, Quality, Compliance and Legal Affairs (Group functions).
Provides assurance that the structure and the operational effectiveness of the internal management measures, including risk management activities are independently evaluated.
Internal Audit (Group function).
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To be able to evaluate the effectiveness of measures, the Group departments (second line) regularly inform and advise the Board of Management about the progress and outcomes of the various risk management programmes. Internal Audit reports independently to the Board of Management and to the Audit Committee on the effectiveness of the risk management and internal control framework, policies and procedures.
First line management are pro-actively advised on any required improvements. An annual internal audit plan is presented to the Board of Management and approved by the Audit Committee. Engagements carried out are summarised in a report presenting the conclusions and highlighting any findings, risks, and related recommendations. For audits, a three-point grading scale is used to express the impact of the findings and the level of action required from either local management or the Board of Management. Business management is required to follow up on recommended actions and this follow-up is monitored within a desired timeframe depending on risk impact and a period for corrective action. Internal Audit also carries out specific ad-hoc investigations at the request of the Board of Management or the Audit Committee. The Audit Committee informs the Company’s Supervisory Board. The role of the Audit Committee and their report on 2020 is described in the Supervisory Board Report section of this Annual Report.
The Board of Management reviews key risks on a regular basis from all regions and key central functions. Based on the risk analysis, the Board of Management implements and maintains internal risk management and control systems. Where relevant, these systems are integrated in Accell Group’s operating processes to ensure that employees are conversant with these systems. The Board of Management monitors the operation of the systems. This monitoring covers the material control measures related to our key risks.
Risk Management Framework
To safeguard the quality of the Company’s financial reporting and operational controls, Accell Group has an internal risk management and control system in place.
This risk management framework comprises the following components:
- Identifying and weighing the risks associated with the various strategic options and formulating realistic objectives and related control mechanisms.
- Identifying and evaluating the main strategic, operational, financial and compliance risks and the potential impact on the company.
- Developing a coherent system of measures to control, limit, avoid or transfer risks. The risk management system is tailored to the size and structure of the Company.
Accell Group deploys a risk management approach that identifies and mitigates risks at all levels of the organisation. The Board of Management determines the level of risk acceptance and decides on risk mitigation.
Accell Group’s risk management framework does not provide absolute certainty that all risks can be prevented or mitigated adequately and in time. The purpose of the risk management framework is to provide a reasonable level of assurance regarding the effectiveness of internal controls pertaining to strategic, financial, compliance and operational risks that may affect the organisation’s objectives.
The approach Accell Group has chosen to deal with these risks has been determined per risk category:
- Strategic risk: with the ambition ‘to become market leader in the mid and higher segment of the bicycle and parts & accessories market in every country in which we operate in a consumer-centric and socially responsible way’, taking and accepting strategic risks in a balanced manner is inevitable.
- Operational risk: Accell Group accepts low to zero risks in the field of product safety. In addition, Accell Group applies high safety standards to ensure a safe working environment in its operations - factories and warehouses. Reporting on safety is part of the reporting cycle. Other operational risks are considered in view of the (day-to-day) business.
- Compliance risk: Accell Group’s risk appetite in this area is zero and our ambition is full compliance with legal and regulatory requirements.
- Financial risk: Accell Group is averse to risks that could endanger the integrity of finance and reporting, and we have a prudent financing strategy and a strict credit policy.
in 2020 Accell Group made various improvements in the risk management process:
- Given the importance of the risk management framework, Accell Group appointed a dedicated Internal Control manager in 2019 and another FTE will be added to support the internal control department in 2021.
- In 2020, Accell Group installed an anonymous whistle blower line. for receiving reports from employees on wrongdoing and to report (alleged) Code of Conduct breaches. The advantage of such an external service provider is that employees are able to report any Code of Conduct breaches anonymously.
- Established a Policy House that contains group policies and provides online access to all employees.
- Established monthly dashboarding of certain operational, compliance and financial risks.
- Updated various policies, such as Tax and Treasury.
- Continued to embed various IT-related controls (such as access to data and systems).
COVID-19-related additional risk management
The COVID-19 outbreak exposed Accell Group to operational and financial risks and to risks related to the health and safety of our people. Within our risk framework, we took the following additional control and governance measures to assess, mitigate and monitor these risks:
- In March 2020, the Board of Management initiated daily updates with regional teams to get updates on health, safety, sales, government measures and cash and working capital positions. Following the recovery in sales from May, we reduced this frequency (to monthly updates in the second half of the year). If needed, the frequency of these governance calls will be increased.
- In March 2020, the Board of Management initiated weekly updates on the supply situation, looking at future orders linked to demand, capacity (at Accell Group and suppliers) and working capital.
- From March till July 2020, the Board of Management held weekly meetings with the Supervisory Board, with updates via a dashboard on health and safety, demand, cash (including additional financing) and the supply chain. In H2 2020, the COVID-19 situation and dashboard updates were part of the regular Supervisory Board and Audit Committee agenda.
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Improvements planned for 2021
The Company is planning the following actions and/or improvements for 2021 on Accell Group's risk control system:
- More detailed guidance on behavior related to our Code of Conduct, that goes beyond the compliance with legal and regulatory framework and will include a training and communication programme. This will be part of an overall compliance programme that will be started in 2021, in which also topics as competition, GDPR etc. will be included.
- Further roll out and embedding of the Accell Internal Control Framework:
- Accell Group has appointed internal control coordinators which monitor the control activities. An important part of the internal control coordinators’ activities is to further establish the Accell Internal Control Framework and to oversee the annual testing of the internal controls.
- As part of the internal control framework, IT controls will be strengthened and embedded (e.g. segregation of duties with systems).
- Recruitment of a data privacy officer, who together with the Information and Security manager will drive the further embedding of cyber security and data privacy related actions.
- Systems and Data: Accell Group will continue to optimise Data Management especially on components; we will perform various upgrades on the current ERP systems.
Key risks and mitigation of these risks
The Board of Management has identified the largest risks on the achievement of Accell's objectives and strategy, on the basis of probability of occurrence and/or impact. Risks have been categorised as strategic, operational, financial and compliance risks. Social and environmental risks have been integrated in these categories with a view to integrated reporting. The following overview represents the key risks, including the mitigating measures, to which the company is exposed. Some risks may only be listed once, while they may fit into more than one risk category.
Market: Offline to online
Consumer purchasing behaviour is shifting from off line (traditional bike retail) to online, a trend that has been accelerated by COVID-19. There is a risk that Accell will lose market share as a result of changes in distribution channels.
Mitigation of the risk
Accell Group wants to ensure that its products are available via all channels, both offline and online:
The bicycle sector is marked by competition between existing providers and new providers entering the market. There is a risk that Accell Group is unable to predict the behaviour of (potential) consumers sufficiently or is unable to respond effectively, leading to loss of market share.
Mitigation of the risk
Accell Group has identified various actions:
Defects in products may result in injury to and claims from end users. These can result in financial damage and/or damage to the Company’s reputation.
Mitigation of the risk
Accell Group takes great care to ensure the quality and safety of its products. Quality is embedded in the innovation teams as part of the design phase and is embedded at each factory and overseen by a group quality director, who drives following actions:
In addition, Accell Group maintains close contacts with government bodies and advocacy groups to safeguard and improve the safety of bicycles.
DISPARITY BETWEEN AVAILABLE SUPPLY AND DEMAND
Given (increased) lead times in the bike business, in combination with model changes (innovations), there is a risk of shortages or surpluses of bike stock. Planning of supply has become more difficult, given longer lead times from suppliers (as a result of increase in global demand driven by COVID-19). This means there is a risk of over or undersupply of bikes, resulting in increased Trade Working Capital or loss of market share.
Mitigation of the risk
Accell Group uses seasonal production and sales plans and aims to continuously improve the predictability of its sales. This is based on the Sales and Operational planning process. In 2020 a review of the S&OP has taken place in light of the changed circumstances. Adjustments will be rolled out in 2021 to further improve availability considering the circumstances in the supply markets.
Accell has taken several steps to improve this planning and it will continue these improvement efforts:
RISK RELATED TO CONTINUITY OF IT SYSTEMS
The IT systems are of vital importance to day-to-day operations. IT systems and the information they contain may be exposed to risks related to the continuity of functionalities. The materialisation of this risk could have an impact on Accell Group’s reputation, revenues and costs, and thus its results.
Mitigation of the risk
Accell Group has created a new IT roadmap, with a three-year view. We have installed an IT steering committee for the approval of initiatives based on the Company’s strategy and to prioritise in the event of conflicts. The roadmap includes but is not limited to the following topics:
Failure to implement or update technologies, processes and practices designed to protect networks, computers, programmes and data from attack, damage, or unauthorised access.
Mitigation of the risk
The measures include but are not limited to the following topics:
Given the increase in environmental exposure, Accell Group evaluates its vulnerability, preparedness for and response to managing emerging and unforeseen environmental risks, such as flooding or earthquakes. Accell Group could be exposed to earthquake risks in the Asia region, (especially Taiwan) and in Turkey near the Aegean Sea. The above could impact future production capacity/supply.
Mitigation of the risk
The measures include but are not limited to the following topics:
Accell Group is committed to compliance with laws and regulations in the various countries in which it operates, as it can be held liable for the consequences of non-compliance. Changes in law and regulations could mean that products, services, policies and/or procedures are not adapted (or not adapted quickly enough) potentially exposing Accell Group to risks such as fines, sanctions and loss of customers, profits and reputation. Given Accell Group’s multi-jurisdictional presence, the risk profile has increased since there is a mix of international laws and regulations, like for example import duties, anti-dumping rules, the UK Bribery Act, Trade Sanctions, Export Controls and Brexit that have to be monitored and complied with.
Mitigation of the risk
Accell Group has established policies and procedures aimed at compliance with applicable laws and regulations:
CURRENCY AND INTEREST RATES
The Company’s turnover, profit and cash flow are subject to exchange rate fluctuations in (partly) non-functional currencies. This pertains primarily to the US dollar and to a lesser extent the Japanese yen, the British pound, the Taiwanese dollar, and the Chinese yuan. Changes in interest rates also affect the company’s results and cash flow.
Mitigation of the risk
Accell Group seeks to minimise the impact of foreign exchange fluctuations:
With regards to interest rate risk, Accell Group partly hedges its long-term floating rate debt with an interest rate swap and cap. The shorter tenor term debt (GO-C) is not hedged.
The company is partly financed via a bank facility, which is used to absorb the impact of seasonal fluctuations in working capital, or to finance (smaller) acquisitions. There is a risk that the company will not be able to obtain the required financial resources or will be unable to obtain those resources in time to meet its financial obligations, which may endanger the growth of the Company.
Mitigation of the risk
Accell Group mitigates this risk with a long-term financing facility, which has been agreed with a consortium of banks:
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The Board of Management is responsible for the design and operation of the internal risk management and control systems. In discharging this responsibility and to provide substantiation for the statement below, the Board of Management has assessed the effectiveness of the design and operation of the internal control and risk management systems.
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As a result of the management testing carried out in 2020, the regions and operating companies issue signed Letters/Documents of Representation to the Board of Management. The Board of Management has reviewed the Letters of Representation, along with reports from Internal Audit and the Board Report from the external auditor. It has assessed the effectiveness of the design and operation of the internal control framework and has discussed this with the Audit Committee and the Supervisory Board.
In 2020, no major failings (i.e. no failings which resulted in material losses or impact) in the design of implementation of the controls in the internal control and risk management systems were observed. In instances when a control did not operate as expected, areas for improvement were identified and remedial action plans were formalised, which plans will continue to be monitored during 2021.
Based on the information referred to above and its assessment, the Board of Management believes that:
- the report provides sufficient insight into any failings in the effectiveness of the internal risk management and control systems;
- the aforementioned systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies;
- based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis;
- the report provides information on those material risks and uncertainties that are relevant to the expectation of the company’s ability to continue as a going concern for a period of twelve months after the preparation of this report.
In accordance with article 5:25c, section 2 sub c, of the Financial Supervision Act, the Board of Management confirms, to the best of its knowledge, that:
- the consolidated financial statements as included in Chapter 4 Financial Statements of this report provide a true and fair representation of the assets, liabilities, financial position and profit or loss of Accell Group N.V. and its consolidated companies;
- the annual report gives a true and fair view of the position on 31 December 2020, and the developments during the financial year of Accell Group N.V. and its group companies included in the consolidated financial statements; and
- the annual report includes a description of the main risks and uncertainties that Accell Group N.V. is facing.
The above statements are given on the basis that the internal risk management framework and internal control system are primarily designed to identify and control significant risks to which the company is exposed, taking into account the nature and scope of the organisation. This does not imply that these systems and procedures provide assurance as to the realisation of operational and strategic business objectives, nor that they can prevent material misstatements, inaccuracies, errors, fraud and non-compliance with legislation, rules and regulations.
Heerenveen, 4 March 2021
Board of Management
Ton Anbeek (CEO)
Ruben Baldew (CFO)
Jeroen Both (CSCO)
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Accell Group recognises the importance of good corporate governance. The Board of Management and the Supervisory Board are responsible for the corporate governance structure of Accell Group and for compliance with the Dutch Corporate Governance Code (the ‘Code’). This section of the report describes Accell Group’s corporate governance structure.
Accell Group N.V. (“Accell Group” or “the Company”) is a public limited liability Company (Naamloze Vennootschap) under Dutch law, that applies a two-tier board structure comprising a Board of Management, composed of managing directors, and a Supervisory Board, composed of supervisory directors. The Supervisory Board supervises the Board of Management and ensures that external experience and knowledge is embedded in the Company’s conduct. The two boards are independent of each other and are ultimately accountable to the General Meeting (“General Meeting”). Accell Group’s corporate governance is laid down in the Company’s articles of association and the Board of Management and Supervisory Board regulations, which can be found on our website. The Company is listed and its ordinary shares are admitted to trading on Euronext Amsterdam.
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Board of Management
The Board of Management is charged with the day-to-day management and is responsible for the continuity of the Company and its affiliated enterprise, as well as for achieving its goals, objectives, strategy and results. The Board of Management is accountable to the Supervisory Board and the General Meeting. In the performance of its tasks, the Board of Management is guided by the Company’s long-term value creation and considers the relevant stakeholder interests in this context. The Board of Management determines the strategy for realising the Company’s long-term value creation and informs the Supervisory Board regarding the determination of this strategy in a timely manner. The Board of Management is also responsible for the identification and management of the risks associated with the Company’s strategy and activities. To this end, Accell Group has an internal risk management and control system. For more detailed information, please see section 2.7 ‘Risk Management’ of this report.
Certain significant resolutions of the Board of Management require the approval of the Supervisory Board. These include resolutions on major investments, the issuance of shares and the establishment and/or termination of long-term alliances with other companies. The General Meeting’s approval is required for resolutions of the Board of Management that involve significant changes to the identity or character of the Company or its business.
On 22 April 2020, the General Meeting granted the Board of Management the authority to repurchase Accell Group shares for consideration. The authorisation was granted under the following conditions:
- the authorisation would be valid for 18 months (starting on 23 April 2020).
- the Supervisory Board’s approval is required for the acquisition.
- the number of shares shall never exceed 10% of the issued share capital at the time of acquisition. and
- the acquisition price shall never exceed 110% of the average share price on the preceding five trading days.
The agenda for the General Meeting of 21 April 2021 includes a proposal to again grant the Board of Management the authority to acquire Accell Group shares under the same conditions as those set out above, such for a period of 18 months. If that authorisation is granted, it will replace the authorisation granted by the General Meeting of 22 April 2020.
Resolutions on the issuance of shares are adopted by the General Meeting, insofar as and if it has not been designated to another corporate body. The pre-emptive rights can be limited or excluded by the corporate body authorised to adopt resolutions on the issuance of shares, provided that said authorisation is granted expressly to that corporate body. On 22 April 2020, a resolution of the General Meeting granted the Board of Management the authorisation, for 18 months, starting on 23 April 2020, with the approval of the Supervisory Board, to:
- issue ordinary shares up to a maximum of 10% of the ordinary shares outstanding at the time of the resolution or to grant or issue rights to such ordinary shares; and
- limit or exclude pre-emptive rights upon the issuance of such (rights to) ordinary shares.
The agenda for the General Meeting of 21 April 2021 includes a proposal to grant this authorisation again for another 18 months. If that authorisation is granted, it will replace the authorisation granted by the General Meeting on 22 April 2020.
The Board of Management represents the Company insofar as the law does not stipulate otherwise. Each member of the Board of Management also has the authority to represent the Company.
The Supervisory Board determines the number of the members of the Board of Management, appoints members of the Board of Management and also has the power to suspend and dismiss members of the Board of Management. The Supervisory Board will consult the General Meeting before any dismissal is effected.
Pursuant to the Code, members of the Board of Management are appointed for a maximum term of four years, and their contract is a service agreement (overeenkomst van opdracht). Their term of appointment ends after the conclusion of the first General Meeting, to be held in the fourth year after the year in which they were appointed. Members of the Board of Management can be re-appointed for an additional four-year period.
The members of the Board of Management jointly manage the Company and are in principle jointly and severally liable for such management. Subject to the approval of the Supervisory Board, each member of the Board of Management may have their personal and primary responsibilities. The Board of Management currently has three members: Ton Anbeek (CEO), who was appointed Chairman of the Board of Management by the Supervisory Board, Ruben Baldew (CFO) and Jeroen Both (CSCO).
The operation of the Board of Management is subject to the Board of Management’s rules of internal procedure, which outline in detail how the Board of Management operates and its relationship with the Supervisory Board, shareholders and the Works Council. These rules, which have been approved by the Supervisory Board, can be found on the Company’s website (under 'Corporate Governance’).
Based on a proposal prepared by the Selection and Remuneration Committee, the Supervisory Board determines the remuneration of the individual members of the Board of Management, with due observance of the remuneration policy adopted by the General Meeting on 22 April 2020. The main elements of the contracts with members of the Board of Management are published on the Company’s website in accordance with the Code. Each year, the Supervisory Board compiles a remuneration report, which contains an explanation of the remuneration of the individual members of the Board of Management.
The remuneration policy as adopted by the General Meeting on 22 April 2020 and the 2020 remuneration report are available on the Accell Group website (under ‘Corporate Governance/Remuneration’). The 2020 remuneration report for the Board of Management will be put on the agenda of the General Meeting of 21 April 2021 for an advisory vote.
The Company does not provide any personal loans or guarantees to members of the Board of Management, managers, or other employees. Accell Group has the usual indemnity and insurance arrangements with respect to normal company business, and these arrangements cover members of the Supervisory Board, the Board of Management, managers, and other employees.
The Supervisory Board supervises and advises the Board of Management on the performance of its management tasks and supervises the overall development of the Company. In the performance of its tasks, the Supervisory Board is guided by the interests of Accell Group and its affiliated enterprise and takes into account the relevant stakeholder interests in this context. The members of the Supervisory Board regularly discuss the Company’s long-term value creation strategy, its execution and the associated key risks, while paying specific attention to the effectiveness of the internal risk management and control systems and the integrity and quality of the Company’s financial reporting. The Board of Management provides the Supervisory Board with all the information it requires to perform its tasks and does so in a timely manner.
In its periodic meetings with the Board of Management, the Supervisory Board discusses a number of subjects, including the general state of affairs, as well as financial reporting based on the operational plan for the year under review (half-yearly and annual reports, interim financial statements, balance sheets, income statements, cash flow statements and capital investments). The agenda also includes subjects such as major investments and/or divestments, management developments, human resources, the relationship with shareholders, the dividend proposal, the independent auditor’s management letter and follow-up actions, involvement insetting the operational plan with the operational and financial goals for the next year and involvement in setting the long-term strategy at least every fifth year.
At least once a year, the Supervisory Board discusses the progress of the strategy and the principal risks connected to the business, the Board of Management’s assessment of the organisation and the operation of the internal risk management and control systems, as well as any significant changes to those systems.
The Supervisory Board has drawn up regulations, which include the distribution of its tasks and its operating methods. The regulations also include a section on its interaction with the Board of Management and the General Meeting. The current regulations were adopted by means of a resolution dated 4 March 2020. The regulations can be found on the Accell Group website (under ‘Corporate Governance/Supervisory Board').
The Supervisory Board is composed of at least three members. The General Meeting appoints the members of the Supervisory Board based on nominations drawn up by the Supervisory Board. The General Meeting can reject the nomination with an absolute majority of the votes cast, representing at least one-third of the issued share capital. If the nomination is rejected, the Supervisory Board shall draw up a new nomination. In the event that the General Meeting fails to appoint the nominee and also fails to reject the nomination, the Supervisory Board shall appoint said nominee. In the event of vacancies, the Supervisory Board announces the nominations simultaneously to the General Meeting and the Works Councils of Accell Nederland B.V., Accell IT Services B.V. and Accell Global B.V. The General Meeting and the Works Councils are entitled to recommend nominees to the Supervisory Board for appointment as members of the Supervisory Board. The Supervisory Board will fill the nominations for one-third of the number of members of the Supervisory Board with persons recommended by the Works Councils acting jointly, unless the Supervisory Board objects to said recommendation and provides sound grounds for such objection.
A member of the Supervisory Board shall, in general, resign no later than on the day of the first General Meeting held four years after their appointment and immediately after the end of said meeting. A resigning member of the Supervisory Board may be reappointed immediately in accordance with the Company's articles of association and the internal regulations of the Supervisory Board.
The members of the Supervisory Board receive a remuneration to be determined by the General Meeting in accordance with the remuneration policy for the Supervisory Board as adopted by the General Meeting on 22 April 2020. The remuneration policy and the Supervisory Board’s 2020 remuneration report are available on the Accell Group website (under ‘Corporate Governance/Remuneration’) and will be put on the agenda of the General Meeting on 21 April 2021 for an advisory vote.
The Supervisory Board has drawn up a retirement schedule, which is published on the Accell Group website (under ‘Corporate Governance/Supervisory Board').
As from 1 January 2020 onwards, the Supervisory Board consists of four members and has appointed two committees from its midst, each with two members. The Audit Committee consists of Ms Daniëlle Jansen Heijtmajer (chair) and Mr Gert van de Weerdhof. The Selection/Remuneration Committee currently comprises Mr Peter Ernsting (chairman) and Mr. Rob ter Haar.
These committees are tasked with preparatory activities as part of the Supervisory Board’s decision-making process. By means of a resolution dated 4 March 2020, the Supervisory Board established revised regulations for the audit committee and the selection/remuneration committee. These regulations can be found on the website (under ‘Corporate Governance/Supervisory Board’). It is the task of the committees to support and advise the Supervisory Board with respect to the items that are under the committees’ responsibility and to prepare the Supervisory Board’s decisions regarding those items. The Supervisory Board as corporate body remains responsible for how it performs its tasks and for the preparatory work carried out by the committees. The committees submit reports on all their meetings to the Supervisory Board.
The Supervisory Board has drawn up a profile of its size and composition, taking into account the nature, size and operations of Accell Group and the desired expertise and background of the members of the Supervisory Board. The previous profile was established in 2011 and can be found on the Accell Group website (under ‘Corporate Governance/Supervisory Board’). This profile has been updated by means of a Supervisory Board resolution dated September 2020 and will be presented to the General Meeting (for information purposes) on 21 April 2021.
The Supervisory Board has appointed from its midst a chair and a vice-chair, and is assisted by a Company Secretary. The Supervisory Board aims to align the experience and expertise of its members effectively with the nature, activities and strategy of Accell Group. The Supervisory Board’s composition is such that the members can operate independently and critically, vis-à-vis each other, the Board of Management and any Company interest whatsoever. The Company is responsible for an introduction programme for persons appointed to the Supervisory Board.
Composition Board of Management and Supervisory Board
The Board of Management and Supervisory Board are composed in such a way that the required expertise, background, and competencies are independently represented to ensure it can fulfil its tasks effectively. With respect to the distribution of seats on the Board of Management and Supervisory Board, the Supervisory Board strives for diversity in terms of education, professional experience, age and gender. The appointments to the Supervisory Board and the Board of Management in 2018 increased the diversity of both bodies, although the current composition is not yet sufficiently balanced. The new profile for the Supervisory Board as defined in 2020 includes diversity aspects, such as a clear target for gender participation of at least 30 per cent female and at least 30 per cent male members. Besides gender, diversity in background, nationality, expertise and experience are equally important to maximising value in the Supervisory Board. These diversity requirements will be taken into account in the search for new Supervisory Board members.
The Supervisory Board also resolved that the diversity aspects defined in the profile for the Supervisory Board will apply equally to the Board of Management. Regrettably, the composition of the Executive Committee is not (yet) in line with the target as far as gender participation is concerned.
In 2020, the Company launched a Diversity & Inclusion policy, which can be found on our website, with the CEO taking the lead as sponsor. A group-wide programme to establish and embed diversity and inclusion is under construction and will be launched in 2021. The target for gender participation in 2025 is to have at least 30 per cent female members in our most senior leadership team, which currently counts approximately 87 members, 18 of which are female. Besides gender, diversity in background, nationality, expertise, and experience are also important aspects. Accell will increase its attention to women in our management development programmes, to ensure that the increase in the number of women in senior management positions is warranted. In addition, external recruitment agencies will be instructed to identify capable female candidates for senior management positions. Finally, the Company will give preference to women in the event of equal suitability.
Notwithstanding the above, it should be noted that, especially at executive level, achieving the gender target is proving to be difficult due to the nature of our business and the lack of female candidates with sufficient management experience in the bike industry. It is therefore difficult to predict when we are likely to achieve this target.
Key powers, such as powers regarding resolutions to amend the articles of association, substantial legal mergers and/or spin-offs that change the character of the Company, and the adoption of the annual accounts, reside with the General Meeting. In addition, the General Meeting adopts the remuneration policy for the members of the Board of Management and Supervisory Board and sets the remuneration for the Supervisory Board. The dividend policy and discharge of the Board of Management and Supervisory Board are also regular items on the agenda of the General Meeting. Accell Group provides shareholders with reports on shareholders’ meetings, as stipulated in the Code. Within 15 calendar days after each General Meeting, the results of the votes per agenda item are published on the Company’s website. A General Meeting is convened at least once a year and is chaired by the chairman of the Supervisory Board.
Accell Group considers it important that as many shareholders as possible participate in the decision-making processes of the General Meeting and those entitled to vote are therefore given the opportunity to appoint proxies or to extend voting instructions ahead of the General Meeting. The engagement of many shareholders, participation in the decision-making process and the level of attendance at the General Meetings in recent years ensure that the corporate governance system operates effectively. At the General Meeting held on 22 April 2020, which was held by means of a webcast without shareholders being present, given the COVID-19 restrictions that were in place, 43.1% of the total number of issued shares was either present or represented.
Financial reporting, the external and internal auditor
The Board of Management is responsible for the quality and completeness of the financial reports that are published. Before being presented to the General Meeting for adoption, annual financial statements as prepared by the Board of Management must be examined by an external certified public auditor.
The General Meeting has the authority to appoint the external independent auditor. The Supervisory Board nominates the auditor for (re-)appointment by the General Meeting once a year, taking into account the advice of the Audit Committee, while giving due consideration to the Board of Management 's considerations. The external auditor attends all Audit Committee meetings and the meetings of the Supervisory Board in which the annual financial statements are to be approved and in which the year-end report of the external auditor is discussed. Prior to publication, the external independent auditor reports its findings related to the audit of the annual accounts simultaneously to the Board of Management and the Supervisory Board and records the results of its findings in a statement. During the General Meeting, the external auditor will be present and may be questioned about its statement regarding the true and fair nature of the financial statements.
KPMG Accountants N.V. has been nominated and appointed as the external independent auditor for Accell Group since 2016 and up to and including the financial year 2021. The Supervisory Board has put forward KPMG Accountants N.V. for reappointment as external auditor for the financial year 2022 on the agenda for the General Meeting of 21 April 2021.
Accell Group has an internal audit function, which operates under the responsibility of the Board of Management, with lines to the CEO, CFO, and the Audit Committee. The role of the internal audit function is to assess the design and the operation of the internal risk management and control systems. The scope of the internal audit function’s work is regulated in an Internal Audit Charter. In line with the Code, both the appointment and dismissal of the Head of Internal Audit shall be submitted to the full Supervisory Board for approval, with a recommendation issued by the Audit Committee. In line with the Code, the Board of Management and the Audit Committee are involved in the preparation and approval of the annual internal audit plan, which is submitted to the Board of Management and Supervisory Board for approval. Internal Audit reports are discussed with the Audit Committee in the presence of the external auditor.
Code of conduct
The Board of Management established a new internal code of conduct in 2018. This Code of Conduct incorporates the desired conduct expected of everyone within Accell Group every day. The Code of Conduct also includes instructions and recommendations on how employees should conduct themselves in certain specific situations. The full text of the internal code of conduct is available on the Accell Group website (under 'Corporate Governance’).
Accell Group has laid down its requirements for suppliers and other parties involved in the production and sourcing process in a separate code of conduct. These requirements relate to issues including the prohibition of child labour, involuntary labour and discrimination, safety requirements, environmental requirements, and labour conditions. The code of conduct for suppliers is available on the Accell Group website (under 'Corporate Governance’).
The Board of Management has established whistle-blower regulations, an internal compliance committee and an internal investigation procedure; in 2020, a whistle-blower line operated by an external professional party became operational, so employees can (anonymously) report alleged irregularities without harming their legal position. Relevant documents can be found on the Accell Group website (under 'Corporate Governance’).
Insider trading regulation
The Insider Trading Regulation established by the Board of Management aims to provide rules to support the legal provisions aimed at preventing insider trading. The basic premise of the Insider Trading Regulation is that people should not execute or recommend transactions in Accell Group shares and other Accell Group financial instruments if they are in possession of inside information, such in accordance with Regulation (EU) no. 596/2014 of the European Parliament and the Council of 16 April 2014 on market abuse (Market Abuse Regulation).
Pursuant to the Insider Trading Regulation, persons with a reporting obligation (including members of the Board of Management and the Supervisory Board) and the so-called designated persons at Accell Group are subject to various closed trading periods, announced by the Compliance Officer, in which they are not allowed to conduct any transactions, regardless of whether they are in possession of inside information or not. In line with the Insider Trading Regulation, persons with a reporting obligation and designated persons must report any transactions they have executed to the Compliance Officer. Those with a reporting obligation must also report their transactions to the Dutch Financial Markets Authority (AFM).
On 12 December 2014, the Supervisory Board established a regulation that includes several provisions related to the possession of and transactions in securities by members of the Board of Management and of the Supervisory Board, other than those issued by their ‘own’ Company. This is the regulation referred to in the last sentence of best practice provision 2.7.2 of the Code.
Transactions involving potential conflicts of interest
Any form of appearance of conflicting interests between the Company and members of the Board of Management and/or Supervisory Board members must be avoided. Decisions to enter into transactions that might lead to a conflict of interest on the part of a member of the Board of Management and that are of material importance to the Company and/or the member of the Board of Management in question must be approved by the Supervisory Board.
In the financial year 2020, there were no transactions involving a conflict of interest with members of the Board of Management or the Supervisory Board or with majority shareholders as provided for in best practice provisions 2.7.4 and 2.7.5 of the Code. The Supervisory Board regulations include rules on how to deal with (potential) conflicts of interest involving members of the Board of Management or the Supervisory Board and the external auditor in relation to Accell Group and stipulate which transactions require the approval of the Supervisory Board.
The Supervisory Board will be involved closely and in a timely fashion in the process related to any offer for shares in the Company, and the Board of Management and the Supervisory Board will immediately discuss any request from a potential bidder to examine Company information.
With regard to the protection against undesirable developments that might affect the independence, continuity and/or identity of the Accell group of companies, the Company has the option to issue cumulative preference shares B. A call option has been granted to the Stichting Preferente Aandelen Accell Group for those cumulative preference shares B.
For more detailed information regarding this protective measure, see section Stichting Preferente Aandelen Accell Group.
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The Company is committed to the principles of corporate governance, and constantly seeks to enhance its corporate governance standards and framework. In 2020, Accell Group reviewed the principles and best practices of the Code and has, where feasible and relevant, taken actions to implement further improvements.
With respect to best practice provisions 2.1.5 and 2.1.6 (describing the existence of a diversity policy, as well as accountability on diversity), which was an exception to the Code in reporting year 2019, in 2020 Accell Group took steps to define targets and establish a group-wide programme to achieve the Company’s Diversity & Inclusion ambition.
Taking this into account, Accell Group applied all principles and best practices of the Code throughout the year (insofar as these are applicable to the Company).
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Decree article 10 of the Takeover Directive
The following information and explanations relate to the provisions of the Decree of 5 April 2006 implementing article 10 of Directive number 2004/25/EC of the European Parliament and the Council of the European Union dated 21 April 2004 and last revised on 13 October 2015:
The Company’s authorised share capital amounts to € 1,200,000 divided into 120,000,000 shares with a nominal value of € 0.01 each, divided into 55,000,000 ordinary shares, 5,000,000 cumulative preference shares F, and 60,000,000 cumulative preference shares B. As of 4 March 2021, the issued and paid-up capital of Accell Group amounted to € 268,050.31, divided into 26,805,031 ordinary shares with a nominal value of € 0.01 each. Only ordinary shares have been issued. The ordinary shares are traded on the Euronext Amsterdam stock exchange. The rights attached to the shares into which the Company’s capital is divided follow from the articles of association and the Dutch Civil Code.
There is no difference in the voting rights attached to an ordinary share, a cumulative preference share F and a cumulative preference share B. As all shares have the same nominal value (€ 0.01), every issued and outstanding share of a class gives the right to cast one (1) vote in the General Meeting and to cast one (1) vote in the meeting of holders of that specific class. Ordinary shares and cumulative preference shares F may only be issued against payment in full. Preference shares B may be issued against partial payment. Holders of ordinary shares and holders of cumulative preference shares F do have a pre-emptive right in respect of new ordinary shares and new cumulative preference shares F to be issued, unless restricted or excluded pursuant to a resolution of the competent corporate body. Holders of ordinary shares and holders of cumulative preference shares F do not have a pre-emptive right in respect of new cumulative preference shares B to be issued. Holders of preference shares B do not have a pre-emptive right in respect of shares to be issued. The relevant financial rights attached to the shares are related to the application of the profits in relation to the classes of cumulative preference shares (if issued). A brief summary of that article is provided in the following sub-section.
A brief summary of Article 25 of the Articles of Association
From the profit realised in any financial year (and if there is not enough profit, as far as possible from the distributable reserves), an amount will first be distributed on the cumulative preference shares B. That amount will be 3.5% above the average refinancing interest determined by the European Central Bank for the past year.
Subsequently, if possible, a dividend will be distributed on the cumulative preference shares F of a certain series, equal to the arithmetic average of the effective return on government bonds.
After the distributions referred to above on shares B and/or F, the Board of Management shall determine, with the approval of the Supervisory Board, what part of the profit will be added to the reserves. The part of the profit that remains thereafter is at the disposal of the General Meeting.
Limits on the transfer of shares
The Company has no statutory or contractual limitation on the transfer of shares, with the exception of the statutory blocking provision with respect to the transfer of cumulative preference shares F. According to the articles of association, the transfer of cumulative preference shares F requires the approval of the Board of Management.
An overview of substantial interests in the equity of Accell Group, which have at the time of preparing this management report been reported under the provisions related to the reporting of controlling interests under the disclosure of the Dutch Financial Supervision Act (WFT), is included in section The Accell Share.
Special control rights
Since 2008 a long-term incentive plan based on performance shares has been introduced for the members of the Management Board. Early 2020, a long-term incentive plan was introduced for senior executive positions below the Management Board; that plan currently applies to approx. twenty five employees. The Company does not have any other employee share or employee option plans
The Company has not issued any shares with special controlling rights.
There are no limitations or terms on the execution of the voting rights attached to ordinary shares.
There are no depositary receipts for shares issued with the cooperation of the Company.
The Company is not aware of any agreements involving a shareholder of the Company that may limit the transfer of shares or that may limit the voting rights.
Appointment and dismissal of members of the Supervisory Board and members of the Board of Management and amendment of the Articles of Association
The General Meeting appoints the members of the Supervisory Board, based on a recommendation from the Supervisory Board. The Supervisory Board appoints the members of the Board of Management. A more detailed explanation of the appointment and dismissal of members of the Board of Management and the Supervisory Board can be found in the Company’s articles of association. Resolutions to amend the articles of association and to dissolve the Company may only be adopted by the General Meeting pursuant to a proposal of the Board of Management and are subject to the approval of the Supervisory Board. Resolutions of the General Meeting to amend the articles of association and to dissolve the Company may be taken with a majority of the votes cast, but if less than half of the issued capital is represented the resolutions have to be taken with a majority of at least two/thirds of the votes cast.
Powers of the Board of Management
The company is managed by the Board of Management. The Board of Management’s powers are those arising from legislation and regulations. See the Board of Management rules for a more detailed description of duties. Resolutions on the issuance of shares are adopted by the General Meeting, insofar as and if it has not designated another corporate body. The corporate body authorised to adopt resolutions on the issuance of shares may limit or exclude the pre-emptive rights, provided that said authorisation is granted expressly to that corporate body. On 22 April 2020, a resolution of the General Meeting extended to 23 October 2021 the period during which the Board of Management is authorised, with the approval of the Supervisory Board, to: (i) issue ordinary shares up to a maximum of 10% of the outstanding share capital, and (ii) limit or exclude pre-emptive rights upon the issuance of ordinary shares. See also the section Corporate Governance of this report.
On 22 April 2020, the General Meeting granted the Board of Management the authority to repurchase Accell Group shares. The authorisation was granted under the following conditions: (i) the authorisation would be valid for 18 months (until 23 October 2021), (ii) the Supervisory Board’s approval would be required for the acquisition of Accell Group shares, (iii) the number of shares would not exceed 10% of the issued share capital and (iv) the acquisition price would not exceed 110% of the average share price on the preceding five trading days. See also the section Corporate Governance of this report. Resolutions to amend the Articles of Association, or to dissolve the company may only be passed by the General Meeting on the basis of a proposal put forward by the Board of Management and approved by the Supervisory Board.
Change of control provisions in significant agreements
Accell Group differentiates the following categories of agreements, as referred to in the Decree on Article 10 of the EU Takeover Directive:
- The Group has a financing agreement with a syndicate of banks. See for further details section 220.127.116.11 of the financial statements. This agreement stipulates that in the event of a change of control the lenders have the right to terminate the agreement and to reclaim the loans issued prematurely in the event of a substantial change in the control over the Company following a public bid as meant in article 5:70 of the Dutch Financial Supervision Act (WFT).
- Accell Group and its subsidiaries have entered into various agreements that contain clauses that in the event of a change of control the other party has the right to terminate the agreement. These agreements are in themselves not considered key agreements within the meaning of the Decree on Article 10 of the Takeover Directive, but jointly they may be considered significant.
- The terms and conditions of the conditional performance share plan stipulate that, upon the occurrence of a change of control, the Supervisory Board may decide to accelerate the vesting of the conditional performance shares on a pro rata basis, both in terms of time and performance. However, the Supervisory Board is also authorised to withdraw conditional and unconditional performance shares in exchange for a cash payment at market value.
- The Company is not aware of any agreements with members of the Board of Management or employees that provide for a payment in the event that the employment is terminated following a public bid as meant in article 5:70 of the Dutch Financial Supervision Act (WFT).
Accell Group regards taxation as an integral part of its business and as an important contribution to Accell Group’s position in business and society. Accell Group’s attitude towards taxation is reflected in its vision ‘corporate social responsibility at the heart of everything we do’. Accell Group takes a long-term view and carefully weighs the interest of all stakeholders. To clarify what this means in practice, Accell Group has developed a Tax Policy via a set of tax principles and tax guidelines. Below you will find a description of Accell Group’s tax principles and tax guidelines.
Accell Group’s tax principles:
- Accell Group pays taxes in a timely fashion and in accordance with all applicable laws and regulations. Accell Group is guided by international standards, such as the OECD Guidelines. Accell Group takes into account both the letter and the spirit of tax laws and regulations.
- Tax is an integral part of doing business. Taxes should follow business and profits are therefore allocated to the countries in which business value is created. Accell Group applies the at arm’s length principle when calculating transfer prices. Accell Group does not use contrived or abnormal tax structures that are aimed at tax avoidance.
- Tax is one of the elements Accell Group takes into account in its commercial and economic activities.
- Wherever Accell Group operates, Accell Group seeks to establish and maintain an open and constructive dialogue with tax authorities and other government bodies, based on the disclosure of all relevant facts and circumstances. If necessary, Accell Group discusses important fiscal aspects with the tax authorities in an open and transparent manner.
- Accell Group seeks a competitive, stable, sustainable and explainable effective corporate tax rate and will when possible optimise the tax efficiency of its corporate structure. However, any optimisation will only be based on opportunities provided by law or case law and any tax planning will be discussed in an open and transparent manner with the relevant tax authorities.
However, in doing so, due consideration needs to be given to Accell Group’s legitimate interests, reputation, brand, and corporate social responsibility.
- Accell Group takes a prudent approach with respect to the tax charge in its financial statements.
- Accell Group is transparent about its approach to tax and its tax position. Disclosures are made in accordance with the relevant domestic regulations, as well as applicable reporting requirements and standards, such as IFRS.
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Corporate income tax (CIT) by region
|The Netherlands||Germany||Other Europe||Other World||Total|
|€ x 1,000||€ x 1,000||€ x 1,000||€ x 1,000||€ x 1,000|
|CIT to be paid (received) 1 January 2020||2,420||498||1,089||-165||3,841|
|CIT paid (received) in 2020||2,154||8,296||450||-104||10,796|
|CIT to be paid (received) 31 December 2020||-2,431||2,238||1,648||97||1,552|
Stichting Preferente Aandelen Accell Group (the Accell Group preference share trust, a Dutch foundation) has its registered office in Heerenveen and aims to protect the interests of Accell Group NV, hereinafter also referred to as the Company, its associated enterprise, including the enterprises maintained by the companies with which it forms a group and all persons involved therein. In the performance of its task, Stichting Preferente Aandelen Accell Group shall do its utmost to safeguard the interests of Accell Group NV and its associated enterprise and any parties involved therein, while at the same time doing its utmost to resist any influences that might affect the independence and/or the continuity and/or the identity of the Company and its associated enterprise in violation with those interests.
To protect the continuity of (the strategy of) Accell Group and its stakeholders, Accell Group NV entered into an option agreement with Stichting Preferente Aandelen Accell Group in May 2015. This agreement replaced the previous option agreement dating from December 1998, which was later amended in 2009.
Pursuant to the option agreement, Stichting Preferente Aandelen Accell Group shall have the right at any time to acquire such a number of cumulative preference shares B as is required to make Stichting Preferente Aandelen Accell Group, after the acquisition of said shares, the holder of one half, less one share, of the (increased) issued share capital (following the issue of shares). Stichting Preferente Aandelen Accell Group can exercise this right at any time (again and again) – partially or entirely up to the aforementioned maximum – if in its opinion the independence and/or the identity and/or the continuity of (the strategy of) the Company, its associated enterprise and any parties involved therein is threatened.
The option can be exercised, among other things, (1) to prevent or delay (the threat of) a public bid on the shares in the share capital of the Company that is deemed hostile, and/or (2) to prevent or oppose an unwanted concentration of voting rights in the General Meeting of Shareholders, and/or (3) to resist any unwanted influence or pressure from shareholders who wish to change the strategy of the Board of Management.
In these cases, the issue of cumulative preference shares B enables the Company, the Board of Management and the Supervisory Board to determine their standpoint vis-a-vis the bidder/hostile shareholder and any plans they may have, to investigate alternatives and to defend the interests of the Company and those of its stakeholders.
Within six months after any issue of cumulative preference shares B, the Board of Management shall convene a General Meeting to inform the shareholders regarding the current status and discuss the same with them.
Pursuant to article 2:346 section 1 sub e of the Dutch Civil Code, the Company has granted the Stichting Preferente Aandelen Accell Group the authority to submit a written request to the Enterprise Chamber of the Amsterdam Court of Appeal to initiate an inquiry into the policy and the general affairs of the Company, within the meaning of article 2:345 of the Dutch Civil Code.
The board of Stichting Preferente Aandelen Accell Group comprises three members, namely Mr. M.P. (Marco) Nieuwe Weme (Chairman), Mr. B. (Bart) van der Meer, and Mr. A.J.M. (Naud) van der Ven.
In the opinion of the Company and in the opinion of Stichting Preferente Aandelen Accell Group, Stichting Preferente Aandelen Accell Group is independent from the Company within the meaning of article 5:71 section 1 sub c of the Dutch Financial Supervision Act (in Dutch: Wet op het financieel toezicht).
Please be also referred to the website of Stichting Preferente Aandelen Accell Group: stichtingpreferenteaandelenaccellgroup.com