4.20
Notes to the company financial statements
A. General
The company financial statements are part of the 2020 financial statements of Accell Group N.V.
B. Basis of preparation
The company financial statements have been prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. To set the principles for the recognition and measurement of assets and liabilities and the determination of the result for its company financial statements, Accell Group makes use of the option provided in section 2:362(8) of the Dutch Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the company financial statements of Accell Group are the same as those applied for the consolidated EU-IFRS financial statements. See note 4.6 Notes to the consolidated financial statements for a description of these principles.
i. Result of participating interests
Participating interests in group companies are accounted for in the company financial statements according to the net equity value, with separate presentation of the goodwill component under intangible fixed assets.
Participations with a negative net asset value are valued at nil. If Accell Group N.V. guarantees the debts of the relevant participations, a provision is formed.
ii. Result of participating interests
The share in the result of participating interests consists of the share of Accell Group in the result of these participating interests. Results on transactions involving the transfer of assets and liabilities between Accell Group and its participating interests and mutually between participating interests themselves, are eliminated to the extent that they can be considered as not realised.
4.20.1 Goodwill
Changes in goodwill were as follows:
| 2020 | 2019 | |
| € x 1,000 | € x 1,000 | |
| Cost | ||
| Balance at 1 January | 10,502 | 10,330 |
| Investments as a result of business combinations | - | - |
| Currency translation differences | - | 172 |
|
Balance at 31 December
|
10,502
|
10,502
|
| Accumulated impairments | ||
| Balance at 1 January | - | - |
| Impairments | - | - |
|
Balance at 31 December
|
-
|
-
|
| Carrying amount | ||
|
Balance at 1 January
|
10,502
|
10,330
|
|
Balance at 31 December
|
10,502
|
10,502
|
4.20.2 Deferred tax assets
Deferred tax assets consist primarily of € 29.7 million (2019: € 21.4 million) for a liquidation loss (see note 4.15.2 Deferred taxes of the consolidated financial statements).
4.20.3 Financial fixed assets
Changes in financial fixed assets were as follows:
| Notes | |||
| 2020 | 2019 | ||
| € x 1,000 | € x 1,000 | ||
| Subsidiaries | |||
| Balance at 1 January | 454,093 | 417,200 | |
| Profit of participating interests | 46,627 | -9,542 | |
| Investments (divestments) | 75,514 | - | |
| Received dividend participating interests | - | - | |
| Translation differences | -3,674 | 1,517 | |
| Actuarial gains and losses | -666 | 18 | |
| Legal restructuring | -568 | - | |
| Reclassification subsidiary to provision | 4.20.5 | -72,857 | 63,506 |
| Repayments of semi-permanent loans | - | -21,532 | |
| Other movements | -2,973 | 2,925 | |
|
Balance at 31 December
|
495,495
|
454,093
|
|
| Loans to group companies | |||
| Balance at 1 January | 43,737 | 43,127 | |
| Loans provided | 4,460 | 1,720 | |
| Loans repaid | -9,015 | -1,110 | |
| Translation differences | - | - | |
|
Balance at 31 December
|
39,182
|
43,737
|
|
|
Total financial fixed assets
|
534,677
|
497,830
|
|
The long-term loans to group companies are provided as long-term financing and are interest-bearing with an interest rate of 2.7% (2019: 2.6%).
The 2020 consolidated financial statements include Accell Group N.V., in Heerenveen, as well as the financial information of the following companies:
Subsidiaries that are immaterial to the consolidated financial statements are not included in the overview above. A complete list of subsidiaries is filed with the Trade Register of the Chamber of Commerce in Leeuwarden, The Netherlands.
4.20.4 Shareholders' equity
The movements in shareholders’ equity in 2020 were as follows:
| Share capital | Share premium | Hedging reserve | Translation reserve | Other legal reserve | Other reserve | Unappropriated result | Total equity | |
| € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | |
|
Balance at 1 January 2020
|
268
|
42,314
|
-432
|
-12,607
|
2,615
|
288,232
|
2,804
|
323,195
|
| Net profit | - | - | - | - | - | - | 64,829 | 64,829 |
| Other comprehensive income | - | - | -7,083 | -4,681 | - | -666 | - | -12,430 |
|
Total comprehensive income
|
-
|
-
|
-7,083
|
-4,681
|
-
|
-666
|
64,829
|
52,399
|
| Transfer to other reserve | - | - | - | - | - | 2,804 | -2,804 | - |
| Dividends paid | - | - | - | - | - | - | - | - |
| Share-based payments | 0 | -0 | - | - | - | 351 | - | 351 |
| Other changes | - | - | - | - | 1,675 | -1,667 | - | 8 |
|
Balance at 31 December 2020
|
268
|
42,314
|
-7,515
|
-17,288
|
4,290
|
289,055
|
64,829
|
375,953
|
The movements in shareholders’ equity in 2019 were as follows:
| Share capital | Share premium | Hedging reserve | Translation reserve | Other legal reserve | Other reserve | Unappropriated result | Total equity | |
| € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | € x 1,000 | |
|
Balance at 1 January 2019
|
266
|
42,468
|
2,644
|
-22,184
|
3,273
|
275,654
|
20,271
|
322,391
|
| Net profit | - | - | - | - | - | - | 2,804 | 2,804 |
| Other comprehensive income | - | - | -3,076 | 9,577 | - | 18 | - | 6,519 |
|
Total comprehensive income
|
-
|
-
|
-3,076
|
9,577
|
-
|
18
|
2,804
|
9,323
|
| Transfers to other reserves | 20,271 | -20,271 | 0 | |||||
| Dividends paid | 2 | -2 | - | - | - | -8,532 | - | -8,532 |
| Share-based payments | - | -152 | - | - | - | 192 | - | 40 |
| Other changes | - | - | - | 1 | -658 | 630 | -27 | |
|
Balance at 31 December 2019
|
268
|
42,314
|
-432
|
-12,607
|
2,615
|
288,232
|
2,804
|
323,196
|
Accell Group has issued share options (note 4.17.4 Share-based payments of the consolidated financial statements).
Ordinary shares
At 31 December 2020, the authorised capital consists of 55,000,000 ordinary shares, 5,000,000 cumulative preference shares F and 60,000,000 cumulative preference shares B, each with a nominal value of € 0.01. Of these, 26,805,031 (2019: 26,802,751) ordinary shares have been issued and duly paid at 31 December 2020. As a result, the issued and paid-up share capital amounted to € 268,050 (2019: € 268,028).
Share premium reserve
The share premium is the income from the issuing of shares in so far as this exceeds the nominal value of the shares (above par income).
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.
Translation reserve
The legal translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. The income statement includes a reclassification gain of € 1.3 million (2019: loss of € 7.9 million) related to the liquidation of Accell North America (2019: US discontinued operations).
Other legal reserves
Other legal reserves consist of a legal reserve for participating interests and a legal reserve for capitalised development costs.
The legal reserve for participating interests, which amounted to € 3.6 million (2019: € 1.9 million), pertains to participating interests that are accounted for according to the equity accounting method. The reserve represents the difference between the participating interests’ retained profit and direct changes in equity, as determined on the basis of Accell Group’s accounting policies, and the share thereof that Accell Group may distribute. The legal reserve is determined on an individual basis.
In accordance with applicable legal provisions, a legal reserve for the carrying amount of € 0.7 million (2019: € 0.7 million) has been recognised for capitalised development in the Netherlands.
Proposal for profit appropriation (Unappropriated result)
The Board of Management proposes to the General Meeting that the result after tax for 2020 of € 64.8 million (profit) should be allocated to the other reserves. The 2020 result after tax is presented as unappropriated profit in shareholders' equity.
Dividend
In light of the unforeseen and unprecedented impact of COVID-19 on economic activity and the markets Accell Group is operating in, and the uncertainty regarding the length and depth of the pandemic, the Board of Management decided on 25 March 2020 to withdraw the 2019 dividend proposal from the Annual General Meeting agenda.
In June 2020, Accell Group entered into an additional € 115 million loan facility with five syndicate banks, which was partially backed by a Dutch state guarantee in favor of the banks under the so-called GO-C scheme (Garantie Ondernemingsfinanciering Corona). The GO-C facility has a term of up to two years. In June 2020, € 60 million was drawn under this facility; the remainder is available until April 1, 2021. According to the GO-C Facility, no cash dividend distributions shall be made, unless the GO-C facility is repaid and cancelled and the original financial covenants that applied prior to June 2020 are complied with. For further details regarding the covenants see note 4.9.1.1.
As a result, no dividend will be distributed over the 2020 financial year.
4.20.5 Provisions
In 2019 the negative net asset value of Accell North America Inc. was included under the provisions and at 31 December 2020 this no longer exists due to the liquidation of Accell North America on 27 October 2020.
4.20.6 Receivables from and liabilities to group companies
The receivables from and liabilities to group companies are current receivables and current liabilities (no interest).
4.20.7 Loans to and from group companies
The short-term loans to and from group companies relate to current accounts arising from cash management within Accell Group N.V. The loans are interest-bearing (3-month EURIBOR plus margin, with an applicable floor of 0% regarding the 3-month EURIBOR).
4.20.8 Other financial instruments
See note 4.12 Derivatives and hedge accounting, note 4.13 Financial risk management and note 4.14 Fair values measurement of the consolidated financial statements for the note on other financial instruments; other financial instruments consist of forward exchange contracts (net financial liability) of € 14.1 million (2019: net financial asset € 2.9 million) and interest rate swaps (financial liabilities) of € 1.6 million (2019: € 1.9 million), both used for hedging purposes.
4.20.9 Borrowings and revolving credit facility
See note 4.9 Net debt, note 4.13 Financial risk management and note 4.14 Fair value measurement of the consolidated financial statements for the note on borrowings of € 183.2 million (2019: € 73.7 million) and for the term and conditions of the revolving credit facility of nil (2019: € 110.0 million). The revolving credit facility amount presented in the consolidated financial statements relates to the Turkish subsidiary. For the note on Accell Group’s policies in respect of liquidity risk and market risk, consisting of currency risk and interest risk, see note 4.13 Financial risk management of the consolidated financial statements.
4.20.10 Personnel expenses
Personnel expenses pertain solely to the Board of Management. The remuneration of the Board of Management, including pension charges as referred to in Section 2: 383, subsection 1 of the Dutch Civil Code, charged in the financial year to Accell Group N.V. amounted to € 1.8 million (2019: € 1.9 million) and to € 0.3 million (2019: € 0.2 million) for the members of the Supervisory Board. For more details on the remuneration of the Board of Management and the Supervisory Board see note 4.17.5 Remuneration of the Board of Management and the Supervisory Board of the consolidated financial statements.
Personnel costs also include an amount of € 351 thousand (2019: € 54 thousand) for conditional shares. For details on this conditional share plan, see note 4.17.4 Share-based payments of the consolidated financial statements.
4.20.11 Other expenses
Other expenses include IT costs, consultancy costs, audit costs and travel expenses.
4.20.12 Net finance cost
Financial income amounted to € 11.7 million (2019: € 4.9 million) and consists primarily of results from treasury activities for group companies and interest income related to loans to group companies. The financial expenses amounted to € 11.0 million (2019: € 1.9 million) and included interest expenses, bank fees and currency results on bank balances and overdrafts.
4.20.13 Contingent assets and liabilities
Several liability and guarantees
The legal entity Accell Group N.V. has issued declarations of joint and several liabilities for debts arising from the actions of Dutch consolidated participating interests. Notices to that effect have been filed with the chamber of commerce where the legal entity on whose behalf the notice of liability has been given is registered.
At 31 December 2020, Accell Group N.V. holds a group guarantee to the trustees of the UK defined benefit plan, whereby in the event of the bankruptcy of the UK subsidiary, Accell Group N.V. guarantees any deficits in the UK pension scheme up to a maximum of £ 8.7 million. In addition, Accell Group has provided a rental guarantee, whereby in the event of a bankruptcy of the Dutch subsidiary, Accell Group guarantees any rental income up to a maximum of € 1.3 million. The other contingent liabilities consist of a number of smaller customs guarantees, bank guarantees and rental guarantees totalling € 3.9 million.
In addition, declarations of joint and several liability have been issued for debts to suppliers arising from the purchase transactions of consolidated participating interests.
Earn-outs
In the Stock Purchase Agreement between Accell North America and Beeline Bikes Acquisition Company, LLC is included an earn-out arrangement of 10% of the Operation Profit for each calendar year during the term 01.01.2021 - 31.12.2024.
In the Asset Purchase Agreement between (amongst others) Accell North America and Alta Cycling Group LLC is included an earn-out arrangement of 15% of the operating profit for each calendar year during the term 01.01.2022 - 31.12.2026, with a maximum amount of US$ 15 million.
Fiscal unity
The Company constitutes the fiscal unity ‘Accell Group N.V.’ with its subsidiaries for corporate income tax purposes and value added tax; the standard conditions prescribe that each of the companies is liable for the corporate income tax payable by all companies belonging to the fiscal unity.
4.20.14 Subsequent events
In February 2021, Accell Group reached an agreement on the sale of the fitness and motorcycle parts business of Vartex AB, Sweden. This business is not part of Accell Group’s strategic activities and reported third-party revenue of € 8.3 million in 2020 (allocated to the Bikes segment). The business-related assets (including real estate) with a carrying amount of € 4.2 million will be transferred in March 2021.
Supervisory Board
R. ter Haar, chairman
G. van de Weerdhof, vice-chairman
P.B. Ernsting
D. Jansen Heijtmajer
Board of Management
A.H. Anbeek, CEO
R.S. Baldew, CFO
J.J. Both, CSCO
Heerenveen, 4 March 2021