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7.7 Notes

1.  Net turnover

Turnover and profit allocation per segment:

Segment reporting is based on business segments as the risk and return profile of Accell Group is largely determined by the difference in the activities and the products that are produced. Because of the sale of a substantial part of the fitness activities in 2014, in 2015 segment reporting is divided in Bicycles and Parts & accessories. The remaining part of the fitness activities are included in the operating segment Parts & accessories.

Information related to each reportable segment is set out below. Segment profit before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

Segment information is composed as follows:

  Net turnover Inter segment turnover Segment result
  2015 2014 2015 2014 2015 2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
            revised
 
Bicycles 719,021 658,144 25,825 16,178 60,255 46,277
Parts & accessories 267,381 224,260 22,033 18,176 16,834 11,507
Elimination of inter segment turnover     -47,858 -34,354    
Non-recurring expense Taiwan         -4,000  
Reorganisation costs           -1,616
Sale of business activities and acquisition costs           951
Subtotal segments 986,402 882,404 0 0 73,089 57,119
             
Income from non-consolidated companies         -930 387
Unallocated expenses         -14,555 -12,981
Financial income         616 272
Financial expenses         -9,689 -9,031
             
Profit before taxes         48,531 35,766

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Assets and liabilities per segment:
  Assets Liabilities
  2015 2014 2015 2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
    revised   revised
 
Bicycles 549,081 486,311 345,901 277,126
Parts & accessories 170,834 129,199 66,296 61,930
Unallocated corporate 9,810 16,284 11,587 11,631
         
Subtotal segments 729,725 631,794 423,784 350,687
Equity     305,941 281,107
Balance sheet total     729,725 631,794

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  Depreciation Investments
  2015 2014 2015 2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Bicycles 6,916 5,944 6,883 5,830
Parts & accessories 2,529 2,322 5,036 15,004
Unallocated corporate 613 637 1,005 538
         
Total segments 10,058 8,903 12,924 21,372

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Geographical information:

Geographical segments are based on the physical location of the assets. The sales to external customers reported in the geographical segments are based on the geographical location of the customers.

  Net turnover Non-current assets 1)
  2015 2014 2015 2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
        revised
 
The Netherlands 222,366 236,736 31,677 30,451
Germany 227,271 198,449 50,188 50,785
Other Europe 367,634 298,172 72,249 70,114
North America 138,308 117,409 13,265 13,115
Other countries 30,823 31,638 10,618 9,298
  986,402 882,404 177,997 173,763
1) Deferred tax assets and post-employment benefit assets are not included in non-current assets, in accordance with IFRS 8.33b.

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2.  Personnel costs

Personnel costs are comprised of the following:

  2015 2014
  € x 1,000 € x 1,000
    revised
 
Wages and salaries 97,849 86,725
Social security charges 13,600 12,868
Pension contributions 5,305 5,386
Profit sharing 2,211 2,168
Share-based payments 355 266
  119,320 107,413

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The remuneration of the Board of Directors and the Supervisory Board is disclosed in the notes to the company financial statements.

Share based payments

In 2015, unconditional option rights are granted to the Board of Directors. The option plan for the Board of Directors is described in the notes to the company financial statements.

Accell Group also has a restricted share plan whereby conditional shares can be granted to the members of the Board of Directors and to directors of subsidiaries who contribute significantly to the result of Accell Group. Both share plans are share-based payments plans with non-vesting conditions. The grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. The conditions have been incorporated into the fair value at grant date by applying a discount to the valuation obtained.

The shares that have been conditionally granted are comprised of the following:

  Number Granting date Expiry date Share price at granting date Fair value at granting date
Conditional shares
Conditional shares granted in 2014 39,142 26-2-2014 2 jaar € 14.13 € 230,000
Conditional shares granted in 2015 46,069 4-3-2015 2-3 jaar € 15.92 € 381,000

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The fair value will be charged to the income statement according to the straight-line method spread over the period between grant date and the time that the shares become unconditional, whereby adjustment will be made for the expected number of shares to be distributed. As a result, € 302,000 has been charged to the income statement in 2015.

3.  Depreciation

Depreciation comprise the following:

  2015 2014
  € x 1,000 € x 1,000
 
Depreciation of intangible assets 964 1,080
Impairment losses on intangible assets 546 217
Depreciation of property, plant and equipment 8,575 7,618
Capital gain/(loss) on sale of tangible fixed assets -27 -12
  10,058 8,903

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4.  Other operating expenses

Other operating expenses consist of costs relating to the general and specific business activities of Accell Group.

In accordance with IAS 38.126 and IAS 17.35c research costs and lease costs are listed below.

  2015 2014
  € x 1,000 € x 1,000
 
Third-party research and development costs 2,284 1,904
Lease expenses 2,715 2,942
  4,999 4,846

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5.  Non-recurring expense Taiwan

In connection to the recently discovered embezzlement of liquid funds at Accell Asia Taiwan a non-recurring expense of € 4 million is recorded to reflect the damage incurred.

6.  Financial income and expenses

Financial income and expenses comprise the following:

  2015 2014
  € x 1,000 € x 1,000
 
Interest income 616 272
Interest expenses -7,650 -7,634
Financing costs -2,272 -1,958
Exchange rate differences 233 561
  -9,073 -8,759

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The policy regarding interest and currency risks is covered in note 22. Financial instruments and risk management.

7.  Taxes

The effective corporate income tax charge comprises the following:

  2015 2014
    revised
  € x 1,000 € x 1,000
 
Current taxes 17,085 9,691
Deferred taxes -840 -425
Taxes in income statement 16,245 9,266
     
Taxes based on the weighted average applicable rate 12,108 9,036
Non-deductible amounts 1,411 482
Participation exemption -106 -439
Benefits from tax facilities -1,029 -924
Deferred tax assets not carried forward 4,988 1,245
Adjustment of current taxes of prior years -51 -125
Adjustment of deferred taxes of prior years -1,076 -9
Taxes in income statement 16,245 9,266

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The effective tax rate consists of the reported tax charge for the current year divided by the profit before taxes. The effective tax rate in 2015 amounts to 33.5% (2014: 26.0%). The tax rate was negatively impacted by the incident in Taiwan and not recognising deferred taxes assets from new tax losses in North America.

8.  Earnings per share

The calculation of earnings per share and of diluted earnings per share is based on the following data:

  2015 2014
    revised
 
Profit for earnings per share (net profit accruing to Accell Group N.V.'s shareholders) € 32,286,000 € 26,500,000
     
Number of issued shares as per balance sheet date 25,270,327 24,864,956
     
Weighted average number of shares for the earnings per share 25,116,249 24,685,681
Potential impact of share options and conditional shares on the issuance of shares 151,396 142,517
     
Weighted average number of issued shares (diluted) 25,267,645 24,828,198
     
Reported earnings per share € 1.29 € 1.07
Reported earnings per share (diluted) € 1.28 € 1.07
     
Adjustment factor according to IAS 33 1.00 0.98422
     
Earnings per share financial year € 1.29 € 1.06
Earnings per share financial year (diluted) € 1.28 € 1.05

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9.  Property, plant and equipment

Changes in property, plant and equipment are as follows:

  Land and buildings Machinery and equipment Total property. plant and equipment
  € x 1,000 € x 1,000 € x 1,000
Cost
Balance at 1 January 2014 63,328 96,596 159,924
Investments 1,953 8,511 10,464
Investments as a result of business combinations 0 92 92
Divestments -162 -321 -483
Currency translation differences 115 380 495
Balance at 1 January 2015 65,234 105,258 170,492
Investments 445 10,084 10,529
Investments as a result of business combinations 0 292 292
Divestments -920 -180 -1,100
Currency translation differences 316 238 554
Balance at 31 December 2015 65,075 115,692 180,767
 
Accumulated depreciation
Balance at 1 January 2014 18,573 76,230 94,803
Depreciation 1,264 6,354 7,618
Balance at 1 January 2015 19,837 82,584 102,421
Depreciation 1,198 7,377 8,575
Balance at 31 December 2015 21,035 89,961 110,996
 
Carrying amount
Balance at 1 January 45,397 22,674 68,071
Balance at 31 December 44,040 25,731 69,771

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Land and buildings with a carrying amount of € 3.7 million as per 31 December 2015 have been pledged to security to the trustees of the UK pension fund.

Besides regular investments by the subsidiaries in 2015 Accell Group invested in the housing of the Dutch locations and made additional investments in an automated warehouse system for delivery of parts.

10.      Goodwill

Changes in goodwill are as follows:

  2015 2014
  € x 1,000 € x 1,000
    revised
Cost
Balance at 1 January 57,867 48,811
Investments as a result of business combinations 1,021 7,398
Currency translation differences 1,607 1,658
Balance at 31 December 60,495 57,867
Accumulated impairments
Balance at 1 January 2,306 2,306
Impairments 0 0
Balance at 31 December 2,306 2,306
Carrying amount
Balance at 1 January 55,561 46,505
Balance at 31 December 58,189 55,561

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Goodwill is tested annually for impairment or more frequently if there are indications of impairment losses. For the purposes of this test, goodwill is allocated to cash-generating units. Allocation is made to the (group of) cash-generating units that is expected to benefit from the business combination from which the goodwill arose. The cash-generating units used in the assessment correspond with the operational segments.

The carrying amount of goodwill (with an indefinite useful life) on segment level is divided as follows:

  2015 2014
  € x 1,000 € x 1,000
    revised
 
Bicycles 40,494 39,493
Parts & accessories 17,695 16,068
  58,189 55,561

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The following main assumptions are used in determining the value in use of the segments Bicycles and Parts & accessories and are based on historical experiences in specific markets and countries:

  • turnover growth based on the historical average of the last 3 years, for Bicycles respectively Parts & accessories of 10.1% (2014: 7.6%) respectively of 3.8% (2014: 4.1%);
  • operating margin based on the average of the last 3 years, for Bicycles respectively Parts & accessories of 5.7% (2014: 5.3%) respectively of 4.1% (2014: 4.0%);
  • working capital based on the historical average ratios in relation to turnover in the last 3 years, for Bicycles respectively Parts & accessories of 34% (2014: 33%) respectively of 27% (2014: 27%);
  • a perpetual growth rate of 1.7% (2014: 3.0%) is used for the estimates of the future cash flow after the initial period of 5 years;
  • a weighted average cost of capital post-tax of 7.4% (2014: 7.5%) was used for the discounting of the cash flows.

The discounting rate applied in accordance with IAS 36.55 corresponds to a weighted average cost of capital pre-tax of 9.6% (2014: 9.8%).

The impairment test in 2015 shows a substantial headroom in goodwill. Accell Group believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the carrying amount to exceed the recoverable amount of the cash-generating units.

11.      Other intangible assets

The changes in other intangible assets are as follows:

  Trademarks and patents Customer lists and licenses Other Total other intangible assets
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
Cost
Balance at 1 January 2014 38,950 2,960 3,038 44,948
Investments 103 0 279 382
Investments as a result of business combinations 0 3,000 36 3,036
Currency translation differences 685 85 0 770
Balance at 1 January 2015 39,738 6,045 3,353 49,136
Investments 7 0 1,075 1,082
Investments as a result of business combinations 0 0 0 0
Currency translation differences 2,716 -186 -3 2,527
Balance at 31 December 2015 42,461 5,859 4,425 52,745
Accumulated depreciation
Balance at 1 January 2014 2,703 290 1,889 4,882
Depreciation 67 272 741 1,080
Impairment losses 217 0 0 217
Balance at 1 January 2015 2,987 562 2,630 6,179
Depreciation 104 396 464 964
Impairment losses 546 0 0 546
Balance at 31 December 2015 3,637 958 3,094 7,689
Carrying amount
Balance at 1 January 2015 36,751 5,483 723 42,957
Balance at 31 December 2015 38,824 4,901 1,331 45,056

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As per 31 December 2015, trademarks mainly consist of the valuation of trademarks Raleigh and Diamondback from the acquisition of Raleigh Cycle (€ 24.1 million), as well as Ghost (€ 9.4 million). Furthermore trademarks of SBS, Brasseur, Hellberg, Currie and Van Nicholas are valued for a total amount of € 5.0 million.

Trademarks have an indefinite useful life since it is not possible to determine a predictable limitation of the useful life of these trademarks.

 The carrying amount of the trademarks (with indefinite useful life) at segment level is specified as follows:

  2015 2014
  € x 1,000 € x 1,000
 
Bicycles 37,983 35,838
Parts & accessories 500 500
  38,483 36,338

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Trademarks with indefinite useful life are subject to impairment testing. The principal assumptions used in this impairment test include the budgeted expectations regarding turnover of the brands, royalty fees of the brands and discounting of the cash flows applying the post-tax weighted average cost of capital of 7.4% (2014: 7.5%). This testing has led to an impairment loss amounting to EUR 0.5 million for trademarks of Accell North America at the end of financial year 2015, because turnover from these trademarks have decreased.

Investments in customer lists and licenses consist of the customer list of Comet, a Finnish customer list and a valuation of the Turkish dealer network. Furthermore an extension of a licensing agreement with 10 years was recognized in 2013. The useful life is estimated at 20 years for the Turkish dealer network and Spanish customer list and 10 years for the Finnish customer list. These respective assets are amortised as from 2012, 2015 and 2013 onwards.

Other intangible assets relate to development expenditure in connection with the development of electric bicycles as well as to software.

Amortisation expenses are accounted for in the income statement within depreciation. The remaining amortisation term for activated patents is 3 years, for the Turkish dealer network 16 years, for the Spanish customer list 19 years, for the Finnish customer list 7 years as well as for the licensing agreement.


12.      Subsidiaries

The consolidated financial statements 2015 include Accell Group N.V., in Heerenveen, and the financial information of the following companies.

  Participation Percentage
Consolidated subsidiaries
Accell Bisiklet A.S., Manisa, Turkey 100%
Accell Duitsland B.V., Heerenveen, the Netherlands 100%
Accell Germany GmbH, Sennfeld, Germany 100%
Accell Hunland Kft, Toszeg, Hungary 100%
Accell IT Services B.V., Heerenveen, the Netherlands 100%
Accell Italia Srl., Milan, Italië 100%
Accell Ltd, St. Peter Port, Guernsey 100%
Accell Nederland B.V., Heerenveen, the Netherlands 100%
Accell North America Inc, Kent, Washington, United States of America 100%
Accell Suisse AG, Alpnach Dorf, Switzerland 100%
ATC Ltd (Taiwan Branch), Taipei, Taiwan 100%
Brasseur S.A., Luik, Belgium 100%
Comet S.L., Urnieta, Spain 100%
Currie Tech Corp., Simi Valley, Californië, United States of America 100%
Cycle Services Nordic ApS, Odense, Danmark 100%
Cycles Lapierre S.A.S., Dijon, France 100%
Cycles France-Loire S.A.S., Saint-Cyprien, France 100%
Delta Metal Technology Ltd, Shenzhen, R.o.C. 100%
E. Wiener Bike Parts GmbH, Sennfeld, Germany 100%
Ghost-Bikes GmbH, Waldsassen, Germany 100%
Raleigh Canada Ltd, Oakville, Ontario, Canada 100%
Raleigh UK Ltd, Nottingham, United Kingdom 100%
Swissbike Vertriebs GmbH, Alpnach Dorf, Switserland 100%
Tunturi-Hellberg Oy Ltd, Turku, Finland 100%
Tunturi-Proway Oy Ltd, Turku, Finland 100%
Vartex AB, Varberg, Sweden 100%
Winora Staiger GmbH, Sennfeld, Germany 100%

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Some 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.

  2015 2014
Non-consolidated subsidiaries
Jalaccell OÜ, Tallinn, Estonia (i) 35% 35%
Babboe B.V., Utrecht, the Netherlands (ii) 38% 38%
Atala SpA, Monza, Italy (iii) 50% 50%
Von Backhaus ApS, Odense, Denmark (iv) 40% 40%
(i) Jalaccell OÜ is a joint venture of Accell Fitness Division B.V. set up for the assembly and storage of fitness equipment.
(ii) Babboe B.V. is an associate that is active in the marketing and sales of carrier bicycles.
(iii) Atala SpA is a joint venture active in the development and sales of bicycles under its own brands.
(iv) Von Backhaus ApS is an associate active in the development and sales of bicycles under its own brands.

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All interest held in these companies are of a strategic nature. The voting rights are equal to the percentage interest held.

Changes in non-consolidated companies is as follows:

  2015 2014
  € x 1,000 € x 1,000
 
Balance at 1 January 4,991 4,526
Investments 0 0
Divestments 0 46
Dividend -292 -77
Net income 282 496
Balance at 31 December 4,981 4,991

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Summary of the financial data for the interests in non-consolidated companies:

  2015 2014
  € x 1,000 € x 1,000
 
Total non-current assets 14,341 13,245
Total non-current liabilities 10,722 9,671
Total turnover 20,132 19,748
Total share in net income -930 387

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During 2015, Accell Group accounted for an impairment of € 1.2 million on a loan to Jalaccell OÜ (refer to note 13. Other financial fixed assets). As well an impairment of € 0.1 million was accounted for in respect of the carrying amount of Group’s share in Jalaccell OÜ. This impairment of € 0.1 million has been incorporated in the carrying amount of Group’s non-consolidated companies. The reason for the impairments is that the transition to other activities in the metal business, initiated after the sale of the fitness activities in 2014, generate insufficient economic basis for a full collection of the outstanding loan.

13.      Other financial fixed assets

  Non-current Current
  31-12-15 31-12-14 31-12-15 31-12-14
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Loans provided to related parties 0 2,183 828 125

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During 2015, Accell Group accounted for an impairment of € 1.2 million on a loan to Jalaccell OÜ (refer to note 12. Subsidiaries); the remaining € 0.8 million is expected to be collected in 2016.

14.      Inventories


  2015 2014
  € x 1,000 € x 1,000
 
Goods in transit 59,287 45,719
Raw materials 105,087 70,022
Work in process 3,091 2,819
Trading and finished products 171,219 125,897
  338,684 244,457

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Goods in transit relates to shipped goods for which Accell Group had acquired the economic ownership as at the balance sheet date, but which have not yet been received.

As at balance sheet date, inventories with a carrying amount of approximately € 10.5 million are valued at lower net realisable value. The cost of inventories recognised as an expense in the income statement include € 3.3 million (2014: € 3.1 million) with respect to write-downs of inventory to lower net realisable value.

The costs of inventory that are recorded as an expense during the financial year amounts to € 719.2 million (2014: € 659.3 million).

15.      Trade receivables


  2015 2014
  € x 1,000 € x 1,000
 
Trade receivables 142,542 140,620
Provision for impairment of receivables -7,972 -7,368
  134,570 133,252

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The nominal value is considered to be equal to the fair value. Trade receivables are non-interest-bearing and, depending on the season, are governed by a 30-150 day term  of payment. The provision for impairment is determined on the basis of an individual assessment of overdue trade receivables. Accell Group has developed a credit policy to maintain control over credit risks relating to trade receivables. The policy regarding credit risks is covered in note 22. Financial instruments and risk management.

The changes in the provision for the impairment of trade receivables are as follows:


  2015 2014
  € x 1,000 € x 1,000
 
Balance at 1 January 7,368 6,458
Utilisation -1,578 -1,697
Provided 2,810 2,438
Release -659 -256
Currency translation differences 31 425
Balance at 31 December 7,972 7,368

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The aging analysis of trade receivables is provided in the overview below.

  Gross Gross impaired trade receivables Provision for impairment Net
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
At 31 December 2015:        
Current 109,235 119 67 109,168
0-90 days overdue 13,754 2,725 371 13,383
90-150 days overdue 4,677 2,341 408 4,269
more than 150 days overdue 14,876 9,845 7,126 7,750
Total 142,542 15,030 7,972 134,570
At 31 December 2014:        
Current 115,176 181 80 115,096
0-90 days overdue 10,633 1,888 225 10,408
90-150 days overdue 2,328 1,242 283 2,045
more than 150 days overdue 12,483 9,524 6,780 5,703
Total 140,620 12,835 7,368 133,252

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Accell Group has agreed various specific and, to a limited extent, individual terms of payment with its customers that differ depending on the nature of the goods delivered and that can also differ per country. Due to the seasonal nature of the activities, customers are offered so-called winter terms, whereby the customers can opt for an extra payment discount or a longer payment period. This is customary in the business.

16.      Equity

The consolidated equity is equal to the equity in the company financial statements. The explanatory notes and movement overviews of equity are included in the company financial statements

17.      Interest-bearing loans


  Non-current Current
  31-12-15 31-12-14 31-12-15 31-12-14
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Term loans 58,888 70,619 12,500 12,500
Other bank loans 75 246 141 226
         
Bank overdrafts 0 0 142,601 82,245
  58,963 70,865 155,242 94,971

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Early 2013, Accell Group entered into a financing agreement with a syndicate of 6 (international) banks for a total group financing of € 300 million. The participating banks in the syndicate are ABN AMRO Bank, Deutsche Bank, ING Bank, Rabobank, BNP Paribas and HSBC. The original financing consists of € 125 million long-term loans (term loans) and working capital financing (revolving credit facility) of € 175 million, of which € 65 million is a season facility. On a portion of the term loans regular redemptions of € 12.5 million per annum are made. As a result of the sale of the activities of Hercules and Tunturi Fitness an additional redemption of € 20.5 million was made. In 2015 the working capital financing has been extended with € 25 million from the so-called ‘accordion-facility’, which is part of the financing agreement. The ‘accordion-facility’ totals to € 50 million; the remaining € 25 million will be drawdown in 2016.

The interest rate for the term loans is fixed and is approximately 3.8% in 2015. With the new financing agreement all existing financing agreements ended, except for the 10-year loan facility from Deutsche Bank of € 15 million. This loan facility is integrated in the new financing agreement and the covenants are harmonised, but the loan has a remaining term of 6 years and has an (in principle fixed) interest rate of 5.8% per annum, whereby the credit rate which is included in this interest rate is determined once a year.

Initially, the financing agreement was committed for 3 years with an option to extend to 5 years. During 2014, all participating banks agreed to the extension to 5 years.

Accell Group has provided securities in the form of trade receivables and inventories for its Dutch, German, English and US group companies to the lenders. The group is not allowed to pledge these assets as security for other borrowings or to sell them to another entity as method of raising financial indebtedness. In connection with the other loans, no collateral was provided. The average interest rate on the other loans is 3.0% .

The policy regarding interest rate risks is covered in note 22. Financial instruments and risk management. The financial covenants, which are part of the financing agreement, are also covered in this note.
The non-current interest-bearing liabilities are due for redemptions as follows:

  Term less than 5 years Term more than 5 years Total
  € x 1,000 € x 1,000 € x 1,000
 
Term loans 56,388 15,000 71,388
Other bank loans 216 0 216
Subtotal 56,604 15,000 71,604
Proportion of loans with a term of less than 1 year -12,641 0 -12,641
Balance at 31 December 2015 43,963 15,000 58,963

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18.      Pension provisions and net pension assets

Defined benefit plans

Accell Group funds defined benefits for qualifying employees. The main defined benefit plan is the plan in the United Kingdom (UK), which accounts for approximately 85% of the defined benefit obligation and for more than 90% of the plan assets. The UK plan is subject to UK laws and is administered by a separate fund that is legally separated from the company. The trustees of this fund are appointed by the company. Pension benefits are related to the member’s final salary at retirement and their length of service. Since December 2002, the defined benefit section of this pension scheme has been closed to future accrual. The deed of the UK plan shows that the company has an unconditional right in the form of refunds, when there is a surplus and the fund has no further obligations, or in case there is a surplus at the time when the plan is wound up.

The UK plan exposes the company to actuarial risks such as market risk, interest rate risk and inflation risk. The scheme does not expose the company to any unusual scheme-specific risk. The scheme’s investment strategy is to invest broadly 67% in return seeking assets (being diversified growth funds and bond portfolios) and 33% in matching assets (index related UK government bonds gilts and investment property bonds). This strategy reflects the scheme’s risk profile and the trustees’ and company’s attitude to risks. The returns from the return seeking assets are not achieved solely by direct investment in return seeking assets, but the equity linked bond portfolio allow exposure to equity type returns using futures backed by collateral in the form of index-linked UK government bonds.

The valuation of the UK pension plan is adjusted in the balance sheet following a recommendation by the Netherlands Authority for the Financial Markets (“AFM”) about the application of accounting standards regarding pensions; a reference is made to page 120.

In addition, Accell Group sponsors funded defined benefit plans for qualified employees in Canada and Taiwan, a fixed unfunded defined benefit plan in Germany and an unfunded defined benefit plan in Hong Kong. The defined benefit plans of Accell Group have no contributions from employees anymore, because the plans are mainly fixed.

The actuarial calculations pursuant to IAS 19 were carried out at 31 December 2015 by actuaries of certified actuarial firms. The principal assumptions used for the purposes of the actuarial valuations are based on the following weighted averages:

  2015 2014
 
Discount rate 3.4% 3,2%
Expected rates of salary increases 2.9% 2,5%
Inflation 2.4% 2,1%
Average longevity at retirement age for current pensioners (years):    
Males 20.8 20,8
Females 23.1 23,0
Average longevity at retirement age for current employees (years):    
Males 22.2 22,1
Females 24.6 24,5

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Amounts recognised in the income statement in respect of these defined benefit plans are as follows:

  2015 2014
    revised
  € x 1,000 € x 1,000
 
Current service cost 56 61
Past service cost 0 0
Administration expense 337 410
Net interest expense -597 -356
Total -204 115

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Amounts recognised in other comprehensive income in respect of these defined benefit plans are as follows:

>
  2015 2014
    revised
  € x 1,000 € x 1,000
 
Remeasurement on the net defined liability:    
Return on plan assets (excluding amounts included in net interest expenses) -264 7,711
Actuarial gains and (losses) from changes in demographic assumptions -1,952 1,681
Actuarial gains and (losses) arising from changes in financial assumptions -237 -9,798
Actuarial gains and (losses) arising from experience adjustments 595 5,517
Adjustments for restrictions on the defined benefit asset 0 0
Total -1,858 5,111

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Amounts recognised in the balance sheet in respect of these defined benefit plans are as follows:

  2015 2014
    revised
  € x 1,000 € x 1,000
 
Net pension assets -20,186 -19,763
Pension provisions 6,170 6,621
Net pension assets -14,016 -13,142

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The defined benefit obligation and fair value of plan assets are specified as follows:

At 31 December 2014 UK plan Other Total
  revised   revised
  € x 1,000 € x 1,000 € x 1,000
 
Present value of funded pension obligation 75,348 6,886 82,234
Minus: Fair value of plan assets -95,111 -6,971 -102,082
Deficit/ (surplus) -19,763 -85 -19,848
Present value of unfunded defined benefit obligation 0 6,706 6,706
Funded status -19,763 6,621 -13,142
Restrictions on assets recognised 0 0 0
Net liability (asset) as per 31 December 2014 -19,763 6,621 -13,142
 
At 31 December 2015 UK plan Other Total
 
Present value of funded pension obligation 78,220 6,072 84,292
Minus: Fair value of plan assets -98,406 -6,261 -104,667
Deficit/ (surplus) -20,186 -189 -20,375
Present value of unfunded defined benefit obligation 0 6,359 6,359
Funded status -20,186 6,170 -14,016
Restrictions on assets recognised   0 0
Net liability (asset) per 31 December 2015 -20,186 6,170 -14,016

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The movement in the present value of the defined benefit obligation is as follows:

  UK plan Other Total
  € x 1,000 € x 1,000 € x 1,000
 
Balance at 1 January 2014 70,444 12,132 82,576
Current service cost 0 61 61
Interest cost 3,211 445 3,656
Actuarial (gains) and losses arising from changes in demographic assumptions -1,681 -116 -1,797
Actuarial (gains) and losses arising from changes in financial assumptions 8,101 1,697 9,798
Actuarial (gains) and losses arising from experience adjustments -5,423 185 -5,238
Exchange differences on foreign plans 4,321 267 4,588
Benefits paid -3,625 -1,079 -4,704
Defined benefit obligation at 31 December 2014 75,348 13,592 88,940
Current service cost 0 14 14
Interest cost 2,543 351 2,894
Actuarial (gains) and losses arising from changes in demographic assumptions 1,952 75 2,027
Actuarial (gains) and losses arising from changes in financial assumptions 354 -131 223
Actuarial (gains) and losses arising from experience adjustments -635 75 -560
Exchange differences on foreign plans 4,697 -298 4,399
Benefits paid -6,039 -1,247 -7,286
Defined benefit obligation at 31 December 2015 78,220 12,431 90,651

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The movement in the fair value of the plan assets is as follows:

  UK plan Other Total
  € x 1,000 € x 1,000 € x 1,000
 
Balance at 1 January 2014 81,622 6,626 88,248
Interest income 3,759 284 4,043
Remeasurement gain (loss):      
Return on plan assets (excluding amounts included in net interest expense) 7,456 410 7,866
Contributions from the employer 1,232 337 1,569
Administration expense -339 -63 -402
Exchange differences on foreign plans 5,006 216 5,222
Benefits paid -3,625 -839 -4,464
Fair value of the plan assets at 31 December 2014 95,111 6,971 102,082
Interest income 3,246 244 3,490
Remeasurement gain (loss):      
Return on plan assets (excluding amounts included in net interest expense) -194 115 -79
Contributions from the employer 623 436 1,059
Administration expense -271 -156 -427
Exchange differences on foreign plans 5,930 -361 5,569
Benefits paid -6,039 -988 -7,027
Fair value of the plan assets at 31 December 2015 98,406 6,261 104,667

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The fair value of the plan assets is categorised as follows:

  2015 2014
  € x 1,000 € x 1,000
 
Cash and cash equivalents 6,370 1,301
Equity investments    
Equity-linked bonds 0 25,558
Diversified growth funds 25,030 19,287
Absolute return bonds 17,913 17,153
Other equity investments 312 4,261
Subtotal equity investments 43,255 66,259
Debt securities    
Index-linked gilts 41,896 20,581
Property bonds 12,932 11,778
Other debt securities 94 2,061
Subtoral debt securities 54,922 34,420
Other 120 102
Total 104,667 102,082

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The fair values of the above equity investments and debt securities are determined based on quoted market prices in active markets. The actual return on plan assets was € 3.4 million in 2015 (2014: € 11.9 million).

The average duration of the defined benefit obligation is 16 years as per 31 December 2015 (2014: 16 years). Significant actuarial assumptions for the determination of the defined benefit obligation are the discount rate and the expected salary increase. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions holding at the end of the reporting period. In the analyses the interdependence of inputs has not been considered.

  • if the discount rate is 1 % higher, the defined benefit obligation would decrease by € 9.4 million (2014: € 10.3 million);
  • if the discount rate is 1 % lower, the defined benefit obligation would increase by € 15.2 million (2014: € 10.0 million);
  • if the expected salary growth increases by 1%, the defined benefit obligation would increase by € 2.2 million (2014: € 5.7 million);
  • if the expected salary growth decreases by 1%, the defined benefit obligation would decrease by € 4.6 million (2014: € 5.7 million).

The sensitivity analyses are prepared at the end of the reporting period using the same methods as applied in the defined benefit obligation in the balance sheet. The sensitivity analyses may not be representative of the actual change in the defined benefit obligation. It is unlikely that the changes in the assumptions would occur in isolation of one another as some of the assumptions are correlated.

The company has provided land and buildings as a pledge to the trustees of the UK pension scheme, as disclosed in note 9. Property, plant and equipment. Besides the company provided to the trustees a group guarantee, whereby in case of a bankruptcy of the UK subsidiary, Accell Group will guarantee possible deficits in the UK scheme to a maximum amount of £ 8.7 million.

Accell Group expects to make a contribution of € 0.9 million in 2016 with regard to the defined benefit plans.

Defined contribution plans

Multi-employer plan

The company’s employees in the Netherlands, approximately 525 employees, participate in a multi-employer sector plan of Metalektro, determined in accordance with the collective bargaining agreements effective for the industry in which Accell Group operates. This collective bargaining agreement has no expiration date. This a multi-employer sector plan covers approximately 1,250 participating companies and 144,000 contributing members. Accell Group’s contribution to the multi-employer sector plan is less than 1% of the total contribution to the plan. The plan monitors its risk on a global basis, not by company or employee, and is subject to Dutch legislation.

The Dutch Pension Act prescribes that a multi-employer sector plan must be monitored against specific criteria, including the coverage ratio of the plan assets to the pension obligations. This coverage ratio must exceed 104.3%. Every company participating in a Dutch multi-employer sector plan contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multi-employer sector plan. The pension rights of each employee are based upon the employee’s average salary during employment.

The coverage  ratio  of  the  multi-employer sector plan decreased to  97.7% as of 31 December 2015 (31 December 2014: 102.0%). Because of the low coverage ratio Metalektro prepared and executed a recovery plan which was approved by De Nederlandsche Bank (DNB, Dutch Central Bank), which monitors pension funds in the Netherlands. Due to the low coverage ratio and the liabilities resulting from the recovery plan the pension premium percentage is 26.6% in 2015 (2014: 27.1%). The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and is based on actual market interest.

The pension sector fund informed the company that the plan qualifies as a defined contribution plan. According to the pension sector fund, the member companies only have an obligation to pay the annual pension premiums due. Member companies do not have any obligation to settle any deficits in the fund. Member companies are also not entitled to any surplus. Accordingly, Accell Group accounts for this plan as a defined contribution plan in the financial statements. Accell Group’s net periodic pension cost for this multi-employer sector plan for any period is the amount of the required contribution for that period.

Other defined contribution plans

Employees of the company’s foreign subsidiaries generally participate in a local government pension plan. The subsidiaries are only required to contribute a certain percentage of salaries to the local pension institutions.

In 2015, an expense of € 5.3 million has been included in the income statement in respect of the defined contributions plans.

19.      Deferred taxes

Deferred taxes comprise the following:

  2015 2014
    revised
  € x 1,000 € x 1,000
 
Deferred tax assets 6,653 7,410
Deferred tax liabilities 9,560 12,721
Net deferred taxes -2,907 -5,311

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The movement in the deferred tax assets and deferred tax liabilities is as follows:

  Loss carry forwards consolidated companies Revaluation of property. plant and equipment Financial instruments Trademark valuation Other deferred taxes Total
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Revised balance at 1 January 2014 8,390 -1,778 2,895 -5,943 -4,388 -824
Added through business combination 9 0 0 -840 -11 -842
Charged through other comprehensive income 0 0 -3,635 0 -1,051 -4,686
Charged through income statement -1,620 -35 0 358 1,722 425
Change in income tax rate 0 0 0 0 0 0
Transfer from/to current tax 0 0 0 0 0 0
Currency translation differences 631 20 0 -63 28 616
Revised balance at 31 December 2014 7,410 -1,793 -740 -6,488 -3,700 -5,311
Added through business combinations 0 0 0 0 -100 -100
Charged through other comprehensive income 0 0 380 0 622 1,002
Charged through income statement -1,829 18 0 254 2,397 840
Change in income tax rate 0 0 0 0 0 0
Transfer from/to current tax 678 0 0 0 0 678
Currency translation differences 394 -12 0 -208 -190 -16
Balance at 31 December 2015 6,653 -1,787 -360 -6,442 -971 -2,907

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Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available. To realise the related tax benefits future taxable profits need to be available in the carryforward period available and deferred tax liabilities from temporary differences need to be generated.

In the review of the deferred tax assets the consequences of tax planning are considered. New tax losses in North America are not recognised in 2015. The unused tax losses of Tunturi-Hellberg Oy Ltd are expected to be realised within the period available, ending at the end of the year 2022.

Accell Group has unused tax losses in its subsidiaries of € 63.8 million (2014: € 49.7 million) for which there is no reasonable assurance that sufficient taxable profit will be available to realise the related tax benefits. As a result no deferred tax assets are recognised in respect of these unused tax losses. The unused tax losses mainly relate to Raleigh prior to acquisition and are measured at a fair value of nil at the acquisition date.

Accell Group and its 100% controlled Dutch subsidiaires form a fiscal unity for Dutch corporate income tax purposes.

20.      Provisions


  Non-current Current
  31-12-15 31-12-14 31-12-15 31-12-14
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Deferred employee benefits 2,420 2,102 57 96
Warranties 2,784 2,928 4,526 3,381
Other provisions 1,402 866 1,354 2,218
  6,606 5,896 5,937 5,695

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The movement in provisions is as follows:

  Deferred employee benefits Warranties Other provisions Total
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Balance at 1 January 2015 2,198 6,309 3,084 11,591
Utilisation -62 -444 -1,542 -2,048
Provided 456 1,627 1,314 3,397
Release -12 -224 -101 -337
Currency translation differences -103 42 1 -60
Balance at 31 December 2015 2,477 7,310 2,756 12,543

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Deferred employee benefits relate to the provision for future anniversary bonuses and resignation payments in some countries. The provision is based on contractual obligations and assumptions with respect to expectations of death and resignation. Warranty provisions represent the estimated costs under warranty obligations for goods delivered and services rendered as at balance sheet date. The provision is based on estimates using historical warranty information.

Provisions for deferred employee benefits and warranty obligations are expected to have a duration between one and five years. Other provisions mainly relate to remaining restructuring provisions for the reorganisation of the activities in the Netherlands and in North America and a provision identified in an acquisition. These provisions are generally expected to have a duration of less than one year.

21.      Deferred income


  Non-current Current
  31-12-15 31-12-14 31-12-15 31-12-14
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Deferred income 2,005 2,560 910 550

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Deferred income consists of receipts in respect of extra warranty claims to be realised in the coming five years.

22.      Financial instruments and risk management

Categories of financial instruments in balance sheet as at 31 December:

  2015 2014
  € x 1,000 € x 1,000
Assets
Amortised cost
Non-current receivables 0 2,183
Trade receivables and other receivables 156,022 151,854
Cash and cash equivalents 14,236 13,529
 
Fair value through cash flow hedging
Other financial instruments 6,048 6,039
 
Liabilities
Amortised cost
Interest-bearing liabilities 155,242 165,836
Trade liabilities and other liabilities 155,361 124,231
 
Fair value through cash flow hedging
Other financial instruments 3,209 4,385

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The fair value of the other financial instruments is determined on the basis of other inputs than quoted prices that are observable (level 2). For the determination generally accepted valuation methods are used. The determined value in this way is equal to the price at which the derivative can be sold in a transparent market.

The other financial instruments comprise:

  2015 2014
  € x 1,000 € x 1,000
 
Currency derivatives - cash flow hedging 6,048 6,039
Interest rate swap - cash flow hedging -3,209 -4,385
  2,839 1,654

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To determine the fair value of other financial instruments the present value of the cash flow model was used. This valuation model uses the present value of the expected payment discounted with discounting rate adjusted for (counterparty)risk. To determine the fair value inputs based on observable market data were used.

In 2015, € 1.2 million was added to the hedging reserve pursuant to the fair value adjustments of the instruments to cover the currency and interest risk in future cash flows. With respect to cash flow hedging of interest rate risks, it is expected that the underlying cash flows materialise at the time that the interest is due on the loans with a one-month or three-month floating interest rate. The cash flow hedges of the currency and interest rate derivatives were assessed as effective in  2015.

Movement of the hedging reserve:

  2015 2014
  € x 1,000 € x 1,000
 
Balance at 1 January 2,315 -9,047
amount included in equity 6,744 9,455
amount included in cost of inventories -9,120 844
amount included in interest expenses 1,140 1,063
Balance at 31 December 1,079 2,315

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Currency derivatives

Currency derivatives stated as at the balance sheet date will be settled during 2015. Currency derivatives outstanding as at the balance sheet date can be specified as follows:

    Contract value Fair value
    2015 2014 2015 2014
    € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Currency hedge Currency        
Put USD 126,267 40,538 5,376 5,513
Call USD 0 0 0 0
Put JPY 27,631 21,087 1,086 -626
Call JPY 0 0 0 0
Put CNY 7,317 9,526 -76 802
Call CNY 0 0 0 0
Put TWD 10,128 4,192 -305 338
Call TWD 0 0 0 0
Put GBP 0 0 0 0
Call GBP 3,600 0 118 0
Put TRY 2,950 1,300 -85 12
Call TRY 0 0 0 0
Put SEK 0 0 0 0
Call SEK 3,870 0 -66 0
        6,048 6,039

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Interest rate swaps

Accell Group uses interest rates swaps to convert the floating interest rate on its borrowings into a fixed interest rate. In 2008 and 2013 interest rate swaps were concluded, respectively for a period of 10 and 5 years, to hedge the interest rate risk of the term loans.

Interest rate swaps outstanding as at the balance sheet date can be specified as follows:

  2015 2014
  € x 1,000 € x 1,000
 
Contract value -2,353 -3,405
Fair value -3,209 -4,385

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The policy of Accell Group regarding capital management, liquidity risks, credit risks, and market risks (currency and interest rate) is outlined below.

Capital management

The company operates a funding policy that is based on the going concern of Accell Group. This is reflected in the management of the capital. Following the growth of the company in recent years, Accell Group decided in 2012 to harmonise its financing structure. This led to a entire refinancing of the company in 2013. The basis was to achieve the right balance between long-term group financing and the strongly fluctuating seasonal working capital financing. Accell Group is quarterly required to comply with the ratios stipulated by the lenders in the financing agreement; in 2015 all financial covenants have been met.

As at 31 December 2015, on the basis of group equity the solvency amounted to 41.9% (as at 31 December 2014: 44.5%). As explained in the section on currency and interest rate risks, the movement in the hedging reserve has an effect on the solvency per year-end. Accell Group has no control over the changes in the market value of the underlying derivative financial instruments.

Liquidity risk

In managing the liquidity risk, Accell Group takes into account the strongly fluctuating seasonal nature of the activities. Therefore, in the funding of the group a distinction is made between long-term (core) funding and the seasonal credit facility. The financing agreement contains financial covenants on a quarterly basis consisting of:

  • term loan/ EBITDA ratio (debt ratio) at year end 2016 below 2.25;
  • solvency ratio higher than 30% at year end 2016 (whereby equity and balance sheet total at year-end are adjusted for, among others intangible assets and related deferred taxes);
  • interest cover higher than 5.5 at year end 2016;
  • with regard to the use of the seasonal financing the actual use (“borrowing reference”) may not exceed the lower of:
    1. the aggregate of:
      1. the higher of 50% of the book value of the qualifying inventories minus the aggregate value of all trade payables of Accell Group and zero; and
      2. 55% of the aggregate book value of all qualifying trade receivables; and
    2. the aggregate of the total facility C commitments and the total of the facility D commitments.

Total loans and bank overdrafts provided to Accell Group amounted to € 214.2 million at the end of the financial year 2015; 28% of this is of a long-term nature. In addition to bank overdrafts, the group’s other current liabilities amounted to € 185.2 million at the end of the financial year.

The table below provides an overview of the total financial obligations, including the estimated interest payments on long-term loans.

  Carrying amount Contractual cash flows < 1year 1- 5 year > 5 year
  € million € million € million € million € million
 
Non-current liabilities 78.2 107.9 16.0 76.1 15.8
Current liabilities 327.8 323.7 323.7 - -

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Credit risk

The activities of Accell Group entail various credit risks. The maximum credit risk is equal to the carrying amount of the trade receivables and other receivables. Risks are limited, because in 2015 individual European debtors that have an expected outstanding amount of more than € 0.1 million, are often insured by a credit insurance company. As of 2016 a number of US receivables are insured in a similar way. No pledges or guarantees are obtained to cover the credit risk other than a retention of ownership of goods delivered. Bicycles and bicycle parts are sold to a wide network of specialised bicycle shops, whereby many of the customers with whom Accell Group conducts business have a long-standing commercial relationship with Accell Group. The credit policy stipulates, inter alia, that upon the acceptance of large customers, the creditworthiness of this potential customer must be verified both internally as well as externally, whereby also a credit limit has to be determined.

There is no significant concentration of credit risks within Accell Group, as the group has a large number of customers. No customers comprise 10% or more of turnover.

The credit risks are continuously monitored. Outstanding receivables exceeding the due date are assessed individually at the end of the financial year, resulting in a substantiation of the provision for the impairment losses of receivables.

Regarding the total outstanding trade receivables of € 142.5 million, the provision for impairment losses amounts to € 8.0 million. Actual utilisation in 2015 amounts to € 1.6 million (2014: € 1.7 million).

Market risk

The market risk encompasses currency risks and interest rate risks. Accell Group uses a variety of instruments to hedge currency and interest rate risks arising from the operating, financing and investment activities. Accell Group’s treasury activities are centralised and carried out in accordance with the objectives and regulations stipulated by Accell Group. Accell Group’s policy stipulates that instruments shall only be kept if there is an actual commercial basis (transactions and obligations). Accell Group’s currency and interest rate risks have not changed during the year. Moreover, Accell Group’s approach to these risks has not changed during the year.

Control of currency risks

In view of the international nature of its activities, Accell Group is exposed to risks when buying and selling in foreign currency. This relates mainly to US dollars (USD), Japanese yen (JPY), Taiwanese dollars (TWD), British pounds (GBP), Canadian dollars (CAD), Turkish lira (TRY), Swedish krona (SEK), Hungarian forint (HUF), Swiss francs (CHF) and Chinese Renminbi (CNY). Accell Group’s policy aims to control the currency risks for all significant exposures, mainly its anticipated purchases in USD, JPY, CNY and TWD, by hedging a significant percentage of the currency risks prior to each season. This involves the use of currency future contracts and related swaps and/or options.

Unrealised gains and losses on the derivatives resulting from the concluded cash flow hedge transactions are temporarily included in the hedging reserve of the group equity. The cash flow hedge transactions have been effective in 2015. The hedging reserve is subject to changes as a result of developments in the market value of the concluded currency derivatives and interest rate swaps. Accell Group has no control over these market value developments.

A 1% change in the EUR/USD and EUR/JPY exchange rate from the current year end exchange rate would result in an approximately € 1.3 million and € 0.3 million respective change in the hedging reserve of the group equity. Covering future cash flows and the use of cash flow hedging causes movements in equity as a result of changes in the market value of the underlying derivatives.

All derivative financial instruments are concluded with ABN AMRO Bank, Deutsche Bank, ING Bank, Rabobank or HSBC. The company incurs credit risks with these banks as long as these derivative financial instruments have a positive fair value and are not yet settled. This risk is considered acceptable in view of the creditworthiness of these banks.

Control of interest risks

As at 31 December 2015, the total of the floating interest on the long-term interest-bearing has been fixed with interest-rate swaps. These instruments are generally available, and are not regarded as specialised or as entailing significant risk.

As at 31 December 2015, the term of 28% of the interest-bearing loans exceeds one year. An increase or decrease of 1% in market interest-rate governing short-term bank credit would have resulted in a decrease or increase in the profit before taxes of approximately € 1.3 million.

23.      Business combinations


In January 2015, Accell Group acquired 100% of the shares in Cycle Service Nordic ApS (“CSN”) in Odense, Denmark. CSN is a distributor of bicycle parts and accessories in Scandinavia. The company has a workforce of 40 employees. The figures of CSN are consolidated as of 1 January 2015.

The provisional acquired net assets consist of the following:

  Fair value on acquisition Fair value adjustments Carrying amount
  € x 1,000 € x 1,000 € x 1,000
 
Non-current assets 292 0 292
Other assets 6,552 447 6,105
Cash and cash equivalents 228 0 228
Other liabilities and acquisition obligations -6,046 -1,177 -4,869
  1,026    
Goodwill 1,021    
Cash and cash equivalents acquired -228    
Net cash flow of business combinations 1,819    

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CSN was acquired to continue the expansion of the activities on bicycle parts & accessories. The consideration paid for the business combinations consist of a premium for expected synergies, growth of turnover and the combined knowledge of the workforce. These aspects of the acquisition cannot be measured reliably and are therefore not reported separately from goodwill. The purchased goodwill is tax non-deductible. The other assets consist of trade receivables and other receivables. CSN contributed turnover from the period of consolidation to the balance sheet date amounting to € 14.5 million. The contribution to the net profit for the financial year 2015 amounts to € 0.6 million. Costs relating to the acquisition (external legal and due diligence costs) are nil.

24.      Dividend

The dividend in respect of financial year 2014 was determined at € 0.61 per share or as stock dividend during the General Meeting of Shareholders of 23 April 2015. After the period in which shareholders could report their preference, 43% of the shareholders opted for the stock dividend. On 20 May 2015 € 8,654,000 was distributed as cash dividend and 398,702 shares were issued as stock dividend and added to issued share capital.

The Board of Director proposes to make available to the shareholders a dividend with stock option of € 0.72 per share with respect to the current year. The dividend proposal is subject to approval by the General Meeting of Shareholders on 26 April 2016 and is not reflected as a liability in these financial statements.

25.      Commitments

Operational lease and other commitments

The company has financial commitments arising from long-term lease agreements on IT equipment and motor vehicles and other contractual agreements. The total commitment from lease agreements amounts to approximately € 3.1 million per year and has an average remaining term of 2.3 years, the total other commitments are € 3.8 million and have a remaining term of on average 1.1 year. Besides, the company has financial commitments arising from long-term rental agreements. This commitment amounts to approximately € 7.4 million per annum and has an average remaining term of 4.0 years.

As at balance sheet date, Accell Group has outstanding non-terminable operational lease and rental commitments expiring as follows:

  2015 2014
  € x 1,000 € x 1,000
 
Within one year 4,913 1,020
Within two to five years 16,856 17,106
After five years 19,697 14,084
  41,466 32,210

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26.      Transactions with related parties

Transactions and balances between Accell Group and its non-consolidated companies have not been eliminated for consolidation purposes.

Sale and purchase of goods

During the year group companies entered into the following transactions with related parties:

  Sales of goods Purchases of goods
  2015 2014 2015 2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Atala SpA 3,585 4,764 1,541 1,721
von Backhaus ApS 1,175 1,149 0 0

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All sales and purchases are priced on an arm’s length basis.
 
The following balances are outstanding at the end of the reporting period:

  Amounts owed by Amounts owed to
  31-12-15 31-12-14 31-12-15 31-12-14
  € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Atala SpA 541 1,672 247 19
von Backhaus ApS 260 193 0 0

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The amounts outstanding are not provided for and will be settled in cash and cash equivalents. No guarantees have been given or received. No expense has been recognised for bad or doubtful debts in respect of the amounts owed by related parties.

Loans to related parties
  31-12-15 31-12-14
  € x 1,000 € x 1,000
 
Loans to related parties 828 2,308

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During 2015, Accell Fitness B.V. accounted for an impairment of € 1.2 million on a loan to Jalaccell OÜ (refer to note 12. Subsidaries); the remaining € 0.8 million is expected to be collected in 2016.

Other

For explanatory notes on the total remuneration of the Board of Directors and Supervisory Board amounting to € 2.7 million, reference is made to the notes on the company financial statements on page 164.

27.      Remuneration of auditors

The total costs for the services rendered by Deloitte Accountants B.V. consist of:

  Deloitte Accountants B.V. Other Deloitte network Total Deloitte Deloitte Accountants B.V. Other Deloitte network Total Deloitte
      2015     2014
  € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000 € x 1,000
 
Audit of the financial statements 389 277 666 268 239 507
Other audit assignments 28 129 157 20 147 167
Tax services 0 14 14 0 14 14
Other non-audit services 0 0 0 0 0 0
  417 420 837 288 400 688

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