7.11 Other information
Profit appropriation pursuant to the Articles of Association
Article 25 (partial)
The Board of Directors, subject to the approval of the Supervisory Board, is authorised to determine which part of the profit shall be allocated to the reserves, after payment of dividends to the holders of both ‘B’ preference shares and ‘F’ preference shares.
The profit then remaining shall be at the disposal of the general meeting of shareholders for the holders of ordinary shares. Pursuant to a proposal of the Board of Directors that has been approved by the Supervisory Board, the general meeting of shareholders may resolve that all or part of a dividend distribution to the holders of ordinary shares shall be made in shares in the share capital of the company instead of cash.
The Board of Directors proposes to pay shareholders a dividend of € 0.72 per share (2014: € 0.61), to be paid in cash or shares at the shareholder’s discretion.
Independent auditor’s report
To: The shareholders and supervisory board of Accell Group N.V.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2015
We have audited the financial statements 2015 of Accell Group N.V. (the company), based in Heerenveen. The financial statements include the consolidated financial statements and the company financial statements.
In our opinion:
- the consolidated financial statements give a true and fair view of the financial position of Accell Group N.V. as at December 31, 2015, and of its result and its cash flows for 2015, in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code;
- the company financial statements give a true and fair view of the financial position of Accell Group N.V. as at December 31, 2015, and of its result for 2015 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The scope of our audit
The consolidated financial statements comprise:
- the consolidated balance sheet as at December 31, 2015;
the following statements for 2015:
- the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows; and
- the notes comprising a summary of the significant accounting policies and other explanatory information.
The company financial statements comprise:
- the company balance sheet as at December 31, 2015;
- the company profit and loss account for 2015; and
- the notes comprising a summary of the significant accounting policies and other explanatory information.
BASIS FOR OUR OPINION
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the “Our responsibilities for the audit of the financial statements” section of our report.
We are independent of Accell Group N.V. in accordance with the Regulation on Auditor Independence in Assurance Engagements [“Verordening inzake de onafhankelijkheid van accountants” – ViO] and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Regulation on Rules of Professional Conduct and Practice of Accountants [“Verordening Gedrags- en Beroepsregels Accountants” – VGBA].
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OUR AUDIT APPROACH
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
Based on our professional judgement we determined the materiality for the financial statements as a whole at € 3.5 million. The materiality is based on 7.5% of profit before tax. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
We agreed with the supervisory board that misstatements in excess of € 175 thousand, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
Accell Group N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of Accell Group N.V.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be performed for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be performed on the complete set of financial information or specific items.
Our group audit mainly focused on significant group entities. The significant group entities are Accell Nederland B.V., Accell North America Inc., Accell Germany GmbH, and Accell Asia Taiwan Co. Ltd. Full-scope audits have been performed with the first three group entities because these group entities have a significant individual size. The last group entity, Accell Asia Taiwan Co. Ltd., is significant because of the fraud relating to the payment organization. Agreed-upon procedures have been performed in respect of Accell Asia Taiwan Co. Ltd., with the support of forensic experts.
In addition, three group entities have been included in the scope of the group audit so as to obtain sufficient coverage for the audit of individual items of the consolidated financial statements, i.e., Raleigh UK Ltd, Cycle Lapierre S.A.S. and Accell Bisiklet A.S. Agreed-upon audit procedures have been performed on financial statement items at twelve group entities, in order to obtain sufficient coverage for the related financial statement as a whole. In addition, local Deloitte auditors have performed review procedures at four group entities.
The total coverage obtained relating to the following the financial statement items is as follows:
None of the group entities falling outside the audit scope represent more than 2% of the consolidated turnover or of the consolidated balance sheet total. The procedures we have performed at group level in respect of the financial information of these other group entities include risk-oriented analytical procedures. This should confirm our estimation that these entities do not include significant risks of material misstatement.
We have engaged Deloitte Netherlands and foreign Deloitte offices to perform audit procedures at all group entities, based on the instructions of the group team.
Where audit procedures have been performed by auditors of group entities, we have determined the extent in which our involvement was necessary to be able draw a conclusion as to whether sufficient audit information has been obtained about these entities as a basis for our opinion on the consolidated financial statements as a whole. This financial year we have visited the auditors of the group entities in the Netherlands and Germany. We have held several telephone meetings with the management and the auditors in the United Kingdom. Likewise, we have consulted with our colleagues at several moments during the audit to agree the audit approach and audit findings and we have examined the locally performed procedures for a number of specific audit components.
The group team has audited the consolidation of the group, the notes to the financial statements, and a number of specific components. These components regard the valuation of goodwill, the valuation of brands, the valuation of deferred tax assets, the recognition of the corrections of errors for pensions, acquisitions that took place in 2015, and the share-based payments.
By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to issue an opinion on the consolidated financial statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole. Our findings on the individual key audit matters should be viewed from that perspective and not as separate opinions on these key audit matters.
|Key audit matters||Our audit of the key audit matters|
|Valuation of goodwill|
|Please refer to the financial statements, page 119 (Accounting policies) and note 10 (Goodwill). As at December 31, 2015 the goodwill in the financial statements was € 58.2 million (2014: € 55.6 million). The annual goodwill impairment test is based on estimates and assumptions of the Board of Directors. For the valuation of goodwill the realizable value has been determined on the basis of the historically realized growth factors of the past three years (see note 10 in the financial statements). These have been calculated to arrive at the expected free cash flows for the years 2016 through 2020, taking into account an end value for the period afterwards. Based on the goodwill impairment test the Board of Directors has concluded that there is no impairment.||Our audit procedures have been aimed at items such as the correctness of the calculations and the substantiation of the assumptions on which the expected future cash flows are based. We have called in a Deloitte valuation expert to examine the cost of capital and the method applied. The historically realized growth factors have been tested for consistency with the previous financial statements, and internal reports.|
|Valuation of deferred tax assets|
|Please refer to the financial statements page 119 (Accounting policies) and note 19 (Deferred taxes). As at December 31, 2015 the deferred tax assets in the financial statements amount to € 6.7 million (2014: € 7.4 million). The company has recognized these deferred tax assets because it is likely they will be able to realize these deferred tax assets as a result of the fiscal profits to be expected in the future. These deferred tax assets particularly refer to Accell North America. The expected realization of these deferred tax assets are based on estimates and assumptions of the Board of Directors. The valuation of the deferred tax assets has been one of our key audit matters, as they are of material significance for the financial statements. They are based on the hidden reserves for tax purposes, forecasts and assumptions about the future profitability, which may deviate in reality.||Our audit has focused on the realizability of the deferred tax assets. We have called in a Deloitte tax expert to assist us in our procedures. The likelihood of the tax assets being realized is affected by uncertainties, such as the expiry period of the deductible losses and the future tax profits available. Our procedures included a test of the assumptions applied.|
|Recognition of pensions|
|Please refer to the financial statements page 119 (Accounting policies) and paragraph 18 (Pension provisions and receivables). Accell Group N.V. has a defined benefit scheme in the United Kingdom. In response to a different view of the Netherlands Authority for the Financial Markets, Accell has recorded the full pension receivable of € 20.2 million in 2015. The comparative figures have been adapted accordingly.||The recognition of and the notes to the pensions has been one of our key audit matters, in particular the recognition of and notes to the surplus of the pension fund in the United Kingdom, as well as the evaluation and correct application of the corrections of errors in accordance with the requirements of IAS 8.|
|Financial theft AAT|
|As reported in the press release of January 27, 2016, Accell Group N.V. has been faced with a case of financial theft by one of its employees at Accell Asia Taiwan Ltd. Co. (AAT). Following up on the financial theft, the Board of Directors, supported by a forensic expert, has examined the cause of this financial theft and prepared a recovery plan for AAT as well as for the group as a whole.||In response to this occurrence in Taiwan, we have expanded the audit scope and we have tested the internal control measures of Accell’s Asian entities in respect of payments. Likewise, we had our internal forensic experts perform test procedures on the payments in 2015. We have called on an internal forensic expert to assess the procedures performed by the forensic expert commissioned by Accell. What’s more, we have taken notice of the recovery plan for both AAT and the group as a whole.|
Responsibilities of management and the supervisory board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.
The supervisory board is responsible for overseeing the company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
A complete description of our responsibilities is available on www.nba.nl/standaardteksten-controleverklaring.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Report on the management board report and the other information
Pursuant to legal requirements of Part 9 of Book 2 of the Dutch Civil Code (concerning our obligation to report about the management board report and other information):
- We have no deficiencies to report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code, and whether the information as required by Part 9 of Book 2 of the Dutch Civil Code has been annexed.
- We report that the management board report, to the extent we can assess, is consistent with the financial statements.
We were appointed the auditor of Accell Group N.V. in 1998 and have been the auditor since then.
Utrecht, March 14, 2016
Deloitte Accountants B.V.
drs. A.J. Heitink RA