5.2
Financial strength and capital efficiency

Working capital came in at € 360 million versus € 289 million the previous year. As a percentage of net turnover, working capital increased to 32.4%, compared with 26.3% at year-end 2018. A major part of the increase as a percentage of net sales was driven by delayed innovations and lower-than-forecast sales. Average working capital was up 70 bps.

Inventories increased by € 47 million to € 387 million. The increase was driven by net sales growth, which was in turn driven by an average price increase due to the growth in the sales of in e-bikes and e-bike parts. In addition, innovation delivery at the end of the year was delayed (with components already in stock) and sales delivery was lower than forecast stock. Average inventory as a percentage was up by 260 bps. As a percentage of net turnover, inventories increased to 34.8% (year-end 2018: 31.0%).

Accounts receivable had risen to € 141 million at year-end 2019, from, € 128 million at year-end 2018. A major part of this increase was driven by net sales growth. Receivables as a percentage of net turnover increased to 12.7% (2018: 11.7%).

Accounts payable declined by € 12 million to €167 million, which is the equivalent of 15.1% of net turnover (year-end 2018: 16.5%). Part of this decline was due to different phasing, with average accounts payable up by 230 bps.

Total net debt, comprising interest-bearing loans, borrowings and cash and cash equivalents, corrected for IFRS 16, increased to € 235 million (year-end 2018: € 151.8 million), largely due to the increase in working capital.

Shareholders' equity remained flat (+ € 0.8 million) at € 323.2 million, largely as a result of the addition of net profit (+ € 2.8 million), dividend payments (-/- € 8.5 million), hedging instruments (-/- € 3.2 million), currency translation adjustment (+ €1.7 million) and reclassification of currency translation via income statement (+ € 7,9 million). The solvency rate stood at 37.6% at year-end 2019 (year-end 2018: 42.3%).

Overall Return on Capital Employed (ROCE) was 11.4%, compared with 10.8% the previous year, thanks to increased EBIT offsetting higher working capital. Corrected for IFRS 16 and one-offs, ROCE was 10.6% versus 11.8% the previous year.