5.1
Group performance
Last year was another important year of transition for the Accell Group. In the first full year of implementing the refined strategy - ‘Lead global. Win local’ - our core European business recorded solid turnover growth of 7.5% in line with our historical average growth in the period 2014 - 2018. In the second half of 2019, we sold our loss-making North American (discontinued) operations following a decision taken at the end of 2018. This will enable us to focus fully on our profitable and growing European (continuing) operations from 2020 onwards.
| 2019 | 2018 | |
| in millions of euro | ||
| Net turnover | 1,111.0 | 1,033.3 |
| Other income | 12.3 | - |
| Net sales growth% vs py | 7.5% | 6.1% |
| Added value | 341.5 | 312.2 |
| Added value% | 30.7% | 30.2% |
| Added value bps vs py | 53 | 82 |
| OPEX | -291.6 | -258.2 |
| General overhead previously allocated to discontinued operations | -2.3 | -2.5 |
| EBIT | 60.0 | 51.4 |
| EBIT% | 5.4% | 5.0% |
| Net finance costs | -9.3 | -7.6 |
| Income from equity-accounted investees, net of tax | 0.4 | 10.9 |
| Result from sale of subsidiaries | -0.1 | - |
| Income tax expense | 8.2 | -15.7 |
| Result from discontinued operations, net of tax | -56.5 | -18.8 |
| Net profit | 2.8 | 20.3 |
| - Net profit from continuing operations | 59.3 | 39.0 |
| - Net profit from discontinued operations | -56.5 | -18.8 |
| Diluted earnings per share from continuing operations (in €) | 2.21 | 1.47 |
| Diluted earnings per share including discontinued operations (in €) | 0.10 | 0.76 |
| 2019 | 2018 | |
| in millions of euro | ||
| EBIT reported | 60.0 | 51.4 |
| One-off | -5.1 | 4.9 |
| EBIT excl. one-off | 54.8 | 56.3 |
| TWC% rolling net sales | 32.4% | 26.3% |
| TWC in bps vs py | 611 | -310 |
FINANCIAL HIGHLIGHTS
Net turnover came in at € 1,111 million in 2019, compared with € 1,033 million in 2018. Growth accelerated to 7.5% up from 6.1% in 2018 and was in line with the average growth rate over the past five years, with every organisation and region contributing.
Growth was driven by e-bike +11% and (e-)cargo bike +47%1 sales. Traditional bike sales were down 13% in value, and now represent only 16% of net turnover. Growth was held back in 2019 by delayed introductions of a number of new innovative bike models. Volumes declined due to lower sales of traditional bicycles in Turkey. In all main regions, volumes stabilised or increased.
| in millions of euro | 2019 | 2018 | Growth% |
| Accell - Bikes Europe | 845.5 | 784.6 | 7.8% |
| Benelux | 220.3 | 205.4 | 7.3% |
| DACH | 429.0 | 421.2 | 1.8% |
| Other Core | 161.4 | 148.1 | 9.0% |
| Velosophy | 34.7 | 9.8 | |
| Accell - Parts | 265.5 | 248.7 | 6.8% |
| Accell Group - Continuing operations | 1,111.0 | 1,033.3 | 7.5% |
Net turnover of 'Accell - Bikes Europe' is based on physical location of entity
Net sales development growth in the Benelux outpaced market growth and came in at 7.3% thanks to an improved product availability and the introduction of various award-winning and innovative new e-bike models. Examples are Sparta M8B e-bike of the year in 2019 and Batavus Finez bike of the year in 2020. Growth in the DACH region (+1.8%) was hampered by delayed innovations of Haibike and Ghost e-MTB models. Other European markets showed good growth of 9.0% driven by strong Raleigh and Lapierre sales and growth in Scandinavia (mainly Finland and Denmark). Our Parts & Accessories business recorded growth of 6.8%. In (e-)cargo, Velosophy with its main brand Babboe continued to perform very well with 47% growth in Europe.
Added value increased by 53 bps to 30.7%, driven by positive mix effects and the fact that supply chain savings offset inflation of materials costs.
Relative to net turnover operating expenses increased to 26.2% from 25.0% in 2018, mainly due to additional – yet planned – investments and costs related to the implementation of the strategic agenda and one-off (and accounting) effects related to the divestment of the North American operations.
EBIT2 came in at € 60.0 million (5.4% of net sales), up 16.6% compared with 2018. EBIT included the following one-offs in 2019:
- + € 6.0 million net benefit:
- Income of + € 11.4 million as a result of CTC deal;
- Write-off of -/- € 5.4 million as a result of Regent deal.
- -/- € 0.8 million: mainly related to restructurings.
Excluding these one-offs, EBIT came in at € 54.8 million (4.9% of net turnover), a slight decline of € 1.5 million or -/- 2.6% compared with 2018.
DISCONTINUED OPERATIONS AND IMPACT DISPOSAL NORTH AMERICA
In August 2019 Accell completed the strategic review of its North American operations, which resulted in the sale and transfer of the loss making US business including the worldwide registrations (excluding the Canadian brand registrations) of the Diamondback, Redline and IZIP brands to the Alta Cycling Group LLC, a portfolio company of Regent LP. Taking into consideration the sale and transfer of the Canadian brand registrations of Raleigh, Diamondback, Redline and IZIP to the Canadian Tire Corporation Limited ('CTC') in July 2019, this meant the North American operations were substantially liquidated as per that date. Subsequently, the closely linked Beeline operations were sold and transferred to a group of investors led by the StrataFusion Group in October 2019. Accell Group will sell its international Raleigh, Haibike and Ghost brands in the United States through the Alta Cycling Group.
| in millions of euro | Discontinued operations | Continued operations |
| Operational result excluding corporate general overhead and one-off | -12.1 | |
| Gain from sale of the Canadian brand registrations | 3.0 | 11.4 |
| Net transaction result on the sale of discontinued operations and sale Diamondback | -31.8 | -5.4 |
| Reclassification of foreign currency translation reserve | -7.9 | |
| Closing and restructuring costs | -7.8 | |
| Income tax expense | 0.0 | 21.4 |
| Net profit | -56.5 | |
The loss from discontinued operations amounted to € 56.5 million in 2019 and can be broken down as follows:
- Operational losses of € 12.1 million reflecting the operational result during the year excluding one-off costs related to the discontinuation of business3.
- A loss related to the outcome of the North America strategic study amounting to € 38.4 mio and consisting of:
- a gain from the sale of the Canadian brand registrations to CTC with € 3.0 million reported under discontinued operations and € 11.4 million reported under continued operations (other income);
- a loss on the sale of the discontinued US operations including transaction costs totalling € 31.8 million. The transaction result in continued operations was a loss of € 5.4 million (write off of brands in operating expenses);
- a reclassification of the cumulative translation reserve of -/- € 7.9 million4
- closing and restructuring costs of € 7.8 million.
In addition, Accell currently expects qualification for the requirements of the Dutch liquidation loss facility to be probable resulting in a deferred tax asset recognition of € 21.4 million.
Footnotes
[1] On an annualised basis as Velosophy (Babboe) was acquired in mid-2018. [2] In accordance with IFRS accounting standards concerning discontinued operations the allocation of general corporate overhead expenses has been adjusted. EBIT from continuing operations include the corporate overhead expenses which were previously charged to the discontinued operations. 2018 numbers have been corrected accordingly. This was € 2.3 million in 2019 and € 2.5 million in 2018. [3] As required by IFRS the corporate overhead expenses previously allocated to the discontinued operations are reported in the result of continuing operations, which contributes € 2.3 million to the operational result of the discontinued business (and € 2.1 million per H1 2019). [4] The substantial liquidation of business required a reclassification of cumulative translation adjustments of -/- € 7.9 million on the net US$ investment from the translation reserve to the other reserves via the income statement.