Basis of preparation
A | General
These consolidated financial statements:
- have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRSs) and with Section 2:362(9) of the Dutch Civil Code;
- were authorized for issue by the Board of Management on 5 March 2020;
- have been prepared on a historical cost basis unless otherwise stated;
- are presented in euros, which is Accell Group’s functional currency;
- are rounded to the nearest thousand, unless otherwise indicated. Calculations in the tables are based on unrounded figures; as a result, rounding differences can occur.
Accell Group has changed the presentation of the consolidated financial statements compared with 2018 to improve readability and provide more relevant information earlier on in the report. These changes have no impact on accounting policies, nor on the amounts recognized; only the presentation format and the order of the notes have changed. Prior year comparative figures have been adjusted for these changes. The changes made are:
- the order of the notes has changed to better align with key management information;
- accounting policies have been moved to the relevant note if this relates to a specific line item in the income statement or balance sheet;
- in the balance sheet, separate line items have been integrated into one line item:
- Goodwill and other intangible assets are now one line item;
- Trade receivables and other receivables are now one line item;
- Interest-bearing loans and the revolving credit facility have been changed into borrowings; and
- Trade payables and other current liabilities are now one line item.
The 2018 consolidated income statement has been restated due to the classification of North America as a discontinued operation (see note 6.16.1). All disclosures regarding the consolidated income statement are only for continuing operations. However, the consolidated balance sheet and the disclosures to the consolidated balance sheet include both continuing operations and discontinued operations.
Furthermore a reclassification, for comparison purposes only, took place for the costs of obsolete raw materials and semi-finished goods.
|Income statement||2018||To discontinued operations||Reclassification||2018 Adjusted (continued operations)|
|€ x 1,000||€ x 1,000||€ x 1,000||€ x 1,000|
|Cost of material and consumables||-769,786||50,014||-1,355||-721,127|
|Depreciation, amortization and impairment losses||-12,347||1,018||-||-11,328|
|Net impairment losses on financial assets||-1,062||-385||-||-1,447|
|Other operating expenses||-133,115||19,535||1,355||-112,225|
|Net finance cost||-7,573||-||-||-7,573|
|Income from equity-accounted investees, net of tax||10,513||386||-||10,899|
|Profit before taxes from continuing operations||35,892||18,842||-||54,735|
|Income tax expense||-15,621||-76||-||-15,697|
|Result after taxes from continuing operations||20,271||18,766||-||39,038|
|Loss after taxes from discontinued operations||-||-18,766||-||-18,766|
B | Use of estimates
In preparing these consolidated financial statements, Accell Group has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 31 December 2019 is included in the following notes:
NOTE 6.10.3 | intangible assets impairment test: key assumptions underlying recoverable amounts, including the recoverability of development costs;
NOTE 6.11.1 | recognition and measurement of provisions: key assumptions about the likelihood and magnitude of an outflow of resources;
NOTE 6.11.3 | measurement of defined benefit obligations: key actuarial assumptions;
NOTE 6.14 | financial instruments - fair values;
NOTE 6.15.2 | recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;
NOTE 6.17.4 | share based payments estimates regarding the number of conditional shares that will vest (performance criteria and continuation of employment);
C | Changes in accounting policies
The amendments and annual improvements to IFRS standards effective from 1 January 2019 did not have an impact on the Accell Group’s financial statements because they are clarifications or depend on future changes/transactions, with the exception of IFRS 16 Leases, which had a material impact.
Accell Group adopted IFRS 16 using the modified retrospective approach, which means that the prior-year figures have not been adjusted. As a lessee, Accell Group is required to recognize a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. In contrast to the presentation of operating lease expenses until 2018, depreciation charges on right-of-use assets and the interest expense from unwinding of the discount on the lease liabilities are recognized in the income statement. The ability to meet bank covenants is not impacted by the implementation of IFRS 16, because IFRS 16 is excluded in the covenants. Although IFRS 16 has no impact on the cash position, it will impact the classification within the statement of cash flows: improvement of ‘net cash flow from operating activities’ due to the cancellation of lease costs and integration of the reimbursement of the lease liability in ‘net cash flow from financing activities’.
Accell Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
- applied the recognition exemption for low value assets (less or equal to € 5,000);
- applied the exemption to not recognize right-of-use assets and lease liabilities for lease terms shorter than 12
- applied a single discount rate to a portfolio of leases with similar characteristics;
- excluded initial direct costs from measuring the right-of-use asset at the date of initial application;
- used hindsight when determining the lease term if the contract contains options to extend or terminate the
The following table shows the impact on the consolidated balance sheet using a weighted-average discount rate of 1.67%. Line items not affected by the change have not been included.
|Balance sheet||31 December 2018||IFRS 16||1 January 2019|
|€ x 1,000||€ x 1,000||€ x 1,000|
|Trade payables and other current liabilities||-212,918||-7||-212,925|
Impact on the financial statements
The reconciliation of operating lease commitments (off-balance sheet commitments at 31 December 2018) to lease liabilities recognized at 1 January 2019 is as follows:
|€ x 1,000|
|Operational lease commitments at 31 December 2018||35,036|
|Excluded low value assets and short term leases||-143|
|Extension and termination options reasonably certain to be exercized (net)||92|
|Estimated cost of dismantling and removing the asset||16|
|Lease liabilities recognized at 1 January 2019||32,618|
Mandatory upcoming changes and early adoption
Accell Group has opted for the early adoption of amendments to IFRS 9, IAS 39 and IFRS 7 due to interest rate benchmark reform that are mandatory as of 1 January 2020. The amendments relate to temporary exceptions from the application of specific hedge accounting requirements and specific disclosures regarding the use of these temporary exceptions due to uncertainties arising from interest rate benchmark reform. Due to the application of these amendments Accell Group can continue applying its current cash flow hedge accounting policies. Other upcoming amendments that are mandatory as of 1 January 2020 are not expected to have a material impact on the consolidated financial statements.