8.7
Performance

8.7.1 Operating segments

Accell Group indentified the following three operating segments: Bikes, Parts and Corporate/Eliminations. The table below provides information on these reportable segments:

Geographical information

The sales to external customers reported in the geographical segments are based on the geographical location of the company and on the location of the customer. Both are reported for continuing operations thus excluding the net turnover from discontinued operations (see note 6.16.1).

Geographical asset information is based on the physical location of the assets at 31 December:

Accounting policies

Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Management, which is considered to be Accell Group's chief operating decision-maker. The reportable segments Bikes and Parts are the main pillars of Accell Group and are supported by the central functions in the Corporate segment. Both the segments Bikes and Corporate report directly to the Board of Management, with dedicated regional directors for Bikes. The segment Parts is managed by one dedicated director, who reports to the Board of Management, and is directly accountable for the functioning of the segment’s assets, liabilities and results. The Board of Management reviews the performance of the segments via internal management reports on a monthly basis. Performance of the regional Bike directors and the Parts director is measured based on contribution profit, as included in the internal management reports. The central functions, which report directly to the Board of Management, include procurement, marketing, innovation & technology (R&D), IT, e-commerce, HR and central G&A. The related cost are allocated to the reportable segments on a reasonable basis.

Unallocated result items comprise net finance expenses, share of profit (loss) of equity-accounted investees and result on the sale of subsidiaries.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill.

Revenue
The majority of Accell Group’s contracts are contracts with customers in which the sale of goods is generally expected to be the single performance obligation. The timing of the transfer of control varies depending on the individual terms of the sales agreement. For sales of bicycles, parts and accessories, transfer usually occurs when the product is delivered to the customer. However, for some international shipments the transfer occurs when the goods are loaded onto the relevant carrier at the port. Generally, the customer has no right of return for such products. Revenue is recognized at the point in time when control of the goods is transferred.

Accell Group provides warranties for general repairs and does not provide extended warranties or maintenance services in its contracts with customers. The warranties serve to guarantee that the bicycle, part or accessory functions as intended and meets the agreed specifications. As such, these warranties are assurance-type warranties which are accounted for under Provisions.

Some contracts with customers provide for customer programmes and incentive offerings, including special pricing agreements, promotions, advertising allowances and other volume-based incentives. Accell Group recognizes revenue from the sale of bicycles, parts and accessories measured at the consideration received or receivable, net of accruals for customer incentives and returns (if the customer has a right of refund). If revenue cannot be reliably measured, Accell Group defers revenue recognition until the uncertainty is resolved.

Accounting estimates

Accell Group makes estimates in the determination of discount accruals, included in trade receivables. When discounts are provided to customers, these reduce the transaction price and consequently the revenue. The conditional discounts in revenue are estimated based on accumulated experience supported by historical and current sales information. Expected sales volumes are determined taking into account (historical) sales patterns and other relevant information. A discount accrual is recognized for expected volume and year-end discounts payable to customers in relation to sales made until the end of the reporting period.

8.7.2 Other income

Other income amounted to € 12.3 million in 2019 and consisted of an € 11.4 million gain from the sale of the Canadian intellectual property rights of the Raleigh, Diamondback, Redline and IZIP bike brands, a gain of € 0.5 million from the sale of intellectual property rights related to the activities of Protanium (Netherlands) and a gain of € 0.4 million mainly from the sale of a building (Brasseur, Belgium). The total gain from the sale of the Canadian intellectual property rights amounted to € 14.4 million (US$ 16 million) and based on the location of the companies generating cash flows via these intellectual property rights a gain of € 11.4 million was allocated to continuing operations and € 3.0 million to discontinued operations.

Accounting policy

Other income is reported on an accrual accounting basis, meaning when the revenues are incurred not necessarily when they are received.

8.7.3 Cost of materials and consumables

Accounting policy

Cost of materials and consumables are recognized in the same period as the revenues to which they relate e.g. when Accell Group sells goods (bikes or bike parts and accessories) or performs services. Expenses are recognized based on accrual accounting. Meaning when the expenses are incurred, not necessarily when they are paid.

8.7.4 Personnel costs

Personnel costs are comprised of the following:

The average number of employees (FTE) was 3,410 (2018: 3,227).  

Accounting policy

All expenses are reported on an accrual accounting basis, meaning when the expenses are incurred (services are received) not necessarily when they are paid. For more details on accounting policies regarding pension contributions and share-based payments see note 6.11.3 and note 6.17.4 respectively.

8.7.5 Depreciation, amortization and impairment losses

Depreciation, amortization and impairment losses comprise the following:

Accounting policy

For the accounting policy on amortization, impairment  and divestment losses on intangible assets see note 6.10.3. For depreciation of property, plant and equipment see note 6.10.1 and for depreciation of right-of-use assets see note 6.10.2.

8.7.6 Other operating expenses

Selling expenses mainly include marketing costs, freight costs, other (outbound) logistics costs, delcredere costs and platform fees. For more details on lease expenses, see note 6.9.1.3.

Accounting policy

All expenses are reported on an accrual accounting basis, meaning when goods are received or services are provided, not necessarily when they are paid.

8.7.7 Earnings per share

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