Download Accell Group profit up 11% in 2011

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PRESS RELEASE
Accell Group profit up 11% in 2011
Heerenveen (the Netherlands), 24 February 2012 – Accell Group N.V. recorded a rise in
turnover and net profit in 2011. Turnover increased by 9% to € 628.5 million, from
€ 577.2 million in 2010, partly on the back of rising sales of electric and sports bicycles, due in
particular to strong growth in Germany. Positive developments in working capital and a relative
reduction of inventories created a strong cash flow. Partly as a result of a positive contribution
on balance from one-off items, net profit for 2011 was up by 11% at € 40.3 million, compared
with € 36.4 million in 2010.
René Takens, Chief Executive Officer of Accell Group: “We are satisfied with the results we
achieved, particularly in view of the current economic climate, which is making consumers hesitant to
make major purchases. The electric bicycle continues to gain in popularity in the Netherlands and
abroad, in particular in Germany. Thanks to the increase in turnover, that segment now accounts for
31% of the total bicycle turnover of Accell Group. Turnover and profit from bicycle parts and
accessories also showed healthy growth. In this segment, we noted that while consumers are putting
off new bicycle purchases, they are investing in the maintenance of their existing bicycles.
In addition to the reduced tax burden, the book profit of € 16 million on the sale of our 22% stake in
the listed company Derby Cycle lifted our net profit. Unfortunately, this effect was for a significant
part offset by the definitive ruling in a case with the Dutch competition authority NMa, which has been
ongoing for more than 10 years.
We expect cycling to remain very popular in the coming years, with bicycles increasingly becoming a
lifestyle product for consumers, especially for young people. We are responding to this international
trend. And thanks to investments in our strong brands, innovations, design and the geographical
presence of our activities we can also respond rapidly to changes in the market. Barring unforeseen
circumstances, we therefore expect a further increase in turnover and net operating result in 2012.”
Key developments in 2011
In 2011, Accell Group saw its turnover increase by 9%, due to both organic growth and as a result of
acquisitions. Turnover in bicycles rose by 9% and sales in bicycle parts and accessories were up 15%.
The bicycle season started early in the spring, but the poor weather in the summer led to the
postponement of sales until after the season. This made extra discounts necessary, which in turn put
pressure on the margins in the second half of the year.
The integration of Accell Bisiklet (Turkey) and the 50% stake in Atala (Italy) was completed in early
2011. In June, we acquired Vartex, a small distributor of bicycles and bicycle parts in Sweden. In
November, Accell Group reached agreement on the acquisition of Van Nicholas, a Dutch niche player
in titanium bicycles for the high-end segment, while in December we reached agreement on the
acquisition of Currie Technologies, an important supplier of electric bicycles and e-steps (mini escooters) in North America.
Turnover at the fitness division, which has been strongly reduced in size in recent years, continued to
decrease in 2011 due to lower sales and the scaling down of the activities in North America.
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Turnover specification (amounts in € million)
Geographical
Netherlands
Germany
France
Rest of Europe
Other countries
Total
216.4
176.3
58.0
123.4
54.4
628.5
Per product group
Bicycles
Parts and accessories
Fitness
465.6
141.3
21.6
Total
628.5
After more than 10 years, September last year saw a definitive ruling in a procedure lodged by the
Dutch competition authority NMa pertaining to an alleged breach by a number of bicycle
manufacturers. The fine initially imposed was cut almost in half to € 6.9 million (excluding interest of
€ 2.6 million), of which € 4.6 million had already been provided for in 2007. Accell Group sold the
22% stake it acquired in Derby Cycle AG in October via a public bid on all shares in Derby Cycle
Werke AG, which resulted in a book profit of € 16 million.
Bicycles/Bicycle parts & Accessories
Turnover in the segment bicycles/bicycle parts & accessories increased by more than 11% to
€ 607.6 million, from € 548.7 million in 2010. The acquisition of the Turkish firm Accell Bisiklet and
the Swedish company Vartex pushed the number of bikes sold to 1,115,000 from 949,000 in 2010.
The average price dropped to € 417, from € 449 in 2010, due to the addition of cheaper bicycles to the
range, in particular through Accell Bisiklet. Organically, the average bike price increased. Sales of
electric bicycles were up 21% and now account for 31% of total bicycle turnover. Turnover in sports
bikes increased by 23%. Profit from this segment came in at € 52.8 million, compared with
€ 55.5 million in 2010.
Sales of bicycles in the Netherlands dropped in line with the market, while turnover in bicycle parts
and accessories showed a strong increase. The poor summer weather meant that in the Netherlands in
particular, a lot of bicycles had to be sold at a discount in the second half year, because they had failed
to sell before the end of the season in September. The market is weak because consumer spending
remains cautious. Consumers are deluded with the idea of an uncertain future, which means they are
postponing purchases of more expensive products more frequently. At the beginning of 2012, Accell
Group acquired Van Nicholas, a niche player in titanium bicycles and frames for the top segment with
attractive international growth potential.
The greatest increase in turnover was recorded in Germany. Bicycle sales were up 26% and turnover
in bicycle parts and accessories rose by 16%. In Germany, national and regional authorities are
strongly promoting cycling and the electric bike is gaining in popularity. Total sales of electric bikes
in the German market were estimated at 250,000 – 300,000 in 2011. The increase in the number of
electric bikes sold also led to an increase in the average bicycle price.
In France, turnover in bicycle sales was down due to a weak market. Turnover in bicycle parts and
accessories in France rose by 26% in 2011.
Turnover in other countries increased both within and outside Europe. The addition of Accell Bisiklet
resulted in an increase in turnover in Turkey, Italy and Finland, while the acquisition of Vartex
increased turnover in Sweden. In the United States, turnover in bicycles and bicycle parts remained
stable, despite the uncertain economic climate. In December, Accell Group reached agreement on the
acquisition of Currie Technologies, an important supplier of e-bikes and e-steps (mini e-scooters) in
the US. The acquisition was completed in Janauary 2012. Accell Group’s turnover from bicycles in
Asia remains limited for now. Demand for bicycles in the higher segments will increase partly as a
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result of rapidly increasing wealth in Asia and we have strengthened our own organisation in the
region in preparation for that growth.
Fitness
Turnover in the fitness segment dropped to € 21.0 million, from € 28.5 million in 2010. This reduced
the contribution to turnover from this segment to 3%. The result from this segment fell to a loss of
€ 1.4 million, from a loss of € 0.4 million in 2010, as a result of the drop in turnover. This loss
excludes extraordinary reorganisation charges of around € 4.0 million. These reorganisation costs
pertain in particular to the costs of reducing inventories and receivables, reorganisation and relocation
costs and deferred taxes. We continued with the gradual downsizing of the organisation in 2011 and
reduced the cost base. A reduction in working capital resulted in a positive cash flow in 2011.
The market for fitness equipment for home use, the main market for the products of Tunturi and
Bremshey, remains weak. We adjusted the organisation in line with reduced turnover levels mainly
through the previously announced downsizing of the activities in North America. We closed down the
office and distribution centre and are only continuing the service activities. We relocated the head
office in the Netherlands to a new and less expensive location and we have also adjusted the
organisation in the Netherlands. We have outsourced all production activities to manufacturers in
Asia. Accell Group has a distribution centre in Asia for centralised deliveries from suppliers. This
centre supplies the full range of products to more than 40 distributors across the world. Accell Group
is keeping all options open in terms of the future of the fitness activities.
Key financial developments in 2011
Total turnover rose by 9% in 2011 to € 628.5 million, with 4% of this growth organic.
Added value (net turnover less material costs and inbound transport costs) as a percentage of turnover
came in at 33% in 2011, compared with 35% in 2010. The slight drop in added value was primarily
related to developments in the second half of the year. Due to a poor summer season, an unusual level
of purchases were postponed until the autumn, which led to higher than regular discounts on the sales
of models from the 2010/2011 ranges. This also led to delays in the delivery of the new products for
the 2011/2012 season, which had a negative impact on the relative added value. Absolute added value
rose by 2% to € 208.2 million, up from € 203.4 million in 2010. Because season prices are agreed with
most suppliers and exchange rates are largely hedged per season, price rises and drops in the cost of
raw materials and parts have little impact on results during a season, but are felt when setting the
prices for the new season.
Operating costs as a percentage of turnover remained stable at 27%, unchanged from 2010. Personnel
costs rose by 5% due to acquisitions and came in at 12.8% of turnover, compared with 13.3% in 2010.
Other operating costs rose by 14% due to acquisitions, as well as an organic increase, and came in at
13.2% of turnover, up from 12.6% in the previous year. Excluding one-off reorganisation charges for
the fitness operations and the extra charge taken for the Dutch competition authority NMa fine, the
operating result (EBIT) came in at € 40.7 million, down from € 44.8 million in 2010. As a percentage
of turnover (operating margin), this adjusted operating result was 6.5%, down from 7.8% in 2010.
Including the reorganisation charges and the NMa fine, the operating result amounted to € 34.8
million.
Financial income and expenses (excluding the interest on the NMa fine) rose by 25% due to a higher
average credit requirement. The tax burden fell to 7%, from 14% in 2010, due to the participation
exemption on the book profit related to Derby Cycle AG and the favourable tax regime in the
Netherlands, as well as the impact of the legal restructuring of Accell Group’s German activities,
which came into effect in 2009. The application of the innovation box had an impact of € 0.8 million
in 2011.
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The result from minority participations came in at € 0.4 million in 2011, up from € 0.1 million the
previous year, due to the addition of the 50% stake in Atala (Italy).
The book profit on the sale of Accell Group’s stake in Derby Cycle AG amounted to more than
€ 17 million, of which € 16.1 million remained after the deduction of costs.
Net profit for the 2011 financial year was € 40.3 million, up from € 36.4 million in 2010. Excluding
one-off items in both 2010 (€ 5.9 million due to the innovation box deduction and the one-off release
of provisions for taxes and acquisitions) and 2011 (€ 8.6 million due on the one hand to the book profit
on the sale of Accell Group’s stake in Derby Cycle and the innovation box, and on the other to the
charges for the NMa fine and the reorganisation of the fitness activities) the net operating result rose
by 4% to € 31.7 million, from € 30.5 million in 2010.
Mainly due to acquisitions (Accell Bisiklet, Atala and Vartex), the balance sheet total had risen to
€ 434.0 million at year-end 2011, from € 383.9 million at year-end 2010. Total working capital
amounted to € 222.0 million, compared with € 199.8 million in 2010. Working capital amounted to
35.3% of turnover, compared with 34.6% in 2010. Acquisitions had an impact of € 16.0 million on this
figure. Inventories decreased by 2% organically at year-end 2011, compared with year-end 2010.
Capital employed rose to € 353.4 million, from € 302.5 million in 2010. The return on capital
employed stood at 11.5% at the end of the 2011 financial year, compared with 15.3% at year-end
2010, based on the operating result adjusted for one-off items. Shareholders’ equity amounted to
€ 214.6 million at the end of the 2011 financial year, up from € 180.4 million at the same time in 2010.
In addition to the impact of the profit realised in 2011, shareholders’ equity was also influenced by the
payment of a cash dividend of € 9.9 million (2010: € 7.6 million) and other movements of around
€ 3.9 million, including the impact of revaluation of financial instruments (currency hedges and
interest rate swaps). Provisions fell to € 22.5 million in 2011, from € 23.3 million in 2010, due on the
one hand to the payment of the NMa fine and on the other to assumption of obligations as a result of
acquisitions.
Solvency stood at 49.5% at year-end 2011, up from 47.0% at year-end 2010. Total loans and bank
credits amounted to € 119.9 million at year-end 2011, compared with € 101.8 million at year-end
2010. The financing ratio of Net Debt / EBITDA stood at 2.0 at the end of the 2011 financial year,
compared with 1.9 a year earlier. Interest coverage on the basis of the adjusted operating result came
in at 6.5 in 2011, down from 10.6 in 2010.
Operating cash flow before working capital and provisions amounted to € 58.6 million, compared with
€ 54.3 million in 2010. Net cash flow from operating activities rose to € 39.4 million, from € 3.3
million in 2010. The strong operating cash flow was largely due to the favourable development of
inventories in the second half of the year.
Earnings per share and dividend
Earnings per share on the basis of the weighted average number of outstanding shares, which stood at
20,905,497 shares at year-end 2011, came in at € 1.93, up from € 1.75 in 2010. Due to the issue of
403,592 shares related to the stock dividend for the 2010 financial year, the correction factor for
earnings per share from previous years is 0.981. The increase compared with the reported earnings per
share in 2010 (€ 1.78) was 8%.
Accell Group will propose to its shareholders the payment of a dividend of € 0.92 per share, compared
with € 0.84 in 2010, in cash or in shares. This results in a pay-out ratio of 48% (2010: 48%) and is
therefore in line with Accell Group’s dividend policy and unchanged from previous years. Based on
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the closing price of Accell Group shares at year-end 2011 (€ 14.10), the dividend yield amounts to
6.5%.
Outlook
Health, environmental awareness, mobility and active leisure time are all sustainable underlying trends
that will continue to boost consumer demand for Accell Group’s products in the years ahead. In
addition to this, bicycles are now increasingly seen as a lifestyle product, especially among young
people.
In the years ahead, the popularity of bicycle use for recreation and sport, and as an alternative to cars
will continue to increase, both in the Netherlands and elsewhere. Consumer demand is high for electric
bikes, more expensive mountain bikes, sports bikes, racing bikes and bikes for special target groups.
Accell Group will continue to use its strong brands to respond to the sustained demand for products
with high levels of added value, products that stand out and are successful because of their innovation
and contemporary design. In 2012, we will continue to focus on supporting these strong brands, on
intensive collaboration with specialised dealers and on targeted marketing at points of sale and
consumer advertising.
In view of macro-economic developments, Accell Group expects the hesitancy among consumers to
make major purchases to continue for the foreseeable future. We also expect the market to remain
highly dynamic. As in previous years, we will see more movements in consumer demand across the
season. Since our brands operate close to their markets, Accell Group can adapt to changing consumer
demands relatively quickly. The willingness among dealers to build up their own inventories remains
low because they are assuming high levels of availability on the supplier side. These developments are
placing greater demands on the organisation’s ability to adapt and realise further profit growth.
Further increases in scale are important to realising benefits in purchasing, production, development
and marketing. In 2012, Accell Group will continue to actively seek potential acquisitions that fit in
with the group’s profile and brand portfolio. Acquisitions must be complementary and add value to the
group in the short term, in terms of both returns and synergy.
Expectation
The medium to long term outlook remains positive. There is structurally positive demand for bicycles
for mobility, health and active sports. This will continue to boost turnover in particular in electric
bikes and sports bikes in the higher market segments. However, the macro-economic conditions in
Europe in particular currently remain highly uncertain.
Barring unforeseen circumstances and based on the above developments, we expect an increase in
turnover and net operating result in 2012 as compared with 2011.
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About Accell Group
Accell Group is active internationally in the mid-range and higher segments of the market for bicycles,
bicycle parts & accessories and fitness equipment. The group is leader in the European bicycle market.
The market approach is based on the key concepts ‘quality’, ‘innovation’ and ‘recognisable added
value’. For consumers this means a broad and strong portfolio of brands, including international top
brands and well-known national brands, often with a long history. Accell Group operates close to the
market, and sells primarily via the specialist retail trade, largely because of its high added value and
numerous innovations.
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Accell Group’s best known brands are Batavus, Koga, Sparta, Winora, Hai Bike, Ghost, Lapierre,
Atala, Redline, Tunturi and XLC. The company has production facilities in the Netherlands, Germany,
France, Hungary and Turkey. Accell Group shares are traded on the official market of the NYSE
Euronext in Amsterdam and included in the Amsterdam Small Cap Index (AScX).
Accell Group recorded turnover of € 628.5 million in 2011 compared with € 577.2 million in 2010 and
net profit of € 40.3 million, compared with € 36.4 million in 2010. Turnover is distributed across the
company’s key markets as follows: the Netherlands 34%, Germany 28% and France 9%. Other
European countries, including Belgium, Denmark, Finland, Austria, Spain and the UK, account for
20% of turnover. The remaining 9% of turnover comes from countries outside Europe, including the
US and Canada.
Financial agenda 2012
•
Publication annual report 2011
•
Publication trading update
•
Annual General Meeting of Shareholders
•
Ex-dividend
•
Determination of stock dividend exchange rate
•
Payment of dividend
•
Publication of half year results 2012
•
Publication trading update
For further information:
Accell Group N.V.
René Takens, Chairman of the Board (CEO)
Hielke Sybesma, Member of the Board (CFO)
Website: www.accell-group.com
15 March 2012
26 April 2012
26 April 2012
30 April 2012
21 May 2012
23 May 2011
26 July 2012
14 November 2012
tel: (+31) 0513-638701
tel: +(31) 0513-638702
Press conference
Today, 24 February 2012 - Okura Hotel, Amsterdam (Ballroom I), reception: 9.30 am; start 10.00
am
Analysts meeting
Today, 24 February 2012 - Okura Hotel, Amsterdam (Ballroom I), reception: 12.00 noon; start 12.30
pm
Annexes
- Condensed consolidated profit and loss statement as at 31-12-2011 and data per share
- Condensed consolidated balance sheet as at 31-12-2011
- Condensed consolidated cash flow statement as at 31-12-2011
- Condensed consolidated statement of changes in equity as at 31-12-2011
- Condensed consolidated statement of realised and non-realised results as at 31-12-2011
- Explanatory notes
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CONDENSED CONSOLIDATED PROFIT AND LOSS STATEMENT
(amounts in € * 1,000)
2011
2010
628,475
577,226
(420,246)
(373,859)
(80,642)
(76,607)
(7,355)
(7,494)
(83,124)
(591,367)
(72,911)
(530,871)
NMa fine
(2,307)
0
Operating profit
34,801
46,355
Result of participations
Result of associates
16,079
356
0
75
Financial income and expenses
(7,845)
(4,228)
Pre-tax profit
43,391
42,202
Taxes
(3,114)
(5,822)
Net profit
40,277
36,380
1,93
1,78
Weighted average number of outstanding shares
20,905,497
20,385,290
Number of outstanding shares at year-end
21,094,760
20.609,012
Net turnover
Cost of raw materials and auxiliary materials
Staff costs
Depreciation and amortisation
Other operating costs
Earnings per share 1)
(amounts in €)
Reported earnings per share
¹) Earnings per share is calculated based upon the weighted average number of outstanding shares.
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CONDENSED CONSOLIDATED BALANCE SHEET
(amounts in € * 1,000)
31 December 2011
31 December 2010
Tangible fixed assets
64,110
59,600
Intangible fixed assets
50,030
42,244
Financial fixed assets
11,946
9,663
Inventories
189,087
178,941
Receivables
114,564
92,164
4,259
1,322
433,996
383,934
214,646
180,392
22,535
23,310
Long-term debts
47,994
51,686
Credit institutions
71,918
50,146
Other short-term debts
76,903
78,400
433,996
383,934
ASSETS
Fixed assets
Current assets
Liquid assets
TOTAL
LIABILITIES
Equity
Provisions
1)
TOTAL
1)
The short term portion of the provisions amounts to € 3,676 and € 3,042 in 2011 and 2010 respectively.
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CONDENSED CONSOLIDATED CASH FLOW STATEMENT
(amounts in € * 1,000)
2011
2010
34,801
16,079
7,382
355
46,355
0
7,549
399
58,617
54,303
(6,486)
52,131
(8,200)
(4,567)
(37,319)
16,984
(3,968)
(9,741)
39,364
3,275
346
(8,061)
(14,748)
272
(4,605)
(60)
(22,463)
(4,393)
Free cash flow 1)
16,901
(1,118)
Cash flow from financing activities
Movements in bank loans and bank credit
Dividends
Share- and option-based payments
(3,982)
(9,890)
(80)
8,434
(7,593)
952
Net cash flow from financing activities
(13,952)
1,793
Net cash flow
Liquid assets as per 1 January
Effect of currency exchange liquid assets
2,949
1,322
(12)
675
849
(202)
Liquid assets as per 31 December
4,259
1,322
Cash flow from operations
Operating profit
Result of participations
Depreciation and amortisation
Share-based payments
Cash flow from operations before working capital and
provisions
Movement in working capital and provisions
Operating cash flow
Paid interest
Paid corporate tax
Net cash flow from operations
Cash flow from investment activities
Received interest
Movement in fixed assets
Acquisitions subsidiary companies
Net cash flow from investment activities
1)
The free cash flow is defined as the balance of net cash flows of operating and investment activities.
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(amounts in € * 1,000)
Balance on 31 December previous year
Dividends
Share-based payments
Other movements
Net profit current year
Balance on 31 December current year
2011
2010
180,392
151,756
(9,890)
355
3,512
40,277
(7,593)
399
(550)
36,380
214,646
180,392
CONDENSED CONSOLIDATED STATEMENT OF REALISED AND NON-REALISED RESULTS
(amounts in € * 1,000)
2011
2010
Realised net profit
40,277
36,380
Fair value adjustment financial instruments
Exchange differences foreign activities
Movements deferred taxes
6,670
(1,406)
(1,668)
(2,414)
398
581
Total of realised and non-realised results
43,873
34,945
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EXPLANATORY NOTES
Principles of valuation and the determination of results
Accell Group N.V.’s annual accounts for the financial year 2011 contain an overview of the applied
principles for financial reporting. The principles laid out in this overview are in accordance with the
standards laid down by the International Accounting Standards Board (IASB) and approved by the
European Commission, as applicable on 31 December 2011. The principles have been applied
consistently to the periods presented in this press release.
Application of new and amended IFRS
Accell Group N.V. has applied all the new and amended standards and interpretations applicable to the
year under review, which have been laid down by the IASB and approved by the European
Commission and which were in force for the period beginning 1 January 2011. The application of the
new and amended standards did not result in any change in the reporting standards of Accell Group
N.V. in the financial year 2011. Accell Group N.V. has decided not to apply any new or amended
standards which came into force after 31 December 2011 prior to that date.
Other
The condensed financial statements presented in this press release have not been audited. For the
insight required to arrive at a responsible opinion concerning the financial position and the results of
Accell Group N.V., this press release should be read in combination with the annual accounts on
which it is based.
Accell Group N.V. will publish its 2011 annual report no later than on 15 March 2012. The annual
accounts 2011 will be submitted to the Annual General Meeting of Shareholders for adoption on 26
April 2012.
*
*
*
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