avatar Accell Group N.V. Finance, Insurance, And Real Estate
  • Location: FRIESLAND 
  • Founded: 1998-09-30
  • Website:

Pages

  • Page 1


  • Page 2

    TABLE OF CONTENTS 3 REPORT OF THE BOARD OF MANAGEMENT 1 Group performance 31 2 Financial strength and capital efficiency 34 3 Risk management 34 4 In control statement 48 5 Management agenda and outlook 49 6 Our brands 49 7 Processes and information technology 51 8 Organisation and people 61 FORWARD-LOOKING STATEMENTS This document may contain forward-looking statements regarding Accell Group’s results, capital and liquidity positions. In addition, forward-looking statements may include, but are not limited to, phrases such as “intends”, “expects”, “is taking into account”, “targets”, “plans”, “estimates” and words with a similar meaning. These statements pertain to or may have an effect on future events, such as Accell Group’s future financial results, company plans and strategies. Forward-looking statements are subject to certain risks and uncertainties that are difficult to predict and which may lead to material differences between the actual results, position and performances, and the expected future results, position or performances implicitly or explicitly contained in said forward-looking statements. Factors that may cause actual results to differ from current expectations include but are not limited to macroeconomic, market and business trends and conditions, changes and developments in legislation, technology, taxes, jurisprudence and regulations, stock exchange fluctuations, legal claims, investigations by regulatory bodies, competition and general economic and/or political changes and other developments in countries and markets in which Accell Group operates. These and other factors, risks and uncertainties, which may have an effect on any forward-looking statement that could cause results to differ materially from those described in the forward looking statements, are described in Accell Group’ annual report. The forward-looking statements contained in this document refer exclusively to statement from the date of this document and Accell Group does not accept any liability for or obligation to amend the forward-looking statements contained in this document, regardless of whether these pertain to new information, future events or otherwise, unless Accell Group is under a legal obligation to do so.


  • Page 3

    3 REPORT OF THE BOARD OF MANAGEMENT 3.1 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 Accell Group Annual Report 2019 Group performance 31


  • Page 4

    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. Accell Group Annual Report 2019 Group performance 32


  • Page 5

    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. Discontinued Continued in millions of euro operations 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. Accell Group Annual Report 2019 Group performance 33


  • Page 6

    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. 3.2 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. 3.3 RISK MANAGEMENT In the execution of its business activities, Accell Group is faced with inherent risks. Risks in the area of meeting its strategic, operational, and financial objectives, as well as financial reporting and the application of laws and regulations. The extent to which the company is willing to run these risks, i.e. its risk acceptance, has been determined per risk category. Accell Group has a relatively balanced risk acceptance with respect to innovation, development and marketing. At the same time, the risk acceptance for product safety is none. Risk mitigation has been realised by transferring risk Accell Group Annual Report 2019 Risk management 34


  • Page 7

    to an insurance company, as well as through other mitigating measures. Accell Group has opted for a proactive risk management approach, anchored in operating processes throughout the organisation. RISK MANAGEMENT FRAMEWORK To safeguard the quality of the company’s financial reporting and operational controls, Accell Group works with a clearly defined administrative organisation and extensive system of internal controls. The internal control system is largely embedded in the company’s information systems. We are aiming for greater automation of our internal controls at group level. And we want to embed our entire administrative organisation more strongly in this internal control system. In 2020, the risk management framework and internal control framework will be further developed and adjusted based upon the new structure and more centralised processes. This risk management framework comprises the following components: ■Identifying and weighing the risks associated with the various strategic alternatives and formulating realistic objectives and related control mechanisms; ■Identifying and evaluating the main strategic, operational, financial and compliance risks and the potential impact on the company; ■Developing a coherent system of measures to control, limit, avoid or transfer risks. The risk management system is tailored to the size and structure of the company. Accell Group employs a risk management approach that identifies and mitigates risks at all levels of the organisation. The Board of Management determines the risk acceptance and decides on risk mitigation. Accell Group’s risk management framework does not provide absolute certainty that all risks can be prevented/mitigated. The purpose is to provide a reasonable level of assurance with regard to the effectiveness of internal controls pertaining to financial and operational risks that may affect the organisation’s objectives. RISK AWARENESS AND CULTURE Employees are expected to be aware of and feel responsible for the risks while carrying out their work. They must abide by the applicable general code of conduct and comply with applicable laws and regulations and policies. Employee risk awareness is continuously enhanced through targeted communication and training. The responsibility for implementing control measures is delegated to employees with responsibility for risk management in a specific area (for example, a process, system, asset or information). Accell Group stimulates a culture in which weak areas in its risk management programmes or control measures can be transparently reported and effectively dealt with. GOVERNANCE (LINES OF DEFENCE) The Board of Management has final responsibility for effectively controlling risks. To support the Board of Management, the responsibilities for risk management are delegated in accordance with the three lines of defence model (see table). Accell Group Annual Report 2019 Risk management 35


  • Page 8

    To be able to evaluate the effectiveness of measures, the central departments (second line) regularly inform the Board of Management about the progress and outcomes of the various risk management programmes. Internal Audit independently reports to the Board of Management and to the Audit Committee about the effectiveness of the risk management and internal control framework, policies and procedures. The Audit Committee informs the Supervisory Board of the Company. The role of the Audit Committee is described in section 5.5 of this Annual Report. Key risks from all regions and key central functions are reviewed by the Board of Management. Based on the risk analysis, the Board of Management implements and maintains internal risk management and control systems. Where relevant, these systems are integrated in Accell Group’s operating processes and we ensure that employees are conversant with these systems. The Board of Management monitors the operation of the systems. This monitoring covers all material control measures related to our key risks. The Board of Management discusses the risk management outcome with the Audit Committee at least twice each year. Market and operational risk management is organised at regional level, while the organisation of the supply chain and HRM is increasingly managed at group level. Management and control measures related to acquisitions, treasury, financial reporting, HR, tax and legal issues are organised at group level. As part of the refined strategy, management is now more centralised, a new region structure has been put in place with a new strategic brand portfolio and the bicycle parts and accessories business is now organised under a single management. This creates more consistency and direction for innovation, marketing and distribution. The internal audit team carries out its tasks on the basis of a detailed internal audit plan and an internal control framework. This framework outlines the inherent risks per process and the associated internal control measures. The Audit Committee defines the responsibility and scope of the internal audit function and approves the internal audit plan. Accell Group Annual Report 2019 Risk management 36


  • Page 9

    RISK MANAGEMENT IMPROVEMENTS Various improvements were made to the risk management process over the course of 2019: ■ Accell Group revitalised its risk management programme, putting its new strategy at the centre. This programme includes both top-down and bottom-up analysis and assessment of the company’s risks. With an initial start in 2018, this programme continued in earnest in 2019. Accell Group established its standard risk register, with periodical assessments and monitoring of the likelihood and impact (i.e. risk) per strategic thrust; ■Given the importance of the risk management framework, a dedicated Internal Control manager was appointed in 2019; ■The central organisation and the regions are now responsible for delivering input to the risk management process; ■In 2019, Accell Group installed a Code of Conduct committee. This committee handles incidents and complaints, and advises the Board of Management on any (disciplinary) measures to be taken. A policy Compliance Incidents Handling and Investigation Procedure has been implemented. RISK PROFILE Global developments in the area of trade and politics affect the markets in which the Accell Group operates. This may involve trade barriers in the form of protectionism or political and social tensions. In addition, laws and regulations are subject to constant change and complexity is constantly increasing. Multi-jurisdictional legislation and regulations such as import duties, anti-dumping rules, the UK Bribery Act as well as Trade Sanctions and Export Controls have increased Accell's risk profile in recent years. KEY RISKS AND MITIGATION OF THESE RISKS Accell Group is active in a significant number of countries. As a result, the Company is potentially exposed to a large number of risks and trends. For example, the results of Accell Group are affected by the general economic conditions and the economic outlook of the countries in which the Company is active. The conditions in the Group’s key purchasing markets also play a role. Risks have been categorised in: strategic, operational, financial and compliance risks. Social and environmental risks have been integrated in these categories with a view to integrated reporting. The Board of Management has identified risks that can be considered the largest risks on the basis of probability of occurrence and/or impact. The following overview represents the key risks, including the mitigating measures, to which the company is exposed. Some risks may only be listed once, while they may fit into more than one risk category. Accell Group Annual Report 2019 Risk management 37


  • Page 10

    Accell Group Annual Report 2019 Risk management 38


  • Page 11

    Accell Group Annual Report 2019 Risk management 39


  • Page 12

    Accell Group Annual Report 2019 Risk management 40


  • Page 13

    Accell Group Annual Report 2019 Risk management 41


  • Page 14

    Accell Group Annual Report 2019 Risk management 42


  • Page 15

    Accell Group Annual Report 2019 Risk management 43


  • Page 16

    Accell Group Annual Report 2019 Risk management 44


  • Page 17

    Accell Group Annual Report 2019 Risk management 45


  • Page 18

    IMPROVEMENTS PLANNED FOR 2020 Accell Group’s risk control system is embedded in the organisation and the company has continued to extend and improve the system in recent years. The company is planning the following actions and/or improvements for 2020: ■Implementation of a speak-up line. On 7 October 2019, the European council adopted new rules on whistle- blower protection. The European Directive on Whistleblower Protection will soon be officially published (already adopted by all bodies). A high level of protection will be offered to those whistle-blowers who have the courage to speak up. A good internal reporting platform will be crucial to provide a low-threshold to report misconduct internally. Accell Group will in the first half of 2020 implement a speak-up line. A speak-up line is an external system for handling reports of wrongdoing and to report code of conduct breaches. The advantage of such an external service provider is that employees are protected and able to report the code of conduct breach anonymously. Accell Group is in the process of requesting proposals from companies specialised in digital ethics and compliance solutions to provide a speak-up line. The whistle-blower regulation, which is available on our corporate website, will be updated accordingly. ■Further embedding whistle-blower line and integrity committee. ■A communication plan will be established (including tone at the top, cascading down), including dilemma training and e-learning courses. Part of this communication plan will also be the further roll-out of the Accell set of values. ■Strengthening the local compliance officers network. ■Annual sign-off of the certificate of compliance with respect to the code of conduct. ■Establishing of the legal compliance house with up-to-date policies. ■Compliance standard will be part of the internal audits. MANAGEMENT STATEMENT The Board of Management has final responsibility for controlling the risks associated with corporate goals and the reliability of external (financial) reporting. The Board of Management is also responsible for assessing the effectiveness of the controls aimed at preventing or mitigating such risks. The Board of Management has assessed the performance of the internal management and control measures. Based on this assessment, the Board of Management concluded that: ■The report provides sufficient insight into the shortcomings and functioning of the internal risk management and control systems; ■The above-referenced systems provide a reasonable degree of certainty that the financial reporting does not contain any material misstatements as at the end of the financial year 2019; ■In accordance with the current state of affairs, the financial reporting has been prepared on a going concern basis; and ■The report includes a statement of the material risks and uncertainties that are relevant to the expected continuity of the Company for a period of twelve months following the preparation of the report. The system of tasks for the internal risk management and control systems and the ensuing findings, recommendations and measures are discussed with the Audit Committee, the Supervisory Board and the external auditor. Accell Group Annual Report 2019 Risk management 46


  • Page 19

    Accell Group Annual Report 2019 Risk management 47


  • Page 20

    3.4 IN CONTROL STATEMENT In accordance with Best Practice provision 1.4.3 of the Dutch Corporate Governance Code, and taking into account the aforementioned, the Board of Management states that: i. the report provides sufficient insights into any failings in the effectiveness of the internal risk management and control systems; ii. the aforementioned systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies; iii. based on the current state of affairs, it is justified that the financial reporting is prepared on a going concern basis; iv. the report provides information on those material risks and uncertainties that are relevant to the expectation of the company’s ability to continue as a going concern for a period of twelve months after the preparation of this report. With reference to article 5:25c, section 2 sub c, of the Financial Supervision Act and with due observance of the above, and based on the audit of the financial statements by the external auditor, the Board of Management as a whole and the persons responsible for these matters, Mr. Ton Anbeek (CEO), Mr. Ruben Baldew (CFO) and Mr. Jeroen Both (CSCO) state that, to the best of their knowledge: ■ the financial statements as included in chapter 6 of this report provide a true representation of the assets, liabilities and the financial position as at 31 December 2019, as well as the profit for the financial year 2019 of Accell Group N.V. and the companies included in the consolidation; ■ the annual report provides a true representation of the situation on 31 December 2019, and the course of business at Accell Group and at companies included in the consolidation for the 2019 financial year and the annual report includes a description of the material risks Accell Group N.V. faces. The Board of Management wishes to note that the internal risk management and internal control system is intended to identify and control significant risks to which the company is exposed, taking into account the nature and scope of the organisation. Such a system does not provide absolute certainty that objectives will be realised. Nor is it possible to completely prevent potential material errors, damage, fraud or the violation of statutory regulations. The actual effectiveness of these systems can only be assessed on the basis of the results across a longer period of time. Board of Management, Ton Anbeek (CEO) Ruben Baldew (CFO) Jeroen Both (CSCO) Accell Group Annual Report 2019 In control statement 48


  • Page 21

    3.5 MANAGEMENT AGENDA AND OUTLOOK We continue to see strong growth momentum in Europe driven by electrification, government incentives and investments in infrastructure. We see improved results of our continuing operations and promising developments in many areas within the group, clearly demonstrating that we are on track to deliver our medium-term financial targets. With the majority of our additional investment related to the strategy 'Lead Global. Win Local' behind us, our focus is now fully on perfect execution and continuous optimisation of our processes, especially in the areas of sales & operations planning, our innovation process and data harmonisation. Main drivers of growth in 2020 will be innovations such as Dutch bike of the year Batavus Finez, Haibike Flyon, Lapierre Xelius, Ghost Superfit and the new high-end e-cargo bike under the Carqon brand, B2B opportunities similar to the high volume deal for the Dutch National police, bike leasing in general and last but not least strong promotions. We believe to be well on track to meet our medium term financial targets. Based on our management agenda we expect further growth of net turnover and EBIT (excluding one off’s) under normal operating conditions. However the full impact of the Corona crisis on our business is unclear yet and we are monitoring the situation closely. Risk mitigating action are being taken. Our current inventory levels provide for some buffer but we anticipate longer delivery times for certain components which may delay the introduction of several new innovative bike models. 3.6 OUR BRANDS We have a strategic focus on 11 European brands: Haibike, Lapierre, Winora, Ghost, Batavus, Sparta, Koga, Raleigh, Babboe, Carqon and the parts and accessories brand XLC, which are sold in five regions: Benelux, DACH (Germany, Austria, Switzerland), SEU (Spain, France, Portugal), UK/Ireland and the Nordics. Accell Group sold the brands Diamondback, IZIP and Redline in 2019 as part of the divestment of the North American business. Winning brands Accell Group has conducted in-depth consumer research in all its selected regions and this serves as the foundation for our commercial growth strategy. We have used the findings to define clear target groups and consumer demands and to clearly define our brand positioning in our markets. In 2019, we devoted a great deal of attention to reallocating our marketing spend, with a sharp focus on growth-driving initiatives. One example was the increased activation of our longstanding Lapierre sponsorship with professional cycling team Groupama-FDJ. Accell Group Annual Report 2019 Our Brands 49


  • Page 22

    The marketing campaign reached over nine million people, tripling the number of unique visitors to the Lapierre website and made a major contribution to higher Lapierre sales. Another example is the Batavus activation in the Netherlands, which resulted in 10% sales growth and an increase in market share in the first half of 2019. Premium brand KOGA also garnered a great deal of international publicity through the launch of its revolutionary KOGA ’KINSEI’ track bike. The ’KINSEI’ will also be the Olympic track bike for the Dutch national track team at the 2020 Tokyo games. In 2019, we also laid the foundation for the continued growth of the world’s best known bicycle brand, Raleigh, with clear positioning that steers innovation, communication and distribution. In 2020, we will take this one step further with enhanced product design, a range of new products and targeted marketing initiatives. On top of this, for 2020 we are planning a number of marketing initiatives for various brands, such as a large-scale brand campaign for Haibike with new product innovations, battery upgrade activation for Batavus and influencer and ambassador activation with Lapierre, aimed at increasing the appeal of these brands beyond their traditional borders in 2020. Innovation For each of the strategic brands, we have defined specific bike models that meet consumer needs in the best possible way and should result in higher rotation on the shop floor, which in turn will be good for both dealers and Accell Group. In addition, we have significantly reduced the number of models, colours and sizes (by up to 40% in some regions) and introduced product platforms that can be used by various brands across the regions. This has reduced complexity in the supply chain and production and will have a positive impact on availability and margins. We have used our innovation strategy and the new brand books to define new product design strategies and new innovation concepts, the first of which we will be launching in 2020. In the cargo bike segment, we are seeing increasing demand for our Babboe brand. The launch of our new premium cargo brand, Carqon, has also been very well received judging by the high order intake at dealers. Accell Group Annual Report 2019 Our Brands 50


  • Page 23

    Consumer-centric strategy We are transforming Accell Group from several standalone operating companies to regional marketing and sales units inspired by our new consumer-centric corporate strategy. As many of our brands have a long history of being primarily product and sales driven, it will take time and effort to build a truly consumer-centric culture right across our organisation. However, we believe that creating genuine customer empathy is about identifying a customer’s emotional needs and understanding the reasons behind those needs. The next step is to respond effectively and appropriately with the right innovations, designs, colours, pricing, customer care, warranties and new services. In 2020, we will continue to invest in data quality, data management systems and the implementation of technology to monitor, segment and profile customers. We will also start a leadership programme to cultivate our values and the right mindset among our employees. Contribution to society We firmly believe that people have the power to make the world a better place. Nothing leverages human power and ingenuity like cycling. Cycling contributes to a better life, better living conditions and a better environment for everyone. As one of the largest bicycle manufacturers in the world, our ambition - and our duty – is to contribute to a better world in everything we do, because we care about the planet and its people. In 2019, we invested both time and money in various sustainability initiatives, including new, clean and safe mobility solutions. Last year, we invested over € 900,000 in the sponsorship of cycling tracks, the promotion of cycling and support for a number of social causes. This figure also includes 30% of our professional sports sponsorship. After all, creating sporting heroes encourages people to be more active and engage in sports themselves. As a major stakeholder in the bicycle industry, we are engaged in an active dialogue and are affiliated with various national and international organisations, industry associations and initiatives that are specifically aimed at promoting cycling (health), safety and sustainable mobility. These include the World Federation of Sporting Goods Industry (WFSGI), the European Cyclists’ Federation (ECF), the Cycling Industries Europe (CIE) and the Confederation of the European Bicycle Industries (CONEBI), which includes the RAI Association in the Netherlands, the Univelo in France and the Zweirat Industrie Verband in Germany. We also work closely with the Dutch Road Safety Council and the German road safety organisation Verkehrswacht. One example of our contribution to society at large is our support for World Bicycle Relief, which is a non-profit organisation that sets up local social workplaces for the production of bicycles in developing counties and donates these bicycles to people in need to improve their access to education, healthcare and work. 3.7 PROCESSES AND INFORMATION TECHNOLOGY As part of our strategy and 'fit to compete' pillar, we continued the optimisation of our supply chain and operations at group level. This approach includes all our business processes, such as procurement, planning, logistics and manufacturing (assembly). In 2019, we appointed a Global Quality Assurance and Compliance Director to further optimise and professionalise quality and compliance. MINIMISING THE ENVIRONMENTAL FOOTPRINT OF OUR OPERATIONS Corporate social responsibility is in the heart of everything we do and for our processes this means full attention to minimising the environmental footprint of our operations, including our footprint due to energy use and single-use plastic, waste generated and carbon emissions generated. We contribute to the global efforts to combat climate change by reducing our carbon footprint. We take measures to contribute to the Paris Agreement’s goal of limiting the global average temperature increase to well below 2 degrees Celsius above pre-industrial levels. Within the carbon footprint programme, we focus on optimising our supply chain, transport (for example by Accell Group Annual Report 2019 Processes and information technology 51


  • Page 24

    transferring production to Europe and reducing air transportation), energy use and on realising our ambition towards sustainable energy of our premises by 2030. As we aim to minimise our environmental footprint, we also focus on eliminating single-use (SU) plastics in our operations, both upstream from our suppliers and downstream to our dealers and consumers. To underline our ambitions, we have defined a new set of sustainability targets for 2025: ■Reduction of carbon footprint: A 20% reduction in energy use, compared to base year 2018, in terajoules relative to turnover; ■ With 60% of all our owned premises to run on sustainable energy towards close to 100% in 2030. ■ ■Reduction of single-use (SU) plastics, with special attention devoted to eliminating fossil-based plastics: 100% SU plastic-free packaging of Accell bicycles, parts & accessories; ■ 50% reduction of SU plastics in transport packaging from our suppliers; ■ Banning the use of SU plastics in our offices and organisation; ■ ■Sustainability to be fully integrated in our New Product Initiation process. In addition to our ambitions on the sustainability front, we are targeting more than € 60 million savings in our supply chain over five years (from 2017). The key drivers of this initiative are: ■ Complexity reduction in models, components and stock-keeping units; ■ Standardisation of product platforms; ■ Rationalisation of manufacturing footprint; ■ Increased manufacturing and logistics efficiency; ■ Procurement – category management. SALES AND OPERATIONAL PLANNING (S&OP) In 2019, the S&OP process was in place in all five regions. The regional S&OP meeting is headed by the Regional Director with teams from sales, marketing, supply chain, finance and research & development. The teams at the meeting review demand, supply plans, new product introductions, product availability and complexity reduction programmes. As part of the S&OP process, last year we continued to expand the supplier collaboration programme to include more intensive information exchange with suppliers on planning. The aim of this programme is to increase delivery reliability, reduce lead times and lower the stocks of components. The number of suppliers participating in the programme quadrupled, with particularly intensive involvement from our largest suppliers and suppliers with the highest delivery risks. In more concrete terms, this translated into the following results for 2019: ■ An improvement of over 10% in the reliability of deliveries from our main suppliers to our factories. ■ The implementation of various new collaborative planning initiatives, with a marked shift in supplier mindsets from reactive (issue solving) to pro-active (issue avoidance). ■ Increased forecast sharing, which cut lead times with our main frame-suppliers. ■ Increased use of pre-production agreements with our main suppliers to ensure on-time deliveries in peak season. ■ A significant (65%) reduction in the stocks of obsolete components. We believe there is ample room for further improvement. In 2020, we will continue to improve our S&OP, focusing on the top 20 models per brand and per region. The objective of the regional S&OP meetings is to improve the availability of the right products by reducing complexity and by optimising sales forecasting by reducing bias and errors. On a group level, we still see opportunities to improve on: ■ Forecasting with a strong focus on our top models; ■ Reduction of Sales Forecast bias and error; ■ (Re-) Allocation of volumes across regions, in particular for our international brands. Accell Group Annual Report 2019 Processes and information technology 52


  • Page 25

    NEW PRODUCT INITIATION (NPI) In 2019, we continued with the introduction and management of the NPI process. This process is now applied at all three of our innovation centres – Sports, Lifestyle and Cargo. The NPI process has four phases, Ideation, Feasibility, Capability and Launch. We use this primarily for our more complex products with a high proportion of components developed in house and that requires intensive cooperation between the various specialist teams. The NPI process is supervised by the Innovation Board headed by the Director of Innovation and Technology. This board decides on new initiatives and research & development projects on a monthly basis. The prioritisation and allocation of people and resources to the NPI projects is based primarily on commercial considerations. We implemented the NPI process in 2019 and delivered a total of 30 projects to market through this process. Major innovation projects delivered included: Haibike Trekking with a Bosch Generation 4 engine, Haibike Flyon, Batavus Finez Powertube, Pack’d and V-light (a new rear light that projects a V-shape onto the ground), Lapierre Overvolt AM, E-Sensium and Zesty TR, Ghost Lector and the Superfit concept. Unfortunately, we continued to experience delays in the delivery of innovations in 2019. We have therefore made a more rigorous execution of our revised innovation process a key priority for 2020. In 2019, we took the first steps toward the introduction of common platforms, including our common frame platforms, which improve efficiencies and lower our cost base. We launched the first standardised platforms and will follow with several more in 2020. In the years ahead, our design team and the Innovation Board will be devoting more attention to sustainability. This will cover a wide range of topics, from design and materials used to reduce our carbon footprint, to more circular business models. Our ambition is to have sustainable elements in every newly launched innovation by 2025. PROCUREMENT In 2019, we continued the roll-out of our category strategies for the various component groups. In addition to reducing the number of components we use on the basis of total cost of ownership criteria and the utilisation of benefits of scale by operating as a group, we see supplier collaboration as an ever more important key driver of our performance. Sharing demand forecasts and securing production capacity is especially important for (e-bike) frames, as production capacity is not available in abundance. In 2019, we stepped up the alignment with our own Asian procurement team in Taipei, in particular for order management efficiency and supplier performance management. Pro-actively managing suppliers in terms of delivery performance is key, as we are seeing clear geo-political shifts with suppliers increasingly relocating production from China to other Southeast Asian countries like Vietnam and Cambodia. To deal with these uncertainties and to contribute to the reduction of our carbon footprint, we continued our initiatives to source closer to our production locations in Europe. One example is the strategic cooperation we now have with Belgium-based innovator REIN4CED for the automated production of high-end carbon fibre bicycle frames. Working with REIN4CED has enabled us to produce carbon frames commercially in Europe for the first time, giving us significant logistic and sustainability advantages and increased supply chain flexibility and efficiency. Other efforts, like those on the indirect procurement front, have focused primarily on supporting our IT team on various projects, as well as on packaging, also aimed at reducing the amount of single-use plastics, and travel initiatives. These efforts have resulted in improved transparency on costs and spending in these particular categories. This approach also resulted in immediate savings and the further professionalisation of our relationships with our suppliers. Accell Group Annual Report 2019 Processes and information technology 53


  • Page 26

    In 2019, we generated supply chain savings of € 13 million, including € 7 million cost avoidance savings. LOGISTICS As of 2019, we manage our group logistics centrally, in close collaboration with our local logistics operations. Our aim is to create a synchronised network of distribution centres, which will make it possible to maximise availability to the market and minimise operational costs by optimising all transport routes and by making use of best practices in our warehouses. Sustainability and efficient logistics go hand in hand. The optimisation of our packaging and direct shipments from our factories to our distribution warehouses will enables us to cut as much as 50%-80% on costs/CO2 emissions on certain routes. Connecting our distribution warehouses in a network will enable us to create cross-regional availability for our products within agreed lead times. The consolidation of our spend on inbound logistics enables us to negotiate better rates, higher service levels and to maximise our use of existing transport space. This includes modes of transport, whether truck, rail, air or sea. We aim to transport our products in the most sustainable way possible. In 2019, we put out our first tenders and signed the first deals. PRODUCTION In 2019, we created the Operational Manufacturing Team, with the aim of aligning supply chain and manufacturing standards across all our factories to increase efficiency and manufacturing quality. Every factory has its own operational excellence programme with set KPI targets, which we monitor and discuss on a monthly basis. We took a number of significant steps to increase safety and efficiency (on average 10%) and manufacturing compliance to plan. The improvement in the compliance to plan led to a significant increase in product availability, while also improving end-of-the-line quality across all our factories. Production footprint Based on the production footprint analysis we performed in 2018, last year we made major progress in in terms of closing and/or selling businesses in 2019. We sold our frame factory in China – Delta Metal –to one of our partners for frame production. A large part of the workforce was transferred to the new owner. Other business sold or closed included Protanium (the Netherlands) and Brasseur (Belgium). We also completed the demolition of our vacated Andrézieux factory and warehouses in France. The land is planned to be sold in 2020. In 2019, we started to build up production facilities for Babboe in Heerenveen and transferred the assembly of Babboe from Asia to Heerenveen. We moved the production of Babboe steel frames to our factory in Turkey. Accell Group Annual Report 2019 Processes and information technology 54


  • Page 27

    In 2020, we will continue with the rationalisation of our production footprint. We will also transfer the painting of frames and components from Asia to our production locations in Europe. This will also make our products more sustainable, as all of our European plants work exclusively with 100% water-based paints and all paint residues are filtered out of the water from our paint shops. Our water purification installations ensure all the water used is returned to the environment in a clean state. Energy Most of our energy consumption is related to our main production facilities in Netherlands, Turkey and Hungary, where we assemble and paint our products. We use ISO 14001 (environmental management) to monitor and improve the environmental performance of our plants. Our production plants in Turkey and Hungary have already been certificated and our Dutch facility has started the certification process, which we expect to finalise in 2020. In 2019, we completed our research into the benefits of installing solar panels on the roof of our production plant in Heerenveen and we will sign the contract in early 2020. This is a major step towards our ambition to reduce our carbon footprint. We expect the changes to the construction of the roof and the installation of the solar panels to take one year. In 2020, we will also start investigating the possibility of installing solar panels on our Hungarian production facility. In addition to transition to the use of energy from renewable sources, our goal is to reduce our energy consumption by 20% by 2025. To help us achieve this goal, we perform energy audits, we replace old equipment and use LED lighting and motion sensors to reduce energy wastage. The Environment Health and Safety (EHS) team uses the energy audits to define and initiate improvement measures and then monitors the progress during the year. We report annually at group level. The EHS team also plays an important role in reducing the impact of our waste on the environment. The table below outlines all the energy sources our organisation uses, including natural gas and other fuels and fuel used to transport people and products, including the percentage of sustainable electricity consumed. Accell Group Annual Report 2019 Processes and information technology 55


  • Page 28

    Our energy consumption declined in 2019 and the percentage of sustainable electricity increased because some of our companies have switched to purchasing sustainable electricity. We measure and report the results of our energy use and CO2 emissions in accordance with the Global Reporting Initiative (GRI) Standards and the Greenhouse Gas (GHG) protocol. These Standards divide emissions into three groups; scope 1 for all direct emissions due to fuel consumption by company-owned facilities and vehicles; scope 2 for purchased electricity, steam, heating and cooling for own use and; scope 3 for all other indirect emissions created by upstream and downstream activities such as business travel by car, lease car and use of packaging material. Accell Group Annual Report 2019 Processes and information technology 56


  • Page 29

    Accell Group Annual Report 2019 Processes and information technology 57


  • Page 30

    Single-use plastics, packaging and waste Accell Group has been targeting the reduction of the impact of waste and packaging for many years, as an integral part of its sustainability drive. Following the Life Cycle Analysis (LCA) of our products that we performed in 2012 and 2017, we identified reducing the impact of our packaging as the next major issue we need to address, besides the reduction of the materials and energy we use to create and transport our bicycles. Due to new insights into the impact of (single-use) plastics in packaging on our environment, we decided to switch our focus from a general reduction to the elimination of plastics in our packaging by 2025. In 2019, we redesigned our bicycle packaging for e-bikes for the brands Haibike, Winora, Ghost and Lapierre produced in Germany and Hungary. Our new, innovative smaller bike transportation box is 100% SU plastic-free. This results in higher transport loading volumes due to the smaller volume of the boxes themselves, while it also improves logistics handling due to a special compartment for additional parts and the manual. The box also provides better bicycle protection, which in turn reduces the costs incurred due to damage. In 2020, we will extend the new design and lessons learned from this project to packaging for other bicycles. In 2019, we also made a start on the switch from plastic tape to paper tape for sealing our packaging, plus reducing the plastic in our XLC brand packaging and replacing plastic bags with transparent and biodegradable glassine bags. As part of our effort to reduce the amount of plastics in the packaging we receive from our suppliers, we have put this subject on the agenda of the procurement team meetings with our suppliers. Step by step, we will start projects with our suppliers to reduce the use of fossil-based plastics in their transport packaging aimed at achieving a 50% reduction in 2025. We will monitor progress by measuring the amount of plastic waste coming from our three major production hubs. Monitoring and reporting on the waste streams within the group will remain on the agenda of our EHS team. In addition to reducing waste, we see the separation of waste as equally important to the creation of a circular economy. The only way to become truly circular is to maximise the separation of waste into different waste streams, so materials can be reused for new products. In addition to the EHS team, the senior management at our production hubs and local organisations also play an important role in eliminating SU plastics. With the support of our CSR and change experts, we have launched workshops to develop local CSR programmes to contribute to our goals, and to make sustainability an integral part of our daily business. Accell Group Annual Report 2019 Processes and information technology 58


  • Page 31

    The table below outlines the processing of our waste. Our primary aim is to reduce the amount of residual waste. This waste stream is either incinerated or goes to landfill and does not contribute the creation of a circular economy. Circular economy Creating a circular economy is not something we can do in isolation. To create real impact on this vital subject, we need to team up with industry partners and our peers. As one of the significant players in the market, and one that accepts its responsibility, we will take a leadership role in the industry on this topic, just as we have in the past on other sustainability topics like the end-of-life of batteries and the development of the social audit platform for the bicycle industry. We are currently in the process of initiating an expert group on Corporate Social Responsibility (CSR) under the umbrella of European industry organisations CONEBI and CIE. Within this industry-wide group of experts, we will discuss the fundamental issues of the circular economy and find solutions to make our industry even more sustainable. QUALITY AND COMPLIANCE In 2019, we appointed a Group Director Quality and Compliance. All our regional operations and production facilities have their ‘own’ quality teams overseen by a small group-level quality team headed by the Group Director Quality and Compliance. We have developed a comprehensive approach and roadmap to align and improve the standards related to quality and compliance across the group for all our products and activities. Audits of chemical substances We conduct internal audits at our local companies on chemical substances from our suppliers. These substances are used to paint parts such as frames and front forks. They are also used in plastic components such as saddles and handlebar grips. In 2019, our REACH laboratory tested a total of 108 components, on which the lab conducted a total of 648 analyses. The products are selected on the basis of the risk profile of the product. Deviations were found in 6.5% of cases. In all these instances, we worked with the supplier to find a solution. Accell Group Annual Report 2019 Processes and information technology 59


  • Page 32

    In 2020, we will continue to implement our quality road map and invest in our test facilities. RESPONSIBILITY IN THE SUPPLY CHAIN Supplier audits Under the umbrella of the World Federation of Sporting Goods Industry (WFSGI), Accell Group was one of the founding members of the Responsible Sport Initiative (RSI). Through the RSI, we cooperate with other companies in the bicycle industry to share social audits and have the same standards, which helps us to prevent audit fatigue among our suppliers. The content of the social audits is based on the WFSGI Code of Conduct and includes general international standards for labour rights, and work and building safety. We select the supplier locations we audit on the basis of country risk and risk to the continuity of our business. We assess countries every year on the basis of the BSCI Country Risk Classification, CPI, ITUC global rights index and the SA8000 risk assessment. Audits are conducted by external auditing companies and our suppliers are always given advance notice. The auditor drafts a report, and if they identify issues these are captured in the Corrective Action Plan (CAP). We manage the follow-up on the CAP directly. To achieve our goal of ensuring international social & safety standards, we gradually audit and re-audit all of our key risk suppliers. To accomplish this, we plan to audit at least 20 facilities per year. In 2019, we achieved this target, as we completed 20 audits. For 2020, we are aiming to increase the number of audits to 30, to ensure we can achieve our ambition to have all our key suppliers in risk countries audited every three to four years by 2025. The results of the social and environmental audits were comparable to those in recent years. As in the previous year, the most common issues related to emergency safety of buildings, personnel administration, working hours and personal protective equipment for workers. The audits did not reveal any critical issues (such as child labour) that were not resolved immediately by the suppliers. Together with the other companies in the Responsible Sport Initiative (RSI), we are working on Corrective Action Plans to resolve these issues. The RSI audits are additional to the Accell ‘Code of Conduct for suppliers’, which we ask all our suppliers to sign and comply with. In 2019, we asked our key component suppliers to renew their commitment to this Code of Conduct and all these suppliers confirmed their commitment. INFORMATION TECHNOLOGY In 2019, we continued with our strategy to streamline and centralise our application portfolio. We used the Accell Group holding company as a pilot for a new group Enterprise Resource Planning (ERP) system. Lessons learned from this pilot will be taken on board in the roll-out of our future CRM and ERP programme. An important part of this programme will be to facilitate our 'Lead Global. Win Local' strategy and the mitigation of risks in our current systems. We also made progress in the professionalisation of the dependencies between our applications by centralising the management of the integration between these applications. This increases transparency, reduces complexity and supports further roll-outs, both for ERP, but also for other applications such as our digital portfolio. Our strengthened data team has defined our group data strategy and has set standards and procedures for data use and processing. Driving data harmonisation and defining key processes across the group will be the foundation of our future IT and digital strategy. Meanwhile, from an internal control point of view, we strengthened the ‘segregation of duties’ set-up in our legacy systems. In addition, we implemented numerous business initiatives, Accell Group Annual Report 2019 Processes and information technology 60


  • Page 33

    including voice picking in various warehouses, our bicycle lease functionality for the Netherlands and the support of internal sales transfers. We also continued the roll-out of our central platform for cooperation and communication - the so-called Accell@Work platform. From a GDPR point of view, we further strengthened our governance, among other things by assigning local data protection officers, by implementing our internal and external data processing agreements and by reviewing and updating our external websites. On the customer-facing side, we implemented a new platform for Customer Relationship Management (CRM) for Business to Consumers in all our regions. We also successfully delivered a brand new e-commerce platform for our Haibike brand. 3.8 ORGANISATION AND PEOPLE ‘The journey continues’ In line with the Accell Group strategy, we made a step change in the adaptation and adoption of the new organisation in 2019. The goal is to create a more agile, efficient and consumer-centric business with a deep commitment to sustainability and people. In 2019, we made only minor changes to the 2018 matrix design. These were changes in reporting lines, meeting attendees and communication cascades; changes that demonstrate our pragmatic approach during the implementation. The overall structure of business regions with a strong commercial focus and a well-equipped centralised hub remains untouched and is now well established. Despite this success, we did see some signs of project overload and immediately intervened, changing the priority attached to large number of initiatives. This increased the focus on those projects with the highest consumer and commercial impact, such as innovation and marketing-related projects. During the year, we organised numerous highly interactive workshops to optimise the finer details of how we work together, how we communicate and how we reach out to each other. This also created a much stronger networked organisation. Transition In 2019, the strategy roll-out had an impact on all our units, teams and people. The support for the strategic direction and our people’s passion for bicycles and brands helped to smoothen the transition process. We put leadership teams in place at every level of the organisation and strengthened cooperative links across countries. We also established more similar job and roles definitions across teams. Dedicated support was provided for specific projects and organisational changes that were more complex or had a greater impact on the transition. Employee representation We very much appreciate the continued and constructively critical support we receive from our employee representation bodies. During our regular meetings, we discussed a great many issues, leading to improved proposals and implementation processes. Examples include organisational changes, the set-up and results of the Employee Engagement Survey and the pilot for the 360-degree feedback system. The works councils in the Netherlands also interacted in various sessions with the Accell Group Supervisory Board. Employee engagement survey As anticipated in the outlook for 2019, it has taken some time for the dust to settle. For this reason, in March we conducted the first ever Accell Group-wide employee engagement survey (EES). More than 72% of our staff on the Accell Group Annual Report 2019 Organisation and people 61


  • Page 34

    payroll responded to the invitation to participate in the EES. Yet again, the results show that Accell staff welcome the new strategy, organisation and spirit of cooperation. The commitment of people to their roles and the organisation remains very strong in a period of change. It was also clear from the EES results that we still face a number of leadership challenges, in terms of the need to continuously improve communications, staff appreciation and recognition. These challenges are translated under the heading of “Vitality”; the desire to improve how Accell staff experiences pressure at work, regain energy and increase the influence on their work content and work pace. We cascaded the EES results down through the organisation and identified specific actions for 2019 and 2020. We will repeat the EES at year-end 2020 to measure progress against targets set. We have also included these targets in the non-financial performance targets for Accell Group senior management. People projects We embedded a number of pilots and initiatives in our overall HR strategy of ‘Simply the best bike company to work for’. These include the introduction of a renewed 360-degree feedback system, the first steps towards defining the foundation for an integrated HR information system, our talent review and talent acquisition approach, CSR workshops and many more. We will continuously update successful programmes, such as the Accell Onboarding programme. In particular, we would like to highlight the efficient and creative approach taken by our largest subsidiaries in Turkey, Hungary and the Netherlands in terms of new initiatives in the recruitment, training and development of a highly diverse group of new colleagues, all of whom we warmly welcome. Accell the Netherlands received special recognition for its efforts and won ‘High achiever Social Entrepreneurship’ award. This award was granted by third- party initiator TNO, on the basis of external audits and is an encouragement to continue on our road to becoming ‘Simply the best bike company to work with’. In this context, we see the growth in the group of female professionals at Accell as an encouraging sign that we are on the right track on this front. Our continued attention to health and safety at work resulted in a number of new initiatives at our major subsidiaries. In general terms, we continue to stress the importance of basic discipline, good training and the attentiveness of all our people. We firmly believe that investments in impactful healthcare initiatives more than pay off in the long run. For instance, last year we offered our staff based in the Netherlands a personal feedback session Accell Group Annual Report 2019 Organisation and people 62


  • Page 35

    on lifestyle and health issues, with the help of a third-party consultancy. The staff response to the invitation and session was positive. Despite this and other initiatives, we did have a number of lost-time accidents1, which we carefully scrutinised to avoid future repetition. In the course of 2019, we tightened reporting procedures and incident definitions. This resulted in a statistical increase in incidents reported. Safety teams now have more accurate data available, enabling them to focus on incident root causes and initiate new measures. The new reporting and follow-up process is anchored in the responsibilities of the Board of Management. [1] ‘A lost-time incident is characterized by loss of working time as the result of an injury at work The absenteeism percentage increased in 2019. In the period ahead, we will be devoting our full attention to reversing this trend. Analysis shows that next to the influence of ‘standard influenza’ and improved reporting on lost time incidents on the absenteeism score there has been an increase in long-term sickness cases which have a considerable impact on the reported trend. We continue to strive for our ambition of zero accidents (compared to 144 accidents in 2019) and encourage exercise and healthy living for all our staff. In 2019, we continued to devote attention to reducing emissions from commuting and the reduction of air travel. Accell Group Annual Report 2019 Organisation and people 63


  • Page 36

    We encourage the use of our own bicycles for commuting to work wherever we can. We also make use of changes in local tax regulations if these make it beneficial to provide staff with bikes. Our goal is to provide 15 hours of training per employee per year. After increasing to 13.3 hours in 2018 (2017: 12.1 hours), this increased to 13.7 hours per FTE in 2019. We will continue to invest in the training and education of our staff in the years ahead. Labour market Over the past few years, we have seen a reversal on the labour market. From a surplus of well-trained and educated people in many functional areas, Europe has quickly developed a shortage of specialists, for instance in IT, Engineering, design, logistics and e-commerce. One of our major advantages in the recruitment and retention of talent is the natural appeal of our products and brands, as well as our solid reputation as an employer in the regions we operate in. The fact that most of our subsidiaries are not based in European economic hotspots is occasionally a minus. The recruitment of new colleagues from the Ukraine for our Hungarian subsidiary is one example of our creativity and pragmatism. This tactic enabled the team in Hungary to recruit new colleagues from Ukraine to tackle a local shortage of experienced mechanics for our production facilities in Hungary. This boosted productivity by more than 50% in this important production hub. Accell Group Annual Report 2019 Organisation and people 64


  • Page 37

    Generally, the increased availability of female professionals in all functional areas is helping us to gradually move towards achieving our ambitious gender diversity goals. We developed and broadened our Diversity and Inclusion policy and practices last year. As part of this, we set up a dedicated task force, to design and help implement a creative and relevant approach to a wide range of diversity and inclusion-related issues. As a first step, our ambition is to have female professionals account for at least 40% of our (senior) management compared to 23% now. In Europe as a whole, total salaries are rising significantly. This rise is sometimes driven by government measures, such as inflation correction (Turkey, Hungary), or is part of a collective labour agreement (the Netherlands) on which we have limited influence. To control cost development, we have installed a new process to authorise increases in the number of FTEs. In terms of salaries, Accell Group continues to aim for the median position in any relevant peer comparison. Priorities for 2020 We will continue with our organisational transition at a steady pace. As the motto for 2020 is ‘Getting the basics right’, we will continue to launch initiatives to increase organisational efficiency and effectiveness. An important part of this will be our preparations for the roll-out of new business systems and our group HR information system. Also on the agenda are the modernisation of our staff benefits programme, the 2020 employee engagement survey, the Accell Purpose workshops and the activation of a large number of CSR programmes and initiatives More specifically, we are moving forward on our multi-year programme to achieve: ■A continuous improvement of our employee engagement survey scores on participation, people satisfaction and engagement; ■A representation of 40% female professionals in (senior) management roles; ■An increased training target to an average of 24 hours/year per FTE; ■A continued rise in productivity throughout the business. Accell Group Annual Report 2019 Organisation and people 65


  • Page 38

    Accell Group N.V. P.O. Box 435, 8440 AK Heerenveen Industrieweg 4, 8444 AR Heerenveen The Netherlands T +31 (0)513 638 703 E info @ accell-group.com www.accell-group.com


  • Page 39

  • View More

Get the full picture and Receive alerts on lawsuits, news articles, publications and more!