Focus items 2019
In its oversight of the management of the business, the Supervisory Board dedicated a good deal of time monitoring the progress made by Accell’s leadership with the implementation of the strategic plan 2018-2022. One notable topic of discussion was the divestment of the North American activities, which was monitored closely in 2019.
The successful completion of the major transition programme initiated in 2018 is seen as crucial for the long-term success of Accell Group. Up until 2018, Accell Group organised its international operations on a decentralised basis. To capture the benefits of scale inherent in the international footprint of our business and to accelerate the speed of innovation, two years ago the Company embarked on a major transition programme with the aim of bundling its dispersed resources to create a joint development, supply chain and marketing organisation. The responsibility for customer relationships remains firmly lodged in the operating units.
This approach will enable Accell Group to service its markets with product innovations faster and at lower costs. In an expanding and increasingly dynamic market, speed of innovation and our ability to stay ahead of competition is of the essence.
We recognise that none of this is easy. It involves major changes in ways of working, a redesign of business processes and a significant cultural shift. This requires an investment in people, production capacity, a shared IT infrastructure and e-commerce approach.
As the Supervisory Board, we realise that it will take time for this effort to be fully reflected in the Company’s cost base, revenues and cash flow. We support the Board of Management in its actions to complete the roll-out of this transition programme. In our view, the quality of the execution is more important than speed of implementation.
With the arrival of the new CFO in late 2018, in 2019 Accell Group redesigned its financial processes to support our new organisational model. Topics like business planning, forecasting, working capital and data management are getting much needed attention.
The Supervisory Board welcomed the efforts by the Board of Management to strengthen its risk management. The attention devoted to the various corporate social responsibility programmes is resulting in good traction; the progress will also be reflected in the long-term performance indicators of the new remuneration policy for the Board of Management that will be proposed in April 2020. Last but not least, the group-wide code of conduct programme will be further embedded during 2020.
The Supervisory Board held twelve plenary meetings in 2019, ten according to a schedule and two additional meetings. We held five closed meetings, in the absence of the Board of Directors, either preceding or following our regular meetings.
Between meetings, the Chairman maintained intensive contact, both in person and by telephone, with the CEO, CFO, as well as with the General Counsel & Company Secretary. Similarly, the chairpersons of the Audit committee and the Selection and Remuneration committee were in frequent contact with, as applicable, the CEO, CFO, the Human Resources director, the Company Secretary & General Counsel and the Internal Auditor. The discussions in the Board were largely based on documents and presentations by the Board of Management and/or advisors. By way of preparation, many subjects were discussed in advance in one of the Board’s committee meetings.
Throughout 2019, Board attendance was high, with members rarely absent.
At the meetings with the Board of Management, the Supervisory Board was updated on a number of recurring items, such as news regarding Accell Group, financial performance, net working capital developments and financial forecasts, the tracking of bank covenant ratios, reports on the operating companies, developments in the markets in which Accell Group operates, business projects, divestments and, more specifically, North America and acquisition opportunities. Other matters discussed included the 2018 annual report and financial statements, the reserve and dividend policy and the dividend proposal over 2018, plus the 2019 interim report and 2019 interim statements. In the Supervisory Board meeting held in March 2019, we assessed the performance rating of the bonuses for 2018, the granting of performance-based shares and the 2019 bonus criteria for the Board of Management. We take a close interest in investor relations, trading updates, share price developments and the composition of the shareholder base, which we evaluate on a regular basis, along with feedback from investor roadshows. Press releases related to the Company’s performance were discussed prior to publication. In 2019, the internal documentation (“draaiboek”) related to a (hostile) takeover approach was updated.
Throughout 2019, we closely monitored progress and provided advice on the 'Lead Global, Win Local' strategy. The strategy requires numerous adjustments, including changes in the field of internal governance, new processes and new ways of working, new competencies and new talent, which will stretch the organisation and its people.
We also paid attention to the scope and details of the transaction and the completion of the disposal of the loss-making operations in North America, progress on the centralised digital and IT roadmap, the structure and activities of (central) marketing, the innovation process and the progress made in the cost savings process. In line with the refined strategy, in the year under review we also discussed various potential acquisitions.
Three of the Supervisory Board meetings were largely dedicated to sessions with the management of Accell Benelux, the innovation team, human resources, DACH, supply chain, parts and accessories, finance and IT, marketing and UK & Ireland, in which they presented their business. In December 2019, the Supervisory Board visited Velosophy, which Accell Group acquired in 2018, and in October we attended a meeting of the Accell Leadership Forum. One of the Supervisory Board members visited the company’s operations in Asia. These interactions provided us with valuable insights into the roll-out of the refined strategy.
In its meeting of January 2020, the Supervisory Board agreed on the overall conclusion that the company’s risk and control systems are in place and working. However, culture and discipline remain crucial in achieving a well-functioning risk management and control system.
In the context of the annual results 2019, in the meeting of the Supervisory Board held on 5 March 2020 we discussed and agreed with the 2019 annual report and financial statements, the reserve and dividend policy and the dividend proposal over 2019. We also assessed the performance rating of the bonusses for 2019, the granting of performance-based shares and we set the 2020 short and long term remuneration criteria for the Board of Management.
The members of the Supervisory Board collectively represent a broad range of experience and expertise and ensure an effective coverage in terms of background and know-how, to provide support and to monitor Accell Group critically during the ongoing transition.
As from 1 January 2020 onwards, the Supervisory Board comprises four members.
In the General Meeting of 24 April 2019, Mr. Rob ter Haar was appointed as a member and chairman of the Supervisory Board for a period of four years. This appointment was initiated to reinforce the Supervisory Board, to enable it to closely monitor the process of change in the company in line with its refined strategy. The appointment was also prompted by a request to this effect from the shareholders at the General Meeting in October 2018.
In April 2019, following the appointment of Mr. Ter Haar, the Supervisory Board was temporarily expanded to five members.
At the same date, Mr. Ab Pasman stepped down from his position as Chairman of the Supervisory Board. He remained a member of the Supervisory Board until the end of 2019, after which he resigned. In recognition of the nine years he served on the Board, including five years as Chairman, the Supervisory Board would like to express its appreciation to Mr. Pasman for his long-term commitment, dedication and contributions to the Company.
In line with the rotation schedule, Mr. Peter B. Ernsting resigned from his position as member of the Supervisory Board at the General Meeting held on 24 April 2019, after having served the company for eight years. Given the number of changes in the composition of the Supervisory Board (and the Board of Management) over the past few years, the General Meeting followed the nomination made by the Supervisory Board, taking into account the enhanced right of recommendation of the Works Councils, to ensure continuity and a smooth transition of responsibilities, and re-appointed Mr. Ernsting on 24 April 2019 for a third term of two years.
The composition of the Board of Management did not change in 2019. At the end of the General Meeting held on 24 April 2019, Mr. Jeroen Both was re-appointed as a member of the Board of Management for another four-year term. In his role as CSCO, Mr. Both is primarily responsible for the management of the central supply organisation and as such he plays an important role in the execution of the strategy.
Following the Supervisory Board's self-assessment in 2018, performed under the leadership of an external board facilitator, we held an (internal) follow-up self-assessment meeting in mid-2019, partly in view of the new composition of our Board. In that meeting, we reflected on our own performance, the composition of the Supervisory Board, and that of the committees. We arrived unanimously at positive assessments of all the items considered and we did not identify any real bottlenecks or serious weaknesses, although we did discuss some minor suggestions for improvements. We also decided to appoint a General Counsel & Company Secretary to assist both the Supervisory Board and the Board of Management in their activities. The Supervisory Board also concluded that almost all the items identified in the previous assessment in 2018 were addressed.
The Supervisory Board meets the requirements of the Dutch Corporate Governance Code on independence. It also complies with the rules to the effect that its members do not hold more than five supervisory board positions at “large” publicly listed Dutch companies. This gives the members sufficient time to fulfil their responsibilities properly, both individually and as a team.
In chapter 4 of this Annual Report, the governance structure of the Company is described, and one deviation from the principles and best practice provisions of the Corporate Governance Code is explained. The Supervisory Board currently does not comply with the standard for a balanced division of the seats on either the Board of Management or the Supervisory Board, but aims to improve this in the search for new members, together with diversity in general. For that purpose, the Company has initiated a project to develop a group-wide diversity programme with the ambition to launch this programme by mid-2020, after which implementation will take place. The Supervisory Board meets the requirements of the Code regarding the independence of its chairman, the other Supervisory Board members and the Board as a whole.
In 2019, there were no material transactions with conflicts of interest involving the Board of Management or Supervisory Board members.
The Board of Management has prepared this annual report, including the 2019 financial statements. KPMG, the external auditor, has issued its unqualified independent auditor report, which can be found on in section 7.1 of this annual report. The Supervisory Board discussed the 2019 financial statements with the Board of Management and the external auditor KPMG Accountants N.V. in its meeting of 5 March 2020 and we concluded that we agree with the 2019 financial statements.
The members of the Supervisory Board and Board of Management have signed the 2019 financial statements pursuant to their statutory obligation under article 2:101.2 of the Dutch Civil Code. The members of the Board of Management have also issued the statements required under section 5:25c.2.c of the Financial Markets Supervision Act (Wet op het Financieel Toezicht).
We recommend that the General Meeting (i) adopts the 2019 financial statements, (ii) approves the proposal to distribute a dividend of € 0.30 per ordinary share, to be paid out in cash or in shares at the option of shareholders, and (iii) discharges the members of the Board of Management for their management of the Company and its affairs in 2019, and the members of the Supervisory Board for their supervision of said management.
Last year was the first full year of Accell Group’s transition programme. Despite the time and energy dedicated to its implementation, the business continued to perform well and offers more potential for the future.
The relationship between the Supervisory Board and the Board of Management, as well as other senior management, is constructive and transparent.
Without the support of everyone in the Accell organisation, the company would not be able to achieve its goals and ambitions. We would like to express our gratitude for the tremendous efforts made by all employees to keep the Company’s operations running, while at the same time helping to realise the required changes. We also wish to thank Accell Group’s business partners for their patience as the Company strives to improve the quality of its products and services.
In 2020, Accell Group will continue on its strategic path. The Supervisory Board is confident that we have the leadership and the people in place to achieve our objectives and create long-term sustainable value for all our stakeholders.
Heerenveen, the Netherlands, 5 March 2020
Rob ter Haar, Chairman
Gert van de Weerdhof, Vice-chairman
Danielle Jansen Heijtmajer