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Accell Group Expects Less Profit but Higher Turnover

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HEERENVEEN, the Netherlands – In a trading update released this morning Accell Group accounted to expect a higher turnover in the second half of 2012, driven both organically as well as through acquisitions. Over the full year 2012 Accell Group also expects higher turnover compared to 2011. However the net operating result will be less in 2012 compared to 2011.

Accell Group Expects Less Profit but Higher Turnover
“Given the current economic situation, Europe in particular, projections are difficult to make”, said René Takens, CEO of Accell Group.

René Takens, CEO of Accell Group: “During the summer the weather conditions were better than last year in most countries in which Accell Group sells bicycles and bicycle parts. This led to a continuation of first half year growth in almost all countries. We now also saw a slight growth in the Netherlands.”

“Sales of bicycle parts & accessories have increased, both organically and through acquisitions. Turnover from the small scale fitness activities remained stable while the result improved due to cost savings.”

Integration Raleigh and Diamondback
“The integration of the acquisitions of Raleigh and Diamondback in April is at full speed. The synergy effects are yet limited, while there are (integration) costs and financing costs. Due to partial pass on of cost increases and acquisition effects the net operating result will, despite higher turnover in the second half of the year, not exceed that of 2011, which means that the decline in result we saw in the first half of the year will not be compensated by the second half of the year. For the longer term we expect a positive development of results”, said René Takens.

For Accell Group the sales of electric bikes and innovative sports bikes continues to develop well while sales of traditional bikes are under pressure. Following better weather conditions in summer, at season end (end of September) less stock will need to be sold at higher discounts.

Less margins
A number of Accell Group companies face cost price increases which can only be passed on partly via the new collections given the current economic conditions. The relative operating costs are at a similar level compared to 2011.

Taking into account the customary effects related to the development of the seasonal sales, no significant changes occurred in recent months regarding the financial position of Accell Group. In order to finance seasonal credit requirements, factoring agreements have been conducted for parts of the accounts receivable.

The seasonal nature of the activities generally results in a substantially lower profit in the second half of the year compared to the first half. Moreover, the number of exceptional items in 2011 as well as in 2012 (costs of acquisitions), is considerable.

Outlook positive?
The medium to long term outlook remains positive. There is a structural good demand for bicycles for mobility, health and physical exercise. In particular, this will continue to thrive sales of electric bikes and innovative sports bikes in the upper segment. Given the current economic situation, Europe in particular, projections are difficult to make. Based on the outlined developments and the current market outlook Accell Group expects a higher turnover and a decrease in net profit for the full year 2012 as compared to 2011.

The net operating profit (net profit excluding exceptional items) in the second half year is expected to come in lower than last year (H2 2011: € 4.4 million) mainly due to a partial pass on of cost increases and a limited contribution and financing costs of acquisitions. For the longer term Accell Group expects a continuation of growth of turnover and net operating result.

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